NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES
(TSX-V:CEX)
CALGARY, March 14, 2012 /PRNewswire/ - Contact Exploration
Inc. ("Contact" or the "Company") (TSX-V: CEX) is
pleased to announce that it has entered into an agreement with MGI
Securities Inc. ("MGI") respecting a brokered private
placement (the "Flow Through Private Placement") pursuant to
which MGI will act as Contact's agent to sell, on a "best efforts"
basis, up to 15,384,615 common shares in the capital of the Company
to be issued on a "flow-through" basis pursuant to the Income
Tax Act (Canada)
("Flow-Through Shares") to exempt buyers on a private
placement basis at a price of $0.13
per Flow-Through Share, for aggregate gross proceeds of up to
$2 million.
Contact expects to use the proceeds of the Flow
Through Private Placement to incur eligible Canadian Exploration
Expenses to fund its ongoing capital programs. These qualifying
Canadian Exploration Expense expenditures will be renounced to
subscribers effective December 31,
2012. The Flow-Through Shares issued pursuant to the
Flow Through Private Placement will be subject to a four-month hold
period from the closing date, which is anticipated to occur on or
about April 5, 2012. The Flow
Through Private Placement is subject to approval from the TSX
Venture Exchange ("TSXV").
Contact is also negotiating a non-brokered
private placement (the "Preferred Share Placement") of up to
$1 million of convertible,
redeemable, 8% preferred shares to a third party purchaser, which
placement remains subject to the completion of final documentation
and the approval of the TSXV. Contact expects to finalize the
Preferred Share Placement within the next few weeks and will
announce further information as terms are finalized.
As previously announced, Contact and its
partners are currently drilling a Montney exploratory well in the Kakwa area of
Alberta. To date, drilling
costs associated with this well remain on budget and intermediate
casing is scheduled to be set in the Montney formation within the next week.
The well is then programmed to be drilled horizontally for a
minimum distance of approximately 1,000 meters, expected to reach
total depth in April 2012.
Should Contact successfully close both the Flow
Through Private Placement and the Preferred Share Placement for the
maximum gross proceeds contemplated, Contact expects to have fully
funded its capital obligations associated with the drilling of the
Montney well, with $1 million of available cash and an undrawn
$2 million credit facility. Contact
anticipates finalizing completion operations on this well after
Spring break-up.
About Contact Exploration Inc.
Contact Exploration Inc. is a public company
which has been focused on Canadian East Coast onshore oil and gas
exploration and development. Our philosophy is to operate
exploration and development in our core areas of Stoney Creek, Hillsborough and Edgett's Landing,
New Brunswick and to participate
through overrides and carried interests in certain regional
unconventional plays in Nova
Scotia and Newfoundland. In
addition to the Atlantic Canadian properties, Contact is pursuing a
new core area in Alberta's "Deep
Basin" targeting the Montney Formation.
ADVISORY ON FORWARD-LOOKING
STATEMENTS: 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 anticipated
closing of the Private Placement and Preferred Share Placement (the
"Placements"), the anticipated use of the proceeds of the
Placements, the timing to conclude drilling operations on the
Company's Montney well and the
Company having fully funded certain obligations subject to the
Placements having closed. This press release also contains
statements concerning the timing and scope of exploration and
development activities on the Company's properties in the
Resthaven-Kakwa area of Alberta,
the prospectivity of the Resthaven-Kakwa area, the petroleum
and natural gas reserves and production that may be encountered
through the exploration of such properties and the timing for
drilling and completing the first well in this area.
Forward-looking statements or information are
based on a number of material factors, expectations or assumptions
of Contact which have been used to develop such statements and
information but which may prove to be incorrect. 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. The closing of the Placements could
be delayed if Contact is not able to obtain the necessary
regulatory and stock exchange approvals on the timelines it has
planned or if final documentation regarding the Preferred Share
Placement is not successfully negotiated. The Placements will
not be completed at all if these approvals are not obtained or some
other condition to the closing is not satisfied. Accordingly,
there is a risk that the Placements will not be completed within
the anticipated time or at all. The intended use of the
proceeds of the Placements by Contact might change if the board of
directors of the Company determines that it would be in the best
interests of Contact to deploy the proceeds in respect of other
Canadian Exploration Expense, or other, expenditures. In addition
to other factors and assumptions which may be identified herein, no
assurances can be given respecting: whether the Company's
exploration and development activities respecting the
Resthaven-Kakwa prospect 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; the
ultimate size and scope of any hydrocarbon bearing formations
at Resthaven-Kakwa; that drilling operations in
Resthaven-Kakwa will be successful such that further
development activities in this area is warranted; that Contact will
continue to conduct its operations in a manner consistent with past
operations; results from drilling and development activities will
be consistent with past operations; the accuracy of the estimates
of Contact's reserve volumes; the general stability of the economic
and political environment in which Contact operates; drilling
results; field production rates and decline rates;
the general continuance of current industry conditions;
the timing and cost of pipeline, storage and facility
construction and expansion and the ability of Contact to secure
adequate product transportation; future commodity prices; currency,
exchange and interest rates; regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in
which Contact operates; and the ability of Contact to successfully
market its oil and natural gas products.
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,
including, without limitation: changes in commodity prices; changes
in the demand for or supply of the Company's products;
unanticipated operating results or production declines; changes in
tax or environmental laws, royalty rates or other regulatory
matters; changes in development plans of Contact or by third party
operators of Contact's properties, increased debt levels or debt
service requirements; inaccurate estimation of Contact's oil and
gas reserve and resource volumes; limited, unfavourable or a lack
of access to capital markets; increased costs; a lack of adequate
insurance coverage; the impact of competitors; and certain other
risks detailed from time-to-time in Contact's public disclosure
documents. 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, 2011. 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.
SOURCE Contact Exploration Inc.