Granite Ridge Resources, Inc.

If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the star and one. Please limit comments to one question and one followup. I will now turn the call over to James Masters, Investor Relations Representative for Granite Ridge.

Thank you, operator, and good morning, everyone. We appreciate your interest in Granite Ridge resources. We will begin our call with comments from Tyler Parkinson, our President and Chief Executive Officer, who will review the quarter's results and company strategy. We will then turn the call over to Kim Weimer, our Interim Chief Financial Officer and Chief Accounting Officer, who will review our financial results in greater detail. Tyler will then return to provide closing comments before we open the call 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. We ask that you 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 these statements. These and other risks are described in yesterday's press release and are filings with the securities and exchange permission. This call also includes references to certain non-GAAP financial measures. Information reconciling these measures to the most directly comparable GAAP measures is available in our earnings release on our website. Finally, this call is being recorded, and a replay and transcript will be available on our website following today's call. With that, I'll turn the call over to Tyler. Thank you, James,

and good morning, everyone. I'm excited to address you today as Granite Ridge's new CEO. Before diving into our second quarter results, I want to acknowledge the leadership transition that occurred during the quarter. Luke Brain-Deberg stepped down as CEO, and I'm honored to have been appointed to lead the company forward. Luke played a pivotal role in shaping Granite Ridge into the successful business it is today. And on behalf of the team, I want to express our gratitude for his significant contributions. We wish him all the best in his next chapter. Turning to our Q2 performance, our quarterly results continue to validate our business model, with production and cash flow once again exceeding expectations. In the second quarter, we turned 4.9 net wells to sales, an increased production by 37% year over year to 31,576 barrels of oil equivalent per day, driven by a 46% rise in oil production and a 28% rise in natural gas production. This growth reflects the strength of our diversified portfolio of oil and natural gas assets and our disciplined approach to capital allocation, which prioritizes the highest risk adjusted returns. Our operated partnership and traditional non-op investment strategies remain the driver of this success. We've partnered with four top tier operators to unlock substantial value in the Permian Basin and are thrilled with the progress achieved to date. Meanwhile, our traditional non-op strategy continues to deliver consistent results, with wells coming online ahead of schedule in the Permian and wells outperforming forecast in the Utica. On the capital front, we spent approximately $77 million on development and $10 million on acquisitions for a total capex spend of $87 million. Year to date, we have invested approximately 149 million of capital on development activities, which is higher than forecast based on the accelerated time and activities, and 44 million in acquisition capital expenditures. These acquisitions, located in the Permian and Appalachian basins, added high quality inventory to our portfolio, enhancing our growth runway. Given our first half performance, driven by stronger than modeled production and unexpected acceleration of new production, we are raising our full year production guidance by 10% at the midpoint to between 31,000 and 33,000 barrels of oil equivalent per day, which will result in year over year growth of 28%. We're also raising our capital expenditure guidance to an all in range of 400 to $420 million, driven mainly by new unbudgeted acquisitions expected to close in 2025. Our deal team's tenacity and strategic approach have led to every transaction we've sourced being off market. For 2025, we anticipate deploying approximately $120 million in acquisition capital, adding 74 net locations. 80% of this capital targets the Permian Basin through our Operator Partnership Strategy, the remaining allocated to our Appalachian leasing strategy, which has delivered exceptional results to date. Our business development engine is operating at peak performance, securing three additional years of inventory at an attractive entry cost of $1.7 million per location. Our Operator partners are doing exactly what we expect them to do, capture attractive development opportunities at the low market value. They are doing an excellent job, and we're excited for the opportunity to fund these projects for the long-term benefit of our shareholders. Moving forward, our guidance will identify both development and acquisition capital expenditure separately, which we hope will offer more transparency for our investors. We occupy a unique niche in the public energy market, looking like an energy company, but acting like an investment firm. Our vision is to become the leading public investment platform for energy development, and we will continue to invest alongside proven, high-quality operating teams to capitalize on undervalued opportunity. Since commodity prices declined in early 2Q, we have moved aggressively to scale our Operator platform and secure long-dated, low-risk inventory at highly attractive entry prices. We have identified nearly $60 million of new inventory acquisitions, 40 million of which are located in the Permian Basin for our Operator partners, and 20 million of which are driven by organic acreage leasing in the Utica Shale. Our strategy remains unchanged. We continue to underwrite development projects targeting full cycle returns exceeding 25%, deliver top quartile growth, and return capital to shareholders through our quarterly dividend. This disciplined approach allows us to remain resilient in any market environment. We may not look like your typical EMP, but we are creating a ton of value. Our investment strategy centers on operating partnerships, with two gaining significant momentum. Our longest-standing partner is Midland-based Admiral Permian Resources. After selling their prior firm Reliance Energy to Concho Resources for $1.6 billion, members of the management team founded the first iteration of Admiral Permian backed by Aries Management. Over a three-year period, Admiral scaled its asset base in the Western Delaware Basin to 20,000 DOE per day before divesting to PetroHunt with a trailing EBITDA of nearly $300 million. I give you their impressive resume to highlight the value of our Operator partnership program. We fund proven, highly talented teams to do what they do best, create significant value through finding and developing oil and gas. We are proud to partner with Admiral Permian Resources in their newest iteration. After just two years of partnership, Admiral produces over 7,000 DOE per day net to Granite Ridge, for 22% of our total production. And as of June 30th, boasts over 40 net locations of high-quality inventory. Petro Legacy is our second partner, focused on growing an asset position in the Midland Basin. Three years ago, the management team sold Petro Legacy II, then backed by NCAT Investments, to Oventive after growing production in the same area to 35,000 DOE per day. Our third and fourth partners, signed in just the last couple of months, are still confidential as they're just starting on their asset acquisition phase. Each partner has their own story, their own unique investment strategy. But taken together, they've had a very specific investment thesis for Granite Ridge, which is that there now exists a void of private capital in the oil and gas space after a 70% decline in upstream private equity fundraising since 2018. The private capital that remains is focused on mega deals with concentrated portfolios. This altered supply and demand dynamic has lowered the entry costs and increased the resulting economic returns on smaller development projects. Add to this that the core of the Delaware Basin, for example, is largely held by seven operators overseeing massive asset packages, and it sets up remarkable opportunities for nimble and aggressive teams to piece together smaller deals at attractive prices. And that suits the traditional Granite Ridge model to a teak. For over a decade, our team's daily pursuit has been uncovering value in oil and gas through smart value-add investments, small deal after small deal, utilizing a huge proprietary data set to accurately underwrite, hitting singles and doubles in the premier basins across the United States. We've done this successfully, enjoying the compounding effect of consistently investing to full cycle returns that comfortably exceed our cost of capital. The Operated Partnership Strategy is not all that different. We still evaluate every deal with our partners and underwrite those with the highest risk adjusted returns. From a macro perspective, volatility persists with oil and natural gas prices softening. Our diversified production mix, roughly balanced between oil and gas, provides a natural balance in our hedging program covering approximately 75% of current production protects our cash flows. Looking ahead, our priorities for the rest of 2025 are clear. First, we'll advance our Operated Partnership Program, which will account for approximately 65% of our development capital spend this year. With three rigs currently running in the Permian, we have the flexibility to adjust activity based on market conditions. Second, we'll maintain a balance between growth and returns supporting our 10% production increase while preserving our 11 cents per share quarterly dividend, which offers an attractive yield at current prices. Finally, we'll safeguard our financial flexibility. Our balance sheet remains strong with a leverage ratio of 0.8 times net debt to adjusted EBITDA. We enhanced liquidity following our borrowing base increase to $375 million in the second quarter, and we'll continue to bolster our liquidity by exploring the credit markets in the fall. Before I hand it over to Kim, I want to underscore my confidence in Granite Ridge's future. We have a proven strategy, a high quality asset base, and a talented team ready to execute. I'm excited to lead us through this next phase of growth and deliver value for our shareholders.