Granite Oil Corp. Provides Drilling Update and Announces Revised Monthly Dividend

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CALGARY, Alberta, Dec. 18, 2017 — GRANITE OIL CORP. (“Granite” or the “Company”) (TSX:GXO)(OTCQX:GXOCF) is pleased to announce its recent successful drilling results and kick off of the next phase of its drilling program in Pod 2.
Operations and Corporate UpdateGranite has recently drilled and completed its ninth and final horizontal development well of 2017. The Company had not drilled a development well since July, 2017, reflecting the Company’s decision to slow development pace and shift focus to the next area of targeted development (Pod 2). The well was drilled on 200 metre offset spacing – the same spacing that allowed the Company to add producing reserves at top tier finding and development costs and recycle ratios in 2016 (see November 9, 2017 press release). Granite is pleased to report the well flowed at rates that are in-line with the successful and economically superior wells drilled in 2016. As well, over the recent months, the Company made adjustments to its drilling and completion (“D & C”) processes and was successful in keeping D & C costs for this well near historic lows of $1.25 million.As the Company established the most efficient formula to recover reserves from Pod 1, representing less than 15% of its delineated pool, it has continued to prepare Pod 2 for development drilling in 2018 through the conversion of multiple producing wells to gas injection wells in 2017. Considering the recent well results, the Company is excited about its 2018 drilling program which will focus on development drilling on 200 m spacing within Pod 2.  The Company has several wells ready to drill in Pod 2 and the next location is expected to spud on January 3rd, 2018.As well, since having not drilled a development well since July of 2017 the Company was able to further evaluate the efficiency of its gas injection Enhanced Oil Recovery (“EOR”) Scheme on base declines. As anticipated, this has resulted in a shallower decline profile.  The Company’s Gas Injection EOR scheme is proven technology with a history of significantly increasing oil recovery.The Company is encouraged with these recent results, continuing to learn and advance towards its final development model.Granite’s previously announced intent to sell a 60% working interest in non-core, non-Bakken assets has been adjusted to sell a higher working interest while still maintaining operatorship of this asset for an increase to the disposition price. All proceeds will be used for a non-permanent repayment of indebtedness under Granite’s existing credit facility, drawn to fund its various capital projects, and for general corporate purposes. The sale is expected to close in the first quarter of 2018.Dividend PolicyGranite is committed to protecting its strong balance sheet and maximizing long-term value from its large, unique Bakken oil pool while funding the dividend income model through internally generated cash flow.  With this in mind,  Granite management along with its Board of Directors has decided to reduce its monthly dividend to $0.023 per common share commencing with the December 2017 dividend that will be paid on January 15, 2018 to shareholders of record on December 29th, 2017. This reduction in the monthly dividend rate from $0.035 to $0.023 per common share reduces Granite’s cash requirements by approximately $4.5 million annually and provides shareholders with a meaningful dividend yield of 9% at a $3.00 share price. This dividend has been designated as an eligible dividend for Canadian income tax purposes. This is the first time Granite has cut the dividend since the Company’s inception in May, 2015, and is a proactive, temporary measure to protect the balance sheet. The reduction provides the Company more flexibility in light of continued uncertainties in oil pricing, including the current widening of WTI-WCS price differentials.   2018 Hedging ContractsThe Company currently has the following hedges booked for 2018:Q1 – 1,300 bbl/d hedged
• 900 bbl/d at an average price of WTI $51.49 USD
• 400 bbl/d at an average price of WTI $72.77 CAD
Q2 – 1,100 bbl/d hedged
• 1000 bbl/d at an average price of WTI $52.56 USD
• 100 bbl/d at an average price of $73.90 CAD
Q3 and Q4 – 800 bbl/d hedged
• 600 bbl/d at an average price of WTI $52.05 USD
• 200 bbl/d at an average price of WTI $70.74 CAD 
Granite will continue to add additional hedges for 2018 and beyond, as per the Company’s hedging strategy. 2018 Outlook  Granite continues to focus on maximizing long term value to its shareholders from its Bakken oil pool. The Company has been resilient through difficult times, achieving significant gains in efficiencies in adding producing barrels organically. With this formula and a deep drilling inventory Granite is well positioned to continue this strategy, and with more financial flexibility it has the opportunity to increase its pace of development if commodity prices and economic conditions warrant. Contact InformationFor further information, please contact Michael Kabanuk, President & CEO by telephone at (587) 349-9123 or Tyler Klatt, V.P. Exploration by telephone at (587) 349-9125.Reader AdvisoriesForward-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. 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: oil and natural gas production levels, forecasted capital expenditures and plans, drilling and development plans, a proposed sale Granite of certain non-core assets, future dividends, Granite’s financial strength, projections of market prices and costs, supply and demand for oil and natural gas, the success of Granite’s 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.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 financing on satisfactory terms.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 oil in place; uncertainties associated with Granite’s ability to obtain financing on satisfactory terms; geological, technical, drilling and processing problems; uncertainties associated with the completion of the sale by Granite of certain non-assets; 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).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.Test Rates. Test rates are not necessarily indicative of long-term performance or of ultimate recovery. Neither a pressure transient analysis nor a well-test interpretation has been carried out and the data should be considered to be preliminary until such analysis or interpretation has been done.

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Maria Burns

Maria Burns

Maria is a Viral News Editor who graduated from the University Of California. She likes social media trends, being semi-healthy, Buffalo Wild Wings and vodka with lime. When she isn’t writing, Maria loves to travel. She last went to Thailand to play with elephants and is planning a trip to Bali.
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