Energy, Automobile, EV, Renewable News | Granite Ridge Resources Inc. Reports Fourth-Quarter and Full-Year 2022 Results, Provides 2023 Outlook

Granite Ridge Resources Inc. Reports Fourth-Quarter and Full-Year 2022 Results, Provides 2023 Outlook

March 28, 2023

DALLAS–(BUSINESS WIRE)–Granite Ridge Resources Inc. (“Granite Ridge” or the “Company”) (NYSE: GRNT) today reported financial and operating results for the fourth quarter and full year 2022.

Fourth Quarter 2022 Highlights

Produced 22,031 barrels of oil equivalent (“Boe”) per day (52% oil), a 45% increase from the fourth quarter of the prior year.
Reported net income of $56.7 million, or $0.43 per share. Adjusted net income (non-GAAP) totaled $50.7 million, or $0.38 per share.
Generated $83.2 million of adjusted EBITDAX (non-GAAP).
Paid $10.7 million in dividends.
Exited 2022 with liquidity of $200.8 million as of December 31, 2022, including $50.8 million of cash.

2023 Outlook

Anticipate paying a quarterly dividend of $0.11 per share for each quarter of 2023.
Planning $260 million to $270 million of capital expenditures, including $46 million of identified acquisitions.
Expecting to generate 9% midpoint annual production volume growth as compared to the full year 2022, based on placing 18 – 20 net new wells on production.

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.

Luke Brandenberg, President and CEO of Granite Ridge, commented, “We were pleased with our strong fourth quarter results, including a year-over-year increase of almost 60% in Adjusted EBITDAX and growth of more than 70% in Adjusted Net Income. Contributing to our success was the continued execution of our operating partners’ well-designed plans to promote efficient and safe operations and increase value through the drill bit and other field development programs.

“2022 was a transformative year for Granite Ridge, with the most significant highlight being the business combination with Executive Network Partnering Corporation (“ENPC”) and GREP Holdings LLC on October 24, 2022 that created NYSE-listed Granite Ridge Resources. The past five months have been a time of integration as we transitioned to a public company; I am proud of our progress and I want to thank our entire team for their hard work and dedication throughout this process. Our asset base performed extremely well in 2022, which is directly attributable to the deep and talented group of public and private operators with whom we are partnered. Their targeted capital investment programs remain squarely focused on executing high rate-of-return projects located in key prolific producing onshore basins that helped drive net production growth of 22%, a 16% increase in proved reserves, Adjusted EBITDA and Adjusted Net Income growth of 73% and 118%, respectively.

“Looking forward, we plan to leverage the positive momentum generated in 2022 to continue to invest in the business. Our development program for 2023 anticipates capital spending across our asset base of $260 million to $270 million, including approximately $46 million of acquisitions and opportunity capture that has been spent or committed to year to date. We will continue to execute on our proven business plan that focuses on responsible growth, including a targeted year-over-year net production increase of 9% using the mid-point of our 2023 full year guidance. Supporting our efforts is a fortress balance sheet that provides maximum flexibility as we increase our asset diversity beyond the interests we currently own in over 2,350 wells across the Permian, Eagle Ford, Haynesville, DJ and Bakken. Finally, we will continue to support the long-term interests of our shareholders through an ongoing and well-defined shareholder return program highlighted by the payment of a meaningful fixed quarterly cash dividend, as well as the opportunistic repurchase of shares depending on market conditions.”

Fourth Quarter 2022 Summary

For the fourth quarter of 2022 oil production volumes increased 29% from the fourth quarter of the prior year to 11,359 barrels (“Bbls”) per day. Natural gas production for the fourth quarter of 2022 totaled 64,033 thousand cubic feet of natural gas (“Mcf”) per day. The Company’s total production for the fourth quarter of 2022 grew 45% from the fourth quarter of the prior year to 22,031 Boe per day.

Net income for the fourth quarter of 2022 was $56.6 million, or $0.43 per share. Excluding non-cash and special items, the fourth quarter 2022 adjusted net income (non-GAAP) was $50.7 million, or $0.38 per share. The Company’s average realized price for oil and natural gas for the fourth quarter of 2022, excluding the effect of commodity derivatives, was $83.32 per Bbl and $4.97 per Mcf, respectively.

Adjusted EBITDAX (non-GAAP) for the fourth quarter of 2022 totaled $83.2 million, compared to $52.5 million for the fourth quarter of 2021. The fourth quarter of 2022 cash flow from operating activities was $95.0 million, including $12.1 million in working capital changes. Operating cash flow before working capital changes (non-GAAP) was $83.0 million. Costs incurred for development activities totaled $91.7 million for the fourth quarter of 2022.

Full Year 2022 Summary

Total production for 2022 increased 22% to 19,765 Boe per day, including a 7% increase in oil production to 10,016 Bbl per day. Natural gas production for 2022 was 58,496 Mcf per day. For 2022, the Company’s average realized price for oil and natural gas, excluding the effect of commodity derivatives, was $92.50 per Bbl and $7.46 per Mcf, respectively, compared to $63.07 per Bbl and $5.04 per Mcf, respectively, for 2021.

Net income for 2022 was $262.3 million, or $1.97 per share, compared with net income of $108.5 million, or $0.82 per share, in 2021. Excluding non-cash and special items, 2022 adjusted net income (non-GAAP) was $247.2 million, or $1.86 per share, compared with adjusted net income of $113.4 million, or $0.85 per share, for 2021.

Adjusted EBITDAX (non-GAAP) for 2022 totaled $365.5 million, compared with $210.4 million in 2021. For 2022, cash flow from operating activities was $346.4 million, including $17.2 million in working capital changes. Operating cash flow before working capital changes (non-GAAP) was $363.6 million. Costs incurred for development activities totaled $256.7 million for the year.

Operational Activity

The table below provides a summary of gross and net wells completed and put on production for the fourth quarter and full year 2022:


	Three Months Ended		Year Ended
	December 31, 2022		December 31, 2022
	Gross	Net	Gross	Net

Permian	54	3.59	134	12.41
Eagle Ford	6	0.56	19	3.62
Bakken	11	0.54	27	0.79
Haynesville	4	1.03	9	2.75
DJ	13	0.48	76	1.21
Total	88	6.20	265	20.78

2022 Proved Reserves

At December 31, 2022, Granite Ridge’s estimated proved reserves totaled 50,534 MBoe, compared to 43,710 MBoe at December 31, 2021. The Company’s proved reserves are approximately 50% oil and 50% natural gas. Proved developed reserves totaled 30,886 MBoe, or 61% of total proved reserves. The table below provides a summary of changes in total proved reserves for the year ended December 31, 2022, as well as the proved developed reserves balance at the beginning and end of the year.


	Oil		Natural Gas
	(MBbl)		(MMcf)		MBoe
Proved developed and undeveloped reserves at December 31, 2021	22,818		125,347		43,710

Revisions of previous estimates	(456	)	6,225		581
Extensions and discoveries	3,690		27,126		8,211
Divestiture of reserves	—		—		—
Acquisition of reserves	3,098		12,892		5,247
Production	(3,656	)	(21,351	)	(7,215	)
Proved developed and undeveloped reserves at December 31, 2022	25,494		150,239		50,534


	Oil	Natural Gas
	(MBbl)	(MMcf)	MBoe
Proved developed reserves:
December 31, 2021	11,658	54,257	20,702
December 31, 2022	15,714	91,034	30,886
Proved undeveloped reserves:
December 31, 2021	11,160	71,090	23,008
December 31, 2022	9,780	59,205	19,648

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. The Company has not entered into any additional derivatives subsequent to year end.

2023 Guidance

The following table summarizes the Company’s operational and financial guidance for 2023.


		2023 Guidance
Annual production (Boe per day)		20,500 – 22,500
Oil as a % of sales volumes		50%
Capital expenditures ($ in millions)⁽¹⁾		$260 – $270

Net wells placed on production		18 – 20

Lease operating expenses (per Boe)		$6.50 – $7.50
Production and ad valorem taxes (as a % of total sales)		7% – 8%
Cash general and administrative expense ($ in millions)		$20 – $22

(1)	Includes $46 million of acquisition capital expenditures.

Conference Call

Granite Ridge will host a conference call on March 28, 2023, at 10:00 AM CT (11:00 AM ET) to discuss the fourth quarter and full year 2022 results. 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 and view the related earnings presentation, visit Granite Ridge’s website at www.graniteridge.com. Alternatively, an audio replay will be available through April 10, 2023. To access the audio replay dial (800) 770‑2030 and enter confirmation code 4127559.

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 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts included in this release regarding Granite Ridge’s 2023 outlook, dividend plans and practices, financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance 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, 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: the ability to recognize the anticipated benefits of the business combination, 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 or make acquisitions, changes in 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 the Granite Ridge’s reserves, the outcome of any known and unknown litigation and regulatory proceedings, legal and contractual limitations on the payment of dividends, limited liquidity and trading of Granite Ridge’s securities, acts of war or terrorism and market conditions and global, regulatory, technical, and economic factors beyond Granite Ridge’s control, including the potential adverse effects of the COVID‑19 pandemic, or another major disease, affecting capital markets, general economic conditions, global supply chains and Granite Ridge’s business and operations, and increasing regulatory and investor emphasis on environmental, social and governance matters.

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. Granite Ridge does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.

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.
Consolidated Balance Sheets
(Unaudited)


	December 31,
*(in thousands, except par value and share data)*	2022			2021
ASSETS
Current assets:
Cash	$	50,833		$	11,854
Revenue receivable		72,287			47,298
Advances to operators		8,908			37,817
Prepaid and other expenses		4,203			676
Derivative assets – commodity derivatives		10,089			434
Total current assets		146,320			98,079
Property and equipment:
Oil and gas properties, successful efforts method		1,028,662			727,547
Accumulated depletion		(383,673	)		(278,773	)
Total property and equipment, net		644,989			448,774
Long-term assets:
Derivative assets – commodity derivatives		—			31
Other long-term assets		3,468			362
Total long-term assets		3,468			393
TOTAL ASSETS	$	794,777		$	547,246

LIABILITIES AND EQUITY
Current liabilities:
Accrued expenses	$	62,180		$	10,321
Other payable		1,523			13
Derivative liabilities – commodity derivatives		431			7,263
Current portion of long-term debt		—			50,000
Total current liabilities		64,134			67,597
Long-term liabilities:
Long-term debt		—			1,100
Derivative liabilities – commodity derivatives		—			657
Derivative liabilities – common stock warrants		11,902			—
Asset retirement obligations		4,745			2,962
Deferred tax liability		91,592			—
Total long-term liabilities		108,239			4,719
TOTAL LIABILITIES		172,373			72,316

EQUITY
Partnerships’ capital		—			474,930
Common stock, $0.0001 par value, 431,000,000 shares authorized, 133,294,897 issued at December 31, 2022.		13			—
Additional paid-in capital		590,232			—
Retained Earnings		32,388			—
Treasury stock, at cost, 25,920 shares at December 31, 2022		(229	)		—
Total equity		622,404			474,930
TOTAL LIABILITIES AND EQUITY	$	794,777		$	547,246

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


	Three Months ended December 31,						Year ended December 31,
*(in thousands, except per share data)*	2022			2021			2022			2021
REVENUES
Oil, natural gas and related product sales	$	116,335		$	79,557		$	497,417		$	290,193
EXPENSES
Lease operating expenses		14,420			8,559			44,678			26,333
Production and ad valorem taxes		9,848			5,137			30,619			18,066
Depletion and accretion expense		21,656			22,221			105,752			94,661
Impairments of long-lived assets		—						—			—
General and administrative		6,476			1,937			14,223			10,179
Gain on disposal of oil and natural gas properties		—			(313	)		—			(2,279	)
Total operating costs and expenses		52,400			37,541			195,272			146,960
Net operating income		63,935			42,016			302,145			143,233
OTHER INCOME (EXPENSE)
Gain (loss) on derivatives – commodity derivatives		5,463			1,271			(25,324	)		(32,389	)
Interest expense		(285	)		(732	)		(1,989	)		(2,385	)
Gain on derivatives – common stock warrants		362			—			362			—
Total other income (expense)		5,540			539			(26,951	)		(34,774	)
INCOME BEFORE INCOME TAXES		69,475			42,555			275,194			108,459
Income tax expense		12,850			—			12,850			—
NET INCOME	$	56,625		$	42,555		$	262,344		$	108,459

NET INCOME PER SHARE:
Basic	$	0.43		$	0.32		$	1.97		$	0.82
Diluted	$	0.43		$	0.32		$	1.97		$	0.82
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic		132,920			132,923			132,923			132,923
Diluted		133,071			132,923			133,074			132,923

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


	Year Ended December,
*(in thousands)*	2022			2021
Operating activities:
Net income	$	262,344		$	108,459
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion and accretion expense		105,752			94,661
Impairments of long-lived assets		—			—
Loss on derivatives – commodity derivatives		25,324			32,389
Net cash payments on derivatives		(42,437	)		(25,219	)
Gain on disposal of oil and gas properties		—			(2,279	)
Amortization of loan origination costs		159			48
Gain on derivatives – common stock warrants		(362	)		—
Deferred income taxes		12,850			—
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Revenue receivable		(24,989	)		(28,603	)
Accrued expenses		9,838			1,840
Prepaid and other expenses		(2,095	)		(125	)
Other payable		5			10
Net cash provided by operating activities		346,389			181,181

Investing activities:
Additions to oil and natural gas properties		(185,497	)		(136,077	)
Acquisition of oil and natural gas properties		(49,191	)		(83,209	)
Deposit on acquisition		(1,899	)		—
Refund of advances to operators		1,180			3,819
Proceeds from the disposal of oil and natural gas properties		4,845			29,443
Net cash used in investing activities		(230,562	)		(186,024	)

Financing activities:
Proceeds from borrowing on credit facilities		21,000			62,000
Repayments of borrowing on credit facilities		(72,100	)		(49,400	)
Cash distributions		—			(51,091	)
Cash contributions		—			46,980
Deferred financing costs		(3,237	)		—
Payment of expenses related to formation of Granite Ridge Resources, Inc.		(18,456	)		—
Purchase of treasury shares		(216	)		—
Payment of dividends		(10,664	)		—
Proceeds from issuance of common stock		6,825			—
Net cash (used in) provided by financing activities		(76,848	)		8,489

Net increase in cash and restricted cash		38,979			3,646
Cash and restricted cash at beginning of year		12,154			8,508
Cash and restricted cash at end of year	$	51,133		$	12,154

Supplemental disclosure of non-cash investing activities:
Oil and natural gas property development costs in accrued expenses	$	48,187		$	6,251
Advances to operators applied to development of oil and natural gas properties	$	103,535		$	48,387

Cash and Restricted cash:
Cash	$	50,833		$	11,854
Restricted cash included in other long-term assets		300			300
Cash and restricted cash	$	51,133		$	12,154

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 December 31,						Year Ended December 31,
	2022			2021			2022			2021

Net Sales (in thousands):
Oil sales	$	87,074		$	55,879		$	338,163		$	215,250
Natural gas and related product sales		29,261			23,678			159,254			74,943
Revenues		116,335			79,557			497,417			290,193

Net Production:
Oil (MBbl)		1,045			812			3,656			3,413
Natural gas (MMcf)		5,891			3,511			21,351			14,861
Total (MBoe)⁽¹⁾		2,027			1,397			7,215			5,890

Average Daily Production:
Oil (Bbl)		11,359			8,826			10,016			9,351
Natural gas (Mcf)		64,033			38,163			58,496			40,715
Total (Boe)⁽¹⁾		22,031			15,187			19,765			16,137

Average Sales Prices:
Oil (per Bbl)	$	83.32		$	68.82		$	92.50		$	63.07
Effect of loss on settled oil derivatives on average price (per Bbl)		(0.51	)		(13.39	)		(6.48	)		(5.58	)
Oil net of settled oil derivatives (per Bbl)		82.81			55.43			86.02			57.49

Natural gas and related product sales (per Mcf)		4.97			6.74			7.46			5.04
Effect of loss on settled natural gas derivatives on average price (per Mcf)		(0.32	)		(0.17	)		(0.88	)		(0.42	)
Natural gas and related product sales net of settled natural gas derivatives (per Mcf)		4.65			6.57			6.58			4.62

Realized price on a Boe basis excluding settled commodity derivatives		57.39			56.95			68.94			49.27
Effect of loss on settled commodity derivatives on average price (per Boe)		(1.20	)		(8.21	)		(5.88	)		(4.28	)
Realized price on a Boe basis including settled commodity derivatives		56.19			48.74			63.06			44.99

Operating Expenses (in thousands):
Lease operating expenses	$	14,420		$	8,559		$	44,678		$	26,333
Production and ad valorem taxes		9,848			5,137			30,619			18,066
Depletion and accretion expense		21,656			22,221			105,752			94,661
General and administrative		6,476			1,937			14,223			10,179

Costs and Expenses (per Boe):
Lease operating expenses	$	7.11		$	6.13		$	6.19		$	4.47
Production and ad valorem taxes		4.86			3.68			4.24			3.07
Depletion and accretion expense		10.68			15.91			14.66			16.07
General and administrative		3.19			1.39			1.97			1.73

Net Producing Wells at Period-End:		132.88			108.64			132.88			108.64