Nikolay Tomov
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Compton Petroleum Corporation Stock (TSE:CMT), (PINK:CMZPF) Collapsed on Releasing Poor Year-end 2010 Results

by Nikolay Tomov Feb 28, 2011
Do you own shares of Compton Petroleum Corporation? Are you intent on acquiring such stock? Then you should be very careful, as now it is probably not the right time for investing. Incautious buying might cause you suffer losses.

Compton_-_Chart_-_28_Feb_2011.pngThe stock of Compton Petroleum Corporation (TSE:CMT), (PINK:CMZPF) sank deeply in the end of last week. The fall was confirmed by the large trading volume and was related to the release of several negative announcements.

On Thursday, the company disclosed its reserves and financial reports for the year 2010. They look quite negative, the figures speak for themselves:
  • The net loss was $330.85M, including a $367M write-down of assets due to the lower natural gas prices;
  • Total proved reserves decreased by 40% while their value fell by 48% compared to the end of 2009;
  • Proved plus probable reserves slumped by 48%, dropping 56% in value.
The result of these somewhat horrifying numbers is obvious. Last Friday, on the Toronto Stock Exchange (TSE) the stock went over 9% down, descending to a new 52-week low of $0.38 during the session. What is worse, the decline was accompanied by a huge turnover of 5.46M shares.

However, the company is not at all in such a bad shape as it seems. In 2010, Compton continued the intense activities on its properties. It managed to spend a total of $46.3M in capital expenditures, from which $6.7M in exploration costs and $39.6M in development costs.

9Compton_-_Logo.pngThe company plans to spend $74.65M in 2011 for the future development of its proved and probable reserves. Based on forecast oil and gas prices, Compton estimates "that its internally generated cash flow will be sufficient to fund these future development costs".

Maybe, a rise in the oil and gas prices, together with an improved company's management, would make the following months look bright for Compton. Of course, without tough efforts this would probably not really happen. The company is at least undertaking some measures. Last Thursday, it announced changes in the management board in an attempt to boost the company's governance.

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