/EINPresswire.com/ -- CALGARY, ALBERTA -- (Marketwired) -- 06/16/16 -- GRANITE OIL CORP. ("Granite" or the "Company") (TSX: GXO)(OTCQX: GXOCF) is pleased to announce its updated budget and guidance for the remainder of 2016.

With low commodity prices through the first half of 2016, Granite's primary focus was to create long-term value with the expansion of its Gas Injection - Enhanced Oil Recovery ('EOR') scheme in its 100%-owned Alberta Bakken oil pool. Throughout the first and second quarter, the Company implemented a major EOR expansion and optimization project. In the first quarter the Company reached a major milestone in its development by achieving a Voidage Replacement Ratio ("VRR") of over 100% in the core of the oil pool, covering 23 sections and containing an internally estimated original oil in place of approximately 200 million barrels. Since ramping up voidage replacement, the Company is seeing a material improvement on the rate of production decline on a pool-wide basis from both historical wells drilled before 2015 and from its EOR-optimized wells drilled in 2015. A figure illustrating these results is included in Granite's current corporate presentation which is available at www.graniteoil.ca. Granite has recently ramped up its production with increased 2016 drilling and continues to maintain a VRR of over 100%. Going forward, Granite will utilize built-in spare capacity from its recent facility expansion to match production growth with gas injection and maintain a minimum VRR of 100%.

In response to an improving oil price outlook for the second half of 2016, and having effectively stabilized its base production with its expanded EOR initiatives, Granite has begun to allocate capital to measured production growth and resource development while continuing to maintain its sustainable dividend.

Updated 2016 Budget and Guidance

Granite has now increased its 2016 capital budget to $17.0 million from $10.2 million. The updated capital budget includes approximately $10.0 million on development drilling and completions, approximately $5.0 million on facilities, injectors and land, and approximately $2.0 million on delineation and exploration projects on its highly prospective Alberta Bakken fairway. The increased budget is directed to: a return to measured production growth in the core of the Company's Bakken oil pool; continued optimization and expansion of its EOR scheme with the conversion of three producing wells to injectors, bringing its injector count to a total of ten; setting up for future development of the Company's West Bakken acreage through the drilling of an exploration well; and seeking regulatory approval for a pilot gas flood scheme.

Granite expects that its oil production volumes will average 3,200 bbl/d for the second half of 2016. Assuming average US$WTI prices of $50.00 per barrel, Granite forecasts second-half 2016 cash flow of $14.6 million, matching budgeted capital expenditures and dividends during the period, and year-end net debt of $24.9 million.

Second Quarter Update

Granite continues to make material gains in reducing its capital costs, with the cost of its two most recent wells, drilled late in the quarter in the core Bakken oil pool, averaging $1.2 million, including drilling, completion and tie-in costs. As a Company first, Granite drilled these wells back to back on the same pad realizing significant drilling and completion efficiencies and cost reductions. These costs represent a 30% reduction in all-in well costs from the $1.7 million at the start of the year.

Subsequent to bringing these two wells on production late in the quarter, Granite's current oil production is approximately 3,200 bbl/d. Second quarter oil production is expected to average approximately 2,900 bbl/d. Total capital expenditures during the second quarter is estimated to be approximately $5 million, which included the drilling of three, 100% working interest oil wells plus approximately $1.0 million on one time facilities expansions and land.

Granite is excited about its outlook for the second half of 2016. The Company has navigated the low oil price cycle while maintaining its dividend and also significantly advancing its EOR project, reducing its costs and improving its balance sheet. In combination with improving oil prices the Company is well positioned for sustainable growth and further developing its large inventory of organic opportunities.

Reader Advisory

Forward-Looking Statements. Certain statements contained in this news release may constitute forward-looking 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. 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. Granite believes that the expectations reflected in those forward-looking statements are 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.

In addition, and without limiting the generality of the foregoing, this news release contains forward-looking statements pertaining to the following: Granite's plans for 2016, Granite's future production levels and cash flow, total payout ratio, net debt, projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, the effectiveness of the EOR Project, capital expenditure programs, treatment under governmental regulatory and taxation regimes, expectations regarding Granite's credit facility and its ability to raise capital and to continually add to reserves through acquisitions and development, and projections of market prices and costs.

With respect to forward-looking statements contained in this news release related to Granite's business and operations, Granite has made assumptions regarding, among other things: prevailing commodity prices, exchange rates, estimates of cost, including drilling and operating costs, the sufficiency of budgeted capital expenditures in carrying out planned activities; the state of the economy and the exploration and production business; the legislative and regulatory environments of the jurisdictions where Granite carries on business or has operations, the impact of increasing competition, and Granite's ability to obtain additional financing on satisfactory terms.

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; 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.

This forward-looking information represents 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 information 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.

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Granite's prospective results of operations, cash flows, debt, drilling costs and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this news release was made as of the date of this news release and was provided for the purpose of providing further information about Granite's anticipated future business operations. Granite disclaims any intention or obligation to update or revise any FOFI contained in this news release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein.

Original Oil in Place (OOIP). OOIP is the equivalent to Discovered Petroleum Initially In Place (DPIIP) for the purposes of this news release. DPIIP is defined as quantity of hydrocarbons that are estimated to be in place within a known accumulation, plus those estimated quantities in accumulations yet to be discovered. There is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of DPIIP at this time, and as such it cannot be further sub-categorized. The OOIP estimates included in this news release have an effective date of January 1, 2016.

Contacts:
Michael Kabanuk
President & CEO
(587) 349-9123

Jonathan Fleming
E.V.P.
(587) 349-9118

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