Core Insights - Granite Ridge Resources, Inc. (NYSE: GRNT) is focused on the Permian Basin and has shown proactive management of resources and growth prospects [1] - The company is experiencing a cash burn of $71 million in 2026 due to increased lease operating expenses while hedging 60% of its oil production to mitigate price volatility [2][6] - Despite a net loss of $25.1 million in 2025, Granite Ridge achieved an adjusted EBITDAX of $69.5 million and aims to generate free cash flow by 2027 [3][4][6] Financial Performance - In 2025, Granite Ridge reported a 27% increase in total production, reaching 35,120 barrels of oil equivalent per day [3] - The company declared a dividend of $0.11 per share and maintained total liquidity of $339.5 million, with a net debt to adjusted EBITDAX ratio of 1.2x [4] - As of the latest data, GRNT's stock price is $5.23, with a market capitalization of approximately $686 million, reflecting a 3.06% increase [5] Strategic Moves - Director Everard Michele J purchased 5,000 shares at $5.17 each, indicating confidence in the company's future [1][6] - The company plans to increase its hedging of oil production to 75%-80% in the second quarter of 2026 [2]

Company Overview - Granite Ridge Resources, Inc. (GRNT) is projected to experience a slight cash burn of approximately $70 million in 2026 if it maintains its quarterly dividend of $0.11 per share at current strip prices [2]. Analyst Background - Aaron Chow, known as Elephant Analytics, has over 15 years of analytical experience and is a top-rated analyst on TipRanks. He co-founded a mobile gaming company that was acquired by PENN Entertainment and has designed in-game economic models for mobile apps with over 30 million combined installs [2]. Investment Focus - The investing group Distressed Value Investing, led by Aaron Chow, emphasizes both value opportunities and distressed plays, particularly within the energy sector [2].

Core Insights - Granite Ridge Resources reported strong production growth in 2025, with a 27% year-over-year increase in average daily production to 35,100 BOE per day in Q4, while total production for the year averaged about 32,000 BOE per day [2][7] - The company is transitioning to a Permian-focused, capital-efficient partnership model, aiming for sustainable free cash flow by 2027 [4][6] - Despite production growth, Q4 revenue was impacted by lower commodity prices, with oil sales averaging $55.49 per barrel and natural gas at $1.81 per Mcf [8][9] Financial Performance - For the full year, oil and natural gas sales reached $450.3 million, with Adjusted EBITDAX of $315 million and operating cash flow of $296.4 million [1][7] - In Q4, Granite Ridge's oil and natural gas sales were $105.5 million, with Adjusted EBITDAX at $69.5 million and operating cash flow totaling $64.5 million [1][7] Production and Growth Strategy - The company anticipates 2026 as a transition year, projecting production guidance of 34,000 to 36,000 BOE per day, representing about 9% growth versus 2025 [5][18] - Management plans to maintain a quarterly dividend of $0.11 per share and expects to achieve sustainable free cash flow in 2027 at current strip prices [5][18] Capital Expenditures and Acquisitions - Granite Ridge reported Q4 capital expenditures of $127.5 million, with full-year capital spending at $401 million, including $279 million for drilling and completion [11][12] - The company executed $122 million in acquisitions across 107 transactions in 2025, securing approximately 20,500 net acres [12][13] Cost Structure and Pricing Environment - Lease operating expenses (LOE) were $7.72 per BOE in Q4 and averaged $7.27 per BOE for the full year, with higher service costs in the Permian Basin being a key driver [9] - Production and ad valorem taxes accounted for just under 6% of revenue in Q4, with G&A expenses at $8 million [9] Balance Sheet and Financial Health - Granite Ridge ended the year with $350 million in outstanding senior notes and $50 million drawn on its revolver, resulting in year-end liquidity of $339.5 million [16] - The company maintains a net debt to Adjusted EBITDAX ratio of 1.2x, within its long-term target range [16] Strategic Initiatives - The company is pursuing a partnership model focused on unit-by-unit inventory capture, with a target of 25% full-cycle returns at strip pricing [6][13] - Recent initiatives include a partnership with Diamondback Energy for a natural gas-fired power generation project in ERCOT, expected to enhance gas realizations [17][19]

Financial Data and Key Metrics Changes - Average daily production increased 27% year-over-year to 35.1 thousand BOE per day for Q4 2025, with total production for the year at 32 thousand BOE per day [4] - Adjusted EBITDAX for Q4 was approximately $70 million and $315 million for the full year [5][16] - Oil and natural gas sales totaled $105.5 million for Q4, remaining flat compared to the prior year due to commodity pricing [15] - Average realized oil price was $55.49 per barrel in Q4, down from $65.53 per barrel in the same period last year [16] - Full year oil and natural gas sales totaled $450.3 million, with production increasing 28% year-over-year [17] Business Line Data and Key Metrics Changes - Capital expenditures for Q4 were $127.5 million, split approximately evenly between development and inventory acquisitions [5] - Total CapEx for the full year was $401 million, with $279 million allocated to drilling and completion [19] - Lease operating expense in Q4 was $7.72 per barrel equivalent, higher than last year due to increased focus on the Permian Basin [17] Market Data and Key Metrics Changes - The company noted a significant impact on revenue and cash flow due to weak realizations in the Permian Basin, particularly for natural gas [16] - Production taxes ran just under 6% of revenue in Q4, with G&A expenses at $8 million [18] Company Strategy and Development Direction - The company is transitioning from a traditional non-operated model to a capital allocator focused on the Permian Basin, aiming for high-quality asset development [4][6] - The strategy includes a focus on short cycle opportunities underwritten at strip pricing, with an average acquisition cost per net location of $1.4 million [9] - The company plans to reduce capital spending while still achieving production growth, with a projected average production of 35,000 barrels of oil equivalent per day in 2026 [11][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium-term outlook despite recent geopolitical shocks, indicating a commitment to maintaining flexibility in capital deployment [12] - The company anticipates achieving free cash flow from operations in 2027, with a focus on aligning development capital with expected cash flow [10][11] - Management highlighted the importance of their operator partnership model in capturing inventory and driving growth [8][22] Other Important Information - The company announced the appointment of Kyle Kettler as the new Chief Financial Officer, emphasizing the need for expertise in capital markets as they transition towards sustainable free cash flow [14] - The company has partnered with Conduit Power to support the development of natural gas-fired power generation, which is expected to enhance gas realizations [13] Q&A Session Summary Question: What drove the lower realized oil and gas prices in Q4? - Management indicated that weak Waha pricing significantly impacted natural gas realizations, while oil pricing had a slight negative difference from benchmark prices [25][26] Question: How many net wells are planned for 2026? - The company plans to bring online about 29 net wells in 2026, with a mix that is expected to tilt back towards oil as the year progresses [30] Question: What is the company's strategy for transitioning to sustainable free cash flow? - Management clarified that the transition is driven by a desire to lower leverage and maintain a conservative financial position while still pursuing growth opportunities [40][41] Question: Can you provide details on the activity and inventory levels across operated partnerships? - Management provided insights into the progress of various partnerships, highlighting the maturity of Admiral and the potential of other partners in capturing inventory [43][44]

Financial Data and Key Metrics Changes - Average daily production increased by 27% year-over-year to 35,100 BOE per day for Q4 2025, with total production for the year at 32,000 BOE per day [4] - Adjusted EBITDAX for Q4 was approximately $70 million and $315 million for the full year [5][17] - Capital expenditures for Q4 were $127.5 million, with full-year CapEx totaling $401 million [5][20] - The quarterly dividend was maintained at $0.11 per share, reflecting a commitment to return capital to shareholders [5][23] Business Line Data and Key Metrics Changes - The company transitioned from a traditional non-operated model to a capital allocator focused on the Permian Basin, which has driven production growth [4][6] - The average realized oil price in Q4 was $55.49 per barrel, down from $65.53 per barrel in the same period last year, while natural gas averaged $1.81 per Mcf [17] - Lease operating expenses in Q4 were $7.72 per BOE equivalent, higher than the previous year due to increased focus on the Permian Basin [18] Market Data and Key Metrics Changes - The company noted a significant decline in private equity fundraising in the natural resources sector, leading to a scarcity of capital and competition in the operated segment [6][7] - The company executed over 50 transactions across the Permian Basin, growing net production to nearly 10,000 BOE per day [8] Company Strategy and Development Direction - The company aims to generate sustainable free cash flow by 2027, transitioning from growth to durability [10][24] - The strategy includes focusing on capital-efficient growth and maintaining a conservative balance sheet while increasing production [10][12] - The company has developed partnerships with proven operators to capture inventory and enhance deal flow [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium-term outlook despite recent geopolitical shocks, indicating a resilient market [12] - The company plans to align development capital expenditures more closely with expected cash flow, projecting a 9% increase in production for 2026 [11][22] - Management emphasized the importance of maintaining flexibility in capital deployment in response to market conditions [12][13] Other Important Information - The company announced a partnership with Conduit Power to develop 200 MW of natural gas-fired power generation, expected to enhance gas realizations [14] - Kyle Kettler was appointed as the new Chief Financial Officer, bringing significant capital markets expertise [15] Q&A Session Summary Question: What drove the lower realized oil and gas prices in Q4? - Management indicated that weak Waha pricing impacted natural gas realizations, while oil prices had a slight negative difference from benchmark prices [27][28] Question: How many net wells are planned for 2026? - The company plans to bring online about 29 net wells in 2026, with a mix that is expected to tilt back towards oil [29][31] Question: What is the company's strategy for transitioning to sustainable free cash flow? - Management clarified that the transition is driven by a desire to lower leverage and maintain a conservative financial position [41][43] Question: Can you provide details on the operated partnerships? - Management discussed the progress of various operated partnerships, highlighting the focus on inventory capture and development plans [45][46] Question: What is the outlook for inventory acquisition opportunities? - Management noted that opportunities for inventory capture remain strong, with a significant budget allocated for acquisitions [63]

Financial Data and Key Metrics Changes - Average daily production increased by 27% year-over-year to 35.1 thousand BOE per day for Q4 2025, with total production for the year at 32 thousand BOE per day [4] - Adjusted EBITDAX for Q4 was approximately $70 million, and $315 million for the full year [5][15] - Capital expenditures for Q4 were $127.5 million, with full-year CapEx totaling $401 million [5][18] - The quarterly dividend was maintained at $0.11 per share, reflecting a commitment to return capital to shareholders [5][20] Business Line Data and Key Metrics Changes - The company transitioned from a diversified investment strategy to focusing on the Permian Basin, which has driven production growth [4][6] - The average realized oil price in Q4 was $55.49 per barrel, down from $65.53 per barrel in the same period last year, while natural gas averaged $1.81 per Mcf [15] - Lease operating expenses in Q4 were $7.72 per barrel equivalent, higher than the previous year due to increased focus on the Permian Basin [16] Market Data and Key Metrics Changes - The company noted a significant impact on revenue and cash flow due to weak realizations in the Permian Basin [15] - The company expects oil volumes to represent approximately 51% of total production in 2026 [10] Company Strategy and Development Direction - The company is shifting from growth to durability, with a focus on sustainable free cash flow generation by 2027 [22] - The strategy includes a deliberate reduction in capital spending while maintaining production growth [19][20] - The company has developed an operative partnership model to capture inventory and enhance deal flow in the Permian Basin [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium-term outlook despite recent geopolitical shocks, indicating a resilient market [11] - The company plans to maintain flexibility with partners to adjust development schedules in response to market conditions [12] - The transition to free cash flow is driven by a desire to lower leverage and ensure long-term business sustainability [41] Other Important Information - The company has partnered with Conduit Power to support the development of natural gas-fired power generation, expected to enhance gas realizations [12] - Kyle Kettler was appointed as the new Chief Financial Officer, bringing significant capital markets expertise [13][14] Q&A Session Summary Question: What drove the lower realized oil and gas prices in Q4? - Management indicated that weak Waha prices impacted natural gas realizations, while oil prices had a slight negative differential compared to benchmarks [26][28] Question: How many net wells are planned for 2026? - The company plans to bring online about 29 net wells in 2026, with a mix that is expected to tilt back towards oil [30] Question: What is the company's strategy for generating free cash flow in 2027? - The transition to free cash flow is based on a desire to lower leverage while still pursuing inventory capture opportunities [41][55] Question: Can you provide details on the operated partnerships? - Management provided insights into the activities and inventory levels across various operated partnerships, highlighting the focus on unit-by-unit inventory capture [44][46]

INVESTOR PRESENTATION | MARCH 2 026 High-Return Capital Allocator at Scale Executing >25% full-cycle returns at strip with a clear transition to sustainable free cash flow 2. Defined as Net Debt / Trailing Twelve Month ("TTM") Adjusted EBITDAX as of 12/31/2025; Net Debt and Adjusted EBITDAX are Non-GAAP financial measures, which are defined and reconciled in the Appendix. 3. As of 2/26/2026; based on last quarter annualized dividend payment of $0.44/share; future dividends are subject to approval by the Gra ...

Group 1: Market Overview - Oil prices are experiencing a surge, with WTI futures at $86.00, up 6.16%, and Brent futures at $89.31, up 4.57% [3] - Dutch TTF gas prices are projected to rise by 40-50% to maintain energy supply in the EU [3] - The S&P SmallCap 600 has a forward P/E of 15.6, while the S&P 500 stands at 21.2, indicating small caps are still undervalued compared to larger companies [1] Group 2: Small-Cap Stocks - Washington Trust Bancorp (WASH) offers a dividend yield of 6.6% and is expected to see earnings jump by 27% in 2026, trading at 10 times earnings [1] - Diversified Energy Company (DEC) has a dividend yield of 8.0% and trades at less than 8 times earnings, focusing on acquiring long-life assets [1] - Granite Ridge Resources (GRNT) has a dividend yield of 8.5% and is projected to achieve 28% production growth in 2025, despite breakeven returns so far [2] Group 3: Health and Wellness Sector - Perrigo (PRGO) has a dividend yield of 10.2% but is facing declining sales and earnings, with a projected drop in adjusted diluted EPS by 16% to 27% in 2026 [2] - Insperity (NSP) offers a high dividend yield of 11.0% but has seen a significant decline in net income, reporting a net loss of $7 million in 2025 [2]

Dividends and Share Issuance - The company paid dividends of $57.7 million, or $0.44 per share, for the year ended December 31, 2025, compared to $57.5 million, or $0.44 per share, for 2024[246] - The company paid dividends consistently over the past two years, but future payments are at the discretion of the Board of Directors and depend on various factors[246] - The maximum number of shares reserved for issuance under the Granite Ridge 2022 Omnibus Incentive Plan is 6.5 million, representing approximately 4.9% of the outstanding shares following the Business Combination[230] - As of December 31, 2025, the company had 3.8 million shares of common stock remaining available for future awards under the Incentive Plan[230] - The company has filed a registration statement to register shares under the Incentive Plan, making them available for sale in the open market[230] Market Risks and Financial Condition - Future issuances of debt and/or equity securities may adversely affect the market price of the company's common stock and could be dilutive to existing stockholders[232] - The market price of the company's common stock may be volatile, influenced by various factors including financial results and market expectations[247] - The company is exposed to market risks due to fluctuations in commodity prices, with a potential $23.4 million decrease in fair value from a 10% increase in average commodity prices for the year ended December 31, 2025[404] - Total indebtedness under the Credit Agreement was $50.0 million as of December 31, 2025, with a 100 basis point increase in interest rates resulting in an additional annual interest expense of approximately $0.5 million[406] - The company may incur significant unrealized losses from derivative financial instruments if market prices increase while contracts remain in place[404] - Investor concerns regarding the financial systems may result in less favorable commercial financing terms, affecting the company's ability to acquire financing[257] Operational Challenges - Ongoing military conflicts and geopolitical tensions are expected to adversely affect the company's business, financial condition, and results of operations[250] - The volatility in oil and natural gas prices has been exacerbated by conflicts, leading to increased uncertainty in global supply and demand[250] - Tariffs imposed on imported goods, such as a 25% tariff on steel, could lead to increased material costs impacting the company's operating expenses[258] - Disruptions from world health events could lead to operational challenges, including supply shortages and interruptions, adversely affecting financial results[253] - The company faces risks from adverse developments in the financial services industry, which could impact projected business operations and financial condition[256] Governance and Taxation - The company is classified as a "controlled company" under NYSE corporate governance rules, which allows it to rely on certain exemptions from governance requirements[240] - Changes in applicable tax laws, such as the introduction of a 15% corporate alternative minimum tax, could increase future tax liabilities and adversely affect operating results[242] - The company may issue securities in connection with investments or acquisitions, which could constitute a material portion of outstanding shares and result in dilution[231] - The company has entered into commodity price risk management arrangements to mitigate exposure to price fluctuations for oil and natural gas production[404]

Financial Performance - Granite Ridge reported a net loss of $25.1 million for Q4 2025, equating to $(0.19) per share, while Adjusted Net Income was $1.5 million or $0.01 per diluted share[8]. - Net income for the year ended December 31, 2025, was $24.353 million, a 29.5% increase from $18.759 million in 2024[40]. - The company reported a net loss of $25.063 million for Q4 2025, compared to a loss of $11.622 million in Q4 2024, but net income for the year was $24.353 million, up from $18.759 million[51]. - Adjusted Net Income for the year ended December 31, 2025, is $56,221,000, compared to $73,776,000 for the year ended December 31, 2024[57]. - Adjusted Earnings Per Diluted Share for the year ended December 31, 2025, is $0.43, compared to $0.57 for the year ended December 31, 2024[57]. Production and Operations - Total production for Q4 2025 increased by 27% year-over-year to 35,120 Boe per day, with oil comprising 49% of the total production[11]. - For the full year 2025, production grew by 28% to an average of 31,984 Boe per day, with oil production increasing by 31% to 16,041 Bbls per day[12]. - The initial guidance for 2026 anticipates production of approximately 34,000 to 36,000 Boe per day, representing a 9% increase at the midpoint compared to 2025[22]. - Average daily oil production increased to 17,152 Bbl in Q4 2025 from 14,717 Bbl in Q4 2024, and natural gas production rose to 107,804 Mcf from 78,104 Mcf[42]. - The total number of net producing wells at period-end was 244.74, an increase from 202.40 in the previous year[42]. Financial Position - The company ended 2025 with total liquidity of $339.5 million, consisting of $324.7 million in committed borrowing availability and $14.8 million in cash[19]. - Granite Ridge's total assets increased to $1.168 billion as of December 31, 2025, compared to $1.036 billion in 2024, marking a growth of 12.7%[36]. - Long-term debt rose to $367.832 million in 2025 from $205 million in 2024, indicating a significant increase of 79.3%[36]. - Granite Ridge's total liabilities increased to $562.311 million in 2025 from $401.126 million in 2024, a rise of 40.2%[36]. - The company had a net debt of $370.486 million as of December 31, 2025, with a current portion of long-term debt at $17.500 million and long-term debt net at $367.832 million[53]. Revenue and Expenses - Total revenues for the year ended December 31, 2025, reached $450.306 million, up 18.4% from $380.030 million in 2024[38]. - Granite Ridge reported oil and natural gas sales of $105.485 million for Q4 2025, a slight decrease from $106.307 million in Q4 2024[38]. - Operating costs and expenses increased to $141.924 million in Q4 2025, compared to $113.223 million in Q4 2024, reflecting a rise of 25.4%[38]. - Operating expenses for Q4 2025 totaled $142.739 million, an increase from $115.849 million in Q4 2024, with lease operating expenses rising to $24.949 million from $15.287 million[42]. - The company reported a net cash provided by operating activities of $296.414 million for the year ended December 31, 2025, compared to $275.733 million in 2024, reflecting a growth of 7.5%[40]. Capital Expenditures - Granite Ridge's capital expenditures for 2025 totaled $401 million, including $279 million for drilling and completion and $122 million for property acquisitions[16]. - The company reported capital expenditures for oil and natural gas properties of $300.768 million in 2025, compared to $285.796 million in 2024, an increase of 5.2%[40]. - The company added 331 gross locations in 2025, with 59.3 Operated Partnership net wells acquired at an average cost of $1.4 million per location[6]. Market and Pricing - The average realized price for oil in Q4 2025 was $55.49 per Bbl, down from $65.53 per Bbl in Q4 2024, while natural gas realized price was $1.81 per Mcf, down from $2.45 per Mcf[42]. - Oil sales in Q4 2025 were $87.563 million, down from $88.730 million in Q4 2024, while natural gas sales increased to $17.922 million from $17.577 million[42]. Impairments and Adjustments - The company reported impairments of long-lived assets of $44.654 million for Q4 2025, compared to $35.637 million in Q4 2024[51]. - Impairments of long-lived assets amounted to $44,654,000 for the year ended December 31, 2025[57]. - Unrealized loss on commodity derivatives was $(22,662,000) for the year ended December 31, 2025[57]. - Tax impact on adjustments for the year ended December 31, 2025, was $(9,215,000)[57]. - The company incurred nonrecurring general and administrative expenses of $1,757,000 related to severance costs for the year ended December 31, 2025[57]. Adjusted Metrics - Adjusted EBITDAX for Q4 2025 was $69.5 million, while for the full year it totaled $315 million[9]. - Adjusted EBITDAX for Q4 2025 was $69.498 million, compared to $82.633 million in Q4 2024, while for the year it rose to $314.961 million from $290.845 million[51]. - The company believes that Adjusted Net Income and Adjusted Earnings Per Share provide useful information for analysis on a recurring basis[56]. - Adjusted Net Income for the three months ended December 31, 2024, was $22,697,000[57].