The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the accompanying notes and other information included elsewhere
in this Quarterly Report on Form 10-Q and with our 2019 Form 10-K, previously
filed with the Securities and Exchange Commission ("SEC").



Available Information



General information about us can be found on our website at www.contango.com.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as any amendments and exhibits to those reports,
are available free of charge through our website as soon as reasonably
practicable after we file or furnish them to the SEC. This report should be read
together with our 2019 Form 10-K and our subsequent filings with the SEC. We are
not including the information on our website as a part of, or incorporating it
by reference into, this report.

Cautionary Statement about Forward-Looking Statements





Certain statements contained in this report may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934, as amended. The words and
phrases "should", "could", "may", "will", "believe", "plan", "intend", "expect",
"potential", "possible", "anticipate", "estimate", "forecast", "view",
"efforts", "goal" and similar expressions identify forward-looking statements
and express our expectations about future events. Although we believe the
expectations reflected in such forward-looking statements are reasonable, such
expectations may not occur. These forward-looking statements are made subject to
certain risks and uncertainties that could cause actual results to differ
materially from those stated. Risks and uncertainties that could cause or
contribute to such differences include, without limitation, those discussed in
the section entitled "Risk Factors" included in this report and in our 2019 Form
10-K and those factors summarized below:

? volatility and significant declines in natural gas, natural gas liquids and oil

prices, including regional differentials;

? any reduction in our borrowing base from time to time and our ability to repay

any excess borrowings as a result of such reduction;

our ability to successfully develop our undeveloped acreage in the Southern

? Delaware Basin and the Mid-continent area of Oklahoma, and realize the benefits

associated therewith;

? increased cost risks associated with our exploration and development in the

Gulf of Mexico;


 ? our financial position;

? our business strategy, including execution of any changes in our strategy or

our new fee for service offering;

? meeting our forecasts and budgets, including our 2020 capital expenditure

budget;

? expectations regarding natural gas and oil markets in the United States and our

realized prices;

? outbreaks and pandemics, even outside our areas of operation, including

COVID-19;

operational constraints, start-up delays and production shut-ins at both

? operated and non-operated production platforms, pipelines and natural gas

processing facilities;

the risks associated with acting as operator of deep high pressure and high

? temperature wells, including well blowouts and explosions, onshore and

offshore;

the risks associated with exploration, including cost overruns and the drilling

? of non-economic wells or dry holes, especially in prospects in which we have

made a large capital commitment relative to the size of our capitalization

structure;

? the timing and successful drilling and completion of natural gas and oil wells;

? the costs associated with the offshore Iron Flea prospect and other offshore

prospects;

? the concentration of drilling in the Southern Delaware Basin, including lower

than expected production attributable to down spacing of wells;

our ability to generate sufficient cash flow from operations, borrowings or

? other sources to enable us to fund our operations, satisfy our obligations,

fund our drilling program and support our acquisition efforts;

? the cost and availability of rigs and other materials, services and operating

equipment;

? timely and full receipt of sale proceeds from the sale of our production;

? our ability to find, acquire, market, develop and produce new natural gas and


   oil properties;


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the conditions of the capital markets and our ability to access debt and equity

? capital markets or other non-bank sources of financing, and actions by current

and potential sources of capital, including lenders;

? interest rate volatility;

? our ability to successfully integrate the businesses, properties and assets we

acquire, including those in new areas of operation;

? our ability to complete strategic dispositions or acquisitions of assets or

businesses and realize the benefits of such dispositions or acquisitions;

? uncertainties in the estimation of proved reserves and in the projection of

future rates of production and timing of development expenditures;

? the need to take impairments on our properties due to lower commodity prices or

other changes in the values of our assets;

the ability to post additional collateral for current bonds or comply with new

? supplemental bonding requirements imposed by the Bureau of Ocean Energy

Management;

operating hazards attendant to the natural gas and oil business including

? weather, environmental risks, accidental spills, blowouts and pipeline

ruptures, and other risks;

? downhole drilling and completion risks that are generally not recoverable from

third parties or insurance;

? potential mechanical failure or under-performance of significant wells,

production facilities, processing plants or pipeline mishaps;

? actions or inactions of third-party operators of our properties;

? actions or inactions of third-party operators of pipelines or processing

facilities;

? the ability to retain key members of senior management and key technical

employees and to find and retain skilled personnel;

? strength and financial resources of competitors;

? federal and state legislative and regulatory developments and approvals

(including additional taxes and changes in environmental regulations);

the ability of the members of the Organization of Petroleum Exporting Countries

? ("OPEC") and other oil exporting nations to agree to and maintain oil price and

production controls;

? the uncertain impact of supply of and demand for oil, natural gas and NGLs;

? our ability to obtain goods and services critical to the operation of our

properties;

? worldwide and United States economic conditions;

? the ability to construct and operate infrastructure, including pipeline and

production facilities;

? the continued compliance by us with various pipeline and gas processing plant

specifications for the gas and condensate produced by us;

? operating costs, production rates and ultimate reserve recoveries of our

natural gas and oil discoveries;

? expanded rigorous monitoring and testing requirements;

? the ability to obtain adequate insurance coverage on commercially reasonable

terms; and

? the limited trading volume of our common stock and general market volatility.






Any of these factors and other factors described in this report could cause our
actual results to differ materially from the results implied by these or any
other forward-looking statements made by us or on our behalf. Although we
believe our estimates and assumptions to be reasonable when made, they are
inherently uncertain and involve a number of risks and uncertainties that are
beyond our control. Our assumptions about future events may prove to be
inaccurate. Moreover, the effects of the COVID-19 pandemic may give rise to
risks that are currently unknown or amplify the risks associated with many of
the factors summarized above or discussed in this report or our 2019 Form 10-K.
We caution you that the forward-looking statements contained in this report are
not guarantees of future performance, and we cannot assure you that those
statements will be realized or the forward-looking events and circumstances will
occur. You should not place undue reliance on forward-looking statements in this
report as they speak only as of the date of this report.



We do not intend to publicly update or revise any forward-looking statements as
a result of new information, future events or otherwise, except as required by
law.



Except as required by law, we undertake no obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances
occurring after the date of this report or to reflect the occurrence of
unanticipated events. These cautionary statements qualify all forward-looking
statements attributable to us or persons acting on our behalf.



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Overview



We are a Houston, Texas based, independent oil and natural gas company, with
regional offices in Oklahoma City and Stillwater, Oklahoma. Our business is to
maximize production and cash flow from our offshore properties in the shallow
waters of the Gulf of Mexico ("GOM") and onshore Texas, Oklahoma, Louisiana and
Wyoming properties and use that cash flow to explore, develop, exploit, and
acquire oil and natural gas properties across the United States.



From the Company's initial entry into the Southern Delaware Basin in 2016 and
through mid-2019, the Company was focused on the development of its Southern
Delaware Basin acreage in Pecos County, Texas. As of March 31, 2020, the Company
was producing from eighteen wells over our approximate 17,200 gross operated
(8,000 company net) acre position in this West Texas area, prospective for the
Wolfcamp A, Wolfcamp B and Second Bone Spring formations.



During the fourth quarter of 2019, we closed on the acquisitions of certain
producing assets and undeveloped acreage of Will Energy Corporation ("Will
Energy") and White Star Petroleum, LLC and certain of its affiliates
(collectively, "White Star") and established an additional core strategic area,
primarily located in the Central Oklahoma and Western Anadarko basins. These
acquisitions were transformative as production from these acquisitions
represented 74% of our total net production for the first quarter of 2020.



In the fourth quarter of 2019, we also entered into a Joint Development
Agreement with Juneau Oil & Gas, LLC ("Juneau"), which provides us the right to
acquire an interest in up to six of Juneau's exploratory prospects located in
the Gulf of Mexico. The first such exploratory prospect acquired was the Iron
Flea prospect located in the Grand Isle Block 45 Area in the shallow waters off
of the Louisiana coastline, which was spud in May 2020 and determined
unsuccessful in June 2020.

The following table lists our primary producing areas as of March 31, 2020:





            Location                                   Formation
                                     Offshore Louisiana - water depths less than
Gulf of Mexico                       300 feet
                                     Mississippian, Woodford, Oswego, Cottage

Mid-continent Region of Oklahoma Grove, Chester and Red Fork Southern Delaware Basin, Pecos County, Texas

                        Wolfcamp A and B
Madison and Grimes counties,
Texas                                Woodbine / Upper Lewisville

Zavala and Dimmit counties, Texas Buda / Eagle Ford / Georgetown

Haynesville shale, Mid Bossier shale and
San Augustine County, Texas          James Lime formations
Other Texas Gulf Coast               Conventional and smaller unconventional
                                     formations
Weston County, Wyoming               Muddy Sandstone
Sublette County, Wyoming             Jonah Field (1)

--------------------------------------------------------------------------------

Through a 37% equity investment in Exaro Energy III LLC ("Exaro"). Production (1) associated with this equity investment is not included in our reported


    production results for all periods shown in this report.

Impact of the COVID-19 Pandemic and 2020 Plan Changes





The COVID-19 pandemic has resulted in a severe worldwide economic downturn,
significantly disrupting the demand for oil throughout the world, and has
created significant volatility, uncertainty and turmoil in the oil and gas
industry. This has led to a significant global oversupply of oil and a
subsequent substantial decrease in oil prices. While global oil producers,
including the Organization of Petroleum Exporting Countries ("OPEC") and other
oil producing nations reached an agreement to cut oil production in April 2020,
downward pressure on commodity prices has remained and could continue for the
foreseeable future, particularly given concerns over available storage capacity
for oil. We have certain commodity derivative instruments in place to mitigate
the effects of such price declines; however, derivatives will not entirely
mitigate lower oil prices. The length of this demand disruption is unknown, and
there is significant uncertainty regarding the long-term impact to global oil
demand, which will ultimately depend on various factors and consequences beyond
the Company's control, such as the duration and scope of the pandemic, the
length and severity of the worldwide economic downturn, additional actions by
businesses and governments in response to both the pandemic and the decrease in
oil prices, the speed and effectiveness of responses to combat the virus, and
the time necessary to equalize oil supply and demand to restore oil pricing. In
response to these developments, we have implemented measures to mitigate the
impact of the COVID-19 pandemic on our employees, operations and financial
position. These measures include, but are not limited to, the following:

? implemented work from home initiatives for all but critical staff and put in


   place social distancing measures;


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? implemented a company wide effort to cut costs throughout our operations;

? developed a plan to utilize our available storage capacity where possible to

temporarily store a portion of our production; and

? suspended any further plans for onshore drilling in 2020.






Additionally, on April 10, 2020, we entered into a promissory note evidencing an
unsecured loan in the amount of $3.4 million (the "PPP Loan") made to the
Company under the Paycheck Protection Program (the "PPP"). The PPP was
established under the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") and is administered by the U.S. Small Business Administration.
Under the CARES Act, the PPP Loan may be partially or wholly forgiven if the
funds are used for certain qualifying expenses. We intend to use the PPP Loan
amount for qualifying expenses, and will continue to assess whether to apply for
forgiveness of the PPP Loan in accordance with the terms of the CARES Act. See
Item 1. Note 12 - "Subsequent Events" for additional information on the terms of
the PPP Loan. We also benefited from certain income tax-related provisions of
the CARES Act. See Item 1. Note 10 - "Income Taxes" for additional information



We continue to assess the global impacts of the COVID-19 pandemic and expect to
continue to modify our plans as more clarity around the full economic impact of
COVID-19 becomes available. See Part II, Item 1A. "Risk Factors" for further
discussion.



Capital Expenditures



During the three months ended March 31, 2020, we brought one well online in the
Southern Delaware Basin, the State Spearhead #1H, which is located in our NE
Bullseye project area but suspended further drilling in the area in response to
the dramatic decline in oil prices during the quarter. Additionally, due to the
recent decline in oil prices, we have suspended any further plans for onshore
drilling in 2020. The offshore Iron Flea prospect in the shallow waters off of
the Louisiana coast in Grand Isle was spud in late May 2020. On June 12, 2020,
the target drilling depth was reached, and the prospect was determined
unsuccessful.



For 2020, we will continue to identify opportunities for cost reductions and
operating efficiencies in all areas of our operations, while also searching for
new resource acquisition opportunities. Acquisition efforts will be focused on
areas in which we can leverage our geological and operational experience and
expertise to exploit identified drilling opportunities and where we can develop
an inventory of additional drilling prospects that we believe will enable us to
economically grow production and add reserves.



On June 5, 2020, the Company announced the addition of a new corporate strategy
that includes offering a "fee for service" property management service for oil
and gas companies with distressed or stranded assets, or companies with a desire
to reduce administrative costs. As part of this service offering, the Company
entered into a Management Services Agreement with Mid-Con Energy Partners, LP
("Mid-Con") (Nasdaq: MCEP) to provide operational services as operator of record
on Mid-Con's oil and gas properties in exchange for an annual services fee of $4
million plus reimbursement of certain costs and expenses, an annual deferred fee
of $2 million per year, and warrants to purchase a minority equity ownership in
Mid-Con (with amount and terms to be disclosed upon execution of the Warrant
Agreement). Both companies and their employees have indemnification rights in
this fee for service arrangement. As of June 4, 2020, John C. Goff, Chairman of
the Board of Directors of the Company, beneficially owns approximately 56% of
the common units in Mid-Con, and Travis Goff, the President of Goff Capital,
Inc., serves on the board of directors of the general partner of Mid-Con.

Impairment of Long-Lived Assets





Under GAAP, when circumstances indicate that proved properties may be impaired,
the Company compares expected undiscounted future cash flows on a field by field
basis to the unamortized capitalized cost of the asset. If the estimated future
undiscounted cash flows based on the Company's estimate of future reserves,
natural gas and oil prices, operating costs and production levels from oil and
natural gas reserves, are lower than the unamortized capitalized cost, then the
capitalized cost is reduced to fair value. In the first quarter of 2020, the
COVID-19 pandemic and the resulting deterioration in the global demand for oil,
combined with the failure by the OPEC and Russia to reach an agreement on lower
production quotas in March 2020, caused a dramatic increase in the supply of oil
and a corresponding decrease in commodity prices, and lowered the demand for all
commodity products. Consequently, during the three months ended March 31, 2020,
we recorded a $143.3 million non-cash charge for proved property impairment of
our onshore properties related to the dramatic decline in commodity prices, as
discussed above, the "PV-10" (present value, discounted at a 10%

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rate) of our proved reserves, and the associated change in our current development plans for our proved, undeveloped locations. No impairment of proved properties was recorded during the three months ended March 31, 2019.





We recorded a $2.6 million non-cash charge for unproved impairment expense
during the three months ended March 31, 2020. The impairment primarily related
to acquired leases in the Company's Central Oklahoma and Western Anadarko
regions which will be expiring in 2020, and which we have no current plans to
develop as a result of the current commodity price environment. During the three
months ended March 31, 2019, we recorded non-cash impairment expense of $0.5
million related to impairment of certain unproved properties, primarily due to
expiring leases.

Summary Production Information





Our production for the three months ended March 31, 2020 was approximately 85%
onshore and 15% offshore, volumetrically, and was comprised of 50% natural gas,
30% oil and 20% natural gas liquids. Our production for the three months ended
March 31, 2019 was 35% onshore and 65% offshore, volumetrically, and was
comprised of approximately 59% natural gas, 23% oil and 18% natural gas liquids.

The table below sets forth our average net daily production data in Mboe/d for each of our fields for each of the periods indicated:






                                                 Three Months Ended
                  March 31, 2019    June 30, 2019     September       December      March 31, 2020
                                                       30, 2019       31, 2019
Offshore GOM                 3.9              3.2             3.3            3.2               2.7
Central                        -                -               -            8.1              10.9
Oklahoma (1)
Western                        -                -               -            1.7               2.9
Anadarko (1)
West Texas (2)               1.0              1.0             0.9            1.4               1.2
Other Onshore                1.1              1.2             1.4            1.4               1.2
                             6.0              5.4             5.6           15.7              18.9

--------------------------------------------------------------------------------

(1) Properties acquired in the White Star and Will Energy acquisitions during the


    three months ended December 31, 2019.

(2) Increase in production during the three months ended December 31, 2019 was


    due to new wells coming online.






Other Investments

Jonah Field - Sublette County, Wyoming





Our wholly owned subsidiary, Contaro Company, owns a 37% ownership interest in
Exaro. As of March 31, 2020, Exaro had 645 wells on production over its 5,760
gross acres (1,040 net), with a working interest between 14.6% and 32.5%. These
wells were producing at a rate of approximately 2.7 Mboe/d, net to Exaro. As a
result of our equity investment in Exaro, we recognized a gain of approximately
$0.3 million, net of no tax expense, for each of the three months ended March
31, 2020 and 2019, respectively. See Item 1. Note 8 - "Investment in Exaro
Energy III LLC" for additional details related to this equity investment.



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Results of Operations for the Three Months ended March 31, 2020 and 2019





The table below sets forth revenue, production data, average sales prices and
average production costs associated with our sales of natural gas, oil and
natural gas liquids ("NGLs") from operations for the three months ended March
31, 2020 and 2019. Natural gas is compared with oil, condensate and NGLs in
terms of thousands of barrels of oil equivalents. Six thousand cubic feet
("Mcf") of natural gas is the energy equivalent of one barrel of oil, condensate
or NGL. Reported operating expenses include production taxes, such as ad valorem
and severance taxes.




                                                     Three Months Ended March 31,
                                                     2020            2019         %

 Revenues (thousands):
 Oil and condensate sales                         $    22,782     $     6,406     256 %
 Natural gas sales                                      8,170           5,642      45 %
 NGL sales                                              3,621           1,963      84 %
 Total revenues                                   $    34,573     $    14,011     147 %

 Production:

Oil and condensate (thousand barrels)


 Offshore GOM                                               9              13    (31) %
 Central Oklahoma                                         289               -     100 %
 Western Anadarko                                          77               -     100 %
 West Texas                                                89              64      39 %
 Other Onshore                                             56              48      17 %
 Total oil and condensate                                 520             125     316 %

Natural gas (million cubic feet)


 Offshore GOM                                           1,263           1,635    (23) %
 Central Oklahoma                                       2,817               -     100 %
 Western Anadarko                                         827               -     100 %
 West Texas                                                50              64    (22) %
 Other Onshore                                            244             194      26 %
 Total natural gas                                      5,201           1,893     175 %

Natural gas liquids (thousand barrels)


 Offshore GOM                                              30              66    (55) %
 Central Oklahoma                                         232               -     100 %
 Western Anadarko                                          46               -     100 %
 West Texas                                                 9              14    (36) %
 Other Onshore                                             16              18    (11) %
 Total natural gas liquids                                333              98     240 %

Total (thousand barrels of oil equivalent)


 Offshore GOM                                             250             352    (29) %
 Central Oklahoma                                         991               -     100 %
 Western Anadarko                                         261               -     100 %
 West Texas                                               106              89      19 %
 Other Onshore                                            112              98      14 %
 Total production                                       1,720             539     219 %

 Daily Production:

Oil and condensate (thousand barrels per day)


 Offshore GOM                                             0.1             0.1    (31) %
 Central Oklahoma                                         3.2               -     100 %
 Western Anadarko                                         0.8               -     100 %
 West Texas                                               1.0             0.7      39 %
 Other Onshore                                            0.6             0.6      17 %
 Total oil and condensate                                 5.7             1.4     316 %




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                                                      Three Months Ended March 31,
                                                      2020             2019         %

Natural gas (million cubic feet per day)
Offshore GOM                                               13.9           18.2      (23) %
Central Oklahoma                                           31.0              -       100 %
Western Anadarko                                            9.1              -       100 %
West Texas                                                  0.5            0.7      (22) %
Other Onshore                                               2.7            2.1        26 %
Total natural gas                                          57.2           21.0       175 %
Natural gas liquids (thousand barrels per day)
Offshore GOM                                                0.3            0.7      (55) %
Central Oklahoma                                            2.5              -       100 %
Western Anadarko                                            0.5              -       100 %
West Texas                                                  0.1            0.2      (36) %
Other Onshore                                               0.3            0.2      (11) %
Total natural gas liquids                                   3.7            1.1       240 %
Total (thousand barrels of oil equivalent per
day)
Offshore GOM                                                2.7            3.9      (29) %
Central Oklahoma                                           10.9              -       100 %
Western Anadarko                                            2.9              -       100 %
West Texas                                                  1.2            1.0        19 %
Other Onshore                                               1.2            1.1        14 %
Total production                                           18.9            6.0       219 %

Average Sales Price:
Oil and condensate (per barrel)                   $       43.77     $    51.08      (14) %
Natural gas (per thousand cubic feet)             $        1.57     $     2.98      (47) %
Natural gas liquids (per barrel)                  $       10.89     $    19.96      (45) %
Total (per barrels of oil equivalent)             $       20.10     $    25.98      (23) %

Expenses (thousands):
Operating expenses                                $      21,483     $    5,192       314 %
Exploration expenses                              $         398     $      224        78 %
Depreciation, depletion and amortization          $      12,854     $    7,556        70 %
Impairment and abandonment of oil and gas         $     145,878     $      587         * %
properties
General and administrative expenses               $       5,425     $    5,005         8 %
Gain from investment in affiliates (net of        $         286     $       30       853 %
taxes)

Selected data per Boe:
Operating expenses                                $       12.49     $     9.63        30 %
General and administrative expenses               $        3.15     $

9.29 (66) % Depreciation, depletion and amortization $ 7.47 $ 14.02 (47) %






*Greater than 1,000%

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

Natural Gas, Oil and NGL Sales and Production





All of our revenues are from the sale of our natural gas, oil, NGL and water
production. Our revenues may vary significantly from year to year depending on
production volumes and changes in commodity prices, each of which may fluctuate
widely. As discussed above, oil prices declined significantly in the first
quarter of 2020 as a result of the effects of the COVID-19 pandemic and the
ongoing disruptions to the global energy markets. Our production volumes are
subject to significant variation as a result of new operations, weather events,
transportation and processing constraints and mechanical issues. In addition,
our production from individual wells naturally declines over time as we produce
our reserves.

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We reported revenues of $34.6 million for the three months ended March 31, 2020,
compared to revenues of $14.0 million for the three months ended March 31, 2019,
an increase, even as prices declined, attributable to the production from the
properties acquired from Will Energy and White Star.



Total equivalent production was 18.9 Mboe/d for the three months ended March 31,
2020, compared to 6.0 Mboe/d in the prior year quarter, an increase attributable
to the additional production from the Will Energy and White Star acquisitions.
Net oil production for the current quarter was approximately 5.7 Mbbl/d,
compared with approximately 1.4 Mbbl/d in the prior year quarter. Net natural
gas production for the current quarter was approximately 57.2 Mmcf/d, compared
with approximately 21.0 Mmcf/d in the prior year quarter, and NGL production for
the current quarter was approximately 3.7 Mbbl/d, compared with approximately
1.1 Mbbl/d in the prior year quarter.



Average Sales Prices



The average equivalent sales price realized for the three months ended March 31,
2020 was $20.10 per Boe compared to $25.98 per Boe for the three months ended
March 31, 2019. The decline was attributable to the decrease in all  realized
 commodity prices in the current year quarter, as a result of the decrease in
demand for commodity products due to the COVID-19 pandemic and the failure of
OPEC and Russia to reach an agreement on oil production quotas in March 2020.
The realized price of oil was $43.77 per Bbl in the current quarter, compared to
$51.08 per Bbl in the prior year quarter. The realized price of gas was $1.57
per Mcf in the current quarter compared to $2.98 per Mcf in the prior year
quarter, and the realized price of NGLs was $10.89 per Bbl in the current
quarter compared to $19.96 per Bbl in the prior year quarter.



Operating Expenses



Operating expenses for the three months ended March 31, 2020 were approximately
$21.5 million, or $12.49 per Boe, compared to $5.2 million, or $9.63 per Boe,
for the three months ended March 31, 2019. The table below provides additional
detail of operating expenses for the three month periods:




                                                                Three Months Ended March 31,
                                                            2020                            2019
                                                (in thousands)     (per Boe)     (in thousands)     (per Boe)
Lease operating expenses                        $        13,051       $ 7.59    $          3,685       $ 6.84
Production & ad valorem taxes                             1,746         1.02                 386         0.72
Transportation & processing costs                         5,552         3.23                 695         1.29
Workover costs                                            1,134         0.65                 426         0.78
Total operating expenses                        $        21,483        12.49    $          5,192       $ 9.63

Lease operating expenses increased $9.4 million compared to the prior year quarter, due to the addition of our acquired properties.

Production and ad valorem taxes increased $1.4 million compared to the prior year quarter, primarily related to the Will Energy and White Star property acquisitions.





Transportation and processing costs increased $4.9 million compared to the prior
year quarter due to additional transportation expense of $5.1 million, primarily
related to the properties acquired in the White Star acquisition.



Workover costs increased $0.7 million for the three months ended March 31, 2020,
compared to the prior year quarter, primarily related to workovers on properties
acquired from White Star.

Impairment and Abandonment Expenses





During the three months ended March 31, 2020, we recorded a $143.3 million
non-cash charge for proved property impairment of our onshore properties as a
result of the dramatic decline in commodity prices, the "PV-10" (present value,
discounted at a 10% rate) of our proved reserves, and the associated change in
our current development plans for proved, undeveloped locations. No impairment
of proved properties was recorded during the three months ended March 31, 2019.



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During the three months ended March 31, 2020, we recorded a $2.6 million
non-cash charge for unproved impairment expense related primarily to acquired
leases in our Central Oklahoma and Western Anadarko regions, which will be
expiring in 2020, and which we have no current plans to develop as a result of
the current commodity price environment. During the three months ended March 31,
2019, we recorded non-cash impairment expense of $0.5 million related to
impairment of certain unproved properties, primarily due to expiring leases.

Depreciation, Depletion and Amortization





Depreciation, depletion and amortization expense for the three months ended
March 31, 2020, was approximately $12.9 million, or $7.47 per Boe. This compares
to approximately $7.6 million, or $14.02 per Boe, for the three months ended
March 31, 2019. The higher depletion expense in the current quarter was
attributable to $7.8 million of additional expense recognized for our acquired
properties, while the lower unit rate reflects the lower purchase price per
barrel for our acquired properties ($6.08 per Boe) and a reduction in the Gulf
of Mexico rate due to impairment recorded during the fourth quarter of 2019.

General and Administrative Expenses





Total general and administrative expenses for the three months ended March 31,
2020 were approximately $5.4 million, compared to $5.0 million for the three
months ended March 31, 2019.

The table below provides additional detail of general and administrative expenses for the comparative three month periods:




                                                 Three Months Ended March 31,
                                                  2020                  2019
                                                        (in thousands)

Wages, bonuses and employee benefits (1) $ 2,568 $

850


Non-cash stock-based compensation (2)                    350

1,052


Professional fees (3)                                  1,616

1,107


Professional fees - special (4)                          783

751


Other (5)                                                108

1,245

Total general and administrative expenses $ 5,425 $

5,005

--------------------------------------------------------------------------------

Higher expenses for the three months ended March 31, 2020 due to the (1) acquisition of White Star employees during the three months ended December

31, 2019.

(2) Lower expense for the three months ended March 31, 2020, due to no stock

grants awarded during the quarter.

(3) Primarily includes fees related to recurring legal counsel, technical

consultants and accounting and auditing costs.

Non-recurring fees incurred in conjunction with our pursuit of strategic (4) initiatives, including the integration of the White Star and Will Energy

assets acquired during the three months ended December 31, 2019.

Includes fees related to insurance, office costs and other company expenses. (5) The 2019 expenses included an additional $0.4 million in rent for our Houston

office lease which expired on March 31, 2019 and was renewed on April 1, 2019


    at a lower monthly rate.




Gain from Affiliates

For the three months ended March 31, 2020 and March 31, 2019, we recorded a gain from affiliates of approximately $0.3 million, net of no tax expense, respectively, related to our equity investment in Exaro.

Capital Resources and Liquidity





Our primary cash requirements are for capital expenditures, working capital,
operating expenses, acquisitions and principal and interest payments on debt.
Our primary sources of liquidity are cash generated by operations, net of the
realized effect of our hedging agreements, and amounts available to be drawn
under our Credit Agreement (as defined below).



During the three months ended March 31, 2020, we incurred expenditures of
approximately $4.0 million on capital projects, including $2.0 million for our
drilling and completion program in the Southern Delaware Basin. We brought one
newly-drilled West Texas well on production and commenced the drilling of a salt
water disposal well in West Texas. Additionally, we paid a $7.1 million deposit
for the turnkey drilling of the offshore Iron Flea prospect, currently included
in "Deposits and other" on our consolidated balance sheet at March 31, 2020,
which will be reclassed to exploration expense in the second quarter of 2020,
due to the well being unsuccessful. The current quarter also included

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Table of Contents



approximately $0.9 million in leasehold acquisition costs, primarily related to
our acreage in the Southern Delaware Basin. The remaining incurred expenditures
are primarily related to capitalized workovers.



Our capital expenditure program for the year 2020 is forecast at approximately
$16.4 million. Due to the low and volatile commodity price environment, the
Company has suspended any further plans for onshore drilling and completions in
2020. We currently expect to limit our onshore capital expenditures to the
completion of the salt water disposal well and related infrastructure in West
Texas ($3.7 million), limited workovers ($3.3 million) which are intended to
increase production and cashflow, and required onshore plugging and abandonment
activity ($0.7 million). We expect that our only offshore capital expenditures
will be the Iron Flea exploratory well, which was spud in late May 2020 and
resulted in a dry hole. During the three months ended March 31, 2020, we paid a
$7.1 million deposit for the turnkey drilling of the Iron Flea prospect, as
explained above.



We believe that our internally generated cash flows, combined with availability
under the Credit Agreement (as defined below), will be sufficient to meet the
liquidity requirements necessary to fund our daily operations and planned
capital development and to meet our debt service requirements for the next
twelve months; however, should our results of operations be less than expected,
or we experience additional reductions in our borrowing base, we may need to
pursue additional sources of liquidity such as monetization of a portion of our
hedge portfolio or access the debt and equity markets, as available, to finance
any necessary capital development and/or repay excess borrowings under our
Credit Agreement, but there can be no assurance such incremental financing will
be available to us or not result in dilution of our stockholders or increase our
debt service costs. The COVID-19 pandemic and the ongoing disruptions to the
global energy markets have negatively impacted, and are expected to continue to
negatively impact, cash flows from operating activities.  In order to mitigate
these effects, we have implemented certain cost cutting measures, such as
suspending our onshore drilling program for the remainder of 2020.

Cash From Operating Activities





Cash flows used in operating activities were approximately $0.2 million for the
three months ended March 31, 2020 compared to $0.1 million used in operating
activities for the same period in 2019. Included in the 2020 activity is $7.1
million in a deposit related to an escrow account set up for the drilling of the
exploratory Iron Flea offshore well, which will be reclassed to expense in the
second quarter of 2020 due to the well being unsuccessful. The table below
provides additional detail of cash flows from operating activities for the three
months ended March 31, 2020 and 2019:

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