Corridor Announces 2014 Year End Results and Reserves
(firmenpresse) - HALIFAX, NOVA SCOTIA -- (Marketwired) -- 03/31/15 -- Corridor Resources Inc. ("Corridor") (TSX: CDH) announced today its 2014 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, 2014 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.
2014 Highlights
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, 2014 with comparisons to the three and twelve months ended December 31, 2013.
Selected Financial Information
Financial Summary for 2014
Q4 2014 Netback Analysis
Corridor's netback for Q4 2014 increased to $5.46/mscf from $5.04/mscf in Q4 2013 as a result of higher natural gas sales prices in the New England market and lower production expenses.
Natural gas revenues decreased to $5,241 thousand in Q4 2014 from $5,841 thousand in Q4 2013 due to the decrease in the average daily natural gas production to 6.9 mmscfpd in Q4 2014 from 7.7 mmscfpd in Q4 2013 which decrease was partially offset by the increase in the average natural gas sales price to $8.30/mscf in Q4 2014 from $8.21/mscf in Q4 2013.
Corridor's royalty expense for Q4 2014 decreased to $160 thousand from $247 thousand for Q4 2013 due to lower natural gas revenues in Q4 2014 and the new royalty regime implemented by the New Brunswick Government on April 1, 2014.
Transportation expense for Q4 2014 decreased to $916 thousand from $973 thousand for Q4 2013 due to the lower natural gas production and the decrease in the cost of Canadian firm transportation on the M&NP effective April 1, 2014, which were partially offset by a stronger U.S. dollar.
Net production expense for Q4 2014 decreased to $718 thousand from $1,034 thousand in Q4 2013 due primarily to lower repairs and maintenance and workover expenses.
2014 Reserve Information
Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick.
GLJ assessed Corridor's reserves in its reports ("the GLJ Reports") dated effective December 31, 2014 and December 31, 2013, which were prepared in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. The following table presents a summary from the GLJ Reports of Corridor's gross natural gas reserves, before the deduction of royalties, using forecast prices and costs.
The decrease in Corridor's proved plus probable natural gas reserves is primarily attributable to lower than expected reserves from the 2014 well re-entry and fracturing program at the McCully Field and a decrease in the number of estimated future development wells which was caused in part by lower estimated future natural gas prices in the GLJ Reports and the announcement in December 2014 of a planned hydraulic fracturing moratorium by the New Brunswick Government. As a result, management has not forecasted any capital spending in New Brunswick until 2017.
GLJ assessed the net present value of Corridor's natural gas, oil and natural gas liquids reserves in the GLJ Reports, based on GLJ's forecast costs and prices as at January 1, 2015 and 2014, as applicable, as follows:
Net Present Value ($ in million) - undiscounted
Net Present Value ($ in million) - discounted at 10%
The 2014 GLJ Report will be available on Corridor's website at and a summary of the 2014 GLJ Report will be included in Corridor's Annual Information Form for the year ended December 31, 2014, a copy of which will be filed on or about March 30, 2015 on SEDAR at .
Anticosti Joint Venture
On March 19, 2015, Anticosti Hydrocarbons (21.67% interest held by Corridor) announced the analytical results of the samples obtained from five stratigraphic coreholes drilled into the Macasty Formation as part of the first phase of the Anticosti Joint Venture's exploration program. The release stated that the results are within the range of the assumptions used in the resource assessment of the Macasty Formation performed in 2011 by Sproule Associates Limited (as previously announced).
Anticosti Hydrocarbons believes that the most important technical factors to consider in regards to the development prospects of the Macasty Formation are:
Anticosti Hydrocarbons also announced that the results of the 2014 stratigraphic corehole program will be used to complete an update of the resource assessment conducted by Sproule Associates Limited in 2011.
Anticosti Hydrocarbons intends to resume the drilling of the remaining approved stratigraphic corehole wells in the spring of 2015, to complete this program during the year, and to drill three horizontal wells in 2016.
New Brunswick
In the McCully Field, Corridor recently placed on production three wells fracture stimulated in the Frederick Brook shale. Two of the wells have proven productive capacity as they continue to clean up drilling/workover fluids. The third well is following the production profile of the F-58 well, Corridor's long term Frederick Brook shale producer. The F-58 well was fracture stimulated with water in a single 11 tonne treatment and placed on production in 2008, and is still producing at an estimated average rate of 180 mscf/d with a 1.8% annual decline. The Company expects F-58 to recover a total of 1.5 bscf (proved plus probable estimate as forecast by GLJ in the 2014 GLJ Report. Corridor is encouraged with these results, as they support the potential for a shale gas resource play utilizing multiple stages per well and larger fracture stimulations (i.e. up to 100 tonnes) per stage.
On March 27, 2015, the New Brunswick Government enacted legislation to impose a moratorium on hydraulic fracturing in New Brunswick, which the Government has stated will continue in effect until five conditions have been met. The five conditions include: obtaining a "social licence" in New Brunswick; obtaining clear and credible information on the impacts on air, health and water so a regulatory regime can be developed; establishing a plan to mitigate impacts on public infrastructure and address issues such as waste water disposal; putting a process in place to fulfill the Province's obligation to consult with First Nations; and establishing a royalty structure which will ensure that benefits are maximized for New Brunswickers. The New Brunswick Government has also announced the appointment of a panel with a mandate to review and report on, within 12 months, whether the five conditions can be met. Notwithstanding the uncertainty resulting from the moratorium, Corridor will continue to be an advocate for the safe and environmentally responsible development of the shale gas industry for the benefit of our shareholders and the people of New Brunswick.
Old Harry
As part of its 2015 capital budget, Corridor is planning to purchase a user license for Controlled Source Electro Magnetic ("CSEM") data over the Newfoundland and Labrador side of the Old Harry prospect. CSEM data is a marine geophysical tool that was developed in recent years to investigate the resistivity of geological prospects, similar to resistivity logging in well bores of potential hydrocarbon zones. Highly resistive layers in a geological structure measured with CSEM technology could indicate hydrocarbon bearing reservoirs and, therefore, would serve to support a success case. The proposed multi-client survey is in the permitting and approval stages of the project, and data acquisition is planned for the fall of 2015, pending regulatory approvals.
2015 Outlook
Corridor is forecasting cash flow from operations of $8.7 million in 2015, which is based on an estimated average natural gas sales price of approximately $7.70/mscf and an estimated average net daily gas production of 6.7 mmscfpd. The average natural gas sales price is based on an exchange rate estimate of $0.85 U.S. per Canadian dollar, an estimated Henry Hub price of $US2.95/mmbtu and an average premium at Algonquin city-gate of $US3.20/mmbtu, and incorporates the following contracted forward sales of natural gas production:
Corridor has authorized a minimum capital expenditure budget of $2.4 million for 2015. Given the uncertainty related to the moratorium in New Brunswick, no significant capital expenditures are planned in that province in 2015. The Anticosti Joint Venture's 2015 exploration program will be at no cost to Corridor.
"Corridor is well positioned in 2015" said Steve Moran, President and Chief Executive Officer. "Our balance sheet is very strong, with an estimated $26 million of positive working capital forecasted for the end of Q1 2015; we generate impressive premiums from our New Brunswick production; and the Anticosti Joint Venture is conducting a significant capital program on Anticosti Island at no cost to Corridor. Corridor will be reviewing opportunities to establish a new core area in 2015 and will not limit its search to Eastern Canada. With the recent downturn in commodity prices, Corridor expects there may be numerous opportunities in 2015, particularly in Western Canada, as other industry participants seek to dispose of assets to remedy leveraged balance sheets. To that end, Corridor has established an office in Calgary, Alberta. Should Corridor successfully identify and transact on a new opportunity, the capital budget would be increased accordingly."
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 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. 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, Quebec.
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 characteristics of Corridor's and the Anticosti Joint Venture's properties; exploration and development plans (including Corridor's 2015 capital program and the Anticosti Joint Venture's plans); plans of the Anticosti Joint Venture to update the Sproule resource assessment; and forward looking statements pertaining to the estimates of reserves: net present values of reserves; the time of filing of Corridor's Annual Information Form and the 2014 GLJ Report; estimated cash flow from operations, natural gas sales price, gas production, exchange rate, capital expenditures, sources of capital; net positive and working capital at the end of Q1 2015. 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, 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.
Contacts:
Steve Moran, President
Corridor Resources Inc.
(902) 429-4511
(902) 429-0209 (FAX)
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Datum: 31.03.2015 - 12:00 Uhr
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