HALIFAX, NOVA SCOTIA–(Marketwired – Oct. 7, 2016) – Corridor Resources Inc. (“Corridor”) (TSX:CDH) announced today that it has entered into a financial hedge for the period from December 1, 2016 to March 31, 2017 for 2,500 mmbtu per day of natural gas production (approximately 2.3 mmscf per day) at a fixed price of $US6.50/mmbtu. All amounts referred to in this press release are in Canadian dollars unless otherwise stated.
Corridor’s strategy is to maximize its field operating netback by producing less natural gas volumes in periods of low natural gas prices and increased natural gas volumes in periods of high natural gas prices. Accordingly, Corridor partially shut-in its natural gas production in September and intends to continue such partial shut-in until the end of November 2016 due to anticipated higher natural gas pricing at the Algonquin city-gates market (“AGT”) from December 1, 2016 to March 31, 2017. Corridor entered into this financial hedge to protect its field operating income against possible low natural gas prices at AGT during the winter season. Management will continue to monitor closely future natural gas prices at AGT until the end of November 2016 and may elect to shut-in more or less production and hedge additional production, all in accordance with its strategy.
Corridor has revised its guidance from guidance previously provided on May 12, 2016 and September 16, 2016 to reflect the decision to partially shut-in production and enter into a financial hedge, as follows:
Revised Guidance from April 1, 2016 to March 31, 2017
|AGT average natural gas price||$US4.00/mmbtu|
|USD/CAD exchange rate||$1.30 USD/CAD|
|Average natural gas price realized||$5.63/mscf|
|Average daily natural gas production||5.9 mmscfpd|
|Field operating netback||$7.8 million|
|Cash flow from operations(1)||$4.6 million|
|Field operating netback per mscf||$3.63/mscf|
|Cash flow from operations(1) per mscf||$2.13/mscf|
|Capital expenditures (for the calendar year 2016)||$0.6 million|
|Working capital estimate (as at March 31, 2017)||$33.8 million|
- 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.
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 which has undiscovered resources on Anticosti Island, Québec.