(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, 2018, with comparisons to the three and six
months ended June 30, 2017. 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 |
|
Three months ended June 30 |
Six months ended June 30 |
|
thousands of dollars except per share amounts |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
Sales |
$ 1,583 |
|
$46 |
|
$ 13,419 |
|
$4,513 |
Net income
(loss) |
$ (10,127 |
) |
$(1,510 |
) |
$ (4,558 |
) |
$315 |
Net income
(loss) per share – basic and diluted |
$ (0.114 |
) |
$(0.017 |
) |
$ (0.051 |
) |
$0.004 |
Cash flow
from operations(1) |
$ 187 |
|
$(1,282 |
) |
$ 9,832 |
|
$2,401 |
Working
capital |
$ 56,219 |
|
$31,796 |
|
$ 56,219 |
|
$31,796 |
Total assets |
$ 117,773 |
|
$103,508 |
|
$ 117,773 |
|
$103,508 |
(1) Cash
flow from operations is a non-IFRS measure. Cash flow from
operations represents net earnings adjusted for non-cash items
including depletion, depreciation and amortization, deferred income
taxes, share-based compensation and other non-cash expenses.
See "Non-IFRS Financial Measures" in Corridor’s MD&A for the
six months ended June 30, 2018. |
Q2 2018 Netback Analysis |
|
Three months ended June 30 |
Six months ended June 30 |
|
thousands of dollars |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
Natural gas production
per day (mmscfpd) |
|
2.8 |
|
|
0.1 |
|
|
6.3 |
|
|
3.6 |
|
Barrels of oil equivalent per day (boepd (2)) |
|
466 |
|
|
18 |
|
|
1,056 |
|
|
604 |
|
Average natural gas
price ($/mscf) |
$ 5.63 |
|
$ 3.86 |
|
$ 11.28 |
|
$ 6.41 |
|
|
|
|
|
|
Natural gas sales |
$ 1,432 |
|
$ 38 |
|
$ 12,938 |
|
$ 4,204 |
|
Realized financial
derivatives gain (loss) |
|
(320 |
) |
|
- |
|
|
(1,398 |
) |
|
1,094 |
|
Other revenues |
|
151 |
|
|
8 |
|
|
481 |
|
|
309 |
|
Royalties |
|
(25 |
) |
|
(1 |
) |
|
(410 |
) |
|
(93 |
) |
Transportation
expense |
|
(22 |
) |
|
- |
|
|
(100 |
) |
|
(428 |
) |
Production expense |
|
(701 |
) |
|
(510 |
) |
|
(1,403 |
) |
|
(1,299 |
) |
Field
operating netback |
$ 515 |
|
$ (465 |
) |
$ 10,108 |
|
$ 3,787 |
|
(2) For the purpose of calculating unit revenues and costs,
natural gas has been converted to barrels of oil equivalent (“boe”)
on the basis of six thousand cubic feet (“mscf”) of natural gas
being equal to one barrel of oil. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of six
mscf to one barrel is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. |
Unlike prior financial periods, Corridor has
determined not to make any disclosure of its financial performance
on a per boe basis for the three and six months ended June 30, 2018
and 2017. Such disclosure would not be a meaningful indicator of
the performance of Corridor given its nominal production in Q2 2018
and Q2 2017 as a result of management’s decision to shut-in its
production during these periods as part of its production
optimization strategy.
2018 Second Quarter
Highlights
- Corridor shut-in all of its natural gas production starting in
May 2018 in accordance with its production optimization strategy.
Sales for Q2 2018 increased to $1,583 thousand from $46 thousand
for Q2 2017 due to management’s decision to delay the shut-in of
all wells at the McCully Field in 2018 until May while in 2017
management had determined to commence the shut-in earlier in April.
As a result, the average daily natural gas production increased to
2.8 mmscfpd in Q2 2018 from 0.1 mmscfpd in Q2 2017. Corridor will
continue to monitor forecast prices to determine when natural gas
production should resume but expects to continue restricting
production until December 2018.
- Corridor’s cash flow from operations increased to $187 thousand
in Q2 2018 from a negative cash flow from operations of $1,282
thousand in Q2 2017 due primarily to higher natural gas sales in Q2
2018 resulting from the production in April 2018 as a result of
management’s decision to delay the shut in of all of its wells in
2018 until May, rather than earlier in April in 2017.
- During the quarter, Corridor announced its decision to suspend
all further technical work and capital spending on the Old Harry
prospect after a comprehensive review revealed more complexity in
the Old Harry prospect than previous analysis had suggested, which
included the results of an integrated geotechnical analysis from a
controlled source electromagnetic survey and reprocessed two
dimensional seismic. This comprehensive review revealed that the
geology and geochemical/petrological analysis of the Old Harry
structure was more complicated than previously understood. Corridor
determined there was no longer a viable path to drilling an
exploration well on the Old Harry prospect before the current
exploration licence on the Newfoundland side expires in January
2021. As a result, Corridor recognized impairment losses of $11,368
thousand in Q2 2018 relating to the costs incurred to date on the
Old Harry prospect.
- During the quarter, the Company entered into an additional
financial hedge at a fixed price of $US7.90/mmbtu for 2,500 mmbtupd
of natural gas production for the period from December 1, 2018 to
March 31, 2019.
- At June 30, 2018, Corridor had cash and cash equivalents of
$56,093 thousand, working capital of $56,219 thousand and no
outstanding debt.
The Corporation will shortly file with the Toronto Stock
Exchange a Notice of Intention to Make a Normal Course Issuer Bid
to purchase up to 6.8 million of common shares of Corridor. Under
the bid, Corridor may purchase its Common Shares, from time to
time, if it believes that the market price of its Common Shares is
attractive and that the purchase would be an appropriate use of
corporate funds and in the best interests of the Corporation. Any
common shares purchased will be cancelled.
“With working capital of approximately $56
million, Corridor enjoys considerable optionality to pursue
opportunities for deployment of our capital. We will continue
to exercise patience and be selective in any opportunities we may
decide to pursue.” said Steve Moran, President and Chief Executive
Officer.
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 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 and an offshore conventional hydrocarbon prospect in
the Gulf of St. Lawrence.
For further information: Contact: Steve
Moran, President and CEOCorridor Resources Inc.#301, 5475 Spring
Garden Road, Halifax, Nova Scotia B3J
3T2
Ph: (902) 429-4511 F: (902) 429-0209 Web: www.corridor.ca
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: the characteristics of Corridor’s properties;
business plans and strategies, including plans to resume production
from its shut-in wells, Corridor’s production optimization
strategy, and plans to commence a normal course issuer bid and to
purchase common shares under such bid; expectations regarding
Corridor’s positioning for 2018 and plans to pursue opportunities;
and expectations regarding natural gas prices.
Statements relating to "reserves" are
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions that the reserves
described exist in the quantities predicted or estimated and can
profitably be produced in the future.
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 the
Corporation and its shareholders. Forward-looking statements
are based on the Corporation's current beliefs as well as
assumptions made by, and information currently available to, the
Corporation concerning anticipated financial performance, business
prospects, strategies, regulatory developments, future natural gas
and oil commodity prices, exchange rates, 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, the ability to add production and reserves
through development and exploration activities, and the terms of
agreements with third parties such as the Corporation's hedging
contracts. 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 include, but are not limited to,
risks associated with oil and gas exploration, development and
production, operational risks, development and operating costs,
substantial capital requirements and financing, volatility of
natural gas and oil prices, government regulation, environmental,
hydraulic fracturing, third party risk, dependence on key
personnel, co-existence with mining operations, availability of
drilling equipment and access, variations in exchange rates,
expiration of licenses and leases, reserves and resources
estimates, trading of common shares, seasonality, disclosure
controls and procedures and internal controls over financial
reporting, competition, conflicts of interest, issuance of debt,
title to properties, hedging, information systems, litigation and
aboriginal land and rights claims. Further information
regarding these factors may be found under the heading "Risk
Factors" in the Corporation’s Annual Information Form for the year
ended December 31, 2017. Readers are cautioned that the foregoing
list of factors that may affect future results is not
exhaustive.
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.