Wednesday, oil and natural gas company Compton Petroleum Corporation (CMT.TO,CMZ) revised its 2009 guidance to assume a more defensive posture, citing continuing weakness in demand for crude oil and natural gas and the resulting low commodity prices.
The company said it currently expects daily production for 2009 to be in the range of 20,500 - 21,500 barrel of oil equivalent, or boe, per day. Production was 28,658 boe per day in 2008.
Funds flows from operations are expected to be between C$60 million and C$70 million. Capital expenditure is anticipated to be C$40 million and General and administrative expenses are anticipated to be in the range of C$28 million - C$29 million.
On March 24, while announcing the financial results for the fourth quarter of fiscal 2008, the company said "We are currently revisiting our initial 2009 plans in light of the continued decline in commodity prices, particularly natural gas prices, and our commitment to limit capital spending to funds flow from operations."
"In response to current commodity prices, we have delayed certain first quarter 2009 expenditures and expect our 2009 capital program will be less than initially planned. We will communicate our revised 2009 plans once they have been finalized," the company said at that time.
Compton said its present guidance is based on average 2009 forecast prices of C$4.90 per mcf of natural gas and C$64.00 per barrel of crude oil. A C$0.25 per mcf change in natural gas prices is expected to result in an C$8.4 million change in funds flow from operations, and a C$1.00 per boe change in crude oil prices is expected to result in a C$0.4 million change in funds flow from operations. The company said it requires a natural gas price of C$5.50 to C$7.50 per mcf (AECO) to drill new wells, depending on the area and well type.
The company said that the restructuring process begun in late 2008 is largely complete and expects it to result in gross savings of about C$9 million, before recoveries and amounts capitalized, in comparison to 2008
Compton intends to strengthen its capital structure by considering possible combinations of farm-ins, asset sales, and additional debt and/or equity capital, and advisors have been engaged to assist with this initiative,
CMZ is currently down $0.02 or 3.60% and trades at $0.67. CMT.TO is currently down C$0.02 or 2.30% and trades at C$0.85.
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