SYS-CON MEDIA Authors: Gilad Parann-Nissany, Michael Bushong, Eric Brown, Kevin Benedict, PR.com Newswire

News Feed Item

Corridor Announces 2013 Year End Reserves and 2014 Capital Program

HALIFAX, NOVA SCOTIA -- (Marketwired) -- 03/06/14 -- Corridor Resources Inc. ("Corridor") (TSX:CDH) announced today its 2013 year end reserve evaluations as well as its budget for 2014.

2013 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 assessed Corridor's reserves in its reports ("the GLJ Reports") dated effective December 31, 2013 and December 31, 2012, 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.


----------------------------------------------------------------------------
                                                   2013 Gross     2012 Gross
                                                     Reserves       Reserves
Reserves Category                                        bscf           bscf
----------------------------------------------------------------------------
Total proved                                             60.5           57.6
Total probable                                           37.8           36.8
----------------------------------------------------------------------------
Total proved plus probable                               98.3           94.5
Possible(1)                                             106.3          107.7
----------------------------------------------------------------------------
Proved plus probable plus possible(1)                   204.6          202.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Possible reserves are those additional reserves that are less certain  
     to be recovered than probable reserves. There is a 10% probability that
     the quantities actually recovered will equal or exceed the sum of      
     proved plus probable plus possible reserves.                           

The increase in Corridor's proved plus probable natural gas reserves is attributable to the planned fracturing of existing McCully wells in the Frederick Brook shale, which extended reserve horizons in these wells, as well as technical adjustments due to well optimization efforts undertaken in 2013 which increased the ultimate recovery of producing wells in all categories. These increases more than offset Corridor's production of 2.9 bscf in 2013.

GLJ assigned to Corridor total proved crude oil reserves of 87 mbbl, total proved plus probable crude oil reserves of 260 mbbl and proved plus probable plus possible oil reserves of 521 mbbl in the GLJ Reports.

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, 2014 and 2013, respectively, as follows:

Net Present Value ($ in million) - undiscounted


----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
                                     Before      After     Before      After
                                     Income     Income     Income     Income
Reserves Category                    Tax(1)     Tax(1)     Tax(1)     Tax(1)
----------------------------------------------------------------------------
Proved                                  205        197        159        159
Proved plus probable                    374        320        316        280
Proved plus probable plus                                                   
 possible(2)                            913        708        981        765
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  The estimated value of future net revenue does not represent the fair  
     market value of Corridor's reserves.                                   
(2)  Possible reserves are those additional reserves that are less certain  
     to be recovered than probable reserves. There is a 10% probability that
     the quantities actually recovered will equal or exceed the sum of      
     proved plus probable plus possible reserves.                           

Net Present Value ($ in million) - discounted at 10%


----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
                                     Before      After     Before      After
                                     Income     Income     Income     Income
Reserves Category                    Tax(1)     Tax(1)     Tax(1)     Tax(1)
----------------------------------------------------------------------------
Proved                                   93         91         68         68
Proved plus probable                    143        130        111        104
Proved plus probable plus                                                   
 possible(2)                            270        222        258        213
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  The estimated value of future net revenue does not represent the fair  
     market value of Corridor's reserves.                                   
(2)  Possible reserves are those additional reserves that are less certain  
     to be recovered than probable reserves. There is a 10% probability that
     the quantities actually recovered will equal or exceed the sum of      
     proved plus probable plus possible reserves.                           

Increase in NPV per share

The increase in the net present value of Corridor's net reserves in 2013 is the result of increases in forecasted natural gas prices as estimated by GLJ to reflect the increased premiums expected in the New England market for the next several years and increases in reserves as explained above. As a result, Corridor's discounted net present value per share before income tax based on proved plus probable reserves has increased by nearly 30% to $1.62 per share in 2013 from $1.25 per share in 2012.

The 2013 GLJ Report will be available on Corridor's website at www.corridor.ca and a summary of the 2013 GLJ Report will be included in Corridor's Annual Information Form for the year ended December 31, 2013, a copy of which will be filed on or about March 25, 2014 on SEDAR at www.sedar.com.

"We are pleased to see a significant increase in the net present value of our 2P reserves in New Brunswick which results from the recognition of the premium pricing that Corridor's production can obtain in the New England market over the next several years," said Phillip Knoll, President and CEO of Corridor.

2014 Capital Program

Corridor has authorized a $27.2 million capital expenditure program for 2014 primarily related to a well re-entry and fracturing program in the McCully Field located in southern New Brunswick. The program is designed to increase natural gas production and revenues from the McCully Field and to evaluate the oil and shale gas potential of the surrounding basin, while maintaining a strong balance sheet with no outstanding debt. Capital expenditures for 2014 will be sourced from cash currently available and net cash flow projected from natural gas production and sales in 2014.

Corridor's program priorities for 2014 include:


a.  running production casing in two of the four well re-entries and
    conducting up to nine fracture treatments, including five planned in the
    Frederick Brook shale and four planned in the Hiram Brook sands in wells
    connected to the McCully midstream facilities. This will increase
    natural gas production and provide additional deliverability profiles
    for our Frederick Brook shale play; 
b.  fracturing and testing the Green Road B-41 well to further evaluate the
    shale gas potential of the Frederick Brook formation in the Elgin sub-
    basin; 
c.  testing of the South Branch G-36 oil discovery well at the Caledonia
    Field based on customized treatment from a paraffin research
    collaboration program with the University of New Brunswick; 
d.  additional well workovers and well optimization programs to increase
    natural gas production at the McCully Field; and 
e.  continuing the regulatory process relating to the Old Harry structure in
    the Gulf of St. Lawrence in preparation for the proposed drilling of an
    exploration well on the prospect within two years.

Corridor is planning the 2014 fracture stimulation program in order for the expected increased production to be available starting November 1, 2014. This should allow the increased production to benefit from Corridor's previously announced forward sale agreement for the 2014-2015 winter season for an average of 4,000 mmbtu per day of natural gas at an average price of $US11.74/mmbtu. The 2014 program is subject to the availability of equipment and obtaining the necessary regulatory approvals, among other conditions.

"Our 2014 program in New Brunswick will provide Corridor additional production and increased cash flows," said Mr. Knoll. "Additionally, this program will provide Corridor with production profiles from several Frederick Brook Shale intervals that will be fracture stimulated in order to further demonstrate the economic potential of developing our substantial shale gas resource which is strategically located with direct access to large, premium markets in New Brunswick and New England."

2014 Budget

Corridor is forecasting cash flow from operations of $14 million in 2014, which is based on an estimated average natural gas sales price of approximately $8.75/mscf and an estimated average net daily gas production of 8.0 mmscfpd. The average natural gas sales price is based on an exchange rate estimate of $0.95 U.S. per Canadian dollar, an estimated Henry Hub price of US$4.75/mmbtu and an average premium at Algonquin of US$3.10/mmbtu. The 2014 estimated average natural gas price includes the impact of Corridor's forward sales of natural gas production previously announced.

Based on available working capital of $17.3 million at December 31, 2013 and Corridor's capital budget of $27.2 million, Corridor is forecasting a net positive working capital of approximately $18.0 million at December 31, 2014, with no outstanding debt. The budget assumes that the Anticosti joint venture announced on February 13, 2014 will close and that the net cash proceeds of $13.9 million will be received on closing.

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; the time of filing of Corridor's Annual Information Form and the 2013 GLJ Report; estimated cash flow from operations, natural gas sales price, gas production, exchange rate, capital expenditures, sources of capital; net positive working capital, debt level for 2014; and closing of the joint venture and receipt of proceeds in respect thereof. 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 the terms of the forward sales agreement and the Anticosti joint venture letter of intent, 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 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 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:
Corridor Resources Inc.
Phillip R. Knoll
President
(902) 429-4511
(902) 429-0209 (FAX)
www.corridor.ca

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.