November 12, 2014

Corridor Announces Third Quarter Results


HALIFAX, NOVA SCOTIA–(Marketwired – Nov. 12, 2014) – (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, 2014, with comparisons to the three and nine months ended September 30, 2013. Corridor’s unaudited financial statements and management’s discussion and analysis for the third quarter have been filed on SEDAR at and are available on Corridor’s website at

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






$ 2,433

$ 3,405

$ 17,778

$ 15,532

Net income (loss)

$ (199)

$ (1,036)

$ 10,061

$ 1,863

Net income (loss) per share – basic

$ (0.002)

$ (0.012)

$ 0.114

$ 0.021

Net income (loss) per share – diluted

$ (0.002)

$ (0.012)

$ 0.112

$ 0.021

Cash flow from operations1

$ 379

$ 907

$ 9,509

$ 7,972

Capital expenditures

$ 18,090

$ 180

$ 20,713

$ 1,282

Total assets

$ 204,192

$ 158,419

$ 204,192

$ 158,419

(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, 2014.


  • Natural gas sales for Q3 2014 decreased to $2,066 thousand from $3,041 thousand for Q3 2013 due to the decrease in the average daily natural gas production to 6.6 mmscfpd in Q3 2014 from 7.8 mmscfpd in Q3 2013 and the decrease in the average natural gas sales price to $3.38/mscf in Q3 2014 from $4.23/mscf in Q3 2013. The well re-entry and fracturing program operations at the McCully Field required the temporary shut-in of several wells during Q3 2014 and this resulted in less than expected natural gas production in Q3 2014. The average natural gas sales price increased to $8.69/mscf for the nine months ended September 30, 2014 from $6.49/mscf for the nine months ended September 30, 2013 as a result of higher natural gas sales prices during this period at the Algonquin city-gate, Corridor’s pricing point.
  • Corridor’s cash flow from operations for Q3 2014 decreased to $379 thousand from $907 thousand in Q3 2013 due primarily to lower natural gas sales. However, Corridor’s cash flow from operations for the nine months ended September 30, 2014 increased to $9,509 thousand from $7,972 thousand for the nine months ended September 30, 2013 as a result of higher natural gas sales prices at the Algonquin city-gate during this period.
  • At September 30, 2014, Corridor had cash and cash equivalents of $30,730 thousand, working capital of $19,669 thousand and no outstanding debt.
  • On October 28, 2014, Corridor announced the initial results of its 2014 well re-entry and fracturing program at the McCully Field and Elgin Field in southern New Brunswick. The program successfully accomplished its two main objectives of increasing natural gas production and revenues from the McCully Field and evaluating the potential of the Frederick Brook shale in the McCully and Elgin areas.
  • On November 3, 2014, Corridor provided an update on its joint venture exploration program on Anticosti Island. The first phase of the program, consisting of drilling 15-18 stratigraphic corehole wells, began in Q2 2014. To date, four stratigraphic corehole wells have been drilled into the Macasty formation and display positive indications of the presence of hydrocarbons. The stratigraphic corehole program experienced start-up delays due to the adoption of a new regulatory framework and the program will be temporarily suspended during the winter season and resume in the spring of 2015. It is expected that the remainder of the stratigraphic corehole program will be completed during the summer of 2015 and that the three exploration wells contemplated in the first phase of the Anticosti exploration program will be drilled and fracture stimulated as soon as possible thereafter.

Q3 2014 Netback Analysis

Three months ended September 30

Nine months ended September 30

thousands of dollars except $/mscf





Natural gas sales

$ 2,066

$ 3,041

$ 16,894

$ 14,505

Royalty expense




Transportation expense





Production expense






$ 515

$ 1,178

$ 10,596

$ 8,858

Natural gas production (mmscf)





Natural gas production per day (mmscfpd)





Natural gas sales ($/mscf)

$ 3.38

$ 4.23

$ 8.69

$ 6.49

Royalty expense ($/mscf)




Transportation expense ($/mscf)





Production expense ($/mscf)





Netback ($/mscf)

$ 0.84

$ 1.63

$ 5.45

$ 3.96

Corridor’s netback for Q3 2014 decreased to $0.84/mscf from $1.63/mscf in Q3 2013 primarily due to the decrease in the average natural gas sales price to $3.38/mscf in Q3 2014 from $4.23/mscf in Q3 2013. The Company’s netback was also adjusted by the following changes in royalty, transportation and production expenses.

Effective April 1, 2014, the Government of New Brunswick implemented a new two-tier royalty regime for natural gas production. The new regime changes the basic royalty rate payable from the previous 10% to a royalty rate equal to the greater of a 4% basic royalty calculated on the wellhead revenues and a 2% minimum royalty calculated on gross revenues. As a result of this new royalty regime and the requirement to pay a minimum royalty rate of 2%, Corridor’s royalty expense for Q3 2014 increased to $47 thousand from nil in Q3 2013.

Transportation expense for Q3 2014 decreased to $837 thousand from $961 thousand for Q3 2013 due to lower natural gas production in 2014 and the decrease in the cost of Canadian firm transportation effective April 1, 2014.

Net production expense for Q3 2014 decreased to $667 thousand from $902 thousand in Q3 2013 due primarily to lower repairs and maintenance and workover expenses. Corridor’s annual plant shut-down was conducted in the second quarter of 2014 as opposed to the third quarter of 2013.


Corridor has decreased its estimated average net daily gas production for 2014 from 8.0 mmscfpd to 7.3 mmscfpd, as the additional production forecasted from the 2014 well re-entry and fracturing campaign is lower than originally budgeted due to fewer fracture stimulations being completed and the start of the additional production being delayed by approximately one month. However, this will be partially offset by the increase in the estimated average natural gas price in Q4 2014 to $10.40/mscf from $8.70/mscf due to higher estimated premiums at the Algonquin city-gate in December. Accordingly, Corridor has increased its forecast average natural gas sales price for 2014 from $9.00/mscf to $9.20/mscf (based on an estimate of US$4.35/mmbtu at Henry Hub, an average estimated premium at the Algonquin city-gate of US$3.55/mmbtu and an estimate of the exchange rate of $0.91 U.S. per Canadian dollar). The 2014 estimated average natural gas price includes the forward sale of 4,000 mmbtupd at an average price of $US11.74/mmbtu from November 1, 2014 to December 31, 2014.

As a result, Corridor has maintained its budgeted 2014 cash flow from operations of $14 million as the lower natural gas sales recognized in Q3 2014 and the expected decrease in the forecasted 2014 natural gas production are expected to be offset by lower estimated production expenses and a higher estimated average natural gas sales price in Q4 2014.

Corridor has decreased its 2014 capital budget from $27.2 million to $25.7 million to reflect the decrease in the estimated cost of the well re-entry and fracturing program. Based on available working capital of $17.3 million at December 31, 2013 and Corridor’s revised capital budget of $25.7 million for 2014, Corridor has increased its net positive working capital forecast from $17.6 million to $19.1 million, with no outstanding debt, at December 31, 2014.

“We are pleased with the third quarter’s activities, including the results of our 2014 well re-entry and fracturing program. The results of the program have demonstrated that the Frederick Brook shale is productive from at least six different sub-intervals across a distance of 25 kilometers. We will now have new production data points when the wells are placed on production in December. The new production information from the Frederick Brook shale will be instrumental in establishing a type curve for single-stage fracture stimulations” said Steve Moran, President and Chief Executive Officer. “We are also encouraged by the information received to date on the stratigraphic corehole program on Anticosti Island as the core obtained from these wells has had positive indications of the presence of hydrocarbons.” said Mr. Moran.

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 production and reserves in the McCully Field near Sussex, New Brunswick and crude oil reserves in the Caledonia Field near Sussex, New Brunswick. In addition, Corridor has contingent resources and discovered unrecoverable resources in Elgin, New Brunswick and has a 21.67% interest in a joint venture which has undiscovered resources on Anticosti Island, Québec.

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; estimated natural gas production; natural gas prices and premiums in the New England market (Algonquin city-gate) and the duration of such premiums; cash flow from operations; capital expenditures for 2014 and, working capital and debt level as at the end of 2014; the characteristics of the Frederick Brook shale; and plans of the Anticosti joint venture.

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 agreements governing the Anticosti joint venture and Corridor’s current beliefs as well as assumptions made by, and information currently available to, Corridor including information 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 and the terms of agreements with third parties, such as Corridor’s forward sales and transportation agreements and the Anticosti Joint Venture. 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, 2013.

Certain of the forward-looking statements in this release may constitute “financial outlooks” as contemplated by National Instrument 51-102 Disclosure Obligations, including information related to projected cash flow from operations, revenues, expenses, capital expenditures, working capital and debt levels for 2014, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2014 financial year. Please be advised that the financial outlook in this MD&A may not be appropriate for purposes other than the one stated above.

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.