Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Granite Ridge Resources Inc (GRNT, Financial) exceeded internal expectations for the third quarter, showcasing strong performance in production and cost management.
- The company's controlled capital program has been successful, with production exceeding targets by 15% and capital expenditures coming in 15% under budget.
- Granite Ridge Resources Inc (GRNT) reported a 9% increase in average daily production compared to the previous quarter, with oil volumes rising by 16%.
- The company successfully closed over a dozen transactions, adding nearly 16 net locations at a total cost of $31 million, aligning with their strategic growth plans.
- Granite Ridge Resources Inc (GRNT) continues to provide shareholder value through its quarterly cash dividend program, maintaining an 11¢ per share dividend, representing a 6.9% yield.
Negative Points
- Despite strong performance, Granite Ridge Resources Inc (GRNT) anticipates a potential 10% decline in gas production in the fourth quarter due to tapering flush gas production.
- The company's net income for the quarter was $9.1 million, which, although positive, reflects challenges in maintaining profitability amidst fluctuating market conditions.
- Year-over-year adjusted EBIDAX was down approximately 9%, primarily due to asset divestitures and lower realized pricing per unit.
- Granite Ridge Resources Inc (GRNT) faces challenges in expanding its control capital program to other basins, particularly in gas-weighted areas due to current economic conditions.
- The company's PDP decline rate has increased slightly to around 40%, indicating a higher production decline rate that may impact future growth sustainability.
Q & A Highlights
Q: Can you explain why your lease operating expenses (LOE) came in below the guided range and how should we think about LOE costs moving forward?
A: Tyler Farquharson, CFO: This year, costs have been lower than expected due to reduced workover expenses. We anticipate that this trend might revert to the mean eventually. For Q4, we expect LOE to be at the lower end of our guidance range, which will likely continue into early 2025.
Q: Could you provide more details on your recent leasehold additions in Appalachia? Are these focused on the Marcellus or Utica, and are they more liquids or dry gas focused?
A: Luke Brandenberg, CEO: We are focused on the Utica condensate window, particularly in Guernsey and Harrison. We partnered with a group active in the area since 2006, allowing us first access to unleased minerals. This area is rich in condensate, situated between dry gas and oil windows.
Q: Can you elaborate on the control CapEx partnerships and the potential for picking up a rig in the Midland Basin?
A: Luke Brandenberg, CEO: We have two partners, one in the Delaware Basin and one in the Midland Basin. We are in the process of building enough inventory to sustain a rig full-time. Currently, we have 5-6 net locations in the Midland Basin and are targeting late this year or early next for rig deployment.
Q: Regarding your production forecasts, what is the expected trajectory for oil and gas production into Q1 2025 and beyond?
A: Luke Brandenberg, CEO: We expect a potential 10% decline in gas production from Q3 to Q4 due to flush production tapering off. Oil production might see a slight uptick. For 2025, we anticipate mid-teens growth in production, driven primarily by oil, with significant contributions from our control capital program.
Q: Are there opportunities for control capital partnerships in other basins beyond the Permian?
A: Luke Brandenberg, CEO: We are exploring opportunities in other basins like the Bakken and Eagle Ford. Gas-weighted areas are challenging due to current economics, but we are in discussions with potential partners. Our existing assets could facilitate partnerships through trades, which can be more appealing than cash.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
