 HOUSTON, Aug. 19, 2020 GLOBE NEWSWIRE -- Contango Oil Gas Company NYSE American: MCF Contango or the Company announced today its financial results for the second quarter ended June 30, 2020. Second Quarter 2020 Highlights Production of 1,469 Mboe for the quarter, or 16.1 Mboe per day, almost three times the 5.4 Mboe per day produced in the prior year quarter, primarily due to additional production from the properties acquired from White Star Petroleum, LLC and certain affiliates collectively, White Star and Will Energy Corporation Will Energy in the fourth quarter of 2019. Production also came in above the high end of our guidance range for the quarter. Lease operating expenses of exclusive of production and ad valorem taxes of 16.3 million during the quarter, 27 below the low end of our guidance range due to reduced workover activity in response to commodity prices and ongoing internal cost savings initiatives. Net loss of 28.0 million compared to a net loss of 5.0 million in the prior year quarter. Recurring Adjusted EBITDAX a non-GAAP measure, as defined and presented herein of 7.5 million, compared to 4.1 million in the prior year quarter. Enhanced management team via the appointment of Chad Roller and Chad McLawhorn as SVP Chief Operating Officer and SVP General Counsel, respectively. Converted all Series C contingent convertible preferred stock into common stock. The Company currently has no outstanding preferred stock. Entered into a Management Services Agreement with Mid-Con Energy Partners, LP MCEP to provide technical, management, and administrative services and serve as operator of record on MCEPs oil and gas properties as part of the Companys new, cost-effective fee for service management business offering.Management Commentary Wilkie S. Colyer, the Companys Chief Executive Officer, said, The economic impacts of COVID-19 during the second quarter of 2020 continued to pose numerous challenges for the energy sector and economy at large. We as a Company were able to use this quarter to focus on internal efficiencies, especially in the field, as evidenced by our above guidance production result as well as below guidance spending. We believe our quick and decisive strategy to minimize capital spending, including cutting costs across the board and concentrating on maintaining our liquidity and balance sheet flexibility, combined with our aggressive hedging program, have put us in a better position than most of our peers to not only survive the current environment, but also to potentially capitalize on it. During periods of severe commodity price dislocation and volatility, such as those experienced in the second quarter, on balance sheet deals are tougher to execute due to a widened spread between buyers and sellers. This can provide Contango opportunities to deploy our resources off balance sheet, such as through our recently announced Management Services Agreement with MCEP whereby we are utilizing our technical, operating and administrative support groups to generate a fee for service cash flow stream that also benefits the counterparty through general and administrative cost reduction. We intend to leverage our experience with providing this service for MCEP to potentially add similar arrangements with additional counterparties. Although we were unable to complete any on balance sheet deals during this quarter due to the aforementioned dislocation and volatility, we were quite active in several marketed and off market deals, and we believe the opportunity set is as attractive as anything we have seen during this prolonged downturn. We remain optimistic that we will be able to continue to scale the business via consolidation at attractive rates of return to shareholders, as is our stated goal.Through our hedging program, we have hedged approximately 70 of our total forecasted PDP oil production for 2020 with swaps at an average floor price of 55.13 per barrel and 68 of our total forecasted PDP gas production for 2020 at an average floor price of 2.57 per Mmbtu. In 2021, we have approximately 67 of total forecasted PDP oil production hedged at 51.71 per barrel. The mark-to-market value of our hedge portfolio at June 30, 2020 was approximately 19.4 million. In spite of the recent rebound in commodity prices, we anticipate that this price environment will continue to put immense pressure on our already distressed industry, largely due to the overleverage in the industry, and we plan to be on the lookout for other ways to take advantage of the dislocation. We appreciate the support of our lenders and shareholders and look forward to continuing to execute our business plan in 2020.Impact of the COVID-19 Pandemic and 2020 Plan Changes The COVID-19 pandemic has resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil throughout the world, and has created significant volatility, uncertainty and turmoil in the oil and gas industry. This has led to a significant global oversupply of oil and a subsequent substantial decrease in oil prices. While global oil producers, including the Organization of Petroleum Exporting Countries OPEC and other oil producing nations reached an agreement to cut oil production in April 2020, downward pressure on, and volatility in, commodity prices has remained and could continue for the foreseeable future, particularly given concerns over available storage capacity for oil. We have commodity derivative instruments in place to mitigate the effects of such price declines; however, derivatives will not entirely mitigate lower oil prices. While there has been modest recovery in oil prices, the length of this demand disruption is still unknown, and there is significant uncertainty regarding the long-term impact to global oil demand, which will ultimately depend on various factors and consequences beyond the Companys control, such as the duration and scope of the pandemic, the length and severity of the worldwide economic downturn, additional actions by businesses and governments in response to both the pandemic and the decrease in oil prices, the speed and effectiveness of responses to combat the virus, and the time necessary to equalize oil supply and demand to restore oil pricing. In response to these developments, we have continued to implement measures to mitigate the impact of the COVID-19 pandemic on our employees, operations and financial position. These measures include, but are not limited to, the following: work from home initiatives for all but critical staff and social distancing measures; a company-wide effort to cut costs throughout our operations; a plan to utilize our available storage capacity to temporarily store a portion of our production in order to market that oil at a later date and capitalize on the contango in the commodity price curve; and suspended any further plans for onshore and offshore drilling in 2020.Summary of Second Quarter Financial ResultsNet loss for the three months ended June 30, 2020 was 28.0 million, or 0.21 per basic and diluted share, compared to a net loss of 5.0 million, or 0.15 per basic and diluted share, for the prior year quarter. Pre-tax net loss for the three months ended June 30, 2020 was 27.7 million, compared to a pre-tax net loss of 4.5 million for the prior year quarter.Average weighted shares outstanding were approximately 131.4 million and 33.9 million for the current and prior year quarters, respectively. The Company reported Adjusted EBITDAX, a non-GAAP measure defined below, of approximately 7.0 million for the three months ended June 30, 2020, compared to 3.1 million for the same period last year, an increase attributable primarily to the incremental contribution from the properties we acquired from White Star and Will Energy in the fourth quarter of 2019, offset in part by lower commodity prices. Recurring Adjusted EBITDAX defined below as Adjusted EBITDAX exclusive of non-recurring business combination expenses and strategic advisory fees was 7.5 million for the current quarter, compared to 4.1 million for the prior year quarter.Revenues for the current quarter were approximately 17.8 million compared to 12.8 million for the prior year quarter, an increase also primarily attributable to the additional production from the acquired Will Energy and White Star properties, and despite the 53 decrease in the weighted average equivalent sales price in production period over period.Production for the second quarter was approximately 1,469 Mboe, or 16.1 Mboe per day, compared to 490 Mboe, or 5.4 Mboe per day for the second quarter of 2019. The properties acquired from White Star and Will Energy contributed approximately 11.5 Mboe per day to the second quarter of 2020. During the second quarter, due to the extreme variability in oil prices ranging from a low of 37.63 per Bbl in April 2020 to a single day high of 40.46 per Bbl in June 2020, we placed into available storage capacity approximately 50,000 barrels of oil net to the Company produced during the second quarter, for later sale at higher prices. These volumes will sell in the third quarter of 2020. In July 2020, the average price was 41.15 per Bbl. We have since resumed normal sales of oil volumes when produced.The weighted average equivalent sales price during the three months ended June 30, 2020 was 12.14 per Boe, compared to 26.03 per Boe for the same period last year, a decline attributable to the decrease in all realized commodity prices in the current year quarter as a result of the decrease in demand for commodity products due to the COVID-19 pandemic and the failure of OPEC and Russia to reach an agreement on oil production quotas until April 2020. 