Corridor Announces 2012 Year End Results and Reserves

HALIFAX, NOVA SCOTIA -- (Marketwire - March 27, 2013) - (TSX:CDH) Corridor Resources Inc. ("Corridor") announced today its 2012 year end financial results and reserve evaluations. Corridor's annual financial statements, management's discussion and analysis and Annual Information Form for the year ended December 31, 2012 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.


2012 Highlights

- Corridor maintains approximately 2 million gross acres (approximately 1.3 million net acres) of undeveloped land in connection with its three high impact exploration prospects (Frederick Brook shale gas prospect, Macasty Formation unconventional oil prospect and Old Harry conventional hydrocarbon prospect). The remaining terms on substantially all the licenses on these prospects range from approximately 4 to 8 years. Corridor is actively seeking joint venture partners in all three prospects.

- Corridor's netback for Q4 2012 increased to $3.43/mmbtu from $2.30/mmbtu in Q4 2011 as a result of higher natural gas sales prices in the New England markets.

- In 2012, Corridor entered into a forward sale agreement for 6,000 mmbtu per day from January 1, 2013 to March 31, 2013 at an average price of $US8.52/mmbtu. The purpose of this agreement was to ensure Corridor achieved a much higher cash flow from operations for 2013 compared to Corridor's 2012 forecasted cash flow from operations. Subsequent to the year end, the remaining production from the McCully Field has been sold at daily market prices which were higher than expected due to the high basis differential in the New England markets. Accordingly, Corridor has increased its Q1 2013 forecast cash flow from operations from $3.7 million to approximately $4.8 million.

- In 2012, Corridor undertook an exploration program on Anticosti Island, with its partner, Petrolia Inc., designed to advance the exploration and development potential of the vast unconventional oil prospect on Anticosti Island. The exploration program included the drilling of three stratigraphic coreholes through the highly prospective Macasty Formation at strategic locations across the Island. Subsequent to the year end, initial results received from the core analyses confirmed that the Macasty Formation is within the oil window in all locations. All three coreholes intersected organic Macasty shale and averaged 4% Total Organic Carbon. These initial results are very positive indicators for the potential production of hydrocarbons from the Macasty Formation and compare favourably with producing wells from the Utica Formation in the State of Ohio.

- Corridor's proved reserves for the McCully Field of 57.6 bscf at December 31, 2012 declined by 2% (including production) compared to December 31, 2011 and proved plus probable reserves of 94.5 bscf at December 31, 2012 declined by 8% compared to December 31, 2011. In addition to the normal decline as a result of the current year's production, the reserves decreased due to lower natural gas prices, however, this was partially offset by an increase in the total volume of economically recoverable reserves due to revised economic assumptions by GLJ Petroleum Consultants Ltd. ("GLJ"). GLJ has assigned a reserve life of over 25 years for Corridor's proved and proved plus probable reserves.

- An extensive review of regulations for oil and gas activities was undertaken by the New Brunswick government in 2012. Subsequent to the year end, the New Brunswick government confirmed its support for natural gas development in its report titled "Responsible Environmental Management of Oil and Natural Gas Activities in New Brunswick" released on February 15, 2013.

"Corridor is encouraged by the recent increases in natural gas prices in North America as evidenced by much higher natural gas prices in the New England markets and our higher cash flow from operations in Q4 2012 and Q1 2013" said Phil Knoll, President and Chief Executive Officer of Corridor. "Corridor is well positioned to take advantage of the strategic infrastructure connecting our New Brunswick resources to these markets, and possesses the sustainability, with no outstanding debt, to advance Corridor's three high impact prospects in Eastern Canada."


Year End Financial Results

The following table provides a summary of Corridor's financial and operating results for the three and twelve months ended December 31, 2012 with comparisons to the three and twelve months ended December 31, 2011.


Selected Financial Information

	Three months ended December 31 		Twelve months ended December 31 	
thousands of dollars except per share amounts 	2012 		2011 		2012 		2011
Revenues 	$ 4,962 		$ 5,295 		$ 14,795 		$ 23,993 	
Net loss 	$ (42,023) 	$ (71,416) 	$ (47,889) 	$ (79,585)
Net loss per share - basic and diluted 	$ (0.475)  $ (0.807)  $ (0.541)  $ (0.899)
Cash flow from operations(1) 	$ 2,380 		$ 2,071 		$ 4,404 		$ 9,250 	
Capital expenditures 	$ 1,195 		$ 4,383 		$ 3,763 		$ 8,951
Total assets 	$ 157,978 		$ 204,017 		$ 157,978 		$ 204,017

(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 management's discussion and analysis for the year ended December 31, 2012.


Financial Summary for 2012

- Natural gas revenues for the year ended December 31, 2012 decreased to $13,345 thousand from $21,777 thousand for the year ended December 31, 2011 due to a decrease in the average natural gas sales price to $4.05/mscf in 2012 from $5.17/mscf in 2011 and a decrease in Corridor's average daily gas production to 9.0 mmscfpd in 2012 from 11.5 mmscfpd in 2011. In 2012 there were record low natural gas sales prices at Henry Hub with prices dropping below US$2.00/mmbtu in Q2 2012. However, premiums at Dracut remained strong and averaged US$1.10/mmbtu for the year ended December 31, 2012. In November 2012, natural gas prices at Dracut began to increase, averaging over US$6.00/mmbtu from November 1 to December 31, 2012.

- Cash flow from operations was $4,404 thousand for the year ended December 31, 2012 compared to $9,250 thousand for the year ended December 31, 2011 due to the lower natural gas revenues in 2012, partially offset by lower transportation expenses. Corridor was successful at lessening the impact of lower natural gas revenues on cash flow from operations by decreasing production expenses and general and administrative expenses. Cash flow from operations for the year ended December 31, 2012 was approximately $400 thousand higher than Corridor's updated forecast due to lower than expected general and administrative and production expenses in Q4 2012.

- Corridor had cash and cash equivalents at December 31, 2012 of $8,014 thousand, net working capital of $10,237 thousand and no outstanding debt.

- Due to a decline in forecast natural gas prices, Corridor was required under International Financial Reporting Standards ("IFRS") to estimate the recoverable amount of its New Brunswick assets at December 31, 2012. The recoverable amount was determined using discounted after-tax future net cash flows of proved plus probable reserves using forecast prices and costs and a discount rate of 10%. As a result, Corridor recorded an impairment loss of $56,325 thousand for the year ended December 31, 2012. Under IFRS, impairment losses are reversed in the future if there is a positive change in the assumptions used to determine the recoverable amount.

- Corridor's gross general and administrative expenses decreased by $1,226 thousand to $3,021 thousand for the year ended December 31, 2012 compared to the year ended December 31, 2011 reflecting management's commitment to lower general and administrative expenses during a period of lower natural gas prices.


Q4 2012 Netback Analysis

	Three months ended December 31 		Twelve months ended December 31
thousands of dollars except $/mscf 	2012 		2011 		2012 		2011
Natural gas revenues 	$4,604 		$4,194 		$13,345 		$21,777
Royalty expense 	(50) 	(-) 	(58) 	(679)
Transportation expense 	(1,037) 	(1,181) 	(4,074) 	(5,499)
Production expense 	(715) 	(752) 	(2,982) 	(3,969)
Netback 	$2,802 		$2,261 		$6,231 		$11,630
								
Natural gas production (mmscf) 	818 		985 		3,293 		4,213
Natural gas production per day (mmscfpd) 	8.9 		10.7 		9.0 		11.5
								
Natural gas revenues ($/mscf) 	$5.63 		$4.26 		$4.05 		$5.17
Royalty expense ($/mscf) 	(0.06) 	(-) 	(0.02) 	(0.16)
Transportation expense ($/mscf) 	(1.27) 	(1.20) 	(1.24) 	(1.31)
Production expense ($/mscf) 	(0.87) 	(0.76) 	(0.91) 	(0.94)
Netback ($/mscf) 	$3.43 		$2.30 		$1.88 		$2.76

Corridor's netback for Q4 2012 increased to $3.43/mmbtu from $2.30/mmbtu in Q4 2011 as a result of higher natural gas sales prices in the New England markets.

Natural gas revenues increased to $4,604 thousand in Q4 2012 from $4,194 thousand in Q4 2011 due to the increase in the average natural gas sales price to $5.63/mscf in Q4 2012 from $4.26/mscf in Q4 2011 which increase was partially offset by the decrease in the average daily natural gas production to 8.9 mmscfpd in Q4 2012 from 10.7 mmscfpd in Q4 2011. The decrease in production in Q4 2012 is due to the decreased drilling activities at the McCully Field since 2009 following decreases in natural gas prices. However, this decrease was partially offset by flush production on the start-up of four McCully wells which had been shut-in from May to November 2012. Corridor resumed production of the shut-in wells early in November 2012 when natural gas prices peaked due to cold weather.

The increase in the royalty expense to $50 thousand for Q4 2012 from $nil in Q4 2011 is due to the higher natural gas revenues in Q4 2012.

Transportation expense decreased to $1,037 thousand for Q4 2012 from $1,181 thousand for Q4 2011 due to the decrease in natural gas production and a decrease of $0.06/mmbtu in the cost of the firm transportation tariff on the Canadian side of the Maritimes and Northeast Pipeline effective January 1, 2012.

Net production expense for Q4 2012 decreased to $715 thousand from $752 thousand for Q4 2011 due to management's efforts to reduce costs.


2012 Reserve Information

Corridor currently has natural gas reserves in the McCully Field near Sussex, New Brunswick and has crude oil reserves in the Caledonia Field near Sussex, New Brunswick.

GLJ has assessed Corridor's reserves in its reports ("the GLJ Reports") dated effective December 31, 2012 and December 31, 2011, which were prepared in accordance with National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities. The following table presents a summary from the GLJ Reports of Corridor's gross natural gas reserves, before the deduction of royalties, using forecast prices and costs.

Reserves Category 	2012 Gross Reserves
bscf 	2011 Gross Reserves
bscf
Total proved 	57.6 	58.7
Total probable 	36.8 	44.0
Total proved plus probable 	94.5 	102.7
Possible(1) 	107.7 	114.1
Proved plus probable plus possible(1) 	202.2 	216.7

(1) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.


The decrease in proved reserves to 57.6 bscf is due to the 2012 production of 3.3 bscf and lower natural gas prices partially offset by an increase by GLJ in the total volume of economically recoverable reserves based on revised economic assumptions.

The decrease in proved plus probable reserves to 94.5 bscf in 2012 is also due to the delay in drilling new development wells as a result of low forecasted natural gas prices.

GLJ assessed the net present value of Corridor's natural gas, oil and natural gas liquids reserves, based on forecast costs and prices as at January 1, 2012 and 2011, respectively, as follows:

Net Present Value ($in million) - undiscounted
	2012 	2011

Reserves Category 	Before Income Tax(1) 	After Income
Tax(1) 	Before Income
Tax(1) 	After Income
Tax(1)
Proved 	159 	159 	219 	211
Proved plus probable 	316 	280 	464 	388

Proved plus probable plus possible(2) 981 765 1,217 931
(1) The estimated value of future net revenue does not represent the fair market value of Corridor's reserves.

(2) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Net Present Value ($in million) - discounted at 10%
	2012 	2011

Reserves Category 	Before Income Tax(1) 	After Income
Tax(1) 	Before Income
Tax(1) 	After Income
Tax(1)
Proved 	68 	68 	96 	95
Proved plus probable 	111 	104 	171 	152
Proved plus probable plus possible(2) 	258 	213 	352 	283

(1) The estimated value of future net revenue does not represent the fair market value of Corridor's reserves.

(2) Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.


The decrease in the net present value of Corridor's net reserves in 2012 is primarily the result of declines in forecasted natural gas prices as estimated by GLJ.

GLJ assigned to Corridor total proved crude oil reserves of 87 mbbl and total proved plus probable crude oil reserves of 260 mbbl as at December 31, 2012 in the 2012 GLJ Report. The complete 2012 GLJ Report will be available in the near future on Corridor's website at www.corridor.ca, and a summary of the 2012 GLJ Report is included in Corridor's Annual Information Form for the year ended December 31, 2012, a copy of which has been filed on SEDAR at www.sedar.com.


2013 Outlook

Corridor is forecasting cash flow from operations of $8 million in 2013 which is based on an estimated average natural gas sales price of approximately $6.60/mscf and an estimated average net daily gas production of 7.7 mmscfpd for 2013. The natural gas sales price is based on an estimated Henry Hub price of US$3.60/mmbtu and an average premium at Dracut of US$2.60/mmbtu which incorporates the forward sale agreement for 6,000 mmbtu per day from January 1, 2013 to March 31, 2013 at an average price of $US8.52/mmbtu. Corridor estimates an exchange rate of $1.00 U.S. per Canadian dollar for 2013.

Based on available working capital of $10.2 million at December 31, 2012 and Corridor's current capital budget of $3.0 million, Corridor is forecasting a net positive working capital of approximately $15.2 million at December 31, 2013, with no outstanding debt. However, the board of directors may approve additional capital expenditures in 2013 relating to one or more of Corridor's prospects.

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 the estimates of reserves, net present values of reserves, characteristics of Corridor's properties, exploration and development plans, plans to solicit joint venture partners; and estimated cash flow from operations, natural gas sales price, gas production, exchange rate, capital expenditures, net positive working capital and debt level for 2013. Statements relating to "reserves" 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.

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

Phillip R. Knoll, President
Corridor Resources Inc.
(902) 429-4511
(902) 429-0209 (FAX)
www.corridor.ca