Corridor Announces Acceleration Of Frederick Brook Shale Gas Appraisal Program And Bought Deal Financing
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Frederick Brook Shale Gas Appraisal Program
Halifax, Nova Scotia, June 2, 2008, (TSX - CDH): Corridor Resources Inc. ("Corridor" or the "Corporation") (TSX:CDH) announced today its plans to accelerate the appraisal and economic assessment of the prospective Frederick Brook shale development in the Elgin area of southern New Brunswick. Corridor's Elgin licences (excluding Corridor licences in the general McCully area) cover an area of approximately 118,000 acres where the Frederick Brook shale is known to be very thick and covers an extensive area.
To commence the program, three widely spaced shale gas appraisal wells are planned to be vertically drilled at locations currently defined by 2-D seismic. Each well will be designed to penetrate and core the full Frederick Brook shale gas section, including a full suite of wireline logs. The logs and core data will be evaluated for lithology, porosity, permeability, organic content and thermal maturity in order to determine the most favourable intervals for shale gas production in this massively thick shale. Following evaluation of the cores, a well will be drilled horizontally into the most prospective part of the Frederick Brook shale for a distance of up to 1,000 meters.
The appraisal program includes multiple fracs in the vertical wells and the horizontal well and also includes a 65 square kilometre 3-D seismic program over the most prospective area. The program is anticipated to cost approximately $32 million, one half of which would be expended in 2008.
McCully Production Acceleration
Corridor also announced that it plans to drill horizontal development and production wells in the thick upper Hiram Brook sands encountered in the northeast extension of the McCully Field. Corridor also plans to drill horizontal wells in the "A" sand of the Hiram Brook formation within the most productive part of the McCully Field, with the intention of significantly increasing the rate of production from the central part of the field. This program, which would include multiple fracs per well, is estimated to cost $14.4 million net to Corridor.
Bought Deal Financing
Corridor is also pleased to announce that it has entered into an agreement, with a syndicate of underwriters including RBC Capital Markets, as sole bookrunner, and Jennings Capital Inc., as co-lead manager, pursuant to which such underwriters have agreed to purchase, on a bought-deal basis, 3,800,000 common shares of the Corporation at a price of $10.60 per share and 1,150,000 flow-through common shares of the Corporation at a price of $13.00 per share. Gross proceeds of the offering will be approximately $55 million.
The underwriters will have an option, exercisable for a period of 30 days from the date of closing, to purchase up to 570,000 additional common shares at a price equal to the offering price to cover over-allotments and for market stabilization purposes.
The share issue will be an underwritten public offering in all provinces in Canada, by way of a short form prospectus, and in the U.S. on a private placement basis pursuant to exemptions from the registration requirements pursuant to Rule 144A and Regulation D of the United States Securities Act of 1933, as amended.
The financing is scheduled to close on or about June 20, 2008 and is subject to regulatory approval and completion of definitive documentation. Net proceeds from the offering will be used primarily to fund the shale gas appraisal program and McCully drilling program described in this press release and for general corporate purposes.
The outstanding securities of Corridor have not been registered in the United States and the common shares and the flow through common shares to be issued under this offering have not been and will not be registered under the United States securities legislation and may not be offered or sold in the United States except in transactions exempt from such registration. This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction where such offer, solicitation or sale would be unlawful.
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 Quebec 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 Corporation's business plans and strategies, the shale gas appraisal program, the McCully drilling program, recoverable natural gas resources, the terms of the financing, the planned use of proceeds from the financing and receipt of all regulatory approvals.
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 the Corporation and its shareholders. Forward-looking statements are based on the Corporation's current beliefs as well as assumptions made by, and information currently available to, the Corporation concerning business prospects, strategies, future natural gas commodity prices, future natural gas production levels, 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 include, but are not limited to 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, co-existence with mining operations, 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, issuance of debt, title to properties, variations in exchange rates and hedging. Further information regarding these factors may be found under the heading "Risk Factors" in the Corporation's annual information form for the year ended December 31, 2007, and in the Corporation's most recent financial statements, management's discussion and analysis, management information circular, material change reports and news releases. Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive.
The forward-looking statements contained in this press release are made as of the date hereof and the Corporation 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.
