Granite Oil Corp. has released its operating and unaudited financial results for the three and six months ended June 30, 2019.
Second Quarter Highlights and Operations Update
Granite Oil earns $2.67-million in Q2 2019During the first six months of 2019, Granite has reduced its net debt by over 10%, exiting the second quarter with net debt of approximately $42.8 million, down approximately $4.9 million from year-end 2018. Granite paid down approximately $0.8 million in net debt during the second quarter while increasing production by approximately 7% as compared to the first quarter. The Company generated funds from operations of approximately $4.2 million in the second quarter, with capital expenditures of approximately $3.3 million, and one-time severance and corporate cash costs of approximately $0.4 million.
During the second quarter, Granite drilled and completed its first development well since June, 2018. This well averaged approximately 260 bbl/d of oil over the first 90 days of production, exceeding type curve estimates and continuing the trend of strong drilling results achieved in 2018. This is the fourth consecutive well in which the Company tested higher frac intensity, with results to-date demonstrating strong performance benefits of this optimized completions strategy and further substantiating the production potential of the Company's drilling inventory.
Production during the second quarter averaged approximately 1,696 boe/d (99.6% oil), representing a 7% increase over the first quarter of 2019. Granite had six wells shut-in for the duration of the second quarter as part of its rotational re-pressurization program and EOR optimization strategy, and has yet to re-initiate production on these wells due to strong field performance through the start of the year and continuing into the third quarter. This strategy provides the Company with the opportunity to further repressure these shut-in areas and also evaluate a potential recompletion strategy for historically under-stimulated wells.
Outlook
Granite continues to deliver on its business plan, being focused on debt repayment and prudent capital management. The Company has reduced its net debt by over 10% relative to year-end 2018, increased production quarter-over-quarter by approximately 7%, while limiting its capital expenditures to $4.1 million over the first half of 2019. With its 2019 capital program heavily weighted to the second quarter, Granite will continue to reduce its net debt through the remainder of 2019 and is on-track to exit the year with net debt between $37 and $39 million, depending upon prevailing commodity prices.