Contango

Oil & Gas Company

Forward Looking Information
This presentation contains forward‐looking statements regarding Contango that 
are intended to be covered by the safe harbor ʺforward‐looking statementsʺ 
provided by of the Private Securities Litigation Reform Act of 1995, based on 
Contango’s current expectations and includes statements regarding acquisitions 
and divestitures, estimates of future production, future results of operations, 
quality and nature of the asset base, the assumptions upon which estimates are 
based and other expectations, beliefs, plans, objectives, assumptions, strategies or 
statements about future events or performance (often, but not always, using 
words such as ʺexpectsʺ, “projects”, ʺanticipatesʺ, ʺplansʺ, ʺestimatesʺ, ʺpotentialʺ, 
ʺpossibleʺ, ʺprobableʺ, or ʺintendsʺ, or stating that certain actions, events or results 
ʺmayʺ, ʺwillʺ, ʺshouldʺ, or ʺcouldʺ be taken, occur or be achieved). Statements 
concerning oil and gas reserves also may be deemed to be forward looking 
statements in that they reflect estimates based on certain assumptions that the 
resources involved can be economically exploited. Forward‐looking statements 
are based on current expectations, estimates and projections that involve a 
number of risks and uncertainties, which could cause actual results to differ 
materially from those, reflected in the statements. These risks include, but are not 
limited to: the risks of the oil and gas industry (for example, operational risks in 
exploring for, developing and producing crude oil and natural gas; risks and 
uncertainties involving geology of oil and gas deposits; the uncertainty of reserve 
estimates; the uncertainty of estimates and projections relating to future 
production, costs and expenses; 
2
Forward Looking Information
potential delays or changes in plans with respect to exploration or development 
projects or capital expenditures; health, safety and environmental risks and risks 
related to weather such as hurricanes and other natural disasters); uncertainties 
as to the availability and cost of financing; fluctuations in oil and gas prices; risks 
associated with derivative positions; inability to realize expected value from 
acquisitions, inability of our management team to execute its plans to meet its 
goals, shortages of drilling equipment, oil field personnel and services, 
unavailability of gathering systems, pipelines and processing facilities and the 
possibility that government policies may change or governmental approvals may 
be delayed or withheld. Additional information on these and other factors which 
could affect Contango’s operations or financial results are included in Contango’s 
other reports on file with the Securities and Exchange Commission.  Investors are 
cautioned that any forward‐looking statements are not guarantees of future 
performance and actual results or developments may differ materially from the 
projections in the forward‐looking statements. Forward‐looking statements are 
based on the estimates and opinions of management at the time the statements 
are made. Contango does not assume any obligation to update forward‐looking 
statements should circumstances or managementʹs estimates or opinions change. 

3
The Big Lebowski
and the
Zen of E & P

4
 Contango’s Core Beliefs
From Inception
„ The only competitive advantage in the natural gas and oil business 
is to be among the LOWEST COST producers 

„ Virtually all the exploration and production industry’s VALUE 
CREATION occurs through the drilling of successful exploration 
wells

„ The goal is only and always value creation PER SHARE

POLICEMAN……“What was in your briefcase?”

DUDE…………“Papers, just papers, my business papers”
POLICEMAN…… “And what do you do sir”
DUDE………….“I’m unemployed”
5
 Contango Total Cost per Mcfe
"Credit Suisse 38"

$7.00

$6.04 $5.93
$6.00
(E) (E)
$5.31 $5.26 $5.35
$5.06
$5.00

$4.00
Credit Suisse 38
(E)
(E) MCF
$3.00
$2.54 $2.61
$2.32
$2.15
$2.00

$1.00

$0.00
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009

*Total Cost Structure includes Operating Costs (including Production taxes), Interest and G&A Plus DD&A for 38 Companies followed
by Credit Suisse
• From a full cycle cost perspective the industry is losing money
• It is not apparent (to me) that full cycle costs have or will decline
• I think the industry needs $6.00/Mcfe to earn a 5‐10% ROR
WALTER.......“I’m sorry the guy wrecked your car Dude, did you make it home?
DUDE……….of course I made it home, you called me here didn’t you?” 6
 And, What About Value Creation?
„ Find, Drill Aquire Capex (last 3 fiscal years)…..............$556 million

„ Reserves added ……………................................................408 Bcfe

F & D & A   $1.36/Mcfe*

„ DD&A for 12 months ended June 30, 2009……………...$1.17/Mcfe

*F & D Drill Bit $.80/Mcfe
*Acquisition Cost $3.10/Mcfe

THE BIG LEBOWSKI……“What does it take to make a man? Is it being

prepared to do the right thing whatever the cost?”

DUDE..............“umh”………..“that and a pair of testicles”…….

7
 Taxes Are By Far Our Biggest Cost
„ Our costs FY 2009 were $2.39/mcfe: 
LOE (including severance + workovers)..= $.87/ Mcfe
G & A……………………………………….= $.35/ Mcfe
Interest……………………………………...= $ 0/ Mcfe
Total Variable Costs……………………...= $ 1.22/ Mcfe
DD&A………………………………………= $ 1.17/ Mcfe
Total Costs…………………………………= $ 2.39/Mcfe

„ Absent dry holes (we follow successful efforts accounting), we are GAAP profitable down to 
about $2.50/MMbtu Henry Hub 

„ Our effective tax rate is about 39% for Federal & State of LA taxes combined

„ Through Capex – principally IDC deductions (and dreaded dry holes) – we can defer 

taxes…..but would rather pay taxes currently than drill wildcat wells we don’t like

DUDE…………“This is a very complicated case, lots of in’s, lots of out’s,

fortunately I’m adhering to a very strict drug regimen to help me keep my
mind limber and figure this out.”

8
 FY 2010 Capex Program
Well 8/8th DHC Cost Contango NRI Status
($MM) DHC W.I. (inclusive of REX and COE)

Nautilus $15 100 % 73% Spud Nov. 09

Dude $15 100 % 72% Spud Q-1 10

His Dudeness $15 100 % 72% Depends
El Duderino $15 100 % 72% Depends

TOTAL $60 100 % 72%

“I am not Mr. Lebowski, you’re Mr. Lebowski. I’m the dude so that’s
what you call me…….that or his dudness, or duder, or el duderino if
your not into the whole brevity thing”

9
 Natural Gas Prices-
How much more pain?
„ Lower 48 ONSHORE supply of natural gas peaked in Nov 2008 
and is in decline.  Demand has bottomed, now increasing   
„ EVENTUALLY, according to Economics 101, when decreasing 
supply collides with increasing demand.......prices rise
„ Natural gas rig count down 50% ± 700 rigs
„ Balance Sheet strength still demands a premium
„ Opportunity abounds 

WALTER..…..“Over the line!!! Over the line!!!”

SMOKEY…..“No I wasn’t”
WALTER…….“Mark it zero Dude”
SMOKEY…...“Mark it 8 Dude”
WALTER…….(Pointing a gun at Smokey’s head)….“Smokey you are
entering a world of pain”
10
 Lower Longer
(Source: EIA 914 for September)

Lower
48 Gulf of
States Mexico Onshore
BCFD BCFD BCFD

Jul-08 63.46 7.50 55.96

Aug-08 63.38 7.00 56.38
Sep-08 56.56 2.22 54.34
Oct-08 61.38 4.55 56.83
Nov-08 63.36 5.57 57.79 Peak Onshore Production
Dec-08 62.84 5.82 57.02 month
Jan-09 62.91 6.33 56.58
Feb-09 63.58 6.53 57.05
Falling but not fast
Mar-09 63.55 6.77 56.78 enough to avoid the
Apr-09 63.44 6.94 56.50 coming sea of red ink. 3Q
May-09 62.96 6.71 56.25 write-downs will get ugly.
Jun-09 63.24 7.21 56.03
Jul-09 62.55 7.38 55.17
BRANDT…….You never went to college?

DUDE…….Well, yeah I did, but I spent most of my time occupying various,

administration buildings-smoking thai-stick, breaking into the ROTC and bowling. I'll
tell you the truth, Brandt, I don't remember most of it. 11
 A LINE IN THE SAND

• What does Chevron know that none of us at this conference seem to know? 
• Every company has a Belief/Need/Story as to why it makes sense to drill NOW
• Hold leases, rig contracts, service costs are low “ We just raised a bunch of capital,”
prices will be up in 2010, hedged, need the money to pay interest and G & A, 
EBITDA/Interest coverage covenant…..etc.
• My personal favorite – A 35% partner – the IRS
• The critical question, however, is what rate of return (ROR) is the industry investing 
capital? Don’t look to F & D cost. I repeat…F & D costs are irrelevant to informing the 
rate of return earned on invested capital.
•ROR =    Profit ÷ Investment       
•We are profitable (owe the IRS money) down to a very low natural gas price. Our 
exploration Capex has the effect of deferring taxes via dry holes – expensed and IDC 
deductions.

DUDE……This Chinaman who peed on my rug, I can't go give him a bill so what are you talking about?

WALTER……This Chinaman is not the issue! I'm talking about drawing a line in the sand, Dude. Across this
line you do not, uh--and also, Dude, Chinaman is not the preferred, uh. . . Asian- American. Please.

DUDE……..Walter, this is not a guy who built the rail- roads, here, this is a guy who peed on my rug. 12
 Hypothetical Example
Assuming No Capex
• Henry Hub gas at $3.50/MMbtu = $4.00 Mcfe (NGL’s & Condensate)
• 75 MMcfed production x 365 days = 27.4 Bcfe
• Revenues = $4.00/Mcf  x 27.4 Bcfe = $110 million 
• Cash expenses = LOE + G & A + interest = $1.22/Mcfe x 27.4 Bcfe = <$33 million>
• DD & A for Tax Purposes = <$7 million>
• Pre tax Income =   $70 million
• Taxes owed 39% (assuming no drilling Capex)=             <$27 million>
• Net Income = $43 million

WALTER……...That wasn't her toe.

DUDE……...….Whose toe was it, Walter?
WALTER…..How should I know? I do know that nothing about it indicates…DUDE….The nail polish,
Walter……
WALTER…..… Fine, Dude. As if it's impossible to get some nail polish, apply it to someone else's toe--
You want a toe? I can get you a toe, believe me. There are ways, Dude.

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 Hypothetical Drilling Economics
• Drill 3 GOM wells at $15 million DHC each – 2 dry holes = $45 million
• One successful well requires an additional $15 million in completion cost  = $15 million
• Gross Capex = $60 million
• Deferral of taxes due to IDC* = <$15 million>*
• Net “tax effected” Capex = $45 million
• Assumed reserves found 40 Bcfe gross x .72 NRI = 29 Bcfe
• Tax effected F & D = $45 million ÷ 29 Bcfe = $1.55/Mcfe
• Tax effected Years to payback net Capex ($45 million)   = 2.5 years**

*Taxes deferred DHC ($30 million) + IDC successful well ($12 million) 
Or $42 million x 35% = $15 million
**20 million Mcfed x ($4/Mcfe ‐ $.50/Mcfe LOE) x .72 NRI = $50,000/day x 900 days (2.5 years) = $45 million

DUDE…………..What's in the carrier?

WALTER……….Huh? Oh--Cynthia's Pomeranian. Can't leave him home alone or he eats
the furniture. I'm looking after it while Cynthia and Marty Ackerman are in Hawaii.
DUDE………..You brought a Pomeranian bowling?
WALTER………..What do you mean "brought it bowling"? I didn't rent it shoes. I'm not
buying it a beer. He's not gonna take your turn.
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 Taxes Paid After Capex
(In Hypothetical Example)

„ Pre-Capex taxes owed = $27 million

„ Taxes Deferred - Offshore IDC = <$15 million>
„ Post Capex taxes owed = $12 million

The objective is first, always and only to create value per share. The
langniappe is deferral of taxes

WALTER……Take the ringer. I'll drive.

DUDE………The what?
WALTER……..The ringer! The ringer, Dude!
DUDE……….What the hell is this?
WALTER…….My dirty undies. Laundry, Dude. The whites.
DUDE………Walter, I'm sure there's a reason you brought your dirty undies
WALTER……Thaaaat's right, Dude. The weight. The ringer can't look empty.
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 Net Negative Capital
19,000,000 Negative Dilution
Series E
18,000,000

17,000,000
16.7 MM Series D
Fully Diluted Shares Outstanding

16.5 MM
16,000,000

Series C

15,000,000

Preferred Series Capital Raised

2.6 MM Seed Capital $5.0 Million
14,000,000
Share Repurchase Series A $2.5 Million
(SUIT)
Series B $5.0 Million
Series C $8.0 Million
13,000,000
Series D $10.0 Million
Series E $30.0 Million
Total $60.5 Million
12,000,000

Shares Purchased Amount

3,945,187 $64.7 Million
11,000,000

Average price paid is $16.40 / share

10,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009

WALTER ………What do you think happens when you get divorced? You turn in your library card?
Get a new driver's license? Stop being Jewish? I'm as Jewish as Tevye.

DUDE………….It's just part of your whole sick Cynthia thing. Taking care of her dog. Going to her
synagogue. You're living in the past.

WALTER …….Three thousand years of beautiful tradition, from Moses to Sandy Koufax-- YOU'RE 16
DAMN RIGHT I LIVE IN THE PAST!
 In Conclusion………..
Run a Screen of E & P Companies with
Following Traits
… 22 Mcfe’s of proved developed reserves per share
… No debt
… 7 employees
… LOE (includes severance tax + workovers) + G&A + 
INTEREST at $1.22/mcfe
… Wildcat exploration upside
… Share repurchase program/no options or shares to 
management & BOD
… Incentive Alignment ‐ Management owns 24% of Company

DUDE..............“This is a very complicated case Maude, lots of in’s, lots of

out’s, lot of what have you’s, lots of strands, lots of strands to keep in the old
duder’s head.”

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The Dude donates his
car to the Navy

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