Compton engages in the exploration, development, and production of natural gas, natural gas liquids, and crude oil in the Western Canada Sedimentary Basin. Our operations are located in the deep basin portion of the Basin, which extends from Northwest Alberta and British Columbia to the United States border.  In this large geographical region, we pursue four deep basin natural gas plays: the Rock Creek sands at Niton in central Alberta, the Basal Quartz sands at High River in southern Alberta, the shallower Southern Plains sand play in southern Alberta, and an exploratory play at Callum/Cowley in the Foothills area of southern Alberta. Being in the Deep Basin, all areas have multi-zone potential, providing future development and exploration opportunity. We are also focusing on developing our emerging oil potential in the Southern Plains area and in the Montana lands. In total, we control over 1.0 million gross (0.9 million net) acres of land underlying these areas. Natural gas represents approximately 84% of reserves and production.

 

Our strategy is focused on creating value for shareholders by providing appropriate investment returns through the effective development and optimization of assets. The evaluation and technical property analysis that was completed in late 2009 and early 2010 resulted in strong returns, emphasizing the underlying value of Compton’s asset base. Operational activities in 2010 included longer horizontal sections (20% increase), higher initial production rates (25% increase), improved base production volumes (5%), reduced drilling costs (15% to 20% decrease) and lower operational costs (21% decrease) than experienced in 2009. Despite lower than anticipated commodity prices, improved efficiencies enabled Compton to execute its drilling plans and further develop the potential of its asset base.

 

Horizontal well and multiple stage fracture stimulation technology was applied at several of our key properties in 2010, expanding our opportunity base by drilling into new zones. We tested formations above and below the Rock Creek Formation in Niton, refractured two wells in High River with strong results, and drilled one oil well targeting the Ellerslie Formation in the Southern Plains. We believe that this technology is particularly applicable to our deep basin assets and has the potential to increase ultimate recovery and improve development economics.

 

Throughout 2011, operational activities will be concentrated on those areas that provide the highest economic return or that will help identify additional future development opportunities for the Corporation. Compton will focus primarily on liquids-rich, high return natural gas in Niton, and on developing its emerging oil prospects. At Niton, Compton will focus on drilling several Rock Creek wells as well as testing other zones including the Ellerslie, Cardium (oil), Notikewan and Spirit River Formations. Success in these formations would provide additional potential for growth. In the Southern Plains, the Corporation expects to drill additional Ellerslie Formation oil wells as well as a test well targeting the Alberta Bakken Formation to evaluate the potential of this zone.  Should a recovery in natural gas prices occur, additional activities may be considered with increases in available capital.