Corridor Announces The Results Of An Independent Reserves Report For The McCully Gas Field
Halifax, Nova Scotia, July 22, 2004: Corridor Resources Inc. (CDH - TSX-V) announced today the results of an independent reserves report (the "Report") for part of the McCully natural gas field located near Sussex, New Brunswick. The Report assesses the quantity and value of Corridor's working interest share of the proved, probable and possible reserves in a portion of the McCully field encompassing the McCully A-67, P-66, K-57 and D-48 wells. The combined geological, reservoir engineering and economics Report was conducted by APA Petroleum Engineering Ltd. (APA) and Petrel Robertson Consulting Ltd., both of Calgary, Alberta.
The Report estimates that the current proved ultimate gas recovery for the portion of the field evaluated is 18 billion cubic feet (bcf), or 9 bcf net to Corridor. The proved reserves are limited to those that can be accommodated within the existing gas contract with Potash Corporation of Saskatchewan Inc. (PCS). Production to date is 0.8 bcf gross, or 0.4 bcf net to Corridor. The probable and possible reserves are associated with future gas export via a pipeline connection to the Maritimes & Northeast Pipeline. Assuming that the gas pipeline connection is initiated (in 2006), APA forecasts that between 120 bcf (proved and probable) and 164 bcf (proved, probable and possible) of gas could be recovered from current and future wells drilled in the evaluation area. Corridor's net share of sales gas is assessed to be 78 bcf for the proved and probable case, and 107 bcf for the proved, probable and possible case.
APA has assessed the value of Corridor's share of the three reserves categories based on both constant costs and prices and forecast costs and prices. Based on cost data provided by Corridor, APA has assessed that the export case appears to be economically attractive and has assigned both proved and probable reserves against this development assumption. The results are presented as follows:
| Working Interest Reserves Case | Price Case | Before Tax* | After Tax* |
|---|---|---|---|
| Proved (limited by current market) | Constant | 31 | 21 |
| (9 bcf sales case) | APA Forecast | 23 | 16 |
| Proved and probable | Constant | 165 | 114 |
| (78 bcf sales gas case) | APA Forecast | 105 | 72 |
| Proved, probable and possible | Constant | 241 | 166 |
| (107 bcf sales gas case) | APA Forecast | 162 | 111 |
| *Net Present Value ($mm) Discounted Cash Flow @10% | |||
APA states that, in their opinion, "...the key technical uncertainty that will drive the profitability of the export scheme is completion efficiency. Particularly, optimized stimulation design may significantly improve the reserves and economics associated with the further development of the McCully field". APA cautions, however, that because the reserves data are based on judgements regarding future events, actual results will vary and the variations may be material. The full APA Report is available for review in Corridor's offices and on Corridor's website (http://www.corridor.ca/).
In other activities, in early August Corridor is preparing to re-enter, side-track and test the Trenton Black River (TBR) formation in the Chaloupe exploration well located on Anticosti Island. The well was drilled in 1999 but the TBR formation was not tested. Log and sample information suggest that the fractured and dolomitized porosity may be oil bearing in this zone, and the objective of the re-entry is to conduct a drillstem test across the prospective interval to obtain a sample of the reservoir fluid. A positive test would be encouraging, as the Chaloupe structure is large and seismic shows the presence of many more similar prospects on the Island. Corridor and Hydro-Quebec hold 75% and 25% working interests respectively in the Chaloupe licence area and Corridor is the operator.
Corridor is a junior oil and gas exploration and production company, headquartered in Halifax, Nova Scotia, with interests onshore in New Brunswick and Quebec, and offshore in the Gulf of St. Lawrence.
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.
