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Corridor to suspend work on Old Harry project

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Oilfield Technology,

Corridor Resources Inc. has announced that it has completed its integrated geotechnical analysis of the Old Harry prospect comprised of data from a controlled source electromagnetic survey (CSEM) and reprocessed two 2D seismic. Old Harry is a large, 43 000 acre undrilled structure with four-way closure located in approximately 470 m of water in the Gulf of St. Lawrence, straddling the border of Newfoundland and Quebec, Canada.

Corridor purchased a licensed copy of a CSEM survey that was conducted in late 2017 over the Newfoundland side of the Old Harry structure. The analysis of the CSEM data proved to be more complicated than anticipated. This led Corridor to take the additional steps to use modern techniques to reprocess 762 km of its proprietary 2D seismic over the Old Harry structure (originally acquired in 1998 and 2002) and undertake an integrated geotechnical review with the aid of several senior consultants.

This comprehensive review revealed more complexity in the Old Harry prospect than previous analysis had suggested and resulted in three key findings:

  • First, it was determined that the geology and geochemical/petrological analysis of the Old Harry structure is more complicated than previously understood. This has led the company to believe the play could be more gas prone than oil prone and the overall hydrocarbon accumulation could be less than originally estimated.
  • Secondly, it was concluded that, in order to more adequately de-risk the prospect, a 3D seismic survey should be conducted over the entire structure before drilling an exploration well.
  • Third, despite renewed efforts, the company has been unable to date to attract a joint venture (JV) partner for the prospect.

As a result of the foregoing, Corridor has determined there is no longer a viable path to drilling an exploration well on the prospect before the current exploration licence on the Newfoundland side expires in January 2021. As a result, Corridor has decided it would not be prudent to continue with additional capital spending on the Old Harry prospect and, accordingly, is suspending all further technical work and expenditures.

Concurrent with the decision to suspend work and expenditures, Corridor intends to make a formal request to the authorities in Newfoundland, Quebec and the Federal Government to: 1) grant a new licence to extend Corridor’s land tenure on the Newfoundland side; and 2) undertake the legislative and regulatory steps necessary to clarify the status of Corridor’s exploration licenses in Quebec. If Corridor is successful in securing such regulatory relief, the additional time to its land tenure and regulatory certainty would enhance Corridor’s opportunity to solicit interest from prospective JV partners.

Given the complexity of the Old Harry prospect, prospective JV partners will need more time to undertake a thorough review of the technical work conducted by Corridor to date and, if deemed necessary, conduct a 3D seismic programme over the structure. If the company successfully secures the regulatory relief that it will be seeking, Corridor would concentrate its efforts on attracting a JV partner to the Old Harry prospect. The company does not anticipate committing any material capital expenditures in any future process to secure a partner.

Going forward, in addition to seeking regulatory relief for Old Harry, Corridor will focus its efforts to advance its exploration and production operations in New Brunswick while continuing to evaluate new opportunities to deploy its working capital, which currently stands at an approximately CAN$58 million.

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