(TSX-V:CEX)
CALGARY, March 31 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSX-V: CEX) is pleased to provide the following operational update. In late 2010 Contact successfully drilled and completed two horizontal wells in the Stoney Creek field in New Brunswick. Although oil productivity was strong, production levels remained below anticipated reservoir performance. The Company has now equipped the N88 well with a larger 300 bbl/d screw pump and has re-entered and cleaned-out suspected restrictions within both the N88 and K78 wells using coiled tubing. In this clean-out, both wells were found to contain significant plugs in their lateral sections, consisting primarily of frac sand. These plugs act to increase the wellbore pressure that hydrocarbons must flow against, restricting production. The location of these sand accumulations indicates that inflow from three of the six fracs in K78 and four of the eight fracs in N88 had been compromised. Although removal of these sand plugs is expected to have a positive result on production rates and reserves from each well, Contact cautions that it is too early to estimate how long the sand plugs were present, to what extent these plugs impacted initial well performance or to what extent the clean out of the wells will improve production volumes or ultimate recoverable reserves.
The N88 well was placed back online with the screw pump on March 28, 2011, initially recovering much of the workover fluid, producing 150 - 175 bbl/d in that time. The K78 well is expected to be online shortly, with swab rates suggesting that initial productivity should exceed earlier reported rates.
Contact continues to be very encouraged with the Stoney Creek reservoir and its performance. The Company is in the process of licensing four locations as part of an anticipated summer 2011 drill program and will incorporate these recent findings into a comprehensive field development program.
About Contact Exploration Inc.
Contact Exploration Inc. is a public company with a focus on Canadian East Coast onshore oil and gas production and 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 certain 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 area of New Brunswick, crude oil production volumes from the Company's recently drilled horizontal wells in Stoney Creek and the sustainability thereof, the effect of clean out operations on the estimated future crude oil production volumes and reserves from these wells and the factors that may effect this estimate, petroleum and natural gas reserves or resources that may be encountered through the exploration of such properties, the ability of the Company to drill additional oil prospects in New Brunswick and possible results from the drilling and completing of additional oil wells on Company land in New Brunswick. 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 or other areas of New Brunswick will be successful, that material volumes of petroleum and natural gas reserves or resources will be encountered from such activities, or if encountered can be produced on a commercial basis or that current levels of crude oil production, or estimates of potential crude oil production in the future, from the Company's recently drilled horizontal wells in Stoney Creek are sustainable or will be met. 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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
