Corridor Announces Second Quarter Earnings
Halifax, Wednesday, August 13, 2008 (TSX - CDH): Corridor Resources Inc. ("Corridor") announced today its second quarter earnings for 2008.
The following table provides a summary of Corridor's financial and operating results for the three and six months ended June 30, 2008. Corridor's financial statements and management's discussion and analysis for the three and six months ended June 30, 2008 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 June 30 2008 |
2007 | Six months ended June 30 2008 |
2007 |
|---|---|---|---|---|
| Revenues | $19,187 | $1,548 | $39,366 | $2,828 |
| Net earnings (loss) | $3,816 | $(900) | $9,897 | $(1,725) |
| Net earnings (loss) per share - basic | $0.046 | $(0.011) | $0.119 | $(0.022) |
| Net earnings (loss) per share - diluted | $0.045 | $(0.011) | $0.119 | $(0.022) |
| Cash flow from operations (1) | $12,042 | $(246) | $26,591 | $(325) |
| Capital expenditures | $14,704 | $25,050 | $32,686 | $59,026 |
| Gross proceeds from capital stock issues | $55,534 | $66,022 | $55,546 | $66,502 |
| Total assets | $286,494 | $236,792 | $286,494 | $236,792 |
| (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 six months ended June 30, 2008. | ||||
Second Quarter Highlights
- During Q2 2008, natural gas production averaged 18.5 mmscfpd net to Corridor (including production from penalty wells) with an average natural gas sales price of $10.97/mscf, resulting in net earnings of $3,816 thousand and basic and diluted net earnings per share of $0.046 and $0.045 respectively.
- Natural gas revenues for the three months ended June 30, 2008 increased to $18,466 thousand from $1,527 thousand for Q2 2007 due to the start-up of natural gas production from the McCully Field to the Maritimes and Northeast Pipeline ("M&NP") on June 28, 2007.
- Net earnings for Q2 2008 increased to $3,816 thousand from a net loss of $900 thousand for Q2 2007.
- On June 20, 2008, Corridor closed a $55 million financing consisting of 3,800,000 common shares and 1,150,000 flow-through shares at a price of $10.60 per common share and $13.00 per flow-through share. The net proceeds from the offering will be used primarily to fund the acceleration of the appraisal and economic assessment of the prospective Frederick Brook shale development in the Elgin area of southern New Brunswick, to fund a program to accelerate production at the McCully Field and for working capital.
- During Q2 2008, Corridor completed drilling the J-47, C-48 and C-57 wells (2.5 net wells) and commenced drilling the I-47 and P-67 wells (1.5 net wells). Corridor intends to conduct well fracturing, completion and testing activities for these wells during Q3 2008 and expects tie-in to the McCully gas gathering system to be completed for all wells by Q4 2008.
- During Q2 2008, Corridor entered into a long term agreement to sell all of its natural gas produced from the McCully Field and surrounding areas in southern New Brunswick. The agreement becomes effective on April 1, 2009 and provides Corridor with year round access to natural gas markets in Maritimes Canada and the US Northeast and allows it to receive corresponding market prices including those in periods of peak demand.
Q2 2008 Netback Analysis
| thousands of dollars except $/mscf |
Three months ended June 30 2008 |
2007 | Six months ended June 30 2008 |
2007 |
|---|---|---|---|---|
| Natural gas revenues | $18,466 | $1,527 | $37,781 | $2,807 |
| Royalty expense | (1,179) | (129) | (2,465) | (230) |
| Production expense | (1,190) | (60) | (2,378) | (115) |
| Transportation expense | (3,156) | (268) | (5,811) | (268) |
| Netback | $12,941 | $1,070 | $27,127 | $2,194 |
| Natural gas production (mmscf) | 1,683 | 110 | 3,475 | 193 |
| Natural gas revenues ($/mscf) | $10.97 | $13.88 | $10.87 | $14.53 |
| Royalty expense ($/mscf) | 0.70 | 1.17 | 0.71 | 1.19 |
| Production expense ($/mscf) | 0.71 | 0.55 | 0.68 | 0.60 |
| Transportation expense ($/mscf) | 1.88 | 2.43 | 1.67 | 1.39 |
| Netback ($/mscf) | $7.68 | $9.73 | $7.81 | $11.35 |
Netback increased to $12,941 thousand for Q2 2008 from $1,070 thousand for Q2 2007 due to the additional production and sale of natural gas resulting from the completion of the midstream facilities connecting the McCully Field to markets throughout the M&NP on June 28, 2007.
Corridor's average daily gas production of 18.5 mmscfpd in Q2 2008 was lower than the budgeted amount of 19.3 mmscfpd, due in part to an almost two day shut down by the M&NP during this period, however this reduction in production was offset by higher than estimated gas prices. Natural gas revenues for the quarter were somewhat limited by forward sales of 10,000 mmbtupd at an average sales price of $US8.82/mmbtu in effect between April 1, 2008 and October 31, 2008.
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 and CEO
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 planned use of proceeds from the June 20, 2008 $55 million financing, drilling plans for the remainder of 2008, and the long term agreement to sell natural gas from the McCully Field and surrounding areas in southern New Brunswick. 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 concerning the planned use of proceeds from the June 20, 2008 $55 million financing are based on current plans for exploration and development activities; forward-looking statements concerning the drilling plans for the remainder of 2008 are based on the Corridor's capital budget for 2008; and forward-looking statements concerning sales of natural gas are based on the terms of the long term agreement to sell natural gas from the McCully Field and surrounding areas in southern New Brunswick. Forward-looking statements are based on Corridor's current beliefs as well as assumptions made by, and information currently available to, Corridor and are set out in Corridor's Management's Discussion and Analysis for the six months ended June 30, 2008. 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 and also Corridor's Management's Discussion and Analysis for the six months ended June 30, 2008.
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.
