Corridor Announces 2007 Year End Results And Reserves
Halifax, Nova Scotia, March 27, 2008, (TSX - CDH): Corridor Resources Inc. ("Corridor") announced today its 2007 year end financial results and reserve evaluations.
Year End Financial Results
The following table provides a summary of Corridor's financial and operating results for the three and twelve months ended December 31, 2007 with comparisons to the four months ended December 31, 2006 and twelve months ended August 31, 2006. In November 2006, Corridor changed its financial year end from August 31 to December 31 to be consistent with most reporting issuers in the oil and gas industry. Corridor's annual financial statements and management's discussion and analysis for the year ended December 31, 2007 have been filed on SEDAR at www.sedar.com and are available on Corridor's website at www.corridor.ca.
All amounts referred to in this press release are in Canadian dollars unless otherwise stated.
Selected Financial Information
| thousands of dollars, except per share amounts | Three months ended | Four months ended | Twelve months ended | |
|---|---|---|---|---|
| December 31 2007 | December 31 2006 | December 31 2007 | August 31 2006 | |
| Revenues | $16,916 | $1,693 | $33,347 | $5,289 |
| Net earnings (loss) | $4,682 | $(268) | $4,049 | $56 |
| Net earnings (loss) per share - basic | $0.057 | $(0.004) | $0.051 | $0.001 |
| Net earnings (loss) per share - diluted | $0.056 | $(0.004) | $0.050 | $0.001 |
| Cash flow from operations (1) | $11,793 | $909 | $20,482 | $4,002 |
| Capital expenditures | $27,728 | $29,939 | $113,148 | $50,141 |
| Gross proceeds from capital stock issues | $1,199 | $30,896 | $67,701 | $44,611 |
| Total assets | $240,187 | $151,623 | $240,187 | $126,052 |
| (1) Cash flow from operations is a non-GAAP measure. Cash flow from operations represents net earnings adjusted for non-cash items including depletion & depreciation, future income taxes, stock-based compensation and other non-cash expenses. See "Non-GAAP Financial Measures" in Corridor's management's discussion and analysis for the year ended December 31, 2007. | ||||
Highlights
- In June 2007, Corridor completed the construction of the gas gathering system, gas processing plant and pipeline lateral to connect the McCully Field near Sussex, New Brunswick with the Maritimes and Northeast Pipeline ("M&NP"). The gross capital cost of the initial gathering system, gas plant and pipeline facilities was approximately $63 million.
- On June 28, 2007, Corridor commenced the flow of natural gas from the McCully Field to the M&NP. For the year ended December 31, 2007 natural gas production averaged 10.2 mmscfpd net to Corridor.
- Natural gas revenues for the year ended December 31, 2007 increased to $31,277 thousand from $5,217 thousand for the year ended August 31, 2006.
- Net earnings for the year ended December 31, 2007 increased to $4,049 thousand from $56 thousand for the year ended August 31, 2006.
- On June 1, 2007, Corridor closed a $60 million financing consisting of 3,540,000 common shares and 1,400,000 flow-through shares at a price of $11.30 per common share and $14.30 per flow-through share. On June 22, 2007 the underwriters exercised the over-allotment option in respect of this offering to purchase an additional 531,000 common shares at $11.30 per share for additional gross proceeds of approximately $6 million.
- During the year ended December 31, 2007, Corridor drilled 10 gross wells (9 net wells) and commenced drilling 1 additional gross well (0.5 net well) late in Q4, 2007.
- During the latter half of 2007, Corridor conducted a multi-well frac stimulation program at the McCully Field at an estimated net cost to Corridor of $25 million, $23 million of which was incurred in the year ended December 31, 2007.
- During Q4 2007, natural gas production averaged 19.1 mmscfpd net to Corridor (including production from penalty wells) and 26.7 mmscfpd total production, with an average natural gas sales price of $8.86/mscf, resulting in net earnings of $4,682 thousand and basic net earnings per share of $0.057.
Filing of Annual Information Form
Corridor also announced today that it has filed on SEDAR its Annual Information Form for the year ended December 31, 2007, which includes Form 51-101F1: Statement of Reserves Data and Other Oil and Gas Information, Form 51-101F2: Report of Independent Qualified Reserves Evaluator and Form 51-101F3: Report of Management and Directors under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Copies of the filings can be obtained electronically through the SEDAR system at www.sedar.com and are available on Corridor's website at www.corridor.ca.
2007 Reserve Information
Corridor currently has reserves of natural gas at only one property, the McCully Field near Sussex, New Brunswick.
Corridor's natural gas reserves, as assessed by GLJ Petroleum Consultants Ltd. ("GLJ") in its report dated effective December 31, 2007 ("the GLJ Report") and prepared in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities presents the following summary of Corridor's gross natural gas reserves, before the deduction of royalties, using forecast prices and costs.
| Reserves Category | 2007 Gross Reserves (bscf) | 2006 Gross Reserves (bscf) |
|---|---|---|
| Total proved | 79.9 | 41.3 |
| Total probable | 50.9 | 101.8 |
| Total proved plus probable | 130.8 | 143.1 |
| Possible | 72.8 | 79.2 |
| Proved plus probable plus possible | 203.6 | 222.3 |
Based on the GLJ Report, Corridor's proved reserves had a significant positive adjustment from December 31, 2006, mainly resulting from the drilling of new wells into the southwest and northeast areas of the McCully Field and from re-classifying reserves previously defined as probable as proved. Similarly, the reduction in probable reserves reflects the transfer of reserves previously defined as probable to proved, as well as the results of the McCully P-76 and H-76 wells in the southwest area of the McCully Field, where over-pressured formation water was encountered in the "A" sand in these wells. Corridor's possible reserves also decreased because of these well results. GLJ's assessment of reserves is based on a 56 well development at McCully constrained primarily by the location of existing wells and the potential for encountering over-pressured formation water in future wells, while a 94 well structure-wide approach was taken to assess reserves for the year ended December 31, 2006. Corridor believes the reserves reported for the year ended December 31, 2007 will increase significantly as additional wells are drilled on the structure.
GLJ assessed the net present value of Corridor's reserves, based on forecast costs and prices, as follows:
Net Present Value ($ in million) - undiscounted
| Reserves Category | 2007 | 2006 | ||
|---|---|---|---|---|
| Before Income Tax | After Income Tax | Before Income Tax | After Income Tax | |
| Proved | 459 | 371 | 320 | 236 |
| Proved plus probable | 785 | 603 | 773 | 521 |
| Proved plus probable plus possible | 1,332 | 992 | 1,324 | 873 |
Net Present Value ($ in million) - discounted at 10%
| Reserves Category | 2007 | 2006 | ||
|---|---|---|---|---|
| Before Income Tax | After Income Tax | Before Income Tax | After Income Tax | |
| Proved | 297 | 244 | 173 | 133 |
| Proved plus probable | 425 | 333 | 282 | 190 |
| Proved plus probable plus possible | 590 | 450 | 420 | 275 |
The complete GLJ Report is available on Corridor's website at www.corridor.ca.
Corridor is a junior resource company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick, Prince Edward Island and Québec and offshore in the Gulf of St. Lawrence. Corridor currently has reserves of natural gas at only one property, the McCully Field near Sussex, New Brunswick. In June 2007, Corridor completed the construction of a field gathering system, a gas plant and a pipeline lateral connecting the McCully Field to markets through the Maritimes & Northeast Pipeline.
For further information:
Corridor Resources Inc.#301, 5475 Spring Garden Road,
Halifax, Nova Scotia
B3J 3T2
Contact: Norman W. Miller, President
Tel: (902) 429-4511
Fax: (902) 429-0209
Web: http://www.corridor.ca/
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan", "continuous", "estimate", "expect", "may", "will", "project", "should", or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements pertaining to the quantity of natural gas reserves, net present values of future net revenues from reserves. Statements relating to "reserves" are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described exist in the quantities predicted or estimated and can profitably be produced in the future.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. There can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to Corridor and its shareholders.
Forward-looking statements are based on Corridor's current beliefs as well as assumptions made by, and information currently available to, Corridor concerning anticipated financial performance, business prospects, strategies, regulatory developments, future natural gas commodity prices, future natural gas production levels, the ability to obtain equipment in a timely manner to carry out development activities, the ability to market natural gas successfully to current and new customers, the impact of increasing competition, the ability to obtain financing on acceptable terms, and the ability to add production and reserves through development and exploration activities. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks that forward-looking statements will not be achieved. These factors may be found under the heading "Risk Factors" in Corridor's Annual Information Form for the year ended December 31, 2007.
The forward-looking statements contained in this press release are made as of the date hereof and Corridor does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
