Contango to reap $50 million from Texas property sale

Ray Tyson

Contango Oil & Gas has completed the sale of nearly all of its South Texas natural gas and oil interests to independent Edge Petroleum for $50 million, the companies said Dec. 29.

Contango said that after adjustments it would net about $35 million in sale proceeds, adding that adjustments were made for taxes and net revenues that Contango received for production occurring after July 1, the effective date of sale, up to the closing date of Dec. 29.

The proceeds will provide working capital for ongoing operations and will allow Contango to continue investing in onshore exploration programs and to maintain its 10 percent limited partnership interest in the Freeport LNG plant, including any potential expansion in the plant’s capacity.

Contango said it plans to participate in about 20 onshore wells in 2005, adding that sale proceeds also would enable the company to consider investing in offshore Gulf of Mexico exploration opportunities developed by its two partially owned subsidiaries, Republic Exploration and Contango Offshore Exploration.