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On Tuesday, November 12, 2013, Institutional Investor and SumZero, the world’s largest online membership community of buy-side investment professionals, hosted an idea competition at Columbia University Business School’s Uris Hall Auditorium.

Nineteen emerging managers were selected from within the SumZero community on the basis of strong performance and high-quality peer reviews. Each manager gave a three minute pitch on their best idea to an audience of analysts and investors who rated their pitch for validity of the thesis, strength of the argument, feasibility of the trade and originality.

We invite you to view these ideas and register to download each presenter’s bio and full pitch paper. If you’re a professional investment officer or analyst, we invite you to register to vote for the winning idea.

Most Attractive Area of the Market Right Now:We use a booms- up investment process, but two areas that have yielded the most attractive investment opportu-nities lately have been the commodities sector (with our favorite being Contango Oil & Gas) and European auto-motive companies, in particular Fiat SpA, our firm’s largest position, as well as Renault SA. We believe after a near-term merger with Chrysler, Fiat is worth nearly four times where it trades today (€5.58), with room to run thereafter.

Least Attractive Area of the Market Right Now:Our least favorite securities in the market place today are bonds of highly leveraged and asset- light companies, par-ticularly of companies that were the targets of leveraged buyouts before the financial crisis. With a relatively weak consumer and weak retail sales, many struggling retailers that have high debt balances are facing a “make or break,” holiday season.

Best Past Investment Made:GreenWood’s best investment, outside of the financial crisis recovery trades, has been Astex Pharmaceuticals

(ASTX), which was recently acquired by Otsuka Holdings for $8.50 per share in cash. We acquired Astex as inves-tors were throwing away the company based on the FDA’s decision to not approve its main drug, Dacogen for use in patients with AML. Our average cost was $1.75, which was close to the company’s liquidation value at the time of purchase.

Worst Past Investment Made:Our worst investment was our bullish bet on the volatility index (VIX) through VIX call options, in late 2011 and 2012. With obvious eurozone risks, as well as an Asian softening, we believed the VIX was ignoring systemic risks. While the index lost little from the levels where we initiated positions, the time decay took over over 7% from our performance in 2012. This mistake birthed our Global Micro strategy.

Personal Investing Style:Value, Distressed, Special Situations

Areas of Personal Expertise:Industrials, Energy, Telecom, Healthcare, Selective Tech

Steven Wood GreenWood Investors

Title: Portfolio Manager Location: New York

Bio: Steven Wood, CFA founded GreenWood Investors in late 2010 when he was 28 years old, based on core beliefs that are quite different from typical total- return investment managers. We believe great investments cannot be made by being overly concerned with month- to- month returns, and investors should have full transparency and liquidity. We share our research with our sophis-ticated investors, who in turn provide invaluable insights in honing our portfolio. Prior to founding GreenWood Investors, Steven worked with notable investors at Carr Securies, Kellogg Capital

Group, and Aslan Capital in distressed, deep value, and special situaons strategies. Through frequent marathons andby being the sole US- focused analyst in Leveraged Finance at RBC Capital Markets during the peak of the LBO boom, Steven has developed a high pain tolerance, a pre-requisite for value investing. Dissatisfied with just one view of the world, Steven received a bachelor of arts from Tulane University in Economics, Political Economy, and International Re-lations. Steven draws inspiration from a patchwork of investors, of which his favorite is Charlie Munger. Security Analysis remains the cornerstone in detailing the primary function of an investment management operation, and provides the necessary building blocks for constructing a rational investment analysis.

AUM: ~$10 million

Firm Focus: US/Int’l Equities & Bonds; Long Focused with Bond Shorts

Firm Strategy: Distressed & Global Micro

Fund Disclaimer: Please see section 15 of appendix.

Contango  Oil  &  Gas  (MCF):  From  Runoff  to  Run  Up           November  3,  2013

Contango  has  always  been  an  entrepreneurial  company  based  on  two  core  beliefs:  that  the  only  compe88ve  advantage  in  the  commodity-­‐based  natural  gas  and  oil  business  is  to  be  among  the  lowest  cost  producers  and  that  virtually  all  the  explora8on  and  produc8on  industry’s  value  crea8on  occurs  through  the  drilling  of  successful  exploratory  wells.    The  company  has  never  confined  itself  to  explora8on  in  the  Gulf  of  Mexico,  yet  became  known  for  it  ever  since  it  hit  a  huge  natural  gas  field  in  2007.      AHer  the  regreIable  death  of  its  incredibly  colorful  and  wise  co-­‐founder  and  chairman  earlier  this  year,  the  other  co-­‐founder  has  assumed  the  role  of  Chairman  and  acquired  very  aIrac8ve  onshore  assets  where  the  company  can  repeatably  drill  high-­‐return  wells  in  order  to  grow  its  per  share  net  asset  value  (NAV).    The  company  will  con8nue  to  drill  high-­‐impact  explora8on  wells  with  a  quarter  to  a  third  of  its  budget,  yet  aHer  the  BP  Macondo  disaster,  approvals  to  drill  prospects  have  been  slowed  down,  puQng  legacy  Contango  in  a  posi8on  to  watch  its  reservoirs  deplete  without  many  opportuni8es  to  counter  this  run-­‐off.    Through  the  recently-­‐completed  merger,  the  addi8on  of  Crimson  Explora8on’s  Eagle  Ford  and  Woodbine  acreage  in  South  and  Southeast  Texas  will  allow  Contango  to  drill  more  predictable  and  high-­‐return  wells  while  it  awaits  approvals  to  drill  its  next  eight  prospects  in  the  Gulf  of  Mexico.    

The  biggest  investment  disasters  in  the  commodity  space  have  been  companies  whose  management  teams  misunderstood  how  to  effec8vely  allocate  capital.    With  Contango,  we  have  the  opposite  situa8on:  a  company  that  has  produced  outsized  returns  historically,  and  has  been  an  avid  buyer  of  its  own  stock  over  the  last  several  years.    As  investors  appreciate  Contango’s  new  asset  mix  and  quality,  we  believe  the  stock  is  due  for  a  re-­‐ra8ng  closer  to  peers  trading  at  47-­‐72%  higher  valua8ons.    Yet,  this  isn’t  the  reason  we  love  Contango.    We  believe  it  has  one  of  the  best  collec8ons  of  assets  in  the  industry,  that  have  industry-­‐leading  economics,  and  are  now  more  diversified.    This  will  allow  the  company  to  steadily  grow  its  NAV  while  keeping  high-­‐impact  explora8on  poten8al  firmly  in  the  company’s  DNA.    Perhaps  people  have  wriIen  off  the  company’s  Gulf  of  Mexico  explora8on  por\olio,  as  they  have  many  8mes  in  the  past,  given  Contango’s  recent  dry  holes.    But  the  company  has  already  announced  that  its  most  recent  well  has  hit  hydrocarbons-­‐  but  has  yet  to  give  any  reservoir  details.    We  would  remind  the  street  that  when  Contango  has  hit  successful  wells  in  the  past  (see  table  3),  although  largely  natural  gas  and  natural  gas  liquids,  the  economics  on  these  wells  surpass  nearly  anything  that  can  be  found  onshore.    Furthermore,  Gulf  of  Mexico  discoveries  can  oHen  8mes  be  significant.    In  Contango,  an  investor  has  the  best  of  four  worlds:  valua8on,  asset  base,  capital  re-­‐alloca8on  abili8es,  and  significant  “op8onality,”  to  the  upside.    Even  if  Contango  traded  in  line  with  peers,  it  would  s8ll  be  a  great  investment.    

Table  1:  Key  Investment  Highlights,  Pro  Forma  Crimson  Merger

Ac8on:  Long  MCF  Equity Situa8on:  Growth,  Value Areas:  S/SE  TX,  Gulf  of  Mexico,  LA

Current  Price:  $43.40 Target  Price:  $85.00  (12-­‐month) NAV  (SEC  PV-­‐10):  $696  million

Shares:  19.1million Net  Debt:  $110  million Reserves  (Developed):  281  Bcfe

Market  Cap:  $828.7  million Enterprise  Value:  $939  million LTM  EBITDAX:  $190  million  

BackgroundWhile  everyone  thinks  of  this  company  as  a  run-­‐off  Gulf  of  Mexico  company,  in  reality,  Contango  has  always  been  a  contrarian  buyer  and  seller  of  assets,  and  is  always  seeking  resource  poten8al  with  the  highest  return  on  invested  capital  (ROIC)  prospects.    The  company  began  establishing  a  presence  in  the  FayeIeville  shale  in  2005  when  very  few  other  companies  aside  from  Southwestern  Energy  Co.  (SWN)  were  focused  on  the  play,  and  was  acquiring  the  bulk  of  its  acreage  at  the  same  8me  the  eventual  regional  behemoth-­‐Southwestern  was  building  its  land  por\olio.    Contango  ended  up  selling  half  of  its  holdings  in  the  basin  to  Petrohawk  in  2007  for  a  rich  price  ($14k  an  acre)  at  a  360%  gain.  The  second  half  was  sold  to  XTO  Energy  (XTO)  in  2008  for  another  nice  price  ($11.4k  an  acre)  at  a  493%  gain.    Thus,  onshore  investments  aren’t  totally  foreign  to  the  company  and  its  key  geologist,  Brad  Juneau.    While  the  company  had  already  established  smaller  footholds  in  the  emerging  Tuscaloosa  Marine  shale  in  Louisiana  and  Mississippi,  as  well  as  the  Jonah  

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gas  field  in  Wyoming,  Crimson’s  Texas  acreage  brings  the  asset  mix  of  the  company’s  por\olio  to  a  much  more  land-­‐focused  company,  with  the  Gulf  of  Mexico  accoun8ng  for  only  35%  of  the  acreage  (see  table  5).    The  primary  reason  for  Contango’s  low  valua8on  over  the  past  few  years  is  that  investors  view  the  company’s  success  in  the  Gulf  of  Mexico  as  unpredictable,  and  not  assured.    Ask  an  old  wildcaIer  what  his  odds  of  success  would  be  in  the  Gulf  of  Mexico,  and  he’d  be  happy  to  have  a  one  in  three  chance  of  drilling  a  successful  well.    Contango  has  improved  on  the  tradi8onal  probability  of  success,  in  achieving  a  46%  rate  of  drilling  commercially  viable  wells  over  the  past  eight  years  (see  table  3).    Even  with  every  other  well  turning  up  as  a  dry  hole,  the  economics  of  drilling  Gulf  of  Mexico  stand  up  to  the  best  onshore  economics.    Over  the  last  eight  years,  Contango  found  and  developed  producing  reserves  for  a  cost  of  $0.78  per  mcfe.    Those  economics  stand  up  to  the  best  of  the  best  of  the  industry’s  cost  curve.    With  such  a  resource  base,  the  company  has  managed  to  create  a  significant  amount  of  value  from  a  low  base  of  invested  capital,  which  actually  turned  nega8ve  for  its  cumula8ve  history  in  late  2008,  as  shown  in  Chart  A.    

Chart  A:  CumulaOve  Invested  Capital  and  Share  Count

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Negative Dilution

If Contango only had one share and I owned it – that would be great.

*The shareholders that didn’t sell now own 16.3% more of Contango than they did in June 2007

Average price under our $100 mm program is $46.35/share

Source:  August  2012  Investor  Presenta5on

Even  spor8ng  such  outstanding  economics,  investors  have  ignored  Contango’s  somewhat  repeatable  history  and  are  focused  on  unconven8onal  oil  &  gas  fields  that  oHen  achieve  rates  of  success  over  95%.    These  fields  give  less  “surprises,”  and  model  out  easier  than  the  unknown  future  success  Contango  will  have  in  the  Gulf  of  Mexico.    Since  the  acquisi8on  of  Crimson  has  closed,  Contango  now  has  a  model-­‐ready  and  aIrac8ve  way  to  grow  its  reserves,  NAV,  and  cash-­‐flow  per  share,  while  maintaining  the  significant  upside  op8onality  the  Gulf  provides.    

Aside  from  the  considerable  number  of  shares  repurchased  over  the  last  several  years,  Contango  has  a  few  other  proof  points  that  the  management  team  has  been  very  good  at  capital  alloca8on.    In  2008,  when  McMoRan  was  focusing  Wall  Street  on  the  gigan8c  poten8al  of  its  “ultra  deep,”  prospects  that  promise  reserves  north  of  1  Trillion  cubic  feet  of  gas  

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(Tcfe),  we  asked  Ken  Peak,  the  former  CEO,  if  Contango  would  pursue  similar  prospects  in  the  Gulf.          Magnanimously,  Peak  said  Contango  wouldn’t  pursue  such  prospects,  even  with  a  partner,  as  they  required  significant  up  front  capital  commitments  with  long  8mes  required  to  achieve  a  return  of  this  capital.    Five  years  later,  the  ultra  deep  has  yet  to  generate  any  cash  flow  for  McMoRan  despite  hundreds  of  millions  of  dollars  spent  on  these  efforts.    Furthermore,  any  investor  in  the  oil  &  gas  space  probably  understands  how  tough  it  has  been  to  make  profitable  bets  on  Canadian  oil  &  gas  companies  and  assets  over  the  past  several  years.    It’s  difficult  to  find  a  more  hated  asset  than  Canadian  gas  reserves,  mostly  due  to  the  deep  discount  gas  prices  receive  in  Alberta  from  the  already  abysmal  Henry  Hub  prices  in  Louisiana.    Perhaps  blackberries  and  prin8ng  presses  have  less  favorable  returns  than  Canadian  gas,  but  in  the  resource  industry,  it’s  hard  to  find  a  worse  return.    Yet,  even  s8ll,  as  the  company  decided  to  mone8ze  noncore  assets  in  order  to  maintain  a  conserva8ve  leverage  profile  (Crimson  was  heavily  leveraged),  Contango  managed  to  net  a  92%  return  on  the  sale  of  its  Duvernay  liquids-­‐rich  gas  assets  in  Canada.    Contango  has  repeatedly  shown  that  it  can  effec8vely  allocate  capital  and  generate  healthy  returns.    This  is  important,  as  the  easiest  way  to  destroy  value  in  the  oil  &  gas  industry,  one  of  the  most  capital-­‐intensive  on  the  planet,  is  to  deploy  capital  in  an  inefficient  manner.    

Because  the  industry  is  liIered  with  poor  capital  allocators,  and  as  a  result  of  the  the  general  weakness  experienced  across  the  commodi8es  complex,  investors  have  largely  given  up  on  the  producers.    These  have  become  the  largest  por8on  of  the  cheapest  securi8es  in  global  markets,  as  54%  of  the  a  current  North  American  “Net  Net”  screen  is  comprised  of  commodity  producers  and  service  companies.    This  is  down  from  66%  just  six  months  ago,  yet  it  s8ll  represents  the  most  oversold  industry  in  global  markets.    To  further  the  odds  stacked  against  the  stock’s  popularity,  only  three  analysts  cover  Contango,  according  to  Bloomberg.    Mr.  Peak  typically  shunned  talking  to  sell-­‐side  analysts,  yet  we  wonder  if  the  15  analysts  that  used  to  cover  Crimson  will  now  launch  coverage  of  Contango.    With  an  enterprise  value  of  nearly  $1  billion  and  a  very  aIrac8ve  asset  por\olio,  Contango  is  growing  to  a  size  that’s  hard  to  ignore.    We  believe  both  the  industry  dynamics  as  well  as  sell  side  coverage  have  made  Contango  a  very  contrarian  investment  (similar  to  the  company’s  own  investment  strategy),  and  the  the  current  valua8on  leaves  a  lot  of  room  for  the  stock  to  appreciate  simply  based  on  greater  awareness  of  the  company  and  its  assets.    Yet,  even  without  a  valua8on  re-­‐ra8ng,  Contango’s  aIrac8ve  assets  will  allow  it  to  meaningfully  and  predictably  grow  asset  value  with  possible  “surprises  to  the  upside”  in  the  Gulf  of  Mexico.

Assets

1) Gulf  of  Mexico  (35%  of  MCF’s  acreage)

Contango  had  some  incredible  early  success  in  the  Gulf  of  Mexico  in  2007  and  2008  when  it  discovered  the  two  related  pools  of  natural  gas  in  its  Dutch  &  Mary  Rose  fields.    The  company  spent  an  average  of  $0.31  per  mcfe  developing  these  two  fields,  which  are  joined  at  the  hip,  by  drilling  seven  ini8al  wells.    The  finding  &  development  costs  (F&D)  weren’t  the  only  aIrac8ve  aspects  of  these  fields,  but  the  ongoing  opera8ng  expenses  were  significantly  below  the  industry  average,  at  $0.78  per  mcfe  (including  G&A  expenses),  compared  to  the  industry  average  of  the  most-­‐scaled  and  largest  producers  of  roughly  $2.30  per  mcfe.    

Table  2:  Contango’s  Historical  Rate  of  Success  in  the  Gulf,  by  Fiscal  Year

2006 2007 2008 2009 2010 2011 2012 2013 2014  TD

Total

Produc8ve  Wells 0.6 1.6 2.0 0.8 1.3 1.0 0.0 0.0 0.8 8.1

Non-­‐Produc8ve  Wells 0.9 0.4 1.0 2.0 2.0 1.0 0.0 2.0 0.0 9.3

Total  Wells 1.5 2.0 3.0 2.8 3.3 2.0 0.0 2.0 0.8 17.4

Success  Rate 40% 80% 67% 29% 39% 50% N/A 0% 100% 46%

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While  $0.31  per  mcfe  is  an  incredibly  aIrac8ve  cost  to  add  natural  gas  reserves,  over  8me,  this  rate  is  of  course  unachievable,  since  drilling  explora8on  wells  involves  its  fair  share  of  unsuccessful  efforts.    Yet,  if  we  look  at  Contango’s  last  six  years,  in  table  3,  and  include  the  costs  of  all  its  unsuccessful  wells,  it’s  evident  that  Contango  maintains  its  compe88ve  advantage  over  8me.    These  results  compare  favorably  to  the  most  aIrac8ve  assets  of  industry-­‐darling  Range  Resources,  which  is  developing  the  compe88ve  Marcellus  shale  for  as  low  as  $0.59  per  mcfe  in  F&D  costs,  according  to  Range’s  most  recent  presenta8on.    

Table  3:  Contango’s  Drilling  History  in  the  Gulf

GOM  Drilling  History: Date Success? Cost Reserves  (Bcfe,  Net)

F&D  Cost

Eugene  Island  10  (Dutch  Field) 2007 Yes $69.1336 $0.31

Mary  Rose  Field 2008 Yes $33.8336 $0.31

High  Island  A198 Mar-­‐08 No $4.2

Eloise  North Oct-­‐08 Yes $16.3 4 $4.66

West  Delta  77  (Devil's  Elbow) Oct-­‐08 No $5.4

Eugene  Island  56  (High  Country  West) Mar-­‐09 No $11.1

Matagorda  Island  617  (Dude) Feb-­‐10 No $14.9

Ship  Shoal  263  (Nau8lus) Mar-­‐10 Yes $45.6 23 $1.98

Vermillion  155  (Paisano) Apr-­‐10 No $5.3

Eugene  Island  10  (Eloise  South) Jun-­‐10 Yes $12.7 6 $2.12

Galveston  Area  277  (His  Dudeness) Sep-­‐10 No $9.5

Vermillion  170  (Swimmy) Feb-­‐11 Yes $26.5 40 $0.66

Ship  Shoal  134  (Eagle) Jul-­‐12 No $28.9

South  Timbalier  75  (Fang) Jul-­‐12 No $21.1

South  Timbalier  17   Jul-­‐13 Yes $12.5 TBD

Total $316.9 408 $0.78

The  company’s  recent  explora8on  well  on  the  Souther  Timbalier  17  block  has  successfully  found  hydrocarbons,  yet  the  company  has  yet  to  release  an  es8mate  on  the  reserve  and  produc8on  poten8al  of  the  well.    Clearly  the  Gulf  has  yielded  the  company  widely  divergent  results  on  successful  wells,  but  also  can  bring  success  that  is  impac\ul  to  the  company’s  producing  reserves  of  280.5  Billion  cubic  feet  equivalent  (Bcfe).    The  next  Gulf  well  to  be  drilled  is  Ship  Shoal  255  in  late  2013,  and  has  an  es8mated  cost  of  $22.5  million.    The  company  is  aiming  to  drill  two  more  prospects  (Eugene  Island  23  and  Ship  Shoals  52  &  59)  in  the  second  and  third  quarters  of  calendar  2014.    Although  results  are  erra8c,  over  8me,  every  other  well  should  be  successful,  and  some  of  these  successes  could  really  move  the  needle  rela8ve  to  the  company’s  current  base  of  reserves.    Under  Contango’s  new  business  model  and  asset  mix,  success  in  the  Gulf  of  Mexico  simply  provides  upside  “op8onality”  to  the  reliably-­‐compounding  onshore  reserves.

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2) Eagle  Ford  /  Buda  play  in  South  Texas  (28%  of  MCF’s  acreage)

Crimson  has  a  legacy  land  posi8on  in  South  Texas,  where  mul8ple  stacked  zones  of  hydrocarbons  include  the  currently-­‐hot  Eagle  Ford  shale.    Innumerable  companies  with  land  holdings  in  the  area  count  the  Eagle  Ford  shale  as  one  the  most  aIrac8ve  targets  of  their  en8re  por\olio.    Contango  has  es8mated  Crimson’s  current  land  posi8on  allows  for  429  wells  in  the  Eagle  Ford,  represen8ng  a  total  poten8al  resource  poten8al  of  79.9  million  barrels  of  oil  (479.4  Bcfe)  with  a  current  net  present  value  of  $991  million.    The  Eagle  Ford  acreage  gives  the  company  a  long  runway  of  $1.8  billion  in  capital  spending  at  aIrac8ve  rates  of  return.    Yet,  because  the  company  holds  nearly  all  of  this  acreage  by  produc8on  (leases  typically  expire  without  produc8on  commencing  over  a  specified  period),  the  company  is  free  to  pursue  other  targets,  such  as  the  very  nascent  but  immediately  aIrac8ve  Buda  limestone  which  sits  directly  beneath  the  Eagle  Ford  shale.    Buda  wells  are  cheaper  than  Eagle  Ford  wells  because  the  naturally-­‐fractured  limestone  doesn’t  need  to  be  fracked  in  order  to  flow  at  high  rates.    Although  the  limestone  is  deeper  than  the  Eagle  Ford  (typically  this  would  be  more  expensive),  forgoing  the  frack  means  a  Buda  well  costs  as  liIle  as  half  that  of  an  Eagle  Ford  well,  yet  many  of  the  early  produc8on  results  have  been  fairly  equivalent  to  the  predictable  produc8on  from  its  neighboring  shale.    

Table  4:  Contango’s  South  Texas  Targets

Loca8ons Reserves  (Mmboe)

NPV Oil  Ra8o

Capex Per  Well

Buda  (Booth-­‐Tortuga) 20 1.8 82 95% 34 1.7

Eagle  Ford  (Zavala  -­‐  Dimmit  160-­‐acre  spacing) 84 13.8 248 92% 294 3.5

Eagle  Ford  (Karnes  County) 9 1.5 20 94% 61 6.8

Eagle  Ford  (Madison) 216 46.2 508 95% 1076 5.0

Eagle  Ford  (Zavala-­‐Dimmit  80-­‐acre  spacing) 87 14.3 192 92% 305 3.5

Eagle  Ford  (Pawnee) 33 4.1 23 0% 56 1.7

Total  Eagle  Ford 429 79.9 991 86% 1792 4.2

While  it’s  too  early  to  make  acreage-­‐wide  assump8ons  on  Contango’s  Buda  poten8al,  the  first  well,  the  Beeler  #2H  cost  the  company  an  es8mated  $3.6  million  to  drill,  and  allowed  the  company  to  recoup  its  en8re  investment  on  the  well  in  roughly  two  months.    We  are  keen  to  learn  the  results  of  the  next  well,  the  Beeler  #3H,  which  has  already  been  drilled,  on  the  next  earnings  call.    Even  if  the  produc8on  rates  decline  drama8cally  from  the  Beeler  #2H,  the  Buda  could  be  an  industry-­‐leading  asset.    Should  the  Buda  prove  to  be  an  elusive  and  unreliable  target,  much  of  this  acreage  has  significant  drilling  runway  in  the  Eagle  Ford  shale.    While  the  nature  of  the  Eagle  Ford  varies  widely  across  this  expansive  play  (some  parts  are  gassier  and  others  are  oilier),  Contango  es8mates  its  429  loca8ons  are  86%  oil  with  the  balance  made  up  of  natural  gas  and  related  liquids.    EOG  Resources,  the  company  with  the  largest  foothold  in  the  Eagle  Ford  shale,  and  with  nearly  all  of  its  acreage  in  the  aIrac8ve  oil  sec8on,  es8mates  that  these  wells,  which  can  be  spaced  as  liIle  as  40  acres  apart  from  each  other  (MCF  es8mates  80-­‐acre  spacing),  deliver  rates  of  return  north  of  100%  using  today’s  oil  prices.    That’s  a  significant  result,  but  the  return  from  the  early  Buda  wells  clearly  dwarf  this  world-­‐class  asset.    We  note  that  EOG  is  one  of  the  most  highly  respected  companies  in  the  industry,  known  for  finding  new  fields  with  superior  economics  and  capitalizing  on  them  well.    We  would  add  that  should  the  Buda  prove  to  be  a  reliable  source  of  successful  wells,  South  Texas  will  begin  to  look  more  and  more  like  the  invaluable  Permian  basin,  which  has  mul8ple  stacked  oil  pay  zones  which  make  each  acre  in  West  Texas  so  aIrac8ve.    

5

MulOple  Pay  Zones  in  South  Texas:

Copyright 2013 Goodrich Petroleum Corporation 22

EAGLE FORD SHALE TREND Overview

TEXAS

TEXAS

Pay Zones

} 90 – 105 feet

} 450 – 500 feet

Source:  Goodrich  Petroleum’s  October  2013  Management  Presenta8on

3) Southeast  Texas  -­‐  Woodbine  (15%  of  MCF’s  acreage)

If  we  follow  the  Cretaceous  layers  of  the  earth’s  crust  northeast,  we’ll  come  to  the  Woodbine  sandstone  in  southeast  Texas.    While  investors  are  less  familiar  with  the  Woodbine  sandstone,  it  has  very  similar  characteris8cs  as  the  nearby  Eagle  Ford.    Prior  to  the  discovery  of  the  Buda,  the  Woodbine  economics  made  it  Crimson’s  most  aIrac8ve  resource.    Besides  MCF,  the  other  two  companies  that  are  focused  on  the  Woodbine  play  are  Halcón  Resources  (HK)  and  ZaZa    Energy  (ZAZA).    Halcón  has  es8mated  its  acreage  in  the  Woodbine  trend  yield  rates  of  return  over  100%  even  at  $80  oil  and  $4  gas.    Thumbing  through  Halcón’s  presenta8on  from  the  IPAA  conference  earlier  this  year,  we  can’t  find  a  more  aIrac8ve  asset  in  the  company’s  por\olio,  which  also  includes  large  posi8ons  in  the  Bakken  and  U8ca  plays.    Investors  have  given  Halcón  quite  a  rich  valua8on,  at  nearly  five  8mes  the  valua8on  of  Contango  based  on  producing  reserves.    Although  Halcón’s  current  producing  assets  are  oilier,  and  more  valuable  given  recent  oil  &  gas  prices,  we  believe  Contango’s  drilling  inventory  is  more  aIrac8ve  or  at  least  equal  to  Halcón’s  base  in  the  Woodbine,  U8ca  and  Bakken.    

ZaZa  has  built  a  large  posi8on  in  the  Woodbine  and  recently  joint-­‐ventured  some  of  its  land  to  EOG  Resources.    EOG  paid  $20  million  for  20,000  net  acres  in  the  Woodbine  play,  or  $1k  an  acre,  plus  a  small  burden  to  carry  ZaZa’s  drilling  costs  on  a  few  addi8onal  wells.    While  this  price  doesn’t  come  close  to  the  typical  transac8on  price  of  Eagle  Ford  acreage,  oHen  well  above  $10k  an  acre,  we  think  it’s  a  healthy  endorsement  of  the  repeatable  and  aIrac8ve  nature  of  the  Woodbine.    Contango’s  2013  and  2014  budget  calls  for  spending  the  majority  of  its  capital  in  the  Woodbine,  taking  $165  million  of  the  total  $280  million  -­‐  $330  million  in  expenditures.    Its  most  recent  wells  have  had  an  es8mated  payback  period  of  less  than  six  months  using  an  oil  price  of  $91.55  and  gas  at  $3.73,  which  have  been  the  average  prices  

6

since  the  beginning  of  2010.    This  essen8ally  means  that  the  $165  million  in  cash  that  Contango  will  spend  in  the  play  over  the  next  24  months  should  generate  over  $367  million  of  incremental  cash  flow  over  the  wells’  ensuing  24  months.    These  assets  will  go  a  long  way  to  giving  Contango  a  solid  base  on  which  to  grow  reserves,  cash  flow  and  net  asset  value  per  share,  even  if  all  of  its  wells  in  the  Gulf  of  Mexico  turn  out  to  be  dry  holes.

© 2013 Sanchez Energy Corporation 17

Tuscaloosa Marine Shale

Eagle Ford to TMS Trend � Sanchez Energy acquired ~40,000 net acres

in the core of the TMS and is in a 50/50 joint venture in an AMI with Sanchez Resources that currently covers ~115,000 gross, ~80,000 net acres – Contiguous blocky acreage – 3+ years of average remaining lease

term allows for industry evolution

TMS Transaction Overview

� TMS is age equivalent to the Eagle Ford Shale – Average depth: 11,000’ to 13,000’ – Thickness: 100’ to 250’ – Oil cut: ~90%

� Multiple IPs of 1,000+ Boe/d � Longer laterals and improved completion

methods continue to further enhance economics

� Drilling and completion costs continue to decrease

Tuscaloosa Marine Shale Overview

SN Marquis

TMS JV

Source:  Sanchez  Energy’s  October  Corporate  Presenta8on  

4) TMS  /  Other  (24%  of  MCF’s  acreage)

The  last  major  asset  in  Contango’s  por\olio  is  a  foothold  in  the  very  nascent  Tuscaloosa  Marine  Shale  (TMS)  in  Louisiana  and  Mississippi.    As  of  June  30,  2013,  the  Company  had  invested  approximately  $9.1  million  to  lease  approximately  24,000  addi8onal  acres  in  the  TMS.    The  company  is  partnered  with  Goodrich  Petroleum  (GDP),  which  has  bet  the  company  on  this  new  trend  given  encouraging,  but  highly  divergent,  drilling  results.    A  successful  well  in  the  TMS  can  

7

generate  rates  of  return  over  100%  if  oil  prices  are  at  or  above  $90.    There’s  no  ques8on  successful  wells  in  the  TMS  have  industry-­‐leading  economics,  but  the  play  has  not  generated  consistent  produc8on  across  the  wells  drilled,  keeping  many  companies  and  investors  skep8cal  that  the  play  will  provide  a  repeatable  way  to  build  produc8on  and  reserves.    Contango  finds  itself  in  the  comfortable  posi8on  of  allowing  neighboring  companies  to  con8nue  to  test  this  play,  while  dedica8ng  a  modest  amount  of  capital  to  keep  drilling  with  its  partner  Goodrich.    News  on  the  Tuscaloosa  Marine  Shale  can  be  followed  on  Kirk  Barrell’s  great  blog  covering  drilling  results  of  the  various  operators.    

Contango  also  owns  a  small  amount  of  acreage  in  the  Jonah  field  of  Wyoming  as  well  as  some  acres  Colorado’s  Niobrara  shale,  but  the  Jonah  field  won’t  move  the  needle  much  for  MCF’s  reserves  and  cash-­‐flow.    The  company  is  unlikely  to  dedicate  many  resources  to  the  Niobrara  acreage  un8l  nearby  operators  prove  the  reliability  of  the  drilling  economics.    

Assets  Drive  Value

As  we  detail  in  the  next  sec8on,  we  believe  Contango  is  undervalued  rela8ve  to  its  closest  peers.    Yet,  even  if  the  stock  doesn’t  re-­‐value  to  levels  closer  to  the  companies  opera8ng  with  a  similar  asset  mix,  we  believe  Contango  will  be  able  to  drive  its  cash  flow  and  reserves  per  share  by  spending  2/3  to  3/4  of  its  capital  budget  on  its  onshore  proper8es,  which  we  know  will  oHen  yield  >100%  returns  on  invested  capital  using  recent  oil  &  gas  prices.      

In  fact,  if  we  assume  that  the  next  four  explora8on  wells  in  the  Gulf  of  Mexico  are  unsuccessful  (although  the  company  has  already  said  the  first  contains  hydrocarbons),  yet  include  the  nega8ve  cash  flow  from  drilling  these  wells,  Contango  can  s8ll  grow  NAV  per  share  by  over  20%  by  the  end  of  2014  assuming  the  medium-­‐term  average  oil  price  of  $91.55  and  gas  price  of  $3.73.    That  calcula8on  also  assumes  the  company’s  wells  in  the  Woodbine  and  Buda  produce  similar  quan88es  of  hydrocarbons  as  their  forerunners  have.    We  think  a  model  which  will  sink  nearly  one  third  of  its  capital  budget  into  unsuccessful  endeavors,  yet  s8ll  grow  the  company’s  NAV  at  over  20%  is  extremely  aIrac8ve.      Should  two  of  the  four  explora8on  wells  in  the  Gulf  prove  to  be  successful,  and  bring  15  Bcfe  of  gas  reserves  each  (at  an  F&D  cost  of  roughly  $1.58  per  mcfe,  which  is  over  three  8mes  higher  than  Contango’s  historical  average  for  successful  wells),  Contango  can  grow  its  NAV  per  share  by  36.4%  using  the  same  medium-­‐term  average  prices  for  oil  &  gas.    Thus,  even  without  a  revalua8on  from  the  current  discount  to  peers,  Contango’s  underlying  value  will  appreciate  handsomely  under  the  new,  more  predictable  capital  alloca8on  model.

ValuaOon

We  believe  the  best  way  to  value  independent  E&P  companies  is  either  based  on  the  SEC-­‐standardized  measure  of  the  present  value  of  proved  reserves,  discounted  by  10%  (the  company’s  NAV),  or  their  Proved  Developed  Reserves.    Because  investors  in  the  energy  space  stampede  from  trend  to  trend,  it  helps  to  compare  companies  with  a  similar  asset  mix.    Investors  have  been  ebullient  over  the  Permian  basin  recently,  yet  are  incredibly  sanguine  on  some  of  the  gas  shale  opportuni8es  that  were  hot  in  2008,  such  as  the  Haynesville  shale.    Eagle  Ford  is  fairly  “hot”  right  now,  and  should  the  Buda,  Woodbine,  and  TMS  prove  to  be  repeatably  successful  areas,  these  should  receive  similar  “hot”  valua8ons,  since  the  economics  of  successful  wells  are  similar,  if  not  beIer.    

Table  4  shows  the  companies  we  believe  have  the  most  similar  mix  of  assets  than  the  new  Contango  does,  and  overlap  at  least  two  of  Contango’s  key  areas  of  opera8on.    Mariner  was  acquired  by  Apache  in  2010,  and  had  a  mix  of  proper8es  between  the  Permian  Basin  and  the  Gulf  of  Mexico.    We’ve  included  it,  not  to  conjecture  the  Eagle  Ford  is  as  aIrac8ve  as  the  Permian  Basin  (even  though  the  ini8al  Buda  results  look  beIer),  but  because  it  was  one  of  the  rare  companies  split  between  the  Gulf  and  onshore  unconven8onal  assets.    

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Table  5:  Peer  Acreage  Mix  of  Company  By  Geography

Gulf  &  Coast Eagle  Ford TMS Woodbine Permian Other  Gas

New  MCF 35% 28% 14% 15% 10%

GDP 13% 45% 42%

SFY 44% 23% 33%

SGY 81% 9% 9%

SN 78% 22%

PQ 25% 18% 57%

Mariner  (ME) 80% 13% 8%

Scouring  through  a  universe  of  over  200  oil  &  gas  securi8es,  we  believe  the  selected  group  of  companies  has  the  most  overlap  with  Contango’s  asset  base.    

Table  6:  Peer  ValuaOons  Based  on  Proved  Developed  (PD)  Reserves,  NAV,  and  Cash  flow  (EBITDAX)

EV PD  (Mcfe)

EV  /  Mcfe %  Gas PV-­‐10 EV/NAV EBITDAX EV/EBITDAX

New  MCF 928 281 $3.31 76% 696 133% 190 4.9x

Peer  Median $5.48 53% 220% 7.0x

GDP 1,412 158 $8.92 76% 357 395% 118 12.0x

SFY 1,621 394 $4.11 50% 1,872 87% 350 4.6x

SGY 2,437 437 $5.58 48% 1,514 161% 655 3.7x

SN 2,616 91 $28.84 12% N/A N/A 145 18.0x

PQ 511 140 $3.65 83% 232 220% 86 6.0x

Mariner  (ME) 3,855 716 $5.38 57% 1,468 263% 482 8.0x

If  we  take  the  peer  median  of  all  three  key  metrics,  we  find  that  Contango  could  re-­‐rate  to  the  $64-­‐75  without  giving  any  credit  for  the  most  recent  Gulf  of  Mexico  discovery,  as  shown  in  Table  7.    We  note  this  uses  the  median  calcula8on,  mi8ga8ng  the  effect  of  the  outliers,  par8cularly  Sanchez  Energy  Corp,  which  is  star8ng  up  an  aggressive  drilling  program  on  recently-­‐purchased  land.  

Table  7:  Contango’s  Fair  Value  Based  on  Peer  ValuaOons

MCF  @  Peer  Value MCF Peers EV Stock  Price

PD  Reserves 281 $5.48 $1,538 $74.78

PV-­‐10  NAV 696 220% $1,533 $74.51

EBITDAX 190 7.0x $1,327 $63.73

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AHer  the  merger  with  Crimson,  Contango  now  has  a  diversified  mix  of  industry-­‐leading  assets,  in  both  the  Gulf  of  Mexico  and  south  and  southeast  Texas,  and  a  business  model  that  can  reliably  grow  reserves  even  if  explora8on  efforts  prove  a  disappointment.    Investors  can  now  count  on  Contango  growing  its  NAV  and  produc8on  per  share  without  any  success  in  the  Gulf,  which  should  allow  the  stock  to  re-­‐rate  to  levels  of  similar  companies  split  between  offshore  and  onshore  targets.    Even  if  Contango’s  valua8on  doesn’t  appreciate  47-­‐72%  to  reflect  its  new  industry-­‐leading  asset  mix,  the  company’s  new  diversified  drilling  budget  will  allow  it  to  grow  its  per  share  NAV  between  20%  and  40%  over  the  next  five  quarters,  depending  on  how  successful  its  efforts  are  in  the  Gulf  of  Mexico.    With  a  board  that  has  proven  its  ability  to  effec8vely  allocate  capital  and  achieve  high  rates  of  return,  we  think  Contango  represents  one  of  the  best  investments  as  a  low-­‐risk,  contrarian  way  to  play  mul8ple  overlooked  and  under-­‐appreciated  themes  while  maintaining  significant  upside  op8onality.    Should  Contango  con8nue  it’s  46%  rate  of  success  in  the  Gulf  of  Mexico,  and  using  the  medium-­‐term  average  prices  of  $91.55  oil  and  $3.73  gas,  we  believe  Contango’s  fair  value  going  into  year-­‐end  2014  will  approximate  $71-­‐103  per  share,  based  on  similar  peer  valua8ons  rela8ve  to  reserves  (proved-­‐developed),  EBITDAX  and  NAV  per  share.    The  average  outcome  of  the  three  measures  is  $85.00,  thus  our  twelve  month  price  target.    We  cau8on  that  this  target  is  based  on  drilling  assump8ons  that  will  almost  surely  prove  to  be  inaccurate,  par8cularly  in  the  Gulf  of  Mexico.    

Catalysts• Buda  Drilling  Results• South  Timbalier  17  Prospect,  Addi8onal  Gulf  of  Mexico  Prospects• Tuscaloosa  Marine  Shale  Results• Analyst  Coverage

Risks• Commodity  prices• Dry  Holes  (though  in  the  past,  this  typically  has  a  less  pronounced  impact)• Hurricanes• Worsening  Drilling  Results  on  Emerging  Plays  (Buda  and  TMS)

Note:  we  have  converted  a  barrel  of  oil  to  a  thousand  cubic  feet  equivalent  of  gas  at  a  6  to  1  ra8o,  the  historical  standard  used  by  the  industry  and  the  SEC.    Clearly,  a  barrel  of  oil  is  currently  nearly  30  8mes  more  valuable  than  one  thousand  cubic  feet  of  gas,  thus  investors  wishing  to  take  this  difference  into  account,  should  look  at  comparable  NAVs  and  EBITDAX.    

This  ar8cle  has  been  distributed  for  informa8onal  purposes  only.    Neither  the  informa8on  nor  any  opinions  expressed  cons8tute  a  recommenda8on  to  buy  or  sell  the  securi8es  or  assets  men8oned,  or  to  invest  in  any  investment  product  or  strategy  related  to  such  securi8es  or  assets.    It  is  not  intended  to  provide  personal  investment  advice,  and  it  does  not  take  into  account  the  specific  investment  objec8ves,  financial  situa8on  or  par8cular  needs  of  any  person  or  en8ty  that  may  receive  this  ar8cle.    Persons  reading  this  ar8cle  should  seek  professional  financial  advice  regarding  the  appropriateness  of  inves8ng  in  any  securi8es  or  assets  discussed  in  this  ar8cle.    The  author’s  opinions  are  subject  to  change  without  no8ce.    Forecasts,  es8mates,  and  certain  informa8on  contained  herein  are  based  upon  proprietary  research,  and  the  informa8on  used  in  such  process  was  obtained  from  publicly  available  sources.    Informa8on  contained  herein  has  been  obtained  from  sources  believed  to  be  reliable,  but  such  reliability  is  not  guaranteed.    Investment  accounts  managed  by  GreenWood  Investors  LLC  and  its  affiliates  may  have  a  posi8on  in  the  securi8es  or  assets  discussed  in  this  ar8cle.    GreenWood  Investors  LLC  may  re-­‐evaluate  its  holdings  in  such  posi8ons  and  sell  or  cover  certain  posi8ons  without  no8ce.    No  part  of  this  ar8cle  may  be  reproduced  in  any  form,  or  referred  to  in  any  other  publica8on,  without  express  wriIen  permission  of  GreenWood  Investors  LLC.

Past  performance  is  no  guarantee  of  future  results.

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