HALIFAX, NOVA SCOTIA — (Marketwire) — 03/27/13 — (TSX: CDH) Corridor Resources Inc. (“Corridor”) announced today its 2012 year end financial results and reserve evaluations. Corridor–s annual financial statements, management–s discussion and analysis and Annual Information Form for the year ended December 31, 2012 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.
2012 Highlights
“Corridor is encouraged by the recent increases in natural gas prices in North America as evidenced by much higher natural gas prices in the New England markets and our higher cash flow from operations in Q4 2012 and Q1 2013” said Phil Knoll, President and Chief Executive Officer of Corridor. “Corridor is well positioned to take advantage of the strategic infrastructure connecting our New Brunswick resources to these markets, and possesses the sustainability, with no outstanding debt, to advance Corridor–s three high impact prospects in Eastern Canada.”
Year End Financial Results
The following table provides a summary of Corridor–s financial and operating results for the three and twelve months ended December 31, 2012 with comparisons to the three and twelve months ended December 31, 2011.
Financial Summary for 2012
Corridor–s netback for Q4 2012 increased to $3.43/mmbtu from $2.30/mmbtu in Q4 2011 as a result of higher natural gas sales prices in the New England markets.
Natural gas revenues increased to $4,604 thousand in Q4 2012 from $4,194 thousand in Q4 2011 due to the increase in the average natural gas sales price to $5.63/mscf in Q4 2012 from $4.26/mscf in Q4 2011 which increase was partially offset by the decrease in the average daily natural gas production to 8.9 mmscfpd in Q4 2012 from 10.7 mmscfpd in Q4 2011. The decrease in production in Q4 2012 is due to the decreased drilling activities at the McCully Field since 2009 following decreases in natural gas prices. However, this decrease was partially offset by flush production on the start-up of four McCully wells which had been shut-in from May to November 2012. Corridor resumed production of the shut-in wells early in November 2012 when natural gas prices peaked due to cold weather.
The increase in the royalty expense to $50 thousand for Q4 2012 from $nil in Q4 2011 is due to the higher natural gas revenues in Q4 2012.
Transportation expense decreased to $1,037 thousand for Q4 2012 from $1,181 thousand for Q4 2011 due to the decrease in natural gas production and a decrease of $0.06/mmbtu in the cost of the firm transportation tariff on the Canadian side of the Maritimes and Northeast Pipeline effective January 1, 2012.
Net production expense for Q4 2012 decreased to $715 thousand from $752 thousand for Q4 2011 due to management–s efforts to reduce costs.
2012 Reserve Information
Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick and has crude oil reserves in the Caledonia Field near Sussex, New Brunswick.
GLJ has assessed Corridor–s reserves in its reports (“the GLJ Reports”) dated effective December 31, 2012 and December 31, 2011, which were prepared in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. The following table presents a summary from the GLJ Reports of Corridor–s gross natural gas reserves, before the deduction of royalties, using forecast prices and costs.
The decrease in proved reserves to 57.6 bscf is due to the 2012 production of 3.3 bscf and lower natural gas prices partially offset by an increase by GLJ in the total volume of economically recoverable reserves based on revised economic assumptions.
The decrease in proved plus probable reserves to 94.5 bscf in 2012 is also due to the delay in drilling new development wells as a result of low forecasted natural gas prices.
GLJ assessed the net present value of Corridor–s natural gas, oil and natural gas liquids reserves, based on forecast costs and prices as at January 1, 2012 and 2011, respectively, as follows:
The decrease in the net present value of Corridor–s net reserves in 2012 is primarily the result of declines in forecasted natural gas prices as estimated by GLJ.
GLJ assigned to Corridor total proved crude oil reserves of 87 mbbl and total proved plus probable crude oil reserves of 260 mbbl as at December 31, 2012 in the 2012 GLJ Report. The complete 2012 GLJ Report will be available in the near future on Corridor–s website at , and a summary of the 2012 GLJ Report is included in Corridor–s Annual Information Form for the year ended December 31, 2012, a copy of which has been filed on SEDAR at .
2013 Outlook
Corridor is forecasting cash flow from operations of $8 million in 2013 which is based on an estimated average natural gas sales price of approximately $6.60/mscf and an estimated average net daily gas production of 7.7 mmscfpd for 2013. The natural gas sales price is based on an estimated Henry Hub price of US$3.60/mmbtu and an average premium at Dracut of US$2.60/mmbtu which incorporates the forward sale agreement for 6,000 mmbtu per day from January 1, 2013 to March 31, 2013 at an average price of $US8.52/mmbtu. Corridor estimates an exchange rate of $1.00 U.S. per Canadian dollar for 2013.
Based on available working capital of $10.2 million at December 31, 2012 and Corridor–s current capital budget of $3.0 million, Corridor is forecasting a net positive working capital of approximately $15.2 million at December 31, 2013, with no outstanding debt. However, the board of directors may approve additional capital expenditures in 2013 relating to one or more of Corridor–s prospects.
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 Quebec 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 resources in Elgin, New Brunswick and undiscovered resources on Anticosti Island, Quebec where Corridor has ongoing exploration projects.
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 the estimates of reserves, net present values of reserves, characteristics of Corridor–s properties, exploration and development plans, plans to solicit joint venture partners; and estimated cash flow from operations, natural gas sales price, gas production, exchange rate, capital expenditures, net positive working capital and debt level for 2013. Statements relating to “reserves” are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described 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 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, 2012.
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 estimated cash flow from operations, working capital and debt level for 2013, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2013 financial year. Please be advised that the financial outlook in this 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.
Contacts:
Phillip R. Knoll, President
Corridor Resources Inc.
(902) 429-4511
(902) 429-0209 (FAX)