Compton reports first quarter 2009 results



    CALGARY, May 11 /CNW/ - Compton Petroleum Corporation (TSX - CMT, NYSE -
CMZ) reports its financial and operating results for the three months ended
March 31, 2009.
    The full text of Management's Discussion and Analysis ("MD&A") and the
Company's audited consolidated financial statements can be found on the
Company's website at www.comptonpetroleum.com and at www.sedar.com
    The current economic environment, market uncertainties, reduced commodity
demand and prices have had a negative impact on our 2009 first quarter
operating results. In response to these circumstances, we have adopted a more
defensive, measured and flexible investment approach - one that is reflected
in our first quarter activities and our plans for the remainder of 2009. Our
overall strategy during this period of uncertainty is that of positioning the
Company such that, once the economic recovery occurs, we will have the ability
to develop and realize on the opportunities inherent in our asset base.
    During 2009, we will focus on addressing our capital structure and those
areas within our control. We have initiated a corporate restructuring process
with an emphasis on improving our capital efficiencies and reducing our
internal cost structures, which is starting to be realized.

    Q1 2009 Summary of Results

    
    -   Generated funds flow from operations of $22.0 million, or $0.18 per
        diluted share
    -   Adjusted operational earnings for the quarter were a loss of
        $2.2 million
    -   Achieved first quarter 2009 average production of 23,194 boe/d, a
        decrease of 30% due to property dispositions and natural declines
    -   Realized a net loss of $17.4 million, due to lower commodity prices,
        production and an unrealized $16.0 million foreign exchange loss
    -   Drilled nine wells with a 100% success rate on total capital
        expenditures of $16.6 million, before acquisitions and divestures


    Financial Review

    -------------------------------------------------------------------------
                                                  Three Months Ended Mar. 31

    (000s, except per share amounts)          2009        2008      % Change
    -------------------------------------------------------------------------

    Total revenue(1)                       $  68,899   $ 160,699        (57%)
    Funds flow from operations(2)          $  22,041   $  67,589        (67%)
    Per share - basic(2)                   $    0.18   $    0.52        (65%)
              - diluted(2)                 $    0.18   $    0.51        (65%)
    Adjusted operational earnings(1)(2)    $  (2,238)  $  19,348
    Net earnings (loss)                    $ (17,368)  $   1,619
    Per share - basic                      $   (0.14)  $    0.01
              - diluted                    $   (0.14)  $    0.01
    Capital expenditures before
     acquisitions and divestments          $  16,643   $ 100,948        (84%)
    Total bank debt & term notes           $ 897,090   $ 897,555           -
    Shareholders equity                    $ 817,620   $ 875,017         (7%)
    Shares outstanding                       125,573     129,339         (3%)
    -------------------------------------------------------------------------
    (1) Prior periods have been revised to conform to current period
        presentation
    (2) Funds flow from operations and adjusted operational earnings are
        non-GAAP measures and are addressed in detail in the MD&A
    

    Revenue decreased by 57% over the first quarter of 2009 due to
significantly lower realized natural gas and liquids prices and reduced
production volumes.
    We recognized a net loss of $17.4 million for the three months ended
March 31, 2009, as compared to net earnings of $1.6 million in 2008. The loss
is largely attributable to the impact of lower commodity prices and production
volumes and an unrealized foreign exchange loss of $16.0 million recognized on
translation of our US dollar denominated senior notes.
    Capital spending, before acquisitions and divestments, during the first
quarter of 2009 decreased by 84% compared to the comparable period in 2008 due
to decreased and delayed activity during 2009. We drilled 9 wells in 2009 when
compared with 99 in 2008. The decline in commodity prices has adversely
impacted economic returns on many of our drilling projects. Until such time as
improved commodity prices and/or reductions in service costs allow us to
achieve our internal rate of return objectives, the majority of our field
activities will focus on optimizing production from existing wells.
    Subsequent to the quarter, Compton renewed the processing agreements with
Mazeppa Processing Partnership for a further five-year period under
substantially the same terms and conditions.

    
    Operations Review

    -------------------------------------------------------------------------
                                                Three Months Ended Mar. 31

                                              2009        2008      % Change
    -------------------------------------------------------------------------

    Average daily production
      Natural gas (mmcf/d)                       117         170        (31%)
      Liquids (bbls/d)                         3,655       5,009        (27%)
      Total (boe/d)                           23,194      33,274        (30%)
    Realized prices
      Natural gas ($/mcf)                  $    5.18   $    7.48        (31%)
      Liquids ($/bbl)                      $   38.35   $   94.97        (60%)
      Total ($/boe)                        $   33.01   $   53.07        (38%)
    Field netback(1) ($/boe)               $   20.87   $   31.94        (35%)

    -------------------------------------------------------------------------
    (1) Field netback is a non-GAAP measures and is addressed elsewhere in
        detail in  the MD&A
    

    Overall production in the first quarter of 2009 fell 30% from the same
period in 2008. Natural gas volumes decreased 31%, while liquids production
decreased 27% from 2008. The decrease in our quarterly volumes is attributable
to the sale of 4,100 boe/d of production associated with certain non-core
assets sold during the third quarter of 2008 as well as natural declines.
Additionally, decreased capital expenditures during the last quarter of 2008
and into 2009 has resulted in minimal new production necessary to offset
declines.
    As part of our objective to adjust our capital structure, several
initiatives are underway 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; and
    -   Farm-out opportunities: We completed two farm-out transactions in the
        first quarter around the Caroline area, each of which has a two well
        drilling commitment. We have received various operational proposals
        over portions of our over 1.2 million net acres of land, which are in
        the process of being considered.

    Hooker (Southern Alberta)
    -------------------------
    
    At Hooker, selective drilling and pool wide optimization can enhance
Compton's depletion strategy to increase capital efficiency and minimize
drilling and completion costs. Since January, we have been remapping the
Hooker pool using a depositional model that was derived from an extensive
geological review of exiting wellbores, including cores, well chip samples,
and well logs. Several locations have been identified for potential drilling
or refracturing of existing wellbores in the latter half of the year, provided
that they meet Compton's internal rate of return hurdles.

    
    Niton (Central Alberta)
    -----------------------
    
    During the quarter, Compton drilled two successful wells at Niton. A
horizontal Rock Creek gas well is currently flowing 5.3 MMcf/d (initial
production rate: 9.5 MMcf/d), and a vertical Rock Creek oil well swab tested
at 50 bbls/d. The oil well is currently awaiting tie-in which is expected by
the end of May. One non-operated well (40% working interest) drilled during
the quarter encountered both Ellerslie and Rock Creek pay. On completion, the
well tested at 436 mcf/d.
    In June, we expect to spud a Rock Creek horizontal well offsetting a
Compton Rock Creek horizontal well that initially produced at a rate of 4.0
MMcf/d and is currently producing 800 mcf/d after six months.

    
    Callum-Cowley & Todd Creek (Southern Alberta)
    ---------------------------------------------
    
    At Todd Creek, the new zone completed in an older existing wellbore in
late 2008 has been on stable production at 2.7 MMcf/d since December 2008. The
well initially tested at 4.0 MMcf/d but has been restricted in order to
provide sufficient test data. We have licensed an offset well from the same
pad, which will not be drilled until mid-summer due to environmental
restrictions. The completion of the offset well will validate 15 sections of
land for future drilling.

    
    Drilling Summary

    The following table summarizes our drilling results.

    -------------------------------------------------------------------------
    Three Months         Natural    Crude
    Ended Mar. 31,           Gas      Oil      D&A    Total      Net  Success
    -------------------------------------------------------------------------
    Southern Alberta          -        -        -        -        -        -
    Central Alberta           8        1        -        9      1.8      100%
    -------------------------------------------------------------------------
    2009 Total                8        1        0        9      1.8      100%
    -------------------------------------------------------------------------
    2008 Total               87        4        4       99       73       96%
    -------------------------------------------------------------------------
    

    All nine gross wells drilled during the first quarter of 2009 were
development wells. Of the nine gross wells drilled, five were non-operated
minor working interest unit wells at Ghost Pine (working interest: 5.7%). In
response to current low commodity prices and marginal drilling economics, we
have reduced our capital expenditures for 2009 to assume a more defensive
posture during these uncertain times.

    Outlook

    Continuing reduced demand for crude oil and natural gas and the resulting
low commodity prices are challenging the industry, including Compton, in terms
of project economics, revenue and funds flow from operations. Combined with
our commitment to limit capital spending to funds generated from operations,
we have revised our 2009 plans in light of the current circumstances to assume
a more defensive posture during these uncertain times. We will adjust our 2009
capital spending up or down, depending upon how economic circumstances unfold
during the year and intend to limit our capital expenditures to within funds
flow from operations.
    We have initiated a corporate restructuring process with a concentrated
emphasis on continued capital efficiencies and reducing our internal cost
structures. Due to these initiatives, we expect to recognize a gross savings
in G&A expenses of approximately $9.0 million, before recoveries and amounts
capitalized, in comparison to 2008.
    From an operations standpoint, our current focus will be on asset
optimization and evaluation of opportunities within our existing asset base to
position the organization for successful development once commodity prices
rebound. Concerning drilling, we have achieved considerable success using
multi-stage fracture technology combined with horizontal wells drilled into
tight natural gas formations over the past year. Funds allocated to drilling
during 2009 are expected to be focused primarily towards the application of
this technology at our Niton and Hooker properties in Alberta, provided that
required rate of return hurdles are met for each project.
    We are progressing with the preliminary evaluation of various options for
change to our capital structure, including farm-ins, asset sales and
additional debt and/or equity capital. We will communicate initiatives that
are focused on strengthening Compton's capital structure and generating value
for shareholders once they have been finalized.

    Additional Information

    Compton has filed its audited Consolidated Financial Statements for the
three months ended March 31, 2009 and related Management's Discussion and
Analysis with Canadian securities regulatory authorities. Copies of these
documents may be obtained via www.sedar.com or the Company's website,
www.comptonpetroleum.com. To order printed copies of the filed documents free
of charge, email the Company at investorinfo@comptonpetroleum.com.

    2009 First Quarter Conference Call

    Compton will host a conference call and web cast on Tuesday, May 12, 2009
at 8:00 a.m. MST (10:00 a.m. EST) to discuss the Company's 2009 first quarter
financial and operating results. To participate in the conference call, please
contact the Conference Operator ten minutes prior to the call at
1-800-796-7558 or 1-416-646-3095. To participate in the web cast, please
visit: www.comptonpetroleum.com. The web cast will be archived two hours after
the presentation at the website listed above. For a replay of this call,
please dial: 1-877-289-8525 or 1-416-640-1917 and enter access code 21305716
followed by the number sign until May 21, 2009.

    Annual and Special Meeting of Shareholders

    Compton's Annual and Special Meeting of Shareholders is scheduled for May
11, 2009 at 3:30 p.m. (Calgary time) in the Historical Ballroom on the Fourth
Floor of the Calgary Chamber of Commerce, 517 Centre Street South, Calgary,
Alberta, Canada. A web cast of the Annual and Special Meeting is available on
Compton's website at www.comptonpetroleum.com; all shareholders are encouraged
to attend either in person or electronically.

    Advisories

    Use of Boe Equivalents

    The oil and natural gas industry commonly expresses production volumes
and reserves on a barrel of oil equivalent ("boe") basis whereby natural gas
volumes are converted at the ratio of six thousand cubic feet to one barrel of
oil. The intention is to sum oil and natural gas measurement units into one
basis for improved measurement of results and comparisons with other industry
participants. We use the 6:1 boe measure which is the approximate energy
equivalency of the two commodities at the burner tip. However, boes do not
represent a value equivalency at the well head and therefore may be a
misleading measure if used in isolation.

    Forward Looking-Statements

    Certain information regarding the Company contained herein constitutes
forward-looking information and statements and financial outlooks
(collectively, "forward-looking statements") under the meaning of applicable
securities laws, including Canadian Securities Administrators' National
Instrument 51-102 Continuous Disclosure Obligations and the United States
Private Securities Litigation Reform Act of 1995. Forward-looking statements
include estimates, plans, expectations, opinions, forecasts, projections,
guidance, or other statements that are not statements of fact, including
statements regarding (i) cash flow and capital and operating expenditures,
(ii) exploration, drilling, completion, and production matters, (iii) results
of operations, (iv) financial position, and (v) other risks and uncertainties
described from time to time in the reports and filings made by Compton with
securities regulatory authorities. Although Compton believes that the
assumptions underlying, and expectations reflected in, such forward-looking
statements are reasonable, it can give no assurance that such assumptions and
expectations will prove to have been correct. There are many factors that
could cause forward-looking statements not to be correct, including risks and
uncertainties inherent in the Company's business. These risks include, but are
not limited to: crude oil and natural gas price volatility, exchange rate
fluctuations, availability of services and supplies, operating hazards, access
difficulties and mechanical failures, weather related issues, uncertainties in
the estimates of reserves and in projection of future rates of production and
timing of development expenditures, general economic conditions, and the
actions or inactions of third-party operators, and other risks and
uncertainties described from time to time in the reports and filings made with
securities regulatory authorities by Compton. Statements relating to
"reserves" and "resources" are deemed to be forward-looking statements, as
they involve the implied assessment, based on estimates and assumptions, that
the reserves and resources described exist in the quantities predicted or
estimated, and can be profitably produced in the future.
    The forward-looking statements contained herein are made as of the date
of this news release solely for the purpose of generally disclosing Compton's
views of its financial and operational results as of March 31, 2009, reserves
volumes, net present value of its reserves and prospective activities. Compton
may, as considered necessary in the circumstances, update or revise the
forward-looking statements, whether as a result of new information, future
events, or otherwise, but Compton does not undertake to update this
information at any particular time, except as required by law. Compton
cautions readers that the forward-looking statements may not be appropriate
for purposes other than their intended purposes and that undue reliance should
not be placed on any forward-looking statement. The Company's forward-looking
statements are expressly qualified in their entirety by this cautionary
statement.

    Non-GAAP Financial Measures

    Included in the news release are references to terms used in the oil and
gas industry such as funds flow from operations, funds flow per share,
adjusted operational earnings, adjusted EBITDA, and field netback. These terms
are not defined by GAAP in Canada and consequently are referred to as non-GAAP
measures. Non-GAAP measures do not have any standardized meaning and therefore
reported amounts may not be comparable to similarly titled measures reported
by other companies.
    Funds flow from operations should not be considered an alternative to, or
more meaningful than, cash provided by operating, investing and financing
activities or net earnings as determined in accordance with Canadian GAAP, as
an indicator of the Company's performance or liquidity. Funds flow from
operations is used by Compton to evaluate operating results and the Company's
ability to generate cash to fund capital expenditures and repay debt.
    Adjusted operational earnings represents net earnings excluding certain
items that are largely non-operational in nature and should not be considered
an alternative to, or more meaningful than, net earnings as determined in
accordance with Canadian GAAP. Adjusted operational earnings is used by the
Company to facilitate comparability of earnings between periods.
    Adjusted EBITDA is a non-GAAP measure defined as net earnings, net of
interest and finance charges, income taxes, depletion, depreciation and
amortization, accretion of asset retirement obligations, and any foreign
exchange gains or losses.
    Field netback equals the total petroleum and natural gas sales, including
realized gains and losses on commodity hedge contracts, less royalties and
operating and transportation expenses, calculated on a $/boe basis. Funds flow
netback equals field netback including general and administrative costs and
interest costs. Field netback and funds flow netback are non-GAAP measures
that management uses to analyze operating performance. Field netback and funds
flow netback do not have a standardized meaning as prescribed by Canadian GAAP
and, therefore, may not be directly comparable to similar measures presented
by other issuers.

    About Compton Petroleum Corporation

    Compton Petroleum Corporation is a Calgary-based public company actively
engaged in the exploration, development, and production of natural gas,
natural gas liquids, and crude oil in the Western Canada Sedimentary Basin.
Compton's shares are listed on the Toronto Stock Exchange under the symbol CMT
and on the New York Stock Exchange under the symbol CMZ.

    %CIK: 0001043572




For further information:

For further information: Susan J. Soprovich, Director, Investor
Relations, Ph: (403) 668-6732, Fax: (403) 237-9410, Email:
investorinfo@comptonpetroleum.com, Website: www.comptonpetroleum.com

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