CALGARY, Sept. 23, 2011 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSX-V: CEX) is pleased to provide an update to its announcement of
September 6, 2011 that it had entered into an oil and gas project in
the prolific Deep Basin region of Alberta, thereby initiating a new
core area for the Company. Contact has entered into this liquids-rich
gas project after thoroughly evaluating the Montney Formation and is
extremely encouraged by recent industry activity in the Deep Basin,
which has demonstrated exceptional initial productivity from horizontal
wells. In particular, two nearby wells that were recently completed in
the Montney Formation each of which recently demonstrated initial
production rates in excess of 2,000 BOE/day, including more than 1,000
bbls/d of condensate.
Under the terms of the agreement announced on September 6, 2011, Contact
will pay a fixed percentage of the costs to drill, complete and equip a
horizontal test well targeting the Montney Formation, to earn a 50%
working interest after payout in seven sections of land. All tie-in
costs are to be shared equally by Contact and the Farmor.
Subsequently, Contact has successfully participated in recent land
sales securing an additional 4 sections, such that Contact now owns or
has the right to earn an interest in 7,040 gross acres (3,520 net) of
highly prospective Montney land in the Deep Basin.
Contact intends to initially target the turbidite unit within the
Lower-Middle Montney, however excellent prospectivity exists in other
units within the Montney on Contact's lands. With success, each
prospective interval within the Montney will be pursued. Contact
estimates that each such interval could require up to 4 laterals per
section to adequately recover the total potential resource.
The initial well has been surveyed and is expected to be spud before
December 15, 2011.
Contact has entered into a revolving operating demand loan with Canadian
Western Bank enabling the Company to access funds up to $1.75MM and a
non-revolving acquisition/development loan in the maximum principal
amount of $0.5MM. This credit facility is secured by Contact's oil and
gas reserves and related assets. To date, Contact has drawn
approximately $1.2 million of the revolving credit facility.
Contact also announces that Mr. Steve Haysom has resigned as a director
of Contact, due to the increasing demands of his other professional
commitments. Management and the Board of Directors of Contact express
their gratitude to Mr. Haysom for his efforts in helping transform
Contact over the past year and a half and wish him well in his current
and future endeavors.
About Contact Exploration Inc.
Contact Exploration Inc. is a public company which has been focused on
Canadian East Coast onshore oil and gas exploration and development.
Our philosophy is to operate exploration and development in our core
areas of Stoney Creek, Hillsborough and Edgett's Landing, New Brunswick
and to participate through overrides and carried interests in certain
regional unconventional plays in Nova Scotia and Newfoundland. In
addition to the Atlantic Canadian properties, Contact is pursuing a new
core area in Alberta's "Deep Basin".
ADVISORY ON FORWARD LOOKING STATEMENTS: This press release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of
any of the words "expect", "anticipate", "continue", "estimate", "may",
"will", "project", "should", "believe", "plans", "intends" and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the forgoing, this
press release contains statements concerning the timing and scope of
additional exploration and development activities on the Company's
properties in the Deep Basin of Alberta, the prospectivity of such
lands and petroleum and natural gas reserves and production that may be
encountered through the exploration of such properties and future
results from operations, among others.
Forward-looking statements or information are based on a number of
material factors, expectations or assumptions of Contact which have
been used to develop such statements and information but which may
prove to be incorrect. Although Contact believes that the expectations reflected in these
forward-looking statements are reasonable, undue reliance should not be
placed on them because Contact can give no assurance that they will
prove to be correct. Since forward-looking statements address future
events and conditions, by their very nature they involve inherent risks
and uncertainties. In particular, in addition to other factors and
assumptions which may be identified herein, no assurances can be given
respecting: whether the Company's exploration and development
activities respecting the Deep Basin properties will be successful or that material volumes of petroleum and natural gas
reserves will be encountered, or if encountered can be produced on a
commercial basis; that drilling operations in the Deep Basin will be
successful such that further development activities in these areas are
warranted; that Contact will continue to conduct its operations in a
manner consistent with past operations; results from drilling and
development activities will be consistent with past operations; the
accuracy of the estimates of Contact's reserve volumes; the general
stability of the economic and political environment in which Contact
operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and
expansion and the ability of Contact to secure adequate product
transportation; future commodity prices; currency, exchange and
interest rates; regulatory framework regarding royalties, taxes and
environmental matters in the jurisdictions in which Contact operates;
and the ability of Contact to successfully market its oil and natural
Further, events or circumstances may cause actual results to differ materially
from those predicted as a result of numerous known and unknown risks,
uncertainties, and other factors, many of which are beyond the control
of the Company, including, without limitation: changes in commodity
prices; changes in the demand for or supply of the Company's products;
unanticipated operating results or production declines; changes in tax
or environmental laws, royalty rates or other regulatory matters;
changes in development plans of Contact or by third party operators of
Contact's properties, increased debt levels or debt service
requirements; inaccurate estimation of Contact's oil and gas reserve
and resource volumes; limited, unfavourable or a lack of access to
capital markets; increased costs; a lack of adequate insurance
coverage; the impact of competitors; and certain other risks detailed
from time-to-time in Contact's public disclosure documents. Additional
information regarding some of these risk factors may be found under
"Risk Factors" in the Company's Management Discussion and Analysis
prepared for the year ended March 31, 2011. The reader is cautioned not to place undue reliance on this
forward-looking information. The forward looking statements contained
in this press release are made as of the date hereof and Contact
undertakes no obligations to update publicly or revise any forward
looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by
applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
SOURCE Contact Exploration Inc.
For further information:
President and CEO
Contact Exploration Inc.
Phone: (403) 771-1091
Fax: (403) 695-3915