November 14, 2016

Corridor Announces Third Quarter Results


HALIFAX, Nova Scotia, November 14, 2016 (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, 2016, with comparisons to the three and nine months ended September 30, 2015. 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 2016 2015 2016 2015
Sales $ 2,167 $ 776 $ 11,185 $ 12,246
Net income (loss) $ (1,261) $ (1,150) $ (41,607) $ 2,073
Net income (loss) per share – basic and diluted $ (0.014) $ (0.013) $ (0.469) $ 0.023
Cash flow from operations (1) $ 233 $ (947) $ 3,585 $ 5,742
Working capital $29,334 $25,741 $29,334 $25,741
Capital expenditures $ 41 $ 62 $ 245 $ 774
Total assets $ 92,149 $ 166,312 $ 92,149 $ 166,312

Q3 2016 Netback Analysis

  Three months ended September 30 Nine months ended September 30
thousands of dollars except $/boe (2) 2016 2015 2016 2015
Natural gas sales $ 1,878 $ 595 $ 10,397 $ 11,653
Other revenues 289 181 788 593
Royalty expense (39) (12) (222) (301)
Transportation expense (770) (485) (3,204) (1,850)
Production expense (556) (392) (1,805) (1,643)
Field operating netback $ 802 $ (113) $ 5,954 $ 8,452
Natural gas production per day (mmscfpd) 5.1 1.1 6.7 3.6
Barrels of oil equivalent per day (boepd) 855 177 1,116 600
Average natural gas price ($/mscf) $ 3.98 $ 6.10 $ 5.66 $ 11.85
Natural gas revenues ($/boe) $ 23.88 $ 36.60 $ 33.99 $ 71.12
Other revenues ($/boe) 3.68 11.12 2.57 3.62
Royalty expense ($/boe) (0.50) (0.75) (0.73) (1.84)
Transportation expense ($/boe) (9.79) (29.86) (10.47) (11.29)
Production expense ($/boe) (7.07) (24.09) (5.90) (10.02)
Field operating netback ($/boe) $ 10.20 $ (6.98) $ 19.46 $ 51.59
General and administrative expenses ($/boe) (8.08) (55.61) (7.36) (19.43)
Interest, foreign exchange and other ($/boe)  0.84 4.32 (0.38) 2.89
Cash flow from operations ($/boe) (1) $ 2.96 $ (58.27) $ 11.72 $ 35.05
  • Cash flow from operations is a non-IFRS financial 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, 2016.
  • 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.

2016 Third Quarter Highlights

  • Sales for Q3 2016 increased to $2,167 thousand from $776 thousand for Q3 2015 due to increased natural gas production partially offset by the decrease in the average natural gas price to $3.98/mscf in Q3 2016 from $6.10/mscf in Q3 2015. The average daily natural gas production increased to 5.1 mmscfpd in Q3 2016 from 1.1 mmscfpd in Q3 2015 as a result of management’s decision to partially shut-in its natural gas production starting in September 2016 as opposed to shutting-in most of the McCully wells from May 1 to October 29, 2015. Management had determined in each of 2015 and 2016 to partially shut-in its producing natural gas wells in the McCully Field to take advantage of the expected significant differential in the sale price of natural gas at Algonquin city-gates (“AGT”) for the summer/fall relative to the winter. Corridor intends to continue the partial shut-ins until the end of November 2016.
  • Corridor’s cash flow from operations increased to $233 thousand in Q3 2016 from a negative cash flow from operations of $947 thousand in Q3 2015 due primarily to the higher natural gas production in Q3 2016. At September 30, 2016, Corridor had cash and cash equivalents of $27,784 thousand, working capital of $29,334 thousand and no outstanding debt.
  • Net general and administrative expenses returned to a more normal level of $636 thousand in Q3 2016 decreasing from $903 thousand in Q3 2015 due mostly to costs incurred of $180 thousand on the formation of the New Brunswick Responsible Energy Development Alliance in Q3 2015.
  • Anticosti Hydrocarbons L.P. has begun construction on two of the three well sites on Anticosti Island. The construction of the third location is awaiting regulatory approvals. The drilling of wells on Anticosti Island has been deferred until 2017.
  • Corridor entered into a forward sale agreement from December 1, 2016 to March 31, 2017 for an average of 4,755 mmbtu per day of natural gas production. The forward sale volumes will be based on AGT pricing, the same pricing as Corridor’s unhedged volumes, but will be subject to lower transportation costs, resulting in an increase of approximately $800 thousand of cash flow from operations over the term of the agreement.
  • Subsequent to the quarter end, Corridor entered into a financial hedge for the period from December 1, 2016 to March 31, 2017 for 2,500 mmbtu per day of natural gas production (approximately 2.3 mmscf per day) at a fixed price of $US6.50/mmbtu.


“Corridor should once again enjoy excellent pricing for its natural gas sales in the AGT market for the upcoming winter period” said Steve Moran, President and CEO. “We remain on track to meet our previous guidance, which should result in a working capital balance of $33.8 million as at March 31, 2017.  We continue to assess opportunities for deploying our working capital in a disciplined, counter-cyclical fashion.”

Corridor is a 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 a shale gas prospect in New Brunswick, an offshore conventional hydrocarbon prospect in the Gulf of St. Lawrence and an unconventional hydrocarbon prospect through a 21.67% interest in Anticosti Hydrocarbons L.P., 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 and exploration and development plans, including plans of Anticosti Hydrocarbons L.P. to construct well locations and regulatory approvals of such plans, drilling plans and timing of such plans, increased cash flow from operations from the forward sale agreement, expectations regarding natural gas prices at AGT and expectations that Corridor will meet its previously disclosed guidance, resulting in a working capital balance of $33.8 million as at March 31, 2017.

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 and the terms of its forward sales agreement 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, 2015.

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.