Granite Ridge Resources(US:GRNT)2024-05-10 23:11Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2024 was $64.5 million, down 8% from the prior year due to lower natural gas prices and the impact of divested assets [54] - Average daily production for the quarter was 23,800 BOE per day, up 3% compared to Q1 2023 and up nearly 11% after adjusting for divested assets [86] - Per unit lease operating costs were $7.13 per BOE, and production and ad valorem taxes were 6.5% of sales, both within the guidance range for 2024 [54] Business Line Data and Key Metrics Changes - The oil production mix for the quarter was 45%, lower than the guidance expectation of 47% for the year, but expected to increase as some natural gas-focused operators defer development projects [3][51] - Total capital spending during Q1 2024 was $65 million, including $3 million of acquisitions [65] - The company expects to place 22 to 24 net wells online during 2024, with nearly 80% of those in the Permian Basin [87] Market Data and Key Metrics Changes - The company successfully completed its semiannual borrowing base redetermination, increasing both its borrowing base and elected commitments to $300 million [4] - The company has a pro forma liquidity of over $180 million and a leverage ratio of 0.4 times net debt to trailing EBITDA, below the target of 0.5 times [4][22] Company Strategy and Development Direction - The company is focusing on controlled capital, aiming for upwards of 40% of its 2024 D&C to be controlled, with a goal for a supermajority of capital to be controlled in the coming years [53] - The strategic partnership initiative aims to bridge the gap between operated and non-operated assets, providing broader deal flow and more control over development timing [63] - The company is targeting areas with low variability and high development potential, such as the Delaware and Eagle Ford basins [103] Management's Comments on Operating Environment and Future Outlook - Management noted that the current period is one of temporary dislocation due to demand destruction, primarily from a tightly held shareholder base [66] - The company anticipates production to be flat through the end of Q3 before ramping up in Q4, exiting 2024 at a high for the year [86] - Management emphasized the importance of patience and focusing on earnings, believing that a series of catalysts will eventually lead to a re-rating of the company's stock [57] Other Important Information - The company declared a cash dividend of $0.11 per share, representing a 6.7% annualized yield based on the closing price [65] - The company is actively working on several deals in the Delaware Basin, with a focus on unit-by-unit deals that allow for incentives based on performance [27][106] Q&A Session Summary Question: What are the drivers for increasing oil production in Q4? - Management indicated that deferrals on gas projects will help increase the oil mix, with expectations to creep from 45% to 50% over the next three quarters [91] Question: Can you provide details on the 5.5 net wells coming online? - The 5.5 net single-mile wells in Loving County are completed and ready to turn on, with an expected sales date of June 1st [93] Question: What is the expected capital expenditure for the second quarter? - The second quarter is expected to be the largest for acquisitions, with about 75% of 2024 acquisition CapEx hitting in this quarter [85]