Corridor Announces Third Quarter Finical Results
Tuesday, November 11, 2008: Corridor Resources Inc. (CDH - TSX) announced today its third quarter earnings for 2008.
The following table provides a summary of Corridor's financial and operating results for the three and nine months ended September 30, 2008. Corridor's financial statements and management's discussion and analysis for the three and nine months ended September 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 September 30 2008 |
2007 | Nine months ended September 30 2008 |
2007 |
|---|---|---|---|---|
| Revenues | $16,253 | $13,603 | $55,619 | $16,431 |
| Net earnings (loss) | $3,874 | $1,092 | $13,771 | $(633) |
| Net earnings (loss) per share - basic | $0.044 | $0.013 | $0.163 | $(0.008) |
| Net earnings (loss) per share - diluted | $0.044 | $0.013 | $0.162 | $(0.008) |
| Cash flow from operations(1) | $11,620 | $9,014 | $38,211 | $8,689 |
| Capital expenditures | $26,638 | $26,394 | $59,324 | $85,420 |
| Gross proceeds from capital stock issues | $- | $- | $55,546 | $66,502 |
| Total assets | $306,811 | $261,287 | $306,811 | $261,287 |
| (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 expenditures. See "Non-GAAP Financial Measures" in Corridor's Management's Discussion and Analysis for the nine months ended September 30, 2008. | ||||
Third Quarter Highlights
- During Q3 2008, natural gas production averaged 16.8 mmscfpd net to Corridor (including production from penalty wells) with an average natural gas sales price of $9.94/mscf, resulting in net earnings of $3,874 thousand and basic and diluted net earnings per share of $0.044.
- Natural gas revenues for the three months ended September 30, 2008 increased to $15,391 thousand from $12,884 thousand for Q3 2007 due to the increase in the average natural gas sales price.
- Net earnings for Q3 2008 increased to $3,874 thousand from $1,092 thousand for Q3 2007, reflecting an increase in the netback and a decrease in the depletion expense.
- During Q3 2008, Corridor completed drilling the McCully I-47, P-67 and N-66 wells (2 net wells) and commenced drilling the South Branch G-36 exploration well (1 net well). Corridor also commenced its 2008 fracture stimulation, completion and testing program for McCully wells during Q3 2008. Once all of the fracturing, testing and tie-in operations have been completed in Q4 2008, Corridor expects seven new wells to initially contribute in the order of 18 to 24 mmscfpd of gross new gas production which will add to the current gross production of 22 mmscfpd, with Corridor's share of total gross production estimated at approximately 70%. This expected additional production is partially dependant on the successful clean-up and performance of the N-66 and I-47 horizontal wells which will be completed and tested in Q4 2008.
Q3 2008 Netback Analysis
| thousands of dollars except $/mscf |
Three months ended September 30 2008 |
2007 | Nine months ended September 30 2008 |
2007 |
|---|---|---|---|---|
| Natural gas revenues | $15,391 | $12,884 | $53,172 | $15,691 |
| Royalty expense | (937) | (793) | (3,402) | (1,023) |
| Production expense | (696) | (539) | (3,074) | (654) |
| Transportation expense | (2,624) | (2,076) | (8,435) | (2,344) |
| Netback | $11,134 | $9,476 | $38,261 | $11,670 |
| Natural gas production (mmscf) | 1,548 | 1,764 | 5,023 | 1,957 |
| Natural gas production per day (mmscfpd) | 16.8 | 19.2 | 18.3 | 7.2 |
| Natural gas revenues ($/mscf) | $9.94 | $7.30 | $10.59 | $8.02 |
| Royalty expense ($/mscf) | 0.61 | 0.45 | 0.68 | 0.52 |
| Production expense ($/mscf) | 0.45 | 0.31 | 0.61 | 0.33 |
| Transportation expense ($/mscf) | 1.70 | 1.18 | 1.68 | 1.20 |
| Netback ($/mscf) | $7.18 | $5.36 | $7.62 | $5.97 |
Netback increased to $11,134 thousand for Q3 2008 from $9,476 thousand for Q3 2007 due primarily to the increase in the average natural gas sales price. This increase was partially offset by a reduction in the average daily production in Q3 2008 to 16.8 mmscfpd from 19.2 mmscfpd in Q3 2007 consistent with predicted natural declines from the initial producing wells. For the nine months ended September 30, 2008, the increase in netback to $38,261 thousand from $11,670 thousand for the nine months ended September 30, 2007 is also 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 Maritimes and Northeast Pipeline on June 28, 2007.
Drilling operations
The Nabors #86 drilling rig has been relocated to the Elgin area in southern New Brunswick to commence drilling the Green Road O-50 well. This well is the first vertical shale gas appraisal well to evaluate the economic assessment of the prospective Frederick Brook shale development in the Elgin area.
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 drilling plans for the remainder of 2008 and the 2008 estimated natural gas production. 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 drilling plans for the remainder of 2008 are based on the Corridor's revised capital budget for 2008 and the estimated natural gas production for 2008 is based on current production levels and production test results from five recently completed wells, along with production estimates for two wells to be completed and tested in the fourth quarter. 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 nine months ended September 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 nine months ended September 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.
