Each one in plain English, with the numbers worked through for a shareholder.
28 Oct 2009material agreement● Neutral
On Oct 22, 2009 Contango's subsidiary Conterra signed a joint venture with Patara Oil & Gas to develop proved undeveloped Cotton Valley gas reserves in Panola County, Texas. Conterra pays 100% of drilling and completion costs for 90% of net revenues, for up to 15 wells at about $1.5 million each. Patara's CEO, B.A. Berilgen, is a Contango director, so this is a deal with a related party. A Oct 23, 2009 amendment loosened certain negative covenants in the $50 million Guaranty Bank credit agreement (as amended and restated March 31, 2009).
On Oct 3, 2008 Contango and its subsidiary Contango Resources Company arranged a $50 million secured revolving credit facility with Guaranty Bank, paying interest at LIBOR plus 2.0% and due Oct 3, 2010. It can fund Gulf of Mexico drilling, share buybacks, dividends and working capital; a $250,000 arrangement fee was paid. The filing does not say how much has been drawn.
On April 3, 2008 Contango bought more working interest in Dutch (Eugene Island 10) and the Mary Rose leases from two companies for $100 million, adding 21 Bcfe of proved reserves. This lifts its working interest to 47.05% in Dutch and an average 53.21% in Mary Rose, bringing like-kind exchange purchases to $309 million, and a partly-owned subsidiary (Republic Exploration LLC) has handed its interests to the company directly. The company also said its board authorized Merrill Lynch to seek proposals to buy Dutch and Mary Rose; if an acceptable offer arrives, it would likely sell Contango to the buyer while spinning the remaining assets to shareholders in a new company, Contango Energy Company. Any deal is subject to terms, approvals and, if needed, a shareholder vote. Audited statements and pro forma information for the acquired interests are still to be filed (waiver requested April 8, 2008).
8 Feb 2008asset acquisition disposition▲ GoodMajor
The sale of Contango's 10% limited partnership interest in Freeport LNG Development LP to Turbo LNG LLC, an affiliate of Osaka Gas, closed on Feb 5, 2008 for $68 million. Of that, $20.3 million repaid the Royal Bank of Scotland debt and another $20.0 million repaid a private investment firm (the secured term loan with Centaurus Capital is the likely lender, an inference), leaving $27.7 million for working capital. Management says it now has over $150 million of cash and $60 million of available borrowing capacity, and still plans to put $109 million into a like-kind exchange. This completes the January 2008 agreement.
5 Feb 2008asset acquisition disposition▲ GoodMajor
The sale of the Eastern core Fayetteville Shale properties to XTO Energy closed on Jan 30, 2008, and Contango received about $128 million. This completes the January 2008 agreement and, with the Western core sale to Petrohawk, ends Contango's Fayetteville Shale holdings. Management intends to use a large percentage of the proceeds for another like-kind exchange purchase of oil and gas properties; the press release puts the taxable proceeds to be invested that way at about $109 million, and says the cash earns 3.5% in the meantime.
On Jan 17, 2008 Contango raised its secured term loan facility with Centaurus Capital from $30 million to $60 million, with $15 million outstanding and maturity extended to June 30, 2009 (in December 2007). A $300,000 arrangement fee was paid. Management says that once the Freeport LNG sale closes it expects to be debt free with $60 million unused capacity, kept as extra liquidity given financial market turmoil.
On Jan 4, 2008 Contango and its partners agreed to sell the Eastern core of their Arkansas Fayetteville Shale properties (about 20,000 acres) to XTO Energy for $236 million, about $128 million of it for Contango's 11,200 net acres. Closing is expected in January 2008; this would sell the Fayetteville acreage Contango kept after the Petrohawk sale, and the company plans to seek another like-kind exchange with the proceeds.
On Jan 7, 2008 Contango agreed to sell its 10% limited partnership interest in Freeport LNG Development LP to a major Asian utility company for about $68 million, subject to the buyer's board approval and customary conditions. Management says it will repay the $20 million Royal Bank of Scotland term loan with the proceeds and keep the rest for working capital. The release also reports the three Dutch wells were shut in by condensate line leaks, with lost cash flow estimated at about $5 million.
9 Jan 2008asset acquisition disposition▲ GoodMajor
On Jan 3, 2008 Contango's subsidiary bought additional working interests in the Dutch (Eugene Island 10) discovery and the five Mary Rose State of Louisiana leases from three companies for $200 million, adding 29 Bcfe of estimated proved reserves. The press release says this qualifies as the like-kind exchange for the Western Fayetteville sale proceeds, and raises Contango's working interest to 42.88% in Dutch and an average 48.65% in Mary Rose. Audited financial statements and pro forma information for the acquired properties are still to be filed.
28 Dec 2007asset acquisition disposition▲ GoodMajor
The Western core Fayetteville Shale sale to Petrohawk closed on Dec 21, 2007, and Contango received $199.2 million. It intends to use the money to buy oil and gas properties through a 1031 like-kind exchange, and expects a profit of about $162.4 million on the sale in the December 2007 quarter, assuming the exchange succeeds. This completes the November 2007 agreement.
Contango and its partners agreed on Nov 26, 2007 to sell the Western core of their Arkansas Fayetteville Shale properties (24,078 acres) to Petrohawk for $343 million, about $200 million of it for Contango's roughly 14,200 net acres. Closing is expected in December 2007, and Contango keeps its interest in the Eastern core; the company says the sale is part of its previously announced review of strategic alternatives.
