Corporate Presentation March 29, 2018 All forward looking statements in this Corporate Presentation are qualified in their entirety by the "Forward Looking Information" on slide 24. 1
Slide 1March 29, 2018
All forward looking statements in this Corporate Presentation are
qualified in their entirety by the "Forward Looking Information" on
slide 24.
1
• Excellent balance sheet with an estimated working capital balance
of approximately $57.0 million at end of Q1 2018
• Long life reserves with minimal future development capital and
predictable, low decline natural gas production (~10%
annually)
• Superior field operating cash flow netback per boe due to
industry leading natural gas pricing at Boston Algonquin City-Gates
(AGT)
• Solid fundamental core value with exposure to two high impact
prospects in Eastern Canada
• Flexibility to take advantage of its balance sheet strength to
act on counter-cyclical opportunities in Western Canada
2
investments)
• Phil Knoll President, Knoll Energy Inc. (private
consulting company)
• Norm Miller Former CEO, Corridor Resources from
1995 to 2010
3
• Steve Moran President and CEO, Corridor Resources Formerly
President and CEO of Bellamont
Exploration Ltd.
• Jim McKee, CPA, CA Independent Businessman Formerly Senior Vice
President, Corporate
Development, Trican Well Service Ltd. and Managing Director,
Investment Banking, RBC Dominion Securities
• Martin Fräss-Ehrfeld Chairman, AVE Capital Limited, provider
of
advisory services to the Children's Investment Fund (UK) LLP
Corporate Snapshot
• Shares Outstanding (2017/12/31) Basic 88,655,299 Diluted (Avg.
exercise price $0.79) 91,920,132
• Tax Pools (2017/12/31) CEE $96.7 MM CDE $55.3 MM Other $23.2 MM
Total $175.2 MM
• Forecast from April 1, 2017 to March 31, 2018
Cash Flow From Operations* $7.8 MM
Field Operating Netback ($/mcf) $9.73
* Cash flow from operations is a non-IFRS financial 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.
4
New Brunswick 195,000 Old Harry - Quebec & NL 251,000
• December 31, 2017 Reserves* MM boe PV@BT10% Proved Developed
Producing 3.044 $55.1 million Total Proved 3.044 $55.1 million
Total Proved plus Probable 3.776 $63.5 million
• Reserve Life* Years
Proved Developed Producing 22 Total Proved 22 Total Proved plus
Probable 28
5
**Reserve Report dated February 2, 2018 prepared by GLJ Petroleum
Consultants Ltd. effective December 31, 2017.
2018 Contingent Resources Report*
Flow NPV (MM$C)
Flow NPV (MM$C)
Low Estimate 9.7 41 1.7 $17.0
Best Estimate 15.9 56 2.7 $26.8
High Estimate 20.3 71 3.5 $37.5
*Contingent Resource Report dated February 2, 2018 prepared by GLJ
Petroleum Consultants Ltd. effective December 31, 2017. See
disclosure notes regarding Contingent Resources at the end of the
presentation.
• 44.0 BCF of Unrisked
Reserves valued @ BT10% effective December 31, 2017* Proved
Developed Producing $0.62 Probable Developed Producing $0.09 Total
Reserve Value $0.71
Estimated Working Capital (2018/03/31)** $0.64
Total Net Asset value per basic share $1.35
7
• Reserve Report dated February 2, 2018 prepared by GLJ Petroleum
effective December 31, 2017.
87% of Corridor’s reserve value is in the Proved Developed
Producing Category
McCully Field Production Optimization Strategy
• To take advantage of the premium winter pricing at AGT, since
2015, Corridor has strategically shut-in production during the
summer/fall months. The resulting build-up in reservoir pressure
yielded flush production (see next slide) during winter months when
natural gas prices at AGT are typically higher
• Corridor’s production optimization objectives are
threefold:
• Generate a similar field operating income with less produced
volume than a continuous production scenario;
• Extend reserve life; and
• Preserve higher field deliverability rates
• Corridor employs hedges to protect its winter pricing premium as
a component of this strategy
• Corridor implemented its optimization strategy again in 2017/18
by shutting-in the vast majority of its production on April 1,
2017. Corridor recommenced full field production in December
2017.
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Higher
production
rates
13.6mmscf/d
Flush
production
periods
Strategic
shut-in
periods
Note: 2015 historical production forecast included for flush
reference and does not represent future plans. 9
Press Release
USD/CAD exchange rate 1.25 USD/CAD
Average daily natural gas production* 3.0 mmscfpd
Field operating netback $ 10.8 million
Cash flow from operations** $ 7.8 million
Field operating netback per mscf $ 9.73/mscf
Cash flow from operations** per mscf $ 7.02/mscf
Working capital (as of March 31, 2018) $ 57.1 million
Capital Expenditures (for the year 2017) $ 3.6 million
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Market Guidance (April 1, 2017 to March 31, 2018)
* Average daily natural gas production for the 12 month period is
inclusive of a shut-in of the vast majority of production from
April 2017 to December 2017. **Cash flow from operations is a
non-IFRS financial 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.
Understanding Corridor’s Premium Natural Gas Market
• Corridor’s production connected to Maritimes and Northeast
Pipeline (MN&P)
• Corridor's gas is priced at Algonquin City-gates (“AGT”)
• There is typically a shortage of natural gas supply capacity for
the winter months
• No new major pipeline expansions are anticipated
• Futures market expecting the premium AGT winter pricing to
continue to at least 2023
• Sable Island is reaching economic limit rapidly, this will
exacerbate the shortfall
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Shifting Maritime Provinces’ Natural Gas Market
• The Maritimes’ primary gas supply has historically been fully
sourced from Sable Island and, since 2013, Deep Panuke,
• By 2017, flow on M&NP pipeline had reversed, with the
Maritimes sourcing a portion of its gas supply the USA*
• Sable Island decommissioning began in late 2017 and is expected
to be completed in 2020**
• The Operator for Deep Panuke has filed an application to start
abandonment and only produces seasonally*
• When Sable Island and Deep Panuke are fully offline, besides
McCully, the Maritimes gas demand will need to be sourced from the
USA or Canaport
• Prices in the Maritimes are already trading at a premium to AGT
and expected to go higher once offshore production ends
• Corridor’s assets are uniquely situated to capture this market
opportunity
12 *Source: Jim Magill and Eric Brooks, S&P Global Platts Gas
Daily, March 21, 2018 **Source: Jim Magill, S&P Global Platts
Gas Daily, November 9, 2017
AGT Futures Pricing Strong for the Foreseeable Future
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• AGT futures pricing* is expected to remain robust to 2023
• Significant premiums over Nymex Henry Hub in the winter
months
• Winter peaks exceed $US10.00/mmbtu
• January 2018 averaged over $US15.00/mmbtu
*Nymex and Algonquin Basis (i.e. AGT) prices are daily settlement
for January 23, 2018 as provided by Intercontinental Exchange (ICE)
NG LD1 Futures and NG Basis LD1 for IF Futures.
-$2
$0
$2
$4
$6
$8
$10
$12
$14
Nymex Henry Hub AGT Differential AGT Yearly Average Price
Two High Impact Prospects
Old Harry
• One of the largest Canadian East Coast offshore geological
structures
• 43,000 acre potential oil prospect
New Brunswick
potential while demonstrating prudent financial management
Old Harry Offshore Potential
• One of the largest undrilled geological structures in Eastern
Canada (43,000 acres/67 sq miles) under simple four-way
closure
• Several direct hydrocarbon indicators identified: satellite
seepage slicks, frequency anomalies, amplitude anomalies, and AVO
anomalies
• Over 1,000 km of modern 2-D seismic
• Basin modeling indicates light oil (~55 API) was initially
generated and could be filling the structure
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• Corridor recently purchased a multi-client CSEM survey over the
Newfoundland side of Old Harry. Data acquisition was completed
November 2017.
• Recording instruments were placed on the sea bottom and an
electro-magnetic (EM) source was towed behind a vessel (see
right).
• Signals from the EM source traveled through the rock formations
to the receivers. Anomalously resistive layers (hydrocarbons)
typically stand-out against a non-resistive background (see figure
upper right).
• A positive CSEM anomaly in a sand/shale sequence may provide
confidence of the existence of hydrocarbon bearing sands.
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Newfoundland Side of Old Harry
Old Harry Go Forward Plan
• Final processing and analysis of the CSEM data expected by April
30, 2018
• Corridor is reprocessing 760 km of its proprietary 2D seismic to
incorporate into an integrated geotechnical model; expected to be
completed by May 30, 2018
• If the results of the geotechnical model results are positive,
Corridor intends to increase its efforts to secure a joint venture
partner to drill an exploratory well (estimated cost of ~$US45
MM*).
• Corridor to provide a shareholder update of its go forward plans
by end of May, 2018
* Estimate as of April 2017
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Canada-Newfoundland and Labrador Offshore
exploration and development activities can be
safely undertaken
until January 2021
New Brunswick Assets
• Current productive capacity up to ~10 mmcf/d net (flush
volumes)
• Frederick Brook has substantial unconventional shale resource
potential:
Black, hydrocarbon rich shale that is up to 1100 m thick
• Regulatory hurdles exist, currently under a hydraulic fracturing
moratorium
NB
NS
PEI
• Natural Gas Facilities (100% WI) include:
Gas Plant - processing capacity of 35 mmcf/d
49 km of 8” transmission line to Maritimes and Northeast
Pipeline
15 kilometers of gathering system
32 producing wells from 11 well pads
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NB
NS
PEI
• 13 wells drilled into the Frederick Brook shale to date
• Frederick Brook shale mapped over wide area – in excess of 20
kilometers laterally
• Depth to top Frederick Brook ranges from 1,600 to 4,000 m
• Potential for vertical or horizontal development
100
1000
2008 2010 2012 2014 2016 2018 M o n th
ly P
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• F-58 production at ~180 mcf/d for past 9 years (1.65 Bcf 2P EUR,
GLJ)
• Very flat production curve with annual decline <2%
annually
• 2014 wells have proved productivity and reserves
• All producing Frederick Brook wells have small single fracs to
date
• G-41 well in Elgin tested up to 12 mmcf/d (1200psi WHP)
• Encountered interbedded sands with high deliverability
• Potential to occur elsewhere in field
~180 mcf/d
0
500
1000
1500
2000
2500
3000
3500
4000
1
10
0 1 2 3 4 5 6 7 8 9 10
W e llh
( p s i)
Flow Time (days)
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• Pursue a termination of the hydraulic fracturing moratorium
• If the moratorium is lifted, secure joint venture capital funding
to undertake a pilot program as follows:
Drill 5 vertical evaluation wells
Recomplete 3 existing wells
Complete with high volume water fracture stimulations
Identify “sweet spots” and drill a second round of horizontal wells
– up to 5 wells
Establish production and reserves for type curves for vertical
versus horizontal wells
Optimize completion techniques
Potential Delineation Wells
Potential Pipeline
Strategic Priorities
• Maximize cash flow and value of McCully assets by implementing
optimization strategies unique to the Northeast U.S. and Maritimes
gas markets
• Continue to advance government and stakeholder relations, social
responsibility and regulatory agendas in our plays
• Seek opportunities for joint ventures for Old Harry and the
Frederick Brook Shale
• Continue with a disciplined approach to identify opportunities
for deploying Corridor’s surplus working capital
Corridor has sustainability combined with tremendous upside
potential
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• 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", “assume” or similar words suggesting
future outcomes. In particular, this presentation contains
forward-looking statements pertaining to the following: Corridor's
business plans and strategies, including efforts to obtain joint
venture partners and next steps in respect of the Old Harry and
Frederick Brook properties; characteristics of Corridor’s
properties, benefits of by implementing optimization strategies;
continuing to advance government and stakeholder relations;
continue with a disciplined approach to identify opportunities for
deploying Corridor’s surplus working capital; exploration and
development plans (including drilling an exploratory well at Old
Harry and a pilot program in the Frederick Brook shale) including
timing of such plans; the benefits of the CSEM data and 2D seismic
processing over the Old Harry structure; market conditions
(including natural gas demand and pipeline development projects and
capacity); expectations of natural gas prices and premiums at AGT
and the Maritimes market; field operating netbacks; production;
expected revenues from hedging agreements; royalties; expenses;
cash flow from operations; capital expenditures and estimates;
working capital estimates; and the U.S. Canada exchange rate.
• Statements relating to “reserves” and “contingent resources” are
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions that the reserves
described exist in the quantities predicted or estimated and can
profitably be produced in the future.
• The forward-looking statements contained in this presentation are
made as of the date hereof and the Company 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. 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 (including any development plans or plans to find joint
venture partners to develop properties) will in fact be realized.
Actual results will differ, and the difference may be material and
adverse to the Corporation and its shareholders.
• Forward-looking statements are based on the Corporation's current
beliefs as well as assumptions made by, and information currently
available to, the Corporation concerning anticipated financial
performance, business prospects, strategies, regulatory
developments, future natural gas and oil commodity prices, exchange
rates, 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, the ability to add production
and reserves through development and exploration activities, and
the terms of agreements with third parties such as the
Corporation's forward sales contracts and hedging contracts.
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 include, but are not limited to, risks
associated with oil and gas exploration, development and
production, operational risks, development and operating costs,
substantial capital requirements and financing, volatility of
natural gas and oil prices, government regulation, environmental,
hydraulic fracturing, third party risk, dependence on key
personnel, co-existence with mining operations, availability of
drilling equipment and access, variations in exchange rates,
expiration of licenses and leases, reserves and contingent resource
estimates, trading of common shares, seasonality, disclosure
controls and procedures and internal controls over financial
reporting, competition, conflicts of interest, issuance of debt,
title to properties, hedging, information systems, litigation and
aboriginal land and rights claims. Further information regarding
these factors may be found under the heading "Risk Factors" in the
Corporation’s Annual Information Form for the year ended December
31, 2017. Readers are cautioned that the foregoing list of factors
that may affect future results is not exhaustive.
• 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 projected cash flow from operations, revenues, expenses,
capital expenditures and working capital, which are provided for
the purpose of forecasting the financial position of Corridor as at
March 31, 2018. Please be advised that the financial outlook in
this presentation may not be appropriate for purposes other than
the one stated above.
Oil and Gas Disclosure
• The term "boe" refers to barrels of oil equivalent. All
calculations converting natural gas to crude oil equivalent have
been made using a ratio of six mscf of natural gas to one barrel of
crude equivalent. Boes may be misleading, particularly if used in
isolation. A boe conversion ratio of six mscf of natural gas to one
barrel of crude oil equivalent is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.
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Contingent Resources
• Contingent resources are those quantities of petroleum estimated,
as of a given date, to be potentially recoverable from known
accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters or a lack of
markets. It is also appropriate to classify as “contingent
resources” the estimated discovered recoverable quantities
associated with a project in the early evaluation stage. In the
case of the McCully Field, the significant contingency was the
imposition by the New Brunswick Government of a moratorium on
hydraulic fracturing in 2015. Contingent resource estimates are
prepared independently from the consideration of commercial risks.
On this basis, it is expected that, as the contingencies are
removed and, in the absence of new technical or economic data, the
contingent resource estimates associated with the development
project would move directly to the corresponding reserves
confidence classification.
• Contingent resources are classified based on project maturity.
The project maturity subclasses include development pending,
development on hold, development unclarified and development not
viable. All of Corridor’s contingent resources are classified as
development on hold. Development on hold means there is a
reasonable chance of development, but there are major non-technical
contingencies to be resolved that are usually beyond the control of
the operator. Significant uncertainty exists with the continuation
of the Government of New Brunswick’s moratorium on hydraulic
fracturing. Removal of the moratorium sooner would positively
affect the value estimates, whereas extension of the moratorium
would negatively affect the estimates. For greater certainty, no
assurance can be given that the moratorium will be lifted.
• There are three classifications of contingent resources
estimates: low estimate, best estimate and high estimate. Best
estimate is a classification of estimated resources described in
the COGE Handbook as being considered to be the best estimate of
the quantity that will be actually recovered. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the best estimate. If probabilistic methods are used,
there should be at least a 50% probability that the quantities
actually recovered will equal or exceed the best estimate; a 90%
probability that the quantities actually recovered will equal or
exceed the low estimate and a 10% probability that the quantities
actually recovered will equal or exceed the high estimate.
• Contingent resources are considered too uncertain with respect to
the chance of development to be classified as reserves. Chance of
development is defined as the probability of a project being
commercially viable. GLJ has estimated the chance of development
for the project at 36% based on the multiplication of an economic
factor (1.0), a technology factor (1.0), a plan development factor
(0.9) and other contingency factor (0.4).
• The net present value of future net revenue attributable to the
contingent resources does not represent the fair market value of
the contingent resources. Estimated abandonment and reclamation
costs have been included in the evaluation.
• There is no certainty that it will be commercially viable to
produce any portion of the contingent resources or that Corridor
will produce any portion of the volumes currently classified as
contingent resources. The estimates of contingent resources involve
the implied assessment, based on certain estimates and assumptions,
that the contingent resources described exists in the quantities
predicted or estimated and that the contingent resources can be
profitably produced in the future. Actual contingent resources (and
any volumes that may be reclassified as reserves) and future
production therefrom may be greater than or less than the estimates
provided herein.
• An estimate of risked net present value of future net revenue of
contingent resources is preliminary in nature and is provided to
assist the reader in reaching an opinion on the merit and
likelihood of the Corporation proceeding with the required
investment. The estimate includes contingent resources that are
considered too uncertain with respect to the chance of development
to be classified as reserves. There is uncertainty that the risked
net present value of future net revenue will be realized. The net
present value of the future net revenue from the contingent
resources does not necessarily represent the fair market value of
the contingent resources.
• The Contingent Resources Report provides estimates of Corridor’s
interests in contingent resources from a future development project
at the McCully Field. The Contingent Resources Report assumes the
New Brunswick Government moratorium on hydraulic fracturing will be
lifted and a development project will begin in 2021. However the
New Brunswick Government announced on May 27, 2016 its decision to
continue the moratorium for an indefinite period. In the event the
moratorium is lifted and Corridor is permitted to conduct the
development project, the Contingent Resources Report contemplates
that Corridor would drill new wells using standard technology and
that these new wells, and existing wellbores requiring completion,
would be hydraulically fractured. The project is based on a
development study utilizing detailed geological, engineering and
economic information for the project with estimated future
development capital costs. Furthermore, in the event the moratorium
is lifted, GLJ has acknowledged that the contingent resources would
meet the technical qualifications for the classification of
reserves.
• For more information regarding Corridor’s Contingent Resources,
readers should refer to the Corporation’s Annual Information Form
for the year ended December 31, 2017.
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