Contact Exploration Inc. has signed a Joint Venture Agreement with Toreador Hungary Ltd., for participation in the drilling of two exploratory wells and the acquisition of 170 square kilometers of 3-D seismic in their shallow gas Szolnok prospect.
The prospects are located in the 262,000 hectare Szolnok exploration license area in the east central part of Hungary. It is one of the largest exploration permits in Hungary and is adjacent to producing oil and gas fields. The block contains at least 10 already defined exploration targets in the shallow Pannonian and Miocene siliclastic formations. The first two wells, to be drilled in the first half of 2008, have depths ranging from 1400 meters to 2250 meters.
Contact will be a partner in the drilling of the two wells and in the acquisition of the seismic data paying 21.67% of the cost to earn a 16.25% interest in the block. The projected total cost for the two wells and seismic is EUR 6.5 million, with Contact's portion being EUR 1.4 million. There are multiple pipeline shipping options in close proximity to each of the proposed wells, with an attractive European pricing scenario for potentially produced hydrocarbons.
This project will be operated by Toreador's staff in Hungary, and Contact will provide technical expertise as needed. The Szolnok opportunity is very similar to Contact's operations in New Brunswick, especially in Stoney Creek, where overlooked shallow reserves and an attractive royalty structure are in close proximity to pipelines and refining capacity. It is Contact's objective to achieve significant reserve and production increases from a non-operated position by participating technically in an area that has not seen modern technology applied to exploration models or reservoirs.
While Contact's main operating focus will remain the exploitation and exploration of its conventional Atlantic Canadian assets, Contact regards this Hungarian joint venture as an excellent opportunity for significant growth in production and reserves.
Toreador is a subsidiary of the NASDAQ listed Toreador Resources Corporation, which has operations in Turkey, Romania, Hungary and France.
Contact Exploration Inc. is a junior exploration company with a focus on Canadian East Coast onshore exploration & production. Contact's land claims and holdings are located in close proximity to the largest consumption markets in North America with pipeline and refinery infrastructure in place.
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