HALIFAX, NOVA SCOTIA–(Marketwired – Nov. 5, 2015) – Corridor Resources Inc. (“Corridor”) (TSX:CDH) is pleased to provide an operations update and announce that it has entered into an additional forward sale agreement.
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. On October 29, 2015, Corridor resumed production of the shut-in wells. Corridor expects to produce 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.
Corridor also advises it has entered into an additional forward sale agreement for 1,000 mmbtu per day of natural gas (approximately 940 mscf per day) 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.
From November 1, 2015 to March 31, 2016, approximately $5.5 million out of an estimated $12.3 million of gross revenues will be generated from the forward sale agreements. The estimated gross revenues are based on the unhedged production volumes to be sold at an average current future strip pricing at AGT of $US6.94/mmbtu for this period.
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 in 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’s recent strategy to maximize its production during the winter months has proven to be a sound decision” said Steve Moran, Corridor’s President and CEO. “Prices in the summer months of 2015 at AGT were weak as expected and, once again, are expected to be the best in North America in the winter months. As a result of our decision to temporarily shut-in our wells, we have extended our producing reserve life and optimized our operating netbacks. We will continue to review this strategy on an annual basis.”
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.