Granite Ridge Resources, Inc.

Good morning and welcome everyone to Granite Ridge Resources' second quarter 2024 earnings conference call. Currently, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I will now turn the call over to Wes Harris, investor relations representative for Granite Ridge. You may begin.

Thank you, operator, and good morning, everyone. We appreciate your interest in Granite Ridge resources. We will begin our call with comments from Luke Brandenburg, our president and chief executive officer, who will provide an overview of key matters for the second quarter and an outlook for 2024. We will then turn the call over to Tyler Farkerson, our Chief Financial Officer, who will review our financial results. Luke will then return to provide some closing comments before we open the call up for questions. Today's conference call contains certain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ from those expressed or implied in these statements. We would ask that you also review the cautionary statement in our earnings release. Granite Ridge disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in yesterday's press release in our filings with the SEC. This conference call also includes references to certain non-GAAP financial measures. Information reconciling non-GAAP financial measures discussed to the most directly comparable GAAP financial measures is available in our earnings release that is posted on our website. Finally, as a reminder, this conference call is being recorded. A replay and transcript will be made available on our website following today's call. So with that, I'll turn the call over to Luke. Luke?

Thank you, Wes. Good morning, and thank you to everyone for joining. We've been busy over the last few months, and I would like to begin by sharing my appreciation for our people here at Granite Ridge. It has been a bit of a deal frenzy as of late, which drives an increased workload across all functions in the organization. It has truly been a team effort as folks step in for one another to get the job done and provide space to spend time with families on summer vacation. I'm grateful to work with each and every one of you. Let's start by discussing the deal side. From April to July, we closed acquisitions representing 95 gross or 25.1 net locations for a total entry, inclusive of expected future drilling carries, of $48 million. In aggregate, we expect these locations to account for $215 million of development capital, the vast majority of which we expect to occur over the next two years. These acquisitions were about 90% Permian-weighted, and of that, about 75% fall into our controlled capital program, including the addition of a new Midland Basin-focused strategic partner. Speaking of our controlled capital program, we now have 5.5 net wells producing and 40.5 net locations, including wells in process. For 2024, we expect controlled capital development CapEx, will represent over 40% of our total development CapEx for the year. It is exciting to see this strategy materialize as we make concentrated investments in high conviction, operated projects with compelling expected returns. One of the qualities we value in non-op is the ability to adapt to whatever the market throws at you. A mentor of mine recently suggested that I look into legendary investor Henry Singleton. Many of you may know the name well, but I was not familiar. I'm on my way down the rabbit hole now, but one quote stood out to me as we were comparing our current 2024 expectations to what we guided to back in March. Mr. Singleton shared, quote, I know a lot of people have very strong and definite plans that they've worked out on all kinds of things, but we're subject to a tremendous number of outside influences and the vast majority of them cannot be predicted. So my idea is to stay flexible, end quote. What outside influences have changed our industry over the past five months? The easiest to identify is hydrocarbon prices. Comparing the full year 2024 consensus pricing when we provided initial guidance in March versus full year 2024 consensus pricing now, gas is down about 22% and oil is down about 2%. So what does that mean for Granite Ridge? We can shift our capital allocation to the most economically advantaged projects to drive long-term value for shareholders. As a non-op, how do we do that? In our traditional non-op business, we make it a point to partner with like-minded operators that maintain conservative leverage profiles, which enables them to maintain a focus on shareholder value. In challenging gas environments such as this, we see our operating partners taking steps, including deferring or ducking gas wells in the Hainesville and Dry Gas Eagleford, and restricting production to maximize long-term value. While we continue to see deal flow in these areas, we've largely not engaged on projects with near-term gas development as they do not currently compete for capital. Further, in our controlled capital business, we've allocated additional capital to oil-weighted projects as we continue to capture opportunities that meet or exceed our target returns. We are not changing production guidance at this time, but I will say that while there are still five months left in the year, I can see a scenario where oil production beats current guidance and gas comes in low, both of which are prudent as we adapt to the current hydrocarbon price environment. With gas to oil equivalent at 6 to 1, despite trading at closer to 30 to 1, this could push us towards the low end of the barrel equivalent production guidance. We anticipate that our oil production will continue to rise over the next two quarters, particularly in the third quarter, where we may see a 10% quarter-over-quarter increase. On the gas side, we expect a 5% to 10% decrease over each of the next two quarters. Looking at wells turned to sales, we are not changing our guidance range at this time. But we do expect to have a good number of wells in process towards the end of the year that may come online in late 2024 or early 2025 that will not contribute much to 2024 production. More near term, we expect about four net wells to turn to sales in the third quarter. On the CapEx side, we are taking inventory acquisitions guidance up from $35 million to $60 million based on identified opportunities that either closed or are expected to close post-June 30th. Additionally, we are raising development CapEx guidance by $60 million at the midpoint for a total CapEx range of $355 to $365 million. About half of the $60 million increase is driven by a shuffling in our controlled capital drilling schedule, and the other half is development tied to the acquisition CapEx increase. We do not anticipate a 2024 production impact from the $60 million increase in development CapEx, but we are excited about how it will position us going into 2025. Looking at remaining CapEx allocation over the next couple of quarters, we expect the vast majority of identified acquisitions to close in the third quarter and that development CapEx will be split roughly 40-60 across the third and fourth quarters. With that, I will turn it over to Tyler to discuss our results for the quarter.