HALIFAX, NOVA SCOTIA--(Marketwired - May 9, 2013) - (TSX:CDH) - Corridor Resources Inc. ("Corridor") announced today its first quarter financial results.
The following table provides a summary of Corridor's financial and operating results for the three months ended March 31, 2013, with comparisons to the three months ended March 31, 2012. Corridor's financial statements and management's discussion and analysis for the first 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 March 31 | |||
| thousands of dollars except per share amounts | 2013 | 2012 | |
| Sales | $ 8,114 | $ 4,156 | |
| Net income (loss) | $ 2,529 | $ (1,654 | ) |
| Net income (loss) per share - basic and diluted | $ 0.029 | $ (0.019 | ) |
| Cash flow from operations(1) | $ 5,261 | $ 1,290 | |
| Capital expenditures | $ 473 | $ 787 | |
| Total assets | $ 159,957 | $ 200,885 | |
| (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 three months ended March 31, 2013. |
Highlights
- Corridor is encouraged by the recent increases in natural gas prices in North America and specifically in the New England market where natural gas prices averaged approximately $US8/mmbtu higher than the Henry Hub price in Q1 2013.
- Natural gas sales for Q1 2013 increased to $7,756 thousand from $3,764 thousand for Q1 2012 due to the increase in the average natural gas sales price to $10.19/mscf in Q1 2013 from $4.16/mscf in Q1 2012, which increase was partially offset by the decrease in the average daily natural gas production to 8.5 mmscfpd in Q1 2013 from 9.9 mmscfpd in Q1 2012.
- During the quarter, Corridor's cash flow from operations increased to $5,261 thousand from $1,290 thousand in Q1 2012 due to higher natural gas sales net of increased royalty expenses. Corridor had cash and cash equivalents as at March 31, 2013 of $12,523 thousand, working capital of $15,075 thousand and no outstanding debt.
- Net income for Q1 2013 increased to $2,529 thousand from a net loss of $1,654 thousand for Q1 2012 due primarily to the higher natural gas sales.
- After an extensive review in 2012 of regulations for oil and gas activities, the New Brunswick government confirmed its support for natural gas development on February 15, 2013 by releasing new rules on oil and gas activities in the province, in its report titled "Responsible Environmental Management of Oil and Natural Gas Activities in New Brunswick".
"We are pleased with our 1st Quarter results and encouraged by increasing natural gas prices, in particular the premiums achieved in our New England market," said Phil Knoll, President and Chief Executive Officer of Corridor Resources. "We believe that elevated price premiums in the New England market will continue for several years. Corridor is strategically positioned with its connections to existing infrastructure in New Brunswick to take advantage of this higher price environment and to create significant value through further development of its high-impact prospects in Eastern Canada."
Q1 2013 Netback Analysis
| Three months ended March 31 | ||
| thousands of dollars except $/mscf | 2013 | 2012 |
| Natural gas sales | $ 7,756 | $ 3,764 |
| Royalty expense | 493 | 8 |
| Transportation expense | 936 | 1,096 |
| Production expense | 729 | 795 |
| Netback | $ 5,598 | $ 1,865 |
| Natural gas production (mmscf) | 761 | 904 |
| Natural gas production per day (mmscfpd) | 8.5 | 9.9 |
| Natural gas sales ($/mscf) | $ 10.19 | $ 4.16 |
| Royalty expense ($/mscf) | 0.65 | 0.01 |
| Transportation expense ($/mscf) | 1.23 | 1.21 |
| Production expense ($/mscf) | 0.96 | 0.88 |
| Netback ($/mscf) | $ 7.35 | $ 2.06 |
Natural gas sales increased to $7,756 thousand in Q1 2013 from $3,764 thousand in Q1 2012 due to the increase in the average natural gas sales price to $10.19/mscf in Q1 2013 from $4.16/mscf in Q1 2012, which increase was partially offset by the decrease in the average daily natural gas production to 8.5 mmscfpd in Q1 2013 from 9.9 mmscfpd in Q1 2012. From January 1, 2013 to March 31, 2013, Corridor had a forward sale agreement for 6,000 mmbtupd at an average price of $US8.52/mmbtu. The decrease in the average daily natural gas production is due to the Company's decision to decrease drilling activities at the McCully Field since 2009 following decreases in natural gas prices.
The increase in the royalty expense for Q1 2013 to $0.65/mscf from $0.01/mscf for Q1 2012 is due to the significant increase in the natural gas sales resulting from higher natural gas prices in 2013.
Transportation expense decreased to $936 thousand for Q1 2013 from $1,096 thousand for Q1 2012 due to the decrease in natural gas production, partially offset by an increase of $0.007/mmbtu in the cost of the firm transportation tariff on the Canadian side of the M&NP effective January 1, 2013 and a weaker Canadian dollar compared to the US dollar.
Net production expense for Q1 2013 decreased slightly to $729 thousand from $795 thousand in Q1 2012 due to a decrease in utilities expenses from the lower natural gas production and to management's commitment to lower production expenses.
Outlook
Corridor has increased its budgeted 2013 cash flow from operations from $8.0 million to $8.3 million to reflect the higher than expected natural gas prices in Q1 2013. Based on available working capital of $10.2 million at December 31, 2012 and Corridor's capital budget of approximately $3.0 million for 2013, Corridor has increased its net positive working capital forecast from $15.2 million to approximately $15.5 million at December 31, 2013 with no outstanding debt.
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 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 and crude oil reserves in the Caledonia Field near Sussex, New Brunswick. In addition, Corridor has contingent resources and discovered resources in Elgin, New Brunswick and undiscovered resources on Anticosti Island, Québec where Corridor has ongoing exploration projects.
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 estimated cash flow from operations, capital expenditures, net positive working capital and debt level for 2013, natural gas prices and premiums and the characteristics and potential of Corridor's properties.
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 anticipated financial performance, 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, the impact of increasing competition, the ability to obtain financing on acceptable terms, and the ability to add production and reserves through development and exploration activities. 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 may be found under the heading "Risk Factors" in Corridor's Annual Information Form for the year ended December 31, 2012.
Certain of the forward-looking statements in this press release may constitute "financial outlooks" as contemplated by National Instrument 51-102 Disclosure Obligations, including information related to estimated cash flow from operations, working capital and debt level for 2013, which are provided for the purpose of forecasting the financial position of Corridor at the end of the 2013 financial year. Please be advised that the financial outlook in this release may not be appropriate for purposes other than the one stated above.
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.
Contact Information:
Corridor Resources Inc.
(902) 429-4511
(902) 429-0209 (FAX)
www.corridor.ca