GRNT - Earnings call transcript Q1 2024 | Granite Ridge Resources, Inc

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

Operator

Good morning, and welcome, everyone, to Granite Ridge Resources First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I will now turn the call over to Wes Harris, Investor Relations [indiscernible].

Wes Harris

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

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

then return over to turn open close before to Financial provide our Tyler results. financial the call review for we will some who our the questions. call Luke will Farquharson, Chief We Officer, will up then comments

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

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

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

Luke Brandenberg

Ridge and glad have Granite It appreciate joining update Thank always opportunity did just like seems this, you, on an to the to but story. an I'm call. share we this Wes, everyone

successfully to continued record what I'd continue gap solid to strategic quarter the initiative both non-op. I'll borrowing we that first about the facility just our and forward credit a announced that our were bigger X we $XXX accomplishments, start successful commitment. this our our to target. we partnership of XX bridge and workmen-like in flashy, like nothing like banks. the more built talk group. million came story expanded We the The side. within execution. capacity partners, as And month financial looks of share Xx credit our The facility facility, base from of about a last credit things taking our bit between look operated triple can quarters, Commitments we with Today, we syndicating on in some strength and to fully and it to elected our nearly with is believe track to

debt debt net and your around Vital. I'm excited and a new now banking less. you support, want extend our existing between on balance I hit average partners. I'll our change to our between does net bounce to target expansion turn Now we trailing on not EBITDA this leverage. We X/X a about I million of of of expect To about to for of thank to relationships million numbers EBITDA, $XXX views million to million put banking to X.Xx turn. $XXX and $XXX round expect on based will that X/X welcome still $XXX will that or briefly and heartfelt

opportunities. we orderly will right the ultimately on this debt we acquisition look of into year Resources. X.X about operator proceeds when to position production BTLD, This had recycle I was preferred common last an a sell an exit in to assets from tag part Vital we and permian sold certain quarter, million Henry As Vital's as of down shares and a XX-XX mentioned compelling of at opportunity this development and received fashion to pay to premium, we assets

Now slightly let's oil as down at came X% expectations hit at results to but details, on equivalent expected Production XX,XXX talk as like our to than quarters. the results. That will the looking higher into we with compared quarter's for was are I'd get well Tyler about as of XX% day. barrels in per expected from compared reported decline. coming the an last what

more to capital and may for as dry the those elected to for year, likes This Haynesville performance specifically this of production gas we are on of compared environment, an the we gas sale dry albeit the online year. this down impact have Adjusted some for have that to X%. Primary as X% the sales Ford. by production deferred the bit of gas is in in our reallocate side, the works on come our side. That both Vital. Now in are the unadjusted gas Eagle minor, theme a to projects but it, a deferrals operating expected opportunities Tyler same-store expected are of to expect price partners call numbers drivers oil-weighted to about oil offset beat, or

on $XX a in bit than expected higher that turned which year an due to million, production. We progresses. We oil as adjusted on and was the loop the keep prices help will you both EBITDAX of

been during a $X.X vast carries transactions the side. net Total locations. the was X.X On than are That target locations of drilling are or location, or pad per through our to we not Permian of net on million front, quarter, bit are in deal that Delaware we all is strategy. have development these the higher including majority closed which equates $X.X our net all the closer well of million. and capital either and in the million note, including terms equal entry, controlled to X process, a created X.X were sales in All both to quality But net $X net turned locations timing. X.X

of locations. entry, million deals X closed agreed an have carries $XX the have XX.X quarter with since or including fully net in to we either stage end Additionally, that and across documentation aggregate

acquisitions While out will guidance in dollars years. each in million that not subsequent of accounted I note would carry $XX door for of some as in all the XXXX these number, transactions hit will our are those go

I On see quarter, for which prior ramp we're second to dry fourth. the way, mentioned a slow of come beginning about, in in some by production the third production quarters expected line. of the the happy next will side, that time quarter. be expect online we in that likely flat March now couple the to to We expected in a gas we The ramp that deferral production roughly down to the had

is quarter the of should be to and for year. up largest acquisitions It CapEx our On of be X/X be the the on our second side, expected for on X or CapEx D&C July the roughly June if Xst, to quarter tough but can tell the it deal year, in based closed close quarter-to-date but deals the next months. close to those will setting XXth

asset CapEx flow In quarter define in it looking we deal have just Controlled flow timing. a opportunities of operators only XXXX of timing. build with or will we at in and in to quarter. Ridge Granite talking broader case develop locations strategic wells about the this, of acquisition sell strategic we a that the this up about is net as partnership looking carry further single a that units quarter. parts early from X.X can inventory. Operating strategic controlled second Granite gives more wells what plan inventory partnership operated to opens partnership Loving at the to it partner, controls third strategy. a dollars second Ridge set With that our Ideally, We drilling XX% Note, the include buyers specifically more where a add both Permian. In quarter. I'll X.X is than next inventory are XX.X to trades deal. a sales call gross net allow of month late some numbers net controlled to some door undervalued to business capital or mile operated both more we can wrap of pad both We broadens as put hit and operated to mile access the that we in to a words, includes premium over control, single by capital. and a control us our or Ridge of a other broader the a to hitting County, turn number the and paid inventory in the pad development cash XX Granite not deal development To little value. capital, represents

to the are Granite later plan We going. one Ridge the cornerstone where rig a second Traditional is CapEx non-op of Foundation, this strategic through pick and but a currently controlled up we are is partner running year.

XXXX we upwards While of be D&C. XX% expect our now CapEx controlled of to

next the Our be majority of goal is several to in super our controlled years. capital a for

does are that, We numbers. to operated that and ask I'll the the not by noncontrol. With into gap bridging demonstrating a mean dive nonoperated Tyler between bit deeper non-op

Tyler Farquharson

Luke, and reported for Thanks, for compared nearly up assets. divested Average per QX X% and everyone. to of after daily day, the quarter XXXX XX% was morning, adjusting XX,XXX good production up BOE

through increasing exiting in high quarter production the before flat and for expect the be year. We quarter to of end the fourth the XXXX third a at

of remains quarter the year of the drift as divestitures. range expectation Oil adjusting XX,XXX was gas-focused natural per our BOE than the after mix for XX,XXX throughout production operators growth annual XX%, development year, unchanged guidance represents Our the X% lower some but day to our remainder the production guidance projects. for of should midpoint for as of XX% Luke for year and mentioned, defer higher

valorem first from $XX.X due BOE noncash impact taxes the Our $X.XX and natural guidance quarter, gas year's within per share was the lower down compensation, and Per XXXX. X.X% and for $X.XX excluding were assets. expense, prior quarter. year of adjusted BOE divested was both sales production operating for were XXXX. G&A this EBITDA range of the costs $X.XX first was and which for EBITDA prices per Adjusted adjusted year for lease the X% ad the unit full our of of EPS was million per to diluted stock-based quarter were

to range annual million $XX $XX of is unchanged. Our guidance million

gross the first online total spending net million, of quarter. partners wells was Ford placed X.X continue expect nearly occurring be XXXX activity our the during in XX% the quarter quarter, the including that in and XX% acquisitions the net Basin. Total XX XXXX wells Permian $XX being production of placed the on the in of total, or to capital $X with During during of wells during XX with of Basin. operating we completed Eagle In those closed and to a to Permian million first XX% XX

the capital our remain acquisitions. expenditures including million, $XXX previously in guided of $XXX year, million we $XX to range to our budgeted of For million expect total

our also We dividend. continued ongoing quarterly cash

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

successfully redetermination, we and end, quarter new completed our to lender commitments $XXX base to subsequent our elected borrowing semiannual both of base X the our syndicate Finally, through and borrowing increasing million banks. addition expanding

remains strength and turn which sheet million balance liquidity remains of over $XXX EBITDA target. X.Xx with to pro forma trailing Our net a our half debt below leverage

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

Luke Brandenberg

wrap I'll I hall Tyler. from you, our town each company-wide sharing Thank host some up that quarter. by takeaways

patient but share investment point be seem investment trading focus will dislocations, but or demand regular is and a quarter's There the time not quite supply. to continue willingness our to to case, our will are price there to This with solve are demonstrated the earnings of may destruction follow to start sustained and response period supply of limited buy GRNT. I'll the tightly demand plenty was their or but or meet demand temporary P enough volume a decline as to story, on held is their destruction demand stay is to We temporary a We what and to must theme their this let ultimately, I the in in firms in a shareholder that dislocation believe due the of and selling E by determine market our that temporary fact shoots chat that GRNT price. basis the base. green dislocation. is time to about this. on the In we due mandate. worry with continue law to, of

there the would do can be as As a control side, on unlikely supply find do of what the given can issuing shares, of absent accretive it trade. we shares management issuing the are acquisition, bit demand shares primarily an supply practically not ways. we GRNT we But we as tough team, lot yield a front, is we stock where a to in limited in currently is part an X do on

tell and us for that Granite at conferences and all upcoming our The Evercore A the earnings to folks in their coverage invite non-deal us Steve release. host and found Ridge be the events is to finding story. all more help shows. first to folks picking to list Chris for Thanks road of our up us can

pounding is to today. for second the problem find a pavement The doing investors solve the research and we that

As re-rate can the what we in us. But is that investors Russell put the the we their and to transition we show be is our is for the assets. XXXX. will base, Take are current there today, years. demonstrate believe SilverBow nothing goes benchmark and is to and difficult a past generalist XXXX NAV trust several shareholder recent resilient, the problem with forth and I and is different, particular investor. valuation of energy group now and repeatable Ridge for back and that tough that Kimmeridge. If of driven but gas ascribe to value it in Russell The X.X% energy Granite else, I for drive a to think small-cap solve generally The investors, trending value to immediately long-term and generalist been has oil this building up

of the Russell traded XXXX, of near-term Civitas. the highly to and solution Russell development Permian current exposure the with leverage Russell part XXXX may a purest Granite vehicle and low names X.X%. a to diversified be asset a can migrate by up Matador in Ridge providing the reallocation level over energy yield Resources, current several to RBC, reconstitution, from the including Additionally, with according XXXX

do controlled now, trading are better that catalysts, many re-rate. of I you be. series the investors that continued likely more our be to the volume, of on our on will We Please that working part base, a We to believe hesitate ownership event invite shareholder not a CapEx we partnerships and won't but it across great story one transformative up hard and will Ridge folks and are happen, organization write. strategic Granite information today's and you causes It a are Granite have strategy. that, months. And out, won't reports, with I the It questions happy Ridge to additional undervalued may reach day, answer on to call. quarters to folks see hope of be be next transitioning we of Operator? any consistent many over several increasing showing the workmen-like performance, of to

Operator

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

Phillips Johnston

I in, to But guess, bit gas you below little I mentioned your your that guidance XX% oil the some going oil going think some realize walk mix you've for ask going are production quarter mix. that. XX% I wanted mix, through about to move the the Tyler, deferred improve forward drivers can to than of that your is projects are year. for maybe us the I a higher absolute to that QX you got

Luke Brandenberg

I Thanks for deferrals of mentioned, question. side. some pieces we're gas the couple on A the seeing

little thought. quicker a oil increasing will mix than bit that the think I accelerate help we

may duck out way Waha of curtailing in may call, the instead slowly that conversation, X drill more that's due X." some the operator operators we're the drilling gas Reeves work just these up. "Hey, this terrible have just actually and some last Permian saying, pricing. wells, wells, mentioned production simply started mid-XXs the to an year, of we deferrals, across defer we County drilling We gas in our is we'll in we having some I If On but

years, the call we as you it, So anticipate XX% upwards XX% that quarters. we later oil even to XX%, the creep XX% may creep across just the next year. next We or of think expect to so, I get but will you'll be that stay from, X continues, that percentage several it break see as in up,

Phillips Johnston

Okay.

about I nice forward? Sounds drove good. we to And of about oil sort premium a relationship how then that sort NYMEX. guess QX talk should going Can your was realization of that? maybe you And think what

Tyler Farquharson

it's Tyler. Phillips, Yes. Sure,

that differentials last did to it if our lumpiness see price. I some quarters. of little And the look over But you again first the seeing small out-of-period drove the some time, a historically in I expect lumpiness a average, in benchmark should higher. We have you're first back think moving forward, We in adjustment to over on have think handful $X still quarter. you quarter minus the

Operator

Scialla the Stephens. The of next question comes Michael from from line

Michael Scialla

Wanted see to if that could some detail I more X.X you're get with on looking [indiscernible] at the partnership. the

second Luke, And guess quarter. been Have of those I those think yet? in completed the coming you are those online to needs what to I said bring happen online? any

Luke Brandenberg

call, thanks Mike. morning, and good Yes, for the for question. the Thanks

they're that in wells, County. Loving So X.X single-mile net is

actually on. fully ready Actually, are it's they ready trees ago, few pipe. Christmas are really waiting of got go. days so just on. got on completed, And to them turn to a We're the picture They everything

June turn what tremendous issues, done. And sales the that's was be side. just right operations frankly, expected done it to the it And I for so completion in really date And it's love the in Xst. to is on now. everything we're it fashion. on more again, earlier, a came targeting AFE about side X.X% is drilling, under XX% the We piping on but

a point, a material and driven quickly, the out drilling just more similar. just was We've by drilling there, price completion was decreases. got crews not great tremendous side necessarily pretty data job. they've really by really The done Just

Michael Scialla

That sounds good.

You partnership CapEx. mentioned the

Now you're thinking XX%.

you XXs, next you may the think XX% and Can see earlier, going I that beyond? that talk where in you go and higher. maybe were talking about year

Luke Brandenberg

question. a good that's Yes,

opportunistic. back regulator a what pick this it to had opportunities. Frankly, well is was were we say it's rigs there chance third early a more of to rig large now, hit an a second short allowing these it. up running another Mike, quarter, I'd who kind X up is to the We going and And some fourth really There's net be do another that on bringing forth have rig group of year. kind year. What earlier So the is that where what for is one expiry talked hit pad, weren't about laid deal independent we've us the us late good this able That's or neat fuse and X.X we're down X right we're trading that the plan. of actually quarter, with. had we was we coming they

We we'll we rig. that crew look, were able were operator, to an up another knew. hot So get from -- rig a to we pick it able

think able I the it that fact, same In unit. using to they're hit pick drilling consultant, to up

So I time. wouldn't I X.X-ish assume rigs assume X But full running rigs next would year.

so And now. expect call it, X.XX right I'd ] higher, ], bit number, similar a mid a see be relatively [ X.XX my that you'd guess maybe [ would

Michael Scialla

second does you. one year? second given guess, for capital be for is It second sounds probably quarter guidance And Got And the quarter come development to I you like kind million formal then in And activity large that I a for half? for the the something down given that extent, quarter, is on the watermark partnership CapEx ballpark? haven't that me. $XX going dictate your guess in the going last any but to the second -- high to of spend. in

Luke Brandenberg

we have the of it little the that a That out generally second quarter the bit Most down. up second right will into second of me gate, pick It's third. the quarter. sounds whole don't largely rig running high to because

quarter, in I'd similar maybe slightly first less. this to expect you're seeing So what something pretty

Operator

next comes Robertson Jeff Research. from Tower from question the line Water The of

Jeffrey Robertson

Granite be look the works as assembles on deals essentially Ridge operators, both where operator like put opportunities capital an to you provider? and partner at comes might capital and a a to looking Granite together Ridge in takes organic who efforts, and that at Luke, looking controlled are

Luke Brandenberg

question, The is the yes Great Jeff. call. Yes. Thanks answer to both. for

really look via the a And so the at controlled strategic And the with for we're that. capital generating One, from ones really, a partnership, it few pieces. capital provider they're opportunities.

where a last boots And ground. unit put up documents the finishing a thing. area, the this into ones and position, year, is another leases. it we've screwed we are that an the another we it screwed this Weren't and was doing units idea. there, we in picking piece together year, on [indiscernible] start EOG we similar we together just did so saw putting had There one up Another for actually that thing only was

mass X so us, the drillable -- And between get had to we a of critical we unit. enough

and like combined would get And and we'd you to take out, if here's get is forces, to zones where, these by. RFP set to drilling we here to opportunity that ran a you to and that budget the the data capital take like different the it we were I'd neat said, and we in did set because plan. time it them drilled do that?" so did the and went to was able will, operators controlled come we'd several an process, to broader what so And that drilling go call drilled really line, talk [indiscernible]. We What and did see "Hey,

wouldn't well. One to a that source doing we're that thing being now, in stretch is say dollar, but we doing that not an their looking right alongside operator do we capital just So that. to could as and we're really coming not

think typical production we've component opportunity. lines I haven't interesting have heavier those a really than the of that opportunities to date. done our seen that an we along but strategy, Most it's

just we've the more good to not so of buyers -- up we're because see production we generally shied from the downside past, And a said valuation in just away just upside perspective, we're production. from because off buying we way we've end mark very them

which appreciate. So to more be we I tend conservative,

Jeffrey Robertson

the of Can to conditions the you -- that capital concept? bear of in all the bring to type you partnership are characterize how operators the receptive in and terms these and some

Luke Brandenberg

approach the to I that right proud strategy, CapEx capital it's bit this up looks majority bringing and it the on what the think new we're taking to mousetrap We is came the with it's appealing -- a Because really we're of. that of question. of like a one Yes. very and the That's a partners, table. great we're really controlled

you're you, the to going going But we're So asset. your control partner, to our company. control

outright. a partnership really at really of their their when so have manage don't to they that's it do assets them. is if we control, And asset fully level that. to where sell, We they and own determine They like just the up They but more company.

a that's Another deal. component, is these very most I unit-by-unit really think, attractive of are deals

an a that we but overall use, We they're deal. unit-by-unit on structure have

And so the unit-by-unit what that for company, a means deals, sourcing is incentives particularly basis, and the there that to it is gives opportunity the which helpful. are out folks operating earn on the

Given X-year labor environment it where extend, when this of the frankly, their material and allows price really the But putting to opportunity X want the then, X. dollars have they believe the are to unit-by-unit what start that's We're you've they they're continue operators reinvest and just seeing because back sooner in partners incentivize because seen private to to it you doing. and continue equity-backed team realizing X- it. grow into a that business to now fruits really is exits deal carry, to the

Jeffrey Robertson

almost structures? on capital are Ridge's -- XX% types these you for opportunity operate, question controlled versus in about different Granite that some regions of think the you business of regions Last first When others for do the Permian you The model. accounts production. greater see 'XX quarter

Luke Brandenberg

do. absolutely We Yes.

we feel more that higher And investments is success the areas taking concentration investment also that I'd one control, that lowest what we we're mitigating another and way, highest is? concentrated at the by taking concentration, in where this are about we what have, very means variability. but we that said or that taking say, if It's sure be so the what to But comfortable talk because we're level, more returns. representing highest want you're probability expected higher by risk,

Eagle are the that consistent in variability. just Ford, quite or other have And places attractive results you right Bakken, where areas much like the areas, think like so places the I less and

lot that's got wouldn't basins you've known big feel of data -- that underwriting. again, such development we that their mean places, are piece what are you of really I strategy. that other of those are to for around think It and go good the lots a consistency but about doesn't you're points a X

subsurface low to about think variability, possible. the plenty just I derisk as that being able So would and have basins development have much of that as

Operator

line from of comes the Scialla question next Michael The Stephens. from

Michael Scialla

I just the at those net I said more looking bit just guess, follow moment. up Delaware looks inventory for want Loving on a partnership, all the Luke to inventory. in color County? of in locations little the the he what those said think on in and that XX Are I like? most

Luke Brandenberg

question. I Good have been may quickly. talking too

XX locations it's we I'd it or of Most it. gross not So of that control. net the say XX.X but Delaware, in all is

We the have But Delaware. County. in the of Midland. vast in opportunities is Loving we're in other on the working some the majority And is majority that, vast

a deals of in have We couple Reeves.

that We in Ward. we're have a deal on working

They know based. tremendous just Basin. is, And there long And They've we're a everybody, the the of Midland broader so one Midland. a have driver time. Delaware frankly, covering They're that reputation this is partner in been particular. in

to flow, getting about. deal And access excited which so unique we're they're some

less But Midland. the than Delaware is consolidated just the far

units. harder just And You you around. is look it. much go anything Midland generally story that undrilled, there's to the to undrilled It's and to Basin find a frankly,

capital to in rate, the And as deal to -- and of a put we're not intentional. quality versus difficult. work Basin more excuse flow out in more as just relative more bit Again, the little deal higher a love flow Midland just the We'd of lot Delaware That's Midland. higher me, seeing it's Delaware. a the result, quantity just So well. hit to continue to quantity

Michael Scialla

-- the that Delaware the similar you type are X-mile the ones they of of -- most are to And just what in those drove?

Luke Brandenberg

It's a mix.

X.X. -- wells we And X X.X mile, that be have X.XX, so some excuse these They're are couple that over talked about but to going are XX,XXX. me, we've X.XX,

unit, space scrap on XX,XXX-foot the can a the So find well. or days, I where and would trade. But looking there's stuff a hair blocking is everybody's everybody get got spot we as looking It's and it. map. and can laterals they the tell If you got look at [indiscernible] at drilling white you, of white bit again, are these that's some info extended little

our well around think probably feet. in average I so that And somewhere is X,XXX

you X mile, of do more there number maybe And good as so a laterals there's mile extended but versus in X have well.

Michael Scialla

characterize about talking zones reason they primary there secondary could that of kind And capture? Springs and A, the you are Bone opportunity Wolfcamp that or to had in the targets? the you the the you're Is kind get more of

Luke Brandenberg

It Yes. a around bounces lot.

it's and But the the well. drill some of if targets majority in the primary the I zones. some as you primary to that's in secondary what's And have opportunities do going that were zones, So of targets, where we're are fact, say, to value. the allocated anyway your we've majority

have an had C Springs large around operator years, forward Bone and developed been them, the We yet. actively with are they developed opportunity in went a fast not the Wolfcamp they but drilled few now B where have a And and and A. the they

great. We're those of side. The once are are able really we talked that so is is online, wells. perspective. drill on on they good beneath from cases, turning facilities. the folks what wells operations over to in about do thing were which we're where synergies some And the drilling These to leverage our existing There's we've the lot farm able at just operations In cost and locations. neat a about a

in B of Y effort there to have or C. the in But don't is X, it's decent Bone A, energy number we so wells. and time, I maturity spend well the a as but the if look And at managing some inventory, Springs the and

Michael Scialla

at for It know in didn't the $X your the prior that count. some quarter technical I just down your or like one. Is quarter, difference year. I your expired in looks shares on repurchases. else about end something way Canada of the just one count the anything share from there? diluted see share million going last the And went that on buyback

Luke Brandenberg

the the be right, with the It share quarterly average, might you're repurchase into XX/XX/XX.

So quarter share $X could first be it between gone fourth that just could counts the million. average quarter, and the down have by

Operator

concludes conference are you for your there this at time, further Thank As no call. questions this participation. today's

may disconnect. You now

Granite Ridge Resources (GRNT) 10 May 242024 Q1 Earnings call transcript