Contact Exploration Announces Equalization and Participation Agreement in its Deep Basin Montney Project and Additional Land Acquisition

CALGARY, Nov. 8, 2011 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSXV: CEX) is pleased to announce that it has entered into an equalization and participation agreement with a third party participant (the "Participant") respecting the Company's Deep Basin Montney project. The Participant is a well capitalized public oil and gas company with extensive experience in numerous Canadian jurisdictions. Under the Agreement, the Participant will pay Contact $1.84 million as a prospect fee and land equalization payment and will pay 37.5% of the costs to drill and complete a first well to earn a 25% working interest in the project. Accordingly, Contact's single well commitment is reduced from 75% to earn a 50% interest to 37.5% to earn a 25% interest, in the 7 sections that the Company initially farmed into.

Contact and its partners were also successful at the most recent Alberta land sale in acquiring an additional 3 sections of land contiguous with the Deep Basin lands previously acquired. Contact and its partners now hold a large, 16 section land block located in the prolific, liquids-rich Resthaven-Kakwa Montney gas trend. Upon drilling and completing the initial well and the Participant paying the land equalization fee, Contact and the Participant will each hold a 25% working interest in all 16 sections.

Contact's capital commitments for the Deep Basin project are significantly lowered as a result of the Participant's equalization and participation.  Contact expects to raise additional capital to fund its ongoing capital programs, including its reduced share of the capital commitments for the initial Montney well, through a non-convertible debenture issuance and/or a flow through share equity financing, for aggregate expected proceeds of approximately $4 million.  Contact will carry out these financings on a non-brokered basis, with closing expected within the next few weeks.  Contact will announce further information as terms are finalized.

Contact operates the Deep Basin project and expects to commence the drilling of the first well into the prospect this winter.  A detailed summary of the project is contained in the corporate presentation on the Company's website.

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" targeting the Montney Formation.

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 exploration and development activities on the Company's properties in the Resthaven-Kakwa area of Alberta, the prospectivity of the Resthaven-Kakwa area, the petroleum and natural gas reserves and production that may be encountered through the exploration of such properties, the timing for drilling of the first well in this area, the expected form, amount and timing of financings to be carried out by the Company and future results from operations and the timing of the future development of the Resthaven-Kakwa prospect through horizontal drilling, 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 Resthaven-Kakwa or Hopewell prospects 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; the ultimate size and scope of any hydrocarbon bearing formations at Resthaven-Kakwa or Hopewell; that drilling operations in Resthaven-Kakwa or Hopewell will be successful such that further development activities in these areas are warranted; that Contact's efforts to raise additional capital will be successful; 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 gas products.

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:

Steve Harding 
President and CEO
Contact Exploration Inc.
Phone:  (403) 771-1091
Fax:  (403) 695-3915
Email:   sharding@contactexp.com
www.contactexp.com

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Contact Exploration Inc.

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