CONTANGO OIL & GAS CO: announcements explained, share price

Announcements, explained

Each one in plain English, with the numbers worked through for a shareholder.

3 Dec 2020capital raising announcement● NeutralMajor

Contango agreed on Nov 29, 2020 to sell 14,194,516 new shares at $1.55 each in a private placement, raising about $22.0M gross. Existing shareholders are diluted by the new shares. The filing does not state what the money is for; the same-week $58M acquisition (which the company said would be funded partly by capital markets financing) is a possible link, but that is an inference. Contango must try to file a resale registration for these shares within 30 days of issuance.

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28 Oct 2020capital raising announcement● NeutralMajor

Contango sold 26,451,988 new common shares at $1.50 each in a private placement, raising about $39.7M gross, with shares issued October 27, 2020. This leaves 159,490,918 shares outstanding, so existing holders are diluted. Contango must file a resale registration statement within 30 days of issue. The amended credit agreement (see next filing) requires a minimum $25M equity contribution, which may be related, but this filing doesn't say so (inference).

What it means for a shareholder

26.5m new shares at $1.50 to raise about $39.7m. That's 17% dilution: every existing holder's slice gets 17% smaller. If you held $1,000 of shares (667 at the issue price), your slice goes from 0.000501% to 0.000418% of the company. To keep it you'd need 133 more shares - about $200 at the issue price.

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24 Dec 2019capital raising announcement● NeutralMajor

Contango raised $53.35 million in a private placement: 19,000,000 common shares at $2.50 plus 2,340,000 non-voting Series C preferred shares at $2.50 (bought by Goff affiliates, CEO Wilkie Colyer and executive W. Farley Dakan) that convert one-for-one on shareholder approval. It also signed a Joint Development Agreement with Juneau Oil & Gas giving it the right to acquire interests in Juneau's Gulf of Mexico prospects for $6.0 million ($1.69 million cash plus 1,725,000 new shares). The new shares dilute existing holders; the release says proceeds are for general corporate purposes including spending under the Juneau agreement. Note the leadership change: Colyer is now President and CEO and Goff is described as Chairman.

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18 Sept 2019capital raising announcement● NeutralMajor

Contango raised money in two ways: a public offering of 44,736,842 common shares plus 6,710,526 more bought by underwriters (net about $46.13 million), and a $7.5 million private sale of 789,474 Series A preferred shares to entities tied to director John C. Goff. The preferred shares convert automatically to common once more shares are authorized and shareholders approve. The proceeds are meant mainly for the cash due on a pending acquisition, with the rest going to repay revolver debt or short-term investments. Contango also signed a new JPMorgan-led revolving credit facility with a $65 million borrowing base maturing September 17, 2024, which resolves the October 2019 maturity of the old RBC facility. The large share issuance dilutes existing holders.

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5 Apr 2012capital raising announcement● NeutralMajor

On March 31, 2012, Contango formed Exaro Energy III LLC through its subsidiary Contara Company, committing up to $82.5 million over five years alongside partners (total commitments $182.5 million) to develop and acquire non-operated oil and gas properties in Wyoming. Contango owns about 45%, which could fall to about 34% if another party buys about $15 million of its commitment; it expects to fund about $41.3 million in April 2012. This is a new onshore investment after the 2011 sale of the Texas assets.

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