FORM 10-K CONTANGO OIL & GAS COMPANY

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CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) 13. Commitments and Contingencies Operating Leases. Contango leases its office space and certain other equipment. As of June 30, 2009 minimum future lease payments are as follows: 2010………………………………………………………………………………… 184,482 2011………………………………………………………………………………… 188,340 2012…………………………………………………………………………………… 63,582 2013………………..………………………………………………………………… 420 2014 and thereafter………………..………………………………………………… - Total $ 436,824 The amount incurred under operating leases during the years ended June 30, 2009, 2008 and 2007 was $160,405, $149,782 and $173,259, respectively. 14. Stock Based Compensation In September 1999, the Company established the Contango Oil & Gas Company 1999 Stock Incentive Plan (the “1999 Plan” or the “Option Plan”). Under the Option Plan, the Company may issue up to 2,500,000 shares of common stock with an exercise price of each option equal to or greater than the market price of the Company’s common stock on the date of grant, but in no event less than $2.00 per share. The Company may grant key employees both incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, and stock options that are not qualified as incentive stock options. Stock option grants to nonemployees, such as directors and consultants, can only be stock options that are not qualified as incentive stock options. Options generally expire after five or ten years. The vesting schedule varies, but vesting generally occurs over a two-year period (1/3 immediately, 1/3 one year from the date of grant and 1/3 two years from the date of grant) or four-year period (1/4 one year from the date of grant and 1/4 two years, three years and four years from the date of grant). As of June 30, 2009, options under the Option Plan to acquire 685,167 shares of common stock at prices between $3.00 and $54.99 per share were outstanding. DB2/21043537.7 F-20
CONTANGO OIL & GAS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) A summary of the status of the Option Plan and those options granted outside of the Option Plan as of June 30, 2009, 2008 and 2007, and changes during the fiscal years then ended, is presented in the table below: Year Ended June 30, 2009 2008 2007 Weighted Weighted Weighted Shares Average Shares Average Shares Average Under Exercise Under Exercise Under Exercise Options Price Options Price Options Price Outstanding, beginning of year……………...… 855,667 $ 11.57 1,026,000 $ 10.87 960,500 $ 7.97 Granted………………………...……………… 60,000 $ 50.91 - $ - 213,500 $ 20.42 Exercised………………………..……………… (230,500) $ 7.18 (71,000) $ 8.18 (107,750) $ 4.93 Cancelled………………………….………...… - $ - (99,333) $ 6.77 (40,250) $ 8.14 Outstanding, end of year…………...………….… 685,167 $ 16.49 855,667 $ 11.57 1,026,000 $ 10.87 Aggregate intrinsic value……………………… $ 17,814,342 $ 69,608,510 $ 26,079,555 Exercisable, end of year………………...……… 625,167 $ 13.19 686,167 $ 10.87 671,500 $ 9.04 Aggregate intrinsic value……………………… $ 18,317,393 $ 56,300,002 $ 18,301,165 Available for grant, end of year……………….. 508,666 568,666 469,333 Weighted average fair value of options granted during the year (1)…………… $ 24.91 $ - $ 10.85 _________________ (1) The fair value of each option is estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants during the years ended June 30, 2009 and 2007, respectively: (i) risk-free interest rate of 3.01 percent and 5.0 percent; (ii) expected lives of five years for the Option Plan and other options; (iii) expected volatility of 53.17 percent and 56 percent; and (iv) expected dividend yield of zero percent. The following table summarized information about options that were outstanding at June 30, 2009: Options Outstanding Options Exercisable Number of Weighted Number of Shares Average Weighted Shares Weighted Under Remaining Average Under Average Outstanding Contractual Exercise Outstanding Exercise Range of Exercise Price Options Life Price Options Price $3.00 - $3.99…………………………………… 35,000 3.0 $ 3.00 35,000 $ 3.00 $9.00 - $9.99…………………………………… 110,000 1.0 $ 9.30 110,000 $ 9.30 $10.00 - $10.99………………………………… 250,000 1.0 $ 10.23 250,000 $ 10.23 $11.00 - $11.99………………………………… 24,167 1.8 $ 11.58 24,167 $ 11.58 $12.00 - $12.99………………………………… 3,000 1.7 $ 12.95 3,000 $ 12.95 $14.00 - $14.99………………………………… 3,000 2.0 $ 14.14 3,000 $ 14.14 $21.00 - $21.99………………………………… 200,000 2.6 $ 21.00 200,000 $ 21.00 $41.00 - $41.99………………………………… 15,000 4.2 $ 41.01 - $ - $54.00 - $54.99………………………………… 45,000 4.2 $ 54.21 - $ - 685,167 1.9 $ 16.49 625,167 $ 13.19 DB2/21043537.7 F-21
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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
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Jay D. Brehmer ....................
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Code of Ethics We adopted a Code of
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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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