Granite Ridge Resources, Inc. Q4 FY2024 earnings call

• Granite Ridge's fourth quarter 2024 results exceeded expectations, contributing to a strong full year 2024.
• The company has shifted focus to operated partnerships, which offer full control over capital allocation, development timing, and well design. In 2024, approximately $120 million was invested in strategic partnerships and controlled capital.
• Production in the fourth quarter of 2024 saw a 4% increase in gas and 16% increase in oil compared to the third quarter. For 2025, production growth is projected at 16% (midpoint) with an oil weighting of 52%.
• Cost improvements were seen in lease operating expenses, with per unit lease operating expense in the fourth quarter at $5.99 per BOE, a 7% decrease from the prior year. Cash G&A expenses also improved, with a per unit cash G&A expense of $2.09 per BOE in the fourth quarter, down 14% from the same quarter in 2023.
• The company paid a regular quarterly dividend of $0.11 per share in the fourth quarter, and another dividend of $0.11 per share was declared payable on March 14, 2025.

Granite Ridge Resources has two main investment categories: operated partnerships and traditional non-op. In 2024, just under half of the capital was allocated to operated partnerships. For 2025, nearly 60% of capex is targeted for operated partnerships. The first six projects in the operated partnership program included 38 wells in the Delaware Basin, with an investment of $148 million. Based on current strip pricing, the full-cycle internal rate of return is estimated at 24%. Traditional non-op remains an important part of the strategy, providing exposure to high-quality assets without direct operational control.

• Production for 2025 is projected to grow by 16% at the midpoint, with an oil weighting of 52%.
• Capex for 2025 is guided to a range of $300 million to $320 million, with 56% allocated to operated partnerships.
• The company targets full-cycle returns of greater than 25% and has lowered 2025 initial cost guidance ranges based on strong performance in 2024.
• A regular quarterly dividend of $0.11 per share was declared payable on March 14, 2025.

• Market conditions, particularly hydrocarbon price volatility, can impact capex decisions. Oil has been volatile, while gas has seen significant year-to-date growth, but oil price volatility is a consideration.
• Impairment in the Williston Basin assets due to maturing properties and lack of additional CapEx investment. However, Luke Brandenberg noted that write-downs were due to marginal inventory booked at low cost, not a bad investment decision.
• Potential impact on partner plans and well turn-to-sales if there are significant changes in market conditions.

Q: Mike asked about the $60 to $80 million contingent capex, factors determining its spend, and impact on 2026.

A: It's market-driven, primarily hydrocarbon pricing and capitalization. Gas is up year to date, benefiting the company's gas production. $60 to $80 million would impact 2026 growth.

Q: Derek Whitfield asked about gas deal sourcing and opportunities.

A: Lost many gas deals in 2024 due to pricing, most opportunity in Permian, and some success in Utica condensate window. Diversification is a strength.

Q: Noah Hungness asked about CapEx guide and impairment.

A: CapEx includes deal and acquisition CapEx. Impairment in Williston Basin was due to maturing assets with marginal inventory booked, but could come back with higher prices.

Q: John Abbott asked about partner plans and guidance.

A: 60% of turn-to-sale wells in 2025 are through operated partnerships (controllable), 40% non-op, with most non-op wells already in process.

Q: Chris Baker asked about operative partnerships and long-term outlook.

A: Operative partnerships will transition from cash flow negative to positive, with first partnership running two rigs, aiming for cash flow positive next year. Close with other partners in advanced discussions.