November 11, 2015

Corridor Announces Third Quarter Results


HALIFAX, Nova Scotia, November 11, 2015 (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, 2015, with comparisons to the three and nine months ended September 30, 2014. 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 2015 2014 2015 2014
Sales $ 776 $ 2,433 $ 12,246 $ 17,778
Net income (loss) $ (1,150) $ (199) $ 2,073 $ 10,061
Net income (loss) per share – basic $ (0.013) $ (0.002) $ 0.023 $ 0.114
Net income (loss) per share – diluted $ (0.013) $ (0.002) $ 0.023 $ 0.112
Cash flow from operations (1) $ (947) $ 379 $ 5,742 $ 9,509
Working capital $ 25,741 $ 19,669 $ 25,741 $ 19,669
Capital expenditures $ 62 $ 18,090 $ 774 $ 20,713
Total assets $ 166,312 $ 204,192 $ 166,312 $ 204,192


Q3 2015 Netback Analysis

  Three months ended September 30 Nine months ended September 30
thousands of dollars except $/boe (2) 2015 2014 2015 2014
Natural gas sales $ 595 $ 2,066 $ 11,653 $ 16,894
Other revenues 181 367 593 884
Royalty expense (12) (47) (301) (1,274)
Transportation expense (485) (837) (1,850) (2,706)
Production expense (392) (667) (1,643) (2,318)
Field operating netback $ (113) $ 882 $ 8,452 $ 11,480
Natural gas production per day (mmscfpd) 1.1 6.6 3.6 7.1
Barrels of oil equivalent per day (boepd) 177 1,107 600 1,187
Average natural gas price ($/mscf) $ 6.10 $ 3.38 $ 11.85 $ 8.69
Natural gas revenues ($/boe) $ 36.60 $ 20.28 $ 71.12 $ 52.12
Other revenues ($/boe) 11.12 3.60 3.62 2.73
Royalty expense ($/boe) (0.75) (0.46) (1.84) (3.93)
Transportation expense ($/boe) (29.86) (8.22) (11.29) (8.35)
Production expense ($/boe) (24.09) (6.55) (10.02) (7.15)
Field operating netback ($/boe) $ (6.98) $ 8.65 $ 51.59 $ 35.42
General and administrative expenses ($/boe) (55.61) (6.53) (19.43) (7.24)
Interest, foreign exchange and other ($/boe) 4.32 1.60 2.89 1.16
Cash flow from operations netback ($/boe) (1) $ (58.27) $ 3.72 $ 35.05 $ 29.34
  • Cash flow from operations and cash flow from operations netback are non-IFRS measures. 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, 2015.
  • For the purpose of calculating unit revenues and costs, natural gas has been converted to barrels of oil equivalent (“boe”) on the basis of six thousand cubic feet (“mscf”) of natural gas being equal to one barrel of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mscf to one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.



  • During the quarter, Corridor was producing natural gas only from wells jointly owned with Potash Corporation of Saskatchewan Inc. (“PotashCorp”) and delivering volumes necessary to meet the short-term natural gas demands of PotashCorp’s Picadilly and Penobsquis mines. On May 1, 2015, Corridor shut-in most of its producing natural gas wells in the McCully Field in New Brunswick due to the significant differential expected in the sale price of natural gas at Algonquin city-gates (“AGT”) for the summer of 2015 relative to the winter of 2015/2016. As a result, Corridor’s average daily natural gas production decreased to 1.1 mmscfpd in Q3 2015 from 6.6 mmscfpd in Q3 2014.


  • Subsequent to the quarter end, Corridor entered into an additional forward sale agreement for 1,000 mmbtu per day of natural gas (approximately 940 mscfpd) for three months at $US7.00/mmbtu for December 2015, $US9.40/mmbtu for January 2016 and $US9.30/mmbtu for February 2016. These volumes are incremental to a previously announced forward sale agreement pursuant to which Corridor has agreed to sell 2,500 mmbtu per day at $US9.25/mmbtu for November 2015 to March 2016.


  • Corridor’s cash flow from operations decreased from $379 thousand in Q3 2014 to a negative $947 thousand in Q3 2015 due primarily to the lower natural gas production following the shut-in of most of the wells at the McCully Field. At September 30, 2015, Corridor had cash and cash equivalents of $23,291 thousand, working capital of $25,741 thousand and no outstanding debt.

Operations Review

Anticosti Island

On October 8, 2015, Anticosti Hydrocarbons L.P. (Anticosti LP) (Corridor interest – 21.67%) announced the completion of the first phase of its exploration program on Anticosti Island consisting of drilling the last seven of twelve stratigraphic corehole wells. The results of the cores are generally consistent with Corridor’s expectations in terms of the Macasty shale’s thickness, total organic content, porosity, permeability and maturity, and compare favorably to other North American shale oil and gas plays.

Recently, the Government of Québec released a study of an Economic Evaluation of Possible Development Scenarios of Hydrocarbons on Anticosti Island (the “Study”).   The Study is one of 64 studies conducted over the last two years by independent experts on behalf of the Government of Québec as part of the Strategic Environmental Assessment specific to Anticosti Island. The full Study can be accessed (in French only) at the following link: The Study concluded that development of hydrocarbons on Anticosti Island has a high probability of economic viability.

The Study is based on historical geological data and two separate independent resource estimates for the Macasty Formation on Anticosti Island prepared by Sproule Associates Limited in 2015 and Netherland, Sewell & Associates in 2011 which, in combination, established a best estimate1 of the Total Unrisked Undiscovered Petroleum Initially-In-Place2,3 at approximately 43.0 billion barrels of oil equivalent (Bboe)4,5,6. Given there are no wells completed and producing from the Macasty Formation on Anticosti Island, the authors of the Study relied upon the advice of industry experts, including Ryder Scott Company L.P., to utilize the Utica and Point Pleasant Formations in Ohio as a basis for a wide variety of estimates, such as: well capital and operating costs; horizontal well lengths and drilling density; initial production rates and decline curves; ultimate estimated reserves per well; and oil to natural gas liquid ratios. Corridor notes the Utica/Point Pleasant Formations are the stratigraphic equivalent of the Macasty and are generating a significant amount of industry investment, as new horizontal drilling and completion techniques have been generating increasingly impressive results.

The Study establishes an “Optimized” scenario, which assumes concurrent natural gas and oil production with a significant majority being natural gas (on a barrel of oil equivalent basis). Two options for delivery of natural gas off the island were evaluated. The first option was the construction of a floating unit for liquefaction of natural gas, the production from which would be sold in overseas markets. The second option considered building a pipeline to be connected to existing North American natural gas infrastructure and which would see natural gas sold in continental markets. The authors of the Study considered both options to be potentially economically viable.

Corridor believes the Study is very comprehensive in nature and represents a reasonable approach to estimate the potential value of hydrocarbon development on Anticosti Island. However, reports such as this are very speculative in nature due to the wide array of estimates that need to be considered. Corridor cautions there is no certainty that any of the estimates in the Study, including the comparison of the Macasty Formation on Anticosti Island to the Utica/Point Pleasant Formations in Ohio, will be accurate or can be reasonably relied upon at this time. It should be noted that the Study was not intended to be prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Anticosti LP has advised that it is planning, subject to the receipt of the necessary approvals, to drill and fracture stimulate three horizontal wells on Anticosti Island in 2016. The locations for three test horizontal wells planned for the summer of 2016 have now been chosen. This drilling program will be a critical step towards understanding the hydrocarbon resource potential on Anticosti Island and the related economic benefits. The drilling and fracture stimulation of the first three wells on Anticosti Island will complete the first phase of the $55 million to $60 million exploration program contemplated by the Anticosti LP joint venture agreements. Corridor is not obligated to contribute any of the capital to be expended by the Anticosti LP up to the first $100 million of gross expenditures.

  • “Best Estimate” means there is at least a 50% probability (P50) that the quantity actually in place is equal to or greater than the estimate.
  • Total Unrisked Undiscovered Petroleum Initially-In-Place (equivalent to Total Resources) is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered.
  • Undiscovered Petroleum Initially-In-Place (equivalent to Undiscovered Resources) are 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 and development risks. The reported volumes are unrisked. There is no certainty that any portion of these resources will be discovered. A recovery project cannot be defined for this volume of undiscovered petroleum initially-in-place at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.
  • The volumes have been reported as Bboe to reflect the uncertainty of hydrocarbon type across the Island.
  • The total of 43 Bboe is reported by the Government of Quebec as the addition of two best estimates of Total Unrisked Undiscovered Petroleum Initially-In-Place that cover separate holdings on Anticosti Island; a best estimate of 30.7 Bboe by Sproule Associates Limited dated April 2015 and a 2011 best estimate of 12.2 Bboe by Netherland, Sewell & Associates.
  • There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

New Brunswick

On May 1, 2015, Corridor shut-in most of its producing natural gas wells in the McCully Field in New Brunswick due to the significant differential expected in the sale price of natural gas at AGT for the summer of 2015 relative to the winter of 2015/2016. On October 29, 2015, Corridor resumed production of the shut-in wells. Corridor expects an average natural gas production of approximately 10.9 mmscfpd (8.5 mmscfpd net) in November and December 2015 and 8.4 mmscfpd (6.6 mmscfpd net) from January 1, 2016 to March 31, 2016. This compares to 9.0 mmscfpd (6.9 mmscfpd net) in Q1 2015, Corridor’s last quarterly period with unrestricted flows.

In late 2014, the Government of New Brunswick announced a moratorium on hydraulic fracturing in the province. In March of 2015, the province convened a three member Commission on hydraulic fracturing with a 12 month mandate to study the issue of hydraulic fracturing in the province. Corridor has met with the Commission and has submitted its case for the practice to continue in the province. The Commission has publically called for submissions from New Brunswick individuals or groups who wish to contribute to the dialogue. The Commission’s website is should any readers wish to view Corridor’s submission or make their own submission.

In response to the moratorium, in early 2015, Corridor initiated the formation of the New Brunswick Responsible Energy Development Alliance (“NBREDA”). NBREDA’s mandate is to provide fact-based information to New Brunswickers interested in learning more about hydraulic fracturing and the potential for natural gas development in the province. To achieve this objective, NBREDA unveiled a new website ( aimed at promoting a two-way dialogue, which includes information about how hydraulic fracturing works, answers to important and frequently asked questions and identifies and provides links to independent, third party studies on the subject. NBREDA has also undertaken an active media campaign to further the awareness of the shale gas industry. Currently, NBREDA has 23 members, comprised of numerous New Brunswick companies, various industry associations and several Atlantic Canadian Chambers of Commerce.   


Corridor has increased its cash flow from operations forecast in 2015 from $6.3 million to $8.2 million. This increase is due to the additional forward sale and management’s decision to resume production of the shut-in wells on October 29, 2015 rather than December 2015, as previously planned. Corridor is now forecasting a net positive working capital of approximately $28 million at December 31, 2015, with no outstanding debt.

Corridor is forecasting $4.4 million of cash flow from operations in the first quarter of 2016.

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. 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:

Contact: Steve Moran, President and CEO

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: business plans and strategies; natural gas production; natural gas prices and premiums at AGT; cash flow from operations in 2015 and Q1 2016, and working capital and debt level as at the end of 2015; drilling plans and capital expenditures of the Anticosti joint venture; characteristics of Anticosti Island; and the development of hydrocarbons on Anticosti Island, including the viability of such development, the majority of any production being natural gas, and the options for development of the infrastructure to transport natural gas and the viability of such options. Statements relating to “resources” are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources described, as applicable, exist in the quantities predicted or estimated and can profitably be produced in the future. 

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, the Study 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, 2014. 

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 2015 and the first quarter of 2016, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2015 financial year and as at the end of the first quarter of 2016. Please be advised that the financial outlook in this news release 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.[/vc_column_text][/vc_column][/vc_row]