Contact Exploration Inc.
TSX VENTURE : CEX

Contact Exploration Inc.

August 21, 2006 10:04 ET

Contact Exploration Inc.: East Coast Operations Update

CALGARY, ALBERTA--(CCNMatthews - Aug. 21, 2006) - Contact Exploration Inc. (TSX VENTURE:CEX) is pleased to announce that drilling operations have been completed on its second horizontal well (I-88-2328) at the company's 100% owned Stoney Creek Field in New Brunswick.

The second horizontal well was drilled to a depth of 1,562 meters and a production liner was set in the 450 meter open hole section. The reservoir section was as expected with very good porosity and hydrocarbon shows.

A completion rig has been mobilized and has commenced with the completion of the first horizontal well A89-2328. The rig will then proceed to complete the I-88-2328 well. As part of the well completions, it is planned to initially obtain reservoir pressure build-ups on both wells after which they will be heated with a glycol circulatory system for approximately 30 days prior to conducting production testing.

Contact is also pleased to announce that it has acquired an additional 11,690 acres in the Stoney Creek area. The acreage compliments our existing acreage in and around the Stoney Creek oilfield and brings our overall acreage position in the area to approximately 75,000 acres. Contact is in the process of completing a 100 km 2-D seismic shoot over this new acreage and its other acreage adjacent to the Stoney Creek Field. The Company anticipates drilling a 1,500 metre test well on these new lands during the fourth quarter.

About Stoney Creek

Located approximately 10 miles south of Moncton, New Brunswick, Stoney Creek is in close proximity to the largest consumption market in North America with existing pipeline and refinery infrastructure in place. Recognized as one of the oldest producing fields in Canada, the Stoney Creek field produced approximately 800,000 bbl of oil and 28.7 billion cubic feet of gas from 1909 to 1991. The reservoir is approximately 2,700 feet deep and averages 100 feet in thickness. The reservoir quality is excellent with porosity averaging 18% and permeability averaging 160 md. To date, less than 5% of the original oil in place has been recovered. Incremental gas reserves also exist. Utilizing 3-D seismic, 3-D reservoir modeling and horizontal drilling technology, Contact plans to exploit incremental oil and gas from the Stoney Creek field.

About Contact

Contact Exploration Inc. is a junior exploration company with a focus on Canadian East Coast onshore exploration. Contact's land is located in close proximity to the largest consumption markets in North American with pipeline and refinery infrastructure in place.

Contact has interests in approximately 2.3 million acres onshore Nova Scotia including its developing Coal Bed Methane play at Cumberland, approximately 160,000 acres onshore West Newfoundland and 75,000 acres onshore New Brunswick which includes the Stoney Creek Field.

Contacts' objective is to deliver early cash-flow from the Stoney Creek Field; expand production potential by utilizing 3-D seismic, horizontal drilling and reservoir modeling while continuing to explore underdeveloped basins for home run targets in the East Coast.

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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