BUY Target: C$15.00

Energy -- Oil and Gas, Exploration and Production

PUTTING A BOW ON IT

Event

Compton released an updated mid-year reserve report and operational update. Reserves

have been internally evaluated as of August 1, 2008. The change in reserve volumes and

values reflect pending asset sales and an update to the price forecast. While 2P reserve

volumes declined 1.2%, the 10% pre-tax value of 2P reserves increased by $508 million

(+17%) or $3.81 per share compared to year-end December 31, 2007. In addition, the proforma

change in net debt is a reduction of $147 million, bringing the total pro-forma

change in 10% pre-tax reserve value and net debt to $655 million or $4.91 per share since

year-end.

Compton also confirmed that its data room will be open on September 8 and a conclusion

to its proposed sale process is expected sometime this fall.

Impact

Positive. We have previously noted that Compton’s year-end reserve value was

conservatively stated given the low price deck assumptions. The indicated change,

combined with the fact that the reduction in debt has added value, we believe, is not

reflected in Compton’s current share price. Only partially offsetting the positive reserve

news was that Compton announced pro-forma production rates for August of 27,000

boe/d. While less than we expected, Compton indicated it expects to see an appreciable

increase over the next few months. In any event, we would note the sale process may be

near complete prior to Compton releasing its next quarterly results. The following tables

summarize the valuation and reserve changes following the mid-year update.