FORM 10-K CONTANGO OIL & GAS COMPANY

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
F-6
Year Ended June 30,
2009 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations……………………………………………………………… $ 55,861,202 $ 83,221,204 $ (1,077,712)
Plus income from discontinued operations, net of income taxes……………………………………… - 173,685,065 (1,616,839)
Net income (loss)……………………………………………………………………………………… 55,861,202 256,906,269 (2,694,551)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization………………………………………………………..… 32,673,191 15,173,285 3,267,252
Impairment of natural gas and oil properties…………………………………………..…………… 11,074,778 1,234,111 192,109
Exploration expenditures………………………….……………………………………..………… 19,038,463 4,747,798 5,473,218
Deferred income taxes…………………………………………………………..…..……………… (1,225,537) 115,952,055 692,818
Loss (gain) on sale of assets…………………………………………………………..…………… - (326,337,749) 2,313,334
Stock-based compensation………………….…………………………………………………….. 1,381,797 1,476,988 1,492,765
Tax benefit from exercise of stock options………………………………………………………… (264,187) (1,080,562) (188,897)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable and other…………………………………………… 39,688,876 (67,279,024) (7,599,816)
Increase in notes receivable……………………………………………………………………… - (250,000) (1,005,000)
Increase in prepaid insurance………………………………………………..…………………… (19,366) (447,202) (205,904)
Increase in inventory…………………………………………………………………………… - - (139,972)
Increase (decrease) in accounts payable and advances from joint owners……………………… (11,597,588) 26,152,482 4,570,213
Increase (decrease) in other accrued liabilities……………………………..…………………… (43,819,351) 75,997,351 (87,286)
Increase (decrease) in income taxes payable…………………………………………………… (7,420,632) 7,210,622 (2,377,988)
Other………………………………………………………...…………………...……………… - 3,286,631 370,723
Net cash provided by operating activities………………………………………………..…… 95,371,646 112,743,055 4,073,018
CASH FLOWS FROM INVESTING ACTIVITIES:
Natural gas and oil exploration and development expenditures…………….……………………… (45,741,659) (119,928,546) (77,688,085)
Sale of short-term investments, net…………………………………………………………………… - 2,200,576 16,271,751
Additions to furniture and equipment………………………………………………………………. (16,025) (43,225) (26,659)
Investment in Contango Venture Capital Corporation……………………………………………… - (1,166,624) (681,244)
Acquisition of natural gas and oil producing properties…………………………………….……… - (309,000,000) -
Sale/Acquisition costs………………………………………………………………………………… - (7,847,613) -
Proceeds from the sale of assets……………..…………………………………………..…………… - 396,925,821 7,000,000
Net cash used in investing activities…………………………………………..…………………… (45,757,684) (38,859,611) (55,124,237)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility………………………………………………………………..…… - 35,000,000 25,000,000
Repayments under credit facility………………………………………………………………..…… (15,000,000) (40,000,000) (15,000,000)
Borrowings (repayments) by affiliates……………………………………………………………… - (8,540,091) 8,540,091
Proceeds from preferred equity issuances, net of issuance costs…………………………………… - - 28,783,936
Preferred stock dividends……………………………………………………………………...……… - (1,547,777) (539,722)
Repurchase/cancellation of stock options…………………………………………………………… - (5,922,532) (202,521)
Purchase of common stock…………………………………………………………………………… (51,795,744) (663,900) -
Proceeds from exercised options……………………………………………………………………… 1,654,345 580,760 519,715
Tax benefit from exercise/cancellation of stock options……………………………………………… 264,187 1,080,562 188,897
Debt issuance costs…………………………………………………………………………..……… (250,000) (163,510) (336,509)
Net cash provided by (used in) financing activities…………………………………...…………… (65,127,212) (20,176,488) 46,953,887
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS…………………………… (15,513,250) 53,706,956 (4,097,332)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD…………………………………… 59,884,574 6,177,618 10,274,950
CASH AND CASH EQUIVALENTS, END OF PERIOD…………………………………………… $ 44,371,324 $ 59,884,574 $ 6,177,618
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes, net of cash received…………………………………………………………… $ 45,592,652 $ 21,974,825 $ 451,993
Cash paid for interest………………………………………………………………………………… $ 397,579 $ 4,305,336 $ 2,702,672
The accompanying notes are an integral part of these consolidated financial statements.