CALGARY, ALBERTA -- (Marketwired) -- 03/14/16 -- GRANITE OIL CORP. ("Granite" or the "Company") (TSX: GXO)(OTCQX: GXOCF) is pleased to present the summary results of the independent reserves report (the "Sproule Report") prepared by Sproule Associates Ltd. ("Sproule") with an effective date of December 31, 2015.
During 2015, $41.2 million was invested in Granite's assets. The primary aim of the 2015 capital program was to expand the gas injection Enhanced Oil Recovery (EOR) scheme on its 100%-owned Alberta Bakken property. During 2015, the Company drilled and completed ten horizontal production wells, added four new gas injection wells through the conversion of four formerly producing wells, and substantially increased the volume of gas injected into the reservoir. Granite also took advantage of low equipment and service costs to expand the EOR infrastructure through the purchase of additional compression facilities, providing the Company with long-term injection capacity for the continued growth of the EOR program.
Granite's Alberta Bakken property produced an average of 3,496 boe per day (92% oil) during 2015, with a fourth quarter average production rate of 3,476 boe per day (96% oil). During 2015, Granite's averaged realized operating netback is estimated to be $25.27/boe.
2015 Reserve Highlights
-- Finding and Development (F&D) costs were $6.13/boe based on the change
in total proved plus probable ("2P") reserves, including the change in
future development capital ("FDC"), resulting in a 2P recycle ratio of
4.1 times(1)(2).
-- F&D costs of $19.23/boe based on the change in total proved ("TP")
reserves, including the change in FDC resulting in a TP recycle ratio of
1.3 times(1)(2).
-- Increased proved developed producing ("PDP") oil reserves by 7.4% to
5,050 Mbbl, all as a result of Granite's 2015 drilling program.
-- Granite's PDP reserves represent approximately 31% of the total proved
plus probable ("2P") reserves.
-- 2P reserves increased by 4.4% to 17,704 Mboe.
-- TP reserves increased by 7.4% to 11,166.4 Mboe.
-- 725 Mbbl of proved oil reserves and 775 Mbbl of probable oil reserves
are included in the Improved Recovery category in the Sproule Report
associated with the EOR scheme. These initial bookings represent a
conservative approach to the incremental recovery potential of the EOR
scheme.
-- Costs associated with drilling future wells dropped by 29% to an average
of $2.14 million per well, reflecting cost improvements Granite has
achieved in 2015. Proved and probable future development capital was
$73.4 million in 2015, a 28% reduction relative to 2014. Granite
anticipates further cost reductions in 2016.
-- Reserve life index of approximately 8.8 years on a total proved basis
and 14.0 years based on a 2P basis (based on average fourth quarter 2015
production rate of 3,476 boe per day).
-- Granite's 2015 drilling program resulted in PDP and 2P reserve additions
replacing 117% and 158%, respectively, of production.
Notes:
1. Financial information is based on the Company's preliminary 2015
unaudited financial statements and is therefore subject to audit
2. Recycle ratio is calculated as operating netback divided by F&D costs
including changes in FDC. Calculation is based on estimated 2015
operating netback of $25.27per boe, which is calculated as revenue less
royalties and production costs.
Comparisons to Granite's prior-year reserves set out above refer to reserves data in the independent reserves report of Sproule with an effective date of January 1, 2015, with respect to Granite's Alberta Bakken property. The Company's Information Circular dated April 9, 2015, a copy of which is available on the Company's SEDAR profile at www.sedar.com, includes additional reserves data from this reserves report. As described in this information circular, the Company completed a reorganization (the "Reorganization") in May 2015 which, among other things, resulted in the conveyance by the Company to Boulder Energy Ltd. of all of its oil and gas assets other than its Alberta Bakken property.
2015 Year End Reserves
The evaluation of Granite's petroleum and natural gas reserves was prepared by Sproule, an independent reserves evaluator, in accordance with definitions, standards and procedures contained in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Additional reserve information, as required under NI 51-101, will be included in the Company's Annual Information Form, which will be filed on SEDAR on or before March 30, 2016. Financial information presented above is based on management-prepared financial statements for the year ended December 31, 2015, which are in the process of being audited by Granite's independent auditors and, accordingly, such financial information is subject to change based on the results of the audit. See "Reader Advisory - Unaudited Financial Information" below.
Summary of Gross Oil and Gas Reserves as of December 31, 2015 (1)(2)(3)(4)(5)(6)
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Future
Oil BTAX Development
Reserves Oil(6) Gas Equivalent PV 10% Capital Recycle
Category (Mbbl) (MMcf) (MBOE) ($000's) ($000's) Ratio
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Proved
Developed
Producing 5,050 3,097 5,566 114,482 0
Proved
Developed Non-
Producing 120 7,241 1,327 4,607 984.4
Proved
Undeveloped 4,062 1,263 4,273 47,476 61,553.1
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Total Proved 9,233 11,601 11,166 166,565 62,637.5 1.3x
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Probable
Developed
Producing 2,755 1,707 3,040 51,968 0
Probable
Developed Non-
Producing 70 3,752 696 2,129 0
Probable
Undeveloped 2,719 499 2,802 43,357 10,792
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Total Probable 5,545 5,958 6,538 97,454 10,792
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Total Proved +
Probable 14,778 17,559 17,704 264,019 73,429.4 4.1x
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Summary of Net Present Value of Future Net Revenue as of December 31, 2015 (1)(2)(3)(4)(5)
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Net Present Value Before Income Taxes
Discounted At
0% 5% 10% 15% 20%
($M) ($M) ($M) ($M) ($M)
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Proved
Developed producing 175,123 139,114 114,482 97,147 84,510
Developed non-producing 24,719 10,085 4,607 2,416 1,468
Undeveloped 113,077 71,726 47,476 32,347 22,351
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Total Proved 312,919 220,925 166,565 131,909 108,329
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Total Probable 254,429 146,399 97,454 71,525 55,938
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Total Proved plus
Probable 567,348 367,323 264,019 203,434 164,267
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Notes:
1. The tables summarize the data set out in the Sproule Report and, as
such, the totals may not add due to rounding.
2. Reserves have been presented on a gross basis which are the Company's
total working interest share before the deduction of any royalties and
without including any royalty interests of the Company.
3. Based on Sproule's December 31, 2015, escalated price forecast. See
"Pricing Assumptions" below.
4. The net present value of future net revenues attributable to the
Company's reserves are stated prior to provision for interest, general
and administrative expenses, and after deduction of royalties, operating
costs, estimated future capital expenditures, and estimated well
abandonment and reclamation costs of existing and future wells evaluated
by Sproule and does not include abandonment costs for wells to which
reserves have not been attributed, or the abandonment and reclamation
costs of facilities and pipelines. Future net revenues have been
presented on a before-tax basis. It should not be assumed that the
present worth of estimated future net revenue presented in the tables
above represents the fair market value of the reserves. There is no
assurance that the forecast prices and costs assumptions will be
attained and variances could be material. The recovery and reserves
estimates of Granite's crude oil and natural gas reserves provided
herein are estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual crude oil, natural gas, and natural
gas liquids reserves may be greater than or less than the estimates
provided herein.
5. The Company's reserves are developed with horizontal wells completed
with multi-stage fracturing techniques.
6. "Oil" values include all light & heavy oil volumes, and natural gas
liquids volumes.
Net Asset Value
Based on Sproule's December 31, 2015, forecast pricing, Granite's net asset value calculation is as set out in the following table.
Summary of Net Asset Value as of December 31, 2015(1)
------------------------------------------------------------------- NAV - Year ended December 31, 2015 ($M) ------------------------------------------------------------------- 2P Reserves NPV 10 before tax (Sproule) 264,019 Net undeveloped land value (internal valuation)(1) 39,200 Estimate Net Debt (unaudited) (39,612) Proceeds from dilutive securities 747 ------------------------------------------------------------------- Net asset value 264,354 ------------------------------------------------------------------- ------------------------------------------------------------------- Fully Diluted shares outstanding (000's) 31,500 Estimate NAV per fully diluted share ($/share) $8.39 -------------------------------------------------------------------
Note:
1. Land value includes 392,000 net undeveloped acres at $100 per acre
Future Development Capital
Summary of Future Development Capital as of December 31, 2015
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Future Development Capital ($M) ($M)
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Total
Total Proved +
Year Proved Probable
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2016 14,150 14,150
2017 15,246 17,490
2018 22,220 22,220
2019 10,038 18,586
2034 984 984
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Total Undiscounted FDC 62,638 73,429
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Pricing Assumptions
The reserve evaluation was based on Sproule's forecast pricing and foreign exchange rates, as at December 31, 2015, as outlined in the following table.
Summary of Pricing Assumption as of December 31, 2015(1)(2)(3)(4)(5)
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Forecast Prices
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Western Natural
Canada Gas
Select Alberta
20.5 degrees AECO-C Exchange
API Spot Rate(2)
($Cdn/Bbl)(4) ($Cdn/MMBtu)(5) ($Cdn/bbl)
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Forecast(3)
2016 55.20 2.25 59.10
2017 69.00 2.95 73.88
2018 78.43 3.42 83.98
2019 89.41 3.91 95.73
2020 91.71 4.20 98.19
2021 93.08 4.28 99.66
Thereafter Escalation Rate of 1.5% (crude oil) and 1.76% (natural
gas)
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Forecast Prices
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Edmonton
Edmonton Edmonton Pentanes
Propane Butane Plus
($Cdn/bbl) ($Cdn/bbl) ($US/$CDN)
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Forecast(3)
2016 39.09 9.09 0.75
2017 51.43 13.64 0.80
2018 58.46 25.84 0.83
2019 66.64 35.35 0.85
2020 68.35 42.30 0.85
2021 69.38 42.94 0.85
Thereafter Escalation Rate of 1.5% (crude oil) and 1.76% (natural
gas)
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Notes:
1. This summary table identifies benchmark reference pricing schedules that
might apply to a reporting issuer.
2. The exchange rate used to generate the benchmark reference prices in
this table.
3. As at December 31, 2015.
4. The price received for the Company's oil, which is considered to be
medium gravity crude oil, has historically corresponded very closely to
Western Canada Select 25 degrees API ($Cdn/Bbl).
5. The price received for the Company's natural gas has historically
corresponded to AECO-C Spot pricing ($Cdn/MMBtu), adjusted for heat
value and transportation.
2016 Guidance
On February 22, 2016, Granite announced its 2016 guidance. The Company included two sustainable budget scenarios, a US$37.00/bbl WTI case and a US$32.50/bbl WTI case. Under the $37.00 case, Granite anticipates production of 3,250 bbl per day of oil, while funding both capital of $14.2 million (six wells) and dividends of $12.8 million, with anticipated cash flow of $27.1 million. Under the US$32.50/bbl WTI case, the Company expects oil production to average 3,000 bbl per day of oil, cash flow of $23.0 million, with capex of $10.2 million (four wells), and the annual dividend of $12.8 million. Under both scenarios, Granite retains its balance sheet flexibility with less than $40 million of net debt forecast by the end of 2016. Granite has the ability to react quickly and increase its capital program with higher commodity prices and is encouraged by recent oil price movements.
Granite's key operational initiative during 2016 is to bring on additional gas compression to ramp up natural gas injection and achieve a voidage replacement ratio ("VRR"; Calculated as total volume injected/total volume produced) of 100%. Granite remains on-track to bring on its additional gas compression equipment by early in the second quarter of 2016. The Company is targeting an exit 2016 decline rate of 16-18% as a result of this additional gas injection, which will improve returns in all economic environments.
Reconciliation of Reserve Information
The following table sets forth a reconciliation of the changes in gross total Company working interest reserve volumes as at December 31, 2015, against such gross reserves as at December 31, 2014, based on the forecast prices and costs assumptions. The gross total Company working interest reserve volumes as at December 31, 2014, includes the oil and gas properties that were conveyed to Boulder Energy Ltd. as part of the Reorganization.
Reconciliation of Company Gross Reserves by Product Type as of December 31, 2015 - Including Properties Conveyed to Boulder Energy Ltd.
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Factors Light and Medium Oil
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
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December 31, 2014 23,368.4 11,777.7 35,146.1
Product Type (398.4) (262.2) (660.6)
Transfer Extensions 89.4 232.0 321.4
Infill Drilling 340.4 71.4 411.8
Improved Recovery 725.0 775.0 1,500.0
Technical Revisions 1,039.6 (1,138.6) (99.0)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions (14,456.6) (6,192.9) (20,649.5)
Economic Factors (42.2) (28.0) (70.2)
Production (1,924.8) 0.0 (1,924.8)
December 31, 2015 8,740.8 5,234.4 13,975.2
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Factors Heavy Oil
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
----------------------------------------------------------------------
December 31, 2014 0.0 0.0 0.0
Product Type 398.4 262.2 660.6
Transfer Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions 8.3 (20.1) (11.8)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors (7.2) (1.9) (9.1)
Production (27.9) 0.0 (27.9)
December 31, 2015 371.6 240.2 611.8
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Factors Associated and Non-Associated Gas
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(MMcf) (MMcf) (MMcf)
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December 31, 2014 55,592.0 21,674.0 77,266.0
Product Type 0.0 0.0 0.0
Transfer Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions 461.0 754.0 1,215.0
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions (41,864.0) (16,437.0) (58,301.0)
Economic Factors (340.0) (33.0) (373.0)
Production (2,249.0) 0.0 (2,249.0)
December 31, 2015 11,601.0 5,958.0 17,559.0
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Factors Natural Gas Liquids
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
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December 31, 2014 2,652.4 1,023.0 3,675.4
Product Type 0.0 0.0 0.0
Transfer Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions (111.6) (43.7) (155.3)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions (2,357.2) (909.0) (3,266.2)
Economic Factors 0.0 0.0 0.0
Production (63.2) 0.0 (63.2)
December 31, 2015 120.4 70.3 190.7
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Factors BOE
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(MBOE) (MBOE) (MBOE)
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December 31, 2014 35,286.1 16,413.0 51,699.2
Product Type 0.0 0.0 0.0
Transfer Extensions 89.4 232.0 321.4
Infill Drilling 340.4 71.4 411.8
Improved Recovery 725.0 775.0 1,500.0
Technical Revisions 1,013.2 (1,076.8) (63.6)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions (23,791.1) (9,841.4) (33,632.5)
Economic Factors (106.1) (35.4) (141.5)
Production (2,390.6) 0.0 (2,390.6)
December 31, 2015 11,166.3 6,537.9 17,704.2
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The following table sets forth a reconciliation of the changes in gross total Company working interest reserve volumes as at December 31, 2015, against the gross working interest reserve volumes of the Company's Alberta Bakken property as at January 1, 2015, based on the forecast prices and costs assumptions. The gross working interest reserve volumes as at January 1, 2015, does not include the oil and gas properties that were conveyed to Boulder Energy Ltd. as part of the Reorganization.
Reconciliation of Company Gross Reserves by Product Type as of December 31, 2015 - Excluding Properties Conveyed to Boulder Energy Ltd.
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Factors Light and Medium Oil
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
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December 31, 2014 8,133.7 5,584.8 13,718.5
Product Type Transfer (398.4) (262.2) (660.6)
Extensions 89.4 232.0 321.4
Infill Drilling 340.4 71.4 411.8
Improved Recovery 725.0 775.0 1,500.0
Technical Revisions 1,039.6 (1,138.6) (99.0)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors (42.2) (28.0) (70.2)
Production (1,146.7) 0.0 (1,146.7)
December 31, 2015 8,740.8 5,234.4 13,975.2
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Factors Heavy Oil
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
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December 31, 2014 0.0 0.0 0.0
Product Type Transfer 398.4 262.2 660.6
Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions 8.3 (20.1) (11.8)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors (7.2) (1.9) (9.1)
Production (27.9) 0.0 (27.9)
December 31, 2015 371.6 240.2 611.8
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Factors Associated and Non-Associated Gas
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(MMcf) (MMcf) (MMcf)
----------------------------------------------------------------------
December 31, 2014 12,061.0 5,237.0 17,298.0
Product Type Transfer 0.0 0.0 0.0
Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions 461.0 754.0 1,215.0
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors (340.0) (33.0) (373.0)
Production (581.0) 0.0 (581.0)
December 31, 2015 11,601.0 5,958.0 17,559.0
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Factors Natural Gas Liquids
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(Mbbl) (Mbbl) (Mbbl)
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December 31, 2014 240.0 114.0 354.0
Product Type Transfer 0.0 0.0 0.0
Extensions 0.0 0.0 0.0
Infill Drilling 0.0 0.0 0.0
Improved Recovery 0.0 0.0 0.0
Technical Revisions (111.6) (43.7) (155.3)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors 0.0 0.0 0.0
Production (8.0) 0.0 (8.0)
December 31, 2015 120.4 70.3 190.7
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Factors BOE
---------------------------------------------
Gross Proved
Gross Proved Gross Probable Plus Probable
(MBOE) (MBOE) (MBOE)
----------------------------------------------------------------------
December 31, 2014 10.383.9 6,571.6 16,955.5
Product Type Transfer 0.0 0.0 0.0
Extensions 89.4 232.0 321.4
Infill Drilling 340.4 71.4 411.8
Improved Recovery 725.0 775.0 1,500.0
Technical Revisions 1,013.2 (1,076.8) (63.6)
Discoveries 0.0 0.0 0.0
Acquisitions 0.0 0.0 0.0
Dispositions 0.0 0.0 0.0
Economic Factors (106.1) (35.4) (141.5)
Production (1,279.4) 0.0 (1,279.4)
December 31, 2015 11,166.3 6,537.9 17,704.2
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March Dividend
Granite is pleased to announce that a dividend of $0.035 per common share will be paid in cash on April 15, 2016, to shareholders of record on March 31, 2016, with an ex-dividend date of March 29, 2016. This dividend has been designated as an "eligible dividend" for Canadian income tax purposes.
2015 Year End Reporting
The Company will report its 2015 year end results on March 21, 2016.
Reader Advisories
Forward-Looking Statements. Certain statements contained in this news release may constitute forward-looking statements. These statements relate to future events or the 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. Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. 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 particular, this news release contains forward-looking statements, pertaining to the following: projections of market prices and costs, supply and demand for oil and natural gas, the quantity of reserves, oil and natural gas production levels, the success of the enhanced oil recovery scheme, capital expenditure programs, treatment under governmental regulatory and taxation regimes, expectations regarding Granite's ability to raise capital and to continually add to reserves through acquisitions and development, projections of market prices and costs, timing of filing of Granite's annual information form and annual financial statements for the year ended December 31, 2015. .
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.
Although Granite believes that the assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because no assurance can be given that they will prove to be correct. 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. 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 securityholders 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).
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.
Unaudited Financial Information. Certain financial and operating information included in this news release are based on estimated unaudited financial results for the year ended December 31, 2015 and are subject to the same limitations as discussed under "Forward- Looking Statements" set out above. These estimated amounts are subject to change upon the completion of the audited financial statements for the year ended December 31, 2015 and changes could be material. Granite anticipates filings its audited financial statements and related management's discussion and analysis for the year ended December 31, 2015 on SEDAR on March 22, 2016.
Information Regarding Disclosure on Oil and Gas Reserves. The reserves data set forth above is based upon an independent reserves assessment and evaluation prepared by Sproule with an effective date of December 31, 2015 (the "Sproule Report"). The presentation summarizes the Company's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for the Company's reserves using forecast prices and costs based on the Sproule Report. All reserve references in this news release are "Company share reserves". Company share reserves are the Company's total working interest reserves before the deduction of any royalties and including any royalty interests of the Company. The Sproule Report has been prepared in accordance with the standards contained in the COGEH and the reserve definitions contained in NI 51-101. All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenues presented in the tables above represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of the Company's crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. All future net revenues are estimated using forecast prices, arising from the anticipated development and production of the Company's reserves, net of the associated royalties, operating costs, development costs, and abandonment and reclamation costs and are stated prior to provision for interest and general and administrative expenses. Future net revenues have been presented on a before tax basis. Estimated values of future net revenue disclosed herein do not represent fair market value. The reserve data provided in this news release only represents a summary of the disclosure required under NI 51-101. Additional disclosure will be provided in the Company's Annual Information Form filed on www.sedar.com on or before March 30, 2016.
Oil and Gas Metrics. This news release contains metrics commonly used in the oil and natural gas industry, such as "recycle ratio", "operating netback", "finding and development ("F&D") costs", "development capital", and "reserve life index ("RLI")". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
"Finding and development costs" are calculated as the sum of development capital plus the change in FDC for the period divided by the change in reserves that are characterized as development for the period. Finding and development costs take into account reserves revisions during the year on a per boe basis. The aggregate of the exploration and development costs incurred in the financial year and changes during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year.
"Development capital" means the aggregate exploration and development costs incurred in the financial year on reserves that are categorized as development. Development capital presented herein excludes land, acquisition and capitalized administration costs.
"Recycle ratio" is measured by dividing the operating netback by F&D cost per boe for the year.
"Operating netback" is calculated using production revenues minus royalties and production expenses calculated on a per boe basis.
"Reserve life index" is calculated as total company share reserves divided by annual production. Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare Granite's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.
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.
Contacts:
Granite Oil Corp.
Michael Kabanuk
President & CEO
(587) 349-9123
Granite Oil Corp.
Jonathan Fleming
E.V.P.
(587) 349-9118
