Granite Ridge Resources Reports Strong Growth Amid Challenges

Granite Ridge Resources, Inc. ((GRNT)) has held its Q3 earnings call. Read on for the main highlights of the call.

Granite Ridge Resources, Inc. recently held its earnings call, revealing a generally positive sentiment with notable achievements in production growth and liquidity improvements. The company celebrated a solid quarter, driven by successful operator partnerships. However, concerns were raised regarding higher lease operating expenses (LOE) and ongoing challenges with Waha natural gas pricing.

Significant Production Growth

Granite Ridge Resources reported a remarkable 27% increase in average daily production, reaching 31,900 barrels of oil equivalent per day. This substantial growth underscores the company’s operational efficiency and strategic focus on expanding its production capabilities.

Enhanced Capital Structure

The company successfully issued $350 million in senior unsecured notes due 2029, with an 8.875% annual coupon rate. This move significantly bolstered Granite Ridge’s pro forma liquidity to $422 million, enhancing its financial flexibility and stability.

Strong Operator Partnership Performance

Admiral Permian Resources, the largest operator partnership, contributed significantly to Granite Ridge’s success, producing 7,400 BOE per day net to the company. This partnership accounts for 23% of the total production, highlighting the importance of strategic alliances in achieving production targets.

Robust Financial Performance

Granite Ridge reported revenues of $112.7 million for the third quarter, up from $94.1 million in the previous year. Additionally, adjusted EBITDAX increased by 4% year-over-year to $78.6 million, reflecting the company’s strong financial health and operational efficiency.

Continued Shareholder Returns

The company maintained its quarterly dividend of $0.11 per share, demonstrating its commitment to providing competitive returns to shareholders and reinforcing investor confidence in its financial strategy.

Higher Than Expected LOE

The earnings call revealed that LOE came in at $8.03 per BOE, higher than anticipated due to increased costs associated with saltwater disposal and contract labor. This represents a challenge that the company needs to address to optimize operational costs.

Waha Natural Gas Price Challenges

Granite Ridge faces ongoing challenges with weak natural gas prices in the Waha region. These pricing issues are expected to persist until pipeline infrastructure improvements are completed in the second half of 2026, posing a potential risk to future profitability.

Forward-Looking Guidance

Looking ahead, Granite Ridge Resources provided detailed guidance for the coming year. The company plans to maintain production guidance of 31,000 to 33,000 BOE per day for 2025, with oil comprising 50% of this mix. Capital expenditures are projected to be between $400 million and $420 million, with a focus on potential acquisitions and maintaining a flexible capital allocation strategy. The company aims for a 25% full-cycle return hurdle, emphasizing its commitment to strategic growth and market responsiveness.

In summary, Granite Ridge Resources, Inc.’s earnings call reflected a positive outlook with strong production growth and enhanced liquidity. While challenges such as higher LOE and Waha natural gas pricing persist, the company’s strategic initiatives and forward-looking guidance demonstrate its commitment to maintaining robust financial performance and shareholder returns.