FORM 10-K CONTANGO OIL & GAS COMPANY

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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
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) 7. Net Income (Loss) Per Common Share A reconciliation of the components of basic and diluted net income (loss) per common share for the fiscal years ended June 30, 2009, 2008 and 2007 is presented below: Year Ended June 30, 2009 Net Income Shares Per Share Income from continuing operations………………...……………………… $ 55,861,202 16,362,719 $ 3.41 Basic Earnings per Share: Net income attributable to common stock…………………………………… $ 55,861,202 16,362,719 $ 3.41 Effect of Potential Dilutive Securities: Stock options…………………………………………………..………… - 640,167 Shares assumed purchased………………………………………………… - (314,004) Restricted shares…………………………………………………………… - 1,544 Income from continuing operations………………………………………… $ 55,861,202 16,690,426 $ 3.35 Diluted Earnings per Share: Net income attributable to common stock…………………………………… $ 55,861,202 16,690,426 $ 3.35 Year Ended June 30, 2008 Net Income Shares Per Share Income from continuing operations, including preferred dividends………… $ 81,673,427 16,184,517 $ 5.05 Discontinued operations, net of income taxes……………………………… $ 173,685,065 16,184,517 $ 10.73 Basic Earnings per Share: Net income attributable to common stock…………………………………… $ 255,358,492 16,184,517 $ 15.78 Effect of Potential Dilutive Securities: Stock options…………………………………………………..………… - 448,264 Restricted shares…………………………………………………………… - 7,570 Series E preferred stock…………………………………………………… 1,547,777 622,364 - Income from continuing operations………………………………………… $ 83,221,204 17,262,715 $ 4.82 Discontinued operations, net of income taxes……………………………… $ 173,685,065 17,262,715 $ 10.06 Diluted Earnings per Share: Net income attributable to common stock…………………………………… $ 256,906,269 17,262,715 $ 14.88 DB2/21043537.7 F-15
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UNITED STATES SECURITIES AND EXCHAN
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CONTANGO OIL & GAS COMPANY AND SUBS
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• Uncertainties in the estimation
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Structuring incentives to drive beh
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Contango Resources Company and Cont
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Leases. The following table sets fo
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Competition The Company competes wi
Page 16 and 17: Jay D. Brehmer ....................
Page 18 and 19: Code of Ethics We adopted a Code of
Page 20 and 21: difficulty and delays in consistent
Page 22 and 23: Exploration is a high risk activity
Page 24 and 25: Competition in the natural gas and
Page 26 and 27: Pursuant to these provisions, the C
Page 28 and 29: Drilling Activity The following tab
Page 30 and 31: At June 30, 2009 Pre-tax net presen
Page 32 and 33: The following graph compares the ye
Page 34 and 35: Item 7. Management’s Discussion a
Page 36 and 37: Natural Gas, Oil and NGL Production
Page 38 and 39: For the year ended June 30, 2008, w
Page 40 and 41: Standardized Measure of Fiscal Year
Page 42 and 43: considerably from actual results. T
Page 44 and 45: EITF 03-6-1 are effective for finan
Page 46 and 47: REPORT OF INDEPENDENT REGISTERED PU
Page 48 and 49: Item 11. Executive Compensation The
Page 50 and 51: 10.25 Partial Assignment of Oil and
Page 52 and 53: SIGNATURES In accordance with Secti
Page 54 and 55: REPORT OF INDEPENDENT REGISTERED PU
Page 56 and 57: CONTANGO OIL & GAS COMPANY AND SUBS
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FORM 10-K CONTANGO OIL & GAS COMPANY

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