Granite Ridge Resources (GRNT) Q2 2024 earnings summary

Executive summary

• Q2 2024 production rose 7% year-over-year to 23,106 Boe/d, with oil comprising 47% of output and oil revenues rising 12% while natural gas revenues declined 29% due to lower prices but higher production.

• Net income for Q2 2024 was $5.1 million ($0.04/diluted share), down from $8.7 million in Q2 2023, primarily due to higher depletion, interest expense, and losses on equity investments; adjusted net income was $17.2 million ($0.13/diluted share).

• Closed acquisitions from April to July totaling $48 million, adding 25.1 net locations and expanding the Controlled Capital program, including a new Midland Basin partner.

• Paid $28.7 million in dividends in the first half of 2024, maintaining a quarterly dividend of $0.11 per share.

• Controlled Capital now represents 5.5 net wells producing and 40.5 net locations, with over 40% of 2024 development CapEx allocated to this strategy.

Financial highlights

• Q2 2024 revenues were $90.7 million, up from $87.6 million in Q2 2023; adjusted EBITDAX was $68.3 million.

• Lease operating expenses were $13.7 million ($6.50/Boe); depletion and accretion expense was $41.6 million.

• Interest expense increased to $5.8 million from $1.2 million year-over-year.

• Operating cash flow before working capital changes was $64.8 million; free cash flow was negative at $(2.1) million due to high development costs.

• Paid a $0.11/share quarterly dividend, annualized at a 7.3% yield.

Outlook and guidance

• 2024 production guidance remains 23,250–25,250 Boe/d, with oil mix guidance raised to 48% for 2024 and an exit rate near 50%.

• 2024 capital expenditure budget is $355–$365 million, including $60 million for acquisitions.

• Expect double-digit production growth in 2025, primarily oil-weighted, driven by Controlled Capital projects.

• Controlled Capital expected to represent over 50% of 2025 development CapEx.

• No change to well count guidance; expect 22–24 net wells online in 2024, with 80% in the Permian.