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.
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; estimated revenues from forward sales agreements and from production in aggregate, estimated natural gas production; natural gas prices and premiums at AGT; and cash flow from operations in the 2015 year and in the first quarter of 2016.
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 agreements and Corridor's current beliefs as well as assumptions made by, and information currently available to, Corridor including information 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 and the terms of agreements with third parties. 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.
Certain of the forward-looking statements in this release may constitute "financial outlooks" as contemplated by National Instrument 51-102 Disclosure Obligations, including information related to projected cash flow from operations and revenues for 2015 and the first quarter of 2016, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2015 financial year and as at the end of the first quarter of 2016. Please be advised that the financial outlook in this MD&A 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.