CALGARY, May 11 /PRNewswire-FirstCall/ -- Compton Petroleum
Corporation (TSX - CMT, NYSE - CMZ) reports its financial and
operating results for the three months ended March 31, 2009. The
full text of Management's Discussion and Analysis ("MD&A") and
the Company's audited consolidated financial statements can be
found on the Company's website at http://www.comptonpetroleum.com/
and at http://www.sedar.com/ The current economic environment,
market uncertainties, reduced commodity demand and prices have had
a negative impact on our 2009 first quarter operating results. In
response to these circumstances, we have adopted a more defensive,
measured and flexible investment approach - one that is reflected
in our first quarter activities and our plans for the remainder of
2009. Our overall strategy during this period of uncertainty is
that of positioning the Company such that, once the economic
recovery occurs, we will have the ability to develop and realize on
the opportunities inherent in our asset base. During 2009, we will
focus on addressing our capital structure and those areas within
our control. We have initiated a corporate restructuring process
with an emphasis on improving our capital efficiencies and reducing
our internal cost structures, which is starting to be realized. Q1
2009 Summary of Results - Generated funds flow from operations of
$22.0 million, or $0.18 per diluted share - Adjusted operational
earnings for the quarter were a loss of $2.2 million - Achieved
first quarter 2009 average production of 23,194 boe/d, a decrease
of 30% due to property dispositions and natural declines - Realized
a net loss of $17.4 million, due to lower commodity prices,
production and an unrealized $16.0 million foreign exchange loss -
Drilled nine wells with a 100% success rate on total capital
expenditures of $16.6 million, before acquisitions and divestures
Financial Review
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Three Months Ended Mar. 31 (000s, except per share amounts) 2009
2008 % Change
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Total revenue(1) $ 68,899 $ 160,699 (57%) Funds flow from
operations(2) $ 22,041 $ 67,589 (67%) Per share - basic(2) $ 0.18 $
0.52 (65%) - diluted(2) $ 0.18 $ 0.51 (65%) Adjusted operational
earnings(1)(2) $ (2,238) $ 19,348 Net earnings (loss) $ (17,368) $
1,619 Per share - basic $ (0.14) $ 0.01 - diluted $ (0.14) $ 0.01
Capital expenditures before acquisitions and divestments $ 16,643 $
100,948 (84%) Total bank debt & term notes $ 897,090 $ 897,555
- Shareholders equity $ 817,620 $ 875,017 (7%) Shares outstanding
125,573 129,339 (3%)
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(1) Prior periods have been revised to conform to current period
presentation (2) Funds flow from operations and adjusted
operational earnings are non-GAAP measures and are addressed in
detail in the MD&A Revenue decreased by 57% over the first
quarter of 2009 due to significantly lower realized natural gas and
liquids prices and reduced production volumes. We recognized a net
loss of $17.4 million for the three months ended March 31, 2009, as
compared to net earnings of $1.6 million in 2008. The loss is
largely attributable to the impact of lower commodity prices and
production volumes and an unrealized foreign exchange loss of $16.0
million recognized on translation of our US dollar denominated
senior notes. Capital spending, before acquisitions and
divestments, during the first quarter of 2009 decreased by 84%
compared to the comparable period in 2008 due to decreased and
delayed activity during 2009. We drilled 9 wells in 2009 when
compared with 99 in 2008. The decline in commodity prices has
adversely impacted economic returns on many of our drilling
projects. Until such time as improved commodity prices and/or
reductions in service costs allow us to achieve our internal rate
of return objectives, the majority of our field activities will
focus on optimizing production from existing wells. Subsequent to
the quarter, Compton renewed the processing agreements with Mazeppa
Processing Partnership for a further five-year period under
substantially the same terms and conditions. Operations Review
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Three Months Ended Mar. 31 2009 2008 % Change
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Average daily production Natural gas (mmcf/d) 117 170 (31%) Liquids
(bbls/d) 3,655 5,009 (27%) Total (boe/d) 23,194 33,274 (30%)
Realized prices Natural gas ($/mcf) $ 5.18 $ 7.48 (31%) Liquids
($/bbl) $ 38.35 $ 94.97 (60%) Total ($/boe) $ 33.01 $ 53.07 (38%)
Field netback(1) ($/boe) $ 20.87 $ 31.94 (35%)
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(1) Field netback is a non-GAAP measures and is addressed elsewhere
in detail in the MD&A Overall production in the first quarter
of 2009 fell 30% from the same period in 2008. Natural gas volumes
decreased 31%, while liquids production decreased 27% from 2008.
The decrease in our quarterly volumes is attributable to the sale
of 4,100 boe/d of production associated with certain non-core
assets sold during the third quarter of 2008 as well as natural
declines. Additionally, decreased capital expenditures during the
last quarter of 2008 and into 2009 has resulted in minimal new
production necessary to offset declines. As part of our objective
to adjust our capital structure, several initiatives are underway
to maximize the value of our assets and increase production and
reserves at minimal cost: - Optimization: We are in the process of
reviewing our existing base of over 1,500 wells for optimization
opportunities. We expect to be able to start workovers and
recompletions during the second half of 2009; - Capital costs: We
are examining ways to reduce drilling and completion capital on a
go-forward basis, as well as reviewing the effect of both the new
royalty structure and the lower cost structure with reduced
industry activity; and - Farm-out opportunities: We completed two
farm-out transactions in the first quarter around the Caroline
area, each of which has a two well drilling commitment. We have
received various operational proposals over portions of our over
1.2 million net acres of land, which are in the process of being
considered. Hooker (Southern Alberta) ------------------------- At
Hooker, selective drilling and pool wide optimization can enhance
Compton's depletion strategy to increase capital efficiency and
minimize drilling and completion costs. Since January, we have been
remapping the Hooker pool using a depositional model that was
derived from an extensive geological review of exiting wellbores,
including cores, well chip samples, and well logs. Several
locations have been identified for potential drilling or
refracturing of existing wellbores in the latter half of the year,
provided that they meet Compton's internal rate of return hurdles.
Niton (Central Alberta) ----------------------- During the quarter,
Compton drilled two successful wells at Niton. A horizontal Rock
Creek gas well is currently flowing 5.3 MMcf/d (initial production
rate: 9.5 MMcf/d), and a vertical Rock Creek oil well swab tested
at 50 bbls/d. The oil well is currently awaiting tie-in which is
expected by the end of May. One non-operated well (40% working
interest) drilled during the quarter encountered both Ellerslie and
Rock Creek pay. On completion, the well tested at 436 mcf/d. In
June, we expect to spud a Rock Creek horizontal well offsetting a
Compton Rock Creek horizontal well that initially produced at a
rate of 4.0 MMcf/d and is currently producing 800 mcf/d after six
months. Callum-Cowley & Todd Creek (Southern Alberta)
--------------------------------------------- At Todd Creek, the
new zone completed in an older existing wellbore in late 2008 has
been on stable production at 2.7 MMcf/d since December 2008. The
well initially tested at 4.0 MMcf/d but has been restricted in
order to provide sufficient test data. We have licensed an offset
well from the same pad, which will not be drilled until mid-summer
due to environmental restrictions. The completion of the offset
well will validate 15 sections of land for future drilling.
Drilling Summary The following table summarizes our drilling
results.
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Three Months Natural Crude Ended Mar. 31, Gas Oil D&A Total Net
Success
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Southern Alberta - - - - - - Central Alberta 8 1 - 9 1.8 100%
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2009 Total 8 1 0 9 1.8 100%
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2008 Total 87 4 4 99 73 96%
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All nine gross wells drilled during the first quarter of 2009 were
development wells. Of the nine gross wells drilled, five were
non-operated minor working interest unit wells at Ghost Pine
(working interest: 5.7%). In response to current low commodity
prices and marginal drilling economics, we have reduced our capital
expenditures for 2009 to assume a more defensive posture during
these uncertain times. Outlook Continuing reduced demand for crude
oil and natural gas and the resulting low commodity prices are
challenging the industry, including Compton, in terms of project
economics, revenue and funds flow from operations. Combined with
our commitment to limit capital spending to funds generated from
operations, we have revised our 2009 plans in light of the current
circumstances to assume a more defensive posture during these
uncertain times. We will adjust our 2009 capital spending up or
down, depending upon how economic circumstances unfold during the
year and intend to limit our capital expenditures to within funds
flow from operations. We have initiated a corporate restructuring
process with a concentrated emphasis on continued capital
efficiencies and reducing our internal cost structures. Due to
these initiatives, we expect to recognize a gross savings in
G&A expenses of approximately $9.0 million, before recoveries
and amounts capitalized, in comparison to 2008. From an operations
standpoint, our current focus will be on asset optimization and
evaluation of opportunities within our existing asset base to
position the organization for successful development once commodity
prices rebound. Concerning drilling, we have achieved considerable
success using multi-stage fracture technology combined with
horizontal wells drilled into tight natural gas formations over the
past year. Funds allocated to drilling during 2009 are expected to
be focused primarily towards the application of this technology at
our Niton and Hooker properties in Alberta, provided that required
rate of return hurdles are met for each project. We are progressing
with the preliminary evaluation of various options for change to
our capital structure, including farm-ins, asset sales and
additional debt and/or equity capital. We will communicate
initiatives that are focused on strengthening Compton's capital
structure and generating value for shareholders once they have been
finalized. Additional Information Compton has filed its audited
Consolidated Financial Statements for the three months ended March
31, 2009 and related Management's Discussion and Analysis with
Canadian securities regulatory authorities. Copies of these
documents may be obtained via http://www.sedar.com/ or the
Company's website, http://www.comptonpetroleum.com/. To order
printed copies of the filed documents free of charge, email the
Company at . 2009 First Quarter Conference Call Compton will host a
conference call and web cast on Tuesday, May 12, 2009 at 8:00 a.m.
MST (10:00 a.m. EST) to discuss the Company's 2009 first quarter
financial and operating results. To participate in the conference
call, please contact the Conference Operator ten minutes prior to
the call at 1-800-796-7558 or 1-416-646-3095. To participate in the
web cast, please visit: http://www.comptonpetroleum.com/. The web
cast will be archived two hours after the presentation at the
website listed above. For a replay of this call, please dial:
1-877-289-8525 or 1-416-640-1917 and enter access code 21305716
followed by the number sign until May 21, 2009. Annual and Special
Meeting of Shareholders Compton's Annual and Special Meeting of
Shareholders is scheduled for May 11, 2009 at 3:30 p.m. (Calgary
time) in the Historical Ballroom on the Fourth Floor of the Calgary
Chamber of Commerce, 517 Centre Street South, Calgary, Alberta,
Canada. A web cast of the Annual and Special Meeting is available
on Compton's website at http://www.comptonpetroleum.com/; all
shareholders are encouraged to attend either in person or
electronically. Advisories Use of Boe Equivalents The oil and
natural gas industry commonly expresses production volumes and
reserves on a barrel of oil equivalent ("boe") basis whereby
natural gas volumes are converted at the ratio of six thousand
cubic feet to one barrel of oil. The intention is to sum oil and
natural gas measurement units into one basis for improved
measurement of results and comparisons with other industry
participants. We use the 6:1 boe measure which is the approximate
energy equivalency of the two commodities at the burner tip.
However, boes do not represent a value equivalency at the well head
and therefore may be a misleading measure if used in isolation.
Forward Looking-Statements Certain information regarding the
Company contained herein constitutes forward-looking information
and statements and financial outlooks (collectively,
"forward-looking statements") under the meaning of applicable
securities laws, including Canadian Securities Administrators'
National Instrument 51-102 Continuous Disclosure Obligations and
the United States Private Securities Litigation Reform Act of 1995.
Forward-looking statements include estimates, plans, expectations,
opinions, forecasts, projections, guidance, or other statements
that are not statements of fact, including statements regarding (i)
cash flow and capital and operating expenditures, (ii) exploration,
drilling, completion, and production matters, (iii) results of
operations, (iv) financial position, and (v) other risks and
uncertainties described from time to time in the reports and
filings made by Compton with securities regulatory authorities.
Although Compton believes that the assumptions underlying, and
expectations reflected in, such forward-looking statements are
reasonable, it can give no assurance that such assumptions and
expectations will prove to have been correct. There are many
factors that could cause forward-looking statements not to be
correct, including risks and uncertainties inherent in the
Company's business. These risks include, but are not limited to:
crude oil and natural gas price volatility, exchange rate
fluctuations, availability of services and supplies, operating
hazards, access difficulties and mechanical failures, weather
related issues, uncertainties in the estimates of reserves and in
projection of future rates of production and timing of development
expenditures, general economic conditions, and the actions or
inactions of third-party operators, and other risks and
uncertainties described from time to time in the reports and
filings made with securities regulatory authorities by Compton.
Statements relating to "reserves" and "resources" are deemed to be
forward-looking statements, as they involve the implied assessment,
based on estimates and assumptions, that the reserves and resources
described exist in the quantities predicted or estimated, and can
be profitably produced in the future. The forward-looking
statements contained herein are made as of the date of this news
release solely for the purpose of generally disclosing Compton's
views of its financial and operational results as of March 31,
2009, reserves volumes, net present value of its reserves and
prospective activities. Compton may, as considered necessary in the
circumstances, update or revise the forward-looking statements,
whether as a result of new information, future events, or
otherwise, but Compton does not undertake to update this
information at any particular time, except as required by law.
Compton cautions readers that the forward-looking statements may
not be appropriate for purposes other than their intended purposes
and that undue reliance should not be placed on any forward-looking
statement. The Company's forward-looking statements are expressly
qualified in their entirety by this cautionary statement. Non-GAAP
Financial Measures Included in the news release are references to
terms used in the oil and gas industry such as funds flow from
operations, funds flow per share, adjusted operational earnings,
adjusted EBITDA, and field netback. These terms are not defined by
GAAP in Canada and consequently are referred to as non-GAAP
measures. Non-GAAP measures do not have any standardized meaning
and therefore reported amounts may not be comparable to similarly
titled measures reported by other companies. Funds flow from
operations should not be considered an alternative to, or more
meaningful than, cash provided by operating, investing and
financing activities or net earnings as determined in accordance
with Canadian GAAP, as an indicator of the Company's performance or
liquidity. Funds flow from operations is used by Compton to
evaluate operating results and the Company's ability to generate
cash to fund capital expenditures and repay debt. Adjusted
operational earnings represents net earnings excluding certain
items that are largely non-operational in nature and should not be
considered an alternative to, or more meaningful than, net earnings
as determined in accordance with Canadian GAAP. Adjusted
operational earnings is used by the Company to facilitate
comparability of earnings between periods. Adjusted EBITDA is a
non-GAAP measure defined as net earnings, net of interest and
finance charges, income taxes, depletion, depreciation and
amortization, accretion of asset retirement obligations, and any
foreign exchange gains or losses. Field netback equals the total
petroleum and natural gas sales, including realized gains and
losses on commodity hedge contracts, less royalties and operating
and transportation expenses, calculated on a $/boe basis. Funds
flow netback equals field netback including general and
administrative costs and interest costs. Field netback and funds
flow netback are non-GAAP measures that management uses to analyze
operating performance. Field netback and funds flow netback do not
have a standardized meaning as prescribed by Canadian GAAP and,
therefore, may not be directly comparable to similar measures
presented by other issuers. About Compton Petroleum Corporation
Compton Petroleum Corporation is a Calgary-based public company
actively engaged in the exploration, development, and production of
natural gas, natural gas liquids, and crude oil in the Western
Canada Sedimentary Basin. Compton's shares are listed on the
Toronto Stock Exchange under the symbol CMT and on the New York
Stock Exchange under the symbol CMZ. DATASOURCE: Compton Petroleum
Corporation CONTACT: Susan J. Soprovich, Director, Investor
Relations, Ph: (403) 668-6732, Fax: (403) 237-9410, Email: ,
Website: http://www.comptonpetroleum.com/
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