Contact Exploration Begins Drilling in Parsons Pond Prospect

Contact Exploration reports that last week the Parsons Pond, West Newfoundland, No. 1 well commenced drilling below surface casing that had been previously set to a depth of 110 meters. The well is being drilled with a coring rig that will provide continuous core over the entire well depth and has been designed so that it may be cased and completed for production. The well is projected to be drilled to a depth of 1,200 meters and is expected to take approximately 45 days to drill and evaluate. Contact is the operator of the drilling program.

Contact has a 50% working interest in the Parsons Pond well. Partners in the well include: Vulcan Minerals, Deer Lake Oil and Gas Inc., Crown Point Ventures Ltd., Gulf Shores Resources Ltd. and Overlord Financial Inc.. each partner has paid $150,000 toward the drilling cost to earn a 10% working interest.

The Parsons Pond area is renowned for surface oil seeps within Cambrian-Ordovician sediments. Shallow historic drilling in the area has encountered a light, sweet oil (43 degrees API) in several well bores which were drilled without the aid of subsurface seismic imaging. Recent seismic surveys of the area now clearly image potentially petroleum-trapping structures at depths beyond the historic drilling attempts. This well is the first in the area to be drilled on modern seismic data.

The target consists of an Ordovician structure which, based on seismic data, has an interpreted closure in excess of 25 square kilometers. A well drilled in 1965 near the structure may have started to tag the target before it was abandoned due to drilling problems. The well had oil shows and gas was encountered at the bottom of the hole.