Compton sells natural gas assets

Compton Petroleum has sold $150 million worth of natural gas production, located mostly in west-central Alberta, in an effort to reduce its debt levels. Compton said the properties, which are located in the Niton and Gilby areas, produce around 3,100 barrels of oil equivalent (boe) per dayÔÇöaround 15 percent of the 19,800 boe per day it produced in the first quarter of this year. Together, they represent proven and probable reserves of around 9.4 million barrels.  The company, which explores for and produces natural gas, natural gas liquids and crude oil in Western Canada, has cut its 2010 production forecast to between 16,000 and 16,500 boe per day, down from its previous guidance of between 17,900 and 18,500 boe per day.  The sale is part of its ongoing efforts to reduce debt, streamline operations and better position itself for growth opportunities.  Compton said it would begin to increase capital spending modestly, in a bid to reverse production declines.  Under new management, Compton is attempting to move forward after putting itself up for sale and spending around three years trying to find a buyer. It has a target of reducing debt from $850 million at the start of 2009 to about $400 million.  Commenting on the sale, Tim Granger, president and chief executive officer of Compton, said: "These transactions highlight the value of our assets, which is not currently being reflected in our share price. The overall deal metrics are excellent, resulting in high per flowing barrel and reserve values as compared to other recent natural gas transactions. They are also consistent with our objective to improve financial flexibility while preserving significant upside potential for shareholders.  ÔÇ£We continue to believe that Compton's asset base can generate solid returns and production growth in a conservative natural gas price environment."  He went on to say: "Looking forward, we anticipate generating sufficient cash flow to maintain or grow our production base. Our overall debt levels are manageable today and, as such, the majority of our focus can now shift to developing our excellent asset base as we continue to work towards further opportunities to improve our debt ratios."  Headquartered in Calgary, Compton pursues three deep basin natural gas plays: the Gething/Rock Creek sands at Niton and Gilby in central Alberta, the Basal Quartz sands at High River in southern Alberta, and the shallower Southern Plains sand play in southern Alberta. In addition, it has an exploratory play at Callum/Cowley in the Foothills area of southern Alberta. Natural gas represents approximately 84 percent of the companyÔÇÖs reserves and production.  The company continues to hold 124,425 net acres in the Niton area, of which 77,545 net acres are undeveloped. It said that during the third and fourth quarters of 2010, it anticipates drilling four gross Cardium wells in the Niton area and two to three Basal Quartz wells at High River. It also plans to drill three wells in the Foothills area prior to year-end: one well at Todd Creek and two at Callum/Cowley.