Compton Petroleum
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Address
3300, 425 - 1st Street S.W.
Calgary, AB T2P 3L8
Canada
Tel (403) 237-9400
Fax (403) 237-9410
Web http://www.comptonpetroleum.com
Email investorinfo@comptonpetroleum.com
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Capex
Compton's 2008 capital expenditure budget has been set at $410 million. Planned activities are weighted towards the latter half of the year during which Compton plan to incur approximately 60% of their budgeted expenditures.
Summary of Compton’s budgeted 2008 capital program
By Category ($ millions)
Land & seismic: $ 30
Drilling & completions: 285
Facilities & equipment: 95
Total: $410
By Area ($ millions)
Central Alberta - Deep Basin: $135
Hooker - Deep Basin: 55
Plains Belly River and Edmonton - Shallow Gas: 180
Callum/Cowley - Foothills: 40
Total: $410
Future Plans
Compton’s 2008 capital budget includes the drilling of 350 wells strongly weighted towards development and exploitation. Compared to the 322 wells drilled in 2007, there are a number of differences between the years that are worthy of note:
• 70 wells will target the deeper formations in the company’s Niton, Caroline, Hooker, and Callum/Cowley properties
- This compares to 50 deeper wells drilled in 2007. Wells in these formations generally have higher productivity and benefit from associated liquids production
- Given recent success with horizontal wells and multi-stage fracs at Niton, Compton plan to utilize this approach more aggressively and investigate using it at Hooker and Caroline. The use of horizontal drilling reduces the number of vertical wells otherwise required
• 275 wells are planned in the company’s southern Alberta core area targeting the shallower Belly River formation
• These wells are very low risk with attractive cost structures
- Compton have high graded their selection where returns are most favourable
- Production infrastructure has been expanded to facilitate rapid tie-ins with the time from rig release to on-stream now averaging approximately 100 days
• Advances in oilfield technology continue to benefit operations
- The use of multi-staged fracs result in considerable cost efficiencies and marked improvement in well productivity
- The importance of directional and pad drilling cannot be overstated - with increased well densities and environmental sensitivities, such drilling techniques will assist Compton to fully access and develop the large natural gas resource potential of our land base
Compton’s drilling program will be supported by a concentrated effort to expedite placing reserves on production. Compton's existing production infrastructure will assist with this and will be complemented by planned infrastructure investments in 2008.
For 2008 Compton have allocated approximately $135 million or 33% of their total planned capital expenditures to central Alberta where they plan to drill 50 wells during 2008. During 2007, targeting the Rock Creek formation, Compton drilled seven horizontal wells at Niton of which five were completed using multi-stage fracing technology with excellent results. During 2008, 13 wells in the area are slated to be horizontal wells.
Southern Alberta - Hooker
Compton have planned 16 wells for 2008 at their Hooker resource play targeting the Basal Quartz formation. Transferring the knowledge and success gained drilling horizontal wells in central Alberta, the company are planning at least three horizontal wells at Hooker in 2008. Compton have currently identified a potential of 15 follow-up horizontal locations for this area should the initial wells prove successful.
Southern Alberta - Foothills
With the recent acquisition of WIN Energy Inc., Compton have significantly expanded their land holdings in the Foothills at Callum and Cowley. the company now hold approximately 239 net sections of high impact exploration lands in this area. Compton intend to drill nine wells in the Callum/Cowley area during 2008. Four of these wells are planned as horizontal wells, and each of these wells will be drilled from existing pads to minimize the environmental impact. The potential impact on the company's value over the next 12 to 24 months from activities in the Foothills could be significant.
Shallow Gas
Southern Alberta - Plains Belly River/Edmonton Group
In 2008, Compton plan to drill 275 Belly River wells, focusing specifically on the top tier prospects identified by the company’s technical teams. Compton have allocated approximately $180 million in their budget to this area, with $5 million directed towards developing an inventory of drill-ready locations such that, as industry conditions improve, the company can easily ramp-up activity. Compton estimate that roughly 40% of their 2008 Belly River wells, all to be drilled in the latter part of the year, will be placed on production in early 2009. These wells will take full advantage of the lower shallow gas royalty rates proposed for 2009.
With recent acquisitions in the area, Compton now hold approximately 1,200 sections of land prospective for the Belly River/Edmonton group. At four wells per section automatic spacing, this translates into a significant multi-year inventory of low risk drilling locations on which to grow the company.Production
2007 average production was 31,326 boe/d. Overall average production, revenue, and adjusted cash flow from operations for 2007 declined from 2006 levels primarily as a result of an overall reduction in drilling, particularly during the first half of the year, and natural declines and property divestments. During the last half of 2007, activity increased appreciatively. Compton drilled a total of 238 wells during the third and fourth quarters of 2007 and fourth quarter production averaged 32,646 boe/d, an increase of 7% over the third quarter.
2006 production grew 13% to average 33,187 boe/day versus 29,424 boe/day in 2005. Compton's increase in low cost reserves and production growth are largely as a result of their continued successful drilling program and capital investment in facilities and infrastructure expansion. The company's ten year compound annual growth rate on reserves is 35%.
Reserves
During 2007 Compton Petroleum Corporation achieved solid proved plus probable reserve additions at competitive finding and development costs. The company successfully completed their 322 well drilling program, replacing 192% of 2007 production at an all-in Finding, Development, and Acquisition cost ("FD&A") of $9.98/boe, excluding change in future capital, and $12.89/boe, including change in future capital.
Compton's 2007 proved plus probable reserves grew by nine percent and are now valued in excess of $3.4 billion dollars, using a discount rate of eight percent. The company added 2.3 million boe proved and 22 million boe proved plus probable reserves, after production and asset sales and including acquisitions, for total proved plus probable reserves of 271 million boe as at December 31, 2007. This number equates to 2.10 boe per common share outstanding, versus 1.93 boe last year, also an increase of nine percent."
Consistent with the Company's strategy of redeploying capital from non-core assets into its focus areas of operations, the Company closed a number of property divestments and strategic acquisitions during the year. Year end 2007 reserves reflect these transactions. During the year Compton acquired a total of 18.9 mmboe proved plus probable reserves at a total cost of $206 million or $10.93 per boe and sold 11.4 mmboe proved plus probable reserves for total proceeds of $262 million or $21.50 per boe. Excluding acquisitions and dispositions, 26.7 mmboe were added during the year at a cost of $14.58 per boe, proved plus probable, excluding future capital, and $18.21 per boe including future capital.
Who's Who
M.F. Belich, Q.C.
Chairman
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I.J. Koop
Director
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J. W. Preston
Director
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J.T. Smith
Director
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J. Thomson
Director
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E.G. Sapieha
President & C.E.O
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N. Knecht
V.P. Finance & Chief Financial Officer
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M. Junghans
V.P. Exploration
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M. Stodalka
V.P. Operations & Engineering
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D. Longfield
V.P. Special Projects
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T. Millar, LL.B.
V.P. & General Counsel
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G. Follensbee
Manager, Joint Ventures & Special Projects
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T. Kosek
Manager, Accounting
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P. Parzen
Manager, IT, Risk & Internal Audit
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P. Parzen
Manager, IT, Risk & Internal Audit
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G. McCullough
Manager, Land
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W. Mrochuk
Manager, Production
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W. Cover
Manager, Drilling & Completions
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R. Dion
Manager, Finance
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G. Fukushima
Manager, Reserves
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B. Wilson
Manager, Engineering North
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B. McCloskey
Manager, Exploration South
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R. Joy
Manager, Exploration North
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R. Gerlitz
Manager, Acquisitions & Divestments
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Offices
Canada
Head Office
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