Corridor Resources Inc.
TSX : CDH

Corridor Resources Inc.

November 10, 2009 16:14 ET

Corridor Announces Third Quarter Results

HALIFAX, NOVA SCOTIA--(Marketwire - Nov. 10, 2009) - Corridor Resources Inc. ("Corridor") (TSX:CDH) announced today its third quarter financial results.

The following table provides a summary of Corridor's financial and operating results for the three and nine months ended September 30, 2009, with comparisons to the three and nine months ended September 30, 2008. Corridor's financial statements and management's discussion and analysis for the third quarter have been filed on SEDAR at www.sedar.com and are available on Corridor's website at www.corridor.ca.

All amounts referred to in this press release are in Canadian dollars unless otherwise stated.



Selected Financial Information
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thousands of dollars Three months ended Nine months ended
except per share amounts September 30 September 30
2009 2008 2009 2008
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Revenues $5,901 $16,253 $37,600 $55,619
Net earnings (loss) $(3,442) $3,874 $3,492 $13,771
Net earnings (loss)
per share - basic $(0.039) $0.044 $0.040 $0.163
Net earnings (loss)
per share - diluted $(0.039) $0.044 $0.040 $0.162
Cash flow from
operations(1) $1,815 $11,620 $22,165 $38,211
Capital expenditures $9,823 $26,638 $32,580 $59,324
Gross proceeds from
capital stock issues $131 $- $131 $55,546
Total assets $306,790 $306,811 $306,790 $306,811
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(1) Cash flow from operations is a non-GAAP measure. Cash flow from
operations represents net earnings adjusted for non-cash items
including depletion & depreciation, future income taxes, stock-based
compensation and other non-cash expenses. See "Non-GAAP Financial
Measures" in Corridor's management's discussion and analysis for the
nine months ended September 30, 2009.


Third Quarter Highlights

- During Q3 2009, natural gas production averaged 14.5 mmscfpd net to Corridor (including production from penalty wells) with an average natural gas sales price of $3.87/mscf, resulting in a net loss of $3,442 thousand and basic and diluted net loss per share of $0.039.

- Natural gas revenues for Q3 2009 decreased to $5,167 thousand from $15,391 thousand for Q3 2008 due to the decrease in the average natural gas sales price from $9.94/mscf to $3.87/mscf and a decrease in production from 16.8 mmscfpd to 14.5 mmscfpd.

- Net earnings for Q3 2009 decreased to a net loss of $3,442 thousand from net earnings of $3,874 thousand for Q3 2008 reflecting the decrease in natural gas revenues.

- On September 9, 2009, Corridor reported the initial results of fracturing and flow-testing of the McCully L-38 and P-47 wells located in the northeastern segment of the McCully natural gas field. The wells were fractured with liquid propane followed by flow-back and initial flow test operations. This was the first time that fracturing with propane was conducted in the McCully Field, as completion operations in previous years had mainly used combinations of water and methanol as the frac fluid. Based on the initial results, Corridor estimated the initial production capacity of the McCully P-47 well to be 9 to 10 mmscfpd and the McCully L-38 well to be 12 to 13 mmscfpd at the McCully gathering system line pressure (3,500 kPa or 500 psi). At September 30, 2009, these wells were shut in for a pressure build-up and to run production tubing. Longer term production rates and pressures are being monitored to more accurately project the longer term performance of the wells.

- On October 15, 2009, Corridor reported it was continuing to flow test the recently completed McCully L-38 and P-47 wells. The wells were producing in-line to the gas plant at constrained rates in the range of 5 to 6 mmscfpd each to assess their respective longer term flow performances. However, early pressure response suggests that both wells may decline from these high initial rates at somewhat more rapid rates than normal for most McCully wells.



Q3 2009 Netback Analysis

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thousands of dollars Three months ended Nine months ended
except $/mscf September 30 September 30
2009 2008 2009 2008
-------------------------------------------------------------------------
Natural gas revenues $5,167 $15,391 $35,543 $53,172
Royalty expense (82) (937) (1,685) (3,402)
Production expense (717) (696) (2,359) (3,074)
Transportation expense (2,040) (2,624) (7,661) (8,435)
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Netback $2,328 $11,134 $23,838 $38,261
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Natural gas production
(mmscf) 1,336 1,548 4,399 5,023
Natural gas production
per day (mmscfpd) 14.5 16.8 16.1 18.3

Natural gas revenues
($/mscf) $3.87 $9.94 $8.08 $10.59
Royalty expense ($/mscf) (0.06) (0.61) (0.38) (0.68)
Production expense
($/mscf) (0.54) (0.45) (0.54) (0.60)
Transportation expense
($/mscf) (1.53) (1.70) (1.74) (1.68)
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Netback ($/mscf) $1.74 $7.18 $5.42 $7.63
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Natural gas revenues decreased to $5,167 thousand for Q3 2009 from $15,391 thousand for Q3 2008 due to the decrease in the average natural gas sales price from $9.94/mscf in Q3 2008 to $3.87/mscf in Q3 2009 and a decrease in production from 16.8 mmscfpd in Q3 2008 to 14.5 mmscfpd in Q3 2009. The decrease in production in Q3 2009 is due to a four day shut-down of the gas plant for maintenance and certain wells being shut-in for work-over and fracturing operations.

The decrease in the royalty expense per mscf for Q3 2009 to $0.06/mscf from $0.61/mscf for Q3 2008 is due to the significant decrease in the natural gas revenues in Q3 2009 while the deductions allowable in the royalty calculation remained consistent.

Net production expense for Q3 2009 increased slightly to $717 thousand from $696 thousand for Q3 2008 despite a decrease in gross production expenses as Corridor's share of gross production has increased compared to Q3 2008. The decrease in gross production expenses is due to lower methanol and water disposal costs.

Transportation expense decreased to $2,040 thousand in Q3 2009 from $2,624 thousand in Q3 2008 due to the following changes: a decrease in natural gas production, a $0.05/mmbtu decrease in the cost of Canadian firm tolls effective April 1, 2009, a decrease in the cost of U.S. firm tolls effective August 1, 2009 and a firm transportation agreement for variable monthly volumes at a cost of 75% of the Canadian firm tolls effective May 1, 2009. These positive changes to transportation expense were lessened by a stronger U.S. dollar in 2009 compared to 2008.

2009 Outlook

Corridor has decreased its 2009 budget for revenues from $54.5 million to $52.0 million to reflect the lower natural gas revenues in Q3 2009 and the forecasted weakening of the U.S. dollar. Corridor has revised its estimate of the exchange rate from $0.90 U.S. per Canadian dollar to $0.95 U.S. per Canadian dollar for Q4 2009. Corridor has maintained its previously estimated average net production for 2009 of 18 mmscfpd as the lower natural gas production in Q3 2009 is expected to be offset by the increase in the estimated average production from 20 mmscfpd to 23 mmscfpd in Q4 2009. The Q4 2009 increase in the estimated average production is due mainly to the increased estimated production from the McCully P-47 and L-38 wells.

As a result, Corridor's previously estimated cash flow from operations for 2009 is forecast to decrease by approximately $2 million to $30.5 million. Corridor is committed to maintaining a strong financial position through this period of low natural gas prices and has maintained its 2009 capital budget of $40.0 million. Corridor is currently forecasting a net positive working capital position of $12 million at December 31, 2009.

Corridor is a junior resource company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick, Prince Edward Island and Quebec and offshore in the Gulf of St. Lawrence. Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick and has recently discovered crude oil reserves in the Caledonia Field near Sussex, New Brunswick. In June 2007, Corridor completed the construction of a field gathering system, a gas plant and a pipeline lateral connecting the McCully Field to markets through the Maritimes & Northeast Pipeline.

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 Corridor's outlook for 2009 with respect to expected revenues, net production, cash flow from operations, capital expenditures, working capital, credit requirements and the Canada-U.S. exchange rate.

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, 2008 and also in Corridor's management's discussion and analysis for the nine months ended September 30, 2009, copies of which are available on SEDAR website at www.sedar.com.

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.

Contact Information

  • Corridor Resources Inc.
    Norman W. Miller
    President
    902-429-4511
    902-429-0209 (FAX)
    www.corridor.ca