Energy, Automobile, EV, Renewable News | Granite Ridge Resources, Inc. Reports Second-Quarter 2024 Results, Declares Quarterly Cash Dividend and Provides Updated Outlook for 2024

Granite Ridge Resources, Inc. Reports Second-Quarter 2024 Results, Declares Quarterly Cash Dividend and Provides Updated Outlook for 2024

August 9, 2024

DALLAS–(BUSINESS WIRE)–Granite Ridge Resources Inc. (“Granite Ridge” or the “Company”) (NYSE: GRNT) today reported financial and operating results for the second quarter 2024.

Second Quarter 2024 Highlights

Increased production by 7% to 23,106 barrels of oil equivalent (“Boe”) per day (47% oil) from the second quarter of 2023.
Reported net income of $5.1 million, or $0.04 per diluted share, and adjusted net income (non-GAAP) of $17.2 million, or $0.13 adjusted earnings per diluted share.
Generated $68.3 million of Adjusted EBITDAX (non-GAAP).
Placed 62 gross (9.10 net) wells online.
Closed multiple transactions during the quarter adding 16.4 net future drilling locations for a total acquisition cost of $22.4 million (including $5.8 million of expected future drilling carries).
Paid dividend of $0.11 per share of common stock during the second quarter.
Ended the second quarter of 2024 with liquidity of $148.2 million.

See “Supplemental Non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as a reconciliation of these measures to the associated GAAP (as defined herein) measures.

Subsequent Events

Closed additional transactions acquiring 8.7 net future drilling locations for a total acquisition cost of $25 million (inclusive of $3 million of expected future drilling carries).
The Company’s Board of Directors declared a regular quarterly dividend of $0.11 per share payable on September 13, 2024 to shareholders of record as of August 30, 2024. Future declarations of dividends are subject to approval by the Board of Directors.

Management Commentary

“The second quarter 2024 was workmanlike from a results standpoint, but the deal side was anything but,” commented Granite Ridge President and Chief Executive Officer Luke Brandenberg. “While our Traditional Non-Op business continued to generate high quality locations with near-term development at an attractive cost basis, it is our Controlled Capital strategy that stood out. By nearly doubling our operated location inventory and adding a Midland Basin-focused Strategic Partner, we continue to increase our capital allocation to Controlled Capital projects. Based on the success of our business model and our compelling fixed dividend that is underpinned by hedged cash flow and conservative leverage, we believe Granite Ridge is positioned to drive long-term value for shareholders.”

Second Quarter 2024 Summary

Second quarter 2024 oil production volumes totaled 10,940 barrels (“Bbls”) per day, a 5% increase from the second quarter of 2023. Natural gas production for the second quarter of 2024 totaled 72,997 thousand cubic feet of natural gas (“Mcf”) per day, a 9% increase from the second quarter of 2023. As a result, the Company’s total production for the second quarter of 2024 grew 7% from the second quarter of the prior year to 23,106 Boe per day.

Net income for the second quarter of 2024 was $5.1 million, or $0.04 per diluted share. Excluding non-cash and nonrecurring items, second quarter 2024 Adjusted Net Income (non-GAAP) was $17.2 million, or $0.13 per diluted share. The Company’s average realized price for oil and natural gas for the second quarter of 2024, excluding the effect of commodity derivatives, was $77.84 per Bbl and $1.98 per Mcf, respectively.

Adjusted EBITDAX (non-GAAP) for the second quarter of 2024 totaled $68.3 million, compared to $69.7 million for the second quarter of 2023. Second quarter of 2024 cash flow from operating activities was $64.2 million, including $0.6 million in working capital changes. Operating Cash Flow Before Working Capital Changes (non-GAAP) was $64.8 million. Costs incurred for development activities totaled $67.0 million for the second quarter of 2024.

Operational Update

During the second quarter the Company closed multiple transactions adding 16.4 net future drilling locations for a total acquisition cost of $22.4 million (including $5.8 million of expected future drilling carries).

Traditional Non-Op or “Burgers & Beer”
- Acquired 51 gross (4.7 net) future drilling locations for a total acquisition cost of $12.6 million. Estimated future development costs for the acquired properties is $50 million.
- Acquisitions include assets in the Midland, Delaware, DJ, Williston and Appalachian basins.
Controlled Capital
- Midland Basin: Acquired inventory of 8 gross (4.1 net) future drilling locations for a total acquisition cost of $3.4 million and estimated future development costs of $24 million.
- Delaware Basin: Acquired inventory of 10 gross (7.7 net) locations for a total acquisition cost of $6.4 million and estimated future development costs of $66 million.
- As the largest interest owner in these locations, Granite Ridge controls development timing.

Subsequent to quarter end, the Company closed additional transactions acquiring 8.7 net future drilling locations for a total acquisition cost of $25 million (inclusive of $3 million of future drilling carries).

Operational Activity

The table below provides a summary of gross and net wells completed and put on production for the three and six months ended June 30, 2024:

	Three Months Ended June 30, 2024		Six Months Ended June 30, 2024
	Gross	Net	Gross	Net
Permian	42	8.80	59	10.32
Eagle Ford	5	0.20	13	3.10
Bakken	11	0.10	29	0.39
Haynesville	0	0.00	6	0.34
DJ	4	0.00	13	0.02
Total	62	9.10	120	14.17

On June 30, 2024, the Company had 267 gross (9.6 net) wells in process.

Costs Incurred

The tables below provide the costs incurred for oil and natural gas producing activities for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,
*(in thousands)*		2024		2023		2024		2023
Property acquisition costs:
Proved	$	1,677	$	1,309	$	2,824	$	19,298
Unproved		17,115		3,161		18,596		12,791
Development costs		66,951		58,739		129,590		157,345
Total costs incurred for oil and natural gas properties	$	85,743	$	63,209	$	151,010	$	189,434

Commodity Derivatives Update

The Company’s commodity derivatives strategy is intended to manage its exposure to commodity price fluctuations. Please see the table under “Derivatives Information” below for detailed information about Granite Ridge’s current derivatives positions.

2024 Guidance

The following table summarizes the Company’s operational and financial guidance for 2024. The Company is providing updated capital guidance incorporating acquisition costs and 2024 expected development capital for the recently acquired properties.

	Prior	Current
Annual production (Boe per day)	23,250 – 25,250	23,250 – 25,250
Oil as a % of sales volumes	47 %	48 %

Acquisitions ($ in millions)	$35 – $35	$60 – $60
Development capital expenditures ($ in millions)	$230 – $250	$295 – $305
Total capital expenditures ($ in millions)	$265 – $285	$355 – $365

Net wells placed on production	22 – 24	22 – 24

Lease operating expenses (per Boe)	$6.50 – $7.50	$6.50 – $7.50
Production and ad valorem taxes (as a % of total sales)	7% – 8%	7% – 8%
Cash general and administrative expense ($ in millions)	$23 – $26	$23 – $26

Conference Call

Granite Ridge will host a conference call on August 9, 2024, at 10:00 AM CT (11:00 AM ET) to discuss its second quarter 2024 results. A brief Q&A session for security analysts will immediately follow the discussion. The telephone number and passcode to access the conference call are provided below:

Dial-in: (888) 660-6093

Intl. dial-in: (929) 203-0844

Participant Passcode: 4127559

To access the live webcast visit Granite Ridge’s website at www.graniteridge.com. Alternatively, an audio replay will be available through August 23, 2024. To access the audio replay dial (800) 770-2030 and enter confirmation code 4127559.

Upcoming Investor Events

Granite Ridge management will also be participating in the following upcoming investor events:

Enercom (Denver, CO) – August 19-21, 2024.
Midwest IDEAS Conference (Chicago, IL) – August 28 – 29, 2024.
Barclays CEO Energy-Power Conference (New York, NY) – September 3 – 5, 2024.
Pickering Energy Partners Energy Conference (Austin, TX) – September 16, 2024.
Minerals & Non-Op Assembly (Houston, TX) – October 15, 2024.
Bank of America Global Energy Conference (Houston, TX) – November 12 – 13, 2024.
Stephens Annual Investment Conference (Nashville, TN) – November 21, 2024.
Capital One Annual Energy Conference (Houston, TX) – December 10, 2024.

Any investor presentations to be used for such events will be posted prior to the respective event on Granite Ridge’s website. Information on Granite Ridge’s website does not constitute a portion of, and is not incorporated by reference into this press release.

About Granite Ridge

Granite Ridge is a scaled, non-operated oil and gas exploration and production company. We own a portfolio of wells and top-tier acreage across the Permian and four other prolific unconventional basins across the United States. Rather than drill wells ourselves, we increase asset diversity and decrease overhead by investing in a smaller piece of a larger number of high-graded wells drilled by proven public and private operators. We create value by generating sustainable full-cycle risk adjusted returns for investors, offering a rewarding experience for our team, and delivering reliable energy solutions to all – safely and responsibly. For more information, visit Granite Ridge’s website at www.graniteridge.com.

Forward-Looking Statements and Cautionary Statements

This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this release including, without limitation, Granite Ridge’s 2024 outlook, financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, indebtedness covenant compliance, capital expenditures, production and cash flows, and our intention or ability to pay or increase dividends on our capital are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production and sales, market size, collaborations, cash flows, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond Granite Ridge’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: Granite Ridge’s financial performance following the business combination, changes in Granite Ridge’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans, changes in current or future commodity prices and interest rates, supply chain disruptions, infrastructure constraints and related factors affecting our properties, ability to acquire additional development opportunities and potential or pending acquisition transactions, as well as the effects of such acquisitions on the Company’s cash position and levels of indebtedness, changes in our reserves estimates or the value thereof, operational risks including, but not limited to, the pace of drilling and completions activity on our properties, changes in the markets in which Granite Ridge competes, geopolitical risk and changes in applicable laws, legislation, or regulations, including those relating to environmental matters, cyber-related risks, the fact that reserve estimates depend on many assumptions that may turn out to be inaccurate and that any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of Granite Ridge’s reserves, the outcome of any known and unknown litigation and regulatory proceedings, limited liquidity and trading of Granite Ridge’s securities, acts of war, terrorism or uncertainty regarding the effects and duration of global hostilities, including the Israel-Hamas conflict, the Russia-Ukraine war, continued instability in the Middle East, including from the Houthi rebels in Yemen, and any associated armed conflicts or related sanctions which may disrupt commodity prices and create instability in the financial markets, and market conditions and global, regulatory, technical, and economic factors beyond Granite Ridge’s control, including the potential adverse effects of world health events, such as the COVID-19 pandemic, affecting capital markets, general economic conditions, global supply chains and Granite Ridge’s business and operations, and increasing regulatory and investor emphasis on, and attention to, environmental, social and governance matters, our ability to establish and maintain effective internal control over financial reporting, and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023 under “Risk Factors,” as updated by any subsequent Quarterly Reports on Form 10-Q that we file with the United States Securities and Exchange Commission.

Granite Ridge has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond Granite Ridge’s control. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, Granite Ridge’s actual results may vary materially from those expected or projected. Forward-looking statements speak only as of the date they are made. Granite Ridge does not undertake, and specifically disclaims, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements, other than as may be required by applicable law or regulation.

Use of Non-GAAP Financial Measures

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), this press release contains certain financial measures that are not prepared in accordance with GAAP, including Adjusted Net Income, Adjusted Earnings Per Share, Adjusted EBITDAX, Operating Cash Flow Before Working Capital Changes and Free Cash Flow.

See “Supplemental Non-GAAP Financial Measures” below for a description and reconciliation of each non-GAAP measure presented in this press release to the most directly comparable financial measure calculated in accordance with GAAP.

Granite Ridge Resources Inc. Condensed Consolidated Balance Sheets (Unaudited)

*(in thousands, except par value and share data)*	June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash	$	13,542		$	10,430
Revenue receivable		67,249			72,934
Advances to operators		13,713			4,928
Prepaid and other expenses		2,481			1,716
Derivative assets – commodity derivatives		4,181			11,117
Equity investments		49,432			50,427
Total current assets		150,598			151,552
Property and equipment:
Oil and gas properties, successful efforts method		1,384,375			1,236,683
Accumulated depletion		(549,466	)		(467,141	)
Total property and equipment, net		834,909			769,542
Long-term assets:
Derivative assets – commodity derivatives		—			1,189
Other long-term assets		4,983			4,821
Total long-term assets		4,983			6,010
Total assets	$	990,490		$	927,104
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accrued expenses	$	62,336		$	60,875
Other liabilities		5,000			1,204
Total current liabilities		67,336			62,079
Long-term liabilities:
Long-term debt		165,000			110,000
Derivative liabilities – commodity derivatives		2,480			—
Asset retirement obligations		9,961			9,391
Deferred tax liability		80,392			73,989
Total long-term liabilities		257,833			193,380
Total liabilities		325,169			255,459
Stockholders’ Equity:
Common stock, $0.0001 par value, 431,000,000 shares authorized, 136,424,207 and 136,040,777 issued at June 30, 2024 and December 31, 2023, respectively		14			14
Additional paid-in capital		654,269			653,174
Retained earnings		47,380			54,782
Treasury stock, at cost, 5,680,255 and 5,677,627 shares at June 30, 2024 and December 31, 2023, respectively		(36,342	)		(36,325	)
Total stockholders’ equity		665,321			671,645
Total liabilities and stockholders’ equity	$	990,490		$	927,104

Granite Ridge Resources Inc. Condensed Consolidated Statements of Operations (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
*(in thousands, except per share data)*		2024			2023			2024			2023
Revenues:
Oil and natural gas sales	$	90,652		$	87,557		$	179,648		$	178,867
Operating costs and expenses:
Lease operating expenses		13,669			14,406			29,148			28,178
Production and ad valorem taxes		6,881			6,303			12,630			12,020
Depletion and accretion expense		41,592			34,969			82,533			68,821
Impairments of unproved properties		—			—			732			—
General and administrative (including non-cash stock-based compensation of $583 and $1,095 for the three and six months ended June 30, 2024)		6,623			8,011			13,115			16,590
Total operating costs and expenses		68,765			63,689			138,158			125,609
Net operating income		21,887			23,868			41,490			53,258
Other income (expense):
Gain (loss) on derivatives – commodity derivatives		(785	)		1,221			(3,946	)		14,544
Interest expense		(5,817	)		(1,211	)		(8,977	)		(1,550	)
Loss on derivatives – common stock warrants		—			(11,012	)		—			(5,734	)
Loss on equity investments		(8,774	)		—			(995	)		—
Dividend income		269			—			269			—
Other		(1	)		—			1			—
Total other income (expense)		(15,108	)		(11,002	)		(13,648	)		7,260
Income before income taxes		6,779			12,866			27,842			60,518
Income tax expense		1,678			4,129			6,515			14,915
Net income	$	5,101		$	8,737		$	21,327		$	45,603

Net income per share:
Basic	$	0.04		$	0.07		$	0.16		$	0.34
Diluted	$	0.04		$	0.07		$	0.16		$	0.34
Weighted-average number of shares outstanding:
Basic		130,204			132,866			130,170			132,933
Diluted		130,251			132,880			130,207			132,941

Granite Ridge Resources Inc. Condensed Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
*(in thousands)*		2024			2023
Operating activities:
Net income	$	21,327		$	45,603
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion and accretion expense		82,533			68,821
Impairments of unproved properties		732			—
(Gain) loss on derivatives – commodity derivatives		3,946			(14,544	)
Net cash receipts from commodity derivatives		6,659			14,411
Stock-based compensation		1,095			1,434
Amortization of deferred financing costs		2,811			327
Loss on derivatives – common stock warrants		—			5,734
Loss on equity investments		995			—
Deferred income taxes		6,403			14,662
Other		(71	)		(145	)
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Revenue receivable		5,685			16,602
Other receivable		530			—
Accrued expenses		(2,398	)		1,472
Prepaid and other expenses		(1,294	)		950
Other payable		3,889			333
Net cash provided by operating activities		132,842			155,660
Investing activities:
Capital expenditures for oil and natural gas properties		(135,874	)		(182,293	)
Acquisition of oil and natural gas properties		(20,868	)		(29,516	)
Proceeds from sale of oil and natural gas properties		2,881			—
Refund of advances to operators		1,282			—
Net cash used in investing activities		(152,579	)		(211,809	)
Financing activities:
Proceeds from borrowing on credit facilities		55,000			72,500
Repayments of borrowing on credit facilities		—			(17,500	)
Deferred financing costs		(3,004	)		(28	)
Payment of expenses related to formation of Granite Ridge Resources, Inc.		—			(43	)
Purchase of treasury shares		(418	)		(5,857	)
Payment of dividends		(28,729	)		(29,263	)
Net cash provided by financing activities		22,849			19,809
Net change in cash and restricted cash		3,112			(36,340	)
Cash and restricted cash at beginning of period		10,730			51,133
Cash and restricted cash at end of period	$	13,842		$	14,793
Supplemental disclosure of non-cash investing activities:
Oil and natural gas property development costs in accrued expenses	$	9,165		$	(13,903	)
Advances to operators applied to development of oil and natural gas properties	$	50,625		$	53,379
Cash and restricted cash:
Cash	$	13,542		$	14,493
Restricted cash included in other long-term assets		300			300
Cash and restricted cash	$	13,842		$	14,793

Granite Ridge Resources Inc. Summary Production and Price Data The following table sets forth summary information concerning production and operating data for the periods indicated:

	Three months ended June 30,					Six Months Ended June 30,
		2024			2023		2024			2023
Net Sales (in thousands):
Oil sales	$	77,493		$	69,070	$	153,259		$	142,545
Natural gas sales		13,159			18,487		26,389			36,322
Total revenues		90,652			87,557		179,648			178,867

Net Production:
Oil (MBbl)		996			948		1,965			1,913
Natural gas (MMcf)		6,643			6,082		13,845			12,802
Total (MBoe)⁽¹⁾		2,103			1,962		4,273			4,047
Average Daily Production:
Oil (Bbl)		10,940			10,418		10,795			10,569
Natural gas (Mcf)		72,997			66,835		76,074			70,729
Total (Boe)⁽¹⁾		23,106			21,557		23,474			22,357

Average Sales Prices:
Oil (per Bbl)	$	77.84		$	72.86	$	78.01		$	74.51
Effect of gain (loss) on settled oil derivatives on average price (per Bbl)		(0.38	)		1.94		(0.14	)		1.98
Oil net of settled oil derivatives (per Bbl) (2)		77.46			74.80		77.87			76.49

Natural gas sales (per Mcf)		1.98			3.04		1.91			2.84
Effect of gain (loss) on settled natural gas derivatives on average price (per Mcf)		0.65			1.02		0.50			0.83
Natural gas sales net of settled natural gas derivatives (per Mcf) (2)		2.63			4.06		2.41			3.67

Realized price on a Boe basis excluding settled commodity derivatives		43.12			44.63		42.05			44.20
Effect of gain (loss) on settled commodity derivatives on average price (per Boe)		1.88			4.09		1.56			3.56
Realized price on a Boe basis including settled commodity derivatives (2)		45.00			48.72		43.61			47.76

Operating Expenses (in thousands):
Lease operating expenses	$	13,669		$	14,406	$	29,148		$	28,178
Production and ad valorem taxes		6,881			6,303		12,630			12,020
Depletion and accretion expense		41,592			34,969		82,533			68,821
General and administrative		6,623			8,011		13,115			16,590
Costs and Expenses (per Boe):
Lease operating expenses	$	6.50		$	7.34	$	6.82		$	6.96
Production and ad valorem taxes		3.27			3.21		2.96			2.97
Depletion and accretion		19.78			17.82		19.32			17.01
General and administrative		3.15			4.08		3.07			4.10

Net Producing Wells at Period-End:		191.94			157.57		191.94			157.57
(1) Natural gas is converted to Boe using the ratio of one barrel of oil to six Mcf of natural gas. (2) The presentation of realized prices including settled commodity derivatives is a result of including the net cash receipts from (payments on) commodity derivatives that are presented in our condensed consolidated statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.