Contango Oil & Gas has completed the sale of substantially all of its onshore assets in the US state of Texas for $40m.

The properties, which were sold to an independent oil and gas firm, include Contango’s 90% working interest and subsequent 5% overriding royalty interest in 21 wells drilled in Panola County, under its JV with Patara Oil & Gas.

The company also sold its 100% working interest in the Rexer #1 well, drilled in south Texas, and a 75% working interest in the Rexer #2 well.

The sold properties had proved reserves of about 17.2 billion cubic feet equivalent, net to Contango.

The proceeds from this sale will be used to, among other things, fund the company’s 2011 capital expenditure program.