CEX
2010-07-29
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Contact Announces Significant Oil and Gas Reserves
Value Increase, Year End Filings and Appointment of a
New Director
CALGARY, ALBERTA--(Marketwire - July 29, 2010) - Contact Exploration Inc.
("Contact" or the "Corporation") (TSX VENTURE:CEX) is pleased to announce
the results from the March 31st, 2010 year-end evaluation of its oil and
gas assets as assessed by the independent firm of Martin & Brusset
Associates of Calgary, as well as the filing of year-end documents on
SEDAR. Furthermore, Contact is pleased to welcome Bruce Allford to its
Board of Directors, who will also serve as Corporate Secretary.
Petroleum Reserves Evaluation
The reserves estimated are net values before tax and after royalties and
were established in accordance with National Instrument 51-101 of the
Canadian Securities Administrators. Contact's reserves include the 100%
working interest Stoney Creek Field in New Brunswick (approximately 99% of
Contact's reserves) and oil producing wells in Stoughton, Saskatchewan.
Highlights include:
/T/
-- Net Proved oil reserves increased in 2010 by 119% above reserve volumes
reported in 2009 to 147,000 barrels from 67,000 barrels
-- Net present value of Net Proved oil reserves (discounted at 10%)
increased by 130% from $1,313,000 to $3,026,000
-- Net present value of Net Proved and Probable oil reserves (discounted at
10%) increased by 45% from $26,265,000 to $37,974,000
-- Net Proved and Probable oil reserves increased by 9% from by 1,316,000
to 1,429,000 barrels
-- Net present value of the entire reserves portfolio (discounted at 10%)
increased by 14% to $61,438,000 from $54,041,000
-- Net Proved and Probable gas reserves remain constant at 7.164 Billion
cubic feet of natural gas
/T/
Increased reserve values resulted from establishing an advanced drilling
and completion strategy at the Company's Stoney Creek Field within a
sophisticated development plan, additional production history from the
Stoney Creek N-78 well enabling more effective modeling of reservoir
performance and changes in forecast prices. Horizontal wells will be
drilled and then completed using advanced multi- stage fracing technology,
enabling greater access to the volumes of oil in place within this very old
field.
/T/
Summary of Oil, Gas & Natural Gas Liquids Reserves and Present Worth
(As of March 31, 2010)
Martin & Brusset Associates April 1, 2010 Prices and Escalations
----- Company's Interest in Reserves -----
Crude Oil Natural Gas NGL's
MBbl MMcf MBbl
Gross Net Gross Net Gross Net
Before Income Taxes
-------------------
Proved Developed
Producing 37 34 0 0 0 0
Non-Producing 0 0 758 629 0 0
Proved
Undeveloped 132 113 0 0 0 0
Total Proved 169 147 758 629 0 0
Probable
Developed 32 29 606 503 0 0
Undeveloped 1448 1254 7231 6032 0 0
Total
Probable 1479 1282 7838 6535 0 0
Proved
+ Probable 1649 1429 8596 7164 0 0
Net Present Value of Net Production
--------------- Income M$ ----------------
Undis-
counted ---------- Discounted -----------
0% 5% 10% 12% 15% 20%
Before Income Taxes
-------------------
Proved Developed
Producing 341 372 389 393 396 398
Non-Producing 3536 2959 2507 2354 2148 1858
Proved
Undeveloped 4454 3431 2637 2369 2010 1505
Total Proved 8331 6762 5533 5116 4554 3760
Probable
Developed 5403 4056 3123 2831 2458 1973
Undeveloped 116690 76943 52782 45758 37161 26553
Total
Probable 122093 80998 55905 48589 39620 28526
Proved
+ Probable 130424 87760 61438 53704 44173 32286
/T/
Year End Summary
Contact did not invest significant capital during the fiscal year 2010.
Operational activity was focused in New Brunswick with emphasis on the
greater Stoney Creek area.
/T/
Fiscal year end March 31, 2010 (Audited)
----------------------------------------
2010 2009 2008
$ $ $
Revenues (Net of Royalties
and tax credits): 1,281,390 1,384,904 1,149,243
Net Loss: (1,390,909) (5,504,753) (143,626)
Loss Per Diluted Share: (0.022) (0.094) (0.004)
Total Assets: 13,234,353 14,620,713 9,184,346
/T/
Highlights include:
/T/
-- A seismic program was shot in New Brunswick to assess the prospectivity
of lands on trend with the Stoney Creek Field
-- This seismic program enabled the retention of associated lands and
helped identify additional prospectivity adjacent to the producing
field.
-- Oil field optimization activities were deployed both within and south of
the Stoney Creek Field.
-- In Nova Scotia, a working interest in the Windsor shale gas block was
converted to a 5% royalty interest.
-- Contact now has approximately $27.5 Million in various long life tax
pools, of which only approximately $100,000 will expire in the next 3
years.
/T/
Outlook
As noted in the press releases of April 12th, May 7th and May 11th 2010,
subsequent to the Company's annual reporting period, a new Board of
Directors and Management team was announced. In conjunction with the Board
and Management announcements, a $3.5 Million private placement was
completed. The Company had indications of interest to substantially surpass
the $3.5 Million raised. Once the Company has full regulatory and Board
approval, the funds will be largely dedicated towards the further
development of the Stoney Creek Field.
The potential shale gas assets within the Company's New Brunswick portfolio
continue to be advanced technically and are expected to play an ever
increasing role in Contact's future activities. Contact's potential shale
gas resources in South Stoney Creek are on trend with Corridor Resources'
2009 announced Green Road G-41 shale gas discovery, currently being further
evaluated by Apache's recently commenced horizontal well. The potential
resources in the Monteagle/Cocagne areas are surrounded by lands that
Southwestern Energy acquired in March 2010 with a successful bid of a $47
Million work commitment. Neither the South Stoney Creek or
Monteagle/Cocagne areas have been assigned value in the current reserve
report.
Details of the reserve report have been included with the year end results
contained in the "Statement of Reserves Data and Other Oil and Gas
Information" (Form 51- 101F1) for the year ending March 31, 2010, which is
available with our full financial year end filings at www.sedar.com.
Appointment of New Director
Contact is pleased to announce the appointment of Bruce Allford as a
Director of the Company and as Corporate Secretary. Mr. Allford is a
partner with the Calgary law firm, Burnet, Duckworth & Palmer LLP. Mr.
Allford is a director or corporate secretary of several other companies in
the energy and energy services sectors.
About Contact Exploration Inc.
Contact Exploration Inc. is a public company with a focus on Canadian East
Coast onshore oil production & exploration. Our philosophy is to operate
production and exploration in our core area of Atlantic Canada, and to
participate through overrides and carried interests in regional
unconventional plays, such as coalbed methane in the Cumberland Basin,
shale gas in the Windsor area, and exploration on the west coast of
Newfoundland. Contact has onshore interests in Nova Scotia, Newfoundland
and New Brunswick which includes the Stoney Creek Field. In addition to the
Atlantic Canadian properties, Contact has producing oil assets in south
eastern Saskatchewan.
ADVISORY: This press release contains certain forward-looking information
and statements within the meaning of applicable securities laws. The use of
any of the words "expect", "anticipate", "continue", "estimate", "may",
"will", "project", "should", "believe", "plans", "intends" and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the forgoing, this press
release contains statements concerning the exploration and development of
the Company's properties in the Stoney Creek and Monteagle/Cocagne areas of
New Brunswick and that petroleum and natural gas reserves may be
encountered through the exploration of such properties. Although Contact
believes that the expectations reflected in these forward looking
statements are reasonable, undue reliance should not be placed on them
because Contact can give no assurance that they will prove to be correct.
Since forward looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties. In
particular, no assurances can be given that the Company's exploration and
development activities in the Stoney Creek and Monteagle/Cocagne areas of
New Brunswick will be successful or that material volumes of petroleum and
natural gas reserves will be encountered, or if encountered can be produced
on a commercial basis. Further, events or circumstances may cause actual
results to differ materially from those predicted as a result of numerous
known and unknown risks, uncertainties, and other factors, many of which
are beyond the control of the Company. Additional information regarding
some of these risk factors may be found under "Risk Factors" in the
Company's Management Discussion and Analysis prepared for the year ended
March 31, 2010. The reader is cautioned not to place undue reliance on this
forward-looking information. The forward looking statements contained in
this press release are made as of the date hereof and Contact undertakes no
obligations to update publicly or revise any forward looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Contact Exploration Inc.
Steve Harding
President & CEO
(403) 234-8663
(403) 695-3915 (FAX)
sharding@contactexp.com
www.contactexp.com
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