Contact Exploration Announces Flow Through Private Placement and Provides Montney Drilling Update

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

(TSX-V:CEX)

CALGARY, March 14, 2012 /PRNewswire/ - Contact Exploration Inc. ("Contact" or the "Company") (TSX-V: CEX) is pleased to announce that it has entered into an agreement with MGI Securities Inc. ("MGI") respecting a brokered private placement (the "Flow Through Private Placement") pursuant to which MGI will act as Contact's agent to sell, on a "best efforts" basis, up to 15,384,615 common shares in the capital of the Company to be issued on a "flow-through" basis pursuant to the Income Tax Act (Canada) ("Flow-Through Shares") to exempt buyers on a private placement basis at a price of $0.13 per Flow-Through Share, for aggregate gross proceeds of up to $2 million.

Contact expects to use the proceeds of the Flow Through Private Placement to incur eligible Canadian Exploration Expenses to fund its ongoing capital programs. These qualifying Canadian Exploration Expense expenditures will be renounced to subscribers effective December 31, 2012.  The Flow-Through Shares issued pursuant to the Flow Through Private Placement will be subject to a four-month hold period from the closing date, which is anticipated to occur on or about April 5, 2012.  The Flow Through Private Placement is subject to approval from the TSX Venture Exchange ("TSXV").

Contact is also negotiating a non-brokered private placement (the "Preferred Share Placement") of up to $1 million of convertible, redeemable, 8% preferred shares to a third party purchaser, which placement remains subject to the completion of final documentation and the approval of the TSXV. Contact expects to finalize the Preferred Share Placement within the next few weeks and will announce further information as terms are finalized.

As previously announced, Contact and its partners are currently drilling a Montney exploratory well in the Kakwa area of Alberta.  To date, drilling costs associated with this well remain on budget and intermediate casing is scheduled to be set in the Montney formation within the next week.  The well is then programmed to be drilled horizontally for a minimum distance of approximately 1,000 meters, expected to reach total depth in April 2012.

Should Contact successfully close both the Flow Through Private Placement and the Preferred Share Placement for the maximum gross proceeds contemplated, Contact expects to have fully funded its capital obligations associated with the drilling of the Montney well, with $1 million of available cash and an undrawn $2 million credit facility. Contact anticipates finalizing completion operations on this well after Spring break-up.

About Contact Exploration Inc.

Contact Exploration Inc. is a public company which has been focused on Canadian East Coast onshore oil and gas exploration and development. Our philosophy is to operate exploration and development in our core areas of Stoney Creek, Hillsborough and Edgett's Landing, New Brunswick and to participate through overrides and carried interests in certain regional unconventional plays in Nova Scotia and Newfoundland. In addition to the Atlantic Canadian properties, Contact is pursuing a new core area in Alberta's "Deep Basin" targeting the Montney Formation.

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", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" 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 the anticipated closing of the Private Placement and Preferred Share Placement (the "Placements"), the anticipated use of the proceeds of the Placements, the timing to conclude drilling operations on the Company's Montney well and the Company having fully funded certain obligations subject to the Placements having closed. This press release also contains statements concerning the timing and scope of exploration and development activities on the Company's properties in the Resthaven-Kakwa area of Alberta, the prospectivity of the Resthaven-Kakwa area, the petroleum and natural gas reserves and production that may be encountered through the exploration of such properties and the timing for drilling and completing the first well in this area.

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.  The closing of the Placements could be delayed if Contact is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned or if final documentation regarding the Preferred Share Placement is not successfully negotiated.  The Placements will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied.  Accordingly, there is a risk that the Placements will not be completed within the anticipated time or at all.  The intended use of the proceeds of the Placements by Contact might change if the board of directors of the Company determines that it would be in the best interests of Contact to deploy the proceeds in respect of other Canadian Exploration Expense, or other, expenditures. 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 Resthaven-Kakwa prospect 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 Resthaven-Kakwa; that drilling operations in Resthaven-Kakwa will be successful such that further development activities in this area is warranted; 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, 2011.  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.