HALIFAX, NOVA SCOTIA–(Marketwire – Sept. 4, 2012) – Corridor Resources Inc. (TSX:CDH) announced today that it is conducting an exploration program on Anticosti Island, with its partner, Petrolia Inc., designed to advance exploration and development potential of the vast shale oil prospect on Anticosti Island.
The exploration program consists of three components. The first component is the planned drilling of three stratigraphic coreholes through the highly prospective Macasty Formation at strategic locations across the Island. Complete cores of the Macasty shale will be preserved and sent to a laboratory specializing in assessing shales. A battery of tests and analyses will be conducted that will help in confirming the quality of the shale as a potential hydrocarbon producer. The results of these analyses will provide information on rock parameters such as porosity, permeability, total organic carbon content, hydrocarbon saturations within the rock, and total thickness over a broader area. A key objective of the coreholes is to test one of the thicker Macasty intervals on Anticosti Island (estimated to be 80 m) where we anticipate optimal maturities and superior rock parameters.
The second component is an extensive well core and cuttings sampling and analyses project that includes 15 wells that have been previously drilled on Anticosti Island. This data will be a supplement to the core and cuttings analyses that have already been obtained on Anticosti Island. In addition, we will sample three wells in the laterally equivalent Utica Formation of Ohio where a number of very interesting Initial Production (IP) rates have been recently announced. A Utica well from the St. Lawrence Lowlands will also be sampled. All samples will be analyzed for Total Organic Content (TOC) and for hydrocarbon maturity. This new data, in combination with the existing data, will refine our understanding of the maturation and TOC (quality) trends on Anticosti Island and help focus our exploration strategy.
The third component is to undertake a baseline study of the Anticosti groundwater system that consists of drilling and monitoring approximately 14 water wells and conducting a number of surface water studies. This activity will give us a better understanding of the Anticosti aquifer system before further Macasty exploration and development activities are undertaken.
The coring, water wells, and data collection are expected to be completed by the end of 2012, with the final analytical results due in 2013.
The objective of these programs is to further define the resource estimates across Anticosti Island and to help select optimal locations where the next stage of drilling and testing programs can be initiated, leading towards potential development of this exciting, emerging Eastern North American oil play.
Corridor controls nearly 900,000 acres (gross acres approximately 1.5 million) of prospective Macasty lands on Anticosti Island. Corridor previously disclosed in its annual information form, the results of an independent resource assessment, dated July 12, 2011 and effective June 1, 2011 by qualified reserves evaluator Sproule Associates Limited of Calgary (“Sproule”) in accordance with National Instrument 51-101. Based on data available at the time, Sproule’s best estimate of the Total Petroleum Initially-In-Place of the Macasty Shale on Anticosti Island is 33.9 (19.8 net to Corridor) billion barrels of oil equivalent (“Bboe”) for Corridor’s land holdings, all of which was as undiscovered resources. The Sproule resources report addressed only the petroleum initially-in-place, since insufficient information was available at such time to estimate the technical or economically recoverable amount of shale gas within the study area.
Corridor continues to evaluate options regarding further exploration and development potential of this resource, including the possibility of farming out portions of the Corridor interest. The Anticosti exploration program is at an early stage; further work is required to determine the potential for commercially viable resource recovery, prior to considering development.
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 natural gas reserves and production in the McCully Field near Sussex, New Brunswick and discovered crude oil reserves in the Caledonia Field near Sussex, New Brunswick in 2008. In addition, Corridor has contingent resources and discovered resources in Elgin, New Brunswick.
Forward Looking Statements
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 resource estimates, exploration and development plans on Anticosti Island, including drilling of three stratigraphic coreholes, the cutting and core sampling and analysis project and a baseline study of the Anticosti groundwater system; the objectives of the Anticosti exploration plan; the characteristics of the Macasty Formation on Anticosti Island, and plans to develop Corridor’s interests on Anticosti Island, including the possibility of farming out some interests . Statements relating to “resources” are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources described exist in the quantities predicted or estimated.
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 its arrangements with Petrolia, 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, 2011.
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.
Oil and Gas Information
All calculations converting natural gas to crude oil equivalent have been made using a ratio of six mscf of natural gas to one barrel of oil equivalent (“boe”). Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mscf of natural gas to one barrel of crude oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
“Total petroleum initially-in-place” or (“PIIP”) refers to that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered. Total petroleum initially-in-place is equivalent to total resources.
“Undiscovered petroleum initially-in-place” or “undiscovered resources” refers to those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially-in-place is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of undiscovered petroleum initially-in-place at this time.
Sproule provided a “best estimate” of undiscovered resources, which is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate. The probability that the quantity actually in place is equal to or greater than the estimate is 50%.
In respect of the Macasty Shale on Anticosti Island, Sproule classified the total petroleum initially-in-place as undiscovered resources in the Sproule Report, based on the following: (i) a core of the Macasty shale from the Chaloupe well contained residual oil; (ii) the Macasty shale has not been flow tested from any well on Anticosti Island; (iii) the resources are inferred to exist based on the interpretation and mapping of limited pyrolysis, core, well log and seismic data; (iv) this is an unconventional shale oil resource that will require a stimulated completion for evaluation and, until an appropriately researched project has been undertaken to identify and evaluate potentially recoverable volumes, it is premature to speculate whether the Macasty contains recoverable or unrecoverable resources. Corridor believes the significant positive factors relevant to the estimates are: (i) the Macasty core from the Chaloupe well drilled in 2010 contained oil and gas. This well is located on the high side of the Jupiter fault, where most of the Corridor acreage is located, and where the shale is interpreted to be oil prone; (ii) the Macasty shale is equivalent to the Utica shale of the St. Lawrence Lowlands of Québec, which has been reported to have produced oil and gas on test; (iii) Core analysis indicates that the Macasty has similar petrophysical and geochemical characteristics to Utica fields found in the North-East US; and (iv) the Macasty shale is a prolific source rock which is within the oil generation window over approximately three quarters of the island (most of it located in the Corridor land holdings).