THIRD AMENDMENT TO CREDIT AGREEMENT

THIRD AMENDMENT TO CREDIT AGREEMENT

This THIRD AMENDMENT TO CREDIT AGREEMENT (“Amendment”), dated as of May 6,  2016, is by and among Contango Oil & Gas Company, a Delaware corporation (the “Borrower”), the lenders party to the Credit Agreement described below (the “Lenders”), Royal Bank of Canada, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), and the other parties in the capacities therein identified.

RECITALS

WHEREAS, the Borrower, the Lenders, the Administrative Agent and certain other Persons are parties to the Credit Agreement, dated as of October 1, 2013, as amended by the First Amendment to Credit Agreement dated as of April 11, 2014 and the Second Amendment to Credit Agreement dated as of October 28, 2014 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”); and

WHEREAS, the Borrower,   the Administrative Agent and the Lenders desire to amend the Credit Agreement in certain respects as set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

AGREEMENT

“Applicable Margin” shall mean the applicable per annum percentage set forth at the appropriate intersection in the table shown below, based on the Borrowing Base Utilization as in effect from time to time:

Applicable Margin



Each change in the Applicable Margin resulting from a change in the Borrowing Base Utilization shall take effect on the day such change in the Borrowing Base Utilization occurs.

“EBITDAX” shall mean, for any period, the sum of Consolidated Net Income for such period plus the following expenses or charges to the extent deducted from Consolidated Net Income in such period: interest, income taxes, depreciation, depletion and amortization and exploration expense; $5.6 million  in fees and expenses incurred in 2015 related to a  proposed but not consummated acquisition of oil and gas properties; and all other non-cash items (including unrealized hedging gains and losses under ASC 815, non-cash asset writedowns or ASC 410 charges and/or any non-cash share based compensation or payment charges under ASC 718).

“Revolving Credit Termination Date” shall mean October 1, 2019.

(ii) amending clause (e) of the definition of “Defaulting Lender” by (A) deleting the “or” at the end of subclause (i) and replacing it with “,” and (B) adding “or (iii) has become the subject of, or has a direct or indirect parent company that has become the subject of, a Bail-In Action” after the word “appointment” and before the “;” at the end of subclause (ii); and

(iii) adding the following new definitions in alphabetical order:

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established

in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Excess Cash” shall have the meaning assigned such term in Section 8.12.

“Third Amendment” shall mean the Third Amendment to Credit Agreement dated as of May 6, 2016 by and among the Borrower, the Lenders signatory thereto and the Administrative Agent.

“Third Amendment Effective Date” shall have the meaning given to the term “Effective Date” in the Third Amendment.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

“Section 8.12    Control Agreements.  Within thirty (30) days following the Third Amendment Effective Date (or such later date as the Administrative Agent shall agree to in its reasonable discretion), the Borrower shall, and shall cause all of its Subsidiaries to, cause at all times thereafter all of its deposit accounts, whether now existing or hereafter created (other than (i) any account all or substantially all of the deposits in which consists of amounts utilized to fund payroll, employee benefit or tax obligations of the Borrower and its Subsidiaries and (ii) fiduciary accounts, whether now existing or hereafter created) to be subject to a deposit account control agreement or other control agreement as applicable, in favor of, and in form and substance reasonably satisfactory to, each of the Administrative Agent and the Borrower.”

“Section 9.20  Anti-Hoarding Provision.  The Borrower shall not, and shall not permit any of its Subsidiaries to, maintain or accumulate the proceeds of any Loan  in deposit, securities or investment accounts outside of the ordinary course of business and its working capital requirements.  If at any time while the Borrowing Base Utilization is in excess of 50%, the Borrower or any of its Subsidiaries shall have in the aggregate at any time any cash or cash equivalents (other than deposits and cash collateral and other than (a) any cash set aside to pay severance and ad valorem taxes, payroll, payroll taxes, other employee wage and benefit payments, working interest obligations and  royalty obligations of the Borrower and its Subsidiaries then due and owing to unaffiliated third parties and for which the Borrower and its Subsidiaries have issued checks or have initiated wires or ACH transfers (or expects to issue checks or initiate wires or ACH transfers within three Business Days) in order to pay, (b) any cash set aside to pay in the ordinary course of business amounts (other than the obligations listed in clause (a) above) of the Borrower and its Subsidiaries then due and owing to unaffiliated third parties and for which the Borrower and its Subsidiaries have issued checks or have initiated wires or ACH transfers in order to pay (or expects to issue checks or initiate wires or ACH transfers within one Business Day),  (c) cash not to exceed the greater of (i) $10,000,000 or (ii) 7.5% of the then effective Borrowing Base and (d) cash proceeds from the issuance or sale of equity securities received during the past six months less any capital expenditures incurred (including, without limitation, in connection with any acquisition) since the receipt of such cash proceeds (the “Excess Cash”), then the Borrower shall promptly prepay the Loans on the next Business Day in an amount equal to such Excess Cash and if any excess remains after prepaying all of the Revolving Credit Loans and the Swing Line Loans because of LC Obligations, pay to the Administrative Agent on behalf of the Lenders an amount equal to the excess to be held as cash collateral as provided in Section 2.07(j) hereof.  Each prepayment of Loans pursuant to this Section 8.12 shall be applied as directed by the Borrower, provided that if the Borrower does not provide instructions for the application of such prepayment, such prepayment shall be applied first, ratably to any Base Rate Loans then outstanding, and, second, to any LIBOR Loans then outstanding, and if more than one LIBOR Loan is then outstanding, to each such LIBOR Loan in order of priority beginning with the LIBOR Loan with the least number of days remaining in the Interest Period applicable thereto and ending with the LIBOR Loan with the most number of days remaining in the Interest Period applicable thereto. Each prepayment of Loans pursuant to this Section 8.12 shall be applied ratably to the Loans included in the prepaid Loans.”

“Section 12.22  Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)the effects of any Bail-in Action on any such liability, including, if applicable:

(i)a reduction in full or in part or cancellation of any such liability;

(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)the variation of the terms of such liability  in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.”

Notwithstanding the foregoing, this Amendment shall not become effective unless each of the foregoing conditions is satisfied (or waived in writing) on or prior to May 13,  2016. 

   THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED

HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

   In the event that any one or more of the provisions contained in this Amendment shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not effect any other provision of this Amendment.

 This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Amendment by signing one or more counterparts.  Any signature hereto delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature hereto.

 This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 THIS AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



(Signature Pages Follow)



In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first written above.

BORROWER:

CONTANGO OIL & GAS COMPANY

By:/s/ E. JOSEPH GRADY
Name: E. Joseph Grady
Title: Senior Vice President & CFO

ADMINISTRATIVE AGENT:

ROYAL BANK OF CANADA

By:/s/ RODICA DUTKA
Name: Rodica Dutka
Title: Authorized Signatory

ISSUING BANK:

ROYAL BANK OF CANADA,

By:/s/ MARK LUMPKIN, JR.
Name: Mark Lumpkin, Jr.
Title:  Authorized Signatory

LENDER:

ROYAL BANK OF CANADA

By:/s/ MARK LUMPKIN, JR. 
Name: Mark Lumpkin, Jr.
Title:  Authorized Signatory



SWING LINE LENDER:

ZB, N.A. dba Amegy Bank

By:/s/ G. SCOTT COLLINS
Name: G. Scott Collins
Title: Senior Vice President

LENDER:

ZB, N.A dba Amegy Bank

By:/s/ G. SCOTT COLLINS
Name: G. Scott Collins
Title: Senior Vice President

LENDER:

REGIONS BANK

By:/s/ DANIEL G. STEELE
Name: Daniel G. Steele
Title: Managing Director

LENDER:

CAPITAL ONE, NATIONAL ASSOCIATION

By:/s/ MATTHEW BRICE
Name: Matthew Brice
Title: Vice President

LENDER:

COMPASS BANK

By:/s/ RHIANNA DISCH
Name: Rhianna Disch
Title: Vice President

LENDER:

BARCLAYS BANK PLC

By:/s/ MARGUERITE SUTTON
Name: Marguerite Sutton
Title: Vice President

LENDER:

BOKF, NA DBA BANK OF TEXAS

By:/s/ MARI SALAZAR
Name: Mari Salazar
Title: SVP, Energy Lending

LENDER:

CADENCE BANK

By:/s/ ANTHONY BLANCO
Name: Anthony Blanco
Title: Vice President

LENDER:

CITIBANK, N.A.

By:/s/ PHIL BALLARD
Name:Phil Ballard
Title: Vice President

LENDER:

IBERIABANK

By:/s/ TYLER S. THOEM
Name: Tyler S. Thoem
Title: Senior Vice President



ANNEX I



LIST OF PERCENTAGE SHARES AND



MAXIMUM REVOLVING CREDIT AMOUNTS