Granite Ridge Resources, Inc. ((GRNT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Granite Ridge Resources, Inc. recently held its earnings call, showcasing a strong operational performance marked by significant production and revenue growth. The company has made strategic acquisitions and maintains a robust financial position. Despite facing challenges such as decreased oil prices and increased operating expenses, the overall sentiment was positive, with highlights outweighing the lowlights.
Significant Production Increase
Granite Ridge Resources reported a remarkable 37% year-over-year increase in production, reaching 31,576 barrels of oil equivalent per day. This growth was driven by a 46% rise in oil production and a 28% increase in natural gas production, underscoring the company’s strong operational capabilities.
Increased Revenue and Cash Flow
The company experienced a 20% increase in total oil and gas sales revenue compared to Q2 2024, driven by higher production levels. Operating cash flow before working capital changes was reported at $69.5 million, reflecting the company’s ability to convert production growth into financial gains.
Raised Production and Capital Expenditure Guidance
Granite Ridge raised its full-year production guidance by 10% at the midpoint, now expecting between 31,000 and 33,000 barrels of oil equivalent per day. Additionally, capital expenditure guidance was increased to $400 million to $420 million, indicating a commitment to future growth.
Strong Partnership and Acquisition Strategy
The company has strengthened its portfolio through partnerships with top-tier operators and significant acquisitions in the Permian and Appalachian basins. These strategic moves have added high-quality inventory to Granite Ridge’s assets.
Robust Financial Position
Granite Ridge maintains a strong balance sheet with a leverage ratio of 0.8x net debt to adjusted EBITDA. The company also increased its borrowing base to $375 million, enhancing its financial flexibility.
Decline in Realized Oil Prices
Despite a 21% decline in realized oil prices, from $77.84 per barrel in the prior year period to $61.41 this quarter, the company managed to increase its total oil and gas sales revenue, showcasing resilience in a challenging market.
Increased Expenses
Lease operating expenses rose to $20.1 million or $7 per BOE, up from $13.7 million or $6.50 per BOE in Q2 2024. This increase reflects higher service and saltwater disposal costs, impacting the company’s operating expenses.
Higher General and Administrative Expenses
General and administrative expenses increased by $1.9 million year-over-year to $8.5 million. This rise was driven by nonrecurring expenses, including severance and capital markets activities.
Net Loss on Equity Investments
Granite Ridge incurred a net loss on equity investments due to the sale of Vital shares, highlighting a challenge in its investment strategy.
Forward-Looking Guidance
Looking ahead, Granite Ridge Resources anticipates continued growth, with a 10% increase in full-year production guidance to between 31,000 and 33,000 barrels of oil equivalent per day. The company expects a 28% year-over-year growth, supported by new acquisitions set to close in 2025. Capital expenditure guidance has been raised to $400 million to $420 million, reflecting the company’s aggressive growth strategy.
In conclusion, Granite Ridge Resources, Inc.’s earnings call highlighted a positive outlook driven by significant production and revenue growth, strategic acquisitions, and a strong financial position. Despite challenges such as decreased oil prices and increased expenses, the company’s forward-looking guidance suggests continued growth and resilience in the face of market fluctuations.