Mr. Steve Harding reports

CONTACT EXPLORATION'S KAKWA DEVELOPMENT CONTINUES WITH SUCCESSFUL MULTI-WELL PAD DRILLING

The three Contact Exploration Inc.-operated wells, at 2-18-63-5 W6M, 8-20-63-5 W6M and 9-20-63-5 W6M, drilled from the company's first three-well pad, have each been successfully completed. Contact holds a 25-per-cent working interest in the new wells.

Each of the new wells was drilled with lateral lengths exceeding 1,900 metres, being approximately 50 per cent longer than the average lateral length of wells previously drilled by Contact at Kakwa, with each being drilled and completed on time and budget. The new wells have undergone testing for a longer duration than Contact's previous Kakwa wells in order to assist with the recovery of the additional frac water volumes pumped in connection with completing these longer wells.

Contact is very encouraged with the test results from the new wells. Contact expects the 16-7 compressor station's existing capacity of approximately 15 million cubic feet per day of natural gas and associated liquids to be fully utilized once the new wells are placed on production, adding to the production volumes from Contact's existing Kakwa wells. In keeping with the company's practices, Contact expects to announce the initial 30-day production volumes from the new wells in due course.

The new wells are currently being equipped for start-up in September, 2014; however, the company has been advised by the mid-stream gas plant operator of a 16-day scheduled plant turnaround in mid-September, 2014. Contact anticipates that all company production will be shut in for the duration of this turnaround. Accordingly, the new wells may not be fully producing until October, 2014.

The company continues to utilize two rigs in its continuing Montney Kakwa horizontal drilling program. In addition, Contact has recently equipped its Upper Montney operated well (25-per-cent working interest) with an artificial lift and expects to see initial results from this operation in mid-September, 2014.

Contact is currently designing an expansion to its operated 16-7 facility (25-per-cent working interest) to increase capacity to up to 30 million cubic feet per day of natural gas and associated liquids, with a targeted start-up for this expansion of spring in 2015.

We seek Safe Harbor.