Contact Exploration Inc.
TSX VENTURE : CEX

Contact Exploration Inc.

January 15, 2008 09:20 ET

Contact Exploration Inc.: Operations, Oil Production and Drilling Update

CALGARY, ALBERTA--(Marketwire - Jan. 15, 2008) - Contact Exploration Inc. ("Contact") (TSX VENTURE:CEX) is pleased to update its shareholders as to progress on the workover project in the Stoney Creek Field, the latest oil production volumes, and exploratory drilling plans in the South Stoney Creek Prospect.

Workover Progress in Stoney Creek New Brunswick:

In October, 2007 Contact commenced a rework program involving existing non-productive boreholes in the Stoney Creek Field. Initial results from the workover project have been very favourable, with inflow of oil seen in most of the wellbores as they were swab tested. Four successful candidates from the group are being prepared for production immediately, with pumps being installed in January. Approval to produce these wells has already been obtained from the New Brunswick government. It is expected that these four wells will add a total additional production of 25 barrels per day to the Stoney Creek Field.

Work on the remaining group of 10 wells in the workover program is still ongoing, with the candidates being analysed for bypassed gas pay. We anticipate bringing several more wells on production in the months ahead. Once this group of workovers is completed, additional non-producing wellbores with potential for re-work have been identified. A candidate for hydraulic fracturing has also been identified in the Stoney Creek Field.

It has been determined in the course of the workovers that there are several distinct production areas within the Stoney Creek Field, some of which have not been exploited. We are also examining the future feasibility of a low cost high density drilling program, once the use of existing wellbores has been maximized.

Corporate Oil Production Update:

In December, 2007 Contact's monthly production was approximately 1,800 barrels. This includes both New Brunswick and Saskatchewan production and gives an average of 60 barrels of oil per day. The average sale price for the oil was $85 per barrel. With a low royalty rate, averaging 12%, this represents a very significant netback to the wellhead for Contact.

For the months prior to December, the approximate production volumes were; 1,850 barrels in November, 1,700 barrels in October, and 650 barrels in September, for production rates of 61, 57 and 21 barrels per day, respectively. It is expected that the exit production rate for February 2008, with the addition of the four wells from the workover campaign, will be approximately 85 barrels per day. Contact is pleased with the solid growth in production of crude and anticipates continued growth from the Stoney Creek Field in the future.

Exploratory drilling plans in South Stoney Creek:

The second exploratory well in the Contact Operated South Stoney Creek Prospect, the Pound Hill C-67-2328 well, has been permitted by the New Brunswick Department of Natural Resources and location construction has commenced. Contact is projecting a February spud date, utilizing the Precision Drilling #176 rig. The planned maximum depth of the well is 1905 metres, with the target formations being the Hiram Brook, Fredricks Brook and Dawson Settlement sands. This location was chosen from evaluation of seismic as well as mapping the regional geology of the area. It is also located in proximity to the south-east corner of the Stoney Creek Field, which has been historically the most prolific production area.

Other Operations:

At the Windsor shale gas project in Nova Scotia, post fracturing operations are ongoing at the Kennetcook well locations, as announced in our December 3, 2007 press release. Operations are being conducted by Triangle Petroleum Ltd.

In Hungary, preparations are being made and equipment is being procured for the joint venture drilling program and the acquisition of 3D seismic data on the Szolnok exploration licence. As announced in the December 19, 2007 press release, two wells are to be drilled in the first half of 2008. Contact will be a partner in the drilling of the two wells and in the acquisition of the seismic data by paying 21.67% of the cost to earn a 16.25% interest in the block. This joint venture is being operated by Toreador Hungary Ltd., a subsidiary of the NASDAQ listed Toreador Resources Corporation.

"We are pleased with the steady growth of our oil production as a company, and looking forward to exploring in markets where world market prices of oil and natural gas can continue to be realized," commented Darcy Spady, President and CEO. "We are excited about future growth in core asset value through continuance of the workovers in Stoney Creek and the close proximity to core asset exploratory drilling in South Stoney Creek."

About Contact

Contact Exploration Inc. is a junior exploration company with a focus on Canadian East Coast onshore exploration & production. Contact's holdings and operations are located in close proximity to the world's largest consumption markets, near strong pipeline and refining infrastructure and in mature jurisdictions with reasonable royalty structures in place.

Contact's Philosophy is to operate production and close proximity exploration in our core area of Atlantic Canada, and to participate in unconventional or high-impact exploration, such as the Windsor Shale Block in Nova Scotia (operated by Triangle Petroleum) or the Szolnok license in Hungary (operated by Toreador Hungary).

Contact has onshore interests in approximately 700,000 acres in Nova Scotia, approximately 160,000 acres in west Newfoundland and 165,000 acres in New Brunswick which includes the Stoney Creek Field (approximately 5,500 acres), a field with estimated proved and probable reserves of 1.2 million barrels of oil and 6.5 bcf of natural gas. In addition to the Atlantic Canadian properties, Contact has producing oil assets in south eastern Saskatchewan and is earning an interest in the Szolnok shallow gas project in east central Hungary.

Certain statements contained herein may constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. We believe that the expectations reflected in the forward-looking statements are reasonable based upon management's current views but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date hereof. We do not intend, and do not assume any obligation, to update conclusions, forecasts or projections that may be contained in these forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by these forward-looking statements will occur, or if they do, that any benefits may be derived from them. Past results have been applied in drawing a conclusion or making a forecast or projection set out in the forward-looking information.

Our actual results could 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 Annual Information Form and Management's Discussion and Analysis, both of which may be found at www.sedar.com.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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