10-Q: Granite Ridge Resources Reports Increased Production and Revenue in Q1 2025

• Granite Ridge Resources reported oil and natural gas sales of $122.931 million for the three months ended March 31, 2025, compared to $88.996 million for the same period in 2024.
• Oil sales increased to $91.847 million from $75.766 million, while natural gas sales rose to $31.084 million from $13.230 million.
• The company's net oil production averaged 14,752 barrels per day, up from 10,650 barrels per day in the prior year.
• Net natural gas production averaged 86,960 Mcf per day, compared to 79,151 Mcf per day in the first quarter of 2024.
• The average realized oil price, net of settled derivatives, was $69.13 per barrel, while the average realized natural gas price, net of settled derivatives, was $3.96 per Mcf.
• Lease operating expenses increased to $16.240 million, and depletion and accretion expense rose to $48.445 million.
• The company reported a net loss on commodity derivatives of $14.857 million and a loss on equity investments of $9.971 million.
• Net income for the quarter was $9.812 million, or $0.07 per share, compared to $16.227 million, or $0.12 per share, in the first quarter of 2024.
• Capital expenditures for oil and natural gas properties totaled $66.728 million, and acquisitions of oil and natural gas properties amounted to $34.692 million.
• The company's borrowing base and elected commitments under its credit agreement were increased from $325.0 million to $375.0 million via the Fifth Amendment on April 29, 2025.
• A dividend of $0.11 per share was declared for the second quarter of 2025, payable on June 13, 2025.

Score: 6

Explanation: The report shows increased production and revenue, which is positive. However, decreased net income, losses on derivatives and equity investments, and increased expenses temper the overall sentiment. The increase in the borrowing base is a positive sign for future growth.

• Significant increase in oil and natural gas sales driven by higher production volumes.
• Increased oil and natural gas production compared to the same period last year.
• Successful acquisition of additional net revenue interests.
• Increase in the borrowing base and elected commitments under the credit agreement, providing greater financial flexibility.
• Declaration of a regular quarterly cash dividend of $0.11 per share.

• Decrease in average realized oil price compared to the same period last year.
• Net loss on commodity derivatives and equity investments negatively impacted net income.
• Increased interest expense due to higher average outstanding balance on the Credit Agreement.
• Increased capital expenditures for oil and natural gas properties and acquisitions.

• Dependence on third-party operators for drilling and production activities.
• Exposure to commodity price volatility, which can impact revenues and cash flows.
• Potential adverse impact of weather on drilling, production, and transportation activities.
• Infrastructure limitations and transportation capacity constraints in certain regions.
• Changes in regulations, including those relating to environmental matters.
• Cyber-related risks.
• Inaccuracies in reserve estimates.
• Limited liquidity and trading of Granite Ridge's securities.
• Geopolitical risks and global hostilities.

The company expects to fund its budgeted capital expenditures and operating expenses for at least the next twelve months with cash on hand, cash flow from operations, and borrowing capacity under the Credit Agreement, and is budgeting approximately $300 million to $320 million in total planned capital expenditures for 2025.

Granite Ridge operates in the oil and gas industry, which is characterized by commodity price volatility and dependence on third-party operators. The company's strategy of investing in a diversified portfolio of assets across multiple basins is aimed at mitigating risk and delivering full-cycle returns. The increase in the borrowing base under the credit agreement reflects the company's ability to access capital and fund its growth plans.

• It is difficult to compare Granite Ridge directly to industry standards without more specific information on their peer group.
• However, similar non-operated oil and gas companies include Viper Energy Partners LP (VNOM) and Black Stone Minerals, L.P. (BSM).
• These companies also focus on acquiring and managing mineral and royalty interests in producing basins.
• Comparing Granite Ridge's production growth, cost structure, and financial leverage to these peers would provide a better understanding of its relative performance.
• For example, Viper Energy Partners LP (VNOM) reported an average realized oil price of $75.34 per barrel in Q1 2024, while Granite Ridge reported $78.27 per barrel.
• Black Stone Minerals, L.P. (BSM) reported total revenues of $148.3 million in Q1 2024, while Granite Ridge reported $88.996 million.

• Shareholders will receive a dividend of $0.11 per share.
• Employees are subject to stock-based compensation plans.
• The company's performance impacts its relationships with operators, lenders, and other stakeholders.

• Continue to monitor commodity prices and manage commodity price risk through hedging strategies.
• Execute planned capital expenditures for 2025.
• Evaluate potential acquisition opportunities.
• Maintain compliance with financial covenants under the Credit Agreement.
• Pay the declared dividend on June 13, 2025.

• The Company pays the Manager an annual services fee of $10.0 million and reimburses the Manager for certain Granite Ridge group costs related to the operation of the Company's assets.

• 2022-10-24: Granite Ridge entered into a senior secured revolving credit agreement.
• 2023-12: The Company completed the sale of certain of its Permian Basin assets to Vital Energy, Inc.
• 2024-06-04: The 2.0% cumulative mandatorily convertible preferred securities were converted into the equivalent number of shares of Vital Energys common stock.
• 2025-03-31: End of the quarterly period.
• 2025-04-29: The Company and its lenders entered into the Fifth Amendment to the Credit Agreement.
• 2025-05-05: Date as of which there were 131,113,060 shares of common stock outstanding.
• 2025-05-08: Date of filing the quarterly report.
• 2025-05-30: Stockholders of record date for the second quarter dividend.
• 2025-06-13: Payment date for the second quarter dividend.
• 2027-10-24: Maturity date of the Credit Agreement.