Granite Oil Corp GXOCF

RE:GXO down - 1.09 % second day in a row

[jerrybe]

Granite definitely correlates less with other oil&gas E&P stocks.

However, their game plan has been very clear ever since they split DeeThree in two.

They have a cash cow with the Ferguson asset in the Bakken. They repressurized the pool by injecting gas...they now have a very steady income that is basically about FCF neutral at these prices.

This year, as the capex needs on their main pool decreases, they will start "stepping out" westward to see if there is more of the same (which there should) a few miles to the west of their current core operations. They have de-risked some of those operations and should they get solid results this year in this new area, it would offer a huge growth opportunity to the firm.

There is nothing "riskier" or "funnier" about how this firm is run. It has a very unconventional asset that works due to the clever repessurization technique, that will allow them to tap into the pool for many years to come. 

This is a solid annuity as long as oil stays above $50, which it has, even in these supposedly very uncertain times. Oil markets are tightening all over. The glut has already disappeared outside of the US. I would not bet against them now. If oil were to go up to $60+, this firm would literally be printing money...I just hope they will hedge out massively the price risk when oil finally breaks out from its tight range. Long and strong.