Southern Alberta – High River Deep Gas play.

Discovered by Compton in 1999, the High River asset is a low to medium permeability Basal Quartz channel sandstone pool, which is the southern Alberta extension of the Lower Cretaceous Deep Basin gas trend.  Compton controls 130 sections at a greater than 80% working interest in this area. This formation offers large growth potential with an estimated 525 to 600 BCF of original-gas-in-place, of which approximately 19% to 23% has been recovered to date. Current production extends over five townships, and in February 2008, this large pool reached a production milestone of 100 BCF. With an annual pool wide base decline of 15%, the pool is a legacy asset with a predictable, stable, water free decline producing liquids rich gas.

 

Compton initiated horizontal drilling with multi-stage fracture stimulations in the pool with the drilling of one well in late 2007 and an additional four wells in 2008. In 2010, activities were focused on transferring the knowledge and efficiencies gained at Niton to the Basal Quartz area to improve economics in the area. Two Basal Quartz vertical wells were refractured late in the year, resulting in combined average production of 450 Mcf/d, which was 4.5-times previous levels. As the cost to refracture wells is considerably less than drilling, the economic return of production gains through refracturing is significant. With this success, additional refracture locations may be identified from the inventory of over 100 producing vertical wells in the area. In addition, one new horizontal well was drilled in the formation late in 2010, although it was later abandoned due to drilling issues.

 

The High River play has historically been developed through drilling one to two vertical wells per section. Reservoir modeling indicates up to four vertical wells per section may be necessary to fully develop the play. Approximately 45 of 57 developed sections have been down spaced to three wells per section. This will provide us with more latitude when establishing optimal well density in order to maximize value of our depletion strategy. The 12 remaining sections have sufficient drainage with current well densities to adequately access the reservoir.

 

Several locations at High River have been identified for potential drilling or refracturing of existing wellbores, should natural gas prices improve to provide additional cash flow for our capital program. Through selective drilling and pool wide optimization, High River’s depletion strategy can be optimized to enhance capital efficiency.