Contact Exploration Inc.
TSX VENTURE : CEX

Contact Exploration Inc.

April 12, 2010 22:23 ET

Contact Exploration Announces Private Placement, New Board of Directors and New Management Team

CALGARY, ALBERTA--(Marketwire - April 12, 2010) - 

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Contact Exploration Inc. ("Contact" or the "Corporation") (TSX VENTURE:CEX) is pleased to announce that it has entered into a financing and reorganization agreement (the "Agreement") with Steve Harding which contemplates (i) the appointment of a new board of directors (the "New Board"), (ii) the appointment of a new management team (the "New Management Team"), and (iii) a non-brokered private placement of up to $3.5 million (the "Private Placement") (collectively, the "Transactions").

Proposed Board of Directors

The New Board of Contact shall consist of the following individuals:

Steve Harding, Proposed Director, President and Chief Executive Officer - Mr. Harding is President and CEO of American Exploration Corp. With 27 years experience, Steve Harding has occupied various senior positions within EnCana Corporation, its predecessor Alberta Energy and Husky Oil and Gas Ltd. (now Husky Energy). His experience includes Vice President Northern Canada and Vice President Alaska/MacKenzie Delta at EnCana and Chief Geoscientist at Husky Energy. Mr. Harding has extensive experience with oil and gas exploration and development within numerous geological basins, both within and outside of North America. Included in his accomplishments is developing the geological model which lead to the discovery of the giant White Rose field, offshore Newfoundland. While at EnCana, Mr. Harding negotiated and secured the largest exploration position in the US and Canadian Arctic, leading to the discovery of the Umiak field and receiving an MMS corporate citizen award for outstanding cultural and environmental efforts in Alaska.

Mr. Harding's Bachelor of Science degree in Geology (Hons) is from McMaster University in Hamilton, Ontario and he earned his Masters degree in Geology at the University of Alberta in Edmonton. He is a professional Geologist with the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Don C. Stachiw, Proposed Director - Mr. Stachiw is President and CEO of Amarone Oil & Gas Ltd. Prior to Amarone, he was Vice President of Exploration and COO of Capitol Energy Resources Ltd. Mr. Stachiw has 25 years of domestic and international oil and gas exploration and production experience around the world including: Off-shore East Coast Canada, MacKenzie Delta, Alaska, British North Sea, Gulf of Mexico and Ecuador. He has served in several capacities of increasing responsibility including senior technical geological, managerial and Vice President positions at a series of major and junior exploration and production oil & gas companies.

Mr. Stachiw holds an Honors Bachelor of Science degree in Geology from the University of Toronto and is a professional Geologist with the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Scott Hadley, Proposed Director - Mr. Hadley is VP Exploration Fairbourne Energy Inc. Mr. Hadley is a Professional Geologist with 24 years of oil and gas development and exploration experience. Mr. Hadley has developed prospects throughout Western Canada in carbonate reef plays, tight gas sands, coal bed methane and shale gas. He is also experienced in the Michigan Basin area in the tight gas sand and reef plays as well as Devonian Shale gas. Mr. Hadley began his career as an Exploration Geologist with Amoco Canada Petroleum. In 1996-97 he attended Amoco Corporation's Petrophysics training program in Tulsa, Oklahoma. Upon his return to Amoco Canada he worked in the Exploration and Production Technology Group as a Staff Petrophysicist. Between 1998 and 2001 he held various management roles and director positions with several TSX Venture Exchange oil and gas companies. Mr. Hadley joined Fairborne Energy in 2002 and has served in various roles of increased technical responsibility to his current position of Vice President Exploration.

Mr. Hadley holds a Bachelor of Science (Honors) degree in Geology from the University of Western Ontario and a Master of Science Degree in Geology from McMaster University. Mr. Hadley is a professional member of the Association of Professional Engineers, Geologists, and Geophysicists (APEGGA), a member of the Canadian Society of Petroleum Geologists (CSPG), a member of the American Association of Petroleum Geologists (AAPG) and a member of the Canadian Well Logging Society (CWLS).

Steve Haysom, Proposed Director – VP Exploration Seven Generations Energy Ltd. Mr. Haysom is a proven oil finder with approximately 15 years in the Canadian oil and gas industry. During his career Mr. Haysom has been directly involved in the acquisition and divestiture of over $700MM worth of Canadian oil & gas properties.

Currently employed at Seven Generations Energy, he was an integral component to the acquisition of Samson (Canada) in August 2008. Working in a geoscience capacity, Mr. Haysom began his career with Husky Energy working numerous project areas across Western Canada. He subsequently moved to Cabre Exploration Ltd. Mr. Haysom joined Alberta Energy Company in 2000 (AEC, now Encana). At AEC/Encana he was employed initially as Regulatory Technical Advisor where he was one of the founders of the Government-Industry Advisory Group (GIAG) and Co-Chair of the Thermal Bitumen Sub-Committee. Mr. Haysom subsequently joined junior start-up Krang Energy as Senior Geoscientist and project manager.

Mr. Haysom is a 1994 graduate of St. Mary's University and holds a Bachelor of Science degree in Geology/Geochemistry. He subsequently completed studies in Geochemistry at Boston College's Graduate School of Arts and Science.

New Management Team

The New Management Team shall consist of the following individuals:

Steve Harding, Proposed President and Chief Executive Officer

Raymond Sully, Proposed Chief Operating Officer

Mr. Sully has over 10 years of diversified experience in the areas of exploitation, reservoir, facilities, and operations engineering, as well as marketing, joint venture and business development. Prior to his current position at Contact Exploration Inc., Mr. Sully served in several capacities of increasing responsibility at a number of oil and gas operating and service companies. His most recent experience was with Seven Generations Energy Ltd. (2008-2010) and Samson Canada/Samson Exploration Ltd. (2004-2008) where he was responsible for assessing new business opportunities and establishing strategies for best exploiting identified reservoirs. Previously, Mr. Sully was employed with AltaGas Ltd. in an Operations Engineering capacity, managing the gathering and processing of natural gas at six gas plants. Mr. Sully's early experience includes assignments with Imperial Oil Ltd., Nova Chemicals and Suncor Energy.

Mr. Sully earned a Bachelor of Science degree in Chemical Engineering from the University of Alberta. He is a professional engineer with the Association of Professional Engineers, Geologists and Geophysicists of Alberta.

Ian Thomson, Proposed Chief Financial Officer

Ian Thomson completed his Bachelor of Commerce degree at the University of Calgary in 2003. He articled at Heywood Holmes & Partners LLP in Red Deer, Alberta for a year before returning to Calgary and joining DNTW Chartered Accountants, LLP. He wrote the UFE in 2005 and obtained his CA designation in September 2006. In January 2006, Mr. Thomson moved on to work with Ascend LLP which merged with Meyers Norris Penny LLP in January 2008. Mr. Thomson started his own firm, Ian Thomson Professional Corporation, in December 2008 through which he provides accounting support to public and private companies, as well as compilations and tax services for owner-managed businesses.

The appointment of the New Management and New Directors remains subject to approval by the TSXV, as such, certain of the current directors and/or officers may continue on in their respective roles until such approval is given by the TSXV at which time they will step down.

Stock Options

Concurrent with the appointment of the New Board and the New Management Team, up to 4,574,339 stock options exercisable at $0.13 shall be granted to the New Board and the New Management Team and certain consultants, subject to approval by the TSX Venture Exchange.

Private Placement

Members of the New Board, the New Management Team and supporting investors will be the primary subscribers for up to 43,750,000 units (the "Units") of Contact at a price of $0.08 per unit. The aggregate gross proceeds to Contact will be approximately $3.5 million. Each Unit will be comprised of one common share and one warrant (a "Warrant"). Each Warrant will entitle the holder to purchase one common share at a price of $0.12 for a period of 24 months from the date of issuance. It is anticipated that Contact may pay finder's fees to certain arm's length finders ("Finder's Fees") in connection with the Private Placement. The Finder's Fees may be payable in cash or Units. No Finder's Fees will be paid to the New Board, the New Management Team, the current board or the management team of Contact.

The gross proceeds of the Private Placement will be used to further develop Contact's Stoney Creek oil field in New Brunswick, as well as continued exploration in Atlantic Canada.

It is anticipated that the Private Placement may close in one or more closings with the first closing for minimum gross proceeds of at least $2 million to occur immediately following receipt of the required shareholder and TSXV approvals discussed in more detail below.

Shareholder and Stock Exchange Approvals

Completion of the transactions contemplated under the Agreement is subject to a number of conditions and approvals including, but not limited to, the approval of the TSXV. It is not anticipated that the Private Placement will result in the creation of a Control Person under the policies of the TSXV. The TSXV requires that the Transaction requires approval of the shareholders of Contact. The required shareholder approval may be obtained by Contact either by receipt of written consents by holders of more than 50% of the issued and outstanding voting shares of Contact (the "Written Consent") or by approval of a resolution at a special meeting of shareholders (the "Contact Meeting"). Pursuant to the Agreement, Contact has agreed to obtain the Written Consent.

Board of Directors and Management Support of the Agreement

The current board of directors of Contact has determined that the transactions contemplated by the Agreement are in the best interests of its shareholders, has unanimously approved the Transactions and recommends that the shareholders approve the Transactions and execute the Written Consent. Any shareholder of Contact wishing to obtain and execute the Written Consent should contact the Corporation as set out below.

The board of directors of Contact has agreed, among other things, to resign concurrently upon completion of the Private Placement and to cancel all unexercised options issued by Contact prior to January 29, 2009 and held by them.

"I am very pleased to support the New Board and the New Management Team," commented Darcy Spady, current President and CEO of Contact. "They bring proven experience and a technical track record which is very much needed to further develop Contact's properties in Atlantic Canada. I expect their technical capabilities will become a valuable asset to Contact's shareholders as they begin their work in the region's very challenging but exciting geology."

Strategic Rationale and Corporate Strategy

The New Board and the New Management Team believe that Contact has assets and exploration potential that will require new funding and new technical expertise to be effective in unlocking their value. The current market conditions and increasing interest in Atlantic Canadian onshore oil and gas exploration create a compelling entry point for the New Board and the New Management Team.

Following completion of the Private Placement, the New Management Team expects to initially focus on increasing production from the Stoney Creek oil field. The New Management Team will also monitor the current drilling program at Parsons Pond in western Newfoundland, in which Contact holds a 5% carried interest, and actively review the shale gas opportunities on leases held by Contact in New Brunswick.

About Contact Exploration Inc.

Contact is a publicly-traded energy company with a focus on Canadian East Coast onshore oil production and exploration. Contact's common shares trade on the TSX Venture Exchange under the symbol "CEX". Contact currently has 62,743,385 common shares issued and outstanding. For the period ending December 31, 2009, Contact had approximately $130,000 in cash, no debt and approximately 50 Boe per day of oil production.

Contact has onshore interests in New Brunswick, Newfoundland and Nova Scotia which include:

  • Stoney Creek Field, NB (approximately 5,500 acres);
  • Frederick Brook Shale Prospect at South Stoney Creek, near Hillsborough, NB;
  • Shale gas leases near Cocagne and Monteagle, NB which are in close proximity to lease block ONG 01-10 which was recently tendered by the Province of NB;
  • 5% carried interest in Parsons Pond oil play, western NL. Operated by Nalcor Energy Oil and Gas, drilling commenced in February 2010 on the Seamus #1 well which is the first deep well ever drilled in the area. Contact is carried through the first well drilled on permits EP 03-101, EP 03-102, EP 03-103;
  • 5% royalty interest in the 475,000 acre Windsor shale prospect in NS;
  • 1.5% royalty interest in the CBM prospect in Cumberland, NS; and
  • Contact also has producing oil assets in south eastern Saskatchewan.

Trading of Contact shares remains halted pending receipt and review by the Exchange of acceptable documentation regarding the proposed Transactions.

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

Note Regarding Forward Looking Statements

This press release contains forward-looking statements. More particularly, this press release contains statements concerning the completion of the Transactions contemplated by the Agreement.

The forward-looking statements are based on certain key expectations and assumptions made by Contact, including expectations and assumptions concerning the timing of receipts of required shareholders, regulatory approvals, third party consents and the satisfaction of other conditions to the completion of the Transactions.

Although Contact believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements 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. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks that required shareholder, regulatory and third party approvals, consents are not obtained on terms satisfactory to the parties within the timelines provided for in the Agreement and risks that other conditions to the completion of the Transactions are not satisfied on the timelines set forth in the Agreement or at all.

The forward-looking statements contained in this press release are made as of the date hereof and Contact undertakes no obligation 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.

Our actual results could also differ materially from those anticipated in these forward-looking statements as a result of factors that may include, but are not limited to, the impact of government regulation, potential delays or changes in plans with respect to exploration and development projects, success of exploration and development activities, general industry and market conditions and other risks detailed from time to time in Contact's Management's Discussion and Analysis, which may be found at www.sedar.com.

The term "Boe" may be misleading, particularly if used in isolation. A boe conversion of 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.

To obtain the form Written Consent, please contact Darcy Spady via the contact information listed below.

Neither the 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.

Contact Information