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Contango Oil & Gas says will plug, abandon Ship Shoal 134 well

Contango Oil & Gas announced that it has reached total depth on its Ship Shoal 134 prospect and no commercial hydrocarbons were found. The company will proceed to plug and abandon the well. The company expects to incur approximately $29.5M to drill, plug and abandon this well, including leasehold costs. The company said, "We continue to drill ahead with our South Timbalier 75 prospect. We are running a drilling liner and expect to reach total depth by late-November 2012. While we are certainly disappointed with the results of Eagle, we fully intend to continue drilling our inventory of offshore prospects, which has been the foundation of our growth over the past several years. We have sufficient cash on hand and expected revenues from operations to drill our offshore acreage inventory during its primary term. After subtracting G&A costs and lease operating expenses, our net monthly revenues are approximately $7.5M per month, net to the Company. The Company has a portfolio of five additional prospects plus two leases not yet awarded from the last lease sale in June 2012. From a timing perspective, we expect to begin drilling our remaining existing inventory in mid-2013, as permits are approved. The company said its offshore production is currently approximately 78M cubic feet equivalent per day, it remains debt-free and expects to have approximately $100M of available cash on hand once it pays all costs associated with Eagle.