UPDATE 1-Compton Petroleum Q3 profit falls 78 pct

* Q3 EPS C$0.10 vs C$0.46 yr ago

* Q3 rev falls 70 pct

* Q3 average production down 24 pct (Adds, details, analysts' comments, updates stock movement)

By Koustav Samanta

BANGALORE, Nov 6 (Reuters) - Canada's Compton Petroleum Corp (CMT.TO) posted a 78 percent drop in quarterly profit, hurt by lower commodity prices and production volumes.

Average production fell 24 percent to 19,760 barrels of oil equivalent per day (boed), primarily due to asset sales, natural declines and minimal new production additions due to lower capital expenditures in 2009, the company said in a statement.

Compton, which has reduced administrative and drilling costs, said it was on track to meet its 2009 average production outlook of 20,500 to 21,500 (boed).

Salman Partners analyst Tim Murray expects the company's production to drop in the fourth quarter due to lack of capital spending.

The company, which has been focusing to reduce its debt for quite sometime, said it expects to cut its total bank debt and senior notes to C$546.5 million by year-end.

Blackmont Capital analyst Gord Currie said conversion of debt to equity seems to be the most appropriate option for the company at the moment to deleverage its balance sheet.

Analyst Murray said, "in the near term, I expect Compton Petroleum to continue to deleverage the balance sheet. I would expect, hopefully, they transact on an asset sale."

The company reported a net income of C$13 million, or 10 Canadian cents a share for the third quarter, compared with C$59.9 million, or 46 Canadian cents a share, a year earlier.

Revenue fell 70 percent to C$47.3 million.

Analysts on average were expecting a loss of 12 Canadian cents, before special items, on revenue of C$55 million, according to Thomson Reuters I/B/E/S.

Cash flow stood at C$7.3 million, or 6 Canadian cents a share, compared with C$91.9 million, or 70 Canadian cents a share, a year ago.

Shares of the Calgary, Alberta-based company were up 4 Canadian cents at C$1.11 Friday afternoon on the Toronto Stock Exchange. (Reporting by Koustav Samanta in Bangalore; Editing by Aradhana Aravindan, Ratul Ray Chaudhuri)