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Contact Exploration Announces Participation in New Acreage and Well

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Contact Exploration said Wednesday that it will be participating in a new non-operated Montney well, immediately adjacent to its existing 25 percent working interest Kakwa acreage. The operator advises that drilling of this well is expected to start in mid-February. Contact is to pay 23.75 percent of the costs of drilling and casing this well to earn an average 23.75 percent working interest in the Montney Formation in 2.25 gross sections of lands contiguous to Contact's existing Kakwa acreage position, subject to a 5 percent non-convertible gross overriding royalty on the production from the well. Once earned, Contact will hold 27 gross (12.75 net) sections of Montney acreage at Kakwa.

The first Contact-operated horizontal Montney well has been on production since Dec.1, 2012. Various capacity bottlenecks associated with downstream processing restricted December 2012 production from this well. Upon introducing additional condensate handling equipment at the well site on Jan. 4, 2013, Contact has maintained stable gross production averaging 3.8 million cubic feet per day (mmcfd) and 575 barrels per day (bbld) well head condensate. Contact has a 37.5 percent working interest in the 13-17 well, before payout. 

Contact's second operated Montney well has been successfully tied into downstream processing facilities. In January 2013, the 14-30 well was flowed for only a brief period, due to the third party gas plant not having capacity for the extremely high levels of free flowing condensate from the well.

Contact's third operated Montney well is being drilled from the same surface location as the 14-30 well, with drilling scheduled to be finished in mid-February 2013, and completion operations anticipated to be finished by mid-March 2013. Once completion operations on the 3-19 well are finished, Contact will equip the 14-30 and 3-19 wells in a similar fashion to the 13-17 well, such that condensate can be separated at location, allowing for flow of natural gas from these wells to the third party facility and for condensate to be trucked directly to the sales point. Contact has a 25 percent interest in both the 14-30 and 3-19 Wells. 

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