HALIFAX, NOVA SCOTIA--(Marketwired - May 12, 2014) - Corridor Resources Inc. ("Corridor") (TSX:CDH) announced today its first quarter financial results.
The following table provides a summary of Corridor's financial and operating results for the three months ended March 31, 2014, with comparisons to the three months ended March 31, 2013. Corridor's unaudited financial statements and management's discussion and analysis for the first 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
||Three months ended March 31
|thousands of dollars except per share amounts
|Net income per share - basic and diluted
|Cash flow from operations(1)
|(1) Cash flow from operations is a non-IFRS measure. Cash flow from operations represents net earnings adjusted for non-cash items including depletion, depreciation and amortization, deferred income taxes, share-based compensation and other non-cash expenses. See "Non-IFRS Financial Measures" in Corridor's MD&A for the three months ended March 31, 2014.
- Corridor's netback for Q1 2014 increased to $12.46/mscf from $7.35/mscf for Q1 2013 primarily as a result of higher natural gas sales prices in the New England market (Algonquin city-gate).
- Natural gas sales for Q1 2014 increased to $11,438 thousand from $7,756 thousand for Q1 2013 due to the increase in the average natural gas sales price to $16.80/mscf in Q1 2014 from $10.19/mscf in Q1 2013, which increase was partially offset by the decrease in the average daily natural gas production to 7.6 mmscfpd in Q1 2014 from 8.5 mmscfpd in Q1 2013.
- Corridor's cash flow from operations for Q1 2014 increased to $8,073 thousand from $5,311 thousand in Q1 2013 due primarily to the higher natural gas sales, partially offset by higher royalty expenses. As at March 31, 2014, Corridor had cash and cash equivalents of $21,349 thousand, working capital of $24,571 thousand and no outstanding debt.
- During the quarter, preparations for the 2014 well re-entry and fracturing program proceeded as planned and Corridor is in the process of obtaining the regulatory approvals necessary and finalizing the logistics to undertake this program in the summer. The 2014 program is designed to increase natural gas production at the McCully Field and provide additional deliverability profiles for the Frederick Brook shale play.
- Subsequent to Q1 2014, Corridor entered into a joint venture (the "Anticosti Joint Venture") on April 1, 2014 with the Government of Québec, through its affiliate Ressources Québec Inc. ("Ressources Québec"), Pétrolia Inc. ("Pétrolia") and Etablissements Maurel & Prom S.A. ("M&P") to appraise and potentially develop hydrocarbon resources on Anticosti Island, Québec. In connection with the establishment of the Anticosti Joint Venture, each of Pétrolia and Corridor transferred their respective Anticosti exploration licenses to a newly formed Anticosti partnership and Ressources Québec and M&P made a commitment to the Anticosti partnership to spend up to an aggregate $100 million on an exploration program starting in 2014. Corridor has an interest of 21.67% in the Anticosti partnership and received net cash proceeds of approximately $13.5 million as part of the establishment of the Anticosti Joint Venture.
- Subsequent to Q1 2014, the Canada-Newfoundland and Labrador Offshore Petroleum Board ("C-NLOPB") issued an updated strategic environmental assessment for the Western Newfoundland and Labrador offshore area on May 5, 2014. This report states that "petroleum exploration activity generally can proceed in the Western Newfoundland and Labrador offshore area with the application of standard mitigation measures currently applied." The C-NLOPB also indicated that additional consultation on Corridor's Old Harry Environmental Assessment ("EA") is required in order for the C-NLOPB to finalize the EA.
"We are pleased with the first quarter's results, including increased cash flow from operations resulting from impressive premiums and netbacks for our New Brunswick production," said Phillip Knoll, President and Chief Executive Officer. "Our 2014 capital program in New Brunswick will provide Corridor with additional production and increased cash flows. Additionally, this program will provide Corridor with deliverability profiles 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" said Mr. Knoll. "With cash and cash equivalents at March 31, 2014 of $21 million and net cash proceeds received on the closing of the Anticosti joint venture of $13.5 million and no outstanding debt, Corridor possesses the financial resources to continue to advance Corridor's growth opportunities."
Q1 2014 Netback Analysis
||Three months ended March 31
|thousands of dollars except $/mscf
|Natural gas sales
|Natural gas production (mmscf)
|Natural gas production per day (mmscfpd)
|Natural gas sales ($/mscf)
|Royalty expense ($/mscf)
|Transportation expense ($/mscf)
|Production expense ($/mscf)
Natural gas sales increased to $11,438 thousand in Q1 2014 from $7,756 thousand in Q1 2013 due to the increase in the average natural gas sales price to $16.80/mscf in Q1 2014 from $10.19/mscf in Q1 2013, which increase was partially offset by the decrease in the average daily natural gas production to 7.6 mmscfpd in Q1 2014 from 8.5 mmscfpd in Q1 2013.
The increase in the royalty expense for Q1 2014 to $1,152 thousand from $493 thousand for Q1 2013 is due to the higher natural gas prices in Q1 2014.
Transportation expense increased to $973 thousand in Q1 2014 from $936 thousand in Q1 2013 even though natural gas production was lower in Q1 2014. This increase was due to the stronger U.S. dollar relative to the Canadian dollar in Q1 2014, the higher transportation costs on the Canadian side of the M&NP in Q1 2014 and a small transportation charge on the Algonquin pipeline to access the Algonquin city-gate pricing point starting in Q2 2013.
Production expense for Q1 2014 increased to $828 thousand from $729 thousand in Q1 2013 primarily due to the payment of a bonus to employees in Q1 2014.
Corridor has increased its budgeted 2014 cash flow from operations from $14 million to $15 million to reflect the increase in the estimated natural gas sales in 2014 due to the higher premiums received at the Algonquin city-gate in Q1 2014 and an increase in the estimated foreign exchange rate for 2014.
Based on available working capital of $17.3 million at December 31, 2013 and Corridor's 2014 capital budget of $27.2 million, Corridor has increased its net positive working capital forecast from $18.0 million to $18.6 million at December 31, 2014, with no outstanding debt. The 2014 budget includes net cash proceeds of approximately $13.5 million received by Corridor on the closing of the Anticosti Joint Venture on April 1, 2014.
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 and crude oil reserves in the Caledonia Field near Sussex, New Brunswick. In addition, Corridor has contingent resources and discovered unrecoverable resources in Elgin, New Brunswick and has a 21.67% interest in a joint venture which has undiscovered resources on Anticosti Island, Québec.
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: estimated natural gas production, cash flow from operations, capital expenditures, net positive working capital and debt level for 2014; natural gas prices and premiums in the New England market (Algonquin city-gate) and the duration of such premiums; plans to undertake a well re-entry and fracturing program at the McCully Field in 2014 and the expected benefits of such program; the financial resources to advance Corridor's opportunities; and regulatory treatment by the C-NLOPB.
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, 2013.
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.