Corridor Announces Second Quarter Results

HALIFAX, NOVA SCOTIA--(Marketwired - Aug. 13, 2014) - (TSX:CDH) - Corridor Resources Inc. ("Corridor") 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, 2014, with comparisons to the three and six months ended June 30, 2013. Corridor's unaudited 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

thousands of dollars except per share amounts		Three months ended June 30		Six months ended June 30
		2014	2013	2014	2013
	Sales	$ 3,632	$ 4,013	$ 15,345	$ 12,127
	Net income	$ 6,251	$ 370	$ 10,260	$ 2,899
	Net income per share - basic	$ 0.071	$ 0.004	$ 0.116	$ 0.033
	Net income per share - diluted	$ 0.070	$ 0.004	$ 0.114	$ 0.033
	Cash flow from operations1	$ 1,057	$ 1,754	$ 9,130	$ 7,065
	Capital expenditures	$ 1,818	$ 629	$ 2,623	$ 1,102
	Total assets	$ 190,658	$ 159,838	$ 190,658	$ 159,838

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 six months ended June 30, 2014.

Highlights

• Natural gas sales for Q2 2014 decreased to $3,390 thousand from $3,708 thousand for Q2 2013 due to the decrease in the average daily natural gas production to 7.2 mmscfpd in Q2 2014 from 8.3 mmscfpd in Q2 2013, which decrease was partially offset by the increase in the average natural gas sales price to $5.19/mscf in Q2 2014 from $4.92/mscf in Q2 2013. The average natural gas sales price increased to $11.12/mscf for the six months ended June 30, 2014 from $7.57/mscf for the six months ended June 30, 2013 as a result of higher natural gas sales prices during this period at the Algonquin city-gate, Corridor's pricing point.

• Corridor's cash flow from operations for Q2 2014 decreased to $1,057 thousand from $1,754 thousand in Q2 2013 due primarily to lower natural gas production. However, Corridor's cash flow from operations for the six months ended June 30, 2014 increased to $9,130 thousand from $7,065 thousand for the six months ended June 30, 2013 as a result of the higher natural gas sales prices at the Algonquin city-gate during this period.

• At June 30, 2014, Corridor had cash and cash equivalents of $35,689 thousand, working capital of $37,380 thousand and no outstanding debt.

• On April 1, 2014, Corridor entered into a joint venture (the "Anticosti Joint Venture") 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. As part of the establishment of the Anticosti Joint Venture, Corridor holds an interest of 21.67% in the Anticosti partnership and received net cash proceeds of $13,479 thousand which resulted in a gain on sale of exploration assets of $8,500 thousand in Q2 2014. Phase 1 of the Anticosti exploration program, which includes drilling 15 - 18 stratigraphic coreholes in the first year, began during the quarter. Four coring rigs are currently on Anticosti Island and will continue to drill coreholes throughout Q4 2014. The results of the cores will help assess the rock quality and determine the locations of the three wells planned to be drilled and fracture stimulated in 2015.

• During the quarter, preparations for the 2014 well re-entry and fracturing program at the McCully Field and Elgin Field continued and Corridor obtained the required regulatory approvals to proceed with this program and mobilized the necessary equipment. The program plans include fracture stimulating three sand intervals in the Hiram Brook and up to seven shale intervals in the Frederick Brook. 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. Corridor is scheduled to complete the program in late Q3 2014 with results expected early in Q4 2014.

• On May 5, 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. 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 consultations on Corridor's Old Harry Environmental Assessment ("EA") are required in order for the C-NLOPB to finalize the EA. Corridor is seeking additional time to execute on its license given the requirement to complete additional consultation.

"We are pleased with the second quarter results which included the closing of the Anticosti Joint Venture, obtaining regulatory approvals to proceed with our 2014 capital program in New Brunswick and increasing our working capital to $37 million. Our year to date results show increased cash flow from operations resulting from impressive premiums from our New Brunswick production which is strategically located with direct access to large, premium markets in New Brunswick and New England" said Phillip Knoll, President and Chief Executive Officer. "The 2014 capital program in New Brunswick and phase 1 of the Anticosti exploration program are currently underway and Corridor looks forward to continuing to advance these exciting opportunities which could provide significant upside for Corridor's shareholders" said Mr. Knoll.

Q2 2014 Netback Analysis

thousands of dollars except $/mscf		Three months ended June 30		Six months ended June 30
		2014	2013	2014	2013
	Natural gas sales	$ 3,390	$ 3,708	$ 14,828	$ 11,464
	Royalty expense	75	-	1,227	493
	Transportation expense	896	929	1,869	1,865
	Production expense	823	697	1,651	1,426
	Netback	$ 1,596	$ 2,082	$ 10,081	$ 7,680
	Natural gas production (mmscf)	653	754	1,334	1,515
	Natural gas production per day (mmscfpd)	7.2	8.3	7.4	8.4
	Natural gas sales ($/mscf)	$ 5.19	$ 4.92	$ 11.12	$ 7.57
	Royalty expense ($/mscf)	0.11	-	0.92	0.33
	Transportation expense ($/mscf)	1.37	1.23	1.40	1.23
	Production expense ($/mscf)	1.26	0.92	1.24	0.94
	Netback ($/mscf)	$ 2.45	$ 2.77	$ 7.56	$ 5.07

Natural gas sales decreased to $3,390 thousand in Q2 2014 from $3,708 thousand in Q2 2013 due to the decrease in the average daily natural gas production to 7.2 mmscfpd in Q2 2014 from 8.3 mmscfpd in Q2 2013, which decrease was partially offset by the increase in the average natural gas sales price to $5.19/mscf in Q2 2014 from $4.92/mscf in Q2 2013.

Effective April 1, 2014, the Government of New Brunswick implemented a new two-tier royalty regime for natural gas production. The new regime changes the basic royalty rate payable from the previous 10% to a royalty rate equal to the greater of a 4% basic royalty calculated on the wellhead revenues and a 2% minimum royalty calculated on gross revenues. As a result of this new royalty regime and the requirement to pay a minimum royalty rate of 2%, Corridor's royalty expense for Q2 2014 increased to $75 thousand from nil in Q2 2013.

Transportation expense per mscf increased from $1.23/mscf in Q2 2013 to $1.37/mscf in Q2 2014 due to the stronger U.S. dollar relative to the Canadian dollar in 2014 and a transportation charge to access the Algonquin city-gate pricing point starting in Q3 2013. This increase was partially offset by the decrease in the cost of Canadian firm transportation effective April 1, 2014.

Net production expense for Q2 2014 increased to $823 thousand from $697 thousand in Q2 2013 due primarily to costs necessary to repair the damage caused by a spring flood and costs related to the well optimization efforts in Q2 2014. However, the increase in the production expense per mscf from $0.92/mscf in Q2 2013 to $1.26/mscf in Q2 2014 is primarily due to the decrease in natural gas production in 2014.

As a result, Corridor's netback for Q2 2014 decreased to $2.45/mscf from $2.77/mscf in Q2 2013.

Outlook

Corridor has decreased its budgeted 2014 cash flow from operations from $15 million to $14 million to reflect lower than expected natural gas prices in Q2 2014 and July 2014. Corridor has decreased its forecast average natural gas sales price for 2014 from $9.25/mscf to $9.00/mscf (consisting of US$4.65/mmbtu at Henry Hub, an average premium at the Algonquin city-gate of US$3.20/mmbtu and an estimate of the exchange rate of $0.93 U.S. per Canadian dollar). Corridor has maintained its estimated average net daily gas production of 8.0 mmscfpd for 2014.

Based on available working capital of $17.3 million at December 31, 2013 and Corridor's capital budget of $27.2 million for 2014, Corridor has decreased its net positive working capital forecast from $18.6 million to $17.6 million, with no outstanding debt, at December 31, 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.

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 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 and Elgin Field in 2014 and the expected benefits of such program; the financial resources to advance Corridor's opportunities; regulatory treatment by the C-NLOPB; plans of the Anticosti Joint Venture; and benefits to shareholders.

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.

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.