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Contango Oil & Gas Company To Distribute CORE

HOUSTON--(BUSINESS WIRE)--Contango Oil & Gas Company (NYSE Amex: MCF) announced today that beginning October 13, 2010 its stock will trade separately from the stock of Contango ORE, Inc. ("CORE") which the Company expects to distribute to its shareholders in late November or early December 2010 following registration with the SEC. CORE has been formed to explore for gold and rare earth minerals in the State of Alaska.

"The current value of the Company's mineral holdings in Alaska is quite small and represents only a tiny fraction of the Company as a whole. We are in the very beginning of an exploratory stage for CORE."

One share of CORE will be distributed for each 10 shares of the Company. No fractional shares will be issued, but a cash payment will be made to shareholders of the Company with less than 10 shares based upon the value established for CORE immediately before the distribution. The record date for shareholders for the distribution is October 15. The Company anticipates that the shares of CORE will trade on the OTCBB after the distribution.

The Company has obtained a valuation report from Avalon Development Corporation, a Fairbanks, Alaska-based mineral exploration consulting firm, of the value of the assets constituting the mineral properties owned or controlled by CORE. Based on that valuation report and the planned $3.5 million cash investment in CORE immediately before the distribution, the Company believes the value of the assets contributed to CORE and distributed to Company shareholders will be approximately $0.45 per share.

Kenneth R. Peak, the Company's Chairman and Chief Executive Officer, said, "The current value of the Company's mineral holdings in Alaska is quite small and represents only a tiny fraction of the Company as a whole. We are in the very beginning of an exploratory stage for CORE."

Contango is a Houston-based, independent natural gas and oil company. The Company's core business is to explore, develop, produce and acquire natural gas and oil properties primarily offshore in the Gulf of Mexico. Additional information can be found on our web page at www.contango.com.

This press release contains forward-looking statements regarding Contango that are intended to be covered by the safe harbor "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995, based on Contango's current expectations and includes statements regarding acquisitions and divestitures, estimates of future production, future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as "expects", "projects", "anticipates", "plans", "estimates", "potential", "possible", "probable", or "intends", or stating that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved). Statements concerning oil and gas reserves also may be deemed to be forward looking statements in that they reflect estimates based on certain assumptions that the resources involved can be economically exploited. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those, reflected in the statements. These risks include, but are not limited to: the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as hurricanes and other natural disasters); uncertainties as to the availability and cost of financing; fluctuations in oil and gas prices; risks associated with derivative positions; inability to realize expected value from acquisitions, inability of our management team to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and processing facilities and the possibility that government policies may change or governmental approvals may be delayed or withheld. Additional information on these and other factors which could affect Contango's operations or financial results are included in Contango's other reports on file with the Securities and Exchange Commission. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Contango does not assume any obligation to update forward-looking statements should circumstances or management's estimates or opinions change.

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