Corridor Announces Impact on Reserves Due to the New Brunswick Government's Decision to Continue Hydraulic Fracturing Moratorium

HALIFAX, NOVA SCOTIA–(Marketwired – June 16, 2016) – Corridor Resources Inc. (TSX:CDH) (“Corridor”) announced today an update to the reserves set forth in the “Statement of Reserves Data and Other Oil and Gas Information” in Corridor’s Annual Information Form for the year ended December 31, 2015 (the “Statement of Reserves”). The Statement of Reserves summarizes the reserves report of GLJ Petroleum Consultants Ltd. (“GLJ”) for Corridor’s properties in the McCully Field and the Caledonia Field in New Brunswick as at December 31, 2015 (the “Original Reserves Report”) and was prepared in accordance with the COGE Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).
On May 27, 2016, the Government of New Brunswick announced its decision to continue a moratorium on hydraulic fracturing for an indefinite period (the “NB Decision”). In light of this announcement, Corridor engaged GLJ to assess the extent of the impact of the NB Decision on Corridor’s reserves as set forth in the Original Reserves Report. For clarity, all of the undrilled wells and several standing wells in the McCully area in the Original Reserves Report contemplated the use of hydraulic fracture stimulations, as such wells could not be made commercially productive otherwise.
Section 5.5 (i.e. Regulatory Considerations) of the COGE Handbook states that … “For proved reserves, regulatory approval must be virtually certain.” and “For probable reserves, approval must be highly likely“. As a result of the NB Decision, Corridor, in consultation with GLJ, no longer considers that the undeveloped wells requiring hydraulic fracture stimulations in New Brunswick meet the necessary conditions set out in NI 51-101 to qualify as reserves. GLJ has advised that such wells would, however, qualify as Contingent Resources in the Project Maturity subclass of “development on hold.”
On June 15, 2016, GLJ provided Corridor with an updated reserves report incorporating the impact of the NB Decision on Corridor’s reserves and the value of reserves as if the NB Decision had been announced prior to December 31, 2015 (the “Updated Reserves Report”). The Updated Reserves Report was prepared in accordance with the COGE Handbook and NI 51-101, and continues to be effective as of December 31, 2015, subject to amendments to reflect the impact on reserves resulting from the NB Decision. In accordance with Part 6 of NI 51-101, Corridor is providing an update to the Statement of Reserves, as set out in Schedule “A”.
The Updated Reserves Report demonstrates that the NB Decision has resulted in a material reduction in Corridor’s undeveloped reserves, future development capital and associated net present value of future revenue. Below is a table providing a reconciliation of the Updated Reserves Report to the Original Reserves Report, both of which are effective as of December 31, 2015. Please note that rounding errors may occur in the table set forth below.
The Updated Reserves Report shows a decrease of 23.1 bscf in proved reserves and 38.8 bscf in proved plus probable reserves. The net present value before income tax discounted at 10% for proved reserves decreases by $13.3 million and by $32.4 million for proved plus probable reserves.
Reserves Reconciliation – Updated Reserves Report to Original Reserves Report

		Reserves Category
Net Corridor WI Reserves Reconciliation Effective December 31, 2015		Proved Developed Producing	Proved Un- developed	Total Proved	Probable	Total Proved + Probable	Possible	Total Proved + Probable + Possible
Total Natural Gas Reserves (Bcf)
Original Reserves Report		18.6	23.3	41.9	19.9	61.8	107.2	169.0
Revision		0.0	-23.1	-23.1	-15.8	-38.8	-102.2	-141.0
Updated Reserves Report		18.6	0.2	18.8	4.2	22.9	5.0	28.0
Change (% )		0.0%	-99.1%	-55.2%	-79.1%	-62.9%	-95.3%	-83.4%
Boe Equivalent Reserves (MM Boe)
Original Reserves Report		3.1	4.0	7.1	3.4	10.5	18.1	28.6
Revision		0.0	-3.9	-3.9	-2.6	-6.5	-17.2	-23.7
Updated Reserves Report		3.1	0.1	3.2	0.7	4.0	0.9	4.9
Change (% )		0.0%	-96.9%	-54.5%	-78.1%	-62.1%	-95.1%	-82.9%
Future Development Capital (MM $)
Original Reserves Report		$2.7	$60.5	$63.2	$13.8	$77.0	$71.0	$148.0
Updated Reserve Report		$2.7	$0.9	$3.5	$0.0	$3.5	$0.1	$3.6
Difference		$0.0	-$59.6	-$59.6	-$13.8	-$73.4	-$70.9	-$144.3
Net Present Value Before Income Tax
Discounted at 10% per year (MM $)
Original Reserves Report		$35.8	$16.7	$52.5	$26.5	$79.0	$106.6	$185.6
Updated Reserves Report		$35.8	$3.4	$39.3	$7.3	$46.6	$5.9	$52.5
Difference		$0.0	-$13.3	-$13.3	-$19.2	-$32.4	-$100.7	-$133.1
Change (% )		0.0%	-79.5%	-25.3%	-72.3%	-41.0%	-94.4%	-71.7%

Corridor expects the reduction in the net present value of its proved plus probable reserves calculated at a discount factor of 10% will lead to an impairment loss. The final calculation of such loss will be disclosed in Corridor’s second quarter financial statements, currently planned for release on August 11, 2016.
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. In addition, Corridor has a 21.67% interest in Anticosti Hydrocarbons, a joint venture which has undiscovered resources on Anticosti Island, Québec.
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 relating to the impact of the NB Decision on Corridor’s reserves and Corridor’s plans, “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. Information relating to the reserves of Corridor contains forward-looking statements relating to future net revenues, forecast capital expenditures, future development plans and costs related thereto, forecast operating costs, anticipated production and abandonment costs.
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 including information 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 and the terms of agreements with third parties. 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, 2015.
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.
Oil and Gas Disclosure
The following terms have the following meanings:
“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 oil 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;
“developed non-producing reserves” refers to those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown;
“developed producing reserves” refers to those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty;
“developed reserves” refers to those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing;
“future net revenue” means a forecast of revenue, estimated using forecast prices and costs or constant prices and costs, arising from the anticipated development and production of resources, net of the associated royalties, operating costs, development costs and abandonment and reclamation costs;
“gross reserves” refers to Corridor’s working interest reserves before the deduction of royalties and before including any royalty interests;
“net reserves” refers to Corridor’s working interest reserves after royalty deductions plus royalty interest reserves;
“possible reserves” refers to those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves;
“probable reserves” refers to those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves;
“prospective resources” refers to those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development;
“proved reserves” refers to those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves;
“reserves” refers to the estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on: analysis of drilling, geological, geophysical and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable, and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates; and
“undeveloped reserves” refers to those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.
SCHEDULE “A”
UPDATE OF STATEMENT OF RESERVES BASED ON THE UPDATED RESERVES REPORT
The Updated Statement of Reserves set forth below is dated June 15, 2016 and is a summary of information contained in the Updated Reserves Report, which has an effective date of December 31, 2015 and a preparation date of June 15, 2016. The Updated Reserves Report was prepared by GLJ in accordance with the COGE Handbook and NI 51-101. The Updated Reserves Report updates certain information in the Original Reserves Report prepared by GLJ with an effective date of December 31, 2015 to reflect the impact of the NB Decision on Corridor’s reserves and the value of reserves as if the NB Decision had been announced prior to December 31, 2015. The reserves data summarizes the natural gas, oil and natural gas liquids reserves of Corridor and the net present values of future net revenue for these reserves using GLJ’s forecast prices and costs effective as at December 31, 2015. All of Corridor’s reserves are located in the McCully Field and the Caledonia Field in New Brunswick, Canada.
The following information should be read in conjunction with the Statement of Reserves Data and Other Oil and Gas Information” disclosed in Corridor’s 2015 Annual Information Form. Please note that rounding errors may occur in the tables set forth below.
Reserves Data

	Summary of Oil and Gas Reserves as of December 31, 2015 (Forecast Prices and Costs)
	Light and Medium Oil		Conventional Natural Gas		Shale Gas		Natural Gas Liquids			Total Oil Equivalent Basis(1)
Reserves Category	Gross (mbbl)	Net (mbbl)	Gross (bscf)	Net (bscf)	Gross (bscf)	Net (bscf)	Gross (mbbl)	Net (mbbl)		Gross (mboe)	Net (mboe)
Proved Reserves
Developed Producing	–	–	17.0	16.6	1.6	1.5	24	23		3,116	3,050
Undeveloped	87	84	0.2	0.1	–	–	–	–		124	112
Total Proved Reserves	87	84	17.2	16.7	1.6	1.5	24	23		3,240	3,162
Probable Reserves	43	42	3.7	3.6	0.4	0.4	5	5		742	719
Total Proved Plus Probable Reserves	130	126	20.9	20.4	2.0	1.9	29	29		3,982	3,880
Possible Reserves (2)	44	36	4.5	4.2	0.5	0.5	7	6		891	837
Total Proved Plus Probable Plus Possible Reserves (2)	174	162	25.4	24.6	2.5	2.4	36	35		4,873	4,717

Notes:
(1)	Natural gas has been converted to boes on the basis of six mscf of natural gas being equal to one boe.
(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.

Summary of Net Present Value of Future net Revenue as of December 31, 2015 Before and After Income Taxes(1) (Forecast Prices and Costs)
		Before Income Taxes(1) Discounted at (%/Year)					Unit Value Before Income Tax Discounted at 10%/Year(2)
Reserves Category		0% ($MM)	5% ($MM)	10% ($MM)	15% ($MM)	20% ($MM)	$/boe	$/mscf
Proved Reserves
	Developed Producing	47.2	41.3	35.8	31.4	27.9	11.75	1.96
	Undeveloped	5.7	4.5	3.5	2.7	2.2	31.25	5.06
Total Proved Reserves		52.9	45.8	39.3	34.1	30.1	12.42	2.07
Probable Reserves		17.6	11.2	7.3	5.0	3.6	10.20	1.70
Total Proved Plus Probable Reserves		70.5	57.0	46.6	39.1	33.8	12.01	2.00
Possible Reserves (3)		15.7	9.5	5.9	4.0	2.9	7.05	1.17
Total Proved Plus Probable Plus Possible Reserves(3)		86.3	66.5	52.5	43.1	36.6	11.13	1.86

		After Income Taxes(1) Discounted at (%/Year)
Reserves Category		0% ($MM)	5% ($MM)	10% ($MM)	15% ($MM)	20% ($MM)
Proved Reserves
	Developed Producing	47.2	41.3	35.8	31.4	27.9
	Undeveloped	5.7	4.5	3.5	2.7	2.2
Total Proved Reserves		52.9	45.8	39.3	34.1	30.1
Probable Reserves		17.6	11.2	7.3	5.0	3.6
Total Proved Plus Probable Reserves		70.5	57.0	46.6	39.1	33.8
Possible Reserves (3)		15.7	9.5	5.9	4.0	2.9
Total Proved Plus Probable Plus Possible Reserves(3)		86.3	66.5	52.5	43.1	36.6

Notes:
(1)	The estimated value of future net revenue does not represent the fair market value of Corridor’s reserves.
(2)	Unit values are based on Corridor’s net reserves.
(3)	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.

Additional Information Concerning Future Net Revenue (undiscounted) as of December 31, 2015 (Forecast Prices and Costs)
Reserves Category	Revenue ($MM)	Royalties ($MM)	Operating Costs ($MM)	Development Costs ($MM)	Abandonment and Reclamation Costs ($MM)	Future Net Revenue Before Income Taxes ($MM)	Income Taxes ($MM)	Future Net Revenue After Income Taxes ($MM)
Total Proved Reserves	118.4	2.6	49.8	3.5	9.6	52.9	–	52.9
Total Proved Plus Probable Reserves	152.4	3.6	64.8	3.5	9.9	70.5	–	70.5
Total Proved Plus Probable Plus Possible Reserves(1)	193.5	6.3	86.1	3.6	11.2	86.3	–	86.3

Note:
(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.

Net Present Value of Future Net Revenue By Product Type as of December 31, 2015 (Forecast Prices and Costs)
Reserves Category		Production Group	Future Net Revenue Before Income Taxes (discounted at 10%/yr) ($MM)	Unit Value(3)
				($/boe)	($/mscf)
Total Proved		Light and Medium Crude Oil (1)	2.5	28.09	4.68
	Reserves	Conventional Natural Gas(2)	33.8	12.06	2.01
		Shale Gas	2.9	10.93	1.82
		Total Proved Reserves	39.3	12.42	2.07
Total Proved Plus		Light and Medium Crude Oil(1)	4.1	30.52	5.09
	Probable Reserves	Conventional Natural Gas(2)	39.0	11.43	1.91
		Shale Gas	3.5	10.38	1.73
		Total Proved Plus Probable Reserves	46.6	12.01	2.00
Total Proved Plus Probable		Light and Medium Crude Oil(1)	5.3	30.04	5.01
Plus Possible Reserves (4)		Conventional Natural Gas((2)	43.3	10.5	1.75
		Shale Gas	4.0	9.46	1.58
		Total Proved Plus Probable Plus Possible Reserves	52.5	11.13	1.86

Notes:
(1)	Including solution gas and other by-products.
(2)	Including by-products but excluding solution gas from oil wells.
(3)	Unit values are based on Corridor’s net reserves.
(4)	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.

Future Development Costs
The following table outlines development costs deducted in the estimation of future net revenue calculated using forecast prices and costs, undiscounted, attributable to the reserve categories noted below.

									Total
Reserve Category	2016	2017	2018	2019	2020	2021	Remainder		Undiscounted	Discounted at 10%
	($MM)	($MM)	($MM)	($MM)	($MM)	($MM)	($MM)		($MM)	($MM)
Proved Reserves	–	–	–	–	3.5	–	–		3.5	2.3
Proved Plus Probable Reserves	–	–	–	–	3.5	–	–		3.5	2.3

Future development costs may be funded with a combination of cash flow, debt, equity and asset sales or joint venture partnerships.