Granite Ridge Resources (GRNT) Q3 2024 earnings summary

Executive summary

• Third quarter results exceeded internal expectations, with average production of 25,177–25,200 Boe/day (50% oil), net income of $9.1 million ($0.07/share), and adjusted net income of $18.5 million ($0.14/share), driven by creative deal sourcing, strong underwriting, and operational excellence.

• Adjusted EBITDAX was $75.4 million, up 10% sequentially but down year-over-year due to asset divestitures and lower pricing.

• Closed over a dozen transactions, adding nearly 16 net locations at a cost of $30.9 million, and increased net producing wells to 195.88 as of September 30, 2024.

• Controlled capital program outperformed, with production 15% above targets and CapEx 15% under budget; over 40 net locations in the Permian to be developed in the next 2–3 years.

• Anticipates double-digit, mid-teens production growth in 2025, with oil weighting projected in the low 50% range.

Financial highlights

• Q3 2024 revenues were $94.1 million, down from $108.4 million in Q3 2023, with oil revenues down 3% and natural gas revenues down 58%.

• Net income was $9.1 million ($0.07/share); adjusted net income was $18.5 million ($0.14/share).

• Adjusted EBITDAX was $75.4 million; operating cash flow before working capital changes was $70.7 million.

• Lease operating expenses decreased 23% year-over-year to $13.0 million ($5.62/Boe); G&A expense per Boe improved 25% to $2.16.

• Free cash flow for Q3 was negative $6.5 million, compared to positive $3.6 million in Q3 2023.

Outlook and guidance

• 2024 guidance unchanged: annual production 23,250–25,300 Boe/day, oil ~48% of sales volumes.

• 2024 capital expenditures expected at $355–$365 million, including $60 million for acquisitions; 22–24 net wells to be placed on production.

• Fourth quarter production expected to decline slightly, with up to 10% gas decline offset by modest oil increase.

• Controlled Capital strategy to spud nine net wells in 2024, with significant production impact expected in Q1 2025.

• Management expects to fund capital needs with cash from operations and available borrowing capacity.