Netherland, Sewell & Associates, Inc., independent reserve evaluators, have completed an evaluation of 100% of Compton’s petroleum and natural gas reserves as at December 31, 2008 in accordance with the provisions of National Instrument 51-101.

 

As required by National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” (“NI 51-101”), Compton filed Form 51-101 F1 as part of its Annual Information Form (“AIF”).  The AIF is considered comprehensive.  Certain information has been summarized below regarding the Company’s operations.  All such information is consistent with the Form NI 51-101 F1 filing.  Compton’s extended disclosure contained in the AIF is available on both the SEDAR website and Compton’s website.

 

2008 Reserve Summary (1)
Company Working Interest before Royalties

 

Summary of Estimated Reserve Volumes - Forecast Prices and Costs (1)

    Oil   Gas   NGL   Sulphur   Total
December 31, 2008   (MBbl)   (MMcf)   (MBbl)   (MLt)   (MBoe)
Proved
    Producing
    Non-Producing
    Undeveloped		  
4,433
37
317		  
440,375
44,076
155,946		  
8,087
613
1,960		  
1,928
66
151		  
87,844
8,062
28,418
Total proved   4,786   640,396   10,660   2,145   124,324
Probable   3,156   479,013   7,230   944   91,164
Total proved plus probable   7,942   1,119,409   17,889   3,089   215,488
(1) Numbers may not add due to rounding.

 

After giving effect to property sales, production, extensions and revisions, our 2008 reserves decreased approximately 25 MMBoe or 16% on a proved basis and 55 MMBoe or 20% on a proved plus probable basis as compared to 2007. During 2008 we produced 10.5 MMBoe and sold approximately 11.6 MMBoe of proved reserves. Net of production and property sales, reserves decreased by 5 MMBoe (3%) on a proved basis and 29 MMBoe (11%) on a proved plus probable basis.
 
We drilled a total of 192 net wells during 2008, four of which were classified as exploratory wells, as compared to 266 net wells in 2007 of which 25 were exploratory. Our 2008 drilling program focused primarily on development activities and the advancement of reserves from the proved undeveloped and probable categories to the proved producing classification in contrast to the greater emphasis placed on discoveries and extensions in prior years.  As a result, our proved developed producing reserves increased by approximately 6 MMBoe or 7.3% before production and property sales.

 

Net Present Value of Reserves (1)

December 31, 2008 Future net revenue
before income taxes discounted at a rate of
($000)   0%   10%   15%
Proved
    Producing
    Non-producing
    Undeveloped
$
3,050,340
333,779
985,397
$
1,180,781
135,560
318,235
$
922,967
101,110
204,504
Total proved $ 4,369,516   1,634,575   1,228,581
Probable   2,985,501   934,202   599,571
Total proved plus probable $ 7,355,017 $ 2,568,777 $ 1,828,152

(1) Pricing assumptions are the average of the four major engineering firms in Calgary, Alberta. Numbers may not add due to rounding

 

Future net revenues are calculated based upon estimated revenue less royalties, operating costs, future development costs, and well abandonment costs.  Estimated income taxes have not been deducted.  The net present value should not be considered the current market value of our reserves or the costs that would be incurred to obtain equivalent reserves.

 

Reserve Reconciliation - Forecast Prices and Costs
  Crude Oil, NGLs
& Sulphur		 Natural Gas Total
  Proved
(Mbbl)		 Probable
(Mbbl)		   Proved
(Bcf)		 Probable
Bcf)		   Proved
(MMcf)		 Probable
(Mboe)		 Proved +
Probable
(Mboe)
December 31, 2007
Extensions
Improved Recovery
Technical revisions
Discoveries
Acquisitions
Dispositions
Economic
Production		 25,477
636
628
(1,905)
34
34
(5,588)
0
(1,726)		 17,154
388
(628)
(2,930)
8
3
(2,665)
0
0		   745
34
46
(98)
0
2
(36)
0
(53)
 625
41
(46)
(123)
0
0
(19)
0
0		   149,564
6,380
8,231
(18,272)
38
433
(11,559)
0
(10,491)		 121,255
7,291
(8,231)
(23,434)
11
40
(5,766)
0
0		 270,819
13,670
0
(41,707)
49
473
(17,325)
0
(10,491)
December 31, 2008 17,591 11,329   640 479   124,324 91,164 215,488

 

Proved reserve extensions, improved recoveries, and discoveries totaled 14.6 MMBoe or 1.4 times 2008 production.

 

Technical revisions reflect adjustments to reserve estimates made in previous years and relate to expected future well performance based upon additional production history, the impact of current operating factors on sales volumes including fuel gas usage associated with production facilities, and land expiries.  Aggregate negative technical revisions, related to December 31, 2007 reserve bookings, were 18.3 MMBoe on a proved basis and 41.7 MMBoe on a proved and probable basis.

 

In the Niton and Hooker areas, a small number of wells accounted for the majority of well performance related revisions. Niton accounted for 4% of the proved revisions and 11% of the proved and probable revisions. Approximately 75% of the proved revisions at Niton are attributable to two horizontal wells.  A total of 189 wells are on production at Niton including 26 horizontal wells.

 

The Hooker area contributed 25% of proved and 21% of proved and probable negative revisions. Approximately 60% of the proved revisions relate to 14 Basal Quartz wells, including three undeveloped locations; in total, 102 Basal Quartz wells are on production in the area.
 
The Plains Belly River accounted for approximately one-half of the negative well performance related revisions. The technical revisions result from a general reduction in the ultimate recovery from 63% of producing well locations. This reduction was also applied to the proved undeveloped and probable locations.

 

Approximately 15% of proved plus probable revisions relate to operational factors and land expiries.