Drilling and Completions Update
As previously reported on January 29, 2013, Contact participated in a non-operated Montney well, immediately adjacent to Contact's existing 25% working interest East Kakwa acreage. The well was successfully drilled before spring breakup and the well operator now advises that the well is expected to be completed and tested in mid-July 2013, as ground conditions have improved and will now support the required equipment. This well will evaluate the Upper Montney. Contact is responsible to pay for 23.75% of well costs to earn a 23.75% working interest in the spacing unit of the well, and a total of 2.25 gross sections, subject to a 5% non-convertible gross overriding royalty.
The next Contact-operated Kakwa well to be drilled in the East Kakwa block is scheduled to be spud within the first two weeks of July 2013. Contact will hold a 25% working interest in this well.
The Company's first 3 operated wells in East Kakwa have continued to produce at high rates and liquids yields. The 13-17 well has been on production since December 2012, and has produced condensate yields steadily at 135 bbl/mmcf, with the well continuing to perform at 1 mmcf/d. Contact's second well, 14-30, has flowed between 2 and 4 mmcf/d in the first two months of production, with condensate yields averaging 180 bbl/mmcf. In accordance with standard operating practices, the 14-30 well has recently been shut in to record build pressures. Since shutting in the 14-30 well, the 3-19 well has been brought online at approximately 3.5 mmcf/d with a condensate yield of 166 bbl/mmcf. Contact holds a 37.5% working interest (before payout) in the 13-17 well and a 25% working interest in both the 14-30 well and 3-19 well.
The Company is also pleased to announce that its proposed 15 MM/d compressor station and condensate stabilization has received approval. The facility will be centrally located and will serve to lower gathering pipeline and wellhead flowing pressures on the East Kakwa lands. Equipment ordering has commenced with start-up still anticipated prior to the end of 2013.
About Contact Exploration Inc.
Contact Exploration Inc. is a public oil and gas company which has a long-term history of operating in Atlantic Canada and has recently demonstrated success in Alberta's liquids-rich Montney Formation tight gas play. For more information, please see the Company's website: www.contactexp.com.
Information Regarding Disclosure on Oil and Gas Reserves and Operational Information
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 or natural gas liquids 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.
The estimates of reserves and future net revenue for individual properties may not reflect the same confident level as estimates of reserves and future net revenue for all properties due to the effects of aggregation.
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 to complete a new non-operated well, the earning by Contact of a working interest upon paying a portion of the costs of completing the non-operated well, the timing to drill and complete a new well at the East Kakwa property and the construction of a 15 MM/d compressor station and condensate stabilization facility.
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