Contango Oil & Gas Company (“Contango”) (NYSE American: MCF) and Mid-Con Energy Partners, LP (“Mid-Con”) (NASDAQ: MCEP) today announced they have entered into an agreement to combine in an all-stock merger transaction. The combination continues Contango’s consolidation strategy, increases its exposure to oil reserves at an attractive price, increases corporate margins via scale and further cost rationalization, and amplifies Contango’s ability to play offense amid the dislocation in the sector, while providing Mid-Con’s unitholders with greater liquidity, financial stability and opportunities for growth on a larger platform.


  • Acquisition of PDP heavy reserves by Contango at an attractive unlevered return
  • Accretive to Contango’s reserve base
  • Mid-Con’s assets oil weighted with low production decline profile, complementing Contango’s higher production and cash flow profile
  • Leverages Contango’s familiarity with Mid-Con’s assets and operations via Mid-Con’s Management Services Agreement
  • Offers Mid-Con’s unitholders enhanced liquidity, financial stability and opportunities for growth through a larger platform
  • Further cost rationalization expected to be realized via consolidation of the entities
  • Immediate free cash flow accretion(1)
  • Enhanced liquidity for the combined entity
  • Maintains strong balance sheet and low leverage profile of Contango
  • Maintains simple capital structure comprised of bank debt and common equity
  • Adds PUD inventory with low CAPEX requirement with opportunity for near term conversion to PDP


Under the terms of the merger agreement, Mid-Con unitholders will receive 1.75 shares of Contango common stock for each Mid-Con common unit owned, representing a 5 percent premium based on a 15-day volume weighted average price. This exchange ratio implies an enterprise value for the combined entity in excess of $400 million based on Friday’s closing price. Upon completion of the merger and closing of the concurrently announced private placement of Contango common stock, Contango shareholders will own approximately 87 percent of the combined company and Mid-Con unitholders will own approximately 13 percent of the combined company on a fully diluted basis.

The transaction, which is expected to close in late 2020 or early 2021, has been unanimously approved by the conflicts committee of the board of directors of Mid-Con and by the full board of directors of Mid-Con, and by the disinterested directors of the board of directors of Contango. Voting agreements have been signed by over 50% of holders on both sides of the transaction, including Goff Capital. The closing is subject to customary shareholder and unitholder approvals and other customary conditions to closing. Contango’s senior management team will run the combined company, and Contango’s board of directors will remain intact. The combined company will be headquartered in Fort Worth, TX but will continue to maintain a presence in both the Houston and Oklahoma markets.


Wilkie Colyer, Contango’s Chief Executive Officer stated, “This merger is exactly the type of transaction we look for to enhance value for our shareholders in the current market. We were able to substantially increase our reserve base and cash flow in an accretive transaction while meeting the needs of Mid-Con unitholders by further rationalizing their cost structure and mitigating their refinancing risk by combining our respective credit facilities. In that sense, this is truly a win for both parties involved in the merger. We of course have great familiarity with the Mid-Con assets having a Management Services Agreement with them and having brought on many of their employees, which has meaningfully enhanced Contango’s expertise. This transaction is simply the next step, and certainly not our last, in our stated goal of consolidating a sector that is in dire need of it. This combination increases our exposure to long lived oil reserves and is accretive to Contango shareholders. Our definition of accretive, by the way, is that it increases the intrinsic value of Contango on a per share basis, and this transaction certainly fits that bill. It also benefits Mid-Con’s unitholders by offering them enhanced liquidity, financial stability and opportunities for growth on a larger platform. We welcome Mid-Con lenders, unitholders, and employees into the Contango family.”

Bob Boulware, the chairman of Mid-Con’s board of directors and its conflicts committee of independent, disinterested directors, stated “This merger was negotiated by our conflicts committee, which determined, with the advice of its financial and legal advisors, that the consideration offered in the merger is fair, from a financial point of view, to Mid-Con’s unaffiliated public unitholders. We are pleased to be able to provide our unitholders with the opportunity to transition at an attractive exchange ratio to ownership of shares in a larger, better capitalized company that is well positioned for future growth.”


Contango has received commitments from its and Mid-Con’s lenders that, effective upon the closing of the merger with Mid-Con, Contango’s borrowing base on its revolving credit facility will be increased from $75 million to $130 million, with the next regular redetermination scheduled for May 1, 2021.


Contango ended the third quarter with $66 million of debt outstanding on its $75 million borrowing base credit facility and approximately $8 million of liquidity. Contango’s sales volumes for the third quarter are in the range of 16,500 – 17,000 Boe/d, which is at the high end of the original 14,000 – 17,000 Boe/d guidance. Realized pricing for the third quarter, without the benefit of hedges, was in the range of $18.85 – 19.15 per Boe. Lastly, we incurred approximately $1.5 million of capital expenditures during the quarter.


Intrepid Partners, LLC is serving as financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal advisor to Contango. Petrie Partners, LLC is serving as financial advisor and Pillsbury Winthrop Shaw Pittman, LLP is serving as legal advisor to Mid-Con.