Granite Ridge Resources, Inc.

Good morning and welcome everyone to Granite Ridge Resources' fourth quarter and full year 2025 earnings conference call. At this time, 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, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now turn the call over to James Masters, Vice President, Investor Relations.

James Meeker & Thank you operator good morning everyone, we appreciate your interest in granite rich resources. James Meeker & We will begin our call with comments from Tyler parkerson our President and chief executive officer. James Meeker & will review the quarter's results and company strategy, along with an overview of 2026 financial and operating guidance and introduce our newly announced chief financial officer kyle kepler. James Meeker & He will then turn the call over to kyle to 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. Credit 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 our filings with the Securities and Exchange Commission. 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 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. We are proud to report results for a third full year as a public company. While much has changed since the company went public in 2022, our commitment to pursuing the highest risk adjusted rate of return projects and creating durable shareholder value remains the same. It is that commitment that drove our evolution from a traditional non-operated company pursuing a diversified investment strategy to a capital allocator focused on the Permian Basin, backing proven management teams to acquire and develop high quality assets. a strategy shift that is the driving force behind our results. For the fourth quarter and full year 2025, average daily production increased 27% year over year to 35.1,000 barrels of oil equivalent per day. Total production for the year increased similarly to 32,000 barrels of oil equivalent per day. Adjusted EBITDAX for the quarter was approximately $70 million and $315 million for the full year. Capital expenditures for the fourth quarter We're 127.5 million, split approximately half to development and half to inventory acquisitions. Our full-year CapEx was $401 million. Finally, we maintained our quarterly dividend of 11 cents per share, which continues to demonstrate our commitment to return meaningful capital to shareholders. Since going public, we have significantly increased production while maintaining a conservative balance sheet. That capital efficient growth is a result of consistently hitting our underwriting targets and increasing our capital allocation to operator projects, thanks to a structural opportunity we identified in the market. Over the past decade, private capital retreated from the natural resources sector in a major way, fundamentally changing the landscape for energy development. Private equity fundraising declined dramatically, and the remaining capital focused on fewer teams chasing larger opportunities. This left a scarcity of capital and competition in the unit by unit operated segment. At the same time, proven operating teams who had built and sold successful companies increasingly lacked access to aligned capital partners. Granite Ridge recognized the opportunity and stepped into the gap by developing our Operative Partnership Model. We first partnered with Admiral Permian Resources, a Midland-based operator with multiple successful exits and deep ties in the community. Central to our strategy was that the Delaware Basin, containing some of the highest quality shale resource in the world, is now controlled by a small number of large asset managers overseeing vast overlapping land positions. These land positions come with a variety of complications like lease expirations, fragmented working interests, and inventory management issues that can turn into high return drilling opportunities for the right partner. Grant Ridge through Admiral has become that partner. Over the past three years, we have executed over 50 transactions across the Permian Basin and have grown net production to nearly 10,000 BOE per day. Grant Ridge and Admiral have become preferred counterparties and inventory additions continue to outpace our two rig development program. We've also signed up three additional operator partners, each pursuing a different strategy in the Permian. We've been deliberate about limiting public disclosure of these partners to preserve their competitive positioning. Each team has successfully built and exited private equity-backed companies in the Permian and have significant personal capital invested alongside us, creating meaningful alignment. We look forward to sharing their progress and demonstrating the scalability of the operator partnership strategy. These partnerships greatly expanded our proprietary deal flow which was already a competitive strength. Last year, we reviewed nearly 700 opportunities with a capture rate of just 15%. In 2025, we invested $122 million across 107 transactions, securing approximately 20,500 net acres and 331 gross or 77.2 net locations, almost exclusively split between two buckets. Non-operated in the Utica Shale, and operator partnerships in the Permian. Because we focus on short cycle opportunities underwritten at strip pricing, our entry costs remain notably low relative to large format transaction comps. In the Permian, our average acquisition cost per net location was just $1.4 million, far below recent public market transactions. This is a three-cycle strategy. We target 25% full cycle returns at strip pricing, compound production, and cash flow growth, and protect downside through discipline leverage. Since our first operator partnership investment with AdMob, we have fundamentally transformed our business from passive non-op to controlled capital with scale, growing production, and high-quality near-term inventory, the results of which are becoming clear in our financials and outlook. Granite Ridge came public with cash on the balance sheet and no debt, but subscale. In the year since, we deliberately used leverage to achieve sufficient scale to support our next evolution, sustainable free cash flow. We're getting close. We see 2026 as a year of transition. Production growth is moderating and development capital expenditures are aligning more closely with expected cash flow. At current threat prices, we expect to achieve free cash flow from operations in 2027. The midpoints of guidance for production and capital for this year are as follows. We expect annual production to average 35,000 barrels of oil equivalent per day, representing a 9% increase over 2025. And we expect our exit in 2026 to be essentially flat or modestly up from exit in 2025. We forecast oil volumes to be approximately 51% of total production. Development capital expenditures are projected at $315 million. with an additional $20 to $30 million for acquisitions that we currently have in the pipeline. Approximately 90% of the capital invested in 2026 will be focused on operated projects. To summarize, we will spend roughly 15% less than last year to achieve production growth of approximately 9%. At current script pricing, we anticipate a modest outspend in 2026. One of our express goals for the business is to generate alpha through the expansion of cash flow above maintenance capital. We currently estimate maintenance capital of approximately $250 million, which provides room for discipline growth above that level. We built our business for capital efficient growth and pre-cash flow visibility at $60 oil. In response to the geopolitical shocks of the past week, we have added oil hedges and will continue to closely monitor the market. Richard Schauffler, M.D.: : Recent events aside, we have been encouraged by the market resilience shown today and remain bullish on the medium term outlook should prices fall below $60 per barrel for a sustained period we retain flexibility with our partners to adjust the development schedule and moderate capital deployment. Richard Schauffler, M.D.: : Finally, let me expand on to recent announcements. Mike SanClements, Alongside diamondback energy we partner with conduit power to support the development of 200 megawatts of natural gas fired power generation in our cot scheduled to come online fully in 2027. Mike SanClements, This transaction will effectively provide a synthetic edge to our permian gas realizations and is expected to enhance value by approximately one to $2 per MCF on our gas exposed to this contract. We think similar opportunities may exist to further improve our gas realizations and we'll be diligent in pursuing them. Second, we recently announced the appointment of Kyle Kepler as our Chief Financial Officer after a six-month search. We went through a thoughtful, diligent process to find the right person that can help guide us through this next season of growth. Our business has matured and the challenges and opportunities are much different than they were a few years ago. We were looking for an oil and gas professional with tremendous experience in capital markets, but also someone with creativity and a track record of creating value. Somebody that could be a thought partner as we grow the business. We couldn't be happier that Kyle decided to join us. He brings significant capital markets expertise, an extensive network, and a keen strategic perspective that will be critical as we transition towards sustainable free cash flow in the next phase of Granite Ridge's development. I'm thrilled to welcome him to the team and his first earnings conference call. Kyle.