Granite Ridge Resources (GRNT) Conference Transcript

Summary of Granite Ridge Resources Conference Call Company Overview - Granite Ridge Resources is a publicly traded diversified US oil and gas company with a market cap approaching $900 million and an enterprise value of about $1 billion [5][9] - The company focuses primarily on the Permian Basin but has assets across six major basins in the US [6] Core Business Strategy - The objective is to provide public investors with private equity-like exposure with daily liquidity [4] - The company emphasizes finding compelling opportunities and allocating cash flow to the best deals [7][16] - Granite Ridge aims for a 16% year-over-year production growth, supported by a strong balance sheet with a leverage ratio of approximately 0.7x [9][10] Financial Performance - The company reported approximately $291 million in EBITDA for 2024, with expectations of cash flow around $330 million for the current year [15][43] - The dividend yield is around 9%, with a commitment to defending it while also focusing on production growth [8][10] Investment Approach - Granite Ridge employs a dual strategy of operated partnerships and traditional non-operated investments, with a focus on risk-adjusted returns [11][12] - The company has evaluated over 650 unique transactions in 2024, maintaining a disciplined approach with a less than 10% closure rate on deals [18][20] Market Position and Competitive Landscape - The company trades at a discount compared to peers, around three times earnings, despite strong asset growth and a solid balance sheet [10][41] - The non-operated space has become more competitive, prompting a shift towards operated partnerships, which are expected to account for about 25% of production this year [32][35] Hedging Strategy - Granite Ridge entered the year with 90% of its current production hedged, which is seen as a risk mitigant rather than a speculative tool [40][41] - The company aims to maintain cash flow to cover maintenance CapEx and dividends for at least 18 months in a challenging price environment [76] Future Outlook - The company anticipates continued growth in operated partnerships, with plans to increase production and capitalize on favorable market conditions [36][47] - There is a focus on maintaining flexibility in drilling operations, allowing for adjustments based on market conditions [68][72] Investor Relations - The company acknowledges the need to communicate its strategy effectively to investors, especially given the broader skepticism towards the energy sector [78][80] - Granite Ridge is committed to proving its business model and generating shareholder value through disciplined capital allocation and operational excellence [80][81] Key Takeaways - Granite Ridge Resources is positioned for growth with a strong focus on disciplined investment strategies and risk management - The company is leveraging its unique expertise in both technical and financial aspects to navigate the oil and gas market effectively - Continued communication with investors and demonstrating operational success will be crucial for the company's market perception and valuation moving forward [82]