Dynegy Inc., formerly NGC Corp. has purchased ComptonPetroleum’s Canadian midstream assets, including 78 miles ofpipelines, and the 82 MMcf/d Mazeppa and 15 MMcf/d Gladysprocessing plants in southern Alberta, for C$60 million. The dealalso includes a transportation, processing and revenue sharingagreement whereby Compton is assured processing and transportationcapacity at set rates and is paid a fee for bringing in new wellsand production.

Under an incentive payment arrangement, relating to a maximum of50 new wells to be drilled in the Mazeppa/Nanton area, Compton willreceive a minimum of C$12.5 million (C$250,000 per well) up to amaximum of C$25.0 million (C$500,000 per well), depending on wellproductivity. On satisfaction of the drilling requirements, Comptonwill receive between C$72.5 million and C$85.0 million in total.

“The acquisition of these midstream assets is a key step in ourstrategy to reestablish Dynegy’s Canadian asset base,” said DynegyChairman Chuck Watson. “The Mazeppa facilities will complement ourexisting gas marketing and trading business. In addition, ourcontinuing relationship with Compton will generate futureopportunities to add throughput to these facilities. We believethere are significant opportunities in the Canadian midstreambusiness as this market continues to evolve.”

Compton CEO Ernie Sapieha said the deal will eliminate Compton’sdebt and help create lines of credit in excess of C$52 million. Thecompany now plans to pursue an accelerated drilling program insouthern Alberta. Compton is planning an initial 18-month, minimum60-well drilling program in the area, targeting deep gas reserves.”The drilling agreement with Dynegy and their planned expendituresin the area will allow us to maintain low finding and developmentcosts while actively pursuing exploration prospects,” said Sapieha.

Calgary-based Compton holds reserves in excess of 200 Bcf, 95%of which are gas and associated liquids.

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