HALIFAX, NOVA SCOTIA--(Marketwire - Aug. 12, 2011) - (News - Market indicators): 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, 2011, with comparisons to the three and six months ended June 30, 2010. 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 |
2011 |
|
2010(1) |
|
2011 |
|
2010(1) |
|
| Revenues |
$5,547 |
|
$6,575 |
|
$13,571 |
|
$16,223 |
|
| Net loss |
$(3,643 |
) |
$(1,739 |
) |
$(5,821 |
) |
$(2,135 |
) |
| Net loss per share - basic and diluted |
$(0.041 |
) |
$(0.020 |
) |
$(0.066 |
) |
$(0.024 |
) |
| Cash flow from operations(2) |
$1,942 |
|
$2,755 |
|
$5,514 |
|
$7,736 |
|
| Capital expenditures |
$873 |
|
$7,681 |
|
$1,578 |
|
$12,332 |
|
| Total assets |
$296,928 |
|
$307,643 |
|
$296,928 |
|
$307,643 |
|
| |
|
| 1. |
As restated under International Financial Reporting Standards ("IFRS"). See "First Time Adoption of IFRS" in Corridor's MD&A for the six months ended June 30, 2011. |
| 2. |
Cash flow from operations is a non-IFRS measure. Cash flow from operations represents cash flow provided by operating activities excluding the change in non-cash operating working capital. See "Non-IFRS Financial Measures" in Corridor's MD&A for the six months ended June 30, 2011. |
Highlights
- During Q2 2011, natural gas production averaged 11.7 mmscfpd net to Corridor (including production from penalty wells) with an average natural gas sales price of $4.83/mscf, resulting in a net loss of $3,643 thousand and basic and diluted net loss per share of $0.041.
- Natural gas revenues for Q2 2011 decreased to $5,155 thousand from $6,141 thousand for Q2 2010 due to the decrease in natural gas production from 13.6 mmscfpd in Q2 2010 to 11.7 mmscfpd in Q2 2011. The average natural gas sales price decreased to $4.83/mscf in Q2 2011 from $4.95/mscf in Q2 2010. The decrease in production is due to the decreased drilling activities at the McCully Field since 2009 following decreases in natural gas prices. The inlet compressor installed in Q3 2010 is performing as expected and partially mitigating production declines.
- Cash flow from operations was $1,942 thousand in Q2 2011 compared to $2,755 thousand in Q2 2010 with cash and cash equivalents at June 30, 2011 of $9,170 thousand. The decrease in cash flow from operations is due to the lower natural gas revenues partially offset by lower transportation expenses.
- Net loss for Q2 2011 increased to $3,643 thousand from $1,739 thousand for Q2 2010 due to the decrease in revenues as well as the write-down of $1,600 thousand of casing inventory. In addition, during the quarter, the Company's deferred income tax recovery decreased by $850 thousand due to the Province of New Brunswick's corporate income tax rate being increased from 8% to 10% effective July 1, 2012 following the New Brunswick Government's 2010 budget.
- During Q2 2011, Corridor engaged MacQuarie Capital Markets to assist the Company in attracting a joint venture partner for the Old Harry project.
- During the quarter, Corridor completed the annual shut-down originally scheduled for the fall at the McCully Field. The shut-down was a success with modifications to the compressor to reduce energy costs. In addition, any lost production experienced during the shut-down was replaced after the start-up with flush production. As a result, the average natural gas production for the quarter remained on budget.
- Subsequent to Q2 2011, the Board of Directors of Corridor conditionally approved further work on the Frederick Brook shale in the Elgin area of New Brunswick, including the drilling of one appraisal well. The Company has sufficient funds to complete this work without access to external sources. Corridor also engaged MacQuarie Capital Markets to assist the Company in connection with a potential joint venture in order to further advance the development of the Frederick Brook shale in New Brunswick.
Q2 2011 Netback Analysis
| |
Three months ended June 30 |
|
Six months ended June 30 |
|
| thousands of dollars except $/mscf |
2011 |
|
2010 |
|
2011 |
|
2010 |
|
| Natural gas revenues |
$5,155 |
|
$6,141 |
|
$12,861 |
|
$15,238 |
|
| Royalty expense |
(127 |
) |
(29 |
) |
(456 |
) |
(321 |
) |
| Production expense |
(1,103 |
) |
(864 |
) |
(2,218 |
) |
(2,094 |
) |
| Transportation expense |
(1,359 |
) |
(1,727 |
) |
(3,050 |
) |
(3,564 |
) |
| Netback |
$2,566 |
|
$3,521 |
|
$7,137 |
|
$9,259 |
|
| |
|
|
|
|
|
|
|
|
| Natural gas production (mmscf) |
1,067 |
|
1,240 |
|
2,208 |
|
2,584 |
|
| Natural gas production per day (mmscfpd) |
11.7 |
|
13.6 |
|
12.2 |
|
14.3 |
|
| |
|
|
|
|
|
|
|
|
| Natural gas revenues ($/mscf) |
$4.83 |
|
$4.95 |
|
$5.82 |
|
$5.90 |
|
| Royalty expense ($/mscf) |
(0.12 |
) |
(0.02 |
) |
(0.21 |
) |
(0.12 |
) |
| Production expense ($/mscf) |
(1.03 |
) |
(0.70 |
) |
(1.00 |
) |
(0.81 |
) |
| Transportation expense ($/mscf) |
(1.27 |
) |
(1.39 |
) |
(1.38 |
) |
(1.38 |
) |
| Netback ($/mscf) |
$2.41 |
|
$2.84 |
|
$3.23 |
|
$3.59 |
|
Natural gas revenues decreased to $5,155 thousand in Q2 2011 from $6,141 thousand in Q2 2010 due to the decrease in the average daily natural gas production to 11.7 mmscfpd in Q2 2011 from 13.6 mmscfpd in Q2 2010. The average natural gas sales price was also decreased to $4.83/mscf in Q2 2011 from $4.95/mscf in Q2 2010.
The increase in the royalty expense per mscf for the three months ended June 30, 2011 to $0.12/mscf from $0.02/mscf for the three months ended June 30, 2010 is due to a decrease in the expenses allowable in the royalty calculation.
Production expense for Q2 2011 increased to $1,103 thousand from $864 thousand for Q2 2010 due to the increase in repairs and maintenance expenses as Corridor's annual shut-down normally done in the third quarter was done in the second quarter this year. Utilities expense also increased due to the addition of an inlet compressor in Q3 2010.
Transportation expense decreased to $1,359 thousand for Q2 2011 from $1,727 thousand for Q2 2010 due to the decrease in natural gas production and a stronger Canadian dollar as compared to the U.S. dollar.
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, Prince Edward Island and Québec and offshore in the Gulf of St. Lawrence. Corridor currently has natural gas reserves and production in the McCully Field near Sussex, New Brunswick and discovered crude oil reserves in the Caledonia Field near Sussex, New Brunswick in 2008. In addition, Corridor has contingent resources and discovered resources of shale gas in Elgin, New Brunswick.
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 business plans and strategies, the process to attract joint venture partners for the Old Harry project and the Frederick Brook shale and the drilling of an appraisal well in the Elgin area of New Brunswick.
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 the characteristics of the Frederick Brook shale, 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. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Unknown risks and uncertainties include, but are not limited to risks associated with oil and gas exploration, financial risks, substantial capital requirements, bank financing, government regulation, environmental, prices, risks may not be insurable and reserves and resources estimates. Further information regarding these factors and additional factors may be found under the heading "Risk Factors" in Corridor's Annual Information Form for the year ended December 31, 2010.
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.