Headwater Exploration Inc (PK) (CDDRF) News

Corridor Resources changed to Headwater Exploration Inc.:

https://otce.finra.org/otce/dailyList?viewType=Symbol%2FName%20Changes

Anyone here?

It looks like this company makes most of its money by getting paid off when the government prohibits exploration on its lands. Not exactly the way I would expect or have wanted to make money with an oil and gas company.

Louis J. Desy Jr.

CSEM doubles success rate of oil wells,ShellGets81%Success

For wells drilled on prospects with a significant CSEM anomaly the success rate increases to 70%, whereas it drops to 35% for wells drilled on prospects without a significant CSEM anomaly. As such, the average success rate for wells drilled on prospects with a significant CSEM anomaly is twice the average success rate for wells drilled on prospects without a significant CSEM anomaly.At a recent conference presentation (Karman et al., 2011), Shell reported that they had drilled 27 exploration wells on a selection of more than 100 CSEM mapped pros-pects since 2002. Of these, 22 were discoveries, providing a success rate of 81%. The average pre-CSEM chance of success for these prospects was 47%.

And the above was from 2011, only 8 years into CSEM tech, must be better today

There is is more, Old Harry will be given a geophysical survey that has ability to with some confidence to tell if there is oil in the formation (the largest undrilled closed structure in the world).

What a risk/reward ratio! If it says "oil" the maybe a double in one day, and down the road $500 million valuation? Billion? if it says no oil, then maybe a 5% decline. As you point out the company is worth more than current price if Old Harry and Anticosti are both thrown away. Plus they got a renewal of it.

Cheers

HALIFAX, NOVA SCOTIA--(Marketwired - Jan. 16, 2017) - Corridor Resources Inc.(CDDRF) ("Corridor") is pleased to report that, on January 15, 2017, the Canada-Newfoundland and Labrador Offshore Petroleum Board ("C-NLOPB") issued exploration license EL-1153 to Corridor in exchange for the surrender of exploration license EL-1105 covering the Old Harry Prospect in the Gulf of St. Lawrence. The new exploration license expires on January 14, 2020, subject to extension by Corridor for an additional one year period (January 14, 2021) with the payment of a $1 million deposit.

Corridor intends to purchase a user license for a Controlled Source Electro Magnetic ("CSEM") data program over the Newfoundland and Labrador side of the Old Harry prospect on EL-1153. CSEM data is a marine geophysical tool developed in recent years to investigate the resistivity of geological prospects, similar to resistivity logging in well bores of potential hydrocarbon zones. Highly resistive layers in a geological structure measured with CSEM technology could indicate hydrocarbon bearing reservoirs and, therefore, would serve to reduce exploration risk and increase the likelihood of finding commercial quantities of hydrocarbons. The undertaking of the CSEM program over the Old Harry prospect, currently planned by an independent service provider for a seven day period in the fall of 2017, is subject to the receipt of the necessary regulatory approvals and vessel availability. Corridor will provide an update once it is certain when the CSEM program will proceed.

Corridor is a Canadian junior resource company engaged in the exploration for and development and production of petroleum and natural gas onshore in New Brunswick and Quebec 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 shale gas prospect in New Brunswick, an offshore conventional hydrocarbon prospect in the Gulf of St. Lawrence and an unconventional hydrocarbon prospect through a 21.67% interest in Anticosti Hydrocarbons L.P., a joint venture which has undiscovered resources on Anticosti Island, Quebec.
Read more at http://www.stockhouse.com/companies/bullboard?symbol=t.cdh&postid=25734347#HVOXJeTi5se0K0hM.99

Great report on CDH-SeekingAlpha CurrentValue.72
http://seekingalpha.com/article/4036471-corridor-resources-potential-gaming-changing-acquisition
Laurent CadotteFollow(339 followers)
Long only, deep value, long-term horizon, contrarian

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Summary

I went long Corridor Resources again on Jan. 6.

Its current NPV is C$0.72 per share.

The acquisition of assets in Western Canada would lead to significant upside.

Note: All figures are in USD unless otherwise stated. Corridor Resources trades primarily on the Toronto Stock Exchange as CDH. If you like this article, please follow me using the link next to my name on top of the page.

image: https://staticseekingalpha.a.ssl.fastly.net/uploads/2017/1/11/22128721-14841915556040723.jpg



Source: Corridor Resources

I bought back the shares of Corridor Resources (OTC:CDDRF) I sold in early 2016 because I realized something last December: If the company is going to buy energy assets in Western Canada, now must be the time.

Why Now?

To answer the above question, because energy prices have bottomed. In other words, Corridor must move in now to benefit from the oil collapse. Indeed, Corridor has been looking to buy Western Canadian energy assets ever since New Brunswick first announced its fracking moratorium.

The price for each flowing barrel is still stable in western Canada. Let's take a look at acquisitions by one of my holdings as an example. Raging River Exploration (OTC:RRENF) paid C$93,550 per boe/d in November 2016 vs. C$42,750 per boe/d in May 2016. The netback adjusted price for each acquisition is stable at about C$42,000 per boe/d. Furthermore, the price of oil is still hovering at under $55 per barrel despite the OPEC deal. In all, there is still some time left for Corridor to find a good deal.

Downside Is Protected

Fundamentally, it's a money thing. Current working capital (C$30M) amounts to C$0.32 per share. The NPV10 of Corridor's current proved producing reserves are worth C$36M, or C$0.40 per share. Therefore, the current fundamental value of the company stands at C$0.72 per share. We are buying a dollar for 70 cents. This should protect our position from any prolonged downside.


Valuation

The company is trading at 2.8 times estimated 2016 FFO (C$43M market cap, C$30M in the bank and 2016 FFO of C$4.6M). Corridor can't grow its production, so the low multiplier is understandable. This multiplier will increase if Corridor starts producing oil in Western Canada.

Let's say the company buys high-grade land for C$58M just like Raging River Exploration did last November.

Price (C$M)
58.0
Netback (C$/boe)
38.5
Production (boe/d)
620
Corridor will take on C$24M of debt with estimated 2016 year-end cash of C$34M. Estimated financing costs amount to C$1.4M per year with financing at 6%. The oil asset will return C$7.3M of FFO annually. Total estimated FFO will amount to C$11.4M, including New Brunswick operations (10.6% decline rate), or C$0.13 per share. This brings shares at C$1.04 with a standard 8x estimated annual FFO.

This analysis is using $50 WTI. As WTI oil increases in price, production grows and leverage (2.1X FFO) comes down, the stock will have even more upside. Also note that some of my holdings currently trade at over 8x annual FFO.

Bottom Line

"Only fools don't change their minds." -- John H. Patterson

I bought back the shares I sold in early 2016. While this is a speculation play (we can't say Corridor will move west for sure), we know management is still working to buy assets in Western Canada.

The stock is trading under its fundamental value (target of C$0.72 per share)
The window for a counter-cyclical acquisition is closing
Management needs to make a move; it's now or never
A game-changing acquisition in western Canada will completely reverse the current stock's performance (target of C$1.04 per share)
This is why I am long Corridor again.

Disclosure: I am/we are long CDDRF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Missed stock spikedown,but now is up. Chart looks like a bottom here. Citygate gas prices down right now as Boston in warm spell, BUT by Friday will be 17 degs, so prices will spike again.

Thu
Showers
59°42°
Fri
Sunny
41°17°
Sat
Partly Cloudy
28°24°
Sun
Sunny
35°23°

Had good talk with CEO Steve Moran

Steve was kind enough to call me being the IR person was on vacation. Was very impressed. First he is a good guy, honest, trust him after the talk. We discussed a bunch of things maybe 45 mins or so.

Yes Bill 106 legalizes Fracking. And they already have permission for 3 Fracks on Anticosti. JMHO there is little doubt Anticosti is a big profitable field waiting for drilling. The issue now those putting up the bucks want more commitment from gov that they can drill up the whole island. That is good and bad. It has delayed drilling, but pressuring for more commitment is good on other hand. To be determined what will happen on that.

NB is off limits fracking wise, ban now.

Old Harry is likley the biggest undrilled structure in the world. It is 5 times bigger than https://en.wikipedia.org/wiki/Hibernia_oil_field which is 2 billion barrels produced or in reserves. So Old Harry could at upper limit be 10 billion barrels. But costly to drill and hard to get a drilling permit as offshore. As they have said, looking for partner. By chance who I suggested would be a good partner has actually shown some interest in years past. Again his honestly came through, said mostly likely the structure will not have oil, but sure is worth finding out, being what the upside is.

So they have a pile of cash they would like invest in some cash flowing western Canada assets/companies and their existing production is doing very nicely.

My bottom line is that CDH is worth its current price plus some, if it did not have Anticosti or Old Harry. Again JMHO Canada gov saying it has billions of barrels is correct at Anticosti and Old Harry could be amazing. Bottom line is that it is maybe the most exciting upside you can buy in as sub $100 million oil company.

Corridor getting 260% more for gas than last year?

http://www.naturalgasintel.com/data/data_products/daily?region_id=northeast

Daily Change
0.71
14.50%
Month/Month Change
2.66
89.90%
Year/Year Change
4.06
260.30%

That reports seems to indicate that, wow what a 4Q they will have.

What is Corridor worth?

Someone on Stockhouse which is the active board for Corridor came up with this today:

Caracteristiques geologiques des evaluation des ressources petrolieres de la Formation de McCasty, Ile d' Anticosti, Quebec Canada (Dossier Publique 8019) 2016.
Oil (P-50) best estimate 32,3 billion bbls in place
Gas (P-50) best estimate 52.4 trillion cu, ft, in place

Let's see....32.3 billion bbls oil in place x 25% recoverable = 8.075 billion bbls recovered x $5/bbl ( a reasonable value for land-based oil in the ground) =$40.375 billion x 21.67% (CDH share) = $8.75 billion divide by 90 million shares = $97.21/sh, value of CDH based on prospective Anticosti OOIP. And more when you add the value of the gas.
No need to quibble about 25% recoverable or value of OOIP.....whatever figures you use, it's enormous. Do your own math.

rlovett

Lets say he is twice as high as should be. That is still $50 a share!! That is why have bot Corridor, even before Bill 106 legalized fracking on Anticosti Island. They own 21% of Anticosti LLC which owns 100% of the roughly 200 kilometer long island which has billions of barrel of oil the Quebec gov has reported. And the gov pays for the first $50 million of drilling, Corridor rides for free. Corridor did a sweet deal when they brought in 2 partners.

Corridor new presentation out today+Fracking AnticostiWillBeLegal

https://www.corridor.ca/wp-content/uploads/2014/05/Corporate-Presentation-December-2016.pdf well worth reading

Talked with Questerre QUE.to and Corridor has new presentation today, Fracking legal with Bill 106

Questerre told me he thinks they will be fracking on Utica in Quebec in 2018. The bill legalized it and passed by big margin. He said the regulations will have to be created, but that things look good.

Corridor has no commented on Bill 106 yet. They have even more to gain. Corridor (CDH) has near 200 kilometer long Anticosti Island and they figure it has about same oil resources as the Utica in Ohio

Anticosti Macasty versus Ohio Utica shale
• Anticosti Island is large enough to cover the productive Utica shale trend. • Similar to Ohio, Anticosti is in thermal window for oil, liquid rich gas and dry gas • Oil window is < 1.1 Ro, liquid-rich gas is between 1.1 and 1.4 and dry gas is > 1.4 • Pay thickness, total organic carbon, and clay content are similar in Anticosti and Ohio • Both contain light oil and NGL’s •
Recent production from Ohio Horizontal Wells*: ? 1493 producing wells ?
4.24 Bcf/d ?
46,518 bbls/d of oil

The IR guy is gone for Christmas at Corridor, so talked with QUE as both in same boat.

Corridor already has special permits to do three wells with fracking on Anticosti which will finish in 2017.

Corridor has so much cash ($30 million working capital) the Enterprise value is only $15 million. They are looking at buying things in western Canada with all their cash.

Today they also PRed they have hedged their gas a fair amount.


Cheers