Contact Exploration Inc.

Contact Exploration Inc.

September 16, 2009 08:30 ET

Contact Announces Stoney Creek Production Enhancements, Seismic Acquisition and Shale Gas Update

CALGARY, ALBERTA--(Marketwire - Sept. 16, 2009) - Contact Exploration Inc. ("Contact") (TSX VENTURE:CEX) is please to update its operations with announcements regarding production enhancements in the Stoney Creek Oil field which may result in an increased reservoir size, plans for workovers on two wells in the Hopewell Fairway, commencement of Seismic acquisition on the east flank of the Frederick Brook Prospect Block, an update on our New Brunswick shale gas prospect, and clarification of our carried working interest on the west coast of Newfoundland.

As part of Contact's ongoing workover strategy on existing wells in the Stoney Creek Oil Field in New Brunswick, well #104 was recently put on production after a cleanout procedure. No stimulation treatment was performed, and after a basic cleanout the well began producing between 7 and 10 barrels of oil per day. This well is located approximately 1 kilometre south of the existing interpreted pool boundary. This indicates a potential extension of the existing reservoir or the potential of a new pool to the south of the Stoney Creek Oil Field. Continued production and monitoring of this well will be required to validate this theory.

Also as part of Contact's ongoing low-cost workover strategy, a chemical enhancement treatment was executed on well #111 in the Stoney Creek field. After treatment and soaking of the near wellbore with the chemical solution, production on this well has increased by a factor of 12, from less than 10 barrels of oil per month, to an expected rate of 120 barrels per month (4 bbl/day). This procedure was very cost effective and with continued positive results in well #111 this same treatment could be used on up to 15 existing wellbores in the field. Contact has also identified up to 19 well locations that can be pad drilled within the existing Stoney Creek Field using similar stimulation techniques as our N-78-2328 well, providing market conditions improve that allow an access to capital. Currently, the workovers and production enhancements are being funded with cash flow from field production.

Contact has also commenced workovers and production testing on the L-44-2328 and H-55-2328 wells located in the Hillsborough area (Hopewell Fairway), approximately 10 kilometres south of the existing Stoney Creek Field. These wells are being re-entered and tested primarily due to their similarity to the wells in Stoney Creek. Based on knowledge gained from commercial production since June of 2007, Contact believes that it can re-activate these wells which were suspended some eight years ago by a previous operator, well before modern production re-commenced from Stoney Creek. This production data from the re-activated wells will help to determine if another field similar to Stoney Creek may exist in the area.

A 10 kilometre seismic acquisition program has been initiated on the east side of the Petitcodiac River on the east flank of the Frederick Brook Prospect block. This data will allow Contact to better understand the potential within our own acreage for the exploration and production of both conventional oil and gas as well as unconventional shale gas at the eastern extent of our landholdings.

Recently Edwin Macdonald, Contact's Vice President of Exploration, has been re-evaluating Contact's shale gas acreage based on regional well data and recently acquired seismic. The geologic interpretation is based on the integration of the 3D seismic volume over our Stoney Creek field with 120 kilometres of 2D regional data which extends across the basin. All existing wellbores in the area have also been scrutinized for the required characteristics to support a viable shale gas producing interval. Geochemical analysis from several of the wellbores show excellent total organic carbon content at maturities ranging from mature for oil to mature for dry gas generation. The section has the potential to generate both liquid and gas hydrocarbons which could be exploited through modern drilling and completion techniques for both conventional and unconventional reservoirs. This data is consistent with geochemical information collected from other portions of the Moncton Sub-basin by the New Brunswick Department of Natural Resources and other exploration companies. From this re-examination of the data, it is believed that there is in excess of 25,000 acres of thick shale gas potential on Contact's main block.

As stated in our most recent MD&A, which is filed on SEDAR, we have continued to participate on the west cost of Newfoundland through a 5% Carried Interest in three exploration blocks in the Parson's Pond area. It was announced recently that Nalcor Energy has become the operator of these blocks, and it is our understanding that drilling plans for one of the blocks are being formulated by the operator for commencement in the near future.

"We are very pleased by the possibility of enlargement of the reservoir size of the Stoney Creek Field, as well as some of the positive results of our low cost workover activities during this period of market instability", noted Darcy Spady, President and CEO. "We are also pressing ahead on future innovation in the prospect area and the collection of important seismic data to enhance future plans and possible drilling activity."

About Contact Exploration Inc.

Contact Exploration Inc. is a public company with a focus on Canadian East Coast onshore oil production & exploration.

Our philosophy is to operate production and exploration in our core area of Atlantic Canada, and to participate through overrides and carried interests in regional unconventional plays, such as coalbed methane in the Cumberland Basin, shale gas in the Windsor area, and exploration on the west coast of Newfoundland.

Contact has onshore interests in Nova Scotia, Newfoundland and New Brunswick which includes the Stoney Creek Field (approximately 5,500 acres), a field with estimated proved and probable reserves of 1.3 million barrels of oil and 7.1 bcf of natural gas, and the Frederick Brook Shale Prospect in South Stoney Creek. In addition to the Atlantic Canadian properties, Contact has producing oil assets in south eastern Saskatchewan.

Certain statements contained herein may constitute forward-looking statements. These statements relate to future events or our future performance, including statements with respect to production enhancements and possible increase in reservoir size, plans for workovers, and seismic acquisition and evaluation. 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, except as required by law. 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 and we have made assumptions in relation to the availability of equipment and our ability to continue to achieve similar results as in the past with respect to workovers.

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

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.

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