GRNT - Earnings call 3 2023 | Granite Ridge Resources, Inc

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Granite Ridge Resources' Third Quarter 2023 Earnings Conference Call.

[Operator Instructions] Thank you. Wes Harris, Investor Relations representative for Granite Ridge.

conference. your begin may You

Wes Harris

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

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

obligation GAAP posted our that measures includes reconciling release and non-GAAP comparable or you should website. revise conference financial the is comments of statements on We events within the yesterday's who that non-GAAP risks are to may Accordingly, up otherwise. federal intention return are as earnings the and any financial and ask review also results. our measures. available call our turn or would These new our then Tyler to implied will place is release conference information, from certain statement review some described financial any undue laws. uncertainties call over subject results to result actual call statements. open These or whether statements, to to filings differ Farquharson, projections that press forward financial our you the statements forward will with not Ridge will then before meaning our references Exchange directly for reliance Commission. This cautionary most a earnings questions. Today's of release. Granite cause We Information and disclaims other looking call Securities future in Chief forward or the looking looking those provide closing Financial the and in also statements. to in we to Officer, certain these on measures update discussed risk contains Luke expressed securities in other

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

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

Luke Brandenberg

into quarter private business couple and the transition story; company of to every we call. to our thanks X-year public the over you'll work capital. to ago. the dialing everyone one, wheels the are stewards join operating A lot on part weeks our our side all continue accounting for field spread investors partners the are us helping for for good for turning. our for folks complete IR hard their to And excitement partners finally, the third The hope in, a the here and Granite day trusting that as public; and from fight I thanking banking grow of legal, joining of of By to to you celebration our research all a this capitalism crossed Ridge to Wes. you, and Thank as team call, me and are mark the fighting us your in the good be keeping of

one Now those is talk quarters fun to of this about.

our On expectations. we side, the asset outperformed internal

lot the a this XXXX. And also of guidance of XXXX where each discuss than bit turned And in development wells, had plan turned of earnings through more On production the X.X expected over growth. with net where month March, partners to side, to like how in or impacts side, we Delaware is beat. We over we credit report see net assets, when wells These morning want in I to all the ever. great detail while a wells we we unit X.X the and to just My on gross remainder quarter-over-quarter plan moving heading. Starting XXXX is which year-end issue would share little but that about corporate we're then folks gross earlier company operating of XX the to a came drove more this sales this in budget. to execution. ultimately, those due is for core led credit in A sales the XX cylinders. on units give X our investable pieces to to for business quarter, the firing under a quarter than XX% to walk

Additionally, in we under in have a X expectations trifecta in Haynesville early, month net unit that the exceeding and hit well coming by production a coming significantly about internal AFE.

I I shift business, cost. to about the Now, should something mention before

and shoots forward. While going of below seen are we costs modeling green coming have we in cost expectations, not declines

or well business CapEx both the the continues set or opportunity beers partnership the the traditional side, on as as to front. robust, On be and front, strategic controlled non-op burgers

expect XX another and on closed end the by have transactions to have of year-to-date we We close year. handful that the

near-term a X represent flowing production, inventory. stool. our CapEx are deals or longer partnership development of development leg in nice blend the of dated of strategic and business controlled these These

concentration a As and take interest direct These higher higher we reminder, a are where these with control investments development partnership risk concentration mitigate we areas expected timing. operators. when controlling opportunities that are over in with proven returns full well-defined through

Finally, I'll turn to the corporate side.

secondary big about for our shares largest from the quarter X was shareholders. million of Our sale event a

As make determination lot this any make investable. more did did was receive offering the proceeds, GRNT but all sell, secondary, to nor we a Granite Ridge to the did not

XX of and a trading Water time sharing Phillips mind we at and consensus post-offering. picking material Bank we with appreciate Tower over and a a us. One increased all lonely increase Stephens one, We bit you We coverage coverage and of investors up significantly with your have sure as in new share volume. research Capital America, of seen added was

cost. Now, these come without all benefits did a not

be But secondary pricing increase, research coverage, recovered investor our in the volume increase to we've and make in to that the decisions order Ridge addition offering largest more shareholder willing demonstrated While hard Granite continues the was to base broader to trading investable. make painful. the bit, a in

outlook attention our year the quarter for account updated third making we're adjustments to to Turning full XXXX, full the some our to year for outperformance.

a year both increasing our we X,XXX This takes the oil than guidance. A an of in are or keep day. previous XX,XXX to where of and of high the midpoint the barrels barrels X% here. day low the per production, oil couple equivalent things by is and XXXX production over XXXX one end up our a to full of guidance midpoint increase the year full mind of first per The higher equivalent about XXXX XX%

from First, fourth while some the of the was of beat due fourth be third in quarter. a third We the acceleration, looking third was to for year. previous point some about decline that quarter Internally, wells at will the mentioned high production from to the quarter a the outperformance, the X% we're those call less to due production volumes in it quarter. meaning

that, are out thing expectations production taking has second primarily oil point while waiting the oil year down side. is we outperformance year-to-date, would the The the our gas on outperformed I a With for our to bit XX%. been

producing On the million up acquisition XXXX inventory million. from acquisition $XX CapEx to side, and $XX property we bucket increasing are our

As that incremental a the closed new About million a guide we deals reminder, PDP acquisition Haynesville, since is not opportunistic expect the increase couple or increase half close we of is that buys. end. roughly quarter are only diversified to is by one future call of of or a deals. the last closed the and in the either The transactions million dots, in $XX $XX the definitive have year

funds need be the are for divest thesis Now, may some of that ease there while the an and may assets. tooth in we part going typically valuation. able public PDP, were in exchange that We long not of for buyers to was to certainty offer of close attractive

be as due as primarily well This acceleration is side, in turn but sales, we taking much of midpoint XXXX, acceleration increasing up in the thought drilling to production come but during we we in XXXX are with the year. million. That in impact operations $XX on the wells turned late On well so way fourth from that net activity XXXX. partner we this in a the to would quarter, expect do that the expect strategic they now as the increase beginning online of of some has not will

the have ball that previously business course leverage. From Tyler, allocation is Before to normal up mentioned XXXX. capital few our a debt I'll standpoint, to I turn a wrap a we thoughts pass half on target with of

turn at We are sitting about now. a quarter

justifies of borrowing I leverage, to as our expect compelling cash within and new get closer the see of it, set all a flow. been Once flow Board that fund live has So post-dividend of us supportive we opportunities. to turn our half reinvesting opportunity you'll long that cash

note other is would drilling The I thing going. are where dollars

control controlled. be that increase future As accelerate, to to we accelerate. partnership And strategic over the XXXX, will quarter hope to can traction, continues we on we our If of capital. our some conditions to for pause, full If have success, of drilling are expect dollars seeing we that timing that what drilling will believe right we're roughly we a can of we our with pause. in years. to want begin gain we Based program

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

Tyler Farquharson

good everyone. Luke. Thanks, morning, And

we recently in the in gas and Haynesville. natural production our During of the XX,XXX the Boe and volumes this turned QX, and versus Permian to on sales gas production estimates higher compared QX XXXX oil key Both of increase to quarter, third internal XX% daily than end experienced day, timing quarter. wells adjustments our XX% was high at as second were outperformance and wells on Haynesville the average per above year's a higher QX favorable

mentioned, full guidance year which increased to our of growth, year. to last we XXXX Luke compared represents Boe midpoint As XX% XX,XXX day, per production

$X.XX and QX, the $X.XX accretion adjusted was EBITDA XX% totaled Adjusted $XX.X adjusted impacting by up was million, quarter Non-cash EPS share EPS share. expense diluted Our quarter. year's $XX.X per the million this for from for depletion second third in quarter. per

our trend price costs Third to and prices, guided for differential higher of expense value of pricing benchmark lower $X.XX was taxes than stock-based for pricing unit Natural costs. Per were per Production were our and XXXX our and during $X the lower X% decrease Boe. this, in to of per range of month with Adjusting a to third negative than XX% in quarter X% our favorable the of third $X.X realizations $X.XX second $XXX,XXX historical barrel our the trend remainder historical expense a of net was operating of market valorem Boe. Bakken. quarter cash weaker per at per quarter NGL non-cash expense sales, our compensation. or gas recurring local to $X.XX was million less of compared X% per $X.XX quarter view unchanged sales. G&A processing lease Boe, G&A the shoulder and was the oil Included within G&A $X.XX Boe. X% were result ad of for quarter due

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

operating Our were An gross production partners with or occurring activity and Permian XX.X net XXX or wells in completed of the in XX total net a gross of X/X on X.X Basin. wells placed end. quarter nearly at progress the additional

are $XXX.X to Year-to-date, our on XX low XX increasing guidance our end $XX.X We including X million operating we spending $XX their an by acquisitions. level the annual including our full by are XXXX. Capital net expectation expanded full production partners totals the well reflect of million. increased by wells increasing wells spending million, million, year as $XX.X to during quarter midpoint acquisitions, million and year acreage, high development on of capital Primarily target during on $XX.X was acquisitions. efforts as the of respective now net company placed the to our of

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

We quarterly ongoing cash our also continued dividend.

yield an closing price. against basis the on that $X.XX declared measured the a share an per dividend During represents X.X% Wednesday's annualized dividend Board quarter,

we addition, at $X.X aggregate the XXX,XXX In repurchased also during cost quarter. of an shares million

end, our our $XX we XX, Subsequent have commitment credit cost amount shares on increasing this revolving elected million. our forma September liquidity bank QX completed of a total with redetermination, million $XXX was the million. Pro million, $XXX facility. from at a of to $X.X for quarter million our drawn approximately of semi-annual $XXX redetermination, we of As at $XX.X million repurchased to end

at quarter turn quarter target. a ratio leverage and our below approximately turn end of Our was a half

Finally, of for to over oil number closing a past the hedges we hand for current Luke to of XXXX XX% it defensive PDP gas. I'll where months, hedged now we have and approximately comments. his added our back Luke? have now

Luke Brandenberg

we like we it sound are third our it you, sum and positioned a pleased record, To as quarter believe up, Thank And results broken with while we Tyler. XXXX. are strongly enter may and we're I do a companies oil hybrid and believe is think investment practically repeating thesis we company it investment Granite gas oil worth firm. for that and is Ridge's differentiated gas non-op

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

many also business, peers as we that more in the demonstrating than value. I'd a decline secondary, we asset like not is space that in an while to look we price trade decline asset price have of have our our a it space, forward decade, the cap This in real beyond from stock decline above to like in the private While and value for small value. business stock does make had stock Granite public not we there in did decreases a it. in the increase risk, Ridge a the distinction

today's answer your all on support. questions up something continued point. I'll We Operator? have price here, special that, happy may again with to particularly folks for our by thanking wrap call. have And We once at appreciate. this any of shareholders we're

Operator

a [Operator Michael Scialla line Instructions] And question from comes of from your Stephens. first

Michael Scialla

mentioned year? of for or on prices imply XX% that I relative target think think year. do to it next where Luke, the high-teens you got what expenditures, strip X.Xx? year when of you've does of that you this to, now, call you're mentioned for control would leverage guess, hit you you'll do And going talking you you next are -- growth based

Luke Brandenberg

Yeah. Mike. Good question.

big So, a from I'd guess of Again, that. we're that that we somewhere, half-turn anticipate it hit on target at best would play the the be this pace will a perspective, That that the middle at year. would leverage time. prices pretty call impact going,

next a so side, control that or that in actually rig, as year. strategic this for period picking and on But looking mentioned, rig I be about at will we'll partnership capital full-time rigs a play acceleration certainly of year it. up practically short will we're time X a and As a role

Michael Scialla

you partnerships? and you Okay. burgers more the versus what's take interests those of the And characterize pipeline beer? strategic of of kind And of opportunities your strategic working the for partnerships can in percentage like typical look

Luke Brandenberg

Yeah, great question.

but So, that on the side, brought a wells, where quite basin X.XX beer net. only bit we from the varies burgers and XX DJ on

very So the generally small DJ. working interests across

some And lot to gets so strategic side, much of closer be XX%, concentrated on That's Permian, the we that the higher. partnership areas a but more may investments.

partnership. speaking, when we with XX% generally in partner a -- so, we And we of maybe Granite group, being Ridge, may the capital that

Ridge, unit, net But XX% unit, generally XXX% XX%, of drilling control look we're XX% somewhere of so at so XX% you if have drilling we're probably the we maybe typically. Now between that. the to Granite and

balance So much more concentration there. And as we talked about, we really like there. the

return like just if if higher have a higher think more concentration, it from there. rates differentiated piece, and control It us You of And sense, really sense, the doing. then accelerate to what look it gives we're also just that lot that but ability pause for we an just I operator perspective. expect makes it's makes

Michael Scialla

one just then, And could. Great. more I if

pricing. on green You seeing some mentioned shoots you're

in what think relative general well AFE costs with can But You're not heading change on for ready well I you've where to far on so based seen year. say are official, to you XXXX? next costs your anything guess, you

Luke Brandenberg

by Yeah, it's with under. seen make to I was were under, Haynesville. in basin best almost of said, Where think a we them but I that for I that by just seen tell we've handful But gosh, was a probably be big were data swing when mean, where And of big we more I late were factor folks had partnered basin ‘XX. bit case think there. will, and majority the beats, the probably which to And points had -- got bit pretty a darn of if prices come drilling them could one XX% close we've certainly pretty lot. little companies a think is of you up beat, line that, that on you I the you like you a in to the really just lot a happy AFEs we really in AFE. And operator tremendous pendulum that. in in -- ramped for saw changes coming

in So than a were ago. shoots, green Permian rigs again, but, X tighter there they are bit the getting are some months

day. so seeing $XX,XXXs rates some And a approaching that are you're rig low

And so, know relief we're seeing any that don't I there.

she as So ‘XX. is expectation goes I'd we say steady look our as towards

Operator

of Tower Your from line Robertson a next comes Water question Jeff from Research.

is Your line open.

Jeffrey Robertson

with all out the going of you year that head first of the XXXX? what start will with as Luke, have or the production some you closing in momentum incremental on into acquisitions, as quarter you some you give up

Luke Brandenberg

Jeff. Yes.

a little was, minus but majority but weighted. this with the inventory bit most $XX of production, late little that a That the the is that said, year. the the group they'll partnered some of million. maybe acquisitions, I'd in So that of or completing say there, I That bit, referenced plus wells Haynesville vast was actually one be we

make out The were to need money, X we to late it mentioned, that on, there's and the I really it that easy them. of hey, fortunate could of were capitalize will, may going And into think don't But inventory increase. see Most where at going you so a I'd a buy bit point, did I real they 'XX get transactions buyer to of little say And assets. natural bit $XX production a little could funds, get fund I immediately. We we life a to acceleration, some, if was start that exit. drilling be good from and have just that funds or for necessarily it's next just just some ton. made million to the we may is really they need we not we increase of a also weighted, through year but guess

of a that in de very things. of scheme And it's we're there, the minimis with. happy But so really valuations we bit did production big little buy

Jeffrey Robertson

was well acquisition recently overperforming under in nearby in that brought in the production? the Haynesville terms of budget and Is

Luke Brandenberg

No, not the side. one be is particularly. This on Texas going to

Jeffrey Robertson

lastly, question a partnerships. And on the

have XXXX. rig different in be Is that would X you'd partnership, over projects? a spread Or said think I that you of here couple like X to Luke?

Luke Brandenberg

question. you that. good asked Glad Yes,

full a for So goal to effectively is rig time. the have each partnership

Now, that unit. may the if not we're, be XX% rig a it of whole again, call

You're per is days, rate group. the it xXXX rig X not full but multiplying

the and to they really scrappy creative, units pick benefits really such drilling to a of the And keeping so on it guys just get run are these rig rig supposed or that together of getting putting get putting objective and running, time the full try up together some putting one of and and deals can stacking other, down. a top is it

Operator

[Operator question of comes Instructions] Your John next line from Bank Abbott America. a of from

John Abbott

thinking stick partnerships. Just the with strategic

understand it's X higher basically next partnership bit I going of a be since if interest working These rig So, partnerships, requires to related little about requires more XX% bit have CapEx. to capital. year, you a a one it

want there? basis? you you just think looking But grow over that a over at then a XX% here, a want Do grow dedicated you want do at strategic guess, of I you since want then multiyear XX%? you that to as grow know partnership rig do strategic you comfortably mean, much you and think more -- per How be the about like that do bit want starting and grow to business? do out How you XX%, about that Do capital you partnership. capital, sort gradually would it to grow you - off I chunky time. I quickly is as to how

Luke Brandenberg

The question. It's try XX% increase from get of truth more XX%. it's we a look be to let's to XX% year great that and a it's to it, X opportunity-driven. plan, I'd less okay, really at way Yeah, a told, say

large that, to here, we're our firms. these in your And here equity are unique partners really private sense replace opportunities not trying so, the

partner who in that they risk a play. need execute. drilling are us role that One, allow kind It's really are that a they criteria drilling we more know to and X that's large and be format lot in of folks A and us, makers know be not not a focused to That's management partner build these the together how for the reasons. good us for proven how there from for make really on putting money folks And a we business. acquisitions. good several for to them. to that know about for They of

is, overhead point other the covering we're the of necessarily all these not But groups.

are we deal, substantial So real these over to and running dollars. that’s X-plus they're a folks $X money put rig percent, a If million willing year full are that own they're, were that their time, in reinvesting.

So it's dollars. real

criteria. the that's So

is, equity piece really again, of other the competing in with The sense teams. backing not we're private

lot private world mid-cap rig million They're opportunities a really so time. finding of are larger deals guys of Those running multi-hundred And firms. the keep generally full dollar the to not this that the or the are opportunity-driven. in is equity

These unit. of are kind unit by

rewind. maybe year get anticipate look basically year team with next I but been that full working we've over when year, a So to out. well, at let's next rig this a -- for time We built running schedule drill

They today, a team, are the an might running. great Both if plus initial it running we about really rig identified full found So you're partnership. a a ground but and it have really was opportunity, probably from year time. away sides we excited hit a

X say it with But that's bounced for So you layering than and I'd it's specific year. is a more every opportunity-driven ultimately, around formula there.

particular shook next today. capital opportunities Basin, there. put hands in think and we where talking units probably had next we're Midland to doubling, But folks could in are with team. be the the there there early from have with dollars that in Bakken I I and that anticipate the together really to put to experience that those relationships wouldn't to second you would even year work if later That ‘XX have year's team groups And, areas be deep

John Abbott

next And partnerships to goes Tyler. on color. really strategic and think, I well. And then here liquidity that it's question, Appreciate the as

for come for partners more I online. on these flow of opportunity lumpier. have flow. visibility the to calls, them could control, you But now be strategic -- cash more is to So spend you to money wait the mean, cash have

your looks up about sit to and it facility looking you increased at you $XXX when million. -- like credit so And

how about strategic time? So you sort that maintain? possibility when -- liquidity you your of expansion think And revolver of about you how guess sort about of model and further do think the to think want I partnership to over you the you

Tyler Farquharson

right. exactly did our nailed it. increase We you $XX we to so That's in post ahead up We by we why of Yeah, next did strategic the you're ramp that. expect added And million wanted capital revolver liquidity get partnership that year. quarter. big

capacity leverage turn I in range kind while do team think our there in So we're second us half gives enough of where $XXX up and million or allows partnerships still start deploying to the that to target we that us else. comfortable us to to fund get a getting strategic those end Bakken giving opportunity to maybe or if team somewhere a the

process start at point. well. our did to if getting we a RBL I go increase -- market capacity second to the have to successful then back as that to were that partnership, And on we'd We think strategic have

John Abbott

follow-up a Understood. on Maybe that. quick just

not you the but if about of so a to leverage. is you up the got So one goal, getting X.Xx second goal, talked -- the thresholds

you that qualify strategic got leverage Or a that? would situation partner, you another where If to up that not possibly take be Xx? would could

Tyler Farquharson

could. It

though, up to more think Xx going we consolidation I being of opportunity. view really a

clear it pathway larger a Xx maybe to take down a format we our target. half So transaction up turn had if back to where it

Luke Brandenberg

a be of adding only period a flow negative a neutral. I time cash you and a think that flow that cash rig, thing you rig, the picking on for up would just Yes, you get add right, get about is to if

clear I frankly as want certainly on sight on just over could half so of hear about think you’d a release. timing those real And X some but would sort to go it press partnerships a you where in turn, or paint depending of of or you you'd talk X, have line us picture calls

we turn, going hey, talked half we a that. So, above are about

can day these, favorite my is with control to to And one well. the is in level. And a for day that. that non-op. and and have it's of if XX% in we've to get sure about off a down right-sizing make set that a other line to Here still got things that If divisible. exposure getting then neat we go spud, folks those thing because with, is piece a infinitely comfortable great It's X, the comfortable where of but than want I non-op always we're the more sight we That's and way a more capital point great you lay piece the there's of over to we of sell that we're to space well a back capital we're on about know non-op about some a out. We quick them to compete we're way. our in market concentration

Operator

Jeff question Water Research. comes next Tower of Your from a line from Robertson

Jeffrey Robertson

discussing opportunities some the and partnerships, around why people all Just of a you with to discussion the for capital Granite on have? of some you are follow-up do Luke, think Ridge's alternatives is capital of they the better source

Luke Brandenberg

with because to about partner great private this a chomp into well. talked and partner Yeah, most get firms equity question as of probably the would these folks it's I strategic characteristics a look, good to

a offers So we be of you think control they we they means when with that really but about only a how to can control One, Ridge the private the partner firms, company. think equity really firm, equity question that good that the assets, few they also importantly, a the to these when And better a are. most Granite about things if control lot partnership sell. it's times private folks not

asset the at level. everything's partnerships, our With

for value, build never asset, they these really They forever, we want to sell proven a while of group folks company. gas oil can sell. asset to make long-term the them. lot want that the group differentiated a moneymakers that, they And the or can they when We're can for and control a we to so are again, which hold created on some

project. we do units really teams And out by unit stands with really those that basis. about a is own drilling talk when is other each think that it's unit to we really different and of are drilling The deal we thing drilling group, important their almost a a

the addition really basis. We exit wells like focused a something strategic to teams that to a because, incentive And with entire the get a on these of funding have comfortable management That's separates I so proven it wait get opportunity vehicle. that teams is us create versus get lot areas. into piece doing differentiator. can in course on they for many basis on partnerships. that of an effectively we're And We're think And year. in two, one, of the real over value the we're a unit-by-unit an to having project-by-project to the and management for

we're our risk to portfolio. able across diversify So our

project-by-project X over also again, more control the So, the for company, payouts. opportunity getting main reasons,

think those better right for are the be we X can reasons I partner really that a folks.

Jeffrey Robertson

And for follow-up then a just Tyler.

think turn you pretty Tyler, XXXX Ridge's be much today? production of strategy approach it as Granite stay is hedging about XX% is the Will change consistent today. half to what you with of or you're a PDP it said, hedged I will leverage

Tyler Farquharson

think we is pretty leverage, like I half low a No, even leverage. that's at turn of

as more side of well. bit on the to think that hedging thinking we'd and leverage go the development about a into consider really opportunities, I adding we'd hedges before lot higher some So quite have a moving

that us think just I what current is in XX% of range So see PDP. you'll consistency XX% from to

Operator

the final no this call turn time. further I Luke remarks. Brandenberg, questions over to some for are There Mr. back at you closing

Luke Brandenberg

fun call. always the perpetually sure interest. for I on Excellent. we're I, And to road a and Tyler thank the about. It's This just want neat on us. Thanks, around. everyone talk say everyone's to I you is Rob. appreciate we're quarter to and I'm

And had... don't so, please ever

Operator

Ladies call. you and this Thank concludes conference your for gentlemen, today's participation.

disconnect. now may You

Granite Ridge Resources (GRNT) 10 Nov 232023 Q3 Earnings call transcript