Edgar Filing: CONTANGO OIL & GAS CO

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant To Section 14(A) Of The Securities
Exchange Act Of 1934 (Amendment No. __)

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[x] Definitive Proxy Statement

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[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Contango Oil & Gas Company
(Name of Registrant as Specified in Its Charter)

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CONTANGO OIL & GAS COMPANY
3700 Buffalo Speedway, Suite 960
Houston, Texas 77098

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 8, 2002

Dear Stockholder,

You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of Contango Oil & Gas Company, which will be held at 3700 Buffalo Speedway,
Second Floor, Houston, Texas 77098, on Friday, November 8, 2002 at 9:00 a.m.,
local time.

At the Annual Meeting you will be asked to vote on the following matters:

(1) To elect our board of directors to serve until the annual meeting of
stockholders in 2003;

(2) To consider and act upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to increase the authorized preferred
stock of the Company from 125,000 shares of preferred stock, par value
$0.04 per share, to 5,000,000 shares of preferred stock, par value $0.04
per share, having such rights and preferences, including voting rights, as
the Board of Directors of the Company may determine; and

(3) To conduct any other business which is properly raised at the meeting.

Stockholders who owned shares of Contango Oil & Gas Company's common stock,
par value $0.04 per share, Series A senior convertible cumulative preferred
stock, par value $0.04 per share, or Series B senior convertible cumulative
preferred stock, par value $0.04 per share, at the close of business on
September 23, 2002 are entitled to receive notice of and to attend and vote at
the meeting.

As a stockholder of Contango Oil & Gas Company, you have the right to vote
on the proposals listed above. Please read the Proxy Statement carefully because
it contains important information for you to consider when deciding how to vote.
Your vote is important.

Whether or not you plan to attend the Annual Meeting in person, please
date, sign and return the enclosed proxy card promptly. A postage-paid return
envelope is enclosed for your convenience. If you decide to attend the meeting,
you can, if you wish, revoke your proxy and vote in person. If you have any
questions, please contact us through our Web Site at www.mcfx.biz, send us an
e-mail at admin@mcfx.biz or write us at 3700 Buffalo Speedway, Suite 960,
Houston, Texas 77098.

By order of the Board of Directors,

/s/ Kenneth R. Peak
--------------------------------------------
Kenneth R. Peak
Chairman, Chief Executive Officer and Secretary

Houston, Texas
October 7, 2002

CONTANGO OIL & GAS COMPANY
3700 Buffalo Speedway, Suite 960
Houston, Texas 77098

---------------------

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 8, 2002

---------------------

To our Stockholders:

The board of directors (the "Board") of Contango Oil & Gas Company, a
Delaware corporation (the "Company" or "Contango"), is furnishing you with this
Proxy Statement in connection with its solicitation of your proxy, in the form
enclosed, for use at the 2002 Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 3700 Buffalo Speedway, Second Floor, Houston, Texas
77098, on Friday, November 8 at 9:00 a.m., local time, for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders.

We are mailing this Proxy Statement to you on or about October 4, 2002,
together with the accompanying proxy card and the Company's annual report on
Form 10-KSB for the fiscal year ended June 30, 2002.

We cordially invite you to attend the Annual Meeting. Whether or not you
plan to attend, please complete, date and sign the proxy card and return it
promptly in the return envelope provided.

QUESTIONS AND ANSWERS

1. Q: Who is asking for my proxy?

A: Your proxy is being solicited by our Board for use at our
Annual Meeting. Our directors and officers may also solicit
proxies on behalf of our Board, in person or by telephone,
facsimile, mail or e-mail. If our directors, officers or
employees solicit proxies, they will not be specially
compensated. Contango will pay all costs and expenses of this
proxy solicitation.

2. Q. What are stockholders being asked to vote on?

A: At our Annual Meeting, stockholders will be asked to vote:

. To elect our board of directors to serve until the annual meeting of
stockholders in 2003;

. To consider and act upon a proposal to approve an amendment to the
Company's Certificate of Incorporation to increase the authorized
preferred stock of the Company from 125,000 shares of preferred
stock, par value $0.04

per share, to 5,000,000 shares of preferred stock, par value
$0.04 per share, having such rights and preferences, including
voting rights, as the Board of Directors of the Company may
determine; and

. On any other matter that may properly come before the Annual
Meeting or any adjournment of the Annual Meeting.

3. Q. Who is entitled to vote?

A: The record of stockholders entitled to vote at the Annual
Meeting was taken at the close of business on September 23,
2002 (the "Record Date"). As of the Record Date, the Company
had outstanding 9,043,282 shares of common stock, par value
$0.04 per share (the "Common Stock"), 2,500 shares of Series A
senior convertible cumulative preferred shares, par value
$0.04 per share ("Series A Preferred Stock"), and 5,000 shares
of Series B senior convertible cumulative preferred Shares,
par value $0.04 per share ("Series B Preferred Stock"). Only
holders of record of the Company's Common Stock, Series A
Preferred Stock and Series B Preferred Stock at the close of
business on the Record Date are entitled to notice of and to
vote at the Annual Meeting.

4. Q: How many shares may vote at the Annual Meeting?

A: The holders of the Company's Common Stock, Series A Preferred
Stock and Series B Preferred Stock vote together as a single
class at the Annual Meeting and any adjournment thereof on the
election of directors, with each record holder of Common Stock
entitled to one vote per share of Common Stock, each record
holder of Series A Preferred Stock entitled to 400 votes per
share of Series A Preferred Stock and each record holder of
Series B Preferred Stock entitled to 227.3 votes per share of
Series B Preferred Stock.

5. Q: How do I vote my shares?

A: A proxy card is included with the proxy materials being sent to you.
The proxy card allows you to specify how you want your shares voted as
to each proposal listed. The proxy card provides space for you to:

. Vote for, or withhold authority to vote for, each nominee for the
Board.

. Approve, or withhold approval of, the proposed amendment of our
Certificate of Incorporation.

If the proxy card is properly signed and returned to us, shares
covered by the proxy card will be voted in accordance with the
directions you specify on the card. The person named as proxy on the
proxy card is Kenneth R. Peak, the Company's Chairman and Chief
Executive Officer. Any stockholder who wishes to name a different
person as his or her proxy may do so by crossing out Mr. Peak's name
and inserting the name of the other person to act as his or her proxy.
In such a case, the stockholder would have to sign the proxy card and
deliver it to the person named as his or her proxy, and that person
would have to be present and vote at the Annual Meeting. Any proxy
card so marked should not be mailed to the Company.

If you return a signed proxy card without having specified any
choices, Mr. Peak, named as proxy, will vote the shares represented at
the Annual Meeting and any adjournment thereof as follows:

. FOR the election of each nominee for director;

. FOR an amendment to the Company's Certificate of Incorporation to
increase the authorized preferred stock of the Company from
125,000 shares of preferred stock, par value $0.04 per share, to
5,000,000 shares of preferred stock, par value $0.04 per share,
having such rights and preferences, including voting rights, as
the Board of Directors of the Company may determine; and

. At the discretion of Mr. Peak, as proxy, on any other matter that
may properly come before the Annual Meeting or any adjournment of
the Annual Meeting.

6. Q: How does the Board recommend I vote?

A: The Board unanimously recommends that you vote "For" each of the
matters to be voted on at the Annual Meeting.

Our executive officers and directors who own shares of Common
Stock have advised us that they intend to vote their shares in
favor of the proposals presented in this Proxy Statement. As
of the Record Date, executive officers and directors
collectively owned 1,743,163 shares of Common Stock,
representing 15.6% of the total shares entitled to vote. Trust
Company of America ("TCW"), which holds 1,851,852 shares of
the issued and outstanding Common Stock and all of the Series
A Preferred Stock which, if converted, constitutes 1,000,000
shares of Common Stock, has advised us that it intends to vote
its shares in favor of the proposals presented in this Proxy
Statement. TCW's shares represent 25.5% of the total shares
entitled to vote. In addition, Aquila Energy Capital
Corporation ("Aquila"), which holds all of the Series B
Preferred Stock, which, if converted, constitutes 1,136,364
shares of the issued and outstanding Common Stock, have
advised us that they intend to vote their shares in favor of
the proposals presented in this Proxy Statement. Aquila's
shares represent 10.2% of the total shares entitled to vote.
See "Security Ownership of Certain Beneficial Owners and
Management".

7. Q: What vote is required?

A: Proposal 1, the election of directors, and Proposal 2, an
amendment to increase the authorized number of shares of
preferred stock, will each require an affirmative vote of a
majority of the shares present in person or by proxy and
voting at the Annual Meeting. In addition, our preferred
stockholders, Trust Company of the West and Aquila Energy
Capital Corporation, each have a separate right to approve the
proposed amendment to the Certificate of Incorporation, and
each has so indicated its approval in writing prior to the
date of this Proxy Statement.

8. Q: What is a "quorum"?

A: Presence at the Annual Meeting, in person or by proxy, of holders of a
majority of the votes entitled to be cast by all record holders of the
Company's Common Stock, Series A Preferred Stock, and Series B
Preferred Stock will constitute a

quorum for the transaction of business. If a quorum is not present,
the Annual Meeting may be adjourned from time to time until a quorum
is obtained.

9. Q: What is the effect of an abstention or a broker non-vote?

A: For the purposes of determining a quorum, shares held by
brokers or nominees will be treated as present even if the
broker or nominee does not have discretionary power to vote on
a particular matter. These shares are called "broker
non-votes". Abstentions will also be counted for quorum
purposes. With respect to all matters other than the election
of directors, broker non-votes and abstentions will have the
same effect as a vote against any specified proposal.

10. Q: What does it mean if I get more than one proxy card?

A: If your shares are registered differently or in more than one account,
you will receive more than one proxy card. Sign and return all proxy
cards to ensure that all your shares are voted.

11. Q: Can I revoke my proxy?

A: You may revoke your proxy at any time before it is exercised
at the Annual Meeting by filing with or transmitting to our
corporate secretary either a notice of revocation or a
properly created proxy bearing a later date. You also may
attend the meeting and revoke your proxy by voting your shares
in person.

12. Q: How will the Company solicit proxies?

A: Proxies will be solicited in person, by telephone, facsimile
or e-mail by directors, officers and employees of the Company
without additional compensation. The Company will reimburse
brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy materials to stockholders.

PROPOSAL 1
ELECTION OF DIRECTORS

At the Annual Meeting, we will present the nominees named below and
recommend that they be elected to serve as directors for a term of one year or
until their successors are duly elected and qualified. Each nominee has
consented to being named in this Proxy Statement and to serve if elected.

Your proxy will be voted for the election of the five nominees named below
unless you give instructions to the contrary. Your proxy cannot be voted for a
greater number of persons than the number of nominees named.

Nominees

Presented below is a description of certain biographical information,
occupations and business experience for the past five years of each person
nominated to become a director. Five directors are to be elected at the Annual
Meeting. Three nominees, Kenneth R. Peak, Jay D. Brehmer and Darrell W.
Williams, are current directors standing for reelection to the Board. Two

nominees, Michael P. Childers and Joseph S. Compofelice, have been nominated to
serve as directors and are standing for election to the Board. If any nominee
should become unavailable for election, your proxy may be voted for a substitute
nominee selected by the Board, or the Board's size may be reduced accordingly.
The Board is unaware of any circumstances likely to render any nominee
unavailable. Directors of the Company hold office until the next annual
stockholders meeting, until successors are elected and qualified or until their
earlier resignation or removal.

Year First
Became a
Name Age Position Director
----------------------- --- ------------------------------ -------------
Kenneth R. Peak 57 Chairman, President, Chief 1999
Executive Officer, Chief
Financial Officer and
Secretary
Jay D. Brehmer 36 Director 2000
Michael P. Childers 41 Nominee for Director
Joseph S. Compofelice 53 Nominee for Director
Darrell W. Williams 58 Director 1999

Kenneth R. Peak was appointed president, chief executive and financial
officer, secretary and a director of Contango in July 1999. Before joining
Contango, Mr. Peak was the president of Peak Enernomics, Incorporated, a natural
gas and oil consulting firm that he formed in 1990. Mr. Peak began his energy
career in 1973 as a commercial banker in First National Bank of Chicago's energy
group. He became treasurer of Tosco Corporation in 1980 and chief financial
officer of Texas International Company ("TIC") in 1982. His tenure with TIC
included serving as president of TIPCO, the domestic operating subsidiary of
TIC's natural gas and oil operations. Mr. Peak has also served as chief
financial officer of Forest Oil Corporation from 1988 to 1989 and as an
investment banker with Howard Weil from 1989 to 1990. Mr. Peak was an officer in
the U.S. Navy from 1968 to 1971. Mr. Peak received a BS degree in physics from
Ohio University and a MBA from Columbia University. He currently serves as a
director of Patterson-UTI Energy, Inc., a North America provider of onshore
contract drilling services to exploration and production companies and Cellxion,
Inc., a privately owned manufacturing and construction company serving the
cellular telephone industry.

Jay D. Brehmer has been a director of Contango since October 2000. He has
been director-capital & finance of Aquila Energy Capital Corporation since 1998.
Prior to joining Aquila, Mr. Brehmer was president and the founder of Capital
Financial Services from 1995 to 1998. From 1990 to 1995, he was vice president
of the Mutual of Omaha's investment banking subsidiary. Mr. Brehmer holds a BBA
degree in business administration from Drake University.

Michael P. Childers is the President of Entergy Asset Management, a wholly
owned subsidiary of Entergy Corporation, responsible for unregulated power
investments. Until July 2002, he served as chief operating officer of Entergy
Wholesale Operations, headquartered in Houston, where his responsibilities
included global development activities focusing on commercial development in
North America. Mr. Childers served as senior vice president & chief development
officer of Entergy Wholesale Operations from January 2000 until being named COO
in September 2001. Before joining Entergy, Mr. Childers served as vice president
of development of Edison Mission Energy from November 1997 to January 2000,
where he was primarily responsible for implementing that company's development,
acquisition and marketing plan for North and South America. From August 1996 to
November 1997, Mr. Childers was a director at Enron Corp., where he coordinated
and supervised power and gas marketing, financial derivative and market
development activities for Enron's North American energy services unit.

Previously, Mr. Childers was a senior manager of business development for
Diamond Energy, Inc., and prior to that, he served as coordinator of business
development for Texaco Cogeneration and Power. Mr. Childers received his BBA
from the University of San Diego.

Joseph S. Compofelice has been the president and chief executive officer of
Aquilex Services Corp., which has provided services and equipment to the
power generation industry since November 2001. From March 1998 until November
2001, Mr. Compofelice was the chairman and chief executive office of CompX
International Inc., a worldwide manufacturer of hardware for the office
furniture and computer industries. From January 1994 until March 1998, he held
various positions, including chief financial office and a director, at NL
Industries, Inc., a maker of titanium dioxide; TIMET, a worldwide manufacturer
of titanium metal sponge, ingot and other titanium products; and Tremont Corp.
In these capacities, Mr. Compofelice was responsible for the financial,
treasury, merger and acquisition activities of those entities, each of which
were traded on the New York Stock Exchange. Mr. Compofelice is a CPA and
received his BS from California State University at Los Angeles and his MBA from
Pepperdine University.

Darrell W. Williams has been a director of Contango since September 1999
and currently is engaged in various consulting assignments as president of
Williams & Associates, Inc., a consulting firm formed by him for outside
consulting to oil and natural gas service companies. Mr. Williams served as
president of Deutag Marketing and Technical Services from 1993 to mid 2002 with
the primary responsibility to develop new business with exploration and
production companies having international drilling departments in North America.
During three years of this time, he lived in Germany as managing director of
Deutag International and had responsibility for all drilling operations outside
of Europe. Before joining Deutag, Mr. Williams held senior executive positions
with Nabors Drilling from 1988 to 1993, Pool Company from 1985 to 1988, Baker
Oil Tools from 1980 to 1983 and SEDCO from 1970 to 1980. Mr. Williams is past
chairman of the Houston Chapter of the International Association of Drilling
Contractors, a past member of the IADC executive committee and a member of the
Society of Petroleum Engineers. He also serves on the Board of SMDC, a Hydril
subsidiary. Mr. Williams graduated from West Virginia University with a degree
in petroleum engineering.

All directors and nominees for director of the Company are United States
citizens. There are no family relationships between any of our directors,
executive officers or nominees for director.

Board Operations and Organization

Mission Statement. The Company's primary objective is to maximize
stockholder value, while at all times observing the highest ethical standards.
The Company will pursue this objective through participation in the energy
industry.

Corporate Authority & Responsibility. All corporate authority resides in
the Board as the representative of the stockholders. Authority is delegated to
management by the Board in order to implement the Company's mission. Such
delegated authority includes the authorization of spending limits and the
authority to hire employees and terminate their services. The Board retains
responsibility to recommend candidates to the stockholders for election to the
Board. The Board retains responsibility for selection and evaluation of the
chief executive officer of the Company, oversight of the succession plan,
determination of senior management compensation, approval of the annual budget,
assurance of adequate systems, procedures and controls, as well as

assisting in the preparation and approval of the strategic plan. Additionally,
the Board provides advice and counsel to senior management.

Compensation of Directors. Directors are compensated in the form of both a
cash payment and Company equity. Each outside director receives a $3,000
quarterly payment and a quarterly stock option grant to purchase 3,000 shares of
Common Stock with an exercise price of the greater of $2.00 or fair market value
at the date of grant.

Board Size. In general, smaller to mid-size boards are more cohesive, work
better together and tend to be more effective monitors than larger boards. Our
Bylaws currently provide for at least three and not more than seven directors.

Annual Election of Directors. In order to create greater alignment between
the Board's and our stockholders' interests and to promote greater
accountability to the stockholders, directors shall be elected annually.

Meetings. Our Board has meetings as necessary. During the fiscal year ended
June 30, 2002, the Board held four regular meetings. All directors attended two
of these meetings, and all but one director attended the other two meetings.
During the fiscal year ended June 30, 2002, the Board passed resolutions by
unanimous written consent on 10 occasions.

Committee Structure. It is the general policy of the Company that the Board
as a whole will consider all major decisions. As a consequence, the committee
structure of the Board is limited to those committees considered to be basic to
or required for the operation of the Company as a publicly owned entity. The
audit committee is the only standing committee. All committees shall be composed
solely of independent directors. The Board may form other committees as it
determines appropriate.

Audit Committee. The audit committee recommends the appointment of
independent public accountants to conduct audits of our financial statements,
reviews with the accountants the plan and results of the auditing engagement,
approves other professional services provided by the accountants and evaluates
the independence of the accountants. The audit committee also reviews the scope
and results of the Company's procedures for internal auditing and the adequacy
of our system of internal accounting controls. Members are Messrs. Romano
(chairman), Brehmer and Williams. Joseph S. Compofelice, subject to his election
as a director, has agreed to assume the responsibility of chairman from Mr.
Romano, who is not standing for reelection to the Board. The audit committee met
formally five times during the fiscal year ended June 30, 2002.

THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE FIVE
NOMINEES AS DIRECTORS OF CONTANGO, TO SERVE UNTIL THE
NEXT ANNUAL MEETING OF STOCKHOLDERS OR UNTIL THEIR
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.

PROPOSAL 2
AMENDMENT TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF PREFERRED STOCK

Under our Certificate of Incorporation, the Board is authorized without
further stockholder action to provide for the issuance of up to 125,000 shares
of preferred stock, par

value $0.04 per share, in one or more series, with such voting powers and with
such designations, preferences, rights, qualifications, limitations or
restrictions, as set forth in resolutions providing for the issue of preferred
stock adopted by the Board. The Board has previously designated 5,000 shares of
preferred stock as Series A Preferred Stock, and has designated 10,000 shares of
preferred stock as Series B Preferred Stock. As of September 3, 2002, we had
outstanding 2,500 shares of Series A Preferred Stock and 5,000 shares of Series
B Preferred Stock.

The Company wishes to amend certain provisions of the Certificate of
Incorporation to increase the authorized preferred stock of the Company from
125,000 shares to 5,000,000 shares with such rights and preferences as the Board
may determine from time to time. The Board believes that the best interests of
the Company and its stockholders will be served by adopting the amendment to the
Certificate of Incorporation (the "Amendment"), attached hereto as EXHIBIT A. On
September 23, 2002, the Board adopted a resolution approving the Amendment.

The Company has no present plans to issue additional preferred shares.

THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO
INCREASE THE AUTHORIZED NUMBER OF PREFERRED SHARES
FROM 125,000 SHARES TO 5,000,000 SHARES.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables show the ownership of our Common Stock by (i) anyone
who is known by us to beneficially own 5% or more of our outstanding Common
Stock, (ii) each of our non-employee directors, (iii) our executive officers and
(iv) our executive officers and directors taken together as a group. Unless
otherwise indicated, each person named in the following table has the sole power
to vote and dispose of the shares listed next to their name based on information
as of September 3, 2002. The address of the members of the Board and our
executive officers is 3700 Buffalo Speedway, Suite 960, Houston, Texas 77098.

Our 5% Stockholders

Common Shares Beneficially Owned
---------------------------------------------
Under Stock
Options and
Warrants, and Percent
Issuable Upon of Total
Conversion Common
of Preferred Stock
Outstanding Stock (1) Total Outstanding
-------------- ------------- ------------- -------------

Aquila Energy Capital Corporation - 1,145,531 (2) 1,145,531 12.7%
909 Fannin, Suite 1850
Houston, Texas 77010
Trust Company of the West (3) 1,851,852 1,451,852 3,303,704 36.3%
865 South Figueroa St.
Los Angeles, California 90017

Members of the Board Who Are Not Employees

Jay Brehmer 11,000 - - *
John B. Juneau 390,001 616,667 (4) 1,006,668 11.1%
Joseph J. Romano 50,001 71,667 (5) 121,668 1.3%
Darrell W. Williams 148,501 76,667 (6) 225,128 2.5%

Our Executive Officers

Common Shares Beneficially Owned Percent
---------------------------------------------- of Total
Under Stock Common
Options and Stock
Outstanding Warrants (1) Total Outstanding
-------------- ------------- ------------- -------------
Kenneth R. Peak, Chairman, President,
Chief Executive and Chief Financial
Officer and Secretary 1,124,359 926,667 (7) 2,051,026 22.7%
William H. Gibbons, Vice President
and Treasurer 18,801 73,333 (8) 92,134 1.0%
Lesia Bautina, Vice President
and Controller 500 10,000 (9) 10,500 *

All Directors and Executive Officers Together

Common Shares Beneficially Owned Percent
--------------------------------------------- of Total
Under Stock Common
Options and Stock
Outstanding Warrants (1) Total Outstanding
------------- --------------- --------- --------------
Directors and executive officers,
as a group (7 persons) 1,743,163 1,775,001 3,518,164 38.9%

-------------
* Less than 1%.

1. Includes shares underlying options and warrants to purchase shares that
currently are vested and exercisable or will vest or be exercisable within
60 days or shares issuable upon conversion of convertible preferred stock.

2. Includes 1,136,264 shares of Common Stock issuable upon conversion of
Series B senior convertible cumulative preferred stock and stock options to
purchase 9,167 shares of Common Stock, all of which are vested or will vest
within 60 days.

3. Trust Company of the West holds its securities of Contango in its capacity
as Investment Manager and Custodian for a client. Shares include stock
options to purchase 16,667 shares of Common Stock, warrants to purchase
435,185 shares of Common Stock and 1,000,000 shares issuable upon
conversion of the Series A senior convertible cumulative preferred stock,
all of which are vested or will vest within 60 days.

4. Includes stock options to purchase 21,667 shares of Common Stock and a
warrant to purchase 200,000 shares of Common Stock, all of which are vested
or will vest within 60 days. Also included in shares are 200,000 shares of
Common Stock, stock options to purchase 270,000 shares of Common Stock and
warrants to purchase 125,000 shares of Common Stock that are owned by
Juneau Exploration Company, L.P. ("JEX"), all of which are vested or will
vest within 60 days. Mr. Juneau is the sole manager of the general partner
of JEX.

5. Includes stock options to purchase 21,667 shares of Common Stock and a
warrant to purchase 50,000 shares of Common Stock, all of which are vested
or will vest within 60 days.

6. Includes stock options to purchase 21,667 shares of Common Stock and a
warrant to purchase 55,000 shares of Common Stock, all of which are vested
or will vest within 60 days.

7. Includes stock options to purchase 226,667 shares of Common Stock and a
warrant to purchase 700,000 shares of Common Stock, all of which are vested
or will vest within 60 days.

8. Includes stock options to purchase 73,333 shares of Common Stock, all of
which are vested or will vest within 60 days.

9. Includes stock options to purchase 10,000 shares of Common Stock, all of
which are vested or will vest within 60 days.

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's Common Stock, to file reports of their
beneficial ownership with the Securities and Exchange Commission. Executive
officers, directors and greater-than-ten percent holders are required to furnish
the Company with copies of the forms that they file.

We believe that all Section 16(a) filing requirements applicable to
executive officers, directors and greater-than-ten percent holders were made
during the Company's fiscal year ended June 30, 2002.

Certain Relationships and Transactions

Directors, Director Designees and Observers. As part of the Certificate of
Designations, Preferences, and Relative Rights and Limitations of the Series A
Preferred Stock, if TCW, as the holder of Series A Preferred Stock, has not
appointed or nominated for election at least one member of the Board and shares
of the Series A Preferred Stock remain outstanding, then, in its capacity as the
holder of Series A Preferred Stock, TCW shall be entitled to designate a person
to attend any meetings of the Board for the sole purpose of observing such
meeting for and on behalf of TCW. In addition, as part of the securities
purchase agreement dated as of December 29, 1999 between Contango and TCW, as
amended August 24, 2000, TCW has concurrent rights to designate a person to
attend any meetings of the Board for the sole purpose of observing such meeting
for and on behalf of TCW, provided that TCW has not nominated or appointed at
least one member of the Board and it holds at least 5% of the Company's
outstanding Common Stock.

As part of the securities purchase agreement dated as of September 27, 2000
between Contango and Aquila, the Company shall use its best efforts to cause one
of the directors to be an individual selected by Aquila in its sole discretion.
Additionally, if at any time Aquila has not appointed or nominated for election
at least one of the members of the Board and it holds at least 5% of the
Company's outstanding Common Stock or a sufficient number of shares of Series B
Preferred Stock which, if converted, would constitute at least 5% of the
Company's outstanding Common Stock (or a combination of the foregoing), Aquila
shall be entitled to designate a person to attend any meetings of the Board for
the sole purpose of observing such meeting for and on behalf of Aquila. This
year, Aquila has selected Mr. Brehmer as its director designee.

Juneau Exploration Company, L.P. John B. Juneau, one of our current
directors, is the sole manager of the general partner of Juneau Exploration
Company, L.P. ("JEX"). Effective September 1, 1999, we entered into an agreement
with JEX whereby we outsourced all of our natural gas and oil prospect
generation and evaluation functions to JEX. As an inducement to enter into the
agreement, JEX received 200,000 shares of our Common Stock. As of September 3,
2002, we have granted to JEX options to purchase 400,000 shares of our Common
Stock in

connection with exploratory successes and acquisitions. Of these options,
300,000 have vested, with the remainder vesting subject to achieving a defined
payout and rate of return. Additionally, we have granted to JEX warrants to
acquire 125,000 shares of common stock in connection with the formation of
Republic Exploration, L.L.C. Mr. Juneau is not standing for reelection to the
Board.

On August 14, 2000, we amended our agreement with JEX whereby in exchange
for our no longer granting stock options for each acquisition and exploration
success, we increased the overriding royalty interest granted to individual
geoscientists from 2.5% to 3.3%. JEX currently receives a 25% proportionately
reduced back-in working interest after we achieve a defined payout. JEX will
continue to bear the upfront overhead costs of performing all functions involved
in bringing a prospect to a ready to drill stage. JEX is required to participate
for a 5% working interest in each transaction recommended. Their overall
remuneration continues to be directly related to our exploration success, as the
overriding royalty and 25% after payout back-in working interest are tied to the
drilling and performance of successful wells. We believe this shifting of risk
and alignment of incentives are key to our goal of achieving profitability.

EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES

Name Age Position
---------------- ----- --------
Kenneth R. Peak 57 Chairman, President, Chief Executive and
Chief Financial Officer and Secretary
William H. Gibbons 59 Vice President and Treasurer
Lesia Bautina 31 Vice President and Controller

Kenneth R. Peak was appointed president, chief executive and chief
financial officer, secretary and a director of Contango in July 1999 and serves
as chairman of the board. Further information about Mr. Peak is provided above
under "Election of Directors - Nominees".

William H. Gibbons joined Contango in February 2000 and was appointed
treasurer in March 2000 and vice president and treasurer in November 2000.
Before joining Contango, he was treasurer of Packaged Ice, Inc. from 1998 to
2000. From 1990 to 1998 and from 1983 to 1986, he provided financial consulting
services to domestic and international oil companies, including a five-year
assignment with Walter International, Inc. Mr. Gibbons began his energy career
with Houston Oil & Minerals Corporation, where he served as treasurer from 1975
to 1981. He also was vice president-finance for Guardian Oil Company from 1981
to 1983 and director-acquisitions for Service Corporation International from
1986 to 1990. Mr. Gibbons received a BA degree in business administration from
Duke University and a MBA in finance from Tulane University.

Lesia A. Bautina joined Contango in November 2001 as controller. Prior to
joining Contango, Ms. Bautina worked as an auditor for Arthur Andersen LLP from
1997 to 2001. Her primary experience is accounting and financial reporting for
exploration and production companies. Ms. Bautina received a degree in history
from the University of Lvov in the Ukraine in 1990 and a BBA in accounting in
1996 from Sam Houston State University, where she graduated with honors. Ms.
Bautina is a Certified Public Accountant and member of the Petroleum Accounting
Society of Houston. Ms. Bautina was born in the Ukraine, speaks four languages
fluently and became a United States citizen in February 2000.

All executive officers and key employees of the Company are United States
citizens. There are no family relationships between any of our directors,
executive officers, key employees or nominees for director.

EXECUTIVE COMPENSATION

Summary Compensation Tables

The following tables and discussion below set forth information about the
compensation awarded to, earned by or paid to our executive officers during the
fiscal years ended June 30, 2002, 2001 and 2000. Other than the salary and bonus
described in the table below, we did not pay any executive officer named in the
table below any fringe benefits, perquisites or other compensation during the
fiscal year ended June 30, 2001. For the fiscal year ended June 30, 2000, Mr.
Peak was the only executive officer whose salary and bonus exceeded $100,000.

Annual Compensation Shares
Fiscal --------------------- Underlying
Name and Principal Position Year Salary Bonus Options
--------------------------- ------ -------- ----- ----------

Kenneth R. Peak (1) 2002 $150,000 $350,000 100,000
Chairman, President, Chief Executive 2001 $150,000 $150,000 200,000
and Financial Officer and Secretary 2000 $139,555 $ - -

William H. Gibbons (2) 2002 $ 93,563 $ 40,000 25,000
Vice President and Treasurer 2001 $108,006 $ 30,000 50,000
2000 $ 38,750 $ - 25,000

Lesia Bautina (3) 2002 $ 53,000 $ 50,000 50,000
Vice President and Controller

------------------

(1) Mr. Peak was appointed as our chief executive officer and president on July
26, 1999 and appointed chairman of the board on September 28, 1999. Prior
to that date he was not affiliated with Contango in any way and did not
receive any compensation from the Company.

(2) Mr. Gibbons joined Contango in February 2000.

(3) Ms. Bautina joined Contango in November 2001.

The following table shows the number of options owned by the named
executive officers. Options in the column marked "unexercisable" are subject to
vesting and will be forfeited if a named executive officer's employment with us
is terminated for certain reasons. None of our named executive officers
exercised options or warrants during the fiscal year ended June 30, 2002.

Value of Unexercised
Number of Unexercised In-the-Money Warrants
Warrants and Options at June 30, 2001 (1)
--------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---------- ----------- ------------- ----------- -------------

Kenneth R. Peak 926,667 173,333 $3,085,801 $577,199
William H. Gibbons 73,333 51,792 $ 244,199 $172,051
Lesia Bautina 10,000 90,000 $ 33,300 $299,700

------------
(1) Based on $3.33 per share, the closing price per share of our common stock
on the American Stock Exchange on June 28, 2002 and the relevant exercise
price.

Employment Agreements

We have no employment agreement with any executive officer.

INDEPENDENT PUBLIC ACCOUNTANTS

On June 10, 2002, the Board of Directors determined, upon the
recommendation of its Audit Committee, to appoint Grant Thornton LLP as the
Company's independent public accountants to audit the Company's financial
statements for the fiscal year ending June 30, 2002, replacing Arthur Andersen
LLP, which the Company dismissed on the same date.

The audit reports of Arthur Andersen LLP on the consolidated financial
statements of the Company as of and for the fiscal year ended June 30, 2001 and
2000 did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years of the Company ended June 30, 2001 and 2000 and
subsequent interim periods to June 10, 2002, there were no disagreements between
the Company and Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure, or audit scope or procedures, which
disagreements, if not resolved to Arthur Andersen LLP's satisfaction, would have
caused Arthur Andersen LLP to make reference to the subject matter of the
disagreement in connection with its reports. None of the reportable events
described under Item 304(a)(1)(v) of Regulation S-K occurred within the two
fiscal years of the Company ended June 30, 2001 and subsequent interim periods
to June 10, 2002.

During the two fiscal years of the Company ended June 30, 2001 and the
subsequent interim period to June 10, 2002, the Company did not consult with
Grant Thornton LLP regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.

Financial Information
Audit Systems Design and All
Name Fees Implementation Fees Other Fees
------ ----- --------------------- ----------

Arthur Andersen LLP $ 37,500 $ - $97,500(1)
Grant Thornton LLP $ 32,500 $ - $10,000(2)

(1) Consists primarily of fees in connection with matters related to audit of
natural gas and oil properties in connection with acquisitions and filing
of registration statements on Form S-1.

(2) Consists primarily of fees in connection with acquisitions and filing of
registration statements on Form S-1.

Contango expects that representatives of Grant Thornton LLP will be present
at the Annual Meeting and will be given the opportunity to make a statement if
they desire to do so and to respond to appropriate questions.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee members are Joseph J. Romano (chairman), Jay D. Brehmer
and Darrell W. Williams, each of which is independent as defined in Section
121(a) of the American Stock Exchange listing standards. Joseph S. Compofelice,
subject to his election as a director, has agreed to assume the responsibility
of chairman from Mr. Romano, who is not standing for reelection to the Board.
The Audit Committee assists the Board of Directors in monitoring the

integrity of Contango's financial statements, compliance with legal requirements
and Contango's external auditors.

The Audit Committee has reviewed and discussed Contango's audited
consolidated balance sheet as of June 30, 2002 and 2001 and consolidated
statements of income, cash flows and stockholders' equity for the two years
ended June 30, 2002 with Contango's management. The Audit Committee has
discussed with Grant Thornton LLP, Contango's independent auditors, the matters
required to be discussed by Statement of Auditing Standards No. 61 (concerning
the accounting methods used in the financial statements).

The Audit Committee has also received and reviewed written disclosures and
the letter from Grant Thornton LLP required by Independent Standards Board No. 1
(concerning matters that may affect an auditor's independence) and has discussed
with Grant Thornton LLP their independence. Based on the foregoing review and
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in Contango's Annual Report on Form
10-KSB for the year ended June 30, 2002 for filing with the Securities and
Exchange Commission.

AUDIT COMMITTEE

Joseph J. Romano
Jay D. Brehmer
Darrell W. Williams

PERFORMANCE GRAPH

The following graph compares the yearly percentage change from July 1, 1999
until June 30, 2002 in the cumulative total stockholder return on our Common
Stock to the cumulative total return on the Russell 2000 Stock Index and a peer
group of five independent oil and gas exploration companies selected by us. Each
of the companies selected had a market capitalization of less than $200 million
as of June 30, 2001. The companies in our selected peer group are Brigham
Exploration Company, Carrizo Oil & Gas, Inc., Edge Petroleum Corp., Goodrich
Petroleum Corp. and PetroQuest Energy, Inc.

[GRAPHIC HERE]
As of June 30,
------------------------------------------
1999 2000 2001 2002
--------- --------- --------- ---------
Contango Oil & Gas Company $ 100 $ 1,000 1,905 1,665
Russell 2000 Stock Index $ 100 $ 113 112 101
Peer Group Composite $ 100 $ 158 231 181

The stock performance for our Common Stock is not necessarily indicative of
future performance. Total stockholder return assumes reinvestment of all cash
dividends.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR THE ANNUAL
MEETING OF STOCKHOLDERS IN 2003

Proposals of stockholders intended to be presented at next year's Annual
Meeting of Stockholders must be received by Kenneth R. Peak at Contango Oil &
Gas Company's principal office located at 3700 Buffalo Speedway, Suite 960,
Houston, Texas 77098 no later than June 6, 2003. If the date of the annual
meeting for 2003 is moved by more than 30 days from the date of this year's
Annual Meeting, then the deadline for receiving stockholder proposals shall be a
reasonable time before the Company begins to print and mail the proxy statement
for the 2003 annual meeting.

ADVANCE NOTICE PROCEDURES FOR NEXT YEAR'S ANNUAL MEETING

The Company advises stockholders that, until further notice, August 26,
2003 is the date after which notice of a stockholder-sponsored proposal
submitted outside the processes of Rule 14a-8 under the Securities Exchange Act
of 1934 (i.e., a proposal to be presented at the next annual meeting of
stockholders that has not been submitted for inclusion in the Company's proxy
statement) will be considered untimely under the Commission's proxy rules.

OTHER PROPOSED ACTIONS

The Board is not aware of any other business that will come before the
Annual Meeting, but if any such matters are properly presented, the proxies
solicited hereby will be voted in accordance with the best judgment of the
persons holding the proxies. All shares represented by duly executed proxies
will be voted at the Annual Meeting.

DOCUMENTS INCORPORATED BY REFERENCE

The Company hereby incorporates by reference into this Proxy Statement the
information in the Company's annual report on Form 10-KSB for the fiscal year
ended June 30, 2002 found under the following captions: Item 6. Management's
Discussion and Analysis of Financial Condition and Results of Operations; Item
7. Financial Statements and Supplementary Data; and Item 8. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure. The
Company's annual report on Form 10-KSB, as filed with the Securities and
Exchange Commission, accompanies this Proxy Statement.

AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN

THIS PROXY STATEMENT REFERS TO CERTAIN DOCUMENTS OF THE COMPANY THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS
DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT CHARGE, DIRECTED TO KENNETH R.
PEAK, CONTANGO OIL & GAS COMPANY, 3700 BUFFALO SPEEDWAY, SUITE 960, HOUSTON,
TEXAS 77098, TELEPHONE NUMBER (713) 960-1901. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY OCTOBER 25, 2002.

By order of the Board of Directors,

/s/ Kenneth R. Peak
--------------------------------------------------
Kenneth R. Peak
Chairman, Chief Executive Officer and Secretary

[Form of Proxy]

CONTANGO OIL & GAS COMPANY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD

The undersigned stockholder of Contango Oil & Gas Company (the "Company")
hereby acknowledges receipt of the Proxy Statement and the notice of the Annual
Meeting of Stockholders to be held on Friday, November 8, 2002 at 9:00 a.m.,
Central Standard Time, at 3700 Buffalo Speedway, Second Floor, Houston, Texas
770978, and hereby further revokes all previous proxies and appoints Kenneth R.
Peak as proxy of the undersigned at the meeting and any adjournments thereof
with the same effect as if the undersigned were present and voting the shares.

(1) The election of directors.

[ ] AUTHORITY GRANTED [ ] AUTHORITY WITHHELD
to vote for nominees to vote for all nominees
listed below, except listed below.
as indicated to the
contrary below.

Nominees: Kenneth R. Peak Joseph S. Compofelice
Jay D. Brehmer Darrell W. Williams
Michael P. Childers

(Instruction: To vote against any nominee, write that nominee's name in the
space provided below.)

--------------------------------------------------------------------------------

(2) Amendment to increase the authorized number of preferred shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) On such other matters as may properly come before the meeting and any
adjournment thereof.

(Continued and to be signed on the reverse side)

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED
ABOVE. IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED "FOR" ALL OF THE NOMINEES FOR DIRECTOR IN PROPOSAL 1 AND "FOR" APPROVAL
OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED PREFERRED SHARES IN PROPOSAL 2. THE PERSON NAMED AS PROXY WILL USE
HIS DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN PROPOSAL 3. THIS PROXY
IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.

Dated: , 2002
----------------------------------

--------------------------------------------------

Sign exactly as your name appears on your share certificate When signing as
attorney, executor, administrator, trustee or guardian, please give full title.
If more than one trustee, all should sign. All joint owners should sign. If a
corporation, sign in full corporation name by president or other authorized
officer. If a partnership, sign in partnership name by authorized person.
Persons signing in a fiduciary capacity should indicate their full title in such
capacity.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

EXHIBIT A

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CONTANGO OIL & GAS COMPANY

Pursuant to Section 242 of the Delaware
General Corporation Law

CONTANGO OIL & GAS COMPANY, a Delaware corporation (the "Corporation"),
DOES HEREBY CERTIFY as follows:

1. The name of the Corporation is CONTANGO OIL & GAS COMPANY.

2. The Certificate of Incorporation of the Corporation is hereby amended to
increase the authorized preferred stock of the Corporation by striking Section A
of Article IV of the Certificate of Incorporation of the Corporation in its
entirety and inserting the following new Section A of Article IV:

"A. This Corporation is authorized to issue two classes of shares of stock
to be designated common stock ("Common Stock") and preferred stock
("Preferred Stock"). The number of shares of Common Stock authorized to be
issued is fifty million (50,000,000), par value $0.04 per share, and the
number of shares of Preferred Stock authorized to be issued is five million
(5,000,000), par value $0.04 per share; the total number of shares which
the Corporation is authorized to issue is fifty-five million shares
(55,000,000)."

3. This Certificate of Amendment of Certificate of Incorporation was duly
adopted and approved in accordance with the provisions of Section 242 of the
Delaware General Corporation Law.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of the Certificate of Incorporation to be duly executed by its
Secretary this ____ day of ______, 2002.

-----------------------------
Kenneth R. Peak
Secretary