CALGARY, Alberta, March 20, 2018 (GLOBE NEWSWIRE) — GRANITE OIL CORP. (“Granite” or the “Company”) (TSX:GXO) (OTCQX:GXOCF) announces that its Board of Directors (the “Board”) has initiated a formal process to review potential strategic alternatives available to the Company (the “Process”) in an effort to enhance shareholder value.
On March 7, 2018, Granite announced 2017 reserves, highlighted by Proved Developed Producing (“PDP”) reserves replacement which resulted in Company-record and industry-leading finding and development costs of $9.00 per BOE (95% oil) and a PDP recycle ratio of 3.3 times. This represents the third consecutive year of increasing PDP reserves replacement and recycle ratios. Further, the Company’s most recent two-well program, which returned to 200 meter offset spacing, has yielded average initial production results (IP30+) in-line with its 2015 and 2016 drilling campaigns. Granite believes the recent results and reserves report validate the Company’s highly effective gas injection Enhanced Oil Recovery (“EOR”) program and its efficiency in converting barrels in the ground into developed producing reserves. With a Company-estimated 200+ million barrels of oil under its approved EOR scheme, and with cumulative oil production plus PDP bookings representing only 5% recovery of the estimated original oil in place, the Company expects this trend to continue with further development of this 100%-owned, early-life-cycle pool.
The Board believes that the current trading price of its common shares does not adequately reflect the underlying value of the Company and its successful EOR project. The Board has appointed an independent committee (the “Special Committee”) to undertake a broad review of potential alternatives to enhance shareholder value. Such strategic alternatives may include, but are not limited to, a sale or merger of the Company or other form of business combination; a sale or joint venture involving all or a portion of the assets; a recapitalization of the Company or other form of strategic investment; or the purchase of assets.
Cormark Securities Inc. and National Bank Financial Inc. have been engaged by the Special Committee as co-financial advisors in connection with the Process.
Granite has not set a definitive schedule for the Process and the Company does not intend to provide updates or otherwise disclose developments with respect to the Process until the Board has approved a definitive transaction or strategic alternative, or otherwise determines that disclosure is necessary or appropriate.
Granite will continue to execute its 2018 business plan, which includes drilling and completing its second well of the year early in the second quarter. The Company will continue to prioritize its balance sheet and dividend while efficiently converting barrels in the ground into producing barrels.