Compton's Callum/Cowley Foothills Gas Plant.

Our Callum/Cowley property consists of a series of over pressured, thrusted, low permeability Belly River sands in the foothills of southern Alberta.  A total of 15 exploratory wells have been drilled over the life of the play.  Based on our initial detailed geological, geophysical, and engineering analysis of seismic, cores, well logs, and test and production data, Callum appears to exhibit many similarities to the deep unconventional gas pools of the Rocky Mountain region of the United States.

 

In 2007, we drilled a horizontal well targeting a specific group of sands plus intersecting mapped fracture systems.  The well came on production at approximately 6.5 mmcf/d, without stimulation.  Further reservoir and completion work is planned on this well bore in 2008.

 

During the fourth quarter of 2007, we acquired WIN Energy Inc., a junior oil and gas company that was active on lands immediately adjacent to ours.  This $30 million acquisition added 68,000 gross (53,600 net) acres of undeveloped land in the Cowley area in southern Alberta prospective for the thrusted Belly River trend.  As at December 31, 2007, we held approximately 239 net sections of high impact exploration lands at Callum and Cowley.

 

With our acquisition of WIN Energy Inc., we also acquired 55 kilometres of 2D seismic and a new 36 square mile 3D seismic survey surrounding currently producing wells.  Using this seismic data, we plan to replicate our recent horizontal well success at Callum in the Cowley area.  In 2008, we plan to drill four extended reach horizontal wells.  These wells will be oriented to intersect the maximum number of natural fractures in the foothills gas play.  Each of these horizontal wells will use multi-stage fracturing techniques and they will be drilled from existing pads to minimize our environmental impact.  We plan to drill a total of nine wells in the Callum and Cowley area in 2008.

 

Compton treats the southern Alberta Foothills region as a unique environmental eco-system.  In conjunction with a number of southern Alberta ranching operations, we are completing a rangeland health assessment that addresses optimal ways to restore these systems to their natural state.  This includes funding of studies on native rough fescue grasses by the University of Alberta, as well as working closely with both industry and landowner work groups.  Surface impact on all proposed wells will be minimized by using existing drill pads or by selecting surface areas on sites previously disturbed by the agriculture industry.