Granite Ridge Resources(GRNT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, production reached a record 27,000 BOE per day, up 10% sequentially, with an increase in oil cut from 50% to 53% [30] - For the full year 2024, total production increased to 25,000 BOE per day, finishing near the high end of guidance [30] - Adjusted net income for Q4 was $22.7 million or$ 0.17 per diluted share, while the net loss was $11.6 million or$ 0.09 per diluted share [31] - Adjusted EBITDAX for Q4 was $82.6 million, a slight increase year-over-year from$ 81.8 million [31] - Full-year adjusted EBITDAX was $290.8 million, down from$ 305.4 million in 2023 due to lower realized commodity prices [32] Business Line Data and Key Metrics Changes - Gas production increased by 4% in Q4 2024, while oil production rose by 16% [24] - The company invested approximately $120 million in strategic partnerships and controlled capital in 2024 [15] - In 2024, nearly half of the capital was allocated to operated partnerships, expected to increase to nearly 60% in 2025 [18] Market Data and Key Metrics Changes - The company anticipates robust production growth of 16% or 29,000 barrels of oil equivalent per day in 2025, driven largely by Permian operated partnerships [25] - Gas prices have increased by 24% year-to-date, while oil prices have decreased by about 6% [50] Company Strategy and Development Direction - The company is transitioning to a model that emphasizes operated partnerships, allowing for greater control over capital allocation and development timing [16] - The strategy aims for full-cycle returns of greater than 25% [19] - The company is focused on non-dilutive capital to expedite the development of existing inventory [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in funding the capital plan and fixed dividend from internally generated cash flow and existing liquidity [27] - The company is optimistic about the economic conditions for its projects, contingent on hydrocarbon prices remaining stable [49] - Management highlighted the importance of diversification in mitigating risks associated with market volatility [50] Other Important Information - The company reported a per unit lease operating expense of$ 5.99 per BOE in Q4, which is 7% lower than the same quarter last year [33] - The company has consistently returned capital to shareholders, paying a quarterly dividend of $0.11 per share [38] Q&A Session Summary Question: Factors determining the potential$ 60 to $80 million CapEx - Management indicated that market conditions are the primary factor influencing the decision to spend this CapEx, with a focus on hydrocarbon pricing [45][46] Question: Plans for adding a rig in the Midland Basin - Management confirmed that both rigs are currently in the Delaware Basin, with plans to start drilling in the Midland Basin by mid-year [58] Question: Opportunities in the natural gas market - Management acknowledged the supportive macro environment for natural gas and expressed optimism about their inventory in the Haynesville and dry gas Eagle Ford [66][67] Question: Impairment in Q4 2024 - Management explained that the impairment was related to maturing assets in the Williston Basin, where less capital has been invested [84][85] Question: Guidance for 2025 and potential well cancellations - Management stated that they control 60% of the expected wells through the Operative Partnership Program and are monitoring market conditions closely [101][102]