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Granite Oil Corp. Reports First Quarter 2019 Financial and Operating Results

CALGARY, Alberta, May 08, 2019 (GLOBE NEWSWIRE) -- GRANITE OIL CORP. (“Granite” or the “Company”) (GXO.TO)(GXOCF) is pleased to report its operating and unaudited financial results for the three months ended March 31, 2019.

FINANCIAL AND OPERATING HIGHLIGHTS

  Three Months Ended March 31,
  2019   2018  
(000s, except per share amounts) ($)   ($)  
FINANCIAL    
Oil and natural gas revenues   9,296   10,675  
Cash flow from (used in) operations 2,427   3,957  
Funds from (used in) operations (1)   4,302   2,711  
Per share – basic 0.11   0.08  
Per share – diluted (2) 0.11   0.08  
Net income (loss) (1,884 ) (3,353 )
Per share – basic (0.05 ) (0.10 )
Per share – diluted (2)  (0.05 ) (0.10 )
Capital expenditures (3) 719   3,461  
Net debt (4) 43,638   42,949  
Shareholders’ equity 190,945   195,391  
(000s) (#)   (#)  
SHARE DATA        
At period-end 38,369   34,191  
Weighted average – basic 38,201   34,191  
Weighted average – diluted 38,685   34,357  
OPERATING (5)        
Production        
Natural gas (mcf/d) 189   289  
Crude oil (bbls/d) 1,553   2,157  
Total (boe/d) 1,585   2,205  
Average wellhead prices    
Natural gas ($/mcf) 4.84   2.19  
Crude oil and NGLs ($/bbl) 65.91   54.71  
Combined average ($/boe) (6) 65.18   53.80  
Netbacks    
Operating netback ($/boe) (7) 41.30   20.12  
Gross (net) wells drilled    
Oil (#) -   1 (1.0 )
Total (#) -   1 (1.0 )
Average working interest (%) -   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 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 Management Discussion and Analysis under “Capital Expenditures” 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 commentary in 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 ”Reader Advisories” under “BOE Presentation”.
(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 the commentary in “Reader Advisories”  under “Non-GAAP Measurements” for further discussion.
   

Operational Update and Budget

Granite recently brought its development well drilled in the second quarter on-stream at a restricted rate, and is currently maintaining Corporate production of approximately 2,000 bbl/d with a number of wells shut-in as part of its rotational re-pressurization process and EOR optimization. The Company continues to focus on cost reduction, operational efficiencies, and debt reduction, as it prioritizes stability in light of the recent volatility in the Canadian energy market. The Company is maintaining its conservative budget for 2019 of approximately 1,650 bbl/d of oil production for the year, with capital expenditures of approximately $6.1 million, providing for total funds from operations of approximately $17.6 million, and exit net debt of approximately $36 million. The budget assumes average West Texas Intermediate (‘WTI’) pricing of approximately $60 USD/bbl, an average Western Canada Select (‘WCS’) differential to WTI of approximately $16 USD/bbl, and a foreign exchange rate of $1.33 CAD per USD for the remainder of 2019.

Outlook

Following an exceptionally challenging time for the Canadian energy industry in 2018, Granite continues to show its resiliency. The Company posted top-tier producing reserve metrics again for 2018, reduced its total net debt by over 8% in the first quarter of 2019 alone, and continues to prove-up its drilling inventory with its recent development well. With this positive momentum and improvement in Canadian commodity pricing, Granite is off to a strong start for 2019.    

Contact Information

For further information, please contact Michael Kabanuk, President & CEO, by telephone at (587) 349-9123, or Devon Griffiths, COO, by telephone at (587) 349-9120.

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. 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, the success of the enhanced oil recovery scheme, the success of the rotational ‎re-pressurization process, 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.‎

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Granite’s prospective results of operations, funds from operations, netbacks, net debt, operating 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.

Non-GAAP Measurements. This news release contains the terms "funds from operations" and "funds from operations per share", which should not be considered an alternative to or more meaningful than cash flow from (used in) operating activities as determined in accordance with IFRS. These terms do not have any standardized meaning under IFRS. Granite's determination of funds from operations and funds from operations per share may not be comparable to that reported by other companies. Management uses funds from operations to analyze operating performance and leverage, and considers funds from operations to be a key measure as it demonstrates the Company's ability to generate cash necessary to fund future capital investments and to repay debt, if applicable. Funds from operations is calculated using cash flow from operating activities as presented in the statement of cash flows, before changes in noncash working capital. Granite presents funds from operations per share whereby per share amounts are calculated using weighted-average shares outstanding, consistent with the calculation of earnings per share.

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.

The Company considers corporate netbacks to be a key measure as they demonstrate Granite's profitability relative to current commodity prices. Corporate netbacks are comprised of operating and funds flow netbacks. Operating netback is calculated as the average sales price of the Company's commodities, less royalties, operating costs and transportation expenses. Funds flow netback starts with the operating netback and further deducts general and administrative costs, finance expense and unrealized gains on financial instruments, and then adds any finance income and realized gains on financial instruments, if applicable. No IFRS measure is reasonably comparable to netbacks. See "Netbacks (per unit)" in the Company's management's discussion and analysis for the three months ended March 31, 2018 filed on www.sedar.com for the netback calculations.

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.‎

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.‎