Contango Oil & Gas Company announced a drilling update, guidance on its 2017 capital program and the addition of 2017 oil and natural gas hedges. In late November, the company completed the drilling phase of initial well on Pecos County acreage, the Lonestar-Gunfighter #1H, an Upper Wolfcamp test that is currently being completed.  The location of this well is in the northwest portion of lease position.  The well was drilled to a total depth of approximately 20,800 feet in 38 days (exclusive of formation evaluation) with a 10,500 foot lateral section drilled in 9 of the 38 days, and is currently being completed with 50 stages of fracture stimulation.  Initial production from the well is expected to commence in mid/late January, with reported results planned for approximately 30 days later. After the drilling of the Lonestar-Gunfighter well, the drilling rig was moved to the central portion of acreage where the next two wells are being batch drilled and will be completed concurrently from a common surface location, each well also targeting the Upper Wolfcamp. The second and third wells, the Rude Ram #1H and the Ripper State #1H, respectively, have been drilled and cased to  horizontal landing point, and drilling of the laterals continues.  Similar to the Lonestar-Gunfighter, these two wells will also be drilled to a total measured depth of approximately 21,000 feet, including a 10,000 foot lateral with approximately 50 stages of fracture stimulation.  Completion operations on the Rude Ram and the Ripper State wells, utilizing a zipper frac strategy, are currently scheduled to begin in mid-March, with initial production expected to commence in mid-April.

The company provided capital expenditure guidance for the year 2017. The company currently forecasts a total capital budget for 2017 of approximately $46.3 million, including $36.6 million for drilling and/or completing nine gross wells in Pecos County.  Consistent with past philosophy, the company will initially limit its 2017 capital expenditures to those that are generally funded by internally generated cash flow.