Corridor provides operations update

Corridor Resources Inc. has provided an operations update and announced that it has entered into an additional forward sale agreement.

On 1 May 2015, Corridor shut-in most of its producing natural gas wells in the McCully Field in New Brunswick due to the significant differential expected in the sale price of natural gas at Algonquin city-gates (AGT) for the summer of 2015 relative to the winter of 2015/2016. On 29 October 2015, Corridor resumed production of the shut-in wells. Corridor expects to produce an average natural gas production of approximately 10.9 million ft3/d (8.5 million ft³/d net) in November and December 2015 and 8.4 million ft³/d (6.6 million ft³/d net) from 1 January 2016 to 31 March 2016. This compares to 9.0 million ft3/d (6.9 million ft³/d net) in 1Q15, Corridor's last quarterly period with unrestricted flows.

Corridor also advises it has entered into an additional forward sale agreement for 1000 million btu per day of natural gas (approximately 940 million ft³/d) for three months at US$US7.00/million btu for December 2015, US$US9.40/million btu for January 2016 and US$US9.30/million btu for February 2016. These volumes are incremental to a previously announced forward sale agreement pursuant to which Corridor has agreed to sell 2500 million btu per day at $US9.25/million btu for November 2015 to March 2016.

From 1 November 2015 to 31 March 2016, approximately US$5.5 million out of an estimated US$12.3 million of gross revenues will be generated from the forward sale agreements. The estimated gross revenues are based on the unhedged production volumes to be sold at an average current future strip pricing at AGT of US$US6.94/million btu for this period.

Outlook

Corridor has increased its cash flow from operations forecast in 2015 from US$6.3 million to US$8.2 million. This increase is due to the additional forward sale and management's decision to resume production of the shut-in wells on 29 October 2015 rather than in December 2015, as previously planned. Corridor is now forecasting a net positive working capital of approximately US$28 million at 31 December 2015, with no outstanding debt.

Corridor is forecasting US$4.4 million of cash flow from operations in the first quarter of 2016.

"Corridor's recent strategy to maximise its production during the winter months has proven to be a sound decision," said Steve Moran, Corridor's President and CEO. "Prices in the summer months of 2015 at AGT were weak as expected and, once again, are expected to be the best in North America in the winter months. As a result of our decision to temporarily shut-in our wells, we have extended our producing reserve life and optimised our operating netbacks. We will continue to review this strategy on an annual basis."

Edited from press release by Angharad Lock

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/05112015/corridor-resources-inc-provides-operations-update-1558/