Granite Ridge Resources(GRNT) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Granite Ridge achieved a production rate of over 29,000 barrels of oil equivalent per day, reflecting a 23% increase compared to the same period last year [6][7] - The company generated $91,000,000 of adjusted EBITDAX, surpassing internal projections [7] - Total revenue for the quarter was$ 122,900,000, up nearly $34,000,000 from the same period last year, with realized prices of$ 69.18 per barrel and $3.97 per Mcf [21] - Adjusted net income was$ 28,900,000, or $0.22 per share, an 89% increase year over year [21] - Operating cash flow before working capital changes was$ 86,700,000 [21] - The company reported a reduction in LOE to $6.17 per BOE, which is 13% lower than last year [8][22] - Operating margin improved from 83% in the first quarter of last year to 87% this year [9] Business Line Data and Key Metrics Changes - Oil volumes increased by 39% and natural gas volumes by 10% [8] - The operated partnership program saw gross daily operated oil production increase by 400% from 2,500 barrels of oil per day to approximately 10,000 barrels of oil per day [7] - The company turned 13.7 net wells to sales during the quarter [8] Market Data and Key Metrics Changes - Year-over-year, gas volumes grew by 10%, and revenue from gas more than doubled to$ 31,000,000, thanks to realized prices of $3.97 per M compared to$ 1.84 per M a year ago [11] - The company maintains a production hedge of approximately 75% through 2026 [10] Company Strategy and Development Direction - The company focuses on geographic and hydrocarbon diversity, currently maintaining a balanced fifty-fifty split between oil and gas [7] - The 2025 budget is projected at $310,000,000, aiming for a 16% production growth at the midpoint [12] - The company emphasizes full cycle returns of greater than 25% on investments [8] - The strategy includes developing operated partnerships, maintaining a balance between growth and returns, and preserving financial flexibility [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to withstand fluctuations in hydrocarbon prices, with a focus on capital stewardship and disciplined allocation [17][18] - The macro environment is improving for natural gas, and the company is evaluating opportunities to accelerate capital deployment in response to improved gas pricing [11] - Management remains cautious about market volatility and is prepared to adjust capital expenditures accordingly [15] Other Important Information - The company has a leverage ratio of just 0.7 times net debt to adjusted EBITDA [10] - The recent borrowing base increase by$ 50,000,000 to $375,000,000 enhances liquidity [21] Q&A Session Summary Question: Contribution from Q1 acquisitions - The acquisition closed earlier this year is expected to contribute about 450 barrels for the year, primarily from Delaware production [31][32] Question: LOE guidance for the year - The expectation is to steer towards the low end of the LOE guidance range for the year [34] Question: Performance of non-op wells - The outperformance is attributed to wells that came online sooner than expected and existing wells that outperformed [38][39] Question: Attractiveness of basins given price dynamics - The company evaluates capital allocation based on the performance of each basin, with a focus on maintaining a diversified portfolio [44][46] Question: Oil cut trends for the year - Oil production is in line with expectations, while gas production was higher than anticipated, leading to a lower oil cut [54][56] Question: Capital allocation between non-op and partnerships - Operated partnership capital will be roughly 60% of total CapEx for the year, allowing for flexibility in response to market conditions [59][61] Question: Performance of partnership wells and rig plans - Operated partnerships are expected to account for roughly a quarter of total production this year, with plans to monitor market conditions closely [70][72]