EXHIBIT 20.2
                                                                   ------------










                                       COMPTON PETROLEUM CORPORATION
                                       CONSOLIDATED FINANCIAL STATEMENTS
                                       December 31, 2007


<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Shareholders of
COMPTON PETROLEUM CORPORATION


We have  audited  the  accompanying  consolidated  balance  sheets  of  Compton
Petroleum  Corporation  as at December  31, 2007 and 2006 and the  consolidated
statements of earnings and other comprehensive income,  retained earnings,  and
cash flow for each of the three years in the period  ended  December  31, 2007.
These consolidated financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company  Accounting  Oversight  Board
(United States).  Those standards  require that we plan and perform an audit to
obtain  reasonable  assurance  whether  the  financial  statements  are free of
material   misstatement.   Our  audits  of  the  financial  statements  include
examining,  on a test basis, evidence supporting the amounts and disclosures in
the financial  statements.  A financial statement audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall  financial  statement  presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material  respects,  the financial position of the Company as at
December 31, 2007 and 2006 and the results of its  operations and its cash flow
for each of the three years in the period ended December 31, 2007 in accordance
with Canadian generally accepted accounting principles.

We also have audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States), the effectiveness of the Company's
internal  control over  financial  reporting as of December 31, 2007,  based on
criteria  established in Internal Control - Integrated  Framework issued by the
Committee of Sponsoring  Organizations of the Treadway  Commission  (COSO), and
our  report  dated  March 24,  2008  expressed  an  unqualified  opinion on the
effectiveness of internal controls over financial reporting.



                                                         /s/ Grant Thornton LLP
Calgary, Canada
March 24, 2008                                           Chartered Accountants




                                      1
<PAGE>

INDEPENDENT AUDITORS' REPORT


To the Shareholders of
COMPTON PETROLEUM CORPORATION

We have audited Compton Petroleum Corporation's internal control over financial
reporting as of December 31, 2007,  based on criteria  established  in Internal
Control--Integrated   Framework   issued  by  the   Committee   of   Sponsoring
Organizations   of  the   Treadway   Commission   (COSO).   Compton   Petroleum
Corporation's  management is responsible  for  maintaining  effective  internal
control over financial reporting and for its assessment of the effectiveness of
internal  control  over  financial  reporting,  included  in  the  accompanying
management's  report.  Our  responsibility  is to express an opinion on Compton
Petroleum  Corporation's internal control over financial reporting based on our
audit.

We conducted our audit in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United  States).  Those standards  require that we
plan and  perform  the  audit to  obtain  reasonable  assurance  about  whether
effective  internal  control over  financial  reporting  was  maintained in all
material  respects.  Our audit included  obtaining an understanding of internal
control over financial  reporting,  assessing the risk that a material weakness
exists,  testing  and  evaluating  the design and  operating  effectiveness  of
internal  control  based  on the  assessed  risk,  and  performing  such  other
procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

A company's internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally  accepted  accounting  principles.  A company's internal control
over  financial  reporting  includes  those  policies and  procedures  that (1)
pertain to the  maintenance of records that, in reasonable  detail,  accurately
and fairly  reflect  the  transactions  and  dispositions  of the assets of the
company;  (2) provide  reasonable  assurance that  transactions are recorded as
necessary to permit  preparation  of financial  statements in  accordance  with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company;  and (3) provide reasonable  assurance  regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the  company's  assets  that could have a material  effect on the  financial
statements.

Because of its inherent limitations,  internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness  to future  periods  are  subject to the risk that  controls  may
become  inadequate  because  of changes  in  conditions,  or that the degree of
compliance with the policies or procedures may deteriorate.

In our  opinion,  Compton  Petroleum  Corporation  maintained,  in all material
respects,  effective  internal control over financial  reporting as of December
31,  2007,  based  on  criteria  established  in  Internal  Control--Integrated
Framework issued by COSO.

We also have audited,  in accordance with Canadian  generally accepted auditing
standards and the standards of the Public Company  Accounting  Oversight  Board
(United States),  the consolidated balance sheets of the Company as at December
31,  2007  and 2006 and the  consolidated  statements  of  earnings  and  other
comprehensive  income,  retained  earnings  and cash flow for each of the three
years in the period ended  December  31,  2007,  and our report dated March 24,
2008, expressed an unqualified opinion on those financial statements.


Calgary, Canada                                          /s/ Grant Thornton LLP
March 24, 2008
                                                         Chartered Accountants


                                       2
<PAGE>

================================================================================
COMPTON PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
As at December 31,                                            2007         2006
--------------------------------------------------------------------------------
(thousands of dollars)
ASSETS

Current
  Cash                                                  $    8,665   $   11,876
  Accounts receivable                                       80,331       83,535
  Unrealized risk management gain (Note 17a (i))             1,835       22,625
  Other current assets                                      19,772       22,869
  Future income taxes (Note 16b)                             2,606        1,479
                                                        ----------   ----------

                                                           113,209      142,384

Property and equipment (Note 5)                          2,116,834    1,977,062
Goodwill (Note 3)                                            9,933        7,914
Other assets (Note 9)                                          291       14,144
Unrealized risk management gain (Note 17a (i))              14,320            -
Deferred risk management loss (Note 2b)                          -        3,968
                                                        ----------   ----------

                                                        $2,254,587   $2,145,472
                                                        ==========   ==========

LIABILITIES

Current
  Accounts payable                                      $  147,983   $  141,443
  Unrealized risk management loss (Note 17a (i))             8,832        4,604
  Future income taxes (Note 16b)                               542        7,269
                                                        ----------   ----------

                                                           157,357      153,316

Bank debt (Note 6)                                         398,426      328,000
Senior term notes (Note 7)                                 433,762      524,385
Asset retirement obligations (Note 11)                      36,696       29,791
Unrealized risk management loss (Note 17a (i))               1,585        6,816
Future income taxes (Note 16b)                             293,494      302,690
Non-controlling interest (Note 4)                           63,311       66,350
                                                        ----------   ----------

                                                         1,384,631    1,411,348
                                                        ----------   ----------

SHAREHOLDERS' EQUITY

Capital stock (Note 12b)                                   235,871      231,992
Contributed surplus (Note 13a)                              24,233       16,974
Retained earnings                                          609,852      485,158
                                                        ----------   ----------

                                                           869,956      734,124
                                                        ----------   ----------

                                                        $2,254,587   $2,145,472
                                                        ==========   ==========

Commitments and contingent liabilities (Note 19)
Subsequent events (Note 20)

On behalf of the Board

M.F. Belich, Q.C. (signed)              J.A. Thomson, C.A. (signed)
Director                                Director

        See accompanying notes to the consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>
============================================================================================
COMPTON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS AND OTHER COMPREHENSIVE INCOME
Years ended December 31,                                     2007         2006         2005
--------------------------------------------------------------------------------------------
(thousands of dollars, except per share data)

<S>                                                     <C>          <C>          <C>
REVENUE
  Oil and natural gas revenues                          $ 500,987    $ 540,837    $ 564,241
  Royalties                                              (102,678)    (123,677)    (132,717)
                                                        ---------    ---------    ---------
                                                          398,309      417,160      431,524
                                                        ---------    ---------    ---------
EXPENSES
  Operating                                               101,478      102,643       73,164
  Transportation                                           12,615       12,564       10,858
  General and administrative                               31,328       26,231       21,223
  Interest and finance charges (Note 8)                    63,493       54,075       34,951
  Tender costs                                                  -            -       20,750
  Depletion and depreciation                              151,411      143,057      105,504
  Foreign exchange gain (Note 10)                         (78,717)        (891)      (7,353)
  Accretion of asset retirement obligations (Note 11)       2,718        2,257        1,975
  Stock-based compensation (Notes 13a and c)               11,034       10,488        5,903
  Risk management (gain) loss (Note 17b)                   (6,014)     (63,721)      19,302
                                                        ---------    ---------    ---------
                                                          289,346      286,703      286,277
                                                        ---------    ---------    ---------

EARNINGS BEFORE TAXES AND NON-CONTROLLING INTEREST        108,963      130,457      145,247
                                                        ---------    ---------    ---------

INCOME TAXES  (Note 16a)
  Current                                                      17           44        5,071
  Future                                                  (26,452)      (3,636)      52,317
                                                        ---------    ---------    ---------
                                                          (26,435)      (3,592)      57,388
                                                        ---------    ---------    ---------

EARNINGS BEFORE NON-CONTROLLING  INTEREST                 135,398      134,049       87,859
  Non-controlling interest  (Note 4)                        6,132        6,623        6,533
                                                        ---------    ---------    ---------

NET EARNINGS                                            $ 129,266    $ 127,426    $  81,326
                                                                     =========    =========
  Other comprehensive income                                    -
                                                        ---------
COMPREHENSIVE INCOME                                      129,266
                                                        =========

NET EARNINGS PER SHARE  (Note 14)
  Basic                                                 $    1.00    $    1.00    $    0.65
                                                        =========    =========    =========

  Diluted                                               $    0.98    $    0.95    $    0.62
                                                        =========    =========    =========

<CAPTION>
============================================================================================
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Years ended December 31,                                     2007         2006         2005
--------------------------------------------------------------------------------------------
(thousands of dollars)

<S>                                                     <C>          <C>          <C>
RETAINED EARNINGS, beginning of year
As previously reported                                  $ 485,158    $ 360,719    $ 284,712
Accounting policy adjustment (Note 2)                      (1,320)           -            -
                                                        ---------    ---------    ---------
As adjusted                                               483,838      360,719      284,712
Net earnings                                              129,266      127,426       81,326
Premium on redemption of shares (Note 12b)                 (3,252)      (2,987)      (5,319)
                                                        ---------    ---------    ---------

RETAINED EARNINGS, end of year                          $ 609,852    $ 485,158    $ 360,719
                                                        =========    =========    =========
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
======================================================================================
COMPTON PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
Years ended December 31,                               2007         2006         2005
--------------------------------------------------------------------------------------
(thousands of dollars)
<S>                                               <C>          <C>          <C>
OPERATING ACTIVITIES
   Net earnings                                   $ 129,266    $ 127,426    $  81,326
     Amortization of deferred charges and other       3,417        1,996        2,190
     Tender costs                                         -            -       20,750
     Depletion and depreciation                     151,411      143,057      105,504
     Accretion of asset retirement obligations        2,718        2,257        1,975
     Unrealized foreign exchange gain               (79,740)        (665)      (7,808)
     Future income taxes                            (26,452)      (3,636)      52,317
     Unrealized risk management (gain) loss           5,467      (27,522)      10,171
     Stock-based compensation                         8,416        9,121        5,903
     Asset retirement expenditures                   (4,441)      (2,352)        (749)
     Non-controlling interest                         6,132        6,623        6,533
                                                  ---------    ---------    ---------
                                                    196,194      256,305      278,112
   Change in non-cash working capital (Note 18)     (23,366)      19,823        6,612
                                                  ---------    ---------    ---------

                                                    172,828      276,128      284,724
                                                  ---------    ---------    ---------

FINANCING ACTIVITIES
   Issuance (repayment) of bank debt                 70,426      152,100      (42,100)
   Issuance of senior notes                               -      174,930      353,130
   Issue costs on senior notes                            -       (3,408)     (12,670)
   Redemption of senior notes                             -       (7,520)    (199,973)
   Proceeds from share issuances, net                 3,446        4,672       89,752
   Distributions to partner                          (9,171)      (9,171)      (9,172)
   Redemption of common shares                       (3,976)      (3,433)      (6,118)
                                                  ---------    ---------    ---------

                                                     60,725      308,170      172,849
                                                  ---------    ---------    ---------

INVESTING ACTIVITIES
   Property and equipment additions                (391,070)    (490,429)    (484,213)
   Corporate acquisitions (Note 3)                 (104,705)           -            -
   Property acquisitions                            (66,808)     (34,444)     (28,575)
   Property dispositions                            307,527        1,350            -
   Change in non-cash working capital (Note 18)      18,292      (57,853)      54,101
                                                  ---------    ---------    ---------

                                                   (236,764)    (581,376)    (458,687)
                                                  ---------    ---------    ---------

CHANGE IN CASH                                       (3,211)       2,922       (1,114)

CASH, beginning of year                              11,876        8,954       10,068
                                                  ---------    ---------    ---------

CASH, end of year                                 $   8,665    $  11,876    $   8,954
                                                  =========    =========    =========
</TABLE>


        See accompanying notes to the consolidated financial statements.

                                       5
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
-------------------------------------------------------------------------------
(Tabular amounts in thousands of dollars, unless otherwise stated)

1.   SIGNIFICANT ACCOUNTING POLICIES

     Compton  Petroleum  Corporation  (the  "Company" or  "Compton")  is in the
     business of the  exploration  for and  production of petroleum and natural
     gas reserves in the Western Canada Sedimentary Basin.

a)   BASIS OF PRESENTATION

     The consolidated financial statements of the Company have been prepared in
     accordance with accounting  principles generally accepted in Canada within
     the framework of the accounting  policies  summarized  below.  Information
     prepared in accordance with accounting  principles  generally  accepted in
     the United States is included in Note 21.

     The consolidated  financial statements include the accounts of the Company
     and its wholly owned subsidiaries.  The consolidated  financial statements
     also include the accounts of Mazeppa Processing  Partnership in accordance
     with  Accounting  Guideline  15  ("AcG-15")   "Consolidation  of  Variable
     Interest Entities", as outlined in Note 4.

     All amounts are presented in Canadian dollars unless otherwise stated.

b)   MEASUREMENT UNCERTAINTY

     The timely  preparation of financial  statements  requires that Management
     make estimates and assumptions and use judgment  regarding the measurement
     of assets,  liabilities,  revenues,  and expenses.  Such estimates  relate
     primarily to transactions  and events that have not settled as of the date
     of the financial  statements.  Accordingly,  actual results may materially
     differ from estimated amounts as future confirming events occur.

     Amounts  recorded  for  depletion  and  depreciation,  and amounts used in
     impairment  test  calculations  are based upon  estimates of petroleum and
     natural gas reserves and future costs to develop those reserves.  By their
     nature, these estimates of reserves,  costs, and related future cash flows
     are subject to uncertainty,  and the impact on the consolidated  financial
     statements of future periods could be material.

     The calculation of asset retirement  obligations  include estimates of the
     ultimate settlement amounts,  inflation factors,  credit adjusted discount
     rates,  and timing of settlement.  The impact of future revisions to these
     assumptions  on the  consolidated  financial  statements of future periods
     could be material.

     The amount of stock based  compensation  expense is subject to uncertainty
     due to the Company's best estimate of whether or not  performance  will be
     achieved and obligations incurred.

     The values of pension  assets  and  obligations  and the amount of pension
     costs  charged to net earnings  depend on certain  actuarial  and economic
     assumptions which by their nature are subject to measurement uncertainty.

                                       6
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

c)   PROPERTY AND EQUIPMENT

     i)   Capitalized costs

          The  Company  follows  the full  cost  method of  accounting  for its
          petroleum and natural gas operations within one Canadian cost centre.
          Under  this  method  all costs  related  to the  exploration  for and
          development  of petroleum  and natural gas reserves are  capitalized.
          Costs include lease  acquisition  costs,  geological and  geophysical
          expenses,  costs of drilling both producing and non-producing  wells,
          production  facilities,  future asset  retirement  costs, and certain
          general and  administrative  expenses directly related to exploration
          and development activities.

          Proceeds from the sale of properties are applied against  capitalized
          costs,  without  any gain or loss being  realized,  unless  such sale
          would significantly alter the rate of depletion and depreciation.

          Expenditures  related to renewals  or  betterments  that  improve the
          productive  capacity or extend the life of an asset are  capitalized.
          Maintenance  and  repairs,  other than major  turnaround  costs,  are
          expensed as incurred. Major turnaround costs are included in property
          and equipment when incurred and charged to depletion and depreciation
          in the  consolidated  statement of earnings  and other  comprehensive
          income  over  the  estimated  period  of time to the  next  scheduled
          turnaround.

     ii)  Depletion and depreciation

          Depletion  and  depreciation  of property  and  equipment is provided
          using the  unit-of-production  method  based  upon  estimated  proved
          petroleum  and  natural  gas  reserves.   The  costs  of  significant
          undeveloped  properties  are excluded from costs subject to depletion
          until  it  is   determined   whether  or  not  proved   reserves  are
          attributable to the properties or impairment has occurred.  Estimated
          future  costs  to be  incurred  in  developing  proved  reserves  are
          included in costs subject to depletion and estimated  salvage  values
          are excluded  from costs  subject to  depletion.  For  depletion  and
          depreciation purposes, relative volumes of natural gas production and
          reserves are converted at the energy  equivalent  conversion  rate of
          six thousand cubic feet of natural gas to one barrel of crude oil.

          Depreciation  of certain  midstream  facilities  is provided for on a
          straight  line  basis  over  30  years  and  depreciation  of  office
          equipment  is provided for on a declining  balance  basis using rates
          which range from 20% to 30% per year.

     iii) Impairment test

          At each reporting  period the Company  performs an impairment test to
          determine the  recoverability  of capitalized  costs  associated with
          reserves.  An impairment  loss is recognized when the carrying amount
          of a cost centre is not recoverable.  The carrying amount of the cost
          centre is not  recoverable if the carrying  amount exceeds the sum of
          the  undiscounted  cash flows from proved  reserves plus the costs of
          unproved  properties.  If the sum of the cash  flows is less than the
          carrying  amount,  the  impairment  loss is  limited to the amount by
          which  the  carrying  amount  exceeds  the sum of the  fair  value of
          discounted  proved and  probable  reserves  and the costs of unproved
          properties  that have been subject to a separate  impairment test and
          contain no probable reserves.

                                       7
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     iv)  Asset retirement obligations

          The  Company   recognizes  the  present  value  of  estimated   asset
          retirement  obligations  on the  consolidated  balance  sheet  when a
          reasonable estimate can be made. Asset retirement obligations include
          those legal  obligations where the Company will be required to retire
          tangible  long-lived  assets  such  as  well  sites,  pipelines,  and
          facilities. The asset retirement cost, equal to the initial estimated
          present value of the asset retirement  obligation,  is capitalized as
          part of the cost of the  related  long-lived  asset.  Changes  in the
          estimated  obligation resulting from revisions to estimated timing or
          amount of  undiscounted  cash flows are recognized as a change in the
          asset retirement obligation and the related asset retirement cost.

          Asset  retirement  costs are amortized  using the  unit-of-production
          method  and  are  included  in  depletion  and  depreciation  in  the
          consolidated  statement of earnings and other  comprehensive  income.
          Increases  in the asset  retirement  obligations  resulting  from the
          passage  of time  are  recorded  as  accretion  of  asset  retirement
          obligations  in the  consolidated  statements  of earnings  and other
          comprehensive income.

          Actual  expenditures  incurred  are charged  against the  accumulated
          obligation.

     v)   Inventories

          Physical inventory held for exploration,  development,  and operating
          activities  is included in property  and  equipment  and is valued at
          estimated realizable value.

d)   GOODWILL

     Goodwill is recorded on a corporate acquisition when the purchase price is
     in excess of the fair values  assigned to assets  acquired and liabilities
     assumed.  Goodwill is not amortized and an impairment test is performed at
     least annually to evaluate the carrying value. To assess  impairment,  the
     fair value of the consolidated  entity,  excluding the Mazeppa  Processing
     Partnership, is determined and compared to the carrying value. If the fair
     value is less than the  carrying  value then a second test is performed to
     determine the amount of the  impairment.  Any loss  recognized is equal to
     the  difference  between the implied fair value and the carrying  value of
     the goodwill.

e)   FINANCIAL INSTRUMENTS AND DERIVATIVES

     On January 1, 2007 the Company adopted the Canadian Institute of Chartered
     Accountants ("CICA") four new accounting standards: Handbook Section 1530,
     "COMPREHENSIVE  INCOME",  Handbook Section 3855, "FINANCIAL  INSTRUMENTS -
     RECOGNITION   AND   MEASUREMENT",   Handbook   Section  3861,   "FINANCIAL
     INSTRUMENTS  - DISCLOSURE  AND  PRESENTATION"  and Handbook  Section 3865,
     "HEDGES".  The adoption of these standards resulted in accounting changes,
     the  impact  of  which  are  disclosed  in  Note 2 to  these  consolidated
     financial statements.

                                       8
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Financial  instruments  are any  contract  that gives rise to a  financial
     asset of one party and a  financial  liability  or  equity  instrument  of
     another  party.  Financial  instruments  were  identified  by the  Company
     through a review of typical  financial  transactions  and risk  management
     activities.  The Company also reviewed  non-financial  contracts,  entered
     into  subsequent to January 1, 2003, for potential  embedded  derivatives.
     Once identified, the financial instruments were classified and measured as
     disclosed below.

     Financial instruments are measured at fair value on initial recognition of
     the instrument except in specific circumstances. Measurement in subsequent
     periods depends on whether the financial instrument has been classified as
     "held for trading",  "available for sale", "held to maturity",  "loans and
     receivables" or "other financial liabilities" as defined by the standards.

     Financial assets and financial liabilities "held for trading" are measured
     at fair  value  with  changes  in  those  fair  values  recognized  in net
     earnings.  Financial  assets  "available  for sale" are  measured  at fair
     value, with changes in those fair values recognized in other comprehensive
     income. Financial instruments "held to maturity",  "loans and receivables"
     and "other financial liabilities" are measured at amortized cost using the
     effective interest method.

     Cash,  and deposits  included in other current  assets,  are classified as
     "held for trading" and are measured at carrying  value which  approximates
     fair value due to the short term nature of these instruments.  Investments
     included in other  current  assets are  designated  as "held for trading",
     accounts receivable are classified as "loans and receivables" and accounts
     payable,  bank  debt and  senior  term  notes  are  classified  as  "other
     financial   liabilities".   Transaction  costs,   premiums  and  discounts
     associated  with the issuance of senior term notes are netted  against the
     notes and amortized to earnings using the effective interest method.

     Derivative financial  instruments are classified as "held for trading" and
     are  recorded at fair value based on quoted  market  prices or third party
     market indications and forecasts. Fluctuations are recorded in earnings as
     risk management gains and losses during each reporting period. The Company
     uses derivative  financial  instruments for non-trading purposes to manage
     fluctuations in commodity  prices,  foreign  currency  exchange rates, and
     interest  rates as outlined in Note 17. The Company does not designate any
     of its current risk management activities as accounting hedges.

f)   JOINT OPERATIONS

     Certain  petroleum and natural gas activities  are conducted  jointly with
     others. These consolidated financial statements reflect only the Company's
     proportionate interest in such activities.

g)   EARNINGS PER SHARE AMOUNTS

     The Company  uses the  treasury  stock  method to  determine  the dilutive
     effect of stock options.  This method assumes that proceeds  received from
     the exercise of in-the-money  stock options are used to repurchase  common
     shares at the average market price for the period.  Basic net earnings per
     common  share are  determined  by dividing  net  earnings by the  weighted
     average  number of common shares  outstanding  during the period.  Diluted
     earnings per share are computed by giving effect to the potential dilution
     that would occur if stock options were exercised.

                                       9
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

h)   INCOME TAXES

     Income taxes are recorded using the liability method of accounting. Future
     income taxes are calculated based on the difference between the accounting
     and income  tax basis of an asset or  liability,  using the  substantively
     enacted income tax rates. Changes in income tax rates are reflected in the
     period in which the rates are substantively enacted.

i)   REVENUE RECOGNITION

     Revenue associated with the production and sale of crude oil, natural gas,
     and  natural gas liquids  owned by the  Company is  recognized  when title
     passes to the customer and delivery has taken place.  Revenue as reported,
     represents the Company's share and is presented before royalty payments to
     governments and other mineral interest owners. Other revenue is recognized
     in the period that the service is provided to the customer.

j)   STOCK-BASED COMPENSATION PLAN

     The Company records compensation expense in the consolidated statements of
     earnings  and other  comprehensive  income  for stock  options  granted to
     directors,   officers,   and  employees   using  the  fair-value   method.
     Compensation  costs are  recognized  over the vesting  period and the fair
     values are determined using the Black-Scholes option pricing model.

     Contributions  to  the  Company's  stock  savings  plan  are  recorded  as
     compensation expense as incurred.

k)   DEFERRED FINANCING CHARGES

     On January 1, 2007 financing  costs related to the issuance of senior term
     notes  were  reclassified  from  other  assets to senior  term  notes,  as
     disclosed  in Note 2. The  costs  capitalized  within  long  term debt are
     amortized using the effective interest method.

l)   FOREIGN CURRENCY TRANSLATION

     Monetary  assets and  liabilities  of the Company that are  denominated in
     foreign  currencies are translated into Canadian dollars at the period-end
     exchange   rate,   with  any  resulting  gain  or  loss  recorded  in  the
     consolidated statement of earnings and other comprehensive income.

m)   DIVIDEND POLICY

     The Company  has neither  declared  nor paid any  dividends  on its common
     shares.  The Company  intends to retain its earnings to finance growth and
     expand its operations and does not anticipate  paying any dividends on its
     common shares in the foreseeable future.

                                      10
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

n)   DEFINED BENEFIT PENSION PLAN

     The Company accrues for  obligations  under a defined benefit pension plan
     and the  related  costs,  net of plan  assets  for  employees  of  Mazeppa
     Processing Partnership.  The cost of the pension is actuarially determined
     using the projected benefit method based on length of service and reflects
     Management's best estimate of expected plan investment performance, salary
     escalation, and retirement age of employees.

o)   RECENT ACCOUNTING PRONOUNCEMENTS

     On January 1, 2008,  the Company  will be required to adopt the  following
     CICA Handbook Sections:

     o    Section 3031, "INVENTORIES" which replaces the existing standard. The
          requirements  include the consistent  grouping of like assets and the
          application  of  the  first-in-first-out  or  weighted  average  cost
          formula methodologies.

     o    Section 1400, "GENERAL STANDARDS OF FINANCIAL STATEMENT PRESENTATION"
          which  requires  assessing and  disclosing  the Company's  ability to
          continue as a going concern.

     o    Section 3862, "FINANCIAL INSTRUMENTS - DISCLOSURES" and Section 3863,
          "FINANCIAL  INSTRUMENTS -  PRESENTATION".  These new  standards  will
          require increased disclosure of financial instruments with particular
          emphasis on the risks  associated  with  recognized and  unrecognized
          financial instruments and how those risks are managed.

     o    Section  1535,  "CAPITAL   DISCLOSURES",   requiring   disclosure  of
          information  about an entity's capital and the objectives,  policies,
          and processes for managing capital.

     The adoption of these  standards is not expected to have a material impact
     on the Company's consolidated financial statements.

     On January 1, 2009 the Company will be required to adopt the CICA Handbook
     Section 3064,  "INTANGIBLE ASSETS". The new section establishes  standards
     for  the  recognition,   measurement,   and  disclosure  of  goodwill  and
     intangible  assets  and  replaces  the  existing  Handbook  Section  3062,
     "GOODWILL AND OTHER  INTANGIBLE  ASSETS" and Section  3450,  "RESEARCH AND
     DEVELOPMENT COSTS".  Intangible assets associated with the exploration and
     development of oil and gas assets are specifically  excluded under the new
     standard.  The  Company is  evaluating  the  implications  but  expects no
     material impact on the consolidated financial statements.

     On January 10, 2006, the CICA Accounting Standards Board ("AcSB") ratified
     a new strategic plan that would see the convergence of Canadian  Generally
     Accepted  Accounting  Principles  ("GAAP")  with  International  Financial
     Reporting  Standards  ("IFRS")  within 5 years.  In March  2007,  the AcSB
     released an  "IMPLEMENTATION  PLAN FOR  INCORPORATING  IFRSS INTO CANADIAN
     GAAP",  which  assumed a  convergence  date of January  1, 2011.  The AcSB
     confirmed this date in February 2008. The Company continues to monitor and
     assess the consequences of the convergence on the  consolidated  financial
     statements as they could have a material impact.

                                      11
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

p)   RECLASSIFICATION

     Certain  amounts  disclosed  for prior  years  have been  reclassified  to
     conform with current year presentation.

2.   CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

On January  1, 2007,  the  Company  adopted  the CICA  Handbook  Section  1530,
"COMPREHENSIVE  INCOME",   Handbook  Section  3855,  "FINANCIAL  INSTRUMENTS  -
RECOGNITION AND MEASUREMENT",  Handbook Section 3861, "FINANCIAL  INSTRUMENTS -
DISCLOSURE AND  PRESENTATION",  Handbook Section 3865,  "HEDGES",  and Handbook
Section 1506, "ACCOUNTING CHANGES".

The  adoption  of these  standards  had no  material  impact  on the  Company's
consolidated   financial   statements.   Any   significant   effects  from  the
implementation of the new standards are disclosed below.

a)   COMPREHENSIVE INCOME

     The new standard  introduced  the statements of  comprehensive  income and
     accumulated other  comprehensive  income to temporarily provide for gains,
     losses and other amounts arising from changes in fair value until realized
     and recorded in net earnings.  The Company has  determined  that it has no
     other comprehensive  income nor accumulated other comprehensive income for
     the year ended December 31, 2007.

b)   FINANCIAL INSTRUMENTS

     The financial instruments standard establishes recognition and measurement
     criteria for financial assets, financial liabilities and derivatives.  The
     Company's policies on accounting for financial instruments is disclosed in
     Note 1.

     Transitional   provisions  were  outlined  in  the  financial  instruments
     standard and required retroactive  adjustment without restatement of prior
     periods.  In addition,  the  provisions  required  that,  upon adoption at
     January 1, 2007,  transitional  adjustments,  net of tax, be recognized in
     the opening balance of retained earnings.

     At January 1, 2007, the following transitional adjustments were required.

     o    The  reclassification  of $14.0 million of deferred financing charges
          as a reduction of senior term notes to reflect the adopted  policy of
          netting long term debt  transaction  costs within long term debt. The
          costs  capitalized  will be amortized  using the  effective  interest
          method.  Previously,  the Company  deferred these costs and amortized
          them  straight  line over the life of the related  senior term notes.
          The adoption of this standard resulted in a $0.3 million net increase
          to opening retained earnings.

     o    $3.97 million of deferred risk  management  loss, $2.7 million net of
          tax,  previously  recognized at January 1, 2004 upon initial adoption
          of  CICA  Accounting   Guideline  13,  "HEDGING   RELATIONSHIPS"  was
          reclassified as a reduction to opening retained earnings.

     o    The fair value measurement of investments  resulted in a $1.1 million
          net increase to opening retained earnings.

                                      12
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

2.   CHANGES IN SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     The  net  effect  on  opening  retained   earnings  as  a  result  of  the
     transitional provisions is as follows:

     Deferred financing charge adjustments                             $   318
     Deferred risk management loss                                      (2,743)
     Fair value of investments                                           1,105
                                                                       -------
     Total adjustment to opening retained earnings                     $(1,320)
                                                                       =======

3.   BUSINESS COMBINATIONS

On August 15, 2007 and December 21, 2007,  respectively,  the Company  acquired
all of the issued and outstanding  shares of Stylus Energy Inc.  ("Stylus") and
WIN Energy Corporation ("WIN"). Both entities were independent  exploration and
production  companies with operations in the Company's core areas. The business
combinations  have been accounted for using the purchase method with results of
operations included in the consolidated  financial  statements from the date of
acquisition. If the purchase price is in excess of the fair value of net assets
acquired, goodwill is recorded.

The following table  summarizes the estimated fair value of the assets acquired
and  liabilities  assumed  at the date of  acquisition.  The  Company is in the
process of  finalizing  the  estimated  fair value of the WIN  acquisition  and
therefore, the allocation of the purchase price is subject to refinement.

NET ASSETS ACQUIRED                           Stylus          WIN        Total
                                           ---------    ---------    ---------
  Working capital                          $ (17,209)   $  (2,010)   $ (19,219)
  Petroleum and natural gas properties       106,916       24,465      131,381
                                           ---------    ---------    ---------
                                              89,707       22,455      112,162
  Future income taxes                        (12,288)       8,132       (4,156)
  Asset retirement obligations                (4,402)        (919)      (5,321)
  Goodwill                                     2,020            -        2,020
                                           ---------    ---------    ---------
                                           $  75,037    $  29,668    $ 104,705
                                           =========    =========    =========
CONSIDERATION
  Cash                                     $  73,782    $  29,414    $ 103,196
  Transaction costs                            1,255          254        1,509
                                           ---------    ---------    ---------

                                           $  75,037    $  29,668    $ 104,705
                                           =========    =========    =========

During the year ended  December 31,  2007,  both  companies  were wound up into
Compton Petroleum Corporation.

                                      13
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

4.   NON-CONTROLLING INTEREST

Mazeppa  Processing  Partnership  ("MPP"  or "the  Partnership")  is a  limited
partnership  organized  under  the laws of the  province  of  Alberta  and owns
certain  midstream  facilities,  including gas plants and pipelines in Southern
Alberta. The Company processes a significant portion of its production from the
area through these facilities pursuant to a processing  agreement with MPP. The
Company  does not have an  ownership  position in MPP,  however,  the  Company,
through a management agreement, manages the activities of MPP and is considered
to be the primary  beneficiary of MPP's operations.  Pursuant to AcG-15,  these
consolidated  financial  statements  include  the  assets,   liabilities,   and
operations of the Partnership.  Equity in the Partnership,  attributable to the
partners of MPP, is recorded on consolidation as a non-controlling interest and
is comprised of the following:

As at December 31,                                         2007        2006
                                                       --------    --------

Non-controlling interest, beginning of year            $ 66,350    $ 68,898
   Earnings attributable to non-controlling interest      6,132       6,623
   Distributions to limited partner                      (9,171)     (9,171)
                                                       --------    --------

Non-controlling interest, end of year                  $ 63,311    $ 66,350
                                                       ========    ========

Commencing May 1, 2004, pursuant to the terms of a processing agreement between
Compton and MPP, Compton pays a monthly fee to MPP for the  transportation  and
processing  of  natural  gas  through  the  MPP  owned  facilities.  The fee is
comprised  of a fixed base fee of $764  thousand  per month plus MPP  operating
costs, net of third party revenues.  These amounts are eliminated from revenues
and expenses on consolidation.

The  processing  agreement  has a five year term ending April 1, 2009, at which
time Compton may renew the  agreement  under terms  determined  at that time or
purchase the  Partnership  units for the  predetermined  amount of $55 million,
deemed to be fair  value.  In the  event  that the  Company  does not renew the
processing  agreement nor exercise the purchase option, the limited partner may
dispose of the Partnership units to an independent third party.

MPP has guaranteed payment of certain  obligations of its limited partner under
a credit agreement between the limited partner and a syndicate of lenders.  The
maximum  liability of the Partnership under the guarantee is limited to amounts
due and payable to MPP by the Company pursuant to the processing agreement. The
maximum liability at December 31, 2007 was $12.2 million (2006 - $21.4 million)
payable over the remaining  term of the processing  agreement.  The Company has
determined that its exposure to loss under these arrangements is negligible.

                                      14
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
5.   PROPERTY AND EQUIPMENT

                                                                ACCUMULATED
                                                                  DEPLETION
                                                                        AND
As at December 31, 2007                                 COST   DEPRECIATION            NET
                                                 -----------   ------------    -----------
<S>                                              <C>            <C>            <C>
Exploration and development costs                $ 2,145,866    $  (603,867)   $ 1,541,999
Production equipment and processing facilities       651,999       (105,720)       546,279
Inventory                                              6,871              -          6,871
Future asset retirement costs                         19,940         (5,396)        14,544
Office equipment                                      14,111         (6,970)         7,141
                                                 -----------    -----------    -----------

                                                 $ 2,838,787    $  (721,953)   $ 2,116,834
                                                 ===========    ===========    ===========

                                                                Accumulated
                                                                  depletion
                                                                        and
As at December 31, 2006                                 Cost   depreciation            Net
                                                 -----------   ------------    -----------

Exploration and development costs                $ 1,931,594    $  (482,524)   $ 1,449,070
Production equipment and processing facilities       582,705        (77,863)       504,842
Inventory                                              6,818              -          6,818
Future asset retirement costs                         17,128         (4,906)        12,222
Office equipment                                       9,359         (5,249)         4,110
                                                 -----------    -----------    -----------

                                                 $ 2,547,604    $  (570,542)   $ 1,977,062
                                                 ===========    ===========    ===========
</TABLE>

During the year,  $9.6  million  (2006 - $10.5  million)  relating  to employee
salaries,  insurance  costs, and overhead  recoveries  determined in accordance
with industry standards, were capitalized.

As at December 31, 2007, future capital  expenditures of $318.3 million (2006 -
$329.7 million,  2005 - $192.9  million),  as estimated by independent  reserve
engineers, relating to the development of proved reserves have been included in
costs subject to depletion. The estimated salvage value of production equipment
and  processing  facilities  at December  31, 2007 was $130.1  million  (2006 -
$120.1  million,  2005 - $108.6 million) and was excluded from costs subject to
depletion.  Undeveloped  properties  with a cost at December 31, 2007 of $260.6
million (2006 - $202.9 million,  2005 - $251.3 million) included in exploration
and development costs, have not been subject to depletion.

                                      15
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

5.   PROPERTY AND EQUIPMENT (CONTINUED)

Prices used in the evaluation of the carrying  value of the Company's  reserves
for the purposes of the impairment test were:

                                      NATURAL       CRUDE OIL
As at December 31, 2007                 GAS       (EDMONTON PAR
                                   (AECO C SPOT)      40 API)          NGL
                                   -------------  --------------    ---------
                                   $ per MMbtu      $ per bbl       $ per bbl

2008                                $   6.74        $   88.48       $   91.04
2009                                $   7.48        $   85.52       $   88.03
2010                                $   7.69        $   83.88       $   86.41
2011                                $   7.80        $   82.03       $   84.54
2012                                $   7.84        $   81.16       $   83.66
Approximate % increase thereafter       2.0%             2.0%            2.0%

6.     CREDIT FACILITIES

As at December 31,                                      2007             2006
                                                   ---------        ---------

Authorized                                         $ 500,000        $ 500,000
                                                   =========        =========

Prime rate                                         $  50,000        $  35,000
Bankers' Acceptance                                  350,000          295,000
Discount to maturity                                  (1,574)          (2,000)
                                                   ---------        ---------

Utilized                                           $ 398,426        $ 328,000
                                                   =========        =========

As at December  31, 2007,  the Company had  arranged a $500 million  authorized
senior credit facility with a syndicate of banks. Advances under the facilities
can be drawn and currently bear interest as follows:

       Prime rate plus 0.95%
       Bankers' Acceptance rate plus 1.95%
       LIBOR rate plus 1.95%

At December  31, 2007 prime and 30 day bankers  acceptance  rates were 6.0% and
4.6% respectively.

Margins  are  determined  based  on the  ratio of  total  consolidated  debt to
consolidated  cash flow. The  facilities  reached term on July 4, 2007 and were
renewed under the same terms and  conditions to July 2, 2008. If not renewed in
2008 they will mature 366 days later on July 3, 2009.

The senior credit  facilities are secured by a first fixed and floating  charge
debenture in the amount of $1.0 billion  covering all the Company's  assets and
undertakings.

                                      16
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

7.   SENIOR TERM NOTES

As at December 31,                                         2007           2006
                                                      ---------      ---------

Senior term notes
  US$450 million, 7.625% due December 1, 2013         $ 444,645      $ 524,385
  Unamortized transaction costs                         (10,883)             -
                                                      ---------      ---------

Carrying value                                        $ 433,762      $ 524,385
                                                      =========      =========

On November 22, 2005, a wholly owned  subsidiary  of the Company  issued US$300
million  senior  term notes  maturing  December 1, 2013.  On April 4, 2006,  an
additional US$150 million was issued under the same terms and conditions as the
original  issue.  The notes bear  interest  at 7.625%,  are  unsecured  and are
subordinate  to the Company's  bank credit  facilities.  The yield to maturity,
using the effective interest method, was 8.840% as at December 31, 2007.

Pursuant to the adoption of Handbook  Section  3855,  "FINANCIAL  INSTRUMENTS -
RECOGNITION AND  MEASUREMENT",  transaction  costs relating to the issue of the
senior term notes reduce the  carrying  value of the notes as disclosed in Note
2.

The notes are not  redeemable by the Company prior to December 1, 2009,  except
in limited  circumstances.  After that time,  they can be  redeemed in whole or
part, at the rates indicated below:

       December 1, 2009                                   103.813%
       December 1, 2010                                   101.906%
       December 1, 2011 and thereafter                    100.000%

During the year the Company entered into foreign exchange contracts as outlined
in Note 17a (iii) which fixed the repayment, in Canadian dollars at December 1,
2010, being the second call date, as outlined in the senior note agreement.

8.   INTEREST AND FINANCE CHARGES

Amounts charged to expense during the year ended are as follows:

Years ended December 31,                             2007      2006      2005
                                                  -------   -------   -------

Interest on bank debt, net                        $22,476   $14,243   $11,520
Interest on senior term notes                      38,345    35,880    20,912
Other finance charges                               2,672     3,952     2,519
                                                  -------   -------   -------

Total                                             $63,493   $54,075   $34,951
                                                  =======   =======   =======

Other finance charges include lease financing, bank service charges and fees as
well as other miscellaneous expenses.

The effective  interest rate on bank debt at December 31, 2007 was 6.5% (2006 -
5.6%).

                                      17
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

9.   OTHER ASSETS

As at December 31,                                          2007        2006
                                                         -------     -------

Deferred financing charges                               $     -     $14,008
Defined benefit pension plan                                 277         125
Other                                                         14          11
                                                         -------     -------

Other assets                                             $   291     $14,144
                                                         =======     =======

On January 1, 2007 financing costs related to the issuance of senior term notes
were  reclassified from other assets to senior term notes, as disclosed in Note
2.

10.  FOREIGN EXCHANGE (GAIN) LOSS

Amounts  charged to foreign  exchange (gain) loss during the year ended were as
follows:

Years ended December 31,                              2007      2006       2005
                                                  --------   -------   --------

Foreign exchange gain on translation of US$ debt  $(79,740)  $  (665)  $ (7,808)
Other foreign exchange (gain) loss                   1,023      (226)       455
                                                  --------   -------   --------

Total                                             $(78,717)  $  (891)  $ (7,353)
                                                  ========   =======   ========

11.  ASSET RETIREMENT OBLIGATIONS

The following  table  presents the  reconciliation  of the beginning and ending
aggregate carrying amount of the obligations  associated with the retirement of
oil and natural gas assets:

As at December 31,                                          2007           2006
                                                        --------       --------

Asset retirement obligations, beginning of year         $ 29,791       $ 20,770
Liabilities incurred                                       8,719          7,031
Liabilities settled and disposed                          (4,532)          (267)
Accretion expense                                          2,718          2,257
                                                        --------       --------

Asset retirement obligations, end of year               $ 36,696       $ 29,791
                                                        ========       ========

The total  undiscounted  amount of estimated  cash flows required to settle the
obligations  was  $246.6  million  (2006 -  $233.0  million),  which  has  been
discounted using a credit-adjusted  risk free rate of 10.8% (2006 - 10.6%). Due
to the Company's long reserve life, the majority of these  obligations  are not
expected to be settled until well into the future.  Settlements  will be funded
from general Company resources at the time of retirement and removal.

                                      18
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

12.  CAPITAL STOCK

a)   AUTHORIZED

     The Company is  authorized  to issue an unlimited  number of common shares
     and an unlimited number of preferred shares, issuable in series.

b)   ISSUED AND OUTSTANDING

      As at December 31,                    2007                    2006
                                  ---------------------   ---------------------
                                     NUMBER                              Number
                                         OF                                  of
                                     SHARES      AMOUNT      Shares      Amount
                                  ---------   ---------   ---------   ---------
                                     (000s)                   (000s)
     Common shares outstanding,
      beginning of year             128,503   $ 231,992     127,263   $ 226,444
      Shares issued under stock
       option plan                      993       4,603       1,489       5,993
      Shares repurchased               (398)       (724)       (249)       (445)
                                  ---------   ---------   ---------   ---------

     Common shares outstanding,
      end of year                   129,098   $ 235,871     128,503   $ 231,992
                                    =======   =========     =======   =========

     The Company has, on an annual basis, instituted a normal course issuer bid
     program.   Under  the  current  program,  the  Company  may  purchase  for
     cancellation   up  to  6,000,000  of  its  common   shares,   representing
     approximately 5.0% of the issued and outstanding common shares at the time
     the bid received regulatory approval.

     During the year,  the Company  purchased for  cancellation  398,300 common
     shares  at an  average  price of $9.98 per  share  (2006 - 248,900  common
     shares at an average  price of $13.79 per  share)  pursuant  to the normal
     course  issuer bid. The excess of the  purchase  price over book value has
     been charged to retained earnings.

c)   SHAREHOLDER RIGHTS PLAN

     The  Company  has a  shareholder  rights  plan (the  "Plan") to ensure all
     shareholders are treated fairly in the event of a take-over offer or other
     acquisition of control of the Company.

     Pursuant to the Plan,  the Board of Directors  authorized and declared the
     distribution of one Right in respect of each common share outstanding.  In
     the event that an  acquisition  of 20% or more of the Company's  shares is
     completed and the  acquisition  is not a permitted  bid, as defined by the
     Plan,  each  Right will  permit the  holder,  other  than  holders  not in
     compliance  with the plan,  to acquire a common share at a 50% discount to
     the market price at that time.

                                      19
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

13.  STOCK-BASED COMPENSATION PLANS

a)   STOCK OPTION PLAN

     The Company has a stock option plan for employees, including directors and
     officers.  The exercise price of each option approximated the market price
     for the common shares on the date the option was granted.  Options granted
     under the plan before June 1, 2003 are fully  exercisable  and will expire
     ten years after the grant date.  Options granted under the plan after June
     1, 2003 are generally fully  exercisable  after four years and expire five
     years after the grant date.

     The following tables summarize the information relating to stock options:

      As at December 31,                      2007                  2006
                                      ---------------------  -------------------
                                                   WEIGHTED             Weighted
                                                    AVERAGE              average
                                        STOCK      EXERCISE    Stock    exercise
                                      OPTIONS         PRICE  options       price
                                      -------     ---------  -------   ---------
                                       (000S)                 (000s)

     Outstanding, beginning of year    11,611     $    7.79   11,446   $    6.13
       Granted                          2,074     $   11.02    2,228   $   13.99
       Exercised                         (993)    $    3.47   (1,489)  $    3.14
       Forfeited                         (608)    $   11.97     (574)  $   10.92
                                      -------     ---------   ------   ---------

     Outstanding, end of year          12,084     $    8.49   11,611   $    7.79
                                      -------     ---------   ------   ---------

     Exercisable, end of year           7,240     $    6.20    6,593   $    4.82
                                      =======     =========   ======   =========

     The range of exercise prices of stock options  outstanding and exercisable
     at December 31, 2007 is as follows:

<TABLE>
<CAPTION>
                                              Outstanding Options           Exercisable Options
                                 ---------------------------------------  ------------------------
                                                 Weighted
                                  Number of      average     Weighted                    Weighted
                                   options      remaining    average       Number of      average
                                 outstanding   contractual   exercise       options      exercise
     RANGE OF EXERCISE PRICES      (years)        life         price      outstanding      price
                                 ------------  -----------   -----------  ------------  ----------
                                     (000s)                                   (000s)
     <S>                           <C>            <C>        <C>            <C>         <C>
     $1.45 - $3.99                  2,665         2.6        $    2.72      2,665       $    2.72
     $4.00 - $6.99                  2,013         2.7        $    4.94      1,995       $    4.93
     $7.00 - $9.99                  1,533         2.2        $    7.94        884       $    7.63
     $10.00 - $11.99                2,740         3.4        $   11.19        633       $   10.92
     $12.00 - $13.99                1,713         2.7        $   12.63        698       $   12.61
     $14.00 - $18.39                1,420         3.1        $   14.69        365       $   14.70
                                   ------      ------        ---------      -----       ---------

                                   12,084         2.9        $    8.49      7,240       $    6.20
                                   ======      ======        =========      =====       =========
</TABLE>

                                      20
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

13.  STOCK-BASED COMPENSATION PLANS (CONTINUED)

     The  Company  has  recorded   stock-based   compensation  expense  in  the
     consolidated  statement  of earnings  and other  comprehensive  income for
     stock options granted to employees,  directors, and officers after January
     1, 2003 using the fair value method.

     The fair value of each option  granted is  estimated  on the date of grant
     using  the  Black-Scholes  option  pricing  model  with  weighted  average
     assumptions for grants as follows:

     Years ended December 31,                             2007     2006     2005
                                                      -------- -------- --------

     Weighted average fair value of options granted   $   4.23 $   6.90 $   5.45
     Risk-free interest rate                              4.1%     4.0%     3.6%
     Expected life (years)                                5.0      5.0      5.0
     Expected volatility                                 39.0%    43.5%    43.9%

     The following  table presents the  reconciliation  of contributed  surplus
     with respect to stock-based compensation:

     As at December 31,                                        2007        2006
                                                           --------    --------

     Contributed surplus, beginning of year                $ 16,974    $  9,173
     Stock-based compensation expense                         8,416       9,121
     Stock options exercised                                 (1,157)     (1,320)
                                                           --------    --------

     Contributed surplus, end of year                      $ 24,233    $ 16,974
                                                           ========    ========

b)   SHARE APPRECIATION RIGHTS PLAN

     CICA Handbook section 3870 requires recognition of compensation costs with
     respect to changes in the  intrinsic  value for the variable  component of
     fixed share appreciation rights ("SARs").  During the years ended December
     31, 2007,  2006 and 2005,  there were no  significant  compensation  costs
     related to the outstanding variable component of these SARs. The liability
     related to the variable  component of these SARs amounts to $1.0  million,
     which is included in accounts payable as at December 31, 2007 (2006 - $1.2
     million).  All  outstanding  SARs  having a variable  component  expire at
     various times through 2011.

                                      21
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

13.  STOCK-BASED COMPENSATION PLANS (CONTINUED)

c)   EMPLOYEE RETENTION PROGRAM

     In recognition of the shortage of qualified  personnel that existed within
     the industry,  the Company  implemented an Employee  Retention  program in
     July 2006 for its existing  employees at the time,  excluding officers and
     directors. Under the program, the Company incurred additional compensation
     costs of $4.0 million,  in July 2007, $2.6 million of which was recognized
     in 2007 and the  balance  in 2006.  Amounts  paid under the  program  were
     determined in relation to the market value of the Company's  capital stock
     and accordingly have been included in stock-based compensation. No further
     obligation exists pursuant to this program.

14.  PER SHARE AMOUNTS

The  following  table  summarizes  the common  shares used in  calculating  net
earnings per common share:

Years ended December 31,                            2007      2006      2005
                                                 -------   -------   -------
                                                  (000s)    (000s)     (000s)

Weighted average common shares
  outstanding - basic                            128,993   127,820   125,627
Effect of stock options                            3,546     5,806     6,040
                                                 -------   -------   -------

Weighted average common shares
  outstanding - diluted                          132,539   133,626   131,667
                                                 =======   =======   =======

In  calculating  diluted  earnings per common share for the year ended December
31, 2007,  the Company  excluded  5,553,700  options (2006 - 1,537,100,  2005 -
331,800) as the exercise price was greater than the average market price of its
common shares in those years.


                                      22
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

15.  DEFINED BENEFIT PENSION PLAN

There are 35 employees of MPP  currently  enrolled in a  co-sponsored,  defined
benefit  pension  plan.  Information  relating  to the MPP  retirement  plan is
outlined below:

As at December 31,                                              2007       2006
                                                             -------    -------

Accrued benefit obligation
   Accrued benefit obligation - beginning of year            $ 7,717    $ 7,562
   Current service cost                                          401        368
   Interest cost                                                 403        387
   Benefits paid                                                (121)      (392)
   Actuarial (gain) loss                                        (705)      (208)
                                                             -------    -------

   Accrued benefit obligation - end of year                  $ 7,695    $ 7,717
                                                             =======    =======

Fair value of plan assets
   Fair value of plan assets - beginning of year             $ 6,635    $ 5,839
   Employee contributions                                         87         82
   Employer contributions                                        460        439
   Benefits paid                                                (121)      (392)
   Actual return on plan assets                                 (164)       667
                                                             -------    -------

   Fair value of plan assets - end of year                   $ 6,897    $ 6,635
                                                             =======    =======

Accrued benefit asset
   Funded status - plan assets less than benefit obligation  $  (798)   $(1,082)
   Unamortized net actuarial loss                                352        414
   Unamortized past service costs                                723        793
                                                             -------    -------

   Accrued benefit asset, included in other assets (Note 9)  $   277    $   125
                                                             =======    =======

Economic assumptions used to determine benefit obligation and periodic expense
were:

Years ended December 31,                                       2007        2006
                                                            -------    --------

Discount rate                                                  5.0%        5.0%
Expected rate of return on assets                              7.0%        7.0%
Rate of compensation increase                                  3.5%        3.5%
Average remaining service period of covered employees      16 YEARS    16 years

Actuarial evaluations are required every three years, the next evaluation being
January 1, 2009.


                                      23
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

15.  DEFINED BENEFIT PENSION PLAN (CONTINUED)

Pension expense, included in MPP operating costs, is as follows:

Years ended December 31,                                        2007       2006
                                                               -----      -----

Current service cost, net of employee contributions            $ 307      $ 292
Interest on accrued benefit obligation                           403        387
Return on assets                                                (479)      (407)
Amortization of past service cost                                 69         69
Amortization of net actuarial loss                                 -          9
                                                               -----      -----

Pension expense, included in operating expense                 $ 300      $ 350
                                                               =====      =====

MPP expects to contribute $547 thousand to the plan in 2008.

16.  INCOME TAXES

a)   The following  table  reconciles  income taxes  calculated at the Canadian
     statutory rate with actual income taxes:

<TABLE>
<CAPTION>
     Years ended December 31,                                  2007          2006          2005
                                                          ---------     ---------     ---------
     <S>                                                  <C>           <C>           <C>
     Earnings before taxes and non-controlling interest   $ 108,963     $ 130,457     $ 145,247
                                                          ---------     ---------     ---------

     Canadian statutory rate                                   32.1%         34.5%         37.6%
     Expected income taxes                                $  34,977     $  45,008     $  54,613
     Effect on taxes resulting from:
       Non-deductible Crown charges                               -         2,145        15,061
       Resource allowance                                         -        (1,987)      (11,980)
       Non-deductible stock-based compensation                2,704         3,147         2,221
       Federal capital tax                                        -             -         1,896
       Effect of tax rate changes                           (50,470)      (49,655)       (5,764)
       Non-taxable capital (gains) losses                   (11,651)         (115)            -
       Other                                                 (1,995)       (2,135)        1,341
                                                          ---------     ---------     ---------

     Provision for income taxes                           $ (26,435)    $  (3,592)    $  57,388
                                                          =========     =========     =========

     Current
       Income taxes                                       $      17     $      44     $   3,175
       Federal capital taxes                                      -             -         1,896
     Future                                                 (26,452)       (3,636)       52,317
                                                          ---------     ---------     ---------

                                                          $ (26,435)    $  (3,592)    $  57,388
                                                          =========     =========     =========

     Effective tax rate                                      (24.3)%        (2.8)%        39.5%
                                                          =========     =========     =========
</TABLE>

                                      24
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

16.  INCOME TAXES (CONTINUED)

     A significant  portion of the Company's  taxable  income is generated by a
     partnership.   Income   taxes  are   incurred  on  the   majority  of  the
     partnership's  taxable  income in the year  following its inclusion in the
     Company's consolidated net earnings.  Current income tax is dependent upon
     the amount of capital expenditures incurred and the method of deployment.

     The Canadian federal government,  during the fourth and second quarters of
     2007 and the second  quarter of 2006, and the Alberta  government,  during
     the second quarter of 2006 enacted income tax rate changes.

b)   Future income taxes are classified on the balance sheet as:

<TABLE>
<CAPTION>
      As at December 31,                                          2007         2006
                                                             ---------    ---------
     <S>                                                     <C>          <C>
     Current asset                                           $  (2,606)   $  (1,479)
     Current liability                                             542        7,269
     Non-current liability                                     293,494      302,690
                                                             ---------    ---------

     Net future income tax liability                         $ 291,430    $ 308,480
                                                             =========    =========

      The net future income tax liability is comprised of:

     As at December 31,                                           2007         2006
                                                             ---------    ---------

     Future income tax liabilities
       Property and equipment in excess of tax values        $ 252,594    $ 229,936
       Timing of partnership items                              43,857       83,328
       Foreign exchange gain on long-term debt                  18,340        8,729
       Other                                                         -        2,591
     Future income tax assets
       Non-capital losses carried forward                       (5,422)           -
       Attributed Canadian royalty income                       (7,810)      (7,462)
       Asset retirement obligations                             (9,177)      (8,642)
       Other                                                      (952)           -
                                                             ---------    ---------

     Net future income tax liability                         $ 291,430    $ 308,480
                                                             =========    =========
</TABLE>

     The  non-capital  losses  available  for carry  forward to reduce  taxable
     income in future years expire between 2011 and 2026.

                                      25
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

17.  FINANCIAL INSTRUMENTS

     DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT ACTIVITIES

     The Company is exposed to risks from  fluctuations  in  commodity  prices,
     interest  rates,  and  Canada/US  currency  exchange  rates.  The  Company
     utilizes various derivative financial instruments for non-trading purposes
     to manage and mitigate its exposure to these risks.  Effective  January 1,
     2004,  the  Company  elected  to  account  for  all  derivative  financial
     instruments using the mark-to-market method.

     On  January  1, 2007 the  Company  adopted  the new  financial  instrument
     recognition,  measurement, presentation and disclosure requirements of the
     CICA  as  disclosed  in  Note  2  (b)  to  these  consolidated   financial
     statements. Certain items have been reclassified as a reduction to opening
     retained  earnings,   net  of  tax,  as  prescribed  in  the  transitional
     provisions.

     Risk  management   activities  during  the  year,   utilizing   derivative
     instruments,  relate to commodity  price  economic  hedges,  a fixed price
     power contract,  foreign  currency  contracts and cross currency  interest
     rate swap arrangements.

a)   UNREALIZED RISK MANAGEMENT GAINS AND LOSSES AS AT DECEMBER 31, 2007

     i)   BALANCE SHEET CLASSIFICATION

     As at December 31, 2007, the Company had outstanding  financial instrument
     contracts for both commodity  price risk  management and foreign  currency
     risk  management  expiring  at various  periods to  December  2010.  These
     contracts  were valued on a  mark-to-market  basis as at December 31, 2007
     and the  unrealized  gains and  losses  relating  to these  contracts  are
     recorded on the consolidated balance sheets as follows:

                                     COMMODITY    FOREIGN       2007       2006
     AS AT DECEMBER 31, 2007         CONTRACTS   CURRENCY      TOTAL      TOTAL
                                      --------   --------   --------   --------
     UNREALIZED GAIN
       Current asset                  $  1,790   $     45   $  1,835   $ 22,625
       Non-current asset                     -     14,320     14,320          -
     UNREALIZED LOSS
       Current liability                     -     (8,832)    (8,832)    (4,604)
       Non current liability                 -     (1,585)    (1,585)    (6,816)
                                      --------   --------   --------   --------
     TOTAL UNREALIZED GAINS (LOSSES)  $  1,790   $  3,948   $  5,738   $ 11,205
                                      ========   ========   ========   ========

     The  amounts  relating  to  commodity  price risk  management  and foreign
     exchange risk management, respectively, are disclosed below:

     ii)   COMMODITY PRICE RISK MANAGEMENT

     The Company enters into economic hedge transactions  relating to crude oil
     and natural gas prices to mitigate  volatility in commodity prices and the
     resulting  impact on cash flow.  The  contracts  entered  into are forward
     transactions  providing  the  Company  with  a  range  of  prices  on  the
     commodities  sold. Prices are marked to industry  benchmarks  specifically
     AECO spot for gas contracts and WTI NYMEX for oil contracts and are valued
     in Canadian dollars unless otherwise disclosed. Outstanding economic hedge
     contracts at December 31, 2007 are:

                                      26
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

17.  FINANCIAL INSTRUMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                DAILY                              MARK-
                                              NOTIONAL           AVERAGE         TO-MARKET
      COMMODITY               TERM             VOLUME             PRICE            GAIN
      ---------               ----             ------             -----            ----
      <S>               <C>                   <C>          <C>                   <C>
      Natural gas
        Collar          Nov./07 - Mar./08     9,524mcf     $8.27 - $10.50/mcf    $   1,416
      Electricity       Jan./06 - Dec./08       2.5MW      $55.00/MWh                  374
                                                                                 ----------
                                                                                 $   1,790
                                                                                 =========
</TABLE>

     The gains and losses realized during the year on the electricity  contract
     are included in operating expenses.

     Subsequent  to December 31, 2007,  the Company  entered into the following
     commodity contracts:

     Natural gas
       Collar        Apr./08 - Oct./08      52,381 mcf      $7.33 - $8.48/mcf
       Fixed         Apr./08 - Oct./08      19,048 mcf      $7.86/mcf
       Collar        Nov./08 - Mar./09      28,571 mcf      $8.40 - $10.00/mcf
       Fixed         Nov./08 - Mar./09       9,524 mcf      $8.51/mcf
     Oil
       Fixed         Mar./08 - Dec./08       1,000 bbl      US$93.00/bbl

     iii) FOREIGN CURRENCY RISK MANAGEMENT

     The Company is exposed to  fluctuations  in the exchange  rate between the
     Canadian  dollar  and the US  dollar.  Crude oil and to a  certain  extent
     natural  gas prices  are based upon  reference  prices  denominated  in US
     dollars,  while the majority of the Company's  expenses are denominated in
     Canadian dollars. When appropriate,  the Company enters into agreements to
     fix the exchange rate of Canadian dollars to US dollars in order to manage
     the risk.

     Concurrent  with the issuance of 9.90%  Senior Notes in 2002,  the Company
     entered into cross currency interest rate swap  arrangements  expiring May
     2009 that convert fixed rate US dollar  denominated  interest  obligations
     into floating rate Canadian dollar denominated  interest  obligations.  On
     purchase of the majority of the 9.90% Senior Notes in November  2005,  the
     Company elected not to collapse the cross currency  interest rate swap and
     maintains it as a source of US funds used to settle  interest  obligations
     on the 7.625% Senior Notes.

     During the year the  Company  entered  into a series of  foreign  exchange
     contracts  relating to the US$450  million  senior  notes due  December 1,
     2013,  effectively fixing the liability in Canadian dollars on December 1,
     2010,  being the second call date of the senior notes.  Additionally,  the
     Company entered into a series of foreign  exchange  contracts  relating to
     the semi-annual interest settlement obligations until November 30, 2010.

                                      27
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

17.  FINANCIAL INSTRUMENTS (CONTINUED)

     On December  31,  2007,  the Company had the  following  foreign  exchange
     contracts in place:

<TABLE>
<CAPTION>
                       AMOUNT                   AMOUNT                                                   MARK TO
        CONTRACT         USD         RATE         CDN                TERM                                 MARKET
        --------         ---         ----         ---                ----                                 ------
    <S>               <C>           <C>       <C>           <C>                                          <C>
    Currency Swap     $450,000,000  96.9750   $436,387,500  Matures on December 1, 2010                  $ 14,146
    Currency Swap     $78,435,000   99.5500    $78,082,043  Equal payments on May 30 and Nov. 30 until        219
                                                            2010
    Cross Currency
    Interest Rate                  BA plus
    Swap              $24,502,500    4.845%    $34,627,785  Equal payments on May 15 and Nov. 15 until   (10,417)
                                                            2009
                                                                                                         ---------
    Total unrealized foreign exchange gain                                                               $  3,948
                                                                                                         ========
</TABLE>

b)   RISK MANAGEMENT (GAIN) LOSS

     Risk management gains and losses recognized in the consolidated statements
     of earnings and other comprehensive  income during the periods relating to
     commodity prices and foreign currency transactions are summarized below:

                                               COMMODITY    FOREIGN
            YEAR ENDED DECEMBER 31, 2007       CONTRACTS    CURRENCY      TOTAL
                                               ---------   ---------   --------
     Unrealized
       Change in fair value                    $ 20,834    $(15,367)   $  5,467
                                               --------    --------    --------

     Realized cash settlements                  (19,220)      7,739     (11,481)
                                               --------    --------    --------

     Total (gain) loss                         $  1,614    $ (7,628)   $ (6,014)
                                               ========    ========    ========


                                              Commodity      Foreign
     Year ended December 31, 2006             Contracts     Currency      Total
                                              ----------   ---------   --------
     Unrealized
       Amortization of deferred loss           $      -    $  1,642    $  1,642
       Change in fair value                     (25,775)     (3,389)    (29,164)
                                               --------    --------    --------
                                                (25,775)     (1,747)    (27,522)
     Realized cash settlements                  (39,217)      3,018     (36,199)
                                               --------    --------    --------

     Total (gain) loss                         $(64,992)   $  1,271    $(63,721)
                                               ========    ========    ========


                                               Commodity                Foreign
     Year ended December 31, 2005              Contracts   Currency       Total
                                               --------    --------    --------
     Unrealized
       Amortization of deferred loss           $      -    $  1,642    $  1,642
       Change in fair value                       5,136       3,393       8,529
                                               --------    --------    --------
                                                  5,136       5,035      10,171
     Realized cash settlements                    9,663        (532)      9,131
                                               --------    --------    --------

     Total loss                                $ 14,799    $  4,503    $ 19,302
                                               ========    ========    ========

                                      28
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

17.  FINANCIAL INSTRUMENTS (CONTINUED)

c)   CREDIT RISK MANAGEMENT

     Accounts  receivable  include  amounts  receivable for oil and natural gas
     sales which are  generally  made to large  credit  worthy  purchasers  and
     amounts  receivable  from  joint  venture  partners  which  are  generally
     recoverable from production.  Accordingly,  the Company views credit risks
     on these amounts as low.

     The  Company  is  exposed  to losses in the  event of  non-performance  by
     counter-parties  to financial  instruments.  The Company  deals with major
     financial institutions and believes these risks are minimal.

d)   FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

     Held for  trading  financial  assets and  liabilities  are carried at fair
     value. The carrying value of accounts  receivable,  accounts payable,  and
     bank debt  approximate  fair value due to the short  term  nature of these
     instruments and variable rates of interest. The senior term notes trade in
     the US and the  estimated  fair value was  determined  using quoted market
     prices.

      As at December 31,                       2007                   2006
                                      CARRYING       FAIR    Carrying       Fair
                                        AMOUNT      VALUE      Amount      Value
     FINANCIAL ASSETS
        Held-for-trading
          Cash                        $  8,665   $  8,665    $ 11,876   $ 11,876
          Other current assets          19,772     19,772      22,869     22,869
        Loans and receivables
          Accounts receivable         $ 80,331   $ 80,331    $ 83,535   $ 83,535
     FINANCIAL LIABILITIES
        Other financial liabilities
          Accounts payable            $147,983   $147,983    $141,443   $141,443
          Bank debt                    398,426    398,426     328,000    328,000
          Senior term notes            433,762    415,743     524,385    503,410

     The  fair  value  of  derivative  financial  instruments  related  to risk
     management  activities,  classified  as  held-for-trading,  are  disclosed
     elsewhere in this note.

18.  CASH FLOW

Changes  in  non-cash  working  capital  items  increased  (decreased)  cash as
follows:

Years ended December 31,                           2007        2006        2005
                                               --------    --------    --------

Accounts receivable and other current assets   $(11,614)   $ 24,395    $(17,672)
Accounts payable                                  6,540     (62,425)     78,385
                                               --------    --------    --------

                                               $ (5,074)   $(38,030)   $ 60,713
                                               ========    ========    ========
Net change in non-cash working capital
Relating to:
  Operating activities                         $(23,366)   $ 19,823    $  6,612
  Investing activities                           18,292     (57,853)     54,101
                                               --------    --------    --------

                                               $ (5,074)   $(38,030)   $ 60,713
                                               ========    ========    ========

                                      29
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

18.  CASH FLOW (CONTINUED)

Amounts  paid during the year  relating to interest  expense and capital  taxes
were as follows:

Years ended December 31,                           2007        2006        2005
                                                -------     -------     -------

Interest paid                                   $60,976     $48,857     $31,444
                                                =======     =======     =======

Current income taxes paid                       $    41     $    14     $ 4,101
                                                =======     =======     =======

19.  COMMITMENTS AND CONTINGENT LIABILITIES

a)   COMMITMENTS

     The Company has committed to certain payments over the next five years, as
     follows:

                                   2008      2009      2010      2011      2012
                                -------   -------   -------   -------   -------

Operating leases                $ 3,811   $ 3,325   $   505   $     -   $     -
Office facilities                 4,351     4,921     6,160     5,484     5,569
MPP partnership distributions     9,172     3,057         -         -         -
                                -------   -------   -------   -------   -------

                                $17,334   $11,303   $ 6,665   $ 5,484   $ 5,569
                                =======   =======   =======   =======   =======

The  Company  has  entered  into a lease  agreement  for new office  facilities
commencing 2009. Annual commitments under the lease agreement are approximately
$5.6  million per year for the 10 year term.  The  commitment  remaining on the
office  facilities  subsequent  to 2012 is $33.6  million  and the total of all
commitments, to expiry, is $80 million.

b)   LEGAL PROCEEDINGS

     The Company is involved in various  legal  claims  associated  with normal
     operations.  These  claims,  although  unresolved  at the current time, in
     management's  opinion,  are not significant and are not expected to have a
     material impact on the financial  position or results of operations of the
     Company.

20.  SUBSEQUENT EVENTS

On January 23, 2008,  Compton  announced  its budget for 2008 and the Company's
longer term plans for 2009 and 2010. On January 29, 2008, the Company  received
a letter  from  Centennial  Energy  Partners  LLC, a major  shareholder  of the
Company,  wherein they restated  comments  contained in a letter to the Company
dated December 14, 2007, that in their opinion,  a major discount had developed
between the underlying  value of the Company's  asset base and its share price.
Additionally,  they expressed  concerns that the Company's plans, as announced,
would not eliminate the discount and require  Compton  shareholders'  to assume
significant  execution  risk,  commodity  price risk and stock  market risk for
minimal per-share return and requested that the Company be put up for sale.

                                      30
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

20.  SUBSEQUENT EVENTS (CONTINUED)

In response to Centennial's concerns, the Board of Directors, in a news release
dated February 28, 2008, announced that it would conduct a formal review of the
Company's business plans and alternatives for enhancing  shareholder value, and
had  appointed  independent  financial  advisors  to assist the  Company in the
conduct of this review.

The Company has  estimated  that during  2008,  Compton will incur direct costs
associated  with,  and costs  resulting  from,  the  process  that could  total
approximately  $22 million.  These  expenses will be recognized  throughout the
year as they occur.

In  addition  to the above,  cash  outlays  associated  with  change of control
provisions   relating  to  the  Company's  senior  notes,   Mazeppa  Processing
Partnership  arrangements,  and employee  contracts could result depending upon
the outcome of the review.

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING

RECONCILIATION OF CONSOLIDATED  FINANCIAL STATEMENTS TO UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES

These consolidated  financial  statements have been prepared in accordance with
accounting  principles generally accepted in Canada ("Canadian GAAP") which, in
most  respects,  conforms to accounting  principles  generally  accepted in the
United  States of America ("US GAAP").  The  significant  differences  in those
principles,  as they apply to the  Company's  statements  of earnings and other
comprehensive  income,  balance  sheets,  and  statements  of  cash  flow,  are
described below.

RECONCILIATION OF NET EARNINGS UNDER CANADIAN GAAP TO US GAAP:

For the years ended December 31,                  2007         2006         2005
                                             ---------    ---------    ---------

Net earnings for year, as reported           $ 129,266    $ 127,426    $  81,326

Adjustments
  Depletion and depreciation, net (Note a)        (625)      (7,744)         650
  Risk management gain, net (Note c)                 -        1,166        1,067
  Business combination, net (Note g)              (201)           -            -
                                             ---------    ---------    ---------

Net earnings - US GAAP                       $ 128,440    $ 120,848    $  83,043
                                             =========    =========    =========

                                      31
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

CONSOLIDATED STATEMENTS OF EARNINGS - US GAAP

For the years ended December 31,                  2007         2006        2005
                                             ---------    ---------   ---------

Revenue, net of royalties                    $ 398,309    $ 417,160   $ 431,524
Expenses
  Operating                                    101,478      102,643      73,164
  Transportation                                12,615       12,564      10,858
  General and administrative                    31,328       26,231      21,223
  Interest and finance charges                  63,493       54,075      55,701
  Depletion and depreciation (Note a)          152,244      153,964     104,525
  Foreign exchange gain                        (78,717)        (891)     (7,353)
  Accretion of asset retirement obligations      2,718        2,257       1,975
  Stock-based compensation                      11,034       10,488       5,903
  Guarantee (Note f)                                 -         (375)       (375)
  Loss on equity investment (Note g)               159            -           -
  Risk management (gain) loss (Note c)          (6,014)     (65,363)     17,660
                                             ---------    ---------   ---------
  Earnings before taxes and
    non-controlling interest                   107,971      121,567     148,243
  Income tax (recovery) expense (Note a, g)    (26,602)      (6,279)     58,292
  Non-controlling interest (Note f)              6,133        6,998       6,908
                                             ---------    ---------   ---------

Net earnings -  US GAAP                      $ 128,440    $ 120,848   $  83,043
                                             =========    =========   =========
Net earnings per common share - US GAAP
Basic                                        $    1.00    $    0.95   $    0.66
                                             =========    =========   =========
Diluted                                      $    0.97    $    0.90   $    0.63
                                             =========    =========   =========

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME- US GAAP

For the years ended December 31,                  2007         2006        2005
                                             ---------    ---------   ---------

Net earnings - US GAAP                       $ 128,440    $ 120,848   $  83,043
Defined benefit pension plan (Note e)               67            -           -
                                             ---------    ---------   ---------

Comprehensive income                         $ 128,507    $ 120,848   $  83,043
                                             =========    =========   =========


CONSOLIDATED  STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE  INCOME (LOSS)
- US GAAP

As at December 31,                                2007         2006        2005
                                             ---------    ---------   ---------

Balance, beginning of year                   $    (893)   $       -   $       -
Defined benefit pension plan (Note e)               67         (893)          -
                                             ---------    ---------   ---------

Balance, end of year                         $    (826)   $    (893)  $       -
                                             =========    =========   =========

                                      32
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS

As at December 31,                                    2007                         2006
                                           -------------------------    -------------------------
                                           AS REPORTED       US GAAP    As reported       US GAAP
                                           -----------   -----------    -----------   -----------
<S>                                        <C>           <C>            <C>           <C>
Assets
  Cash                                     $     8,665   $     8,665    $    11,876   $    11,876
  Other current assets                         104,544       104,544        130,508       130,508
  Property and equipment (Note a)            2,116,834     2,106,073      1,977,062     1,967,135
  Goodwill (Note g)                              9,933         9,732          7,914         7,914
  Other assets (Notes d, e)                        291         9,403         14,144        12,160
  Deferred risk management loss (Note c)             -             -          3,968             -
  Unrealized risk management gain               14,320        14,320              -             -
                                           -----------   -----------    -----------   -----------

                                           $ 2,254,587   $ 2,252,737    $ 2,145,472   $ 2,129,593
                                           ===========   ===========    ===========   ===========

Liabilities and shareholders' equity
  Current liabilities                      $   157,357   $   157,357    $   153,316   $   153,316
  Long term debt (Note d)                      832,188       841,577        852,385       850,526
  Asset retirement obligations                  36,696        36,696         29,791        29,791
  Unrealized risk management loss                1,585         1,585          6,816         6,816
  Guarantee obligation (Note f)                      -             -              -           873
  Unfunded pension liability (Note e)                -           798              -         1,082
  Future income taxes (Notes a, e)             293,494       290,203        302,690       297,755
  Non-controlling interest (Note f)             63,311        63,311         66,350        65,477
                                           -----------   -----------    -----------   -----------

                                             1,384,631     1,391,527      1,411,348     1,405,636
                                           -----------   -----------    -----------   -----------

  Capital stock  (Note b)                      235,871       265,858        231,992       261,979
  Contributed surplus                           24,233        24,233         16,974        16,974
  Retained earnings                            609,852       571,945        485,158       445,897
  Accumulated other comprehensive
  income (loss) (Note e)                             -          (826)             -          (893)
                                           -----------   -----------    -----------   -----------

                                               869,956       861,210        734,124       723,957
                                           -----------   -----------    -----------   -----------

                                           $ 2,254,587   $ 2,252,737    $ 2,145,472   $ 2,129,593
                                           ===========   ===========    ===========   ===========
</TABLE>

                                      33
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.   UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

For the years ended December 31,                   2007         2006         2005
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>
Operating activities
  Net earnings                                $ 128,440    $ 120,848    $  83,043
  Amortization of deferred charges
     and other                                    3,417        1,996       22,940
  Depletion and depreciation                    152,245      153,964      104,525
  Accretion of asset retirement obligations       2,718        2,257        1,975
  Unrealized foreign exchange gain              (79,740)        (665)      (7,808)
  Future income taxes                           (26,619)      (6,323)      53,221
  Unrealized risk management (gain) loss          5,467      (29,164)       8,529
  Loss on equity investment                         159            -            -
  Other                                          10,107       13,392       11,687
  Change in non-cash working capital            (23,366)      19,823        6,612
                                              ---------    ---------    ---------

Cash from operating activities                  172,828      276,128      284,724
                                              ---------    ---------    ---------

Cash from financing activities                   60,725      308,170      172,849
                                              ---------    ---------    ---------

Cash used in investing activities              (236,764)    (581,376)    (458,687)
                                              ---------    ---------    ---------

Change in cash                                   (3,211)       2,922       (1,114)

Cash, beginning of year                          11,876        8,954       10,068
                                              ---------    ---------    ---------

Cash, end of year                             $   8,665    $  11,876    $   8,954
                                              =========    =========    =========
</TABLE>

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a)   FULL COST ACCOUNTING

     The  full  cost  method  of  accounting  for  crude  oil and  natural  gas
     operations under Canadian and US GAAP differ in the following respects.

     Under US GAAP,  an  impairment  test is applied to ensure the  unamortized
     capitalized costs in each cost centre do not exceed the sum of the present
     value,  discounted at 10%, of the estimated  constant  dollar,  future net
     operating  revenue from proved reserves plus unimpaired  unproved property
     costs less  applicable  taxes.  Under Canadian GAAP, a similar  impairment
     test  calculation  is performed  with the  exception  that cash flows from
     proved  reserves  are  undiscounted  and  utilize  forecasted  pricing  to
     determine whether impairments exist. If impairment exists, then the amount
     of the write down is  determined  using the fair value of reserves.  Under
     SEC  regulations,  the  excess  above  the  ceiling  is not  expensed  if,
     subsequent  to the end of the  period,  but  prior to the  release  of the
     financial  statements,  oil and natural gas prices  increase  sufficiently
     such that an excess above the ceiling  would have been  eliminated  if the
     increased prices were used in the calculation.

                                      34
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

     The Company has completed an impairment  test  calculation at December 31,
     2007 which  indicated an impairment of its oil and natural gas  properties
     of  approximately  $105  million,  net of  tax  (December  31,  2006 - $52
     million).  However, natural gas prices subsequent to December 31, 2007 and
     2006 improved sufficiently to eliminate this calculated  impairment.  As a
     result, the Company was not required to record a write-down of its oil and
     natural  gas  properties,  in either  year,  under the full cost method of
     accounting.  Based on spot  prices for oil and  natural gas as of December
     31, 2007, commodity hedges increased the full cost ceiling by $1.1 million
     (December 31, 2006 - $21.1 million), net of income tax.

     Depletion and depreciation on property and equipment is provided using the
     unit-of-production  method under  Canadian and US GAAP.  Both methods also
     use proved  reserves to determine the rate.  However,  for Canadian  GAAP,
     proved  reserves are determined  using  forecasted  prices whereas US GAAP
     applies  constant  prices.  This  reconciliation  item  resulted in a $0.8
     million  increase  to  depletion  and  depreciation  expense  for US  GAAP
     purposes  during the year ended  December 31, 2007 (2006 - $10.9  million,
     2005 - $1.0 million decrease).

b)   FUTURE INCOME TAXES

     Under US GAAP,  enacted  tax rates  are used to  calculate  future  taxes,
     whereas  Canadian GAAP uses  substantively  enacted tax rates.  The future
     income tax  adjustments  included in the  reconciliation  of net  earnings
     under  Canadian GAAP to US GAAP and the balance sheet effects  include the
     effect of such rate differences,  if any, as well as the tax effect of the
     other reconciling items noted.

     US GAAP  requires  flow-through  shares be  recorded  at their  fair value
     without any adjustment for the  renouncement of the tax deductions and any
     temporary difference resulting from the renouncement must be recognized in
     the determination of tax expense in the year incurred.

     The  cumulative  retained  earnings  adjustment  relating to  flow-through
     shares issued prior to December 31, 2003 was $30.0 million.

     The net future income tax liability is comprised of:

     As at December 31,                                     2007           2006
                                                       ---------      ---------

     Future income tax liabilities
       Property and equipment                          $ 249,552      $ 227,103
       Timing of partnership items                        43,857         83,328
       Foreign exchange gain on long-term debt            18,340          8,729
       Other                                                   -            489
     Future income tax assets
       Non-capital losses carried forward                 (5,422)             -
       Attributed Canadian royalty income                 (7,810)        (7,462)
       Asset retirement obligations                       (9,177)        (8,642)
       Other                                              (1,201)             -
                                                       ---------      ---------

     Future income taxes                               $ 288,139      $ 303,545
                                                       =========      =========

     Net future income taxes                           $ 288,139      $ 303,545
     Current portion, net                                  2,064         (5,790)
                                                       ---------      ---------
     Non-current future income taxes                   $ 290,203      $ 297,755
                                                       =========      =========

                                      35
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

c)   DERIVATIVE INSTRUMENTS AND HEDGING

     On January 1, 2004, the Company adopted under Canadian GAAP, EIC 128 which
     required  derivatives  not  designated  as  hedges to be  recorded  on the
     balance sheet as either assets or liabilities at their fair value. Changes
     in the derivative's  fair value are recognized in current period earnings.
     Under the transitional  rules, any gain or loss at the implementation date
     was deferred and recognized into revenue.  At January 1, 2007, the Company
     adopted the CICA  Handbook  Section  3855 as  disclosed in Note 2 to these
     consolidated  financial statements.  Under the new standard,  the deferred
     loss  amount  was  reclassified  as  an  adjustment  to  opening  retained
     earnings,  net of tax, without restatement of prior periods.  The deferred
     loss  recognized  at January 1, 2004 under  Canadian GAAP had already been
     recognized in earnings for US GAAP. As a result,  the deferred  amount has
     now been  fully  recognized  in  earnings  for both  Canadian  and US GAAP
     purposes.  The Company has not designated any of its financial instruments
     as hedges for accounting purposes under US or Canadian GAAP.

d)   DEFERRED FINANCING CHARGES

     Under US GAAP,  discounts on long-term  debt are classified as a reduction
     of  long-term  debt.  For Canadian  GAAP,  prior to 2007,  discounts  were
     recorded as deferred  financing  charges.  At January 1, 2007, the Company
     adopted the CICA  Handbook  Section  3855 as  disclosed in Note 2 to these
     consolidated financial statements.  Under the standard, deferred financing
     charges  are  classified  as a reduction  of senior  term  notes,  without
     restating prior years and the Company began  amortizing  these costs using
     the effective interest method.

     In 2007, as a result of the adoption of 3855,  transaction  costs,  netted
     within senior term notes under Canadian GAAP,  have been  reclassified  to
     other assets, to be in compliance with US GAAP.

e)   DEFINED BENEFIT PENSION PLAN

     At December 31, 2006, the Company adopted,  for US GAAP purposes SFAS 158,
     "Employers'   Accounting   for   Defined   Benefit   Pension   and   Other
     Postretirement  Plans, an amendment of FIBS Statements No. 87, 88, 106 and
     132(R)".  These  amendments  required the Company to recognize the over or
     under funded status of defined  benefit pension plans on the balance sheet
     as either an asset or liability  and to  recognize  changes in the funding
     status through other comprehensive income. The transitional provisions, on
     adoption,  required an  adjustment to the closing  balance of  accumulated
     other comprehensive  income.  Canadian GAAP currently requires recognition
     of the accrued  benefit or  liability  and does not require the Company to
     recognize the funded status of the plan on the balance sheet.

f)   GUARANTEE

     As disclosed in Note 4 to the consolidated  financial statements,  MPP has
     guaranteed  payment of certain  obligations of its limited partner under a
     credit  agreement  between the limited partner and a syndicate of lenders.
     Canadian  GAAP  only  requires   disclosure  of  this  type  of  financial
     arrangement.  US GAAP, under FIN 45 "Guarantor's Accounting and Disclosure
     Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
     of Others", requires the fair valuation of the guarantee and the inclusion
     of the  liability  in the  consolidated  balance  sheets.  The  offsetting
     adjustment is reflected as a charge to non-controlling interest.

     The value of the  guarantee at December 31, 2007 was  estimated to be $nil
     (December 31, 2006 - $873 thousand).

                                      36
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

g)   BUSINESS COMBINATION

     On August  15,  2007,  the  Company  closed the  acquisition  of Stylus as
     disclosed in Note 3 to these consolidated financial statements. During the
     five month  period prior to close,  the Company had  acquired  3.7% of the
     issued  and  outstanding  shares  of Stylus  on the open  market.  US GAAP
     requires  retroactive  restatement  of  the  initial  3.7%  to  an  equity
     investment  from the date of acquisition to the date of  consolidation  on
     change of control.  The  application  of this standard to the  acquisition
     resulted in a current  period  charge to earnings of $201  thousand  and a
     corresponding adjustment to goodwill.

h)   RECEIVABLE AND PAYABLE AMOUNTS

     As at December 31,                                  2007              2006
                                                      -------           -------
                                                      (in thousands of Canadian
                                                                dollars)
     Accounts receivable includes the following:
       Revenue receivable                             $ 3,854           $ 2,234
       Joint interest receivable                       16,594            16,295
       Accruals                                        56,526            60,663
       Other receivables                                3,357             4,343
                                                      -------           -------

                                                      $80,331           $83,535
                                                      -------           -------

     As at December 31,                                  2007              2006
                                                      -------           -------
                                                      (in thousands of Canadian
                                                                dollars)
     Accounts payable includes the following:
       Trade payables                                 $ 34,342          $ 42,976
       Royalties payable                                 5,956             4,728
       Accruals                                        107,215            90,858
       Other payables                                      470             2,881
                                                      --------          --------

                                                      $147,983          $141,443
                                                      --------          --------


                                      37
<PAGE>

===============================================================================
COMPTON PETROLEUM CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
(Tabular amounts in thousands of dollars, unless otherwise stated)
-------------------------------------------------------------------------------

21.  UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING (CONTINUED)

i)   RECENT ACCOUNTING PRONOUNCEMENTS

     As at January 1, 2007, the Company  adopted,  for US GAAP  purposes,  FASB
     Interpretation  No. 48 "Accounting  for  Uncertainty  in Income Taxes,  an
     interpretation  of FASB  Statement No. 109". The  interpretation  provides
     clarification  and  guidance  on  financial   statement   recognition  and
     disclosure  of  uncertain  tax  positions  taken or  anticipated  in a tax
     return.  The adoption of this  standard has had no material  impact on the
     Company's consolidated financial statements.

     New and  revised  accounting  pronouncements  have been  evaluated  by the
     Company and it was  determined  that the  following may have a significant
     impact on the consolidated financial statements:

     i)   As of January 1, 2008, the Company will be required to adopt,  for US
          GAAP  purposes,  SFAS 157 "Fair  Value  Measurements".  The  standard
          provides a common definition of fair value,  expands disclosure about
          fair value measurements,  and establishes a methodology for measuring
          fair value  under US GAAP.  The  Company  does not  believe  that the
          adoption  of this  standard  should  have a  material  impact  on its
          consolidated financial statements.

     ii)  As of January 1, 2008, the Company will be required to adopt,  for US
          GAAP  purposes,   the  measurement   requirements   under  SFAS  158,
          "Employers'   Accounting  for  Defined   Benefit  Pension  and  Other
          Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106
          and  132(R)".  This  portion of the  amended  standard  requires  the
          Company  to measure  the funded  status of the plan as of the date of
          the year-end consolidated financial statements. The Company currently
          measures  the funded  status of the plan each  year-end  and believes
          there should be no significant  impact on its consolidated  financial
          statements due to the adoption of this standard.

     iii) As of January 1, 2009, the Company will be required to adopt,  for US
          GAAP   purposes,   SFAS  No.   160,   "Non-controlling   Interest  in
          Consolidated Financial Statements, an Amendment of ARB No. 51". Under
          the standard,  the non-controlling  interest in a subsidiary is to be
          classified  as  a  separate   component  of  equity.   Also,  the  US
          consolidated  statement  of earnings  presentation  will  require net
          earnings to include the amounts  attributable  to both the parent and
          the  non  controlling  interest  and  to  disclose  these  respective
          amounts. The Company believes the adoption of the standard should not
          have a material impact on the consolidated financial statements.

     iv)  As of January 1, 2009,  the Company  will be required to adopt for US
          GAAP purposes, SFAS 141(R), "Business  Combinations",  which replaces
          SFAS 141.  This  revised  standard  requires  assets and  liabilities
          acquired in a business  combination,  contingent  consideration,  and
          certain acquired contingencies to be measured at fair value as of the
          date of  acquisition.  Also,  transaction  costs are to be recognized
          separately  from the business  combination.  The Company is assessing
          the impact  this  standard  will have on its  consolidated  financial
          statements  for all  transactions  entered  into after the  effective
          date.

                                      38
<PAGE>

SUPPLEMENTAL OIL AND NATURAL GAS INFORMATION (UNAUDITED)

A)   NET PROVED OIL AND NATURAL GAS RESERVES

The net proved oil and natural gas reserve  estimates  as at December 31, 2007,
2006 and 2005 set forth  below were  prepared  in  accordance  with  guidelines
established  by the Securities and Exchange  Commission  and  accordingly  were
based on existing economic and operating conditions. Oil and natural gas prices
in effect as of the  respective  year ends  were used  without  any  escalation
except in those instances where the sale was covered by contract, in which case
the applicable contract price was used. Operating costs, royalties,  and future
development costs were based on current costs with no escalation.

There are numerous  uncertainties  inherent in estimating  quantities of proved
reserves  and in  projecting  the  future  rates of  production  and  timing of
development expenditures.  The following reserve data represents estimates only
and should not be construed as being exact.  Moreover, the present value should
not be construed as the current  market value of the  Company's oil and natural
gas reserves or the costs that would be incurred to obtain equivalent reserves.
All of the reserves are located in Canada.

<TABLE>
<CAPTION>
Estimated Quantities of Reserves

Years ended December 31,                      2007                    2006                    2005
                                     ---------------------   ---------------------   ---------------------
                                     CRUDE OIL     NATURAL   Crude oil     Natural   Crude oil     Natural
                                       & NGL'S       GAS       & NGL's       Gas       & NGL's       Gas
                                      --------------------   ---------------------   ---------------------
                                       (MBBLS)      (MMCF)     (mbbls)      (mmcf)     (mbbls)      (mmcf)
<S>                                     <C>        <C>          <C>        <C>          <C>        <C>
Balance, beginning of year              27,620     553,331      29,515     455,503      18,771     359,975
  Revisions of previous estimates        2,247      14,217      (1,130)     66,149       5,550      59,930
  Extensions, discoveries and
    other additions                        933      48,434       1,840      74,649       6,498      66,940
  Acquisitions of minerals in place      1,091      38,286         201      10,270         723       5,564
  Dispositions of minerals in place     (8,935)     (9,288)       (229)    (12,939)          -         (56)
  Production                            (2,070)    (41,999)     (2,577)    (40,301)     (2,026)    (36,850)
                                      --------------------   ---------------------   ---------------------

Balance, end of year                    20,886     602,981      27,620     553,331      29,516     455,503
                                      ====================   =====================   =====================

Proved developed reserves
  Balance, beginning of year            23,334     411,075      23,827     385,243      15,481     318,177
  Balance, end of year                  17,829     452,871      23,334     411,075      23,827     385,243
                                      ====================   =====================   =====================
</TABLE>

B)   CAPITALIZED COSTS RELATED TO OIL AND NATURAL GAS ACTIVITIES

The aggregate  capitalized  costs of oil and natural gas  activities  and costs
incurred  in oil  and  natural  gas  property  acquisitions,  development,  and
exploration activities were as follows (excluding MPP):

Capitalized costs

As at December 31,                                      2007               2006
                                                 -----------        -----------
                                                   (in thousands of Canadian
                                                            dollars)

Proved properties                                $ 2,444,137        $ 2,231,401
Unproved properties:
  Acquisition                                        159,578            131,333
  Exploration                                        153,827            108,487
Accumulated depletion and depreciation              (710,076)          (561,961)
                                                 -----------        -----------

                                                 $ 2,047,466        $ 1,909,260
                                                 ===========        ===========

                                      39
<PAGE>

SUPPLEMENTAL OIL AND NATURAL GAS INFORMATION (UNAUDITED) (CONTINUED)


<TABLE>
<CAPTION>
Costs incurred on unproved properties

                                                       Includes costs incurred in
                                     --------   -------------------------------------------
                                        CUMM.      Prior
As at December 31,                       2007       2007        2006        2005      Years
                                     --------   --------    --------    --------   --------
(in thousands of Canadian dollars)
<S>                                  <C>        <C>         <C>         <C>        <C>
Acquisition                          $159,578   $ 28,245    $  1,843    $ 12,296   $117,194
Exploration                           153,827     45,340     (35,119)     60,368     83,238
                                     --------   --------    --------    --------   --------

                                     $313,405   $ 73,585    $(33,276)   $ 72,664   $200,432
                                     ========   ========    ========    ========   ========
</TABLE>

Costs incurred

Years ended December 31,                          2007         2006        2005
                                             ---------    ---------   ---------
                                             (in thousands of Canadian dollars)

Acquisition costs (net of disposition)
  Proved properties                          $(109,262)   $  33,094   $  28,575
  Unproved properties                           28,245        1,843      12,296
Development costs
  Development of proved undeveloped reserves   293,335      304,316     140,504
  Other                                        (41,550)     111,773     283,667
Exploration costs                               42,908       72,448      46,484
                                             ---------    ---------   ---------

Total costs incurred                         $ 213,676    $ 523,474   $ 511,526
                                             =========    =========   =========

Costs  are  transferred  into the  depletion  base on an  ongoing  basis as the
undeveloped  properties  are evaluated and proved  reserves are  established or
impairment determined. Pending determination of proved reserves attributable to
the  above  costs,   the  Company  cannot  assess  the  future  impact  on  the
amortization rate.

C)   STANDARDIZED  MEASURE OF  DISCOUNTED  FUTURE  NET CASH  FLOWS AND  CHANGES
     THEREIN RELATING TO PROVED OIL AND NATURAL GAS RESERVES

The  standardized  measure of  discounted  future  net cash  flows and  changes
therein  relating  to  proved  oil  and  natural  gas  reserves  ("Standardized
Measure")  does not purport to present the fair market  value of the  Company's
oil and natural gas  properties.  An  estimate of such value  should  consider,
among other  factors,  anticipated  future  prices of oil and natural  gas, the
probability  of  recoveries in excess of existing  proved  reserves and acreage
prospects,  and  perhaps  different  discount  rates.  It should be noted  that
estimates  of  reserve  quantities,   especially  from  new  discoveries,   are
inherently imprecise and subject to substantial revisions. The computation also
excludes values attributable to the Company's midstream interests,  referred to
in the Financial Statements as Mazeppa Processing Partnership.

Under the Standardized  Measure,  future cash inflows are estimated by applying
year  end  prices,  adjusted  for  contracts  currently  in  place  to  deliver
production to the  estimated  future  production  of year end proved  reserves.
Future cash inflows are reduced by estimated future  production and development
costs based on year end costs to determine  pre-tax cash inflows.  Future taxes
are computed by applying the  statutory  tax rate to the excess of pre-tax cash
inflows over the Company's tax basis in the  associated  proved oil and natural
gas  properties.  Tax credits and net  operating  loss carry  forwards are also
considered in the future income tax calculation.  Future net cash inflows after
income taxes are discounted  using a 10 percent annual  discount rate to arrive
at the Standardized Measure.

                                      40
<PAGE>

SUPPLEMENTAL OIL AND NATURAL GAS INFORMATION (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
Years ended December 31,                                    2007           2006           2005
                                                     -----------    -----------    -----------
                                                        (in thousands of Canadian dollars)
<S>                                                  <C>              <C>          <C>
Future cash inflows                                  $ 5,740,433      5,253,029    $ 6,571,858
Future production costs                               (2,183,122)    (1,946,470)    (1,718,793)
Future development costs                                (340,215)      (339,699)      (209,901)
                                                     -----------    -----------    -----------

Future net cash flows                                  3,217,096      2,966,860      4,643,164
Income taxes                                            (518,136)      (519,798)    (1,344,684)
                                                     -----------    -----------    -----------

Total undiscounted future net cash flows               2,698,960      2,447,062      3,298,480
10 percent annual discount for estimated timing of
  cash inflows                                        (1,340,535)    (1,185,942)    (1,726,975)
                                                     -----------    -----------    -----------

Standardized measure of discounted
  future net cash flows                              $ 1,358,425      1,261,120    $ 1,571,505
                                                     ===========      =========    ===========
</TABLE>

The Company  estimates that it will incur $177.6 million in 2008, $97.1 million
in 2009 and $18.6 million in 2010 to develop proved undeveloped reserves.

The  following  table sets  forth an  analysis  of changes in the  standardized
measure of  discounted  future net cash flows from  proved oil and  natural gas
reserves:

<TABLE>
<CAPTION>
Years ended December 31,                                       2007           2006           2005
                                                        -----------    -----------    -----------
                                                            (in thousands of Canadian dollars)
<S>                                                     <C>              <C>          <C>
Beginning of year                                       $ 1,261,120      1,571,505    $   752,878
  Sales of production, net of production costs             (286,961)      (291,896)      (336,711)
  Net change in sales prices, net of production costs        18,800       (731,330)       614,690
  Extensions, discoveries and additions                     117,276        183,795        354,186
  Changes in estimated future development costs                 202       (221,882)      (135,499)
  Development costs incurred during the period which
     reduced future development costs                       281,269        314,251        353,740
  Revisions in quantity estimates                            58,269        (74,504)       526,474
  Accretion of discount                                     144,449        215,170         75,288
  Purchase of reserves                                      116,362        (23,176)        (7,749)
  Sales of reserves                                         211,215         47,220             87
  Net change in income tax                                    9,411        396,818       (331,850)
  Changes in production rates (timing) and other           (572,987)      (124,851)      (294,029)
                                                        -----------    -----------    -----------

Standardized measure, end of year                       $ 1,358,425      1,261,120    $ 1,571,505
                                                        ===========      =========    ===========
</TABLE>



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