CALGARY, ALBERTA–(Marketwired – Oct. 16, 2013) – Contact Exploration Inc. (“Contact” or the “Company“) (TSX VENTURE:CEX) is pleased to announce that the fourth Contact-operated horizontal Montney well at 5-23-63-6 W6 (the “5-23 Well“) (Contact 25% working interest) has been successfully completed and tested. The well was flow-tested for approximately 170 hours. During the final 24 hours of flow-back the well produced against anticipated gathering system pressure of approximately 2,000 kPa and averaged gross production rates of 1,433 boe/d consisting of 815 bbl/d condensate and 3,704 mscf/d natural gas (204 bbl/d and 920 mscf/d, or 358 boe/d combined, net to Contact).
The 5-23 Well continues to demonstrate a high ratio of condensate to natural gas production from the Kakwa Montney play, flowing at an average 195 bbls of condensate/mmscf during the entire test. The total drill depth of the 5-23 Well was approximately 70 to 100 meters vertically deeper and two miles further west than any other Contact-operated Kakwa well. The confirmation of liquids-rich gas prospectivity in the Middle Montney further to the west on Contact’s East Kakwa lands extends the scope and magnitude of the Company’s East Kakwa project.
The Company advises that although the initial rates from the 5-23 Well are very encouraging, production test results are not necessarily indicative of long-term performance or of ultimate recovery from the 5-23 Well. Going forward, Contact plans to release 30 day initial production rates from additional wells drilled at Kakwa, the results of which are expected to be more reflective of longer term performance.
Facilities and pipeline work will begin immediately to provide for tie-in of production from the 5-23 Well into Company-operated infrastructure, including the 16-7-63-5 W6M compressor station and condensate stabilization facility (“16-7 Facility“). Construction of the 16-7 Facility continues on schedule for facility start-up in December 2013.
Contact continues to make improvements to the design of its operated wells at Kakwa. The Company’s fifth operated Kakwa well at 16-25-63-5 W6M (“16-25 Well“) was spud on September 10, 2013 and reached a total depth of 4,680 meters after 33.5 days of drilling, representing a 25% reduction in drilling time from other Contact-operated Kakwa wells. Production casing is now being run in the 16-25 Well, with rig release expected in the very near term. Contact expects to begin completion operations on 16-25 Well in November 2013.
Contact has entered into a one year contract with a drilling contractor, securing a drilling rig for use in Kakwa. The Company intends to utilize this rig to spud its next 25% working interest Montney well to drill from a surface location at 16-8-63-5 W6M with a bottom hole location at 16-17-63-5 W6M in November 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.
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 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.
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 foregoing, this press release contains statements concerning the Company announcing 30 day production test results on future Kakwa wells, such tests being reflective of future performance of the applicable wells, timing for start-up of the 16-7 Facility and the tie-in of the 5-23 Well, the timing for rig release and completion operations on the 16-25 Well and the timing of drilling Contact’s first well with the new drilling rig, among others.
Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Contact which have been used to develop such statements and information but which may prove to be incorrect. Although Contact believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them 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. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company’s exploration and development activities respecting the Deep Basin Montney project, the 5-23 Well and the 16-25 Well will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; that the results of the 24 hour production test will be indicative of the long-term performance of the 5-23 Well or of ultimate recovery from the well; the ultimate size and scope of any hydrocarbon bearing formations at the Deep Basin Montney project; that additional drilling operations in the Deep Basin Montney project, including at the 5-23 Well and the 16-25 Well, will be successful such that further development activities in this area is warranted; that Contact’s efforts to raise additional capital will be successful; that the new drilling rig will spud in November 2013; that the 16-7 Facility will be completed for start-up in December 2013; that Contact will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Contact’s reserve volumes; the general stability of the economic and political environment in which Contact operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Contact to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Contact operates; and the ability of Contact to successfully market its oil and natural gas products.
Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company’s products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Contact or by third party operators of Contact’s properties, increased debt levels or debt service requirements; inaccurate estimation of Contact’s oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Contact’s public disclosure documents. Additional information regarding some of these risk factors may be found under “Risk Factors” in the Company’s Management Discussion and Analysis prepared for the year ended March 31, 2013. The reader is cautioned not to place undue reliance on this forward-looking information. The forward-looking statements contained in this press release are made as of the date hereof and Contact undertakes no obligations 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.
Neither 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.