CALGARY, ALBERTA–(Marketwired – May 9, 2017) – GRANITE OIL CORP. (“Granite” or the “Company”) (TSX:GXO)(OTCQX:GXOCF) is pleased to release its financial and operational results and operational update for the three months ended March 31, 2017.

Message to Shareholders

Granite successfully drilled and completed three horizontal development wells in the first quarter of 2017, with results comparable to the Company’s best wells in 2016. Two of these wells tested reduced offset spacing of just over 100 meters as we continue to optimize the long-term development of the pool. The Company continues to monitor the results from these wells and are highly encouraged by the implications the reduced spacing could have on improving long-term ultimate oil recovery from the pool.

Granite continued with its disciplined approach in the quarter, with net capital expenditures of approximately $4.8 million, representing another quarter-over-quarter reduction. The Company achieved this despite delays and general cost increases of 10% from increased demand in the service sector.

The Company can and has responded quickly to this new operating environment, implementing several initiatives in the second quarter which have resulted in further, permanent efficiency gains in its drilling and completions activities. These initiatives have allowed the Company to further reduce its drilling times, resulting in drill-and-case costs of approximately $0.7 million in the second quarter compared to an average of approximately $0.85 million in 2016, a savings of approximately 20%. As well, Granite successfully tested a new hydraulic fracturing method on its first location drilled in the second quarter of 2017, which is expected to reduce all-in completion costs by up to 15% going forward.

Granite has recently completed a facility expansion, installing a second higher pressure inlet that takes advantage of the increased number of flowing wells, significantly minimizing the Company’s long term facility requirements and reducing operating costs.

The Company currently has two wells drilled that are awaiting completion and expects to drill and complete an additional six wells during the remainder of 2017 under the current budget. With its facility requirements for the year met and only one well left to convert to gas injection, the Company is in very good shape for 2017.

Granite’s annual borrowing base review under its demand credit agreement has been completed and the borrowing base will remain at $60 million with the same syndicate of banks, consisting of a $45 million revolving demand credit facility and a $15 million revolving demand operating facility.

Outlook

The Company remains on track with its prior guidance. For the duration of 2017, the Company is committed to its long-term model, protecting its dividend, production base and balance sheet through continued uncertainty in commodity pricing. With its low-cost structure, 100% ownership, large inventory of infill drilling opportunities and strong hedge position, the Company remains confident it can execute on this long-term model.

Reader Advisories

Forward-Looking Statements. Certain statements contained in this news release may constitute forward-looking statements or information (collectively, “forward-looking statements” or “statements”). These statements relate to future events or Granite’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Statements relating to “reserves” are also deemed to be 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 that the reserves can be profitably produced in the future. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. In particular, this news release contains forward-looking statements, pertaining to the following: forecasted capital expenditures and plans, drilling and development plans, Granite’s financial strength, anticipated production rates, projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, the success of the enhanced oil recovery scheme, expectations regarding Granite’s credit facility, treatment under governmental regulatory and taxation regimes and expectations regarding Granite’s ability to raise capital and to continually add to reserves through acquisitions and development.

Granite believes the expectations reflected in such forward-looking statements and the assumptions upon which such forward-looking statements are based, to be reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon by investors. These statements speak only as of the date of this news release and are expressly qualified, in their entirety, by this cautionary statement. Granite’s actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: volatility in the market prices for oil and natural gas; general economic conditions, stock market volatility and ability to access sufficient capital from internal and external sources, uncertainties associated with estimating reserves; uncertainties associated with Granite’s ability to obtain additional financing on satisfactory terms; geological, technical, drilling and processing problems; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; incorrect assessments of the value of acquisitions; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel. Readers are cautioned that the foregoing list of factors is not exhaustive. Management has included the above summary of assumptions and risks related to forward-looking information provided in this news release in order to provide security holders with a more complete perspective on Granite’s future operations and such information may not be appropriate for other purposes. Additional information on these and other factors that could affect Granite’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

With respect to forward-looking statements contained in this news release, Granite has made assumptions regarding, among other things: prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; the legislative and regulatory environments of the jurisdictions where Granite carries on business or has operations; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to market oil and natural gas successfully and Granite’s ability to obtain additional financing on satisfactory terms.

The forward-looking statements represent Granite’s views as of the date of this document and such information should not be relied upon as representing its views as of any date subsequent to the date of this document. Granite has attempted to identify important factors that could cause actual results, performance or achievements to vary from those current expectations or estimates expressed or implied by the forward-looking information. However, there may be other factors that cause results, performance or achievements not to be as expected or estimated and that could cause actual results, performance or achievements to differ materially from current expectations. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those expected or estimated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Non-GAAP Measurements. This news release contains the terms “net debt”, which represent current assets less current liabilities, excluding current derivative financial instruments, is used to assess efficiency, liquidity and the Company’s general financial strength. No IFRS measure is reasonably comparable to working capital deficit. This press release uses the term “operating netback” or “netback”, which is calculated by deducting royalties, operating expenses and transportation expenses from oil and gas revenue and adjusting for any realized hedging on financial instruments, is not a recognized measure under IFRS.

BOE Presentation. References herein to “boe” mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Granite Oil Corp.
Tyler Klatt
V.P. Exploration
(587) 349-9125