Contact Updates on Seismic Acquisition, Shale Gas Prospect

Contact Exploration has provided an update on its operations and has announced new production enhancements in the Stoney Creek Oil field, which may result in an increased reservoir size. Additionally, the company announces plans for workovers on two wells in the Hopewell Fairway, commencement of Seismic acquisition on the east flank of the Frederick Brook Prospect Block, an update on our New Brunswick shale gas prospect, and clarification of our carried working interest on the west coast of Newfoundland.

As part of Contact's ongoing workover strategy on existing wells in the Stoney Creek Oil Field in New Brunswick, well #104 was recently put on production after a cleanout procedure. No stimulation treatment was performed, and after a basic cleanout the well began producing between 7 and 10 barrels of oil per day. This well is located approximately 1 kilometer south of the existing interpreted pool boundary. This indicates a potential extension of the existing reservoir or the potential of a new pool to the south of the Stoney Creek Oil Field. Continued production and monitoring of this well will be required to validate this theory.

Also as part of Contact's ongoing low-cost workover strategy, a chemical enhancement treatment was executed on well #111 in the Stoney Creek field. After treatment and soaking of the near wellbore with the chemical solution, production on this well has increased by a factor of 12, from less than 10 barrels of oil per month, to an expected rate of 120 barrels per month (4 bbl/day). This procedure was very cost effective and with continued positive results in well #111 this same treatment could be used on up to 15 existing wellbores in the field. Contact has also identified up to 19 well locations that can be pad drilled within the existing Stoney Creek Field using similar stimulation techniques as our N-78-2328 well, providing market conditions improve that allow an access to capital. Currently, the workovers and production enhancements are being funded with cash flow from field production.

Contact has also commenced workovers and production testing on the L-44-2328 and H-55-2328 wells located in the Hillsborough area (Hopewell Fairway), approximately 10 kilometres south of the existing Stoney Creek Field. These wells are being re-entered and tested primarily due to their similarity to the wells in Stoney Creek. Based on knowledge gained from commercial production since June of 2007, Contact believes that it can re-activate these wells which were suspended some eight years ago by a previous operator, well before modern production re-commenced from Stoney Creek. This production data from the re-activated wells will help to determine if another field similar to Stoney Creek may exist in the area.

A 10 kilomete seismic acquisition program has been initiated on the east side of the Petitcodiac River on the east flank of the Frederick Brook Prospect block. This data will allow Contact to better understand the potential within our own acreage for the exploration and production of both conventional oil and gas as well as unconventional shale gas at the eastern extent of our landholdings.

Recently Edwin Macdonald, Contact's Vice President of Exploration, has been re-evaluating Contact's shale gas acreage based on regional well data and recently acquired seismic. The geologic interpretation is based on the integration of the 3D seismic volume over our Stoney Creek field with 120 kilometers of 2D regional data which extends across the basin. All existing wellbores in the area have also been scrutinized for the required characteristics to support a viable shale gas producing interval. Geochemical analysis from several of the wellbores show excellent total organic carbon content at maturities ranging from mature for oil to mature for dry gas generation. The section has the potential to generate both liquid and gas hydrocarbons which could be exploited through modern drilling and completion techniques for both conventional and unconventional reservoirs. This data is consistent with geochemical information collected from other portions of the Moncton Sub-basin by the New Brunswick Department of Natural Resources and other exploration companies. From this re-examination of the data, it is believed that there is in excess of 25,000 acres of thick shale gas potential on Contact's main block.

As stated in our most recent MD&A, which is filed on SEDAR, we have continued to participate on the west cost of Newfoundland through a 5% Carried Interest in three exploration blocks in the Parson's Pond area. It was announced recently that Nalcor Energy has become the operator of these blocks, and it is our understanding that drilling plans for one of the blocks are being formulated by the operator for commencement in the near future.

"We are very pleased by the possibility of enlargement of the reservoir size of the Stoney Creek Field, as well as some of the positive results of our low cost workover activities during this period of market instability", noted Darcy Spady, President and CEO. "We are also pressing ahead on future innovation in the prospect area and the collection of important seismic data to enhance future plans and possible drilling activity."