Granite Ridge Resources(GRNT)2024-08-09 21:23Financial Data and Key Metrics Changes - Average daily total production for Q2 2024 was 23,100 BOE per day, up 7% compared to the prior year quarter [9] - Adjusted EBITDA was 0.13 per diluted share for Q2 2024, flat from the prior year due to lower natural gas prices and divested assets [10] - Oil production as a percentage of total production increased to 47% for Q2 2024, with expectations to exit 2024 around 50% [10][11] - Per unit lease operating costs were 48 million, primarily in the Permian Basin [4] - Controlled capital development CapEx is expected to represent over 40% of total development CapEx for 2024 [5] - The company anticipates about four net wells to turn to sales in Q3 2024, with a total expectation of 22 to 24 net wells to be placed online during 2024 [11] Market Data and Key Metrics Changes - Hydrocarbon prices have changed significantly, with gas down about 22% and oil down about 2% compared to initial guidance in March 2024 [6] - The company is shifting capital allocation towards oil-weighted projects due to the current pricing environment [7] Company Strategy and Development Direction - The company is focusing on a controlled capital program, increasing its allocation to high-return operated projects [5][14] - The strategy includes adapting to market conditions by prioritizing economically advantageous projects [6] - The company aims for double-digit production growth year-over-year in 2025, driven by its controlled capital program [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the current hydrocarbon price environment allows for flexibility in capital allocation [6] - The company expects oil production to rise over the next two quarters, with a potential 10% quarter-over-quarter increase in Q3 [7] - Management believes the market is undervaluing the company, highlighting the potential for growth and shareholder value [13][14] Other Important Information - The company raised its 2024 acquisition capital guidance to 0.11 per share was declared, representing a 7.3% annualized yield [13] Q&A Session Summary Question: Expectations for oil production growth in Q3 - Management expects a 10% sequential increase in oil production in Q3, primarily driven by the first controlled capital pad brought online in June [18][19] Question: Impact of increased development budget on future growth - The increased development budget is expected to set the company up for growth in Q1 2025, with double-digit growth anticipated [20][21] Question: Acquisition of new locations and partnerships - A significant portion of the new locations acquired was through the new Midland Basin partnership, which is expected to drive future growth [24][25] Question: Production from deferred and DUC wells - Management indicated that there are several deferred and DUC wells that could add net production with minimal CapEx if commodity prices increase [28][29] Question: Lower lease operating expenses (LOE) - The lower LOE was driven by reduced gathering costs and less workover expense, primarily due to deferrals in the Haynesville [31] Question: Future production growth visibility with controlled capital - The controlled capital strategy is expected to enhance visibility for future production growth and cash flows, supporting the dividend [36][37]