Contango Oil & Gas Company (NYSEMKT:MCF)

CAPS Rating: 4 out of 5

A natural gas and oil company, whose business is to explore, develop, produce and acquire natural gas and oil properties, offshore in the Gulf of Mexico and in the Arkansas Fayetteville Shale.

Recs

7
Player Avatar TMFBabo (100.00) Submitted: 12/8/2010 12:01:13 AM : Outperform Start Price: $57.47 MCF Score: +2.17

At an oil and gas conference, Ken Peak something to this effect: "I don't give myself stock options because then I'd have to give my board and my employees stock options - and I don't want to give my board and my employees stock options." I also remember he took great pleasure in showing that Contango raised a total of $65M in capital from 2001 to 2007 and as of August 2010, had repurchased shares to the tune of $89M. Since 2001, there has also been negative dilution.

I think the best share issuance/repurchase strategy is one where management buys shares back when it's low and issues them when it's high. The second best would be Ken Peak's style - that man hates dilution.

What you get in Contango is a very low-cost gas producer operating in the Gulf of Mexico trading at a decent (but not amazing) discount to its reserves with a great CEO - not a bad bet.

Report this Post 4 Replies
Member Avatar TMFBabo (100.00) Submitted: 12/8/2010 12:03:56 AM
Recs: 0

I see 3 errors in that short pitch.

Member Avatar toshimelonhead (67.38) Submitted: 1/12/2011 9:50:35 PM
Recs: 0

Sadly I can't point them out even though I just green-thumbed this. What am I missing here that you can see?

Member Avatar birge1 (< 20) Submitted: 2/9/2011 10:31:45 AM
Recs: 0

Contango is a great business model with no debt and no tax loss carryforwards to expire yearly. Sadly, the market punishes all gas producers, especially in the gulf with exposure to storms. Gas is dead and will remain so until we clean out d.c. .... again. We need a national govt policy favoring conversion of fleet vehicles to natural gas with depot fueling; leave gasoline for the little guy who can not afford to convert. Contango also needs to split the stock about 2:1 to be more affordable for individuals. All companies need to do this, and we as shareholders should insist on it. It's the main way we can make a few nickels.

Member Avatar BurntTiger (21.28) Submitted: 3/14/2011 3:45:08 PM
Recs: 0

when i look at insider transactions on yahoo finance I see that options have been used for Peak and several others. Is this a error? Is Babo right that they don't do options or is yahoo finance right?

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