FORM 10-K CONTANGO OIL & GAS COMPANY

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
5. Sale of Properties - Discontinued Operations
The Company did not have any discontinued operations for the fiscal year ended June 30, 2009.
During the fiscal year ended June 30, 2008, the Company sold its Arkansas Fayetteville Shale properties,
an on-shore well in Texas and an on-shore well in Louisiana for approximately $328.3 million, in the aggregate,
recognizing a gain of approximately $262.3 million. The Company’s proved and unproved properties as of June 30,
2007 were reduced by approximately $64.9 million as a result of classifying these sales as discontinued operations.
In accordance with SFAS 144, we classified our property sales as discontinued operations in our financial
statements for all periods presented. The summarized financial results for discontinued operations for the periods
ended June 30, 2008 and 2007 are as follows:
Operating Results:
June 30,
2008 2007
Revenues………………………………………………………… $ 9,679,330 $ 4,547,661
Operating expenses ……………………………………………… (1,144,786) (780,709)
Depletion expenses……………………………………………… (3,273,655) (1,659,933)
Exploration expenses…………………………………………… (359,888) (4,402,354)
Impairment……………………………………………………… (591,737) (192,109)
Gain on sale of discontinued operations………………………… 262,898,530 -
Gain before income taxes…………………………………… $ 267,207,794 $ (2,487,444)
(Provision) benefit for income taxes…………………………… (93,522,729) 870,605
Gain from discontinued operations, net of income taxes………… $ 173,685,065 $ (1,616,839)
6. Sale of Properties – Other
Freeport LNG Development, L.P.
On February 5, 2008, the Company sold its ten percent (10%) limited partnership interest in Freeport LNG
Development L.P. (“Freeport LNG”) to Turbo LNG LLC, an affiliate of Osaka Gas Co., Ltd., for $68.0 million, and
recognized a pre-tax gain of approximately $63.4 million on the sale. Freeport LNG is a limited partnership formed
to develop, construct and operate a 1.75 billion cubic feet per day (“Bcfd”) liquefied natural gas (“LNG”) receiving
and gasification terminal on Quintana Island, near Freeport, Texas. The Company used $20.3 million of the
proceeds from the sale to pay off its debt with The Royal Bank of Scotland plc, including principal, interest and fees.
Another $20.0 million was used to pay off its debt with a private investment firm. The remaining $27.7 million was
used for working capital purposes.
Contango Venture Capital Corporation
In March 2008, Contango Venture Capital Corporation (“CVCC”), our wholly-owned subsidiary, sold its
direct and indirect investments in Gridpoint, Inc., Trulite, Inc., Protonex Technology Corporation, Jadoo Power
Systems, Contango Capital Partners Fund, L.P. and Contango Capital Partnership Management, LLC for $3.4
million, in the aggregate, recognizing a loss of approximately $2.9 million for the fiscal year ended June 30, 2008.
CVCC’s only remaining alternative energy investment is Moblize, Inc. (“Moblize”). As of August 31, 2009, CVCC
owned 443,648 shares of Moblize convertible preferred stock, which represents an approximate 19.5% ownership
interest. Moblize develops real time diagnostics and field optimization solutions for the oil and gas and other
industries using open-standards based technologies.
DB2/21043537.7 F-14