Corridor Resources Inc.
TSX : CDH

Corridor Resources Inc.

March 19, 2010 07:58 ET

Corridor Reports on Year End Reserves, Contingent Resources and Apache's Plans for 2010

HALIFAX, NOVA SCOTIA--(Marketwire - March 19, 2010) - (TSX:CDH) - Corridor Resources Inc. ("Corridor") announced today its 2009 year end reserves and contingent resources evaluations, as well as Apache Canada Ltd.'s ("Apache") drilling and completion plans for 2010.

2009 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 Petroleum Consultants Ltd. ("GLJ") has assessed Corridor's reserves in its reports ("the GLJ Reports") dated effective December 31, 2009 and December 31, 2008 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.

Reserves Category 2009 Gross Reserves bscf 2008 Gross Reserves bscf
Total proved 74.3 77.5
Total probable 63.3 68.7
Total proved plus probable 137.6 146.1
Possible 110.4 109.5
Proved plus probable plus possible 248.0 255.6

Based on the 2009 GLJ Report, Corridor's 2009 proved natural gas reserves reflect increases resulting from the drilling of new wells in the McCully Field and decreases resulting from technical adjustments due to production performance to date from several previously drilled wells. Corridor sold production of 6.2 bscf from the McCully Field in 2009. GLJ's proved plus probable reserves assessment is based on a 45 well development at the McCully Field constrained by the location of existing wells and the potential risk of encountering over-pressured formation water and pyrobitumen in future wells. However, no formation water bearing reservoirs has been confirmed to date in the northeastern part of the McCully Field where most future wells are expected to be located, potentially increasing reserves if more than 45 wells are ultimately drilled in the McCully Field.

GLJ assessed the net present value of Corridor's natural gas, oil and natural gas liquids reserves, based on forecast costs and prices, as follows: 

Net Present Value ($ in million) - undiscounted 

  2009 2008
Reserves Category Before
Income
Tax
After
Income
Tax
Before
Income
Tax
After
Income
Tax
Proved 380 322 467 381
Proved plus probable 875 676 1,044 791
Proved plus probable plus possible 1,815 1,345 2,149 1,577

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

  2009 2008
Reserves Category Before
Income
Tax
After
Income
Tax
Before
Income
Tax
After
Income
Tax
Proved 199 177 258 219
Proved plus probable 346 280 439 346
Proved plus probable plus possible 592 453 711 538

GLJ has assigned to Corridor total proved crude oil reserves of 87 mbbls and total proved plus probable crude oil reserves of 521 mbbls. The complete 2009 GLJ Report will be available in the near future on Corridor's website at www.corridor.ca, and a summary of the 2009 GLJ Report will be included in Corridor's Annual Information Form for the year ended December 31, 2009, a copy of which will be filed on SEDAR at www.sedar.com.

2009 Contingent Resource Information

Corridor currently has contingent natural gas resources in the Frederick Brook shale formation in the area surrounding the Green Road G-41 well located four kilometers north of Elgin, New Brunswick. Contingent resources are those quantities of petroleum estimated, on a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as "contingent resources" the estimated discovered recoverable quantities associated with a project in the early project stage. The primary contingencies with respect to Corridor's economic contingent resources include the uncertainty surrounding the economic viability of the related development project due to the early stage of resource evaluation. This includes the uncertainty that all internal and external approvals will be forthcoming along with documented intent to develop the resources within a reasonable time frame. Other commercial considerations that may preclude the classification of contingent resources as reserves include factors such as legal, environmental, political and regulatory matters or a lack of markets.

Resources and contingent resources do not constitute, and should not be confused with, reserves. Reserves and resources will vary from its reserve and resource estimates, and those variations could be material.

GLJ has assessed Corridor's contingent resources in its report dated effective December 31, 2009 (the " GLJ Elgin Contingent Resources Report") which was 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 Elgin Contingent Resources Report of Corridor's gross contingent natural gas resources, before the deduction of royalties, using forecast prices and costs.

Contingent Resource Category (before royalty) (1) 2009 Gross Contingent Resources (bscf)
Low Estimate 395
Best Estimate 494
High Estimate 708
1. The Company Interest has been calculated without taking into account the 50% working interest that may be earned by Apache in approximately 116,000 acres of lands covering the Frederick's Brook shale formation pursuant to the Apache Agreement. If Apache earns such 50% working interest, Corridor's Company Interest will be reduced to 198 (low estimate), 247 (best estimate) and 354 (high estimate).

Based on the GLJ Elgin Contingent Resources Report, Corridor's 2009 contingent natural gas resources reflect the postulated development of a first tranche of shale gas development in the vicinity of the Green Road G-41 vertical well. The report is based on Corridor's results from the G-41 well, including well logs and production test results from two fractured intervals within the Frederick Brook formation. The postulated development is limited to a silty and shaly section approximately 383 meters in thickness and 14,750 acres in area, representing less than 8% of the total Frederick Brook rock volume and total shale gas potential outlined by GLJ and shown in the attached map. The postulated development is intended to indicate development potential and is not intended to predict possible Apache development plans for the area.

A map is available at the following address: http://media3.marketwire.com/docs/map_Corridor_0319.pdf

GLJ assessed the net present value of Corridor's contingent natural gas resources, based on forecast costs and prices, as follows: 

Net Present Value ($ in million) – before income tax (1) 

Contingent Resource Category Undiscounted Discounted      @ 10%
Low Estimate 1,425 50
Best Estimate 2,555 304
High Estimate 4,770 868
1. The net present value has been calculated without taking into account the 50% working interest that may be earned by Apache in approximately 116,000 acres of lands covering the Frederick Brook shale formation pursuant to the Apache Agreement. If Apache earns such 50% working interest, Corridor's undiscounted net present value will be reduced to $713 million (low estimate), $1,278 million (best estimate) and $2,385 million (high estimate) and Corridor's discounted net present value will be reduced to $25 million (low estimate), $152 million (best estimate) and $434 million (high estimate).

There is no certainty that it will be economically viable to produce any portion of the resources.

The complete GLJ Elgin Contingent Resources Report will be available in the near future on Corridor's website at www.corridor.ca., and a summary of the report will be included in Corridor's Annual Information Form for the year ended December 31, 2009, a copy of which will be filed on SEDAR at www.sedar.com.

Apache Plans for 2010

Apache has provided Corridor with preliminary information regarding their drilling and completion plans for 2010 relating to their farm-in on Corridor's interests in the Elgin area (please refer to Corridor's press release dated December 7, 2009). Apache has indicated to Corridor that it plans to commence drilling operations in June 2010 at the Green Road location north of Elgin. The initial well is expected to be drilled from the G-41 well-pad to twin the upper part of Corridor's G-41 well and then drilling a horizontal leg in the silty/sandy interval within the upper part of the Frederick Brook formation. Following completion of drilling operations at this location, Apache plans to move the drilling rig approximately three kilometers to the southwest to drill a second well from a new well pad at the original Will DeMille #1 location. The new well is expected to twin the upper part of the Will DeMille #1 well and Apache then plans to drill a horizontal leg in the upper part of the Frederick Brook shale formation. Corridor, in partnership with Columbia Natural Resources Canada, Ltd., had drilled the original Will DeMille #1 vertical well in 1999 and abandoned the well after flaring gas during drilling operations in the upper part of the Frederick Brook shale. Later this year, Apache has advised Corridor that it plans to undertake multi-stage fracturing operations in the horizontal legs of each of these wells and to conduct flow testing to evaluate the commercial potential of developing natural gas from the Frederick Brook formation in this area. "We are very excited about Apache's plans to drill and fracture horizontal wells as follow-ups to the two previously drilled wells" said Norman Miller, Corridor's President. "Success in these new wells could open up development of the enormous natural gas resources known to be present in the Frederick Brook formation in the Elgin area".

Apache has until June 1, 2011 to spend a committed $25 million to undertake operations pursuant to its farm-in agreement with Corridor prior to electing whether or not to spend a further $100 million to earn 50% of Corridor's interest in 116,000 acres in the Elgin/Sussex area.

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 Québec and offshore in the Gulf of St. Lawrence. Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick and 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 the quantity of reserves and contingent resources, net present values of reserves and resources, , plans regarding development of the Frederick Brook formation, Apache's drilling and completion plans for 2010 relating to their farm-in on Corridor's interests in the Elgin area. Statements relating to "reserves" and "resources" are forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves and resources 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, 2008.

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