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CONTANGO

CONTANGO. “It Ain’t Always Easy”. Plan B. Looking for Plan C. Our Industry. Capital intensive Depleting asset business Mature basins Everybody else has more reserves Commodity biz, but prices are robust Hedge on war on terror Hedge on strong global economy (Chindia).

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CONTANGO

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  1. CONTANGO “It Ain’t Always Easy”

  2. Plan B

  3. Looking for Plan C

  4. Our Industry • Capital intensive • Depleting asset business • Mature basins • Everybody else has more reserves • Commodity biz, but prices are robust • Hedge on war on terror • Hedge on strong global economy (Chindia)

  5. The Ideal Oil & Gas Company Would have R/P of zero Contango Reinvestment risk Contango Shareholder Friendly Contango Comment Not conventional wisdom- we finally got there EBITDAX of $118.2 million over last 5 years “PV-10 vs. Going Concern” Multiple “big Impact” ideas with minimum capital at risk. LNG/Deep Shelf/Alternative Energy How much of the pie is yours? Fully/Fully diluted share count down 6% since inception “Second, we wish for very little trading activity. If we ran a private business with a few passive partners, we would be disappointed if those partners, and their replacements, frequently wanted to leave the partnership. Running a public company we feel the same way”. Warren Buffett

  6. Let’s Cut To The Chase Market Value Added- MVA ( 1 )

  7. The Contango Model • Outsource everything - +/- 10 GEO’s • 4 employees • Successful efforts accounting • No hedges • Large management ownership • Expense options • Perpetual pikable preferred • Quarterly reserves/SEC PV-10 disclosure

  8. Our Four Biz Segments • Onshore • 15-25% ROR business • +/- $500,000 DHC/ well • Modest growth with a shot at quantum • Offshore • 4,000 blocks 3-D reprocessed PSTM/41 Leases • $2 million reprocessing center • Largely self-funding going forward • LNG • 10% ownership in Freeport LNG • $1.3 mm net investment • No Contango G&A necessary • Under Construction/ Expansion Possible • Alternative Energy • Betting on fuel cells

  9. Onshore Wells to be drilled in the next 12 months – 20, with estimated net to Contango DHC $10 million.

  10. Onshore Goals • +/- $2.00/Mcfe F&D cost • Tax shield • 2 or 4“game changing” dry holes/year • At best it will be “lumpy”

  11. Offshore Wells to be drilled in the next 6 months – 4-6, with estimated net to Contango DHC $0.

  12. Offshore Goals • Drill 5+wells/year – 2005 /2006 /2007 • Modest CAPEX going-forward - less than $5 million • 5-10 discoveries? • $0/Mcfe F&D cost “No matter how great the talent or effort, some things just take time,” says Buffett. “You can’t produce a baby in one month by getting nine women pregnant”. The Real Warren Buffett By James O’ Loughlin

  13. Central Gulf of Mexico Sale 190

  14. LNG • FERC Approval • COP/ DOW/ Mitsubishi TUA’s • Construction has begun- 2008 startup LNG Goals • Expand beyond 1.5 Bcfd to 2.5 Bcfd • Largely funded by non recourse debt • Hang-on to our 10% ownership stake

  15. Alternative Energy • 32% ownership in G.P. – Contango Capital • 25% ownership in Limited Partnership • $2.1 million net investment • Focus on fuel cells • No Contango G&A necessary

  16. Alternative Energy Goals • First limited partnership closed- $8.2 million • Grow JADOO and Trulite • Fund 10 ideas • 2-4 winners?

  17. MCF’s Beginning “By the way, any Company we buy will have to pay taxes” Warren Buffett- 2002 Annual Shareholders Meeting

  18. Forward Looking Information The following presentation contains “forward-looking statements” and is made pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. Oil and gas activities are subject to risks and uncertainties inherent in the exploration, development, operation and marketing of oil and natural gas. These risks include, but are not limited to, volatility of products, prices, uncertainties in reserve estimates, drilling risks, operations and production risks and environmental issues. Results could vary materially from the forward-looking information. You are cautioned that such forward-looking statements should be read in conjunction with the available company information, including the most recent Form 10-K/SB, and Form 10-Q.

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