Corridor And Potash Corporation Of Saskatchewan Sign Natural Gas Facilities And Sales Agreements
Halifax, Nova Scotia, September 4, 2002: Corridor Resources Inc. (CDH - TSX-V) announced today that it has entered into agreements with Potash Corporation of Saskatchewan Inc. (PCS) for the production, transportation , processing and marketing of natural gas from the McCully #1 and #2 wells for use at the PCS potash mill located near Sussex, New Brunswick.
Under the terms of a Joint Operating Agreement , Corridor and PCS will jointly produce sufficient natural gas from the McCully #1 and #2 wells to meet an average mill demand of 2.3 million cubic feet of gas per day. An independent reservoir analysis has projected that the wells can recover more than 10 billion cubic feet of natural gas over their production life (20 years) and can sustain the demand rate for a period of four to five years before gas volumes begin to decline below the levels required for the mill. At that time, it is expected that an additional McCully well or wells will be connected in order to continue to meet the mill demand. Corridor will remain the operator of the production wells. The initial two wells are projected to drain less than 8% of the original Corridor/PCS McCully four-section joint venture area.
Under the terms of a Construction, Ownership and Operation Agreement, Corridor and PCS will jointly finance the field facilities, pipeline and processing facilities to transport and process the gas for the mill, and PCS will operate these facilities. Construction of the facilities will begin immediately, and initial gas is expected to be delivered to the mill by mid February, 2003. Corridor currently intends to finance its share (approximately $3 million) of the facilities costs from the proceeds of a convertible note issue. Terms of the financing will be announced in the near future.
Corridor will sell its 50% share of natural gas to the PCS mill under the terms of a Gas Purchase and Sale Agreement. The gas will be priced monthly based upon the value of No. 2 furnace oil (heating oil). The Gas Purchase and Sale Agreement will terminate at such time as a natural gas pipeline connection becomes available to the Maritimes & Northeast Pipeline located some thirty miles to the north of the mill.
Regarding New Brunswick activities outside the original Corridor/PCS four-section joint venture area, Corridor anticipates that by mid to late October the farmor will make its election as to whether or not it will drill an additional (optional) three wells on the farmout lands.
Corridor is a junior oil and gas exploration company, headquartered in Halifax, Nova Scotia, with interests onshore in New Brunswick, Prince Edward Island and Quebec, and offshore in the Gulf of St. Lawrence.
Potash Corporation of Saskatchewan Inc. is a publicly traded company on the Toronto and New York stock exchanges.
This press release contains certain forward looking statements relating to, but not limited to, Corridor's operations, anticipated financial performance, business prospects and strategies, including expectations relating to production levels; capital expenditure programs; the quantity of natural gas reserves; projections of market prices; projections of costs; supply and demand for natural gas; expectations regarding the ability to raise capital and to continually add to reserves through exploration and development; and treatment under governmental regulatory regimes. These statements are based on current expectations that involve numerous assumptions regarding factors and risks that could cause actual results to vary materially, including, without limitation to, the following factors: risks associated with oil and gas exploration, financial risks, substantial capital requirements, bank financing, government regulation, environmental, prices, markets and marketing, dependence on key personnel, dependence on Potash Corporation of Saskatchewan, Inc., availability of drilling equipment and access, risks may not be insurable, management of growth, expiration of licenses and leases, reserves estimates, seasonality, competition, conflicts of interest, Kyoto Protocol, issuance of debt, title to properties and hedging. There is no representation by Corridor that actual results achieved will be the same in whole or in part as those set out in the forward looking information. Furthermore, the forward looking statements contained in this press release are made as of the date hereof, and Corridor undertakes no obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise.
