Corridor Resources Inc.
TSX : CDH

Corridor Resources Inc.

October 28, 2014 08:29 ET

Corridor Announces Initial Results of 2014 Capital Program

HALIFAX, NOVA SCOTIA--(Marketwired - Oct. 28, 2014) - Corridor Resources Inc. ("Corridor" or the "Company") (TSX:CDH) is pleased to announce the initial results of its 2014 capital program in the McCully Field and surrounding basin in southern New Brunswick. The program was designed to increase natural gas production and revenues from the McCully Field and to evaluate the potential of the Frederick Brook shale in the McCully and Elgin areas.

A summary of the program's results are as follows:

Field Well Formation (Intervals Completed) Fracture Size (Proppant tonnes) Flow Period (Hours) Flowing well head pressure (kPa) (1) Final Test Rate (mcf/d) (2)
McCully E-67B Upper Frederick Brook (one) 55 133 2308 309
McCully J-76 Upper Frederick Brook (one) 28 139 1010 273
McCully L-37 Hiram Brook G (two) 96 114 9723 987
Elgin B-41 Upper Frederick Brook (one) 30 98 540 213 (3)
McCully P-76 Upper Frederick Brook (one) 14 46 946 504
(1) Flowing well head pressure means flowing tubing head pressure at the end of the production test.
(2) Final test rate means the average rate for the final 12 hours at the end of a 4-day flow period that was preceded by an initial flow period intended for fracture fluid clean-up. The wells were still producing fracture fluids at the end of their respective test periods and will continue to clean-up once placed on permanent production.
(3) During the clean-up period of the B-41 well, numerous flow and shut-in periods were performed. A total of 98 barrels of oil (45° API) was also recovered during this clean-up period at a final rate of approximately 7 bbls/mmscf.

Steve Moran, President and CEO of Corridor, stated, "The program successfully accomplished its two main objectives, which were to: 1) increase natural gas production in the McCully Field; and 2) provide an opportunity to establish a production profile from multiple intervals within the Frederick Brook shale. While production test information is preliminary in nature and not necessarily indicative of long-term production or ultimate recovery, we certainly have increased our current productive capacity. The new production information from the Frederick Brook shale will be instrumental in establishing a type curve for single-stage fracture stimulations. This will aid us greatly in planning future drilling and completion programs, which would contemplate wells with multiple fracture stimulations employing increasingly larger tonnage per stage. Companies in other North American shale gas plays are typically conducting up to 20 fracture stimulations per well utilizing in excess of 100 tonnes of proppant per stage. The preliminary test results from our single stage fracture stimulations, using considerably less proppant tonnage, are promising."

The results from the program have demonstrated that the Frederick Brook shale is productive from at least six different sub-intervals across a distance of 25 kilometers. The following is a simplified cross-section of the various wells where Corridor has successfully tested natural gas from the Frederick Brook shale.

To view the cross-section, please visit the following link: http://media3.marketwire.com/docs/corridor_resources_fig01_oct28.pdf

The focus of this year's program was to utilize existing wellbores that provided the most readily available access to stimulate and produce the Frederick Brook shale and not necessarily the most prospective intervals. Due to the great thickness of the Frederick Brook (up to 1100 meters thick), there are numerous additional prospective intervals that have not been stimulated to date. Corridor believes the vertical distribution and linear extent of the successful tests is further evidence in support of the best estimate of discovered unrecoverable resources of 67.3 TCF (59.1 net to Corridor) in the Frederick Brook shale by the independent firm GLJ Petroleum Consultants Ltd. (GLJ), which estimate is set forth in Corridor's Annual Information Form for the year ended December 31, 2013, a copy of which is available under Corridor's profile at www.sedar.com.

The Company has one long term producing well from the Frederick Brook shale. The F-58 well in McCully was fracture stimulated with water in a single 11 tonne treatment and placed on production in 2008. It is still producing at an estimated average rate of 180 mscf/d with a 1.8% annual decline. To date (October 26th, 2014), F-58 has produced a total of 411 mmscf. The Company expects F-58 to recover a total of 1.5 Bscf (proved plus probable estimate as forecast by GLJ in its report effective December 31, 2013). Preliminary test data from the 2014 program indicates that the newly fracture stimulated Frederick Brook intervals are initially comparable to F-58.

With the exception of the P-76 well, all of the wells in this year's program were stimulated with liquefied petroleum gas (LPG). The Frederick Brook shale in P-76 was fractured with water in 2007 and had been suspended while the Hiram Brook formation was placed on production in that well.

In the Elgin area, the Green Road B-41 horizontal well was stimulated in an upper Frederick Brook zone. This horizontal well had been unsuccessfully stimulated in a lower interval of the Frederick Brook shale in 2010. This summer's successful fracture program supports Corridor's belief that properly designed well and fracture programs for the Frederick Brook shale will lead to commercial development. B-41 is the second well in the Elgin Area to successfully test natural gas from the Frederick Brook shale. Corridor's Green Road G-41 well tested at a restricted rate of 4.0 mmscf/d from a different interval in the Frederick Brook shale in 2011.

The Company notes that the incidence of oil in B-41 is the first oil recovered from the Frederick Brook shale in the Elgin field. While it is too early to quantify the significance of the presence of oil in the Frederick Brook, the Company is further encouraged by the occurrence of heavier hydrocarbons.

A planned completion of the P-67 well in the Hiram Brook formation was not undertaken due to a bridge plug failure. Three intervals in the Frederick Brook shale of the E-67B well were not completed as planned due to hole instability issues encountered during re-entry.

Based on field estimates, the preliminary estimated cumulative capital for this year's capital program is $24 million versus a forecast of $25 million. The Company will review its production guidance once the newly completed wells have been placed on production and have established a stabilized initial rate.

All of the wells are presently shut-in for pressure build-up. With the exception of B-41 in Elgin, following their build-up period, all of the wells will be placed on production to take advantage of premium pricing over the winter heating season. Corridor sells its natural gas into the New England market and is priced at the Algonquin City Gate. Corridor currently has 4,000 mmbtu (approximately 3.8 mmscf/d) sold forward for the period of November 1, 2014 to March 31, 2015 at $US11.74/mmbtu. As of October 27, 2014, the Algonquin City Gate winter 2014-2015 basis differential was approximately a $US10.00/mmbtu premium to Henry Hub.

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.

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: results of the 2014 capital program in the McCully Field and surrounding basin in southern New Brunswick and the expected benefits of such programs, estimated natural gas production, future drilling and completion program, the characteristics of the Frederick Brook shale, the 2014 capital expenditures, plans to review Corridor's 2014 production guidance, plans to put all the wells on production and timing of such production, natural gas prices and premiums in the New England market (Algonquin city-gate) and the duration of such premium, future sales by Corridor and prices to be obtained by such sales.

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 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, such as Corridor's forward sales and transportation agreements and the Anticosti Joint Venture. 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.

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.

Resources Disclosure

"Discovered resources" is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable. "Undiscovered resources" refers to those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of undiscovered petroleum initially-in-place is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of undiscovered petroleum initially-in-place at this time.

"Discovered unrecoverable petroleum initially-in-place", the equivalent of "discovered unrecoverable resources", refers to that portion of discovered petroleum initially-in-place which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks;

Resources do not constitute, and should not be confused with, reserves. Actual reserves and resources will vary from the reserve and resource estimates, and those variations could be material. There is no certainty that it will be economically viable to produce any portion of the resources.

The resources assessment was completed by GLJ Petroleum Consultants Ltd. effective June 1, 2009, as modified on March 25, 2014, setting forth certain information regarding discovered unrecoverable resources of Corridor's interests in the Frederick Brook shale formation. The best estimate is the value that best represents the expected outcome with no optimism or conservatism. There is no certainty that it will be commercially viable to produce any portion of these discovered resources.

For further information on Corridor's resources and reserves, see Corridor's Annual Information Form for the year ended December 31, 2013.

Contact Information

  • Corridor Resources Inc.
    Steve Moran
    President & CEO
    (902) 429-4511
    (902) 429-0209 (FAX)
    www.corridor.ca

    Corridor Resources Inc.
    #301, 5475 Spring Garden Road,
    Halifax, Nova Scotia B3J 3T2