HALIFAX, Nova Scotia, Aug. 13, 2018 (GLOBE NEWSWIRE) — (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|
|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.