Contact updates drilling operations

Contact Exploration Inc. updates its shareholders as to progress on the workover project in the Stoney Creek Field, the latest oil production volumes, and exploratory drilling plans in the South Stoney Creek Prospect.

In October, 2007 Contact commenced a rework program involving existing non-productive boreholes in the Stoney Creek Field. Initial results from the workover project have been very favourable, with inflow of oil seen in most of the wellbores as they were swab tested. Four successful candidates from the group are being prepared for production immediately, with pumps being installed in January. Approval to produce these wells has already been obtained from the New Brunswick government. It is expected that these four wells will add a total additional production of 25 barrels per day to the Stoney Creek Field.

Work on the remaining group of 10 wells in the workover program is still ongoing, with the candidates being analysed for bypassed gas pay. We anticipate bringing several more wells on production in the months ahead. Once this group of workovers is completed, additional non-producing wellbores with potential for re-work have been identified. A candidate for hydraulic fracturing has also been identified in

It has been determined in the course of the workovers that there are several distinct production areas within the Stoney Creek Field, some of which have not been exploited. We are also examining the future feasibility of a low cost high density drilling program, once the use of existing wellbores has been maximized.