Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome everyone to Granite Ridge Resources Second Quarter 2023 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. A question-and-answer session will follow the formal presentation. [Operator Instructions] Thank you.

It is now my pleasure to turn the call over to Wes Harris, Investor Relations Representative for Granite Ridge.

Wes Harris

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

of for call our who We remainder the of overview for our our comments up quarter, will our open matters some Luke and financial second an XXXX. Officer, will begin the Executive questions. We'll with will Brandenberg, outlook for results. for then Chief President Farquharson, provide key then turn the closing who Officer return over call Financial the provide comments Luke we before will call Tyler to to Chief review and our

Today's or in forward-looking cause Securities may conference meaning our in would We implied statement risks call you laws. contains within Federal that expressed certain uncertainties actual projections these review statements. results to and of the that subject cautionary and statements earnings ask other to These differ also are statements release. those the from

Granite new risks otherwise. our Commission. Ridge forward-looking reliance the or in as any with intention place other not statements. whether a on press release to yesterday's Exchange future described filings revise Securities or undue forward-looking information, These obligation update disclaims and you should any and result are events of statements, in Accordingly, or

certain to posted on financial our non-GAAP most financial directly earnings that is This measures our release also includes comparable is discuss website. to conference call references measures. reconciling GAAP measures Information non-GAAP financial the available in

transcript will available Finally, as made and a reminder, being be replay this call our The today's website is on phone call. recorded.

the I'll that, Luke. turn with over call Luke, to So

Luke Brandenberg

perspective. call the slightly Workman a Ridge. better meeting to joining internal This We in term morning, And for us were line today's From I'll solid board it good and Tyler the for was in board Wes. used quarter you, our Across you steal than our Granite expectations. Like. results everyone. a results Thank call. appreciate

of boring, bit wealth roughly but turned and line. It to EBITDAX, to better, seems a creating higher led be almost in outcome. into public this boring good. work new way a was company, Production were a went sales bit boring can adjusted hard lot as good which a CapEx and a And

thank amount partners, team and the well time to over efforts determining energy as immense day operating an appreciate as well when I'd for we all our of our past sales, a it. like to their greatly quarter, nearly

potential spot evaluation screened deals A have unique efforts. deal quarter seen day, particularly business a a and bright over we've Year-to-date, deal seven of in opportunities. our deals and/or Historically, of year. in the were development the we the Ford, transaction transactions roughly each Basin. DJ Eagle about Permian, in already half or and XXX evaluated was XXX a $XX capital representing Because of one XX the billion and first year, over of Haynesville which the

strategic the into We opportunity partnership our part in mitigate with core more strategic transactions more We look initiative and higher of of stool, insight concentration returns, more we the sharing on risk A a make are coming set areas leg quarters. this to our with partners. expected Permian our in development to few where those partnership forward concentrated timing. allocation strategic

the board, initiatives. key the solid of several of I'm across on addition our with In made we've execution progress pleased

is war chop addition wood June, to and trading While volume. one volume, previous than removed the increase punch two of and to an more have end the we still of at Index and doubled Russell exchange overhang

Since quarter to roadshows our ago we've months at of company. progress see to increase It's three non-deal to roughly continue starting earnings great share this as stride spoke investor are and and conferences a We reflected up some really first on in our we're the price visibility hit public as call. we XX%.

I'll table Now XXXX. full the outlook for set, year out turn the at

are we expected up to well than and midpoint over oil day. by Permian XXXX. of our the the XX% XXX takes increasing barrels the or increase XX,XXX of a As of per oil production stronger This of in full year Haynesville equivalent low-end barrels result guidance XXXX performance equivalent, the a

side, which the capital million. guidance, our referred guidance CapEx development capture are we're by as past changing we not the on inventory in but increasing opportunity to our On I've $X acquisitions,

where Now are million as we production while agreements. to for executed deals have guide continues do guide we a that and The to investments. our pursue not definitive closed acquisitions acquisitions reminder, team either new opportunities, future inventory or have $XX

on CapEx XXXX count is back mentioned loaded. sales call, our front to half loaded, the As for development is turn previous half our but

will of one. quarter our We sales, three third of about as quarters remaining three the development about that wells anticipate occur to will exciting as be turned to be The in CapEx quarters quarter. an remaining our well

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

Tyler Farquharson

Thanks, Luke. morning, And good everyone.

net we per net of diluted During and reported income $X.XX income the per second quarter, share. diluted of $X.XX share, adjusted

quarter year-over-year for production per increase quarter-over-quarter. the day, a decrease daily XX% a and X% XX,XXX BOE average was Our

Looking during half growth low second forward, with of quarter's to our anticipated the the production this we XXXX. production volume year, for expect be point

producing factors, production Per BOE quarter of And and of represents workover increased costs several Luke an $X.XX for to growth due including the lower addition last saltwater to higher to increase which for guidance first lease year per day, compared as compared to production. BOE a disposal the acquired properties, XX,XXX mentioned, our expenses unit XX% midpoint the combination cost, the now and quarter year. were we range increased per tightened our operating

in remains unchanged. valorem For to of per at taxes LOE and XX% X% of sales, continue $X.XX of for to XXXX, we our sales of XXXX expect $X.XX view BOE. and came Production ad

these BOE. G&A or the of our expense non-cash in Included was in compensation for $X.X our expense second Adjusting costs. exchange $X.X items, $XXX,XXX recurring quarter $X.XX million was per G&A $X.XX G&A for cash was expense per stock-based million, transaction and BOE. warrant

transaction $X.X $XX range million, full costs. to the the million expect G&A to $XX exchange continue of to We in excluding recurring cash foreign in year XXXX be million

on Permian end, or quarter X.X completed XX activity gross, we a the at production XX.X that had of net total an placed wells At Our operating and in XXX wells XX% basins. gross, additional with net end. DJ progress quarter of occurring in partners and

year to Our XX placed XX production expectation wells unchanged. net of on is full

right track. the spending quarter Capital on was during

deployed the of During closed we acquisitions. annual guidance million $X.X acquisitions. million, $XX capital these $X including of reflect We're million by including spending quarter, recently $XXX transactions. to million our capital totals million year-to-date increasing our of $XX And

spending $XXX capital for total million $XXX guidance now million Our XXXX. is to

continued We've quarterly ongoing our also dividend cash program.

Wednesday's $X.XX X.X% price. approximate the the which share a an dividend represents per dividend During Board quarter measured declared against yield closing

buyback shares XXX,XXX second quarter we cost the an repurchased of aggregate million million. $XX our plan, at stock during at Looking $X.X

$X a June of have As we repurchased cost of XX, of at a shares $XXX,XXX million. total

plan is the repurchase stock evaluated end authorized XXXX will of be and later this Our through year.

on facility, finally, $XXX cash And revolver with million $XX availability revolving liquidity $XX drawn million. second or and credit we million of on million ended $XX our quarter was with the the ending our

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

Luke Brandenberg

you, Thank Tyler.

discussed a in we in As hybrid. on Granite calls, is previous are different have Ridge a we world the that public bit

and and all gas we hand, On the our an property one oil assets real interests. oil gas as are company, are

and but greater alignment, evaluate best two of more and is drilling an to to other hand, picking opportunities, day-to-day allocate job the liquidity deals our the frack rather as a we're investment source locations not with but investor returns. risk-adjusted and On capital designs, daily on firm, or

Our band objective outcomes of and through high making. is disciplined low in investing diversification, decision to tighten investment gas oil and the leverage,

a demonstrating and to business, in the Granite business While an as many we that look decade, space value like of Ridge forward space in real beyond asset our value. our for small-cap in a above peers and we there's have trade asset private more public the the

plans and that a our we relationship forward conclude do long-term. returns, continued both in your to we deliver shareholder the to future share meaningful support, to our to the shareholders investors with, have not I'd for and near like story opportunity and look by thanking yet our

So that, on questions any call, happy answer are operator? today's with we might folks to have

Operator

[Operator from first line Your the Johnston One. Capital comes of question Phillips Instructions] with

Your is open. line

Phillips Johnston

Luke, wanted happy question maybe about partnerships. Hey, guys, out first to comments of to flesh some M&A. strategic I My and your thanks pertains Friday.

So larger of look at a plan recently, if as be the you to done peers Granite footprint, would in kind more Ridge remarks. to opposed of similar interest your public acreage your of have more or of you guys larger mentioned non-op any what partner traditional where a working the owner? to one wondering plans where development deals prepared I'm sort true of in you're at size passive a have looked deals non-op

Luke Brandenberg

Yeah, is, answer And The Phillips. the thanks question. good morning, for absolutely.

like put that maybe that we couple fact, a on offers thus deals In of look far. in

to out several overtime. do where as terms directly that's of build On a small the larger we in with partnering a asset in a strategic folks we're are really But private model, format team with going well. conversation partnership, more type an acquisition, in of that that's chunks equity

One when the of look value much smaller we stay we to processes. more more goal one banker at that, off deals. value and is of try seen larger as our from just to the We there, away haven't thing marketing see kind

private of quantities the it equity tell And And, an we're be large as potentially capital so that fundraising, to necessarily compete thought equity are in I don't one ago, talking firms. about going was years partner that a for not you private acquisition, lot the thing is out interesting folks this is midcaps. as but could make capital a we have looking with to really several and

that's and like the if those asset, the focus there asset owned. is probably reason guys they idea the is, that buy the only the that I equity But private

makes drilling, good XXX% us to asset have invested the to is that to a of And probably stop their If we going well. for choose we're it in. they so go CapEx line as sight that sense of

view we dialogue that or firms. with equity like the private So regular

buy a from when Right the darn packages so because impasse, of an bit now, it's lot A&D cost you've of hard X.X% went of to debt to had a the our PDP, market, just X.X%. on

And to a is so PDP tough it's what of want. which PDXX, at sellers buy lot still just

but as a concept. We there? of doing exploring of peers like like So value our well. done And on it we what transacted of any, we a kind think winded lot way that's they're I long the are are driving saying certainly that.

Phillips Johnston

Yeah.

think And how rate what maybe That's rate the production Thanks. early think right color. it's we kind just size? of about might and year really high-level production your But a growth maybe what from next term, your perspective, look should company talk longer then you good. obviously a growth do 'XX. just of good Sounds is like thinking to for

Luke Brandenberg

question. great a that's Yeah,

one cash flow. standpoint, we're pretty much talked about we've our reinvesting that of thing all a targeting generally So from free CapEx

maybe a is And production digits, what low-double high so digit high-single that like year-over-year level looks at growth.

production year that growth. and with to anticipate bump this high-single So at something is again, about look guidance, a around I year-over-year digit digit internally. a low-double what year looking small we we're at XX% range,

Phillips Johnston

Luke. great. Okay, Thanks,

Luke Brandenberg

Thanks, got Have weekend. a You it. Phillips. great

Phillips Johnston

you. Thank

Operator

the Your Alliance next Jeff question Partners. with Grampp Global from line comes of

line is open. Your

Jeff Grampp

the Good time. morning, guys. Appreciate

Luke Brandenberg

Yeah, morning. good

Jeff Grampp

maybe that reinvesting Luke, growing on So of kind I building cash that free to that I policy. at returns. it sounded that think focus commentary. like, into all tie you dividend top-line attractive the said wanted to target off the last

of so newly guys the company, real I terms of in when you kind public board, You precedent, no that policy? are guess, review in

guys the in, story it you think say, medium framework of kind I overall, dividend is more growing kind term, you growth just the guess, a of in the the fair think shareholder you asset fitting the do there's And dividend? see Is Or guys? for focus base to in in versus return how that do that here? on

Luke Brandenberg

of if great a question. continue conversation say, I'd to targets, can meetings. that the our think allocating that find we high that level, of point and board a At something it's increasing better is meet use a the And at capital our there, is, idea it's production return we Yeah, opportunities primary capital.

to full a not ignore, capital available if There's cash allocate go investors. return a CapEx. allocate to have, growth said, you say, dividend. to flow slow That cycle the let's to through We're able to we're work. period, for better certainly to or free growth put if getting we We

volume haven't also had some dividend, more partnerships. looking about of And you, the we date, to capital honest that's bytes as think I'd as be our of by strategic are one, you. we a just great terms seen. I we've allocating flow increasing And driven chunkier deal probably To tell forward to through that lot conversation ever is with in

us. to And those really are exciting

and too, a not dividend we've group, a dividend. again, But always that, So sure talked the to had that investor is increasing want investor. is retail of makes about us to specifically the make broader one interesting the piece

having a love we dividend that But we two, defend. easily can very

And I we hedging to of production things sure just at is deck, not make keep that a at and want keep where the a we that's And XX where flat that can least money. roughly cover on. dividend liked a now. months us production months least I you at spot dividend. really people One sit We that making and aren't can cover Folks look count sets work. XX that good the for my for feel dividend really the price that we right can from in perspective sustainable at flat,

Jeff Grampp

Great, recognition What people function see that brand that public guys now that guys? step just change you that having flow, maybe play? was deal in being attribute dynamic flow that of know side, deal there of acquisition too? in sense you And your attributing in a of commentary. bit industry appreciate is on the kind didn't who increase a you little guys kind that Is for and for a any a broader more

Luke Brandenberg

question. is sector, it's becoming were above. a are the board. think excited across understood about public, that. better say Yes, it's I that's a Non-OP now the just do more balance a good folks more and think I that in I'd few all there's

strategic of our partnerships, if too, another But team, our piece it really will. through is you we've BD broadened

these companies unmarketed seems the again, deal guys three the with, on with mean, this weeks. new we every up incredible they're bringing BD couple, coming that it of in One just like side. that I They're partner a truly are

increased. but deals at. it's looking But that looping partnership we're strategic up based only that see comment of into changed we're of deals, the that not neat slash volume to the on number character again, so the the the And has

in deals exciting So chunkier which for that nature, is we're seeing us. are

the investment do If think the to you of in an any side. were fund limited want the about predecessor scale company, about and

more got lot deals Now then take control mentioned I having in can over of flow mitigate consolidated have we where insight that some more reinvest, that higher concentrated we the from you've company, timing. concentration the cash as also and to more these earlier had or to a us public returns allows of more some investments risk

well. competitions as flow the there. So is The deal up

wouldn't say up, blown slog, I just lot It's the of changing, because So is we characters we suggest there. tough we low get that away a deal on a And there's out fruit it's the hanging bid that frankly, on doing on. of increased. the the the But of return expected a good is are transactions number that deals numbers and work. I'd

to So a be lot encouraged about.

Jeff Grampp

last It Great, what one, way isn't different for front years, the up great. But a you the guys the on like on speaking. point. of just And have drastically flows couple year executed related up. to looks follow over acquisition last deal budget that ballpark than this

months. last the just I that threshold Or that the pricing you of the kind quality conservatism in past? kind you of are higher than a say of overall would for some several you commodity are terms of guys the Is the seeing? commentary it in deals looking choppiness So guys just return having given years guess,

Luke Brandenberg

Yeah, the it first deals. the of a the half to the quarter, I'd part really, we competition side, first in were in just getting goes the of of on back lot truly year. blown And out water of say particularly

really was to of in that component it was And sure if just new non-op was a trying that chase space, the That work. capital put so money not to it.

deals, some entry another associated bets. more that because a say There's with some tell of concentrated these that piece of costs. lot in I'd more you CapEx of I'd these it's

dramatically back not of the end of CapEx higher. dollars higher. spent while is those inventory these some In the of acquisition so And on may dollars be cases, in the quantity

those full looking going are whenever And up. investment, so at we're the cycle dollars

Jeff Grampp

makes a guys. Understood, that sense. lot for Thanks the time, of All right.

Luke Brandenberg

Cool. Thanks question. the for Have one? good a

Operator

from is question Water Robertson next Your Tower Instructions] Research. [Operator Jeff with

Your line is open.

Jeff Robertson

into for Good morning. of line Phillips' plans get about on following Luke, start XXXX? operators' do good just When up to you sight Thanks. growth. question production your

Luke Brandenberg

for Yeah. Thanks in Jeff. calling

you difficulty] have But [technical partnerships, bit some that many tell of we lot XX you so have strategic darn for pad so maybe it. of for I'd frankly. you pretty little the quite of good what I'd is particularly nine months, because development, into months. surely darn the a So With there's that good have pretty months. participating goes or in wells were time say for a insight lead visibility nine

You a have little that. gets It decent bit after visibility. tougher

for immense And when come down so dataset just a the operator back. a couple One that. of there's of decade comments is I'll data just to is, still suggest is, going EOG use a and big benefit a an an to lot that come on example. for

good data the drill typically they'll and in, the certain a drill zones, very have maybe different really okay, maybe door. deck, then drill they We time, come next they'll wait pad of suggest, the set they'll amount

to to period. that allows try to So us happen XX-month going predict what's beyond that

that thing the of I'd not but you it most says, other sure knows. make the model I'm whatever certainly these after operator fact the adapt. say can months, even They The is, can tell XX operators is

they so things like. going changes done, adapt to look on how is set their based what try And to hydrocarbon prices not they're inventory

these they're so smart. are very And guys

we we the like which XX feel strategic And that is it. the we little timing really something bit so well. of better those nine on flows as partnerships, that to pretty good can is so month about More feel about where about that, cash a as would

Jeff Robertson

and to operators blocking partners? acquisition refreshed is Is to Luke, budget non-op Secondly, type their tackling the budgets AFEs send and their there some strategy. seasonality out

Luke Brandenberg

seasonality good really the year. Yeah, the of a The question. at end it's is

So November specifically fourth this the in December. see but we'll like and quarter,

regular a years time, was And follow. wellbore that -- not position. lot it non-op what buyers what the we There call market. is big a a ago in It's market have who was and on that operators, they'll years a in where there we only of a several they'll yes, basis So do market.

some so get in have typically We when we again, And work actually dollars the blown now. -- now. put we'll out there And we capacity. follow of bid put to a the we constantly. But water

CapEx. $XX you November, market that $XXX say really sent met say of where AFEs week, $XX out Permian later $XXX million is Will year see the But that CapEx. to and seasonality the come and have they're operator every AFEs in December, million that in in the have million that million

tail definitely you the see So towards that do end.

Again, we're reasons plan of reasons, for et different lot There's in for a that tax not IDCs, folks market. that that particularly competitive cetera.

read a So we a in like keep good they of break. be a sometimes, will cyclical, maybe got on competitors you it, you'll kids maybe predictable out month we their those but hypothetically speaking, but only it to But fourth the there, like of because spring good And pulse that where get cyclicality is the were money, can have on April, quarter. late lot ran have distracted, feel. a

So we [indiscernible]. again, a keep full

Jeff Robertson

you. Thank

Operator

of the is Dunlap Your Dunlap next question from line with Management. Carter Equity

is line open. Your

Carter Dunlap

Hey, about that somewhat thought curious flow get flow. I there's terms people guys. mean, you? also deal factor. that questions flow I to kind half we I'm volume? half? but of of what the from deck that And or think second you been if in impedes say, this one basically of about materially first the want at or is Do better than let's lot just helps know a commodity And

Luke Brandenberg

in prices. about hoping, question. you What Carter I is half, first I'm optimism the it's have more good that a Yeah, think

really half may had we higher folks leads you back because they seeing weren't around deals the was And really consensus have up into doing were balled And that. that pricing. pretty so

see For on and at you're opportunities, below want right make breaks to strip strip, line seems where just we're that not and look we're it at, above you where generally a there. when the sure deal evaluating looking strip to us, we'll

tighten because of at investing strip a of strip, generally, end bets we'd at we're strip. work like to But putting invest outcomes different if the lot And to you across to by you're the use going prices. cycle, at

were I think into leaning because folks lot of that. we lost deals, a

oil folks I side, in think are they're not you've seen it that now more that bidding that as much. specifically and we'll there's on get a into well, to stripped, leaning that the where as prices, scenario rise

so on us And may help price that the side.

just material of earlier. environments to The about really uncertainty PDP a then big is transact a and you PDP had one hard interest rate the hydrocarbon I area on where mentioned so increase, prices. also it. lot There's is just

we've I think That's be I of bit may that seen up, an a could that think now a but sellers. more, happen. optimistic, a maybe run between gap there little smaller and that that bit buyers maybe

Carter Dunlap

Appreciate All right, thanks. it.

Luke Brandenberg

sir. Yes

Operator

There today's call. today's time. conference are on no participating you thank further Ladies this call. gentlemen, and at questions This for concludes

You may disconnect. now

Granite Ridge Resources (GRNT) 11 Aug 232023 Q2 Earnings call transcript