FORM 10-K CONTANGO OIL & GAS COMPANY

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
three companies, one of them was the managing member of REX, who exchanged an ownership interest in REX for
a direct working interest in Dutch and Mary Rose. The Company purchased a 2.45% working interest in Dutch and
a 2.68% working interest in Mary Rose from this company for approximately $58.9 million. The effective date of
the transactions was January 1, 2008.
On February 8, 2008, the Company acquired a 0.3% overriding royalty interest in the Dutch and Mary Rose
discoveries for $9.0 million in a like-kind exchange, using funds from the sale of its Eastern core Arkansas
Fayetteville Shale properties held by a qualified intermediary. We allocated 60%, or $5.4 million, of the purchase
price to Dutch, and the remaining 40%, or $3.6 million, to Mary Rose.
On April 3, 2008, the Company acquired additional working interests in the Dutch and Mary Rose
discoveries in a like-kind exchange, using funds from the sale of its Eastern core Arkansas Fayetteville Shale
properties held by a qualified intermediary. The Company purchased an additional 4.17% working interest and
3.33% net revenue interest in Dutch and an additional average 4.56% working interest and 3.33% net revenue
interest in Mary Rose from two different companies for $100 million. The effective date of the transaction is
January 1, 2008.
Pro Forma Results
The pro forma results presented below for the fiscal year ended June 30, 2008 and 2007 have been prepared
to give effect to our 2008 acquisitions on our results of operations under the purchase method of accounting as if
they had been consummated on July 1, 2007 and July 1, 2006. The pro forma results do not purport to represent
what our results of operations actually would have been if these acquisitions had in fact occurred on such date or to
project our results of operations for any future date or period. The results of our 2008 acquisitions for the fiscal year
ended June 30, 2008 are reflected in our revenues, net income, and earnings per share in our presented Consolidated
Statements of Operations.
Year Ended June 30,
2008 2007
Pro Forma:
Revenues………………………………………………………… $ 125,058,436 $ 17,514,201
Net income (loss)………………………………………………… $ 86,391,194 $ (866,581)
Basic earnings per share………………………………………… $ 5.24 $ (0.09)
Diluted earnings per share……………………………………… $ 5.00 $ (0.09)
10. Series E Perpetual Cumulative Convertible Preferred Stock
On May 17, 2007, we sold $30.0 million of our Series E preferred stock to a group of private investors.
The Series E preferred stock is perpetual and cumulative, is senior to our common stock and is convertible at any
time into shares of our common stock at a price of $38.00 per share. Each record holder of Series E preferred stock
is entitled to one vote per share for each share of common stock into which each share of Series E preferred stock is
convertible. The dividend on the Series E preferred stock can be paid quarterly in cash at a rate of 6.0% per annum
or paid-in-kind at a rate of 7.5% per annum, at the Company’s option. Our registration statement filed with the
Securities and Exchange Commission, covering the 789,468 shares of common stock issuable upon conversion of
the Series E preferred stock was declared effective September 12, 2007. Net proceeds associated with the private
placement of the Series E preferred stock was approximately $28.8 million, net of stock issuance costs.
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