10-Q: Granite Ridge Resources Reports First Quarter 2024 Results, Navigates Commodity Price Volatility

• Granite Ridge Resources reported a net income of $16.2 million for the first quarter of 2024, compared to $36.9 million in the same period last year.
• The company's revenue decreased by 3% year-over-year to $89 million, primarily due to lower realized natural gas prices, partially offset by increased oil prices and production.
• Oil production remained relatively stable at 969 thousand barrels, while natural gas production increased to 7,203 million cubic feet.
• The company's average realized oil price was $78.27 per barrel, and the average realized natural gas price was $2.20 per Mcf, including the impact of settled derivatives.
• Operating expenses increased to $69.4 million, driven by higher lease operating expenses and depletion costs.
• The company recognized a $7.8 million gain on equity investments, primarily from its holdings in Vital Energy.
• Granite Ridge's debt increased to $137.5 million, with $102.2 million available under its credit facility.
• The company's borrowing base was increased to $300 million and aggregate elected commitments were increased to $300 million on April 1, 2024.
• The company paid dividends of $14.3 million, or $0.11 per share, during the quarter.

Score: 5

Explanation: The document presents a mixed picture. While the company has taken steps to improve its financial position, the decrease in net income and revenue, along with increased operating expenses, temper the positive aspects. The company is navigating a volatile market, and the results reflect the challenges of the current environment.

• The company increased its borrowing base and aggregate elected commitments to $300 million, enhancing financial flexibility.
• Granite Ridge recognized a significant gain of $7.8 million on its equity investments.
• Oil production remained relatively stable, and natural gas production increased.
• The company maintained compliance with all covenants required by its credit agreement.
• The company continues to pay a dividend of $0.11 per share.

• Net income decreased significantly compared to the same period last year.
• Total revenue decreased by 3% year-over-year.
• Operating expenses increased by 12% year-over-year.
• The company recorded a loss of $3.2 million on commodity derivatives.
• Interest expense increased to $3.2 million due to higher debt and interest rates.

• The company is exposed to commodity price volatility, which can significantly impact revenue and profitability.
• The company is dependent on third-party operators for its production activities, which introduces operational risks.
• Changes in interest rates can affect the cost of borrowing under the credit facility.
• The company's financial performance is subject to various market conditions and regulatory changes.
• The company's future performance is subject to the success of drilling and production activities by its operating partners.

The company expects to fund its 2024 capital expenditure budget of $265 million to $285 million with cash from operations and borrowings under its credit facility. The company will continue to monitor and adjust its capital expenditures in response to market conditions.

• Management considers current expectations and assumptions about future events to be reasonable, but they are inherently subject to risks and uncertainties.
• Management monitors the financial condition of financial institutions and does not anticipate any losses from these counterparties.

The report reflects the ongoing volatility in the oil and gas industry, with fluctuating commodity prices impacting revenue and profitability. The company's non-operated model and hedging strategies are designed to mitigate some of these risks. The increase in the borrowing base and aggregate elected commitments is a positive sign for the company's financial flexibility in a volatile market.

• Granite Ridge's production volumes are comparable to other non-operated E&P companies of similar size.
• The company's realized oil and gas prices are in line with market benchmarks, with slight premiums or discounts based on location and transportation.
• The increase in operating expenses is a common trend in the industry due to inflation and increased activity.
• The company's debt levels and liquidity position are within industry norms for companies with similar capital expenditure plans.
• The company's hedging strategy is a common practice to mitigate commodity price risk, but the mark-to-market losses on derivatives are a reminder of the risks involved.

• Shareholders will be impacted by the decrease in net income and the volatility in the share price.
• Employees may be impacted by changes in the company's financial performance and strategic direction.
• Customers and suppliers will be impacted by the company's production levels and financial stability.
• Creditors will be impacted by the company's debt levels and ability to repay its obligations.

• The company will continue to monitor and adjust its capital expenditures in response to market conditions.
• The company will continue to evaluate potential acquisition opportunities.
• The company will continue to manage its commodity price risk through hedging strategies.

• The company pays an annual service fee of $10 million to Grey Rock Administration, LLC, for management services.

• May 16, 2022: Date of the Business Combination Agreement.
• October 24, 2022: Date of the closing of the Business Combination and the initial credit agreement.
• December 31, 2023: End of the stock repurchase program.
• March 6, 2024: Effective date of the Change of Control Termination Agreement with Kimberly Weimer.
• March 31, 2024: End of the reporting period for the first quarter results.
• April 1, 2024: Date of the Third Amendment to the Credit Agreement.
• May 6, 2024: Date of outstanding shares of common stock.
• May 9, 2024: Date of the filing of the quarterly report.
• May 23, 2024: Date of Vital Energy's stockholder meeting to approve the conversion of preferred stock.