Compton to Continue Development of Significant Natural Gas Resources With 2008 Capital Budget

    CALGARY, Jan. 23 /CNW/ - Compton Petroleum Corporation (TSX - CMT, NYSE -
CMZ) is pleased to provide preliminary 2007 operational results and to
announce its updated strategic plans, capital program, and budget targets for
2008. Our 2008 plans are designed to deliver solid organic growth, realize on
the significant potential of our assets, maintain an acceptable capital
structure, and position Compton to quickly and efficiently react to
opportunities and industry conditions as they may arise.

    Budget Highlights

    -   Continuation of our expanded natural gas focus as announced in 2007

           -  The 2008 budget builds upon the momentum developed from our
              successful 2007 drilling program

    -   Significant capital investment program focused on production growth

           -  $410 million to be expended on our extensive inventory of
              natural gas properties
           -  Emphasis on placing incremental production volumes on stream
           -  Continued divestiture of non-core properties, substantially all
              oil producing, with $250 million of anticipated proceeds to
              assist in funding the 2008 capital program

    -   Budgeted 350 well drilling program

           -  Includes 70 wells targeting higher productivity deeper
              formations in our Niton, Caroline, Hooker, and Callum/Cowley
           -  Continued growth in our Belly River development program, with
              275 wells to be drilled with an accelerated tie-in program to
              bring production volumes on stream promptly

    -   Increased production volumes

           -  Natural gas volumes are projected to average between 196 and
              202 mmcf/day, a 34% to 38% increase from 2007 levels
           -  Oil and liquids volumes projected to average 3,300 bbls/day, a
              50% decline from the 2007 average following the major property
              sale at the end of Q3 2007 and additional sales budgeted to
              close during 2008
           -  Combined production volumes projected to average between
              36,000 and 37,000 boe/day, a 16% to 19% increase over average
              2007 volumes

    -   Higher cash flow

           -  Cash flow is projected in the $245 to $255 million range,
              approximately 30% higher than expected 2007 final results,
              based upon average 2008 benchmark AECO natural gas pricing of
              $6.98/mcf (US$7.64/mcf NYMEX) and $80.00/bbl for Edmonton Light
              crude oil (US$81.00 WTI)

    -   Capital structure

           -  Anticipated operating cash flow and proceeds from asset sales
              in excess of capital spending
           -  Excess proceeds available for debt repayment
           -  Target 2008 year end debt to trailing cash flow ratio of 3:1

    "Compton is opportunity rich. Our asset base holds significant resource
potential and years of low-risk drilling opportunities with which to grow,"
said Ernie Sapieha, President and CEO. "Importantly, each of our four resource
plays are economic at current natural gas prices. Our 2008 drilling program
high-grades our drilling opportunities, concentrating on higher productivity
wells with superior returns on capital. With the finalization of our Cecil
property disposition and additional planned divestitures of non-core assets at
Bigoray and Thornbury, we will have the additional funds necessary to
accelerate our strategic natural gas initiatives. Should natural gas prices
strengthen from those budgeted, our budget and corporate structure provides us
with the flexibility to further expand our drilling programs."

    2007 in Review

    Our plans for 2008 build upon activities and successes achieved during
2007, including the expansion of our core properties through a series of minor
strategic acquisitions. Although we have not finalized our 2007 operational
and financial accounts, we are pleased to provide the following preliminary

    -   Production during the month of December reached our previously
        announced exit target of 36,000 boe/day, excluding production from
        the Cecil property held for sale;
    -   Average annual production volumes of  approximately 31,000 boe/day
        consisting of natural gas volumes of 147 mmcf/day and oil and liquid
        volumes of 6,500 bbls/day;
    -   Operating cash flow approximating $190 million;
    -   Capital expenditures of $375 million, before acquisitions and
    -   Year end debt of $835 million comprised of our senior notes and
        syndicated credit facility;
    -   A 322 well drilling program (10% exploratory, 90% development), with
        a success rate in excess of 95%.

    The foregoing estimated results are preliminary and subject to adjustment
upon finalization. We expect to receive final year end reserve numbers and
Netherland Sewell's independent report in early March and we will release the
details thereof shortly thereafter.

    2008 Capital Expenditure Budget Set at $410 million

    During 2007, we communicated our intent to pursue the next phase of
Compton's growth by becoming a natural gas focused resource play company. To
this end we initiated efforts in mid-2007 to substantially expand our drilling
programs over the next three years. Weak natural gas prices combined with the
rapid appreciation of the Canadian dollar have, in the shorter term, moderated
our pursuit of higher drilling counts although our focus on development of the
resource remains. Our planned 2008 activities are weighted towards the latter
half of the year during which we plan to incur approximately 60% of our
budgeted expenditures. Compton's $410 million 2008 budget is set to
appropriately grow our asset and production bases while maintaining capital
    Our 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 our 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, we 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 our southern Alberta core area targeting the
        shallower Belly River formation

           -  These wells are very low risk with attractive cost structures
           -  We have high graded our selection where returns are most
           -  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 our 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

    Our 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.
    A summary of our budgeted 2008 capital program is outlined below:

    By Category, ($ millions)
      Land & seismic                                                    $ 30
      Drilling & completions                                             285
      Facilities & equipment                                              95

    By Area, ($ millions)
      Central Alberta - Deep Basin                                      $135
      Hooker - Deep Basin                                                 55
      Plains Belly River and Edmonton - Shallow Gas                      180
      Callum/Cowley - Foothills                                           40

    Drilling by Area, Gross Well Count
      Central Alberta                                                     50
      Hooker, BQ                                                          16
      Plains Belly River and Edmonton                                    275
      Callum/Cowley - Foothills                                            9

    Given the timelines from concept to production for natural gas prospects,
we believe it is of utmost importance to maintain operational momentum while
at the same time being mindful of industry economic realities. With the
momentum achieved in 2007 and the approach to our 2008 drilling program, we
are confident that we can meet our budget objectives even during this period
of uncertainty in natural gas markets.
    Drilling plans specific to each of our core areas are as follows:

    Deep Basin & Foothills

    Central Alberta -- Niton and Caroline

    For 2008 we have allocated approximately $135 million or 33% of our total
planned capital expenditures to central Alberta where we plan to drill
50 wells during 2008. During 2007, targeting the Rock Creek formation, we
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

    We have planned 16 wells for 2008 at our Hooker resource play targeting
the Basal Quartz formation. Transferring the knowledge and success we have
gained drilling horizontal wells in central Alberta, we are planning at least
three horizontal wells at Hooker in 2008. We 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., we have significantly
expanded our land holdings in the Foothills at Callum and Cowley. We now hold
approximately 239 net sections of high impact exploration lands in this area.
We 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 our 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, we plan to drill 275 Belly River wells, focusing specifically on
the top tier prospects identified by our technical teams. We have allocated
approximately $180 million in our budget to this area, with $5 million
directed towards developing an inventory of drill-ready locations such that,
as industry conditions improve, we can easily ramp-up activity. We estimate
that roughly 40% of our 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, we 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 our


    It is noteworthy that all of Compton's natural gas resource plays provide
solid economic returns in the current price and capital cost environment. A
summary of representative well returns by play type, based upon current
forecasted pricing as provided by GLJ Petroleum Consultants Ltd., is outlined

                                               Capital per well   Before tax
    Play                                             $thousands        IRR %
    ----                                            -----------   -----------
    Plains Belly River                                     $536          38%
    Hooker BQ                                            $1,836          51%
    Niton Vertical Well                                  $1,836          40%
    Niton Horizontal Well(1)                             $3,570        +100%
    Economics are calculated using Alberta's existing royalty structure.
    These figures are based on average unrisked, drilling, completions, and
    equipping costs, excluding sunk costs.

    (1) Niton horizontal well economics are based upon a limited number of
        wells and production history.

                                            Plains                  Vertical
    Field Netbacks by Play, ($/mcfe)   Belly River    Hooker BQ         Well
    -----------------------            -----------   -----------  -----------

    Gas Price                                $6.50        $6.50        $6.50
      Operating costs                        (1.40)       (1.24)       (1.25)
      Royalties                              (1.11)       (1.69)       (1.63)
      F& D Costs                             (2.23)       (1.15)       (1.30)
    Field Netback                            $1.76        $2.42        $2.32

    Field netbacks are calculated giving effect to Alberta's existing Royalty
structure and historical operating and F+D costs.

    Asset Divestitures

    In mid-2007, we announced our intention to sell our major oil producing
properties in the Peace River Arch. The Worsley field was sold at the end of
the third quarter of 2007 for proceeds of $270 million at attractive metrics.
We are currently pursuing the sale of our Cecil property with several parties.
The delayed sale of Cecil has been of benefit to Compton due to a) continued
improvement in oil prices since the third quarter of 2007, and b) the success
of recent waterflood programs that indicate higher recoverable reserves. The
new independent reserve report covering the Cecil property will be finalized
shortly and will form the basis for concluding negotiations with the parties
who are most interested in purchasing Cecil. For budget purposes we have
assumed a closing date of March 31, 2008.
    We also plan to sell additional high quality non-core assets during 2008
including our Bigoray and Thornbury properties. In this regard, intend to
engage an agent shortly. We expect to close these divestitures in the third
quarter of 2008.
    Proceeds from the various asset divestitures are expected to aggregate at
least $250 million. These proceeds will be used to fund the approximate
$160 million of capital expenditures in excess of cash flow, with the balance
being available to reduce outstanding debt.

    2008 Projections

    Production Volumes

    Natural Gas, (mmcf/d)                                          196 - 202
    Oil and liquids, (bbls/d)                                          3,300
    Combined, (boe/d)                                        36,000 - 37,000
    2008 year end exit rate, (boe/d)                         39,500 - 40,500

    Price Realizations                                Benchmark     Realized
    ------------------                                ---------     ---------

    Natural gas (AECO, $/mcf)                             $6.98        $6.95
    Crude oil  (Edmonton light, $/bbl)                   $80.00       $72.75

    Cash Flow(1)                                                    Realized
    -------------                                                   ---------

    Total, ($ millions)                                          $245 - $255
    $/share, basic                                             $1.90 - $1.98
    (1) Cash flow is a non-GAAP measure, the components of which are set out
        in Compton's 2006 Annual Report.

    Pricing Sensitivities

      Natural Gas      a $0.25 change in AECO pricing results in a
                       $14 million change in cash flow
      Crude Oil        a $1.00 change in crude oil pricing results in
                       a $0.4 million change in cash flow

    Corporate Debt, ($millions, December 31, 2008)

    Senior Notes, due 2013                                              $436
    Syndicated Credit Facility                                           313
    Total                                                               $749

    During the fourth quarter of 2007, with the strengthening of the Canadian
dollar against that of the U.S. dollar, we entered into foreign exchange
contracts related to our US$ denominated Senior Notes. The contracts
effectively fix the Canadian dollar repayment amount of the notes at
$436 million and crystallized an unrealized foreign exchange gain of
approximately $92 million.
    In light of current commodity prices, we have very recently reviewed the
borrowing base related to our syndicated credit facility with the agent of the
syndicate, and are comfortable the existing borrowing base is sufficient to
support the current authorized $500 million facility.

    Hedging Policy

    In support of our capital programs, we have a stated policy to minimize
commodity price volatility through entering into commodity hedge contracts. It
is our intent to enter into hedge arrangements as appropriate for up to 50% of
our production. In this respect we have, concurrent with the recent
strengthening of natural gas prices, entered into costless collar hedge
contracts for 14,250 mcf/d of natural gas with an average floor price of
$6.72/mcf and a ceiling price of $7.89/mcf for the period April through
October 2008. It is our intent to continue layering in additional contracts
based on market conditions and as attractive opportunities arise.

    Strategic Plan

    Compton's management team and Board of Directors believe in and remain
committed to our strategic goal of delivering growth through accelerated,
large scale drilling programs. It is the right plan for Compton. We will
realize on the value of our natural gas resource plays through increased
production, cash flow, and reserves resulting from increased drilling. We
remain committed to the future for natural gas and to capturing the full
benefit of our large inventory of prospects.
    The continued development of our existing natural gas resource plays
through the implementation of our longer term initiatives and based upon the
capital programs outlined below is projected to result in annual production
growth rates of 16% to 22%.

                                              2008         2009         2010
                                             ------       ------       ------
    Number of wells                            350          550          700
    Capital expenditures, $ millions          $410         $545         $675

    Funding of the 2009 and 2010 capital programs will depend on prevailing
natural gas prices, potential property divestitures, and utilization of our
debt capacity which is expected to increase concurrent with production and
reserve growth resulting from the expanded drilling programs. Assuming a
constant natural gas price of $7.50/mcf during 2009 and 2010, increased
borrowings necessary to fund the foregoing capital program would result in a
debt to cash flow ratio throughout the period of approximately 3 to 1. A
strengthening of natural gas prices from those reflected above and potential
property dispositions provide us the flexibility to further expand our
drilling programs.
    With respect to the publicly released letter received from our largest
shareholder dated December 14, 2007, the Board of Directors considers such
views as important input in its assessment of alternatives to create
shareholder value, particularly coming from a long-standing and respected
shareholder. Mel Belich, Chairman of the Compton Board, added, "After a
thorough review, it is the Board's current view that the most appropriate
strategy to create value for all shareholders is for Compton to continue to
invest in the large growth potential of its asset base. The Board is confident
that the 2008 budget together with the company's three year plan provides the
best alternative for significant shareholder value creation." The Board
intends to continue to regularly assess value creation alternatives based on
results achieved by management in the execution of Compton's business plan,
available financing, or material changes in the commodity price and cost


    "Our 2008 budget demonstrates our commitment to continue to grow as a
pure natural gas resource play company, while at the same time maintaining
stability through a down turn in the natural gas markets," said Mr. Sapieha,
Compton's CEO. "Although 2007 proved to be a difficult operating year for the
industry and for Compton, we are pleased to report that we have executed a
successful drilling program and met our production targets, averaging
approximately 31,000 boe/d for the year. Our 2008 budget is designed to grow
our boe/d production by approximately 16% to 19%. Non-core asset divestitures
will bridge the gap between our cash flow and planned expenditures and allow
us to focus our efforts on our core natural gas resource plays. Given
continuing gas price volatility and regulatory uncertainties including the new
Alberta royalty structure, we will focus on what we can control and improve.
This includes an emphasis on capital discipline, economic ranking of our
projects, and project execution."
    Compton is implementing a new organizational structure that will further
enhance our ability to deliver increased productivity in an efficient and
timely manner in 2008 and beyond. In support, and as an integral part of this
initiative, we are pleased to announce the following two additions to our
executive team.
    Rob Symonds, P.Eng, has joined Compton as Vice President Foothills &
Corporate Development. Mr. Symonds holds a Master of Science in Petroleum
Engineering and is a professional engineer in Alberta. Previously, Mr. Symonds
was Vice President, Foothills Business Unit for Shell Canada Limited. A
seasoned executive with expertise in all aspects of exploration, development,
production, and operations, Mr. Symonds will also oversee all reservoir and
reserve functions at Compton.
    Gary Follensbee, P.Eng., has been appointed Vice President, Engineering &
Exploitation. Mr. Follensbee is responsible for managing all aspects of the
support systems required to expedite Compton's large drilling inventory to the
approved application status. Also a seasoned executive, Mr. Follensbee has
over 30 years of experience in all aspects of the oil and gas industry. Mr.
Follensbee has held several senior management positions, and prior to joining
Compton as a senior manager, he was Senior Manager, Canadian Operations for J.
M. Huber Canada Ltd.
    Both Mr. Symonds and Mr. Follensbee will be integral to Compton's
Executive Management Team.

    Concluding Comments

    "We have made significant improvements in our project execution
strategies," said Mr. Sapieha. "We have a highly enviable suite of assets in
our portfolio. Optimizing our operations to deliver results from those assets
to our shareholders in 2008 and beyond is our primary goal."


    Compton will be conducting a conference call and audio web cast
January 24, 2008 at 11:00 a.m. (MT), 1:00 p.m. (ET) to discuss the Company's
2008 operating plans. To participate in the conference call, please contact
the Conference Operator at 10:50 a.m. (MT), ten minutes prior to the call.

    Conference Operator Dial-in Number: Toll-Free +1-800-733-7560
    Local Toronto: 416-644-3414
    Audio web cast URL:

    The audio replay will be available two hours after the conclusion of the
conference call and will be accessible until Thursday, January 31, 2008.
Callers may dial toll-free 1-877-289-8525 and enter access code 21260425
(followed by the pound key).

    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 (iv) 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. 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 updated strategic plans, capital
program and budget targets for 2008. 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. Compton cautions
readers that the forward-looking statements may not be appropriate for
purposes other than their intended purposes. The Company's forward-looking
statements are expressly qualified in their entirety by this cautionary

    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.

For further information:

For further information: Ernie Sapieha, President & CEO, or Norm Knecht,
VP Finance & CFO, Telephone: (403) 237-9400, Fax (403) 237-9410, Website:, Email:

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