Corridor Resources Inc. (TSX:CDH) ("Corridor" or the "Company") announced today its 2016 year-end financial results and reserves evaluations. Corridor's annual financial statements, annual management's discussion and analysis and Annual Information Form for the year ended December 31, 2016 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.
Financial Summary for 2016
2016 Reserve Information
Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick. GLJ assessed Corridor's reserves in its report dated March 1, 2017 and effective as at December 31, 2016 ("2016 GLJ Reserves Report") and its updated report dated June 15, 2016 and effective December 31, 2015 ("GLJ 2015 Updated Reserves Report") (collectively, the "GLJ Reports") which were both prepared in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities ("NI 51-101"). The GLJ 2015 Updated Reserves Report updated GLJ's initial reserves report effective December 31, 2015 to assess the impact on Corridor's reserves of the New Brunswick Government's announcement on May 27, 2016 of its decision to continue the moratorium on hydraulic fracturing for an indefinite period. The GLJ 2015 Updated Reserves Report demonstrated that the New Brunswick Government's decision resulted in a material reduction in Corridor's undeveloped reserves, future development capital and associated net present value of future revenue as Corridor's undeveloped wells no longer qualified as reserves given that such wells require hydraulic fracture stimulations. See Corridor's material change report dated June 16, 2016, a copy of which is filed on SEDAR at www.sedar.com.
Anticosti Joint Venture
Corridor has a 21.67% interest in Anticosti Hydrocarbons L.P., which has undeveloped lands on Anticosti Island, Québec. The Anticosti Joint Venture is a limited partnership between Corridor, Ressources Québec Inc., a subsidiary of Investissement Québec (an affiliate of the Government of Québec), Pétrolia Inc. and Saint-Aubin E&P Québec Inc. formed to appraise and potentially develop hydrocarbon resources on Anticosti Island.
Beginning in December 2015, the Premier of Québec stated on numerous occasions that he is not in favor of the development of hydrocarbons on Anticosti Island and that he is willing to face the financial consequences of pulling out of the Anticosti Joint Venture and cancelling the agreements governing the Anticosti Joint Venture.
Subsequently, in March 2016, the Premier issued a statement confirming that the Québec Government would respect the Anticosti Joint Venture agreements as long as the project met environmental standards.
In January 2017, the Québec Government announced its decision to support the designation of Anticosti Island as a UNESCO World Heritage site. If designated as a UNESCO World Heritage site, the Anticosti Joint Venture would not be permitted to engage in development or production of oil and gas on the Island. While the Québec Government confirmed its intention to respect the Anticosti Joint Venture agreements, there is uncertainty that Anticosti Hydrocarbons' drilling program will proceed in 2017. Corridor is reviewing its options to ensure the value of its investment in Anticosti Hydrocarbons is protected.
On January 15, 2017, the Canada - Newfoundland and Labrador Offshore Petroleum Board issued exploration license EL-1153 to Corridor in exchange for the surrender of exploration license EL-1105 covering the Newfoundland and Labrador sector of the Old Harry Prospect in the Gulf of St. Lawrence. The new exploration license expires on January 14, 2020, subject to extension by Corridor for an additional one year period (January 14, 2021) with the payment of a $1 million deposit.
Corridor intends to purchase a user license for a controlled source electro-magnetic ("CSEM") data program to investigate the resistivity of geological prospects over the Newfoundland and Labrador sector of the Old Harry prospect, similar to resistivity logging in well bores of potential hydrocarbon zones. Highly resistive layers in a geological structure measured with CSEM technology could indicate hydrocarbon bearing reservoirs and, therefore, would serve to reduce exploration risk and increase the likelihood of finding commercial quantities of hydrocarbons. The undertaking of the CSEM program, currently planned by an independent service provider for a seven day period in the fall of 2017, is subject to the receipt of the necessary regulatory approvals and vessel availability.
Corridor has revised its guidance for the period from April 1, 2016 to March 31, 2017 from guidance previously disclosed on October 7, 2016 to reflect actual results to December 31, 2016 and expected natural gas prices from January 1, 2017 to March 31, 2017.
Notwithstanding a significant decrease in natural gas prices at AGT from those previously forecasted for the first quarter of 2017, Corridor's cash flow from operations for the period from April 1, 2016 to March 31, 2017 is only expected to decrease by $0.2 million to $4.4 million. This is due to the financial hedges Corridor put in place and lower general and administrative expenses.
Corridor is currently evaluating alternatives for its optimization strategy for the period from April 1, 2017 to March 31, 2018 and anticipates providing guidance for that period at its annual shareholders' meeting, currently scheduled for May 11, 2017.
"Corridor is well positioned for 2017," said Steve Moran, President and Chief Executive Officer. "Our balance sheet is very strong, with a forecast $33.2 million of positive working capital at the end of Q1 2017. We are very pleased with the results of our optimization strategy over the past two years, taking advantage of the winter pricing premium of our natural gas market, while preserving reserves for production in future years. We expect this winter pricing premium to continue for the foreseeable future. Corridor has been evaluating new opportunities to deploy our working capital, but with the prolonged downturn in commodity prices, we have been patient in our approach. We will continue to be selective in any opportunities we may decide to pursue."
Corridor is a 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. In addition, Corridor has a shale gas prospect in New Brunswick, an offshore conventional hydrocarbon prospect in the Gulf of St. Lawrence and an unconventional hydrocarbon prospect through a 21.67% interest in Anticosti Hydrocarbons L.P., a joint venture with undeveloped lands on Anticosti Island, Québec.
SOURCE: Corridor Resources Inc.
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