Granite Oil Focuses on Downspacing in Q3; Infill Drilling

Granite Oil reported its Q3 2017 results.

Highlights:

Downspacing: Granite has infill drilled at  progressively closer offset spacing, moving from 400 meters in 2015 to 200 meters in 2016, with increasingly positive gains in capital efficiency and reserves. This down‐spacing exercise was an important step in the early development of the pool to avoid overcapitalization and determine the optimal development formula for maximizing long‐term oil recovery and value. In 2017, the Company tested further down‐spacing, with infill drilling on 100 and 133 meter intervals (see May 9, 2017 press release). These wells initially tested at rates comparable  to  wells  drilled  on  200  meter  spacing,  and  while  economic,  have  proved  to  be  less productive over time. Through this necessary and extensive testing, Granite has determined the optimal down‐spacing going forward is 200 meters.

Granite’s team is moving to its next area of targeted development where it has been pressuring up some of its top‐tier acreage. To date, the Company has drilled eight of its ten originally budgeted developmentwells and is planning to drill a ninth development well on 200 meter spacing late in Q4 in the second development pod. The decision to delay the ninth well and defer the tenth development well until 2018 has been made to provide additional time to achieve what management has learned to be optimal reservoir pressure in the EOR scheme. The Company is confident this well will return to Granite’s top‐ tier type curve.