Sellers Capital urges Contango president to buy back more shares

By Lisa Kerner

Charlotte, N.C., Oct. 17 - Contango Oil & Gas Inc. investor Sellers Capital, LLC said the company is "ignoring a significant opportunity to increase shareholder value by not aggressively buying back shares in the current market environment."

In an Oct. 17 letter to Contango president Kenneth Peak, Sellers Capital said it has been repurchasing shares but believes Contango needs to be much more aggressive to take advantage of what could be "a once-in-a-lifetime opportunity to profit from the market's irrationality."

According to Sellers Capital, share repurchases now are the single best use of corporate capital.

Sellers Capital suggested Peak purchase no less than 10% of the outstanding shares immediately, using about four months' worth of after-tax cash flow.

The investor believes Peak should also consider "buying more shares as market conditions warrant," according to the letter included in a schedule 13D filed with the Securities and Exchange Commission.

Based in Houston, Contango is an oil and natural gas exploration, development and production company.

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