Compton engages in the exploration, development, and production of natural gas, natural gas liquids, and crude oil in the Western Canada Sedimentary Basin. Our operations are located in the deep basin portion of the Basin, which extends from Northwest Alberta and British Columbia to the United States border.  In this large geographical region, we pursue three deep basin natural gas plays: the Basal Quartz sands at Hooker in southern Alberta, the Gething/Rock Creek sands at Niton and Caroline in central Alberta, and the shallower Plains Belly River sand play in southern Alberta. In these areas, predictable development results can be achieved at minimal risk. In addition, we have an exploratory play at Callum/Cowley in the Foothills area of southern Alberta.  In total, we control over 1.5 million gross (1.2 million net) acres of land underlying these areas. Natural gas represents approximately 86% of reserves and production.

 

Our strategy is focused on creating value for shareholders by providing appropriate investment returns through the effective development and optimization of assets. Several operational initiatives are underway in 2009 to maximize the value of our assets and increase production and reserves at minimal cost:

  • Optimization: We are in the process of reviewing our existing base of over 1,500 wells for optimization opportunities. We expect to be able to start workovers and recompletions during the second half of 2009;
  • Capital costs: We are examining ways to reduce drilling and completion capital on a go-forward basis, as well as reviewing the effect of both the new royalty structure and the lower cost structure with reduced industry activity;
  • Return on investment: We have established appropriate rate of return hurdles for drilling that are being applied to new projects; and
  • Farm-out opportunities: We completed two farm-out transactions in the first quarter and are in the process of considering various other proposals

In 2008, Compton applied horizontal well and multiple stage fracture stimulation technology at several of our key properties. We believe that this technology is particularly applicable to our deep basin assets and has the potential to increase ultimate recovery and improve development economics. Throughout 2009, Compton will focus its resources on optimizing its asset base and improving the success of horizontal well multi-stage fracture technology. Our 2009 drilling will be dependent on our ability to generate acceptable rates of return, and are expected to be focused primarily towards the application of this technology at the Niton and Hooker properties.