Contact Exploration Reviewing Data from Parsons Pond No. 1

Contact Exploration Inc. reports that core plugs from the Parsons Pond No. 1 well, drilled in West Newfoundland, Canada, were analyzed to determine their velocity profiles so they could be compared with the estimates utilized in the original seismic interpretation. Estimates were used in the interpretation since there have been no wells drilled previously in this area with either core or log data available. The results show that the upper sands in the well, which were encountered in greater thickness than anticipated, were also lower velocity than estimated. This means that the targeted highly reflective zone at 870 meters was actually the Cow Head limestone, penetrated at 635 meters. The prospective Daniel's Harbour Member was thus not encountered in the tested fault block. There are no immediate plans to deepen the well, but further evaluation will address the possibility of deeper targets at this location.

In the short term Contact and its joint venture partners in the well are reviewing the potential for testing the uphole fractured zones in the Parsons Pond No. 1 well which had hydrocarbon shows during drilling and which may be equivalent to zones of production from old wells in the area. It is anticipated that a decision on this will be made within the next 30 days. Work would commence immediately once the appropriate equipment is available.

In the longer term, the new seismic information has shown that the middle Ordovician platform play is shallower than previously anticipated at approximately 2,300 meters. It also has the potential to be larger than previously mapped based on the new seismic information. Contact plans to re- map the play with the new seismic information and work with existing partners to attempt to get this deeper target drilled as soon as partners and financing can be arranged. The deeper play cannot be accessed with the existing well bore and must be drilled with a conventional drilling rig.

Contact feels that this new core data and seismic information will greatly improve our chances of establishing commercial production at Parsons Pond in the near future.