Contact Exploration Provides Operations Update
CALGARY, ALBERTA--(Marketwired - Jan 20, 2014) - Contact
Exploration Inc. ("Contact" or the "Company") (TSX-VENTURE:CEX) is
pleased to provide an operations update on its activities in the
Kakwa area of Alberta.
Operated Activities
Contact holds a 25% working interest in all Montney wells and
associated facilities on a 16 3/4 section block in the Kakwa,
Alberta area, other than in the 13-17-63-5W6 Well ("13-17 Well") in
which the Company's working interest is 37.5% before payout, 25%
after payout. Contact is the operator of all wells and facilities
on this 16 3/4 section block.
The central compression and condensate stabilization facility
located at 16-7-63-5W6 ("16-7 Facility") has now been fully
constructed and commissioned. The 16-7 Facility will be used to
compress natural gas from the Contact-operated Kakwa area wells for
transportation to a third party gas plant, as well as to stabilize
and store condensate prior to trucking liquids to sales off-take
facilities. Over the past two weeks the 16-7 Facility has
demonstrated the ability to receive up to 14mmcf/d of natural gas
production and associated condensate production. The commissioning
of the 16-7 Facility extended from mid-December 2013 to mid-January
2014. Contact's December 2013 Kakwa production was thereby
restricted due to additional downtime of the Kakwa wells while the
16-7 Facility underwent commissioning.
The Contact operated wells at 13-17-63-5W6, 14-30-63-5W6,
3-19-63-5W6 and 5-23-63-6W6 are currently flowing through the 16-7
Facility at aggregate gross production rates of up to 8mmcf/d
natural gas and 1,200bbl/d condensate (2mmcf/d and 300bbl/d net to
Contact). This flush production rate is expected to decline as
production continues, in keeping with normal production declines.
However, Contact anticipates that production from wells currently
being drilled, completed or tied-in at Kakwa will continue to
increase the Company's overall production levels.
Contact recently completed and production tested the
16-25-63-5W6 Montney well ("16-25 Well"). During a short production
test, the 16-25 Well demonstrated initial deliverability and
condensate yields consistent with the Company's other operated
wells at Kakwa. Contact notes that the results from production
testing are not necessarily indicative of the long term performance
or of the ultimate recovery from the 16-25 Well. The 16-25 Well is
now being equipped to produce into the 16-7 Facility and Contact
expects this well to be brought onto production in early February
2014.
Contact has completed drilling of the 16-17-63-5W6 Montney well
("16-17 Well") to a total depth of 5,191m. The 16-17 Well was
drilled from the same pad as Contact's first Kakwa Montney well at
13-17. Drilling operations were carried out on time and on budget,
taking 42 days from spud to rig release. Completion operations are
underway on the 16-17 Well and Contact expects to undertake
production testing of the well in late January 2014. With success,
the 16-17 Well will be equipped for production into the 16-7
Facility, with production expected to commence in mid-February
2014.
Also at Kakwa, Contact is currently drilling a Montney well at
15-30-63-5W6 ("15-30 Well"), the first of two back-to-back wells
expected to be drilled by the Company from the drilling pad at
3-30-63-5W6. The 15-30 Well was spud on December 31, 2013 and is
expected to take approximately 45 days to reach total depth. Upon
casing the 15-30 Well, Contact intends to immediately spud an
additional well from the 3-30 pad ("02/14-30 Well"), with spudding
expected to occur in February 2014. The 02/14-30 Well is being
designed to penetrate the Upper Montney D4 interval. Contact
expects to complete both the 15-30 Well and the 02/14-30 Well upon
concluding drilling operations on the 02/14-30 Well. Contact
anticipates drilling and completion operations on the 15-30 Well
and the 02/14-30 Well to be finalized in April 2014 and, with
success, expects both wells to be equipped and flowing into the
16-7 Facility in May 2014.
As previously announced Contact intends to employ one rig year
round at Kakwa. The Company is currently permitting a new
multi-well pad at 7-19-63-5W6 to facilitate the drilling of two
long-reach (approximately 1.5 mile) horizontal wells between April
and July 2014. The Company expects to complete these wells
consecutively once the second well has finished drilling.
Non-Operated Activities
Adjoining the 16 3/4 section block discussed above, Contact
holds a 23.75% working interest in two non-operated sections at
Kakwa. The Company participated in the drilling of one Montney well
on these lands, at 14-2-63-6W6 ("14-2 Well"). The 14-2 Well was
placed into production in September 2013 but was shut in for
substantially all of November and December 2013 due to the
operator's infrastructure restrictions. The participants in the
14-2 Well met in late 2013 to discuss production strategies, and
the operator agreed to re-commence production at restricted but
stable rates. The 14-2 Well re-commenced production on January 7,
2014 as part of establishing a longer term performance profile, and
determining an optimum go-forward production strategy, for the
well.
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 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 expected production declines
from existing wells, and production additions from new wells, at
Kakwa; the timing for the 16-25 Well to be brought onto production;
the timing to test, equip and bring onto production the 16-17 Well;
the timing to drill the 15-30 Well to total depth, the timing to
spud the 02/14-30 Well and the timing to complete, equip and bring
both such wells onto production; and the timing to drill and
complete two long-reach horizontal wells off a pad at
7-19-63-5W6.
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 and completion
operations in the Deep Basin Montney project 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, 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.
Contact Exploration Inc.Steve HardingPresident and CEO(403)
771-1091(403) 695-3915sharding@contactexp.comwww.contactexp.com
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