Contango Oil & Gas Company (MCF-A) Quote

GlobeNewswire – Fri Jun 5, 7:32AM CDT

Contango Oil & Gas Company (NYSE American: MCF) (“Contango” or the “Company”) announced that it will offer a cost-effective “fee for service” property management option to companies with distressed or stranded assets, or companies with a desire to reduce administrative costs, while providing Contango a new avenue for growth that aligns with the Company’s own business strategy. Contango also announced today that it has entered into a Management Services Agreement with Mid-Con Energy Partners, LP (“Mid-Con”) to provide operational services as operator of record on Mid-Con’s oil and gas properties.

Under the Management Services Agreement, Contango will take over the operations of Mid-Con’s oil and gas assets in exchange for a services fee ($4 million per year) plus reimbursement of certain costs and expenses, an annual deferred fee component ($2 million per year), and warrants to purchase common units in Mid-Con at $4.00 per unit. Contango anticipates hiring several key employees from Mid-Con’s technical team to expand Contango’s expertise with enhanced oil recovery operations and enhance the Company’s fee for service capability for other similar fee for service opportunities.

Wilkie S. Colyer, the Company’s President and Chief Executive Officer stated, “During our last earnings call, we talked about being creative and adapting our offensive strategy given the current oil price environment, and this is a great example of our approach. We are excited to announce this transaction with Mid-Con Energy Partners, LP and feel this is a win-win for both parties. The transaction benefits Contango in that we can generate asset light revenue/cash flow while also aligning our interests with those of Mid-Con via warrants to participate in value creation at Mid-Con. Mid-Con also benefits by leveraging our existing platform to significantly lower its cost structure and freeing up capital to pay down debt during this period of depressed commodity prices. We continue to see our distressed asset business as a solution to non-natural owners of oil and gas assets, and we feel this is a great example of the kind of transaction needed in today’s environment. As an industry, G&A is still too high, and consolidation of sub-scale businesses is the best path forward to position those assets for a recovery.”

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