HALIFAX, Nova Scotia, November 12, 2019 (TSX – CDH): Corridor Resources Inc. (“Corridor”) announced today its third quarter financial results.
The following table provides a summary of Corridor’s financial and operating results for the three and nine months ended September 30, 2019, with comparisons to the three and nine months ended September 30, 2018. Corridor’s unaudited financial statements and management’s discussion and analysis for the third 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 September 30||Nine months ended september 30|
|thousands of dollars except per share amounts||2019||2018||2019||2018|
|Sales||–||–||$ 7,023||$ 13,419|
|Realized financial derivatives gains (losses)||–||–||$ 2,898||$ (1,398)|
|Net income (loss)||$ (1,318)||$ (1,860)||$ 1,368||$ (6,418)|
|Net income (loss) per share – basic and diluted||$ (0.015)||$ (0.021)||$ 0.015||$ (0.072)|
|Cash flow from operations (1)||$ (1,422)||$ (867)||$ 6,295||$ 8,965|
|Working capital||$ 62,059||$ 54,286||$ 62,059||$ 54,286|
(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 See “Non-IFRS Financial Measures” in Corridor’s MD&A for the nine months ended September 30, 2019.
Q3 2019 Netback Analysis
|Three months ended September 30||Nine months ended september 30|
|thousands of dollars||2019||2018||2019||2018|
|Natural gas production per day (mmscfpd)||–||–||3.8||4.2|
|Barrels of oil equivalent per day (boepd )||–||–||627||700|
|Average natural gas price ($/mscf)||–||–||$ 6.40||$ 11.28|
|Natural gas sales||–||–||$ 6,574||$ 12,938|
|Realized financial derivatives gains (losses)||–||–||2,898||(1,398)|
|Field operating netback||$ (600)||$ (525)||$ 7,789||$ 9,583|
(2) 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
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 nine months ended September 30, 2019 and 2018. Such disclosure would not be a meaningful indicator of the performance of Corridor given there was no production in each of Q3 2019 and Q3 2018 due to management’s decision to shut-in production starting in May of each year as part of its production optimization strategy.
2019 Third Quarter Highlights
- Corridor shut-in all of its natural gas production for all of Q3 2019 in accordance with its production optimization strategy. With the arrival of cold weather in the Boston region, Corridor resumed partial production on November 8, 2019 with a plan to ramp up to full production starting in early December
- At September 30, 2019, Corridor had cash and cash equivalents of $61,253 thousand and working capital of $62,059 thousand and no outstanding
- During the quarter, Corridor purchased and cancelled 154,066 of its common shares at an average price of $0.673/share under its normal course issuer bid which ended on August 22, Corridor now has 88,147,005 basic common shares outstanding.
- Subsequent to the quarter end, the Company entered into a financial hedge for 2,500 mmbtupd from November 8, 2019 to November 30, 2019 at a fixed price of $US4.85/mmbtu, and another financial hedge for 2,500 mmbtupd from December 1, 2019 to March 31, 2020 at a fixed price of $US7.12/mmbtu. Corridor now has a total of 5,000 mmbtupd hedged for the period of December 1, 2019 to March 31, 2020 at an average price of $US8.06/mmbtu. In aggregate, Corridor’s financial hedges represent approximately 55% of Corridor’s total estimated production from November 8, 2019 to March 31, 2020.
- On October 31, 2019, Corridor announced the commencement of a formal process to explore and develop strategic alternatives with a view of enhancing shareholder
Increased Cash Flow and Production Guidance to March 31, 2020
Corridor has increased its guidance for the period from April 1, 2019 to March 31, 2020 from the guidance previously disclosed in the press release dated August 12, 2019, as follows:
|August 12, 2019 guidance||Revised guidance|
|AGT average natural gas price||$Us 3.93/mmbtu||$US 3.99/mmbtu|
|Average sales price realized (including financial hedges)||$9.00/mscf||$8.85/mscf|
|USD/CAD exchange rate||$1.30 USD/CAD||1.30 USD/CAD|
|Average daily natural gas production||3.4 mmscfpd||3.7 mmscfpd|
|Field operating netback||$8.7 million||$9.4 million|
|Cash flow from operations (1)||$7.1 million||$7.4 million|
|Field operating netback per mscf||$6.92/mscf||6.93/mscf|
|Cash flow from operations (1) per mscf||$5.63/mscf||$5.44/mscf|
|Capital expenditures (for the year ending December 31, 2019||$1.8 million||$1.1 million|
|Working capital estimate (as at March 31, 2020)||$68.1 million||$69.3 million|
|Working capital estimate per basic common share (as at March 31, 2020)||$0.77||$0.79|
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 See “Non-IFRS Financial Measures” in Corridor’s MD&A for the nine months ended September 30, 2019.
Key highlights of the revised guidance are as follows:
- An increase to estimated field operating netback to $9.4 million from an 8% increase in forecasted natural gas production due in part to the resumption of production earlier than previously planned and a mark to market gain on our recent financial hedges; and
- a decrease in capital expenditures for the year ended December 31,
As a result of the revised guidance, Corridor now estimates that its working capital estimate as of March 31, 2020 will be $69.3 million or $0.79 per basic common share.
An updated corporate presentation dated November 2019 is now available on Corridor’s website at www.corridor.ca.
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.