Granite Oil Corp. has now successfully drilled, completed and is testing the second well of a five well development drilling program to be carried out in the second half 2016. The 10-24 well targeted a re-pressured portion of the Bakken oil pool. The well has produced an average of 370 bbls/d of oil and 900 mscf/d of natural gas over a nine-day test. Currently, the well is flowing at a restricted rate of approximately 350 bbls/d of oil and 1,500 mscf/d of natural gas, with a wellhead pressure of 610 PSI. The all-in well costs were $1.2 million for each of these two wells, and both wells have exhibited strong initial oil production rates. By the end of 2016, Granite will have increased its gas injector well count to 11 up from six at the beginning of the year. As a result, a substantial portion of the core Bakken oil pool area has been returned to original reservoir pressure conditions, satisfying Granite's key strategic objective for 2016. The process of expanding the EOR scheme over the course of 2015 and 2016 included the shutting in of nine producing wells designated for future conversion to injector wells, of which five wells have been converted to injector wells to date. This process has decreased Granite's oil production by approximately 290 bbl/d since the beginning of 2015.

The company's third quarter production is expected to average approximately 2,800 bbls/d with current oil production in excess of 3,000 bbls/d.

The remaining three wells of Granite's current development drilling program will be drilled during the fourth quarter. Granite anticipates its fourth quarter oil production to average 3,100 bbls/d and that it will incur capital expenditures of $4.0 million. Based on internal projections, year-end debt is expected to be approximately $31 million which equates to an annualized debt to cash flow of 1.2x.