CALGARY, May 3, 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.
SOURCE Contact Exploration Inc.