Granite Ridge Resources, Inc. (“Granite Ridge”) (NYSE: GRNT) reported financial and operating results for the third quarter 2024.
Third Quarter 2024 Highlights
- Achieved average production of 25,177 barrels of oil equivalent (“Boe”) per day (50% oil).
- Reported net income of $9.1 million, or $0.07 per diluted share, and adjusted net income (non-GAAP) of $18.5 million, or $0.14 adjusted earnings per diluted share.
- Generated $75.4 million of Adjusted EBITDAX (non-GAAP).
Placed 93 gross (5.18 net) wells online.
- Closed multiple transactions during the quarter adding 15.9 net future drilling locations for a total acquisition cost of $30.9 million (including $0.6 million of expected future drilling carries).
- Paid quarterly dividend of $0.11 per share of common stock during the third quarter, implying a 6.9% annualized yield based on November 6, 2024 closing share price of $6.35.
- Ended the third quarter of 2024 with liquidity of $127.8 million.
Subsequent Events
- Completed the Company’s semi-annual bank redetermination process and increased the borrowing base and elected commitment amounts to $325 million.
- The Company’s Board of Directors declared a regular quarterly dividend of $0.11 per share payable on December 16, 2024 to shareholders of record as of November 29, 2024. Future declarations of dividends are subject to approval by the Board of Directors.
Management Commentary
"Granite Ridge has once again delivered a strong quarter of operational and financial performance," said President and CEO Luke Brandenberg. "We exceeded our expectations in production, adjusted EBITDA, LOE, and G&A, thanks to the quality of our assets, superior underwriting, dedicated staff, and the outstanding performance of our operating partners. Our significant cash flow generation allows us to reinvest in high-return projects and provide shareholders with a current dividend yield of nearly 7%. This quarter’s results underscore our ability to grow production, maintain a strong balance sheet, and prioritize total shareholder returns."
"Controlled Capital is increasingly central to our strategy, and we are thrilled with its progress. Early results from our Delaware Basin partnership have been encouraging. In 2024, we plan to spud nine net Controlled Capital wells, with significant production impacts expected starting in Q1 2025. Our Midland Basin partner is also actively expanding its inventory, positioning us to advance that asset base in 2025. Unlike the traditional non-operated model, Controlled Capital gives us control over capital expenditure timing and cash flows while adhering to our rigorous underwriting standards. We believe our disciplined approach to capital allocation, leverage, and hedging will drive significant value for our shareholders."
Third Quarter 2024 Summary
Third quarter 2024 oil production volumes totaled 12,655 barrels (“Bbls”) per day, a 3% increase from the third quarter of 2023. Natural gas production for the third quarter of 2024 totaled 75,133 thousand cubic feet of natural gas (“Mcf”) per day, a 12% decrease from the third quarter of 2023. As a result, the Company’s total production for the third quarter of 2024 decreased 5% from the third quarter of the prior year to 25,177 Boe per day.
Net income for the third quarter of 2024 was $9.1 million, or $0.07 per diluted share. Excluding non-cash and nonrecurring items, third quarter 2024 Adjusted Net Income (non-GAAP) was $18.5 million, or $0.14 per diluted share. The Company’s average realized price for oil and natural gas for the third quarter of 2024, excluding the effect of commodity derivatives, was $73.44 per Bbl and $1.24 per Mcf, respectively.
Adjusted EBITDAX (non-GAAP) for the third quarter of 2024 totaled $75.4 million, compared to $83.2 million for the third quarter of 2023. Third quarter of 2024 cash flow from operating activities was $74.7 million, including $4.0 million in working capital changes. Operating Cash Flow Before Working Capital Changes (non-GAAP) was $70.7 million. Costs incurred for development activities totaled $77.2 million for the third quarter of 2024.
Operational Update
During the third quarter the Company closed multiple transactions adding 15.9 net future drilling locations for a total acquisition cost of $30.9 million (including $0.6 million of expected future drilling carries).
- Traditional Non-Op or “Burgers & Beer”
- Acquired 23 gross (1.4 net) future drilling locations for a total acquisition cost of $5.0 million. Estimated future development costs for the acquired properties is $15 million.
- Acquisitions include assets in the Delaware, Bakken and Appalachian basins.
- Controlled Capital
- Midland Basin: Acquired inventory of 13 gross (10.7 net) future drilling locations for a total acquisition cost of $22.1 million and estimated future development costs of $77 million.
- Delaware Basin: Acquired inventory of 7 gross (3.8 net) locations for a total acquisition cost of $3.8 million and estimated future development costs of $33 million.
- As the largest interest owner in these locations, Granite Ridge controls development timing.
