Related Party Transactions

Juneau Exploration L.P. In April 2012, the Company announced that Mr. Brad Juneau, the sole manager of the general partner of Juneau Exploration, L.P. ("JEX"), had joined the Company’s board of directors and that the Company had entered into an advisory agreement with JEX (the "Advisory Agreement"), whereby in addition to generating and evaluating offshore and onshore exploration prospects for the Company, JEX will direct Contango’s staff on operational matters including drilling, completions and production. Pursuant to the Advisory Agreement, JEX was paid an annual fee of $2.0 million.

Effective January 1, 2013, the Advisory Agreement was terminated, and the Company and JEX entered into a First Right of Refusal Agreement (the "First Right Agreement"). Under the First Right Agreement, JEX granted a first right of refusal to Contango to purchase any exploration prospects generated and recommended by JEX. Prospects will be presented along with terms and conditions for purchasing each prospect and Contango shall have the first right of refusal to purchase the prospect from JEX for a period of 10 days, subject to mutually acceptable terms. Pursuant to the First Right Agreement, JEX will be paid an annual fee of $0.5 million, which approximates the costs incurred by JEX for their continued support to the Company in the areas of operations, engineering, and land functions.

Effective January 1, 2013, Contaro Company, a wholly-owned subsidiary of the Company, entered into an advisory agreement with JEX (the "Contaro Advisory Agreement"). Under the Contaro Advisory Agreement, JEX will provide advisory services to Contaro in connection with Contaro's investment in Exaro, and Mr. Juneau will serve on the board of managers of Exaro and perform such duties as described in the limited liability company operating agreement of Exaro. Pursuant to the Contaro Advisory Agreement, JEX will be paid a monthly fee of $10,000 and shall be entitled to receive a one percent (1%) fee of the cash profit earned by Contaro. Cash profit is defined as the amount of cash received by Contango as a result of its investment in Contaro, less the cash invested by the Company as a result of its investment in Contaro.

In August 2012, the Company's Chairman and Chief Executive Officer, Mr. Kenneth R. Peak, took a leave of absence, and the Board of Directors of the Company appointed Mr. Juneau as President and Acting Chief Executive Officer of the Company. In December 2012, Mr. Joseph J. Romano was elected President and Chief Executive Officer of the Company. Mr. Romano is the President and Chief Executive Officer of Olympic Energy Partners LLC ("Olympic"). Mr. Peak remains the Company's Chairman.

JEX and Olympic have historically participated with the Company in the drilling and development of certain prospects through participation agreements and joint operating agreements, which specify each participant’s working interest ("WI"), net revenue interest ("NRI"), and describe when such interests are earned, as well as allocate an overriding royalty interest ("ORRI") of up to 3.33% to benefit the employees of JEX, excluding Mr. Juneau, except where otherwise noted. Olympic last participated with the Company in the drilling of wells in March 2010, and does not anticipate participating in any future wells. Olympic's ownership in Company-operated wells is limited to our Dutch and Mary Rose wells.

Republic Exploration LLC. In his capacity as sole manager of the general partner of JEX, Mr. Juneau also controls the activities of REX, an entity owned 34.4% by JEX, 32.3% by Contango, and 33.3% by a third party which contributed other assets to REX. REX generates and evaluates offshore exploration prospects and has historically participated with the Company in the drilling and development of certain prospects through participation agreements and joint operating agreements, which specify each participant’s working interest, net revenue interest, and describe when such interests are earned, as well as allocate an overriding royalty interest ("ORRI") of up to 3.33% to benefit the employees of JEX. The Company proportionately consolidates the results of REX in its consolidated financial statements.

As of December 31, 2012, Contango, Olympic, JEX, REX and JEX employees owned the following interests in the Company's offshore wells.



	Contango				Olympic				JEX				REX				JEX Employees
	WI		NRI		WI		NRI		WI		NRI		WI		NRI		ORRI
Dutch #1 - #5	47.05	%	38.12	%	3.02	%	2.42	%	1.61	%	1.29	%	—	%	—	%	2.02%
Mary Rose #1	53.21	%	40.45	%	3.61	%	2.7	%	2.01	%	1.51	%	—	%	—	%	2.79%
Mary Rose #2 - #3	53.21	%	38.67	%	3.61	%	2.58	%	2.01	%	1.44	%	—	%	—	%	2.79%
Mary Rose #4	34.58	%	25.49	%	2.34	%	1.7	%	1.31	%	0.95	%	—	%	—	%	1.82%
Mary Rose #5	37.80	%	27.88	%	2.56	%	1.87	%	1.43	%	1.04	%	—	%	—	%	1.54%
Ship Shoal 263	100.00	%	80.00	%	—	%	—	%	—	%	—	%	—	%	—	%	3.33%
Vermilion 170	83.20	%	64.83	%	—	%	—	%	4.30	%	3.35	%	12.50	%	9.74	%	3.33%

Below is a summary of payments received from (paid to) Olympic, JEX and REX in the ordinary course of business in our capacity as operator of the wells and platforms for the periods indicated. The Company made and received similar types of payments with other well owners (in thousands):



	Three months ended December 31,
	2012									2011
	Olympic			JEX			REX			Olympic			JEX			REX
Revenue payments as well owners	$	(1,510	)	$	(1,089	)	$	(741	)	$	(2,261	)	$	(1,429	)	$	(418	)
Joint interest billing receipts	235			199			230			251			257			776



	Six months ended December 31,
	2012									2011
	Olympic			JEX			REX			Olympic			JEX			REX
Revenue payments as well owners	$	(3,050	)	$	(2,222	)	$	(1,590	)	$	(4,615	)	$	(2,712	)	$	(448	)
Joint interest billing receipts	529			419			321			680			503			1,858

Below is a summary of payments received from (paid to) Olympic, JEX and REX as a result of specific transactions between the Company, Olympic, JEX and REX. While these payments are in the ordinary course of business, the Company did not have similar transactions with other well owners (in thousands):



	Three months ended December 31,
	2012							2011
	Olympic		JEX			REX		Olympic		JEX			REX
Reimbursement of certain costs	$	—	$	(255	)	$	—	$	—	$	(1	)	$	—
Payments under April 1, 2012 Advisory Agreement	—		(333		)	—		—		—			—
REX distribution to members	—		—			323		—		—			—



	Six months ended December 31,
	2012							2011
	Olympic		JEX			REX		Olympic			JEX			REX
Reimbursement of certain costs	$	—	$	(401	)	$	—	$	(10	)	$	(6	)	$	(10	)
Prospect fees	—		—			—		—			(250		)	—
Payments under April 1, 2012 Advisory Agreement	—		(1,000		)	—		—			—			—
REX distribution to members	—		—			646		—			—			—

As of December 31, 2012 and June 30, 2012, the Company's consolidated balance sheets included the following balances (in thousands):



	December 31, 2012									June 30, 2012
	Olympic			JEX			REX			Olympic			JEX			REX
Accounts receivable:
Trade receivables	$	2		$	1		$	1		$	10		$	20		$	18
Joint interest billings	79			85			78			192			158			92

Accounts payable:
Royalties and revenue payable	$	(1,133	)	$	(842	)	$	(642	)	$	(1,198	)	$	(813	)	$	(682	)
Joint interest billings	—			(101		)	—			—			—			—

In addition to the above, the Company paid Mr. Brad Juneau $28,000 and $56,000 during the three and six months ended December 31, 2012 for his services as a director of the Company.