Granite Ridge Resources, Inc.

Good morning and welcome everyone to Granite Ridge Resources' fourth quarter and full year 2024 earnings conference call. Currently, all participants are in 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 with the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now turn the call over to James Masters, Investor Relations representative for Granite Ridge.

Thank you, operator. 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. We'll review company strategy, discuss 2024 results, and provide an outlook for 2025. We will then turn the call over to Tyler Farkerson, our chief financial officer, We'll review our financial results in greater detail. 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 and are filings with the Securities and Exchange Commission. 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. With that, I'll now turn the call over to Luke.

Thank you, James, and good morning, everyone. I appreciate you joining us today. This is an exciting call for us at Granite Ridge. Our fourth quarter 2024 results exceeded our expectations and contributed to a strong full year 2024. I look forward to discussing that in more detail shortly. Even more exciting than our accomplishments in 2024 are our plans for 2025. Since going public, we've been laying the groundwork for the significant progress we anticipate this year. We have an exceptional team of professionals and partners in place. Now is the time to execute. As this is a year-end call, I will begin with an update on the Granite Ridge business and why we believe it offers a unique value proposition within the oil and gas sector. Next, I will share the results of the capital we've invested in operated partnerships, which is rapidly transforming the company into one that controls its capital expenditures and cash flow timing, similar to an operator. Finally, I will highlight the results we have achieved this year and outline what you can expect from us in 2025 before turning the call over to Tyler for the details. Since going public in 2022 we've been viewed as a non operated oil and gas company, however, our roots go back to 2014 as an oil and gas private equity firm and our business model has always represented a blend of both non control and controlled investments. We are less an oil and gas company and we are a publicly traded private equity firm with career oil and gas investors in a technical team applying an investment driven approach to oil and gas development. Over the past decade, we have built interests in over 3,100 wells across six of the premier unconventional basins in the United States. We offer our investors a diversified portfolio targeting best-in-class, full-cycle returns by investing in oil and gas projects with proven public and private operators. The opportunity set has evolved in the past few years, and Granite Ridge is doing what we do best, identifying dislocations in the markets. In 2014, non-operated inventory in near-term development traded at a substantial discount to operated inventory, roughly 50%. By 2023, the volume of non-operated oil and gas deals had surged, but the discount began to compress as mineral buyers expanded into non-operated interests and family offices increased their allocations, often seeking the tax benefits associated with oil and gas development. As the non-operated space became more competitive, smaller operated deals offered higher returns. This shift occurred due to an exodus of private capital living a void in the market. From 2018 to 2023, private equity fundraising for U.S. natural resources plummeted by nearly 90%. Although more robust lately, those firms that have been successful in raising capital are generally allocating larger commitments to fewer teams. Recognizing this evolution, We're once again partnering with highly talented, proven value creators who have successfully built companies for private equity. In 2024, we've invested approximately $120 million in what we previously referred to as strategic partnerships and controlled capital. By partnering with proven operators as the majority working interest owner, we gained control over capital and development timing, leading to higher returns and enhancing our ability to generate shareholder value. As our controlled investments have grown in scale and importance, we are simplifying how we describe our opportunity set to better reflect our forward-looking strategy. But going forward, our investments will fall into two categories, operated partnerships and traditional non-op. Operated partnerships are controlled investments with proven value creators in their areas of expertise where we hold the majority working interest. These deals give us full control over capital allocation, development timing, and well design, allowing for us to optimize returns. Traditional non-op remains an important part of our strategy, where we own minority interests in core areas managed by experienced operators. This provides exposure to high quality assets without the need for direct operational control. This shift is not just about terminology. It is about how we're positioning Granite Ridge for the future. In 2024, just under half our capital was allocated to operated partnerships. but the success of our early investments give us confidence to lean in further. In 2025, the strategy will account for nearly 60% of our CapEx. For our investors, this means more control, higher returns, and increased optionality in a competitive market. We are targeting full cycle returns of greater than 25% and have been pleased with our results to date. To add some color, our first six projects in our Operated Partnership Program included 38 wells, all in the Delaware Basin. We invested $148 million, and based on realized and projected cash flows at current strip pricing, we estimate a full cycle internal rate of return of 24%, fully accounting for inventory costs as well as drilling and completion expenses. We are currently running two rigs and have 92 gross or 42.9 net locations in hand or under definitive agreements across two operating partners in the Permian Basin. the operated partnership strategy continues to gain momentum and we are in active discussions with several additional management teams. We have built a great mousetrap that provides public investors with private equity like exposure, offers proven value creators a differentiated capital structure that does not rely on an exit, but offers the flexibility to build a company rather than an asset to flip. As I mentioned on the last call, it is different and is working. As usual, Tyler will provide a detailed overview of the fourth quarter, but I would like to highlight a few key points. In our last call, I mentioned we expected roughly a 10% decline in gas production, offset by a modest increase in oil production. I was pleasantly surprised to be wrong, but for the right reasons. In the fourth quarter of 2024, compared to the third, gas production actually increased by 4%, complemented by a 16% increase in oil production. The primary driver of this outperformance was acceleration in our traditional non-op business, specifically chunky interests in wells operated by Mewburn, EOG, and Silverhill that came online earlier than expected. Additionally, early outperformance in a couple of our operated partnership units contributed to the beat. We are looking ahead to an exciting year for Granite Ridge, with robust production growth of 16% or 29,000 barrels of oil equivalent per day at the midpoint, with an oil weighting of 52%. This is largely driven by our Permian-operated partnerships and a few high working interest Permian units in our traditional non-op business. We expect gas production to remain steady through the first three quarters, followed by an increase in the fourth quarter as about a dozen wells come online across the Hainesville, Drygas, Eagleford, and traditional non-op Permian. Oil production is expected to decline by about 5% in the first quarter, increase slightly in the second quarter, and accelerate in the second half of the year as our second Delaware-focused operated partnership rig, stood up this mid-February, begins to contribute in earnest. We are guiding to a total capex range of $300 million to $320 million, with 56% allocated to operated partnerships and the remainder to traditional non-op. As is our norm, this range only includes deals and developments that are either in hand or under contract. Absent a significant negative change in hydrocarbon prices, we are confident that we can fund this capital plan, as well as our fixed dividend, from internally generated cash flow and existing liquidity. We have a substantial amount of oil-weighted inventory in our Operated Partnership Program, and current economics are incentivizing us to drill sooner rather than later. While honoring the conservatism towards leverage that is in our DNA, I could see a path towards an additional $60 million to $80 million in development CapEx this year. This additional CapEx would be weighted towards the fourth quarter and would likely have a negligible impact on 2025 production, but would significantly contribute to early 2026. We continue to evaluate various debt financing opportunities, which we believe offer attractive options for our capital plans. We plan to continue to monitor market conditions, and our strategy remains focused on non-dilutive capital to expedite the development of our existing inventory. On that note, I'll hand it over to Tyler to provide more insights into our results.