Compton Responds to Shareholder's Concerns, Point to Poor Gas Production
On Dec. 14, 2007, a significant shareholder representing 19.8% of the shares outstanding made a regulatory filing in the United States which included, among other topics, a statement that in its view Compton's common shares are trading at a significant discount to the shareholder's perception of the Company's net asset value, and a request of Compton's Board of Directors to consider strategic alternatives to bridge this gap. The Board will, on behalf of all shareholders, fully consider this filing.
The current business environment for Compton and the Canadian natural gas industry at large is challenging to say the least. Our current share price reflects the depressed state of the natural gas industry, particularly in Alberta, resulting from (a) low natural gas prices, (b) the rapid appreciation of the Canadian dollar, (c) the high cost structure of the basin, and (d) regulatory issues including uncertainties relating to the proposed new Crown royalty structure in Alberta. Given these cyclical bearish factors and the upcoming release of our 2007 year end reserve report and audited financial statements, the Board and Management are puzzled by the shareholder's request and particularly with its timing.
While 2007 has been a difficult operating year for the industry in general, Compton has been successful on a number of fronts. We will have completed a successful drilling program, drilling approximately 340 wells during the year, including several promising exploration successes, and expect to meet our 2007 production targets. Compton concluded the sale of several properties, including the major sale of the Worsley oil field, for proceeds in excess of $300 million with the intention of redeploying the proceeds into our large natural gas resource plays.
There has been considerable change in 2007, from our operational activities to the external business environment. These will be reflected in our two principal year end reports. Within the next two months we will receive the report of our independent reserves evaluator, Netherland Sewell & Associates Inc., which will provide in depth detail on the value of our reserves. Within the next three months we will also be issuing our audited financial statements.
We remain bullish on the outlook for natural gas and are confident that our longer term strategy is sound and achievable. This strategy was communicated in our July 11, 2007 press release and updated as part of our third quarter press release on November 12, 2007. In essence, our strategy is to accelerate the drilling of our large inventory of natural gas reserves and convert them to incremental production volumes. We believe Compton's solid reserve base, extensive land position, large inventory of drilling prospects, and projected growth for 2008 bode well. The implementation of our strategy continues to be a dynamic process as we must constantly respond to factors beyond our control.
While Compton is opportunity rich, the Board must endeavor to capitalize on these opportunities in a timely fashion. The Board continues to review Compton's competitive position and will take appropriate steps to ensure our actions will be in the best interest of all shareholders.
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