corridor resources - 2010 year end investor presentation
TRANSCRIPT
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7/28/2019 Corridor Resources - 2010 Year End Investor Presentation
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Investor Presentation
Update 2010 Progress
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Disclaimer
Forward Looking Information Disclosure
This presentation 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. This presentationcontains forward-looking statements pertaining to the following: Corridors operations, anticipated financial performance, businessprospects and strategies, including expectations relating to exploration and development drilling programs; fracturing, completion andwork-over programs; capital expenditure programs; the characteristics and potential of the Frederick Brook shale, Hiram Brook formation,and Old Harry prospect; the quantity of reserves and resources; initial production capacity; tax rates and royalties; Apache Canada Ltd.splans; Corridors farmout and option agreement with Apache, including the appraisal program, Apaches commitment to make
expenditures and the potential exercise of Apaches option; and potential partners in respect of the Old Harry prospect and Anticosti.Furthermore, statements relating to reserves and "resources" are forward-looking statements, as they involve the implied assessment,based on certain estimates and assumptions that the reserves and resources, respectively, described exist in the quantities predicted orestimated and can profitably be produced in the future. Undue reliance should not be placed on forward-looking statements, which areinherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (bothgeneral and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-lookingstatements will not occur. These factors include, but are not limited to: risks associated with oil and gas exploration, financial risks,substantial capital requirements, bank financing, government regulation, environmental, prices, markets and marketing, issuance of debt,variations in exchange rates and hedging. Further information regarding these factors may be found under the heading "Risk Factors" inCorridor's Annual Information Form for the year ended December 31, 2009 and its most recent management's discussion and analysis,copies of which are available on www.sedar.com. Readers are cautioned that the foregoing list of factors that may affect future results isnot exhaustive. 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 availableto, Corridor concerning anticipated financial performance, business prospects, strategies, regulatory developments, future natural gas andoil commodity prices, exchange rates, future natural gas production levels, the ability to obtain equipment in a timely manner to carry outdevelopment 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, the ability to add production and reserves through development and explorationactivities and the provisions of Corridors agreement with Apache Canada Ltd. Although management considers these assumptions tobereasonable based on information currently available to it, they may prove to be incorrect.
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Disclaimer, contd
The forward-looking statements contained in this presentation are made as of the date hereof and Corridor does not undertake anyobligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. Theforward-looking statements contained herein are expressly qualified by this cautionary statement
Oil and Gas Resources Disclosure
"Resources" are quantities of petroleum that are estimated to exist originally in naturally occurring accumulations, including the quantityof petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimatedquantities in accumulations yet to be discovered.
"Discovered resources" refers to that quantity of petroleum that is estimated, as of a given date, to be contained in knownaccumulations prior to production. The term discovered resources is equivalent to discovered total petroleum-initially-in-place. There is nocertainty that it will be commercially viable to produce any portion of the discovered resources.
"Contingent resources" are those quantities of petroleum estimated, on a given date, to be potentially recoverable from knownaccumulations using established technology or technology under development, but which are not currently considered to be commerciallyrecoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political andregulatory matters or a lack of markets. It is also appropriate to classify as "contingent resources" the estimated discovered recoverablequantities associated with a project in the early project stage. The primary contingencies with respect to Corridor's economic contingentresources include the uncertainty surrounding the economic viability of the related development project due to the early stage of resourceevaluation. This includes the uncertainty that all internal and external approvals will be forthcoming along with documented intent todevelop the resources within a reasonable time frame. Other commercial considerations that may preclude the classification of contingentresources as reserves include factors such as legal, environmental, political and regulatory matters or a lack of markets.
Rider A
GLJ provided a "Low Estimate", "Best Estimate" and "High Estimate" in its resources report on Corridor's resources in the areasurrounding the Green Road G-41 well located four kilometers north of Elgin, New Brunswick, which is only a subset of the area coveredby the GLJ Shale Resources Report. The Best Estimate is considered to be the best estimate of the quantity that will actually berecovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilisticmethods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the bestestimate.
Resources do not constitute, and should not be confused with, reserves. Actual reserves and resources will vary from the reserve andresource estimates, and those variations could be material.
GLJ 's estimates of resources and reserves were prepared in accordance with National Instrument 51-101 Standards of Disclosure forOil and Gas Activities and are summarized in Corridor's Annual Information Form for the year ended December 31, 2009, a copy of whichis available on www.sedar.com.
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Highlights
Atlantic Canadian Exploration & Production company with enormousresource potential
Commanding land position in Eastern Canada
Significant potential shale resource play in New Brunswick with Apache
Recognized leader in developing frontier basins in Eastern Canada
Strong technical and commercial team with focus on big play opportunities
Existing cash flow has allowed Corridor to fund on-going developmentopportunities
Prudent financial management with strong balance sheet and no debtdrawn to date through period of depressed gas market conditions
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Opportunities
ANTICOSTI
900,000 NET ACRES
OLD HARRY125,000 NET ACRES
SOUTHERN NEW BRUNSWICK
320,000 NET ACRES
PRINCE EDWARD ISLAND260,000 NET ACRES
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2011 Priorities
Advance shale gas opportunities in New Brunswick with ApacheJ oint Venture
Progress Old Harry Prospect towards drilling exploration well withintwo years
Advance potential of farm-ins of Anticosti play with partner (Petrolia)
Maintain cash flow from existing McCully Field to fund priorities
Retain licenses adjacent to Apache farm-in and McCully lands toestablish additional resource potential
Work with partners, government, and stakeholders to ensure thebenefits of oil and gas activities in Eastern Canada are recognizedand industry activity advanced
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Strong & Experienced Team
Management Team Board of Directors
Phil Knoll, P.Eng. Doug Foster
CEO/President
Tom Martel, Ph.D. Norm Miller
Chief Geologist
Larry Huskins, P.Eng., M.B.A. J ack BrayDrilling Completions Team Lead
Don LeBlanc, B.Sc. (Magnis Cum) Eng./Phys. Achille Desmarais
Advisor Reservoir/Production Engineering
Doug Bailey, P.Eng. Mike Seth
Production Operations Manager
Lisette Hachey, C.A. Robert Penner
CFO
Dena Murphy, M.Sc., M.M.M., C.R.S.P. Phil Knoll
QHSE Manager
Paul Durling, B.Sc.
Chief Geophysicist
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Maritime Advantages
Large, relatively unexploredresource potential
Relatively higher sales prices
proximity to markets
heat content premium
sweet gas
Competitive royalties
Existing infrastructure &improving logistics
Maritimes & NE Pipeline
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Common Shares
Common Shares (November 15, 2010) Issued and outstanding: 87,807,466
Fully diluted: 92,804,134
Market Capitalization
$616 million
Closing price of CDH Common Shares on the TSX Nov 15/09 to Nov 15/10
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McCully/Elgin Explorationand Development Area
321,242 net acres; high workinginterests
Three large onshore plays
Frederick Brook Shale Gas
Hiram Brook Gas
Hiram Brook Oil (discovered atSouth Branch G-36 well)
Currently producing up to 20mmcf/d gross (15 mmcf/d net)from Hiram Brook reservoirs
Completed inlet compressionproject in third quarter to stabilizeproduction levels
McCully / Elgin
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Shale Gas Potential inMcCully/Elgin Areas
Corridor conducted two fracs inUpper Frederick Brook shale atGreen Road G-41 vertical well
Lower Black Shale zone after 83hour flow period, final rate was0.43 mmscf/d at ~150 psi, peakingat 0.98 mmscf/d
Upper Silty/Sandy zone produced 42.4 mmscf over 185hours, peaking at 11.7 mmscf/dwith final rate of 3 mmscf/d at~700 psi
Lower Frederick Brook shaleproducing gas from the F-58 wellsince March 2008
Still producing 0.2 mmscf/d from avery small (11 tonne) frac
Testing indicates both Upper andLower Frederick Brook shale areproductive across a large area
Green Road G-41 & B-41
Will DeMille G-59
McCully E67B & F-58
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Shale Gas Assessment Elgin/McCully Area
Independent assessment by GLJ provides a best estimate of 67 TCFof discovered resources (59 TCF net to Corridor), free gascomponent
Upper Frederick Brook 500 meters thick, GLJ estimates 43 TCF ofgross discovered resources (TerraTek estimates 309 bcf/mi2 in the E-
67b well)
Lower Frederick Brook 600+ meters thick, GLJ estimates 24 TCF ofgross discovered resources (TerraTek estimates 318 bcf/mi2 in the E-67b well)
Productivity extends widely across the basin, although basin area isrelatively small, the shale thickness means resource estimate is verylarge
GLJ s 10% recovery factor may be conservative, based on others nowachieving >20% recoveries
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Example Shale GasDevelopment
Corridor holds a continuous land position across McCully/Elgin area(includes Apache farm-out lands)
Very thick shale means large gas volumes per area providing aneconomy of scale potential
Multiple horizontals from a single pad development. Thereforepotential to lower infrastructure/development costs, (i.e. pipelines,pads, H20 supply and handling, G&P, etc.)
Location close to existing mainline transportation to major markets(MNP system) allows for premium netback prices potential relativeto other shale gas developments
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Apache Canada Farm-Out
Apache committed to undertake $25mmprogram to earn 50% working interest inthe units drilled and option program
Apache has option to undertake further notless than $100mm program to earn 50%working interest in area wide farm-outlands (58,000 acres net), starting not laterthen J une 1, 2011
Apache completed two horizontal wells atGreen Road G-41 and Will DeMilletargeting 1,000 meters horizontal FB
Apache commenced frac of G-41 well onNov.7th with expectation of five days tocomplete operation and intends to moveonto Will DeMille to undertake similar
program Target 30 day flow tests, after
completion of five fracs per well, expectedto be scalable, results to follow
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Shale Gas Fraccing
~1000 m horizontal legs in both GreenRoad & Will DeMille wells
5 fracs in each well
3000 4000 m3 of water per stage
200 tonnes of proppant (sand) per stage
Planned rate of 16 m3/min
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Old Harry Prospect
43,000 acres (67 mi2) of early,simple, four-way closure
Thick oil-prone source rock, andcarboniferous coal source rock witha large fetch area
Good reservoir rock derived fromthe Canadian Shield
Overlying shale seal is 1000 thick
Multi-TCF or billion bbl resourcespotential
Six satellite seepage slicks
Flat spots, amplitude, frequency
and AVO anomalies within thesame horizon
Thousands of mi2 of unexploredbasin with excellent source,reservoir and trap potential
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Old Harry Update
Corridor is currently solicitingpartners to drill an exploration wellon NFLD side
Corridor is commencing planningpreparation and permitting
documentation to support drillingexploration well within two yeartarget
Corridor completed site survey inOctober as per budget, in order toprovide data to support drilling
plans
Corridors 2011 capital budgetexpected to include funds tosupport above activities
Old Harry Prospect
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Anticosti ExplorationUpdate
Drilled three wells to target BlackRiver and Mingan oil plays and toevaluate shale oil potential ofMacasty (Utica)
Drilling results showed two wellswith oil shows and no perm andone well with great perm (15,000
bbls/d) and salt water
Cored 27 m of Macasty fromChaloupe well, currently in fortesting; oil indications are present
Prospective Macasty shale oilunder most of Anticosti lands
(1.5mm gross acres)
Corridor proceeding with partnerto solicit farm-in for shale oilexploration program
1.5 Million Acres
(900k Corridor, 600k Petrolia)
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Q3 2010 FinancialResults
$ in thousands Sept 2010 Sept 2009
Revenues $21,694 $37,600
Net earnings (loss) $(5,203) $3,492
Net earnings (loss) per share- Basic $(0.059) $0.040
- Diluted $(0.059) $0.040
Cash flow from operations $10,112 $22,165
Capital expenditures $20,141 $32,580
Net working capital $1,883 $11,261
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Q3 2010 Netback
Sept 2010 Sept 2009
Production (mmscfpd) 13.2 16.1
($/mscf)
Average gas price $5.63 $8.08Transportation expense $1.40 $1.74
Royalty expense $0.10 $0.38
Production expense $0.72 $0.54
Netback $3.41 $5.42
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2010 Outlook
$ in thousands Q4 2010 Dec 2010
Production (mmscfpd) - net 13.7 13.3
Revenues $7,000 $29,000
($/mscf)
Average gas price $4.97 $5.46
Transportation expense $1.46 $1.42
Royalty expense $0.10 $0.10
Production expense $0.91 $0.77
Netback $2.50 $3.17
Capital expenditures $2,400 $22,500
Net working capital $2,000 $2,000
Cash flow from operations $2,500 $12,500