PROPERTY ACQUISITIONS / Compton and Dynegy
COMPTON PETROLEUM AND DYNEGY INC. ANNOUNCE SALE AND PURCHASE
OF MAZEPPA GAS PLANT
CALGARY, July 7 /CNW/ - Compton Petroleum Corporation (Compton) and
Dynegy Inc. (formerly NGC Corporation.) today announced an innovative
agreement whereby Dynegy Canada Inc., a wholly owned subsidiary of Dynegy
Inc., will acquire Compton's midstream gas processing facilities in southern
Alberta, including its 82 mmcfd sour gas plant at Mazeppa.
Under the terms of the agreement:
- Dynegy Canada will acquire Compton's interests in the Mazeppa and
Gladys gas plants, with combined capacity of 97mmcfd, located 50
kilometers south of Calgary, together with approximately 125
kilometers of associated gathering pipelines.
- Compton is assured processing and transportation capacity, at set
rates, and will receive C$60 million, (subject to adjustments), on
closing. In addition, under an incentive payment arrangement, relating
to a maximum of 50 new wells to be drilled in the Mazeppa/Nanton area,
Compton will receive a minimum of C$12.5 million (C$250,000 per well)
up to a maximum of C$25.0 million (C$500,000 per well), depending on
well productivity. Pursuant to the agreement and on satisfaction of
the drilling requirements, Compton will receive between C$72.5 million
and C$85.0 million in total.
''The acquisition of these midstream assets is a key step in our strategy
to reestablish Dynegy's Canadian asset base'', said Chuck Watson, chairman and
CEO of Houston based Dynegy Inc. ''The Mazeppa facilities will complement our
existing gas marketing and trading business. In addition, our continuing
relationship with Compton will generate future opportunities to add throughput
to these facilities. We believe there are significant opportunities in the
Canadian midstream business as this market continues to evolve.''
According to Rod Wimer, president of Dynegy Canada Inc., ''Compton is a
successful, aggressive exploration and production company well positioned to
exploit the area's production potential. This potential, coupled with Dynegy's
strength in the midstream processing and marketing area makes this a win-win
agreement.
Ernie Sapieha, Compton's President and CEO stated, ''On closing, Compton
will be debt free with available lines of credit in excess of C$52 million;
Compton will now aggressively pursue an accelerated drilling program in
southern Alberta.'' Compton has access to approximately 665 sections of land
in the Mazeppa/Nanton area, which is characterized by multi zone, liquids rich
gas reserves. With financing in place, Compton is planning an initial
18-month, minimum 60 well, drilling program in the area, targeting deep,
natural gas reserves, principally in the Turner Valley and Wabamun zones.
''The drilling arrangement with Dyngey and their planned expenditures in the
area will allow us to maintain low Finding and Development costs while
actively pursuing exploration prospects'', added Sapieha.
Compton Petroleum Corporation is a Calgary based E & P Company with
reserves in excess of 200bcf equivalent, 95% of which are natural gas and
associated gas liquids. The Company's common shares are listed and trade on
The Toronto Stock Exchange under the trading symbol ''CMT''.
Dynegy Canada Inc. (formerly known as NGC Canada Inc.) is a wholly owned
subsidiary of Houston-based Dynegy Inc. (NYSE:DYN). Dynegy, one of the leading
marketers of energy products and services in North America, recently changed
its name from NGC Corporation to reflect the company's evolution from a
natural gas marketing company to a dynamic energy company with a full energy
network to meet the growing challenges of the energy market of the future. Its
leadership position in gathering, processing, independent power generation,
transportation and marketing of energy products enables the company to offer
energy solutions to customers in North America, the United Kingdom and
Australia.
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For further information: Compton Petroleum Corporation: E.G. Sapieha,
President & CEO, or N.G. Knecht, VP Finance & CFO, Telephone: (403) 237-9400,
Fax: (403) 237-9410; Dynegy Canada Inc.: Jonathan Horlick, VP, Secretary &
General Counsel, Corporate Services & Finance, Telephone: (403) 213-6222, Fax:
(403) 213-6224, or Jennifer Rosser, Telephone: (713) 767-5129
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