Granite Ridge Resources, Inc. ((GRNT)) has held its Q4 earnings call. Read on for the main highlights of the call.
Granite Ridge Resources, Inc. recently held its earnings call, revealing a mixed sentiment among stakeholders. The company showcased impressive production growth and successful partnership strategies, alongside notable cost efficiencies. However, these positives were tempered by a reported net loss, decreased EBITDAX, and asset impairments. Despite these challenges, the company’s forward-looking strategy and commitment to maintaining dividends suggest a strong confidence in future performance.
Record Production in Fourth Quarter
Granite Ridge achieved a record production milestone in the fourth quarter, producing 27,000 barrels of oil equivalent (BOE) per day. This achievement marks a significant 10% sequential increase, underscoring the company’s operational efficiency and growth potential.
Oil and Gas Production Exceeds Expectations
In the fourth quarter of 2024, Granite Ridge’s gas production increased by 4% and oil production soared by 16%, surpassing previous expectations of a 10% decline in gas production and a modest oil increase. This performance highlights the company’s ability to exceed market expectations and optimize production.
Strong 2025 Production Guidance
Looking ahead, Granite Ridge projects a 16% increase in production for 2025, with a targeted oil weighting of 52%. This guidance reflects the company’s strategic focus on enhancing production capabilities and optimizing its resource portfolio.
Successful Operated Partnership Strategy
Granite Ridge’s investments in operated partnerships in 2024 have proven fruitful, yielding an estimated internal rate of return of 24% across 38 wells in the Delaware Basin. This success underscores the effectiveness of the company’s partnership strategy in driving financial returns.
Improved Cost Efficiency
The company reported a 7% decrease in per unit lease operating expenses year-over-year in the fourth quarter, with full-year lease operating expenses improving by 8% over 2023. These improvements reflect Granite Ridge’s commitment to cost management and operational efficiency.
Consistent Dividend Payouts
Granite Ridge maintained a regular quarterly dividend of $0.11 per share, projecting a robust dividend yield of over 7.5% for 2025. This consistency in dividend payouts highlights the company’s dedication to returning value to shareholders.
Fourth Quarter Net Loss
Despite operational successes, Granite Ridge reported a net loss of $11.6 million, or $0.09 per diluted share, in the fourth quarter of 2024. This loss presents a challenge for the company as it navigates market fluctuations and operational hurdles.
Decrease in Adjusted EBITDAX for 2024
The company experienced a decrease in adjusted EBITDAX for 2024, totaling $290.8 million, down from $305.4 million in 2023. This decline is attributed to lower realized commodity prices and asset divestitures, impacting overall financial performance.
Impairments in Williston Basin Assets
Granite Ridge faced impairments in its Williston Basin assets due to a lack of additional capital expenditure investment and the maturing of assets. This situation highlights the challenges of asset management in a dynamic market environment.
Forward-Looking Guidance
Granite Ridge Resources provided robust guidance for 2025, with a planned capital expenditure range of $300 million to $320 million. The company aims for a 16% production growth, targeting 29,000 BOE per day with an oil weighting of 52%. They anticipate steady gas production through the first three quarters, with an increase in the fourth quarter. The company is targeting full-cycle returns greater than 25% and plans to fund its CapEx and fixed dividend from internally generated cash flow and existing liquidity.
In summary, Granite Ridge Resources’ earnings call presented a mixed sentiment, balancing strong production growth and strategic successes with financial challenges such as net losses and decreased EBITDAX. The company’s forward-looking guidance and commitment to dividends reflect a confidence in overcoming these hurdles and achieving future growth.