Earnings call transcript Q4 2022

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Operator

Good morning, and welcome, everyone to Granite Ridge Resources Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]

I would now turn the call over to Wes Harris, Investor Relations Representative for Granite Ridge.

Wes Harris

good and operator, you, morning, everyone. Thank your appreciate interest in Resources. Ridge Granite We

overview for will comments XXXX. Officer, Chief an with our who key Luke provide We call and from begin and fourth the quarter Brandenberg, President will of full-year matters Executive

will return over Tyler I to before future and Financial the discuss Farquharson, website. financial results. we call review that we updated note an to outlook the also questions. who our would will our turn call open Luke then Chief We posted to Officer, will for presentation up then plans have company our

actual conference of to expressed those and implied federal projections other differ subject in contains These or meaning these laws. cause the are statements within uncertainties results Today's securities and call to from forward-looking certain statements. risks statements may that

Additional is differ transcript our filed you made results on statement the website information available that our will available could We cautionary in review would factors on was cause call. replay and XX-K, that release, a today's ask in yesterday. Company's to be that it earnings following the in

the includes references release directly on as Ridge is future result discussed reliance Granite intention non-GAAP measures in filings measures is to whether comparable obligation our This certain our or call of with to website. and yesterday's in or statements. These earnings financial release not also measures. forward-looking SEC. available GAAP press any most our on are revise Accordingly, non-GAAP posted Information the financial statements, the in forward-looking new to financial that reconciling conference risks or review information, you otherwise. described events any undue or update should disclaims a place other and

is Finally, as a this call being recorded. conference reminder,

our Chief President So over with Officer. Luke I'll call Executive and Luke? turn Brandenberg, to the that,

Luke Brandenberg

and you, everyone. morning, Thank Wes, good

I'd you call. joining say really us like I our that Before to we today's for into results, jump do appreciate

to pursuing Permian anniversary work of groups is. capital, our the out. lot areas We young XX-year with one strategy. story to story a non-op company public do We Eagle What so of to a a a in like Ford. first of specifically do our and with institutional are it marks the were great get XXXX

new public, we have non-op So for are private value while investors to for we creating the years. been and

foundation. business a Our the team is on the future set Ridge. there to The built Granite have execute. on and opportunity solid we is The bright field for is right

report XXXX. fourth With that, results we full-year pleased and are quarter outstanding to for

of network Our you across thank outperformance continued I is work our a To all operators dedicated of and focus of your for team the to hard country proven and am direct say, the our I that result of fortunate work. dedication. professionals

was as on quarter to XXXX on plan. execute successful look fourth business XXXX that we many and Our we forward success leveraging fronts our

XX%, XX%, fourth quarter XX% and year-over-year and oil for including net XX,XXX income XX% day, respectively. of under the period Highlights include growth adjusted a XX% adjusted barrels of of year-over-year net increase equivalent and oil. Revenue the in of year EBITDAX just growth production prior from to per

XX.X to During XXX turned partners operating wells to the which sales, operating Granite which fourth wells for XX quarter, sales, On our partners full-year equated Granite X.X our equated to basis, wells wells a turned Ridge. to for Ridge. net net

contributed to financial that's XXX%, $XXX XX,XXX respectively. income than development million production XXXX oil oil, net and growth have XX% XX% EBITDAX XX% now revenue and of of increase outperformance, operational of to across portfolio equivalent including adjusted per net success barrels a material and higher campaigns our under The including the day, in adjusted XX% targeted and full-year the seen assets we XXXX just of in

$XXX million, balance XXXX of of cash. debt and fortress a $XX liquidity sheet included We no with and million ended including

in balanced reflected million also of a X.Xx year. was XX% XX-XX XXXX proved in all-in of replacement including oil in to over barrels year SEC our XX equivalent, which the success production total of mix This of ratio the oil for year-end represents an continued grew and prior reserves, Our gas. reserves increase natural

proved proved our at XX% Looking Ford, mix seen Bakken at proved billion. Eagle the of total $X.X DJ. XX% diversification region. XX% by developed clearly year-end reserves total using would were XXX% were in in X% be sorting to Haynesville, and proved prices in Permian, X% asset I reserves proved were XX% our that undeveloped. At developed our the the XXXX, proved can note in XX% producing, were the reserves year-end, were proved XX% the non-producing of PV-XX in our total were and grew when SEC were reserves were the also our located The in of the total

of as Now turn handful of net $XX anticipate our continues and The to to to $XXX spent I during That $XXX time pursue that drilling million committed opportunity we capture. will to opportunities. It a year-to-date. any or been completion now outlook acquisitions new sales. integration pivot and the dollars we'll months team growth have to and to for about expenditures been includes acceleration. dollars We XXXX. well note has our not to million past expect turn year XX does XX of for million wells we number capital and or But as acquisitions capture of uncommitted that CapEx include opportunity

XX% of of the XX% the occur the expect roughly the with year On CapEx first front, second roughly quarter. in coming D&C in half that to we

which XX% level of X% the equivalent over per is We expect including full-year represents increase XXXX XX,XXX responsible a to we production growth. full-year of a of production, believe XXXX At midpoint, that barrels XX,XXX oil. oil day,

slight production are of of For net the numbers production turn and decline to quarter off quarter, our from X% some anticipate towards the rolls sales a first fourth XXXX we from the our back around weighted flush and XXXX year. half

more results detail. our Tyler? So with financial Tyler in to I'll ask that, discuss

Tyler Farquharson

our fourth quarter and pleased growth continued the for our XXXX financial full-year forward good comments, Echoing to and you, Luke, everyone. Luke's Thank and look were XXXX. results morning, we in very with

increase of equivalent of compared last per the over production and oil day, fourth respectively. fourth our and XXXX sequentially quarter XX,XXX the the was During an of to quarter quarter, average XX% barrels XX% daily

As revenue we gas rolling realized from our two-stream production our a reminder, on sales the gas natural a basis into liquid report natural revenue.

XX% We natural which per realized XXX% gas $X.XX prices This barrel of the per and due production coming or of which gas was weaker the benchmark average pricing of the for percentage lower for prices was $XX.XX natural our XX% quarter average prices than was quarter. approximately the third for oil for of gas of the than revenues quarter moderately Henry natural fourth WTI Hub XXXX. gas realized of and the price Haynesville. quarter a Mcf, differentials, larger approximately to gas million the widening of the overall higher from result The basis and was quarter, $XXX.X NGL oil

quarter million Turning for or per for the XXXX. $X.XX expectations cost to and BOE. expenses were fourth our $XX.X Lease operating

looking For per were $X.X and LOE at BOE. to sales. $X.XX BOE Production $X.XX X% of XXXX, ad of million per or $X.XX we are or valorem taxes

them or the depletion and $XX.X to be expect and of $XX.XX we expense million in X% XXXX, accretion was range sales of BOE. For to per X%

was or BOE. Our per the $X.X quarter fourth $X.XX cash G&A expense million for

preparation with the from and agreement formation connection in incurred G&A, transaction-related in fee January our directly services of Our Included cash XXXX. and the our S-X in $X.X our million of with our management XXXX, for Grey G&A Ridge Form Granite master to included of in expenses quarter Ridge fourth filed non-recurring October in cost Granite Rock. costs attributable the

and As approximately the per employees covers is quarter year that XX million per Ridge. Grey Rock a provide services reminder, Granite various $X.X MSA million to $XX or

XX% of our or quarter. which income million. We $XX.X per million the per $XX.X to than the net million reported for net $X.XX G&A cash share $X.XX of the $X.XX income to approximately We currently million be net income million XXXX. expect was $XX in or full-year or per for XXXX for higher adjusted fourth $XX range of Adjusted quarter share share, of $XX.X was

XXXX, was year-over-year same increase that partially EBITDAX in adjusted natural realized a increase XX% gas prices. contributing finally, growth million for the in was offset adjusted a XX% oil a the decrease prices in million to XX% and were realized $XX.X XX% And to production by EBITDAX period compared in in $XX.X

expenditures the million. totaled quarter Capital $XX.X during

periods. production the accelerated approximately delivery progress and which of quarter XX% At the as year-end, additional to wells contributed be third an in X.X we Permian. nearly net in were prior to of the expect had and we wells, first net XX.X well X.X in we production was during placed on half Our production which a completed one-third versus of gains to net XXXX. quarter our turned wells This sales placed from the the on in we increase dramatic

quarterly million guiding million, covered, not that $XX capture already date. has additional XXXX to the already this dividend $XXX guide million this the Luke Annualized beyond do share, XX. during X% As opportunity we expenditures per We of $X.XX opportunity represents as against fourth cash are capital price to quarter. through approximately initiated what occurred current to $XXX to capture ongoing of $XX quarter We past Friday, occurred last approximate at dividend annually our week. including per million March of or share targeted yield per $X.XX at an measured

open approved to In buyback the stock in $XX million a Board plan mid-December, shares our repurchase market.

located basins repurchase little shares shares U.S. a base December, and lower During the non-op first production over we continue prolific diversified Granite asset quarter across the and we the last during risk viewed mix undervalued supported a producing Ridge of we to model as repurchased business half key our given as by in XX,XXX

turning Finally, sheet. to balance the

cash into October availability million. borrowings we year-end, of of on and credit we with past revolver with facility of that the As $XX this million $XXX year entered liquidity $XXX the million, of an under had no began revolving we this

transactions opportunities value compliment As to other strong and through the in expand to such, acquisitions remain continue current execute business immediately for increase strategically all and accretive on we a our that to business shareholders. position

I'll to Luke? now for back hand comments. closing his Luke it

Luke Brandenberg

been sentiment of October, relates energy industry. a to public in we it Thanks, late the continues evolve to market months handful since busy as went Tyler. It has and

a upstream gas I capitalizing benefits been During prospective have pleased on conversations significant the for the Ridge this with vehicle significant is have current why and of sector. to investment differentiated by a number about and oil believe afforded we Granite period, shareholders

on is Ridge uniquely positioned Granite We multiple believe fronts.

strategy model materially and diversify interest of Eagle in of basins operators execution the that foremost, This our business. DJ. asset our in a Ford, position the resulted to materially wells we of opportunity has in smaller across our the more risks a across in larger U.S. than current to Bakken Permian, participate as investors for wells portion X,XXX decreases provides in business and non-op premier ownership as First compared the The Haynesville, number

on high than that drives focused are to long-dated value efforts inventory. immediate quality, near-term our Our shareholders drilling development business inventory more

us building business each our Finally, operators as non-op model the operations team. basin we allows an internal less overhead versus in partner to best with carry

sheet is Our also fortress key company. for balance the

We we are volatility leverage given of the profile that serves the committed gas cyclical maintain a nature well and oil inherent and to us conservative sector. ensuring which

As for operators. drilling obligations a to in activity non-op, are to and basis, development by well-by-well we participate common elect ability to the have contracts not a burdened we on long-term

We to also obligations. enjoy flexibility increased hedging related

with of is to We vehicle Granite exclusively operators, under production and responsible investor given the number long-term both Ridge exposure public as private, public growth. of for on continue provides publics that best Granite the areas non-operated low to properties. unique that view the built focus through Ridge a leverage core small

of to have inventory, We with continue particularly best the some of many the drilling private country's which Permian. operators, will partnering in

private As investors. class to first such, public access that investors’ inaccessible traditional operators to have provide previously upstream been would we

the to this ideally to business and committed ongoing our is suited return to our capital are regard. success We of model shareholders, ensure long-term and our in

annual we provide to of appropriate. implemented have continue on built volatility dividends Recognizing have shareholders. our an the to cash as will opportunistic will gas we've of repurchase business the comfortably sector, program and a We that and $XX that also execute oil share million

We areas industry of is focus Supporting the strategy and is over our gas pricing growth cyclical time. is our clearly operation volatile. oil recognized our responsible and that of the hydrocarbons on in overall

portfolio our cost such, continue minimal pace increases and to assets a supports incremental which that we our As overhead to highly emphasis reasonable growth. production requires fixed support to will place on adding structure, is at

a to wrap-up. to bit script I'm give here going off

performance stock has Our been [ugly]. year-to-date

and true. flow company trading is are little of when the a We debt like with cash a a opposite lot

XX cheap] months day meantime, at dividend have our than trailing be less us but a equity [awfully technical X% We challenge a Xx adjusted XX% from private overhang, and that one look will approaching we in EBITDAX behind the and yield.

any call. on we may folks answer have with today's are So Operator? that, to questions happy

Operator

Instructions] Capital come One. the Johnston line of ahead. Please from Phillips Our first go will [Operator question with

Phillips Johnston

Thanks. guys. Hey,

XXXX. a Just questions for guidance about few the CapEx

you QX exit First, just well Whether this $XX budget. for million it's D&C XXXX full-year the year? the inflation or cost the to guys relative on rate? What are average assuming

Luke Brandenberg

Hey. the Granite being Good question]. call. [Appreciate inaugural for morning, Phillips, question and Ridge thanks for earnings that

AFEs, saw we wells flatten to a as we're XXXX. a But On quite at hand in piece to the from average really XXXX areas upwards you'd in of On when it interesting inflation a really at and the versus on in that and CapEx wells numbers, kind increase the XXXX of are they're basis doing bit. up we're a come but we inflation CapEx from XX for analysis really side, pretty and at is XX% it's looking looked now Haynesville inflation interesting, process. seeing in material expect to pretty high-single-digit other The then inflation you bit actually in are still then we starting XXXX have this Permian. several And an that see out over like those out the [Bakken] past years quite areas maybe of have morning right are D&C annual most. that

So whole, up. in to see on I number But when we type a what the it's single-digit that number that is the slightly actually XXXX. comparing saw think you'd

Phillips Johnston

to Eagle Ford fairly of for for then the the Haynesville you maybe similar mix pretty wondering between XX wells year be to it at Bakken… by Permian expect XX% And last helpful. well percent similar to Would the around to year's the year, XX% to call for rest last count, That's net just for perfect. and planned XX XX-ish the both Okay, about region. it, split with and just kind

Luke Brandenberg

Good question. Yes.

our be we we are one real at is this Permian, time. a interesting there operations So Ford, expect best that strategic north partnerships guess our of the XX%, because Eagle driver little to maybe XX%, Ford Eagle of main have.

working And so there. your chunked we have interest

Haynesville then wells this our So dropped but be Midland Ford be that early think over a to I basin percent. Bakken Eagle coming the XX-ish some lot. wells going some delta to maybe year, closer your is could has really off your in are a And little in well, online net

that's in that. than net the We one are going to lot factor be a of out less good are consolidation Midland. the a Really well There continued there. folks just of doing there

down So say burgers to strategy has relative in Midland Delaware. I'd our slowed the – and beer

Phillips Johnston

Yes.

maybe Okay. budget. million for And acquisitions I $XX then in if Tyler. The more opportunity and could capture sneak one

or I that's of year-to-date. think committed what's mentioned been spent you kind

year? grow that creep obviously the the think throughout So that eventually should of is higher year. number what about to How we number might to going by this end

Tyler Farquharson

Yes.

closed number or also [turn] of our it So additional the first typical well includes that number are that expected opportunity capture, wells included end larger that does acquisition we in throughout the through as occurred any There have as opportunity year. January. carry in that basically to sales quarter. was the a capture Then that's

think to I So up. we'd would be run it expect that – it's quarterly move not expect to I rate. our don't

in I for expect what think to but I saw full-year, So would the it with it radically increase, increase QX. we wouldn't

expected I the cash for [indiscernible] is think year. number for flow that

we maybe more years where were outer the some spot first our shift spending in of to the be would that period. spending think I So going current to versus

Phillips Johnston

it. Thanks Great. guys. Appreciate

Luke Brandenberg

Thank Okay. you.

Operator

Please Alliance next Global go [Operator come ahead. the of with Jeff line Your will from Grampp Instructions] question Partners.

Jeff Grampp

you location last the for of any Good terms would development the would building time. or assets, expectations, production to you be detail sharing anything near-term on could the be kind of the topic in guys would share guys Thanks acquisitions, of any comfortable Maybe the morning, guys. on care – helpful?

Luke Brandenberg

beer real most assets our play of morning anticipate of Yes. seeing is And Jeff, in most of in in California are, what basin. way, next I'd to forward Most next say be burgers – rates will we really good so targeting, look where active our that years. to Texas, and Delaware within by week. the the and dollars going of development see and you specifically in us acquisition you're [indiscernible] couple strategy, we're where West the the

just on get challenges for us of for non-op, be reserve One and one year, any about to difficult certainly credit the must two. beyond proved inventory but

so And that's we can Most and is in Delaware. the of near-term really where high our that's focus get quality inventory.

really DJ a put is Another capital basin. bit little the place we of

up things competition But in cycle competition are we time. The shorter opportunities that terms very is so stealing are it you're less high have there. maybe mean You seeing doesn't quality, up there. of some and

So whereas units it'll shorter from there. we the a for wells, is in that online Permian, be inventory buying – rig are under buying buying occasionally, acreage Really basin DJ onsite, you we though And front may the bit. be be in months. of again, the time so biggest may have the us in drill hope XX driver and cycle

while production really on we've these a side. done going prices primary oil hydrocarbon so some the that's especially smaller And not acquisitions, forward focus

Jeff Grampp

some Got a really the guys mean, strategic helpful. part it deck details And like any you it. more? you. more a the sticking there? that slide just can extent Delaware, of strategy. of you broader partnership. But referenced share kind think that's on Thank That's sounds maybe the details I acquisition the bit Can discuss to give I us –

Luke Brandenberg

Yes.

us – You is primary for got say strategic I'd growth the really it, partnerships. our Jeff. a focus That's

source of operator partner, we we're goal long like can more excited creative a constructive of that capital looking that looks a for different a or that really is a them. for provide maybe the solution what really capital. flexible about known is, have And we So time, and source capital a know that finding for an is

is did in of Midland, private that's out found we this team had equity really a high time. been were long They a group a we what so – historically out doing quality And based over for bit a the past lot The of for of really of private cliff capital. five and a fallen backed has fundraising equity success. were They a years. different a looking source off

the This well, build and equity more And fantastic a there still of out folks strategy focused businesses the partner really have one still backed smaller has to an unit-by-unit strategy the and But we development. with assets of – there's those. on larger companies. been on was some shift, are that private opportunity

us, pick you're team, and side-by-side the And opportunities are looks a so for work like you you it up to plan. you then with what drilling as evaluating come together

so non-op, And development with drilling. perspective, a the over from the more the the also a zones of really pace non-op we're able have we're that lot more we're mitigate able control to and challenges historical over to control timing,

can't areas of a making So do that look, with those, like. but and we we we teams strategic really lot we're like they're bets

for with So looks an public that's really frankly with exciting daily liquidity investor. the us. like except looks investor, area what and like it equity for it more private exposure And the of inline kind

in one and mouse decade. And be That's I Tyler base so of to strategic partnerships past we but built that's that's can we're growth of our focus change a that, come great think for a lot real I driver our beer it'll the we on because and is not the trap the grow strategy. lot and business, a spent dramatically been a over going that And how a that and us. just burgers neat that's strategy, can on time

Jeff Grampp

strategic the of tend of on be acreage? those of structure tend a undeveloped really a there [indiscernible] or are you needs to or particular Are the to operator is you in kind of a helpful. typically, if structure acquiring bespoke guys across you working acquiring those those Do those are guys That's like other – curious to do could – interest just [you terms how amount partnerships locations share]? specified Understood.

Luke Brandenberg

Yes.

model to at private equity really look for in on can is, but you that strategic These was to and drilling more interesting, I'd equity, project than that, a partnerships financing kind developing a involved it's everything project if level, So of management the of it's private went if the wanted and corporate more operator did look you're they to whole are team bespoke is often what over day thing unit, really be course the doing. more be one. the example, these the difference nature, projects then

project really a And but so in a what XXX% doing finance, that they're result, as it's unit. of it's

So it's kind there. hybrid of neat a

and our stay objective to We on control mean, Again, they we that Our structure agree have is spending interest, on their at level their plan allows, always capital provide company. operators the interest the working to agree partner I own upfront. a upfront.

the of on may that are the really where to a, interest area [indiscernible], in opportunities they're and generally see so particular with but us. though And asset level hit project they may they're partnerships the we basis, any operator come the to area a to have

Jeff Grampp

Got I helpful. That's appreciate it. really Understood. the time guys.

Luke Brandenberg

got You it.

Operator

further at any to We time. no for I'll conference have turn management back questions closing the this remarks.

Luke Brandenberg

Regina. you, Thank

exciting time Just want is call. everybody an to This on for being us. again, for our thank

Our public Q&A. call to earnings first take

future. much your in look, Granite I So questions just in we'd look you, to see appreciate appreciate any Ridge if love more to your – the many come chat and you with to calls love we'd interest have forward and very time.

Operator

for gentlemen, that all you meeting. and today's Thank will Ladies joining. conclude

may You now disconnect.

Granite Ridge Resources (GRNT) 28 Mar 232022 Q4 Earnings call transcript