Welcome to the Contango results for Second Quarter 2016. Today's conference is being recorded. At this time, I would like to turn the conference over to Joe Grady, Chief Financial Officer. Please go ahead, sir.

Thank you. I would like to welcome everyone to Contango's earnings call for the second quarter of 2016. On the call today are myself; Allan Keel, our President and CEO; Steve Mengle, our Senior Vice President of Engineering; Tommy Atkins, our Senior VP of Exploration; and Carl Isaac, our Senior VP of Operations. I'll give you a brief overview of financial results and then we'll turn it over to Allan, who'll give you an update on our recent operations. We'll follow that with a Q&A session. And just as a reminder, as typical for most companies, we'll limit questions to those from analysts that follow our stock closely, as we believe that that is the most constructive and productive use of everyone's time. Before we get started, I want to remind everyone that the earnings press release and the related discussion this morning may contain forward-looking statements as defined by the Securities and Exchange Commission which may include comments and assumptions concerning Contango's strategic plans, expectations and objectives for future operations. Such statements are based on assumptions we believe to be appropriate under the circumstances. However, those statements are just estimates, are not guarantees of future performance of results and therefore should be considered in that context. Moving on to the financial results, our net loss for the quarter was $17.3 million or $0.90 per basic and diluted share, compared to a net loss of approximately $19.5 million or $1.03 per share for the prior-year quarter. As you noticed in the release, there were a number of factors that contributed to the change. The major positives being lower cash costs, lower exploration expenses and lower DD&A in the current-year quarter, offset in part by lower revenue due to lower production and prices and the fact that we fully reserve the…

Thanks, Joe. Good morning, everyone and thanks for being with us today. I'll give you a brief update of kind of what's been happening during this past quarter. From a calendar standpoint, the second quarter ended quietly, with the results within guidance and with very little CapEx activity. As you've seen from our news releases, things got a little bit more active in July. We've been working with a private company for a few months regarding the position in the Southern Delaware Basin and we were able to close that acquisition and exploration agreement here recently. We feel really good about the fact that the seller wanted to retain a 50% working interest in the leases we acquired. So, after the carry portion of the purchase price has been paid, we'll be 50/50 partners. In order to fund our early capital needs for that project, we also completed a public offering in which we received proceeds of approximately $47 million. We're very excited about this new acreage position and our ability to raise new equity capital that will allow us to develop this acreage, using internally-generated cash flow and also maintain a healthy balance sheet. We've been looking for an entry point here into the West Texas area for quite some time. We were looking for an area that could give us inventory of high-quality drilling opportunities that give us good returns in this lower-price environment that we're in now. I think, in terms of structuring the transaction in the way that we did which includes an upfront cash payment of $10 million in carries or through well carries, over time and an approximate $5 million contingent amount to be paid in the form of spud fees after we drill the first six wells, we think that's -- the deal…

[Operator Instructions]. We will now take our first question from Kyle Rhodes with RBC Capital Markets.

Just curious if there's any differences in type curve expectations between the three benches that are prospective on your acreage. And I guess, what's the early game plan as far as delineating the other zones? I know you're targeting the Wolfcamp A on the first well; but just curious how you're thinking about testing those other zones, going forward.

As far as type curve, I mean, we're using one type curve for all three at the moment. The reality is, we have a lot more data in the Wolfcamp A, then in the Wolfcamp B, second; and the Bone Springs really is just developing in the area. And so, until we get more information on it, we're just keeping one type curve. So, it's a little -- we don't know as much about the Bone Springs yet.

So, fair to think the first kind of six wells -- they're all going to be Wolfcamp As?

Yes, A or possibly B, but yes.

And then, how is your Delaware acreage set from a gathering and processing standpoint? Are there any current agreements in place there? And I guess, what are the plans on the salt water disposal side?

So, from a takeaway standpoint it's actually pretty mature. There's actually a gas takeaway in the leasehold and then there's actually a second gas takeaway that's fallow that would have to be retested to reengage; but really, in good shape from the gas standpoint. From an oil standpoint, we'll start out hauling oil away with trucks, but we feel pretty confident that the oil pipeline that's about 3 miles away from us is going to be excited to build to us, so that we can get away from some of the other issues related to trucking oil. So, the acreage sets up really nice, from a product takeaway standpoint. Your second question was regarding salt water disposal. And within 10 miles of the acreage, there's three commercial facilities that are available. But our plan generally will be to control our own destiny in terms of salt water disposal and water management, with a recycling plan enacted to provide us adequate volumes of frac water.

And you mentioned potentially wanting to grow your position in the Delaware. Obviously, prices have been moving north here. What's the, I guess, running room you guys could see, kind of in your immediate target area and is there anything left to do on the organic front or is it, larger packages kind of all that remains at this point?

Yes. I think that we'll take expansion out there, for sure. I mean, we can't speak about it all, but our plans are to expand out here. No doubt about it.

Okay. And then just one on the other kind of legacy properties. I know in the past you'd talked about an Eagle Ford test on the KM Ranch there in South Texas. Assuming that's kind of off the board for a while now?

Yes. We need higher prices to reengage in that area.

We will now take our next question from Ron Mills with Johnson Rice.

On the updated presentation, you call out some recent wells that have been drilled. There's nothing on your acreage, but I think 20 wells in and around -- within 3 to 4 miles of your position. Any color you can provide on those wells and how those wells are performing relative to your type curve; and, if you know, are those -- were those wells completed with the same frac recipe that you plan to use?

Yes. So, our type curve was generated using those wells. So, that's -- other words -- so, our type curve is the average performance of those 20 wells. And those 20 wells were wells that had lateral links where between 6000 and 9000 feet. Their average lateral link was about 7500 feet, 7300 feet, I think. And they were -- generally had the higher-profit concentrations in the half out of the larger frac fluid concentration. So, they were similar in nature to what we're talking about doing.

Okay. And then, on your acreage position, is there any bias in terms of where your first well will be drilled -- East-West; North-South? And when you look at your first six under the initial carry, is the plan to spread those across the position?

Yes. Well, our first well, we're going to plan on going East-West. We think the raw properties show that, so that that's the most advantageous place to go. There is a mix out here, of North-South and East-West. We're pretty comfortable with -- that you can go either direction., but we think that raw mechanics basically show that an East-West direction, at least in this area, is preferable. We do have to hold the acreage first and so there will be somewhat of a spread across. Probably the bias will be done into Wolfcamp A and the B which will therefore hold the Bone Springs. So, that's kind of the way that we'll go about it.

Okay. And then, the acreage position -- at least, you highlight that all of your 157 wells can be 10,000-foot laterals. I guess that points to the contiguity of the acreage position. Did I read that correctly or will you have some shorter laterals? And then, to follow on Kyle's question, the -- if you increase organically, is it just through picking up small pieces here and there in kind of adjacent areas?

Yes. The latter question first. Yes. I mean, we will houseclean in and around us, we think, as well as looking at other opportunities as we go forward. I can't remember your first question, I'm sorry.

It had to do with the contiguity of the position and you point to 10,000-foot laterals. It's -- I mean, it's impressive that the -- that your whole inventory's able to be developed on that -- at that length.

That's correct. And we think that we can do that. There will be -- we'll have to work at it, but we think that most, if not all, of the lateral -- the wells would be 10,000-foot laterals.

Okay. And then one last one. I think you've mentioned this, Joe -- the plan in terms of -- as we start thinking about growth from this program. And it sounds like, based on yesterday's strip -- is that the price point where you would be able to remain balanced between your cash flows and CapEx? Or is that at a higher price deck?

Well, it was originally at a little higher price deck. But where we're today, versus where we first talked about that, is not a meaningful difference.

Thank you. And I will now hand the program back over to Allan Keel.

Thank you and like to appreciate -- tell everybody we appreciate your time today and look forward to giving you an update soon. And hopefully if we get some improvement in these oil prices. So, thanks again.