CALGARY, Alberta, Dec. 06, 2018 (GLOBE NEWSWIRE) -- GRANITE OIL CORP. (“Granite” or the “Company”) (TSX: GXO) (OTCQX: GXOCF) provides an update to its dividend policy.

From September 2018, the Canadian energy sector has faced unprecedented discounts for its crude products that have had major impacts on the industry, the province and the country. These discounts are a result of crude inventory builds related to American refinery maintenance shutdowns and Canada’s lack of access to international markets outside of the United States. More recently, broader industry sentiment has been affected by concerns of increasing global supply, particularly in the United States, which has pushed West Texas Intermediate ('WTI') down nearly $10 USD per barrel since the end of October.

The recent decisions by the Alberta Government to instate mandatory production cuts and purchase additional transport-by-rail capacity are positive steps to alleviate negative pressure on Canadian pricing. However, concerns regarding continued volatility, commodity price pressure and political uncertainty over the coming months remain high. While Granite expects improvement in Canadian oil pricing through the first half of 2019, the Company also believes it is critical to take prudent, decisive steps to maximize the strength and flexibility of the Company over the long-term. To this end, management and the Board of Directors of Granite have decided to suspend the payment of dividends effective December, 2018. The November 2018 dividend, payable to shareholders of record on November 30, 2018, will be paid in the normal course on December 14, 2018.

Granite views its dividend as a valuable component to its business strategy and stakeholders, and is committed to its reinstatement when prices warrant and a more balanced supply-demand picture improves industry stability. In the interim, the Company will redirect this capital to debt repayment to ensure preservation of the Company’s balance sheet and further improve Granite’s strength going forward. 

Risk Management

In the first quarter of 2019, Granite has 800 bbl/d of oil hedged at an average price of approximately $85.85 CAD compared to a fourth-quarter 2018 average of 1200 bbl/d at $72.68 CAD (assumes an exchange rate of $0.77 CAD/USD). The Company is also receiving improved pricing relative to WCS market prices as a result of its direct-to-refinery sales agreement. This agreement has the added benefit of ensuring the Company’s access-to-market when many producers are facing increased pipeline apportionment and associated pricing risks.

Outlook

Granite continues to position itself to take advantage of more positive market conditions. The Company has industry-leading capital efficiencies and operating costs, which in depressed price environments will out-perform peers. Granite also currently has approximately 200 bbl/d of oil production shut-in which is being re-pressurized by the Company’s EOR scheme. This production can be brought on-stream quickly, when appropriate, to take advantage of improved prices for no incremental capital. The Company has the flexibility to act quickly and will adjust its capital program and allocation of free cash flow accordingly to maximize shareholder value.

Management and the Board would like to thank the employees and shareholders of Granite for their ongoing commitment to the Company. We will continue to manage these challenging times to ensure the Company’s shareholders benefit over the long-term.

Contact Information

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.

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: drilling and development plans, Granite’s financial strength, anticipated production rates, projections of market prices, supply and demand for oil, oil production levels, and the success of the enhanced oil recovery (‘EOR’) scheme.

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 sufficiency of budgeted capital expenditures in carrying out planned activities; 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.