Contact Exploration Provides Operations Update
CALGARY, Dec. 13, 2012 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSX-V: CEX) announces that the first Contact-operated horizontal Montney well at 13-17-63-5 W6 (the "13-17 Well") was placed on production on December 1, 2012. The Company is pleased to report that during the first seven days of production the 13-17 Well averaged 200bbls of wellhead condensate/mmcf natural gas. Contact expects additional liquids recoveries at the third party gas plant to add between 30 and 130bbl/mmcf, depending on whether the gas is processed through the deep cut plant. On a per production day average basis, the 13-17 Well flowed gross rates of 750bbl/d condensate and 3.7mmcf/d raw gas during the first week (being 281 bbl/d condensate and 1.4mmcf/d raw gas net to Contact, before payout). Contact notes that downstream liquids processing bottlenecks have required Contact to temporarily restrict the productive capacity of the 13-17 Well, as Contact works with downstream plant operators to manage the substantial condensate volumes from the well. Contact also notes that during this production restricted period, flowing pressures at the 13-17 Well, being over 20MPa (2,900psi) at the well head, averaged over three times the line pressure. Contact holds a 37.5% working interest before payout and a 25% working interest after payout in the 13-17 Well. The Company advises that although the foregoing initial production rates from the 13-17 Well are very encouraging, these results may not necessarily be indicative of long-term performance or of ultimate recovery from the 13-17 Well.
Contact is also pleased to announce that operations to tie-in the second Contact operated Kakwa Montney well at 14-30-63-5 W6 (the "14-30 Well") are on schedule. Contact expects these operations to be finalized and the 14-30 Well to be on production by early January 2013, subject to processing capacity being available. Contact holds a 25% working interest in the 14-30 Well as well as in all additional wells to be drilled on the Kakwa joint interest block, going forward.
Also at Kakwa, Contact expects to spud the third Contact operated Montney well at 3-19-63-5 W6 (the "3-19 Well") within the next week. The 3-19 Well is a development well, being drilled between the 13-17 and 14-30 Wells. Drilling operations on the 3-19 Well are scheduled to be finished by late February 2013, inclusive of a break in drilling operations for the Christmas holidays.
New Brunswick Update
As announced by Contact on October 24, 2012, Contact is negotiating with Pieridae Energy Canada ("Pieridae"), a Canadian energy infrastructure development company, a formal participation and earning arrangement for the funding and joint development of Contact's New Brunswick natural gas assets. Pieridae previously announced the development of a liquefied natural gas export facility in Goldboro, Nova Scotia, Canada. Under the arrangement with Pieridae, Contact is to exclusively manage the exploration and development operations of all North American on-shore natural gas assets that become, going forward, dedicated to providing natural gas production for the Goldboro facility. Contact and Pieridae are currently finalizing the formal, definitive agreements respecting the project, and Contact expects the agreements to be completed within the next few weeks.
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 forgoing, this press release contains statements concerning additional liquids recoveries from the 13-17 Well at the third party gas plant, the timing to tie-in the 14-30 Well and for that well to be on production, the timing to spud and finish drilling operations on the 3-19 Well and the timing to finalize negotiations with Pieridae regarding the participation and earning arrangements and the specific terms of that arrangement, 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 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; 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 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 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, 2012. 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.
SOURCE Contact Exploration Inc.