Corridor Announces Production Optimization Strategy and Guidance for 2017/2018

HALIFAX, NOVA SCOTIA--(Marketwired - Oct. 11, 2017) - Corridor Resources Inc. (TSX:CDH) ("Corridor" or the "Company") announced today it has finalized its production optimization strategy for the period from November 1, 2017 to March 31, 2018. Accordingly, the Company wishes to provide an update of its operating and financial guidance to the end of March 2018.

Natural Gas Production Optimization Strategy

Since 2015, Corridor has employed a production optimization strategy by shutting-in all or a portion of its natural gas production during the warmer weather months, i.e. when natural gas prices at the Algonquin city-gates market ("AGT") typically trade at a discount to NYMEX Henry Hub ("HH"), with a view to optimizing the recovery of expected flush volumes to coincide with anticipated higher natural gas pricing during the winter period, i.e. when AGT natural gas prices typically trade at a premium to HH. The objective of Corridor's production optimization strategy is to maximize its field operating netback while producing lower natural gas volumes and preserving Corridor's reserves for production in future years.

In accordance with this strategy, Corridor shut-in all its natural gas production on April 1, 2017. The Company has now finalized its plan to partially recommence its natural gas production in November 2017, with full field production expected by December 2017.

A key component of Corridor's strategy is to enter into financial hedges and forward sale agreements over the higher priced winter period to secure a threshold of revenue and mitigate the risks associated with the volatility of natural gas prices. Accordingly, Corridor previously announced it had entered into a financial hedge at a fixed price of $US7.40/mmbtu for 2,500 mmbtupd of natural gas production for the period from December 1, 2017 to March 31, 2018. Corridor announces today it has entered into an additional financial hedge at a fixed price of $US7.83/mmbtu for 2,500 mmbtupd of natural gas production for the period from December 1, 2017 to February 28, 2018.

These financial hedges will result in an average hedged price of $US7.61/mmbtu for natural gas production of 5,000 mmbtu per day (approximately 4.7 mmscfd) from December 1, 2017 to February 28, 2018 and $US7.40/mmbtu for 2,500 mmbtu per day for March 2018. In total, these hedges will generate approximately $4.8 million of sales revenue out of estimated total revenues of $9.8 million, representing approximately 48% of Corridor's estimated production during the period from December 1, 2017 to March 31, 2018. Corridor may enter into additional hedges for the winter period in due course, as it typically targets hedging up to 50% of its forecasted production. Corridor's unhedged production will be sold at a combination of monthly and daily AGT market prices. Currently, the forward strip pricing for AGT is averaging approximately $US7.25/mmbtu for the period from December 1, 2017 to March 31, 2018.