Niton

The Niton area is a multi-zone liquids rich, tight gas play with production primarily coming from Jurassic Rock Creek and Mannville Ellerslie sands at depths ranging from 1,950 to 2,700 metres. Proprietary exploration, development, and operational knowledge gained by the Corporation in southern Alberta has resulted in accelerated growth of this core area over the past few years. Compton is an active driller at Niton, with over 205 wells drilled to date on its 245 sections of controlled land in this area at a 73% working interest. Compton experienced significant drilling success over the past three years as a main area of focus. Improved drilling methods resulted in approximately 25% higher average initial production rates and 15% to 20% lower drilling costs in 2010 over the previous year. This area is highly accretive to the Corporation, providing strong economics in a low gas price environment.

 

In 2011, Compton will focus on the development of the liquids-rich, high return Rock Creek formation at Niton, where the Corporation can generate strong rates-of-return. This area has multi-zone potential, providing the opportunity to expand our development base by moving into other geological horizons. The majority of these formations occur above the Rock Creek zone and are being exploited by other operators either vertically or horizontally. Compton intends to continue technical work to better understand these other uphole zones above the Rock Creek using horizontal drilling with multi-stage fracturing.

 

During 2010, the Corporation began testing some of these uphole zones to further evaluate the area’s potential. A Spirit River Formation vertical well was drilled in late 2010 and brought on production at 1 MMcf/d. The results from this well support further development in the Spirit River Formation, reinforcing Niton’s multi-zone potential. This evaluation and testing may lead to new drilling programs in the future, supplementing the growth potential from the Rock Creek formation.

 

Rock Creek Formation

The Rock Creek play’s variable permeability and water-free nature lends itself well to horizontal drilling and multistage fracturing. Compton is the leading Niton operator developing this play with 36 successful horizontal wells producing from this zone at the end of 2010. The typical horizontal Rock Creek well has an average initial rate of 3 MMcf/d in the first month of production, which results in attractive economics..

 

The strong drilling and economic results achieved in 2009 continued into 2010, resulting in volume performance that exceeded expectations. In addition, the Corporation’s focus on internal cost reduction and improved drilling techniques resulted in higher initial production rates than previously experienced and well costs that were 15% to 20% lower than previous horizontal multi-stage fractured wells drilled in the area. Overall, Compton drilled six Rock Creek wells during 2010 with strong results. The most recent Rock Creek well drilled during the fourth quarter had an initial test rate of 5.5 MMcf/d with 30 bbl/MMcf of liquids. The well is currently on production at approximately 3.3 MMcf/d and 35 bbl/MMcf of liquids. The well was on production in late February 2011 at approximately 3.3 MMcf/d and 35 bbl/MMcf of liquids.

 

Spirit River Formation

The Spirit River formation is a new formation that Compton began developing in 2010. It is in early stage of development with 12 producing vertical wells. The geology of the formation is similar to the Spirit River/Wilrich play being developed west and northwest of Compton’s lands. In late 2010, a Spirit River Formation vertical well was drilled and brought on production at 1 MMcf/d. The results from this well support further development in the Spirit River Formation, reinforcing Niton’s multi-zone potential.

 

Ellerslie Formation

The Ellerslie formation is an under-pressured, essentially water-free, tight channel sand complex that is similar to our Hooker play, ranging in depth from 1,950 to 2,300 metres. Historically, these sands have only been developed through vertical drilling. Compton drilled two horizontal wells in 2008 targeting lower permeability sands in this zone. Both wells are on production with an average production rate of 670 Mcf/d as a first month initial rate. Older offset vertical wells, adjacent to Compton’s horizontals, had limited productive capability.