CALGARY, May 4, 2012 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSX-V: CEX) is pleased to announce that the Contact operated horizontal Montney well (the "13-17 Well") has been successfully drilled and completed with a 15 stage water-based foam frac. Following a 96 hour frac flow back, the well was still cleaning up, with average gross production rates over the final 24 hours of production testing being 1,150 bbl/d condensate and 8,290 mscf/d gas, being 2,532 boe/d combined (431 bbl/d and 3,109 mscf/d, or 950 boe/d combined, net to Contact and before payout) against a wellhead pressure of 1,100psi. In addition to well head condensate, the gas analysis from the 13-17 Well suggests that an additional 25-35 bbl/mmscf of natural gas liquids are recoverable through typical refrigeration processing, and up to 70 bbl/mmscf if deep cut processing is available. The well is currently being equipped with tubing following which additional clean up of frac water is expected over the next several days. The 13-17 Well was drilled and completed within the expected timelines and on budget.
Contact holds a 37.5% interest (25% after payout) in the 13-17 Well, and holds a 25% working interest in a 16 section contiguous land block offsetting the 13-17 Well, with Contact being operator for the entire block. The successful drilling and completion of the 13-17 Well is a milestone for Contact, establishing what is expected to be a significant new core area for the Company at Kakwa. Surveying and applications have commenced for both tie-in operations as well as for the drilling of a follow-up well. The Company currently anticipates the 13-17 Well to be tied-in by September 2012.
Steve Harding, President and CEO commented, "Contact is very pleased with the successful execution and test results from the 13-17 Well. This productivity test substantially exceeds our expectations for liquids yield and confirms our technical work that had suggested our acreage was in the heart of the liquids-rich Montney trend. This result provides a multi-fold boost to our production capability, on a property that we expect will be capable of producing exceptional volumes with further development. We will continue to be focused on our inventory of liquids-weighted projects, characterized by strong economics."
The Company advises that although these initial rates are very encouraging, production test results are not necessarily indicative of long-term performance or of ultimate recovery from the well.
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 the exploration and development projects 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 USE OF "BOEs": "BOEs" may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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", "continue", "estimate", "may", "will", "should", "believe", "plans", "cautions" 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 of clean up of frac water from the Company's 13-17 Well, the timing to tie-in the 13-17 Well and to drill a follow up well at Kakwa, the establishing of a new core area by the Company at Kakwa and the Company's expected working interest in contiguous sections of land following the tie-in and payout of the 13-17 Well, 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 Montney project and the 13-17 Well 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 the results of the 24 hour production test will be indicative of the long-term performance of the 13-17 Well or of ultimate recovery from the well; the ultimate size and scope of any hydrocarbon bearing formations at the Deep Basin Montney project; that additional drilling operations in the Deep Basin Montney project, including at the 13-17 Well, will be successful such that further development activities in this area is 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.
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