FORM 10-K CONTANGO OIL & GAS COMPANY

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
7. Net Income (Loss) Per Common Share - continued
Year Ended June 30, 2007
Net Loss Shares Per Share
Loss from continuing operations including preferred dividends…………… $ (1,617,434) 15,430,146 $ (0.11)
Discontinued operations, net of income taxes……………………………… $ (1,616,839) 15,430,146 $ (0.10)
Basic Earnings per Share:
Net loss attributable to common stock……………………………………… $ (3,234,273) 15,430,146 $ (0.21)
Effect of Potential Dilutive Securities:
Stock options…………………………………………………..………… - (a)
Series D preferred stock…………………………………………………… (a) (a)
Series E preferred stock…………………………………………………… (a) (a)
Net loss attributable to common stock……………………………………… $ (3,234,273) 15,430,146 $ (0.21)
Diluted Earnings per Share:
Net loss attributable to common stock……………………………………… $ (3,234,273) 15,430,146 $ (0.21)
Anti-dilutive Securities:
Shares assumed not issued from options to purchase
common shares as income from continuing
operations was in a loss position for the period…………………… $ - 1,026,000
Series D Preferred Stock……………………………………………… $ 314,722 447,061 $ 0.70
Series E Preferred Stock……………………………………………… $ 225,000 94,909 $ 2.37
(a) Anti-dilutive.
8. Change in Ownership of Partially-Owned Subsidiaries and Overriding Royalties
On April 3, 2008, the members of REX entered into an Amended and Restated Limited Liability Company
Agreement (the “REX LLC Agreement”), effective as of April 1, 2008, to, among other things, distribute REX’s
interest in Dutch and Mary Rose to the individual members of REX or their designees. In connection with this
distribution, REX repaid in full all amounts owing by REX to a private investment firm under a $50.0 million
demand promissory note with such private investment firm (the “REX Demand Note”), and all security interests and
other liens granted in favor of such private investment firm as security for the obligations under the REX Demand
Note have been released and terminated. The Company’s portion of such repayment was approximately $22.5
million.
Effective April 1, 2008, in connection with the REX LLC Agreement, the Company sold a portion of its
membership interest in REX to an existing member of REX for approximately $0.8 million. As a result of the sale,
the Company’s equity ownership interest in REX has decreased from 42.7% to 32.3%. Also effective April 1, 2008,
the Company sold a portion of its membership interest in COE to an existing member of COE for approximately
$0.9 million. As a result of the sale, the Company’s equity ownership interest in COE has decreased from 76.0% to
65.6%.
9. Acquisitions
On January 3, 2008, the Company acquired additional working interests in the Eugene Island 10 (“Dutch”)
and State of Louisiana (“Mary Rose”) discoveries in a like-kind exchange, using funds from the sale of its Western
core Arkansas Fayetteville Shale properties held by a qualified intermediary. The Company purchased an additional
8.33% working interest and 6.67% net revenue interest in Dutch and an additional average 9.11% working interest
and 6.67% net revenue interest in Mary Rose from three different companies for $200 million. We allocated 60%,
or $120.0 million, of the purchase price to Dutch, and the remaining 40%, or $80.0 million, to Mary Rose. Of these
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