Halifax, Nova Scotia, May 1, 2015, (TSX – CDH): Corridor Resources Inc. (“Corridor” or the “Corporation”) announced today an update to its 2015 operations.
Corridor has decided to shut-in certain of its producing natural gas wells for the period from May 1, 2015 to October 31, 2015. The estimated average production from these wells is approximately 5 mmscf/d for such period. Corridor will continue to produce the wells it jointly owns with Potash Corporation of Saskatchewan Inc. in order to meet PotashCorp’s short-term natural gas demands for its Picadilly and Penobsquis mines.
In reaching this decision, Corridor considered the significant differential in the sale price of natural gas expected for the summer of 2015 relative to the winter of 2015/16. Currently, the average futures strip pricing for Algonquin city-gates during the 2015 summer period (i.e. May to October) is approximately $US2.70/mmbtu. Conversely, the average futures strip pricing for Algonquin city-gates during the 2015/16 winter period (i.e. November 2015 to March 2016) is approximately $US10.20/mmbtu. In addition, as previously announced, Corridor entered into a forward sale agreement for the 2015/16 winter period for 2,500 mmbtu per day of natural gas production (approximately 2.3 mmscf per day) at an average price of $US9.25/mmbtu.
The Corporation expects the shut-in wells to produce at flush rates when they are brought back on production and to ultimately recover approximately 25%-30% of the cumulative shut-in volumes during the 2015/16 winter period, due to a build-up in the formation pressure in the wells during the shut-in period. Accordingly, Corridor is planning to optimize the recovery of the flush volumes to match the peak pricing period for the Algonquin city-gates market, typically in January and February.
As a result of the shut-in, Corridor’s forecasted average net daily gas production for 2015 will decrease from 6.7 mmscf/d to approximately 4.1 mmscf/d. However, the average natural gas sales price for 2015 is expected to increase from $7.70/mscf to $11.05/mscf. The Corporation does not anticipate any significant changes to its forecasted 2015 cash flow from operations of $8.7 million, as lower natural gas volumes are expected to be mostly offset by lower expenses and higher realized pricing. Accordingly, the Corporation still expects to exit 2015 with approximately $27 million of working capital and no outstanding debt.
Steve Moran, Corridor’s President and CEO comments “Corridor sells its gas into a unique market that provides for significant premiums during the winter pricing period. By optimizing our production profile to take advantage of the seasonal pricing differential, we can increase our netback on a per unit basis, reduce our decline rate and increase our reserve life index.”
Corridor has three high impact exploration prospects: the Frederick Brook shale gas prospect in New Brunswick and the Old Harry conventional hydrocarbon prospect in the Gulf of St. Lawrence with a total of approximately 420 thousand net acres of undeveloped land; and the Macasty Formation unconventional hydrocarbon prospect through a 21.67% interest in the Anticosti Joint Venture, which has approximately 1.5 million acres of undeveloped land.
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 2 offshore in the Gulf of St. Lawrence. Corridor currently has natural gas production and reserves in the McCully Field near Sussex, New Brunswick. In addition, Corridor has discovered unrecoverable resources in Elgin, New Brunswick and a 21.67% interest in Anticosti Hydrocarbons, a joint venture which has undiscovered resources on Anticosti Island, Québec..
For further information:
Steve Moran, President
Corridor Resources Inc.
#301, 5475 Spring Garden Road, Halifax, Nova Scotia B3J 3T2
Ph: (902) 429-4511 F: (902) 429-0209
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: timing and duration of the planned shut-in, the estimated average natural gas production of the shut-in wells from May 1 to October 31, 2015, the expected flush rates of the shut-in volumes, the plan to optimize the recovery of the shut-in wells, the estimated cash flow from operations, natural gas sales prices, gas production, cash flow from operations and working capital at the end of 2015.
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, including the terms of its forward sales agreement, 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, 2014.
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.