Granite Ridge Resources(US:GRNT)2025-11-07 17:00Financial Data and Key Metrics Changes - Average daily production increased by 27% year over year to 31,900 barrels of oil equivalent per day [4] - Adjusted EBITDA grew by 4% from the prior year period to $78.6 million [4] - Revenue for the third quarter was $112.7 million compared to $94.1 million in the prior year period [13] - Net income was $14.5 million, or $0.11 per diluted share, while adjusted net income was $11.8 million, or $0.09 per diluted share [13] - Operating cash flow before working capital changes totaled $73.1 million [13] - The company ended the quarter with a leverage ratio of 0.9 times, well below the long-term target of less than 1.25 times [4][15] Business Line Data and Key Metrics Changes - Capital expenditures totaled $80.5 million, consisting of $64 million in development and $16.5 million in acquisitions [4] - Approximately 50% of capital spending has been deployed in operator partnerships [5] - Admiral Permian Resources, the largest operator partnership, produced 7,400 BOE per day net to Granite Ridge, representing 23% of total production [8] Market Data and Key Metrics Changes - Oil and gas prices have remained relatively stable over the past 12 months, providing a constructive backdrop for continued disciplined growth [10] - The company expects to maintain production guidance of 31,000-33,000 BOE per day for the full year 2025 [14] Company Strategy and Development Direction - The company aims to scale its operator partnership platform and define its model as publicly traded private equity [5] - The operator partnership model is viewed as the most capital-efficient path to scale, allowing for deliberate, cycle-resilient decisions around capital allocation [8] - The company plans to pursue measured growth with modest outspend if oil prices are above $50, while pivoting to maintenance mode if prices fall below $55 [11] Management's Comments on Operating Environment and Future Outlook - Management is cautious about near-term oil price uncertainty but constructive on the long-term outlook [11] - The company is committed to maintaining flexibility in capital allocation and has a strong balance sheet to operate through cycles [12] - The company is focused on opportunities that clear a 25% full-cycle return hurdle and exceed its cost of capital [10] Other Important Information - The company continues to return cash to shareholders with a quarterly dividend of $0.11 per share, equating to an annualized yield of approximately 8.3% [15] - The company has successfully issued $350 million of senior unsecured notes due 2029 with an 8.875% annual coupon, enhancing its capital structure [5][15] Q&A Session Summary Question: Details on third and fourth partnerships - The partnerships are in aggregation mode, focused on the Permian Basin, with expected development activity in 2026 if successful in inventory aggregation [21][22] Question: CapEx adjustments in a low oil price environment - In a $55 or lower oil price environment, the company would cut CapEx back to $225 million, focusing on acquisitions rather than drilling [23][24] Question: Growth trajectory into 2026 - Production contributions from Petro Legacy are expected to ramp up by mid-year 2026, while Admiral is running two rigs [29] Question: LOE trends for Q4 and 2026 - LOE was higher due to increased saltwater disposal costs, and the company expects to be at the higher end of guidance for 2025 [34] Question: Waha gas pricing and hedging - The company does not currently have basis hedges for Waha exposure but is considering adding them [38] Question: CapEx trends into Q4 - The company expects Q4 CapEx to be around $125 million, primarily due to remaining acquisitions [45] Question: Capital allocation for next year - The company expects a significant oil weighting in capital allocation, with continued success in Appalachia [46]