Strikes against Western Canada

The high-cost Western Canada Sedimentary basin has attracted two more black marks.

ConocoPhillips said its operations in the Foothills region of the Canadian Rockies will post a $90 million after-tax charge against its earnings for the final quarter of 2006.

It blamed “declining well performance and drilling results.” The company currently produces about 363,000 barrels of oil equivalent per day in Canada.

Meanwhile, mid-sized producer Compton Petroleum has put the brakes on first-half spending for 2007 in hopes that a decline in upstream activity will lower oilfield service costs.

The Calgary-based company said it plans to trim its capital spending budget by 20 percent to C$375 million, following the lead of companies such as EnCana, Talisman Energy and Canadian Natural Resources who have restrained spending until there is an easing in field costs.

Compton Chief Executive Officer Ernie Sapieha told analysts he anticipates reduced activity will lower long-term costs.

The company still plans to match last year’s performance by drilling about 330 wells, but will trim its budget by concentrating on cheaper, shallow natural gas wells, while restraining its land purchases and investment in facilities and equipment.

It is aiming for a 14 percent hike in production this year to 38,000 barrels of oil equivalent per day.

Canaccord Adams said it is cautious about the challenge Compton faces in meeting its growth objectives while reining in capital spending.

—Gary Park