Granite Oil Corp. (ticker: GXO) has established its operational core in the Bakken siltstone play, located in southern Alberta. The company is focused on further developing the play’s enhanced oil recovery (EOR) operations and on building additional profile on the western portion of the play.
In its Bakken play, Granite holds approximately 350,000 acres with 100% working interest. Granite currently has 45 producing horizontal wells, and an additional nine gas injection wells in the Bakken field. In the Q1 of 2017, the company produced an average of 3,009 BOEPD—96% of which was oil—and drilled three new wells. Granite itself owns 100% of the infrastructure and land.
EOR in the Alberta Bakken
Granite’s EOR operations have taken the form of natural gas injection, with the hope of producing additional incremental oil and ultimately improving the recovery within the field. The company claims that its EOR method has been tested and optimized for the Bakken play and that all necessary long-term equipment and infrastructure has been installed—lessening the potential for large capital expenditures in the near future. One benefit and objective for Granite is to utilize its EOR processes to guarantee shallow decline rates in order to generate long-term cash-flow.
Utilizing gas injection EOR is rationalized by the improved recovery of the process. On average, EOR wells recovery approximately 2.4 times more oil than non-EOR wells.
Planning for the long-term
Granite reports a 20-year drilling inventory and that the company only requires approximately $13 million per year to guarantee 3-5% growth yearly. The company anticipates stable production—capping at slightly over 3,500 BOEPD through 2031. In tandem with its stable production, the company anticipates a steady decline in development capital, to approximately $6 million per year by 2031.
In developing its Alberta Bakken further, Granite intends to add approximately 130 new horizontal wells to its core production area—with an anticipated cost of approximately $1.2 million per well. The $1.2 million price tag per well was achieved after dramatic cost reduction from 2014 to 2017—from an average of $3.72 million per well to approximately $1.25 million per well.
Seeking new opportunities
Granite has pursued exploration by investing approximately $3 million in 2017 in delineation and exploration efforts. The company has planned a main pool delineation well and two exploration wells for later in 2017. The company acquired approximately 50,000 net acres in the Bakken in 2016.
Granite Oil Corp. is presenting at EnerCom’s The Oil & Gas Conference® 22
Granite will be a presenting company at the upcoming EnerCom conference in Denver, Colorado—The Oil & Gas Conference® 22.
The conference is EnerCom’s 22nd Denver-based oil and gas focused investor conference, bringing together publicly traded E&Ps and oilfield service and technology companies with institutional investors. The conference will be at the Denver Downtown Westin Hotel, August 13-17, 2017. To register for The Oil & Gas Conference® 22 please visit the conference website.
