Compton Petroleum Signs Farm-Out Agreement With K2 America

Compton Petroleum Corporation (TSX - CMT), announced the signing of a farm-out and joint venture agreement between a wholly-owned subsidiary of Compton and K2 America Corp., a wholly owned subsidiary of Guardian Exploration Inc. (TSX - GX) on its Montana Bakken property.

The Agreement relates to Compton's holdings located in the northern part of Montana, approximately 80 miles south of the Canada-US border. The farm-out joint venture will cover all of the Company's 79,000 net acres, granting K2 the ability to earn a 50% interest in this area by incurring capital expenditures on the exploration and development of the property. Compton will retain a 50% working interest in the area without incurring any capital expenditure commitments.

K2 has committed to completion of a survey program at a minimum cost of $2.0 million on or before July 31, 2012, consisting of a combination of 2D/3D seismic, airborne geophysical surveys and geochemical imaging on the lands. Upon completion of the survey, Compton's Montana lands will be divided into three reasonably equal sized earning blocks. Thereafter, K2 has committed to spud a test well on one of the earning blocks or before December 31, 2012, targeting the Bakken oil formation. Upon completion of the well, K2 will earn 50% working interest in that earning block and is granted the option to drill one or more option wells to earn the un-earned blocks. The option must be exercised within 90 days following the drilling rig release date, unless the well proves to be a commercial discovery, in which case the option period will be extended to one year.

"This farmout joint venture is an important first step in exploring the potential of our Bakken lands in Montana," said Tim Granger, president and chief executive officer. "We're pleased with this strategic partnership. The opportunity provides us with the ability to expand our resource base knowledge in an area of interest while moving forward with the development of our liquids rich Niton area and our emerging oil prospects."

The Agreement will be subject to any required regulatory approval, any third party consents, and the entering into of a formal joint venture agreement.