CALGARY, Alberta, Nov. 12, 2018 (GLOBE NEWSWIRE) — GRANITE OIL CORP. (“Granite” or the “Company”) (TSX: GXO) (OTCQX: GXOCF) is pleased to report its operating and unaudited financial results for the three months and nine months ended September 30, 2018.
FINANCIAL AND OPERATING HIGHLIGHTS
|Three Months Ended September 30,||Nine Months Ended September 30,|
|(000s, except per share amounts)||($)||($)||($)||($)|
|Oil and natural gas revenues||12,724||12,676||37,493||40,915|
|Funds from operations (1)||3,071||6,218||9,871||19,521|
|Per share – basic||0.09||0.18||0.29||0.58|
|Per share – diluted (2)||0.09||0.18||0.28||0.57|
|Net income (loss)||637||(2,996||)||(3,077||)||(612||)|
|Per share – basic||0.02||(0.09||)||(0.09||)||(0.02||)|
|Per share – diluted (2)||0.02||(0.09||)||(0.09||)||(0.02||)|
|Capital expenditures (3)||703||3,531||10,005||14,168|
|Net debt (4)||47,069||36,893||47,069||36,893|
|Weighted average – basic||34,191||34,171||34,191||33,723|
|Weighted average – diluted||35,166||34,443||35,185||34,083|
|Natural gas (mcf/d)||–||499||137||558|
|Crude oil (bbls/d)||1,951||2,579||2,100||2,749|
|Average wellhead prices|
|Natural gas ($/mcf)||–||2.95||1.73||2.81|
|Crude oil and NGLs ($/bbl)||70.90||52.85||65.26||53.95|
|Combined average ($/boe) (6)||70.90||51.76||64.69||52.74|
|Operating netback ($/boe) (7)||26.38||29.53||25.09||29.21|
|Gross (net) wells drilled|
|Oil (#)||– (–)||2 (2.0)||3 (3.0)||8 (8.0)|
|Total (#)||– (–)||2 (2.0)||3 (3.0)||8 (8.0)|
|Average working interest (%)||N/A||100||100||100|
(1) Funds from operations and funds from operations per share are not recognized measures under International Financial Reporting Standards (IFRS). Refer to the commentary in the Reader Advisories under “Non-GAAP Measurements” for further discussion.
(2) The Company uses the weighted average common shares (basic) when there is a net loss for the period and the weighted average common shares (diluted) when there is net income in the period to calculate net income (loss) per share diluted. The Company uses the weighted average common shares (diluted) to calculate the funds from operations diluted.
(3) Total capital expenditures, excluding acquisitions and excluding non-cash transactions. Refer to commentary in the Q3 2018 Management’s Discussion and Analysis under “Capital Expenditures and Acquisitions” for further information.
(4) Net debt, which is calculated as current liabilities (excluding derivative financial instruments) and bank debt less current assets (excluding derivative financial instruments), is not a recognized measure under IFRS. Please refer to the Reader Advisories under “Non-GAAP Measurements” for further discussion.
(5) For a description of the boe conversion ratio, refer to the commentary in the Management’s Discussion and Analysis under “Other Measurements”.
(6) Combined average realized prices includes all oil, gas and NGL sales revenue, excluding other income.
(7) Operating 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. Please refer to Reader Advisories under “Non-GAAP Measurements” for further discussion.
The Canadian energy industry continues to experience significant pricing pressure related to limited takeaway capacity and lack of access to international markets. During such times, Granite retains a strategic advantage over its peers with some of the lowest operating expenses in the basin and an established enhanced oil recovery (‘EOR’) scheme that can be used to actively improve reservoir pressures and associated productivity. Currently, Granite is leveraging this advantage by shutting in producing wells in areas of lower pressure and directing gas injection to these areas to increase reservoir pressure. These wells will be returned to production when prices warrant, at which time, Granite will benefit from higher production and improved netbacks. In adopting this strategy, Granite is not only retaining the value of its product and its reserves, but also improving the efficiency of its asset in a manner that requires no incremental capital input. As a means to further enhance the value of its product, Granite has taken steps to improve the price it receives for its oil by trucking directly to a Montana refinery (please refer to the Company’s news release dated October 30, 2018). The Company continues to put significant energy into pursuing additional opportunities for increased pricing.
Hedging has impacted the Company’s 2018 cash flow, with losses totaling approximately $2.0 million in the quarter and $5.3 million through the first nine months of 2018. Granite is looking forward to the completion of these contracts in December 2018, at which time the Company’s 2019 hedges come into effect at significantly higher prices.
Granite’s 2019 hedges are as follows: First Quarter – 800 bbl/d (100 bbl/d at $65.72 USD and 700 bbl/d at $85.86 CAD); Second Quarter – 600 bbl/d at $85.48 CAD; Third Quarter – 400 bbl/d (100 bbl/d at $69.20 USD and 300 bbl/d at $86.53 CAD).
Balance sheet protection is critical at this time. As demonstrated in the third quarter, Granite is minimizing capital spending and will continue to do so until market conditions improve. In the current environment, the Company is focusing on debt reduction, improved liquidity, and maximizing capital efficiency. The Company will continue to evolve and adapt its strategy to effectively weather the current price challenges and provide long-term value for shareholders.
For further information, please contact Michael Kabanuk, President & CEO, by telephone at (587) 349-9123, Devon Griffiths, COO, by telephone at (587) 349-9120, or Tyler Klatt, V.P. Exploration, by telephone at (587) 349-9125.