November 13, 2012

Corridor Announces Third Quarter Results

HALIFAX, NOVA SCOTIA–(Marketwire – Nov. 13, 2012) – (TSX:CDH) Corridor Resources Inc. (“Corridor”) announced today its third quarter financial results.

The following table provides a summary of Corridor’s financial and operating results for the three and nine months ended September 30, 2012, with comparisons to the three and nine months ended September 30, 2011. Corridor’s financial statements and management’s discussion and analysis for the third quarter 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

Three months ended September 30

Nine months ended September 30

thousands of dollars except per share amounts

2012

2011

2012

2011

Total sales

$ 2,969

$ 5,127

$ 9,833

$ 18,698

Net loss

$ (1,777

)

$ (2,348

)

$ (5,866

)

$ (8,169

)

Net loss per share – basic and diluted

$ (0.020

)

$ (0.027

)

$ (0.066

)

$ (0.092

)

Cash flow from operations(1)

$ 630

$ 1,665

$ 2,024

$ 7,179

Capital expenditures

$ 928

$ 3,050

$ 2,568

$ 4,628

Total assets

$ 198,100

$ 295,392

$ 198,100

$ 295,392

(1)Cash flow from operations is a non-IFRS measure. Cash flow from operations represents net earnings adjusted for non-cash items including depletion, depreciation and amortization, deferred income taxes, share-based compensation and other non-cash expenses. See “Non-IFRS Financial Measures” in Corridor’s MD&A for the nine months ended September 30, 2012.

Highlights

  • Corridor had cash and cash equivalents as at September 30, 2012 of $7,730 thousand, working capital of $9,061 thousand and no outstanding debt. During the quarter, Corridor had cash flow from operations of $630 thousand. The decrease in the cash flow from operations from $1,665 thousand in Q3 2011 is due to lower natural gas revenues partially offset by lower transportation expenses. However, Corridor was successful at reducing the impact of lower natural gas revenues on cash flow from operations by decreasing production expenses and general and administrative expenses.
  • Natural gas revenues for Q3 2012 decreased to $2,616 thousand from $4,722 thousand for Q3 2011 due to the decrease in the average natural gas sales price to $3.51/mscf in Q3 2012 from $4.63/mscf in Q3 2011 and the decrease in the average daily natural gas production to 8.1 mmscfpd in Q3 2012 from 11.1 mmscfpd in Q3 2011. During the quarter, natural gas production decreased as Corridor completed the annual shut-down at the McCully Field and continued the shut-in of four McCully wells with a gross average lost daily production of approximately 1 mmscfpd. Corridor resumed production of the shut-in wells early in November 2012 when natural gas prices peaked due to cold weather.
  • Dr. Louis LaPierre, a professor at the University of Moncton in New Brunswick, was asked by the Office of the Premier and the Minister of Natural Resources in New Brunswick to solicit feedback on the Government’s proposed regulations for the shale gas industry. After public consultation on the subject, Dr. Lapierre recommended, in his report titled “The Path Forward” dated October 2012, that the industry should move ahead with shale gas exploration in New Brunswick.

Q3 2012 Netback Analysis

Three months ended September 30

Nine months ended September 30

thousands of dollars except $/mscf

2012

2011

2012

2011

Natural gas sales

$ 2,616

$ 4,722

$ 8,741

$ 17,583

Royalty expense

223

8

679

Transportation expense

923

1,268

3,037

4,318

Production expense

766

999

2,267

3,217

Netback

$ 927

$ 2,232

$ 3,429

$ 9,369

Natural gas production (mmscf)

745

1,020

2,475

3,228

Natural gas production per day (mmscfpd)

8.1

11.1

9.0

11.8

Natural gas sales ($/mscf)

$ 3.51

$ 4.63

$ 3.53

$ 5.45

Royalty expense ($/mscf)

0.22

0.21

Transportation expense ($/mscf)

1.24

1.24

1.23

1.34

Production expense ($/mscf)

1.03

0.98

0.92

1.00

Netback ($/mscf)

$ 1.24

$ 2.19

$ 1.38

$ 2.90

Natural gas revenues decreased to $2,616 thousand in Q3 2012 from $4,722 thousand in Q3 2011 due to the decrease in the average natural gas sales price to $3.51/mscf in Q3 2012 from $4.63/mscf in Q3 2011 and the decrease in the average daily natural gas production to 8.1 mmscfpd in Q3 2012 from 11.1 mmscfpd in Q3 2011. During the quarter, natural gas production decreased as Corridor completed the annual shut-down at the McCully Field and continued the shut-in of four McCully wells, which were initially shut-in in May 2012. The production lost during the seven day shut-down was partially replaced with flush production at start-up.

The decrease in the royalty expense per mscf for Q3 2012 to nil from $0.22/mscf for Q3 2011 is due to the significant decrease in the natural gas revenues resulting from low natural gas prices and production in Q3 2012, while the deductions allowable in the royalty calculation did not decrease significantly.

Transportation expense decreased to $923 thousand for Q3 2012 from $1,268 thousand for Q3 2011 due to the decrease in natural gas production and a decrease of $0.06/mmbtu in the cost of the firm transportation toll on the Canadian side of the Maritimes and Northeast Pipeline effective January 1, 2012.

Net production expense for Q3 2012 decreased to $766 thousand from $999 thousand in Q3 2011 due to the decrease in work-over activities in 2012 and the decrease in utilities expense due to lower usage as a result of the shut-down in Q3 2012.

2012 Outlook

Corridor has increased its forecasted 2012 cash flow from operations from $2.5 million to $3.0 million to reflect the decrease in forecasted 2012 production expenses and G&A expenses.

Corridor has increased its 2012 capital budget by $2.0 million to approximately $4.0 million to include an exploration program on Anticosti Island, Québec and the re-testing of the Green Road B-41 shale gas well near Elgin, New Brunswick.

Based on available working capital of $9.5 million at December 31, 2011 and Corridor’s revised capital budget of approximately $4.0 million, Corridor is forecasting a net positive working capital of approximately $8.5 million at December 31, 2012 with no outstanding debt.

Corridor is an Eastern Canadian junior resource company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick 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 of shale gas 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: business plans and strategies; plans to conduct an exploration program on Anticosti Island and to re-test the Green Road B-41 well; natural gas sales, production, natural gas prices, expenses and cash flow from operations in 2012; debt and net positive working capital as at December 31, 2012 and the 2012 capital budget.

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, 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.

Certain of the forward-looking statements in this press release may constitute “financial outlooks” as contemplated by National Instrument 51-102 Disclosure Obligations, including information related to projected revenues, expenses, capital expenditures and production for 2012 and working capital and net debt as at December 31, 2012, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2012 financial year. Please be advised that the financial outlook in this press release may not be appropriate for purposes other than the one stated above.