HALIFAX, NOVA SCOTIA--(Marketwired - Aug. 12, 2013) - Corridor Resources Inc. ("Corridor") (TSX:CDH) announced today its second quarter financial results.
The following table provides a summary of Corridor's financial and operating results for the three and six months ended June 30, 2013, with comparisons to the three and six months ended June 30, 2012. Corridor's financial statements and management's discussion and analysis for the second 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 June 30 | Six months ended June 30 | |||||
| thousands of dollars except per share amounts | 2013 | 2012 | 2013 | 2012 | ||
| Sales | $ 4,013 | $ 2,708 | $ 12,127 | $ 6,864 | ||
| Net income (loss) | $ 370 | $ (2,435 | ) | $ 2,899 | $ (4,089 | ) |
| Net income (loss) per share - basic and diluted | $ 0.004 | $ (0.028 | ) | $ 0.033 | $ (0.046 | ) |
| Cash flow from operations(1) | $ 1,703 | $ 104 | $ 6,964 | $ 1,394 | ||
| Capital expenditures | $ 629 | $ 853 | $ 1,102 | $ 1,640 | ||
| Total assets | $ 159,838 | $ 199,345 | $ 159,838 | $ 199,345 | ||
| (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 and six months ended June 30, 2013. |
Highlights
- Natural gas sales for Q2 2013 increased to $3,708 thousand from $2,361 thousand for Q2 2012 due to the increase in the average natural gas sales price to $4.92/mscf in Q2 2013 from $2.86/mscf in Q2 2012, which increase was partially offset by the decrease in the average daily natural gas production to 8.3 mmscfpd in Q2 2013 from 9.1 mmscfpd in Q2 2012.
- During the quarter, Corridor's cash flow from operations increased to $1,703 thousand from $104 thousand in Q2 2012 due primarily to higher natural gas sales. Corridor had cash and cash equivalents as at June 30, 2013 of $14,181 thousand, working capital of $15,463 thousand and no outstanding debt.
- Corridor's netback for the six months ended June 30, 2013 increased to $5.07/mscf from $1.45/mscf for the six months ended June 30, 2012 as a result of higher natural gas sales prices in the New England market.
- Net income for Q2 2013 increased to $370 thousand from a net loss of $2,435 thousand for Q2 2012 due primarily to the higher natural gas sales and to an increase of $972 thousand in the Company's deferred income tax recovery due to the Province of New Brunswick's corporate income tax rate being increased from 10% to 12% effective July 1, 2013 following the New Brunswick Government's 2013 budget.
- Subsequent to the quarter end, the Canada-Newfoundland and Labrador Offshore Petroleum Board amended Corridor's Exploration License in the Gulf of St. Lawrence to extend Period 1 of the license from seven years to eight years (January 15, 2016). In addition, this exploration license has a provision whereby Corridor can extend the drilling period by an additional year with the payment of a $1 million deposit. This extension should provide Corridor with sufficient time to gain the regulatory permits required to drill the Old Harry prospect in a two year drilling window between 2015 and 2016.
- Corridor continues to have discussions with various industry participants with a view to reaching joint venture agreements in respect of Corridor's three high impact exploration prospects (Frederick Brook shale gas prospect, Macasty Formation unconventional oil prospect on Anticosti Island and Old Harry conventional hydrocarbon prospect).
"We are pleased with Corridor's results for the first half of 2013 and encouraged by increasing netbacks due to the higher premiums achieved in our New England market," said Phil Knoll, President and Chief Executive Officer of Corridor Resources. "We are confident that elevated price premiums in the New England market will continue for several years and, as a result, Corridor is planning to undertake a drilling program at our McCully Field in 2014, subject to the availability of equipment, regulatory approvals and confirmation of a competitive royalty regime. The drilling program is expected to increase natural gas production as well as further test the deliverability of the Frederick Brook shale."
Q2 2013 Netback Analysis
| Three months ended June 30 | Six months ended June 30 | |||
| thousands of dollars except $/mscf | 2013 | 2012 | 2013 | 2012 |
| Natural gas sales | $ 3,708 | $ 2,361 | $ 11,464 | $ 6,125 |
| Royalty expense | - | - | 493 | 8 |
| Transportation expense | 929 | 1,018 | 1,865 | 2,114 |
| Production expense | 697 | 706 | 1,426 | 1,501 |
| Netback | $ 2,082 | $ 637 | $ 7,680 | $ 2,502 |
| Natural gas production (mmscf) | 754 | 826 | 1,515 | 1,730 |
| Natural gas production per day (mmscfpd) | 8.3 | 9.1 | 8.4 | 9.5 |
| Natural gas sales ($/mscf) | $ 4.92 | $ 2.86 | $ 7.57 | $ 3.54 |
| Royalty expense ($/mscf) | - | - | 0.33 | - |
| Transportation expense ($/mscf) | 1.23 | 1.23 | 1.23 | 1.22 |
| Production expense ($/mscf) | 0.92 | 0.85 | 0.94 | 0.87 |
| Netback ($/mscf) | $ 2.77 | $ 0.78 | $ 5.07 | $ 1.45 |
Natural gas sales increased to $3,708 thousand in Q2 2013 from $2,361 thousand in Q2 2012 due to the increase in the average natural gas sales price to $4.92/mscf in Q2 2013 from $2.86/mscf in Q2 2012, which increase was partially offset by the decrease in the average daily natural gas production to 8.3 mmscfpd in Q2 2013 from 9.1 mmscfpd in Q2 2012. The decrease in the average daily natural gas production is due to the Company's decision to decrease drilling activities at the McCully Field since 2009 following decreases in natural gas prices.
Transportation expense decreased to $929 thousand in Q2 2013 from $1,018 thousand in Q2 2012 due to the decrease in natural gas production. The impact of the increase of $0.007/mmbtu in the cost of Canadian firm transportation effective January 1, 2013 and the stronger U.S. dollar in Q2 2013 was partially offset by the higher proportion of natural gas production covered off by transportation agreements at a cost significantly lower than firm tolls.
Net production expense for Q2 2013 decreased slightly to $697 thousand from $706 thousand in Q2 2012 due to a decrease in utilities expenses from lower natural gas production.
Outlook
Corridor has increased its budgeted 2013 cash flow from operations from $8.3 million to $9 million to reflect higher than expected natural gas sales in 2013. Corridor has increased its forecast average natural gas sales price for 2013 from $6.7/mscf to $7.0/mscf (consisting of US$3.75/mmbtu at Henry Hub, an average premium for the New England market of US$2.80/mmbtu and an estimate of the exchange rate of $1.01 U.S. per Canadian dollar). Corridor has also increased its forecast average net daily gas production for 2013 from 7.7 mmscfpd to 7.8 mmscfpd.
Based on available working capital of $10.2 million at December 31, 2012 and Corridor's revised capital budget of approximately $2.7 million for 2013, Corridor has increased its net positive working capital forecast from $15.5 million to approximately $16.5 million at December 31, 2013, with no outstanding debt.
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 resources in Elgin, New Brunswick and undiscovered resources on Anticosti Island, Québec where Corridor has ongoing exploration projects.
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: estimated natural gas production, cash flow from operations, capital expenditures, net positive working capital and debt level for 2013; natural gas prices and premiums in the New England market; plans to undertake a drilling program at the McCully Field in 2014; expectations relating to the regulatory approvals process in respect of, and drilling plans for, the Old Harry prospect.
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, 2012.
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 2013, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2013 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.
Contact Information:
Corridor Resources Inc.
(902) 429-4511
(902) 429-0209 (FAX)
www.corridor.ca