Granite Ridge Resources Inc (GRNT, Financial) released its 8-K filing on November 7, 2024, reporting financial results for the third quarter of 2024. The company, a scaled, non-operated oil and gas exploration and production entity, invests in a diversified portfolio across the Permian and other prolific U.S. basins, generating maximum revenue from oil.
Performance Overview
Granite Ridge Resources Inc reported a net income of $9.1 million, or $0.07 per diluted share, falling short of the analyst estimate of $0.15 per share. The adjusted net income was $18.5 million, or $0.14 per diluted share. The company achieved an average production of 25,177 barrels of oil equivalent per day, with oil constituting 50% of the production. Despite these figures, the company's total production decreased by 5% compared to the same quarter last year, primarily due to a 12% decline in natural gas production.
Financial Achievements and Challenges
Granite Ridge generated $75.4 million in Adjusted EBITDAX, a key metric for assessing operational performance, although this was a decrease from $83.2 million in the third quarter of 2023. The company closed multiple transactions, adding 15.9 net future drilling locations at a total acquisition cost of $30.9 million. These strategic acquisitions are crucial for future growth and maintaining a competitive edge in the oil and gas industry.
Income Statement and Cash Flow Analysis
The company's revenue for the quarter was $94.1 million, slightly below the analyst estimate of $95.89 million. Operating costs and expenses totaled $69.4 million, leading to a net operating income of $24.7 million. Cash flow from operating activities was $74.7 million, with $4.0 million attributed to working capital changes. The company ended the quarter with liquidity of $127.8 million, reflecting a strong balance sheet position.
Balance Sheet Highlights
Granite Ridge's total assets increased to $1.04 billion from $927.1 million at the end of 2023. The company reported long-term debt of $195 million, up from $110 million, indicating increased leverage to support its growth initiatives. Stockholders' equity stood at $660.6 million, a slight decrease from $671.6 million at the end of 2023, primarily due to dividend payments and treasury stock purchases.
Management Commentary
Granite Ridge has once again delivered a strong quarter of operational and financial performance," said President and CEO Luke Brandenberg. "We exceeded our expectations in production, adjusted EBITDA, LOE, and G&A, thanks to the quality of our assets, superior underwriting, dedicated staff, and the outstanding performance of our operating partners."
Strategic Developments and Future Outlook
The company declared a quarterly dividend of $0.11 per share, maintaining a 6.9% annualized yield. Granite Ridge also completed its semi-annual bank redetermination process, increasing its borrowing base to $325 million, which provides additional financial flexibility. The company's focus on controlled capital and strategic partnerships in the Delaware and Midland Basins is expected to drive significant production impacts starting in Q1 2025.
Conclusion
Granite Ridge Resources Inc's third-quarter performance highlights both achievements and challenges. While the company missed analyst estimates, its strategic acquisitions and strong liquidity position underscore its potential for future growth. The focus on disciplined capital allocation and strategic partnerships positions Granite Ridge well for navigating the complexities of the oil and gas industry.
Explore the complete 8-K earnings release (here) from Granite Ridge Resources Inc for further details.
