FORM 10-K CONTANGO OIL & GAS COMPANY

CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)
The net deferred tax asset (liability) is comprised of the following:
Year Ended June 30,
2009 2008 2007
Deferred tax asset (liability):
Net operating loss carryover……………………………… $ - $ - $ 13,254,460
AMT credit carryforward………………………………… - - 523,149
Temporary basis differences in
natural gas and oil properties and other………………… (110,964,147) (112,189,684) (10,400,593)
Net deferred tax asset (liability) $ (110,964,147) $ (112,189,684) $ 3,377,016
12. Long-Term Debt
On August 26, 2008, the Company prepaid the $15.0 million it had outstanding under its $30.0 million loan
agreement with a private investment firm (the “Term Loan Agreement”) and terminated the Term Loan Agreement.
On February 5, 2008, using the proceeds from our $68.0 million sale of Freeport LNG, the Company prepaid the
$20.0 million it had outstanding under its three-year $20.0 million secured term loan facility with The Royal Bank
of Scotland plc (the “RBS Facility”) and terminated the RBS Facility.
On October 3, 2008, the Company and its wholly-owned subsidiary, Contango Operators, Inc, as successor
by merger to Contango Resources Company, completed the arrangement of a $50 million Hydrocarbon Borrowing
Base secured revolving credit facility pursuant to a credit agreement with Guaranty Bank, as administrative agent
and issuing lender (the “Credit Agreement”). The credit facility is secured by substantially all of the Company’s
assets and is available to fund the Company’s exploration and development activities, as well as the repurchase of
shares of the Company’s common stock, the payment of dividends, and working capital as needed. Borrowings
under the Credit Agreement bear interest at LIBOR plus 2.0% per annum. The outstanding principal amount and
any accrued interest thereon is due October 3, 2010, and may be prepaid at any time in accordance with the Credit
Agreement with no prepayment penalty. An arrangement fee of 0.5%, or $250,000, was paid in connection with the
facility and a commitment fee of 0.5% is paid on the unused commitment amount. As of June 30, 2009, no amounts
had been drawn on the credit facility.
On August 21, 2009, Guaranty Bank was closed by the Office of Thrift Supervision, and the Federal
Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a
financial institution is closed. All of our deposit accounts at Guaranty Bank were transferred to BBVA Compass
and were available immediately. We understand that the terms of our Credit Agreement remain unchanged and have
been assumed by BBVA Compass.
The Credit Agreement contains certain negative covenants that, among other things, restrict or limit our
ability to incur indebtedness, sell certain assets, and pay dividends. Failure to maintain required working capital or
comply with certain covenants in the Credit Agreement could result in a default and funds not being available for
borrowing. As of June 30, 2009, the Company was in compliance with its financial covenants, ratios and other
provisions of the Credit Agreement.
DB2/21043537.7 F-19