Granite Ridge Resources(GRNT)2024-11-07 22:21Commodity Prices - For the three months ended September 30, 2024, the average NYMEX oil pricing was $76.43 per barrel, which is 7% lower than the average price of $82.20 per barrel for the same period in 2023[157] - The average realized oil price per barrel after reflecting settled derivatives for the three months ended September 30, 2024, was $73.99, compared to $78.52 for the same period in 2023[158] - For the nine months ended September 30, 2024, the average NYMEX oil pricing was $78.58 per barrel, which is 2% higher than the average price of $77.30 per barrel for the same period in 2023[157] - The average realized natural gas price per Mcf after reflecting settled derivatives for the three months ended September 30, 2024, was $1.98, compared to $3.13 for the same period in 2023, representing a significant decline[159] - The average NYMEX natural gas pricing for the nine months ended September 30, 2024, was $2.11 per Mcf, which is 18% lower than the average price of $2.58 per Mcf for the same period in 2023[159] - The oil price differential to the NYMEX benchmark price during the three months ended September 30, 2024, was a discount of $(2.99) per barrel, compared to a discount of $(3.79) per barrel for the same period in 2023[151] - The natural gas price differential to the average NYMEX price during the three months ended September 30, 2024, was a discount of $(0.87) per Mcf, compared to a discount of $(0.08) per Mcf for the same period in 2023[152] Revenue and Sales - Oil and natural gas sales for the three months ended September 30, 2024 decreased by 13% compared to the same period in 2023, with oil revenues down 3% and natural gas revenues down 58%[163] - For the nine months ended September 30, 2024, oil revenues increased by 3% driven by a 3% increase in production, while natural gas revenues decreased by 38% due to a 39% decrease in realized prices[164] - Total revenues for the three months ended September 30, 2024 were $94.1 million, down from $108.4 million in the same period of 2023[162] Expenses - Lease operating expenses for the three months ended September 30, 2024 were $13.0 million, a decrease of 23% from $16.9 million in the same period of 2023[166] - Production taxes for the three months ended September 30, 2024 were $5.3 million, compared to $7.1 million during the same period in 2023, representing 6% of oil and natural gas sales[168] - Depletion and accretion expense for the three months ended September 30, 2024 was $44.1 million, a decrease of 1% from $44.3 million in the same period of 2023[171] - General and administrative expenses for the three months ended September 30, 2024 were $5.6 million, an increase of 6% from $5.2 million in the same period of 2023[175] - Exploration expense for the three months ended September 30, 2024 was $0.3 million, a decrease of 82% from $1.6 million during the same period in 2023[174] Financial Performance - The company’s revenues, cash flows from operations, and future growth depend substantially on the timing and success of drilling and production activities by operating partners[147] - The company expects continued volatility in commodity prices, which have historically been unpredictable[154] - The company reported a total gain on commodity derivatives of $11.8 million, compared to a loss of $8.1 million for the same period in 2023[177] - The company recorded a net cash receipt of $5.7 million from commodity derivatives for the three months ended September 30, 2024, an increase from $4.4 million in the same period of 2023[178] - Interest expense increased to $4.8 million for the three months ended September 30, 2024, up from $1.4 million in the same period of 2023, primarily due to a higher average outstanding balance on the revolving credit facility[179] - The company experienced a loss of $18.3 million from equity investments during the three months ended September 30, 2024, compared to a loss of $19.3 million for the nine months ended September 30, 2024[183] - Income tax expense for the three months ended September 30, 2024, was $4.3 million, compared to $5.2 million for the same period in 2023[184] Debt and Liquidity - As of September 30, 2024, the company had $195.0 million of debt outstanding under its Credit Agreement and $127.8 million of liquidity available[186] - The company paid dividends of $14.4 million, or $0.11 per share, during the three months ended September 30, 2024, compared to $14.8 million, or $0.11 per share, in the same period of 2023[188] - For the nine months ended September 30, 2024, net cash used in investing activities was $233.6 million, down from $286.5 million in the same period of 2023[194] - The company reported a net cash provided by financing activities of $38.5 million for the nine months ended September 30, 2024, compared to $29.1 million for the same period in 2023[196] - The company entered into the Fourth Amendment to the Credit Agreement on November 1, 2024, increasing the borrowing base from $300 million to $325 million[202] - As of September 30, 2024, the company was in compliance with all financial covenants required by the Credit Agreement[206] Capital Expenditures - The company has budgeted approximately $355 million to $365 million in total planned capital expenditures for 2024, including about $60 million for acquisitions of oil and natural gas properties[208] - For the three months ended September 30, 2024, the company incurred $77.2 million in costs on oil and natural gas properties, compared to $75.7 million for the same period in 2023[208] - The company reported total property acquisition costs of $32.9 million for the three months ended September 30, 2024, compared to $19.4 million for the same period in 2023[210] - The company incurred $206.8 million in costs on oil and natural gas properties for the nine months ended September 30, 2024, compared to $233.1 million for the same period in 2023[208] Strategic Outlook - The company has a portfolio of wells and top-tier acreage across multiple prolific unconventional basins in the United States, enhancing asset diversity and reducing overhead[143] - The company expects to fund planned capital expenditures with cash generated from operations and, if required, borrowings under its Credit Agreement[208] - The company may seek additional capital for strategic acquisitions or increased drilling activity, depending on market conditions[211] - A 10% increase in average commodity prices would have decreased the fair value of commodity derivatives by $14.6 million at September 30, 2024[219] - The impact of a one percent increase in interest rates on the company's total indebtedness would result in increased annual interest expense of approximately $2.0 million[221]