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Granite Ridge Resources, Inc. (GRNT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong operational execution: production rose 23% YoY to 29,245 Boe/d (50% oil), Adjusted EBITDAX $91.4M, and Adjusted EPS $0.22, with LOE/unit improving 13% YoY to $6.17/Boe .
  • Versus S&P Global consensus, Adjusted/Primary EPS beat ($0.22 vs $0.198), while S&P-standardized revenue was slightly below ($116.3M* vs $118.4M*) and EBITDA came in below ($76.0M* vs $87.4M*). Company-reported oil & gas sales were $122.9M, reflecting definitional differences versus S&P standardized revenue ; S&P data marked with asterisks and disclaimer below.
  • 2025 guidance reaffirmed: 28–30k Boe/d, 51–53% oil, capex $300–$320M, LOE $6.25–$7.25/Boe, taxes 6–7% of sales, cash G&A $25–$27M; dividend maintained at $0.11 per share .
  • Balance sheet/liquidity improved: borrowing base raised to $375M post quarter-end; pro forma liquidity $140.8M at 3/31; net debt/TTM Adjusted EBITDAX 0.7x .
  • Potential stock catalysts: EPS beat and cost/LOE traction; reaffirmed 2025 guide despite volatility; offset by EBITDA miss vs S&P metrics and capex above consensus due to opportunistic acquisition timing .

What Went Well and What Went Wrong

  • What Went Well

    • Production and cash flow outperformed internal plans: “generated $91 million of Adjusted EBITDAX, surpassing our internal projections,” driven by strong new well performance/timing across multiple basins .
    • Cost structure improved: LOE fell to $6.17/Boe (−13% YoY); operating margin improved to 87% from 83% YoY; tracking to low end of LOE guidance .
    • Portfolio/hedge strength and liquidity: ~75% production hedged through 2026; borrowing base increased to $375M, pro forma liquidity $140.8M; leverage 0.7x .
    • Management quote: “We achieved 23% year-over-year daily production growth and generated $91 million in Adjusted EBITDAX…driven by strong new well performance and favorable timing across multiple basins.”

  • What Went Wrong

    • S&P-standardized EBITDA and revenue missed S&P consensus (EBITDA $76.0M* vs $87.4M*; standardized revenue $116.3M* vs $118.4M*), despite company-reported sales of $122.9M . Values with asterisks from S&P Global.
    • Non-cash headwinds: loss on commodity derivatives ($14.9M) and loss on equity investments ($10.0M) weighed on GAAP EPS (diluted $0.07) .
    • Capex above expectations: total Q1 capex ~$106M vs consensus ~$87M as management executed a $14M opportunistic acquisition; supportive strategically, but a near-term variance .

Financial Results

P&L vs Prior Periods (Company-reported and S&P-standardized where noted)

MetricQ3 2024Q4 2024Q1 2025
Oil & Gas Sales / Revenues ($M)$88.8* (S&P)$100.3* (S&P)$122.9 (company) / $116.3* (S&P)
Net Income ($M)$9.1 -$11.6 $9.8
Diluted EPS ($)$0.07 -$0.09 $0.07
Adjusted EPS ($)$0.14 $0.17 $0.22
Adjusted EBITDAX ($M)$75.4 $82.6 $91.4
EBIT Margin (%)41.1%* (S&P)19.4%* (S&P)23.7%* (S&P)
Net Income Margin (%)10.2%* (S&P)-11.6%* (S&P)8.4%* (S&P)

Notes: Values marked with asterisks are retrieved from S&P Global and may reflect standardized definitions that differ from company presentations. Values retrieved from S&P Global.*

Q1 2025 vs S&P Global Consensus

MetricActualConsensusSurprise
Primary/Adjusted EPS ($)$0.22$0.1975+$0.0225 (beat)
Revenue ($M, S&P standardized)$116.331*$118.383*-$2.052 (miss)
EBITDA ($M, S&P standardized)$76.023*$87.419*-$11.396 (miss)

Notes: All numbers in this table are from S&P Global; values marked with asterisks are retrieved from S&P Global. Company-reported oil & gas sales were $122.9M . Values retrieved from S&P Global.*

KPIs and Operating Metrics (Q1 2025)

  • Average daily production: 29,245 Boe/d; Oil 14,752 Bbl/d; Gas 86,960 Mcf/d .
  • Oil & gas sales: $122.9M; oil $91.85M; gas & related $31.08M .
  • Realized prices (ex-derivatives): oil $69.18/Bbl; gas $3.97/Mcf .
  • LOE: $16.2M ($6.17/Boe); Production taxes: $8.4M (6.8% of sales); G&A: $7.5M ($2.84/Boe) .
  • Operating cash flow: $76.1M; OCF before working capital changes: $86.7M .
  • Capex: $105.8M total (development $71.4M; acquisitions $34.4M); 10 acquisitions in Delaware/Utica adding 12.0 net locations .
  • Wells: 13.7 net TIL; 126 gross (15.1 net) wells in process at 3/31 .
  • Balance sheet: debt $250.0M; cash $16.1M; liquidity $90.8M at 3/31; pro forma liquidity $140.8M after borrowing base step-up .
  • Hedge book (selected): 2025 oil collars 2.43MM bbls floors ~$61–62; ceilings ~$77–78; 2025 gas collars 7.34 Bcf floors ~$3.22; ceilings ~$4.00; 2025 gas swaps 8.44 Bcf at ~$3.57 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Production (Boe/d)FY 2025~29k Boe/d midpoint; 16% growth (Q4 call) 28,000–30,000 Maintained
Oil mix (% of volumes)FY 2025~52% (Q4 call) 51%–53% Maintained
Total capex ($M)FY 2025$300–$320 $300–$320 Maintained
LOE ($/Boe)FY 2025Lowered initial 2025 range (Q4 call; no range disclosed) $6.25–$7.25 Reaffirmed
Production & ad valorem taxes (% sales)FY 2025Below 2024 range exiting year (Q4 call) 6%–7% Reaffirmed
Cash G&A ($M)FY 2025$23–$26 (2024); 2025 initial lowered (Q4 call) $25–$27 Reaffirmed
Dividend ($/sh)Q2 2025$0.11 (declared for Mar 2025) $0.11 payable Jun 13, 2025 Maintained

Management explicitly reaffirmed all 2025 guidance items on May 8–9, 2025 .

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Operated Partnerships (Permian)Early outperformance; capex ~50% in 2024; inventory >40 net Permian locations; Midland partner ramp contemplated Running 2 rigs Delaware; 56% of 2025 capex; targeting >25% full-cycle returns; first 6 projects ~24% IRR; potential Midland start mid-2025 Now ~60% of 2025 capex; scaled back to 1 rig due to volatility; expect ~25% of production in 2025 from partnerships; considering Midland 4-well pad this summer, flexible to defer Expanding but paced prudently
Capital allocation flexibilityDeals compete for capital; accelerate in 2025 Base capex $300–$320M; optional +$60–$80M if prices/liquidity allow Proceeding with base ~$310M; can swiftly cut ~$30M operated capex if oil weak; non-consenting selective wells High discipline maintained
Cost structure (LOE/G&A)LOE $5.62/Boe; G&A $2.16/Boe; trending lower with scale LOE $5.99/Boe in Q4; 2024 LOE $6.29/Boe; lowered 2025 cost ranges LOE $6.17/Boe; 13% YoY improvement; tracking to low end of LOE guide; G&A $2.84/Boe Sustained efficiency
Hedging & leverageEmphasis on risk management, high hedge coverage ~90% of current production hedged through 2026; leverage <1.25x target; 2025 yield >7.5% ~75% hedged through 2026; net debt/TTM Adjusted EBITDAX 0.7x; borrowing base to $375M Robust protection/liquidity
Gas macro & mixGas surprised to upside in Q3; expect Q4 gas decline Constructive gas outlook; Haynesville/dry gas EF potential in late 2025 Gas pricing improved; evaluating acceleration in Haynesville/dry gas EF; oil cut could be lower if gas outperforms Gas optionality rising

Management Commentary

  • Strategy and execution: “Our first quarter results highlight the quality of our asset base… We achieved 23% year-over-year daily production growth and generated $91 million in Adjusted EBITDAX…driven by strong new well performance and favorable timing across multiple basins.”
  • Operated Partnerships returns: “With every dollar we invest…we are targeting full cycle returns of greater than 25%, and we are pleased that the results to-date align with those expectations.”
  • Cost and margin: “On an operating margin basis, we improved from 83%…to 87% this year…repeatable cost structure improvements.”
  • Capital discipline: “We have non-consented well proposals that do not meet our return threshold and identified approximately $30 million in CapEx [we] can swiftly cut or defer if market conditions require.”
  • Risk management: “With low leverage and a robust hedge book covering approximately 75% of current…production through 2026, we are well-prepared to capitalize on opportunities.”

Q&A Highlights

  • Acquisition contribution/timing: ~450 Boe/d for 2025 from Q1 acquisitions (Delaware), minimal Q1 impact due to late close; ~$9M revenue implication cited by management .
  • LOE outlook: Tracking toward the low end of the $6.25–$7.25/Boe range for 2025 .
  • Drivers of Q1 beat vs internal: One Delaware pad online earlier; Utica pads early; existing wells returning from offset frac sooner; Waha price improvement allowed choke openings on gassy Delaware pad .
  • Oil cut and gas outperformance: Oil in line; gas better than expected; guidance stays 51–53% oil; if miss, likely due to stronger gas .
  • Partnership pace: Operating one rig now (from two) due to prudence; partnerships to be ~25% of 2025 production; D&C execution competitive with top basin operators; considering DUCs if prices soften .

Estimates Context

  • S&P Global consensus (Q1 2025): EPS $0.1975 vs actual $0.22 (beat); standardized revenue $118.4M* vs actual $116.3M* (miss); EBITDA $87.4M* vs $76.0M* (miss). Company-reported oil & gas sales were $122.9M (different definition vs S&P standardized revenue) . Values retrieved from S&P Global.*
  • Implications: EPS beat should support upward revisions to 2025 EPS. EBITDA shortfall vs S&P standard (and higher capex vs expectations) may temper near-term EBITDA/FCF estimates; management reaffirmed FY guide (production/costs), which may anchor revisions to mix/quarterly cadence rather than full-year totals .

Key Takeaways for Investors

  • Granite Ridge executed a high-quality quarter: higher production, tighter costs, and an EPS beat vs S&P consensus, underpinned by diversified exposure and disciplined capital allocation .
  • Guidance unchanged and credible: stable production and cost guide with flexibility to modulate Operated Partnership spend if oil weakens; dividend intact at $0.11 .
  • Balance sheet/liquidity robust: 0.7x net debt/TTM Adjusted EBITDAX and expanded borrowing base ($375M) provide ample runway to pursue accretive deals and manage volatility .
  • Watch mix and gas leverage: management flagged potential for higher-than-expected gas volumes (positive cash impact at current pricing), which could modestly lower oil cut versus guidance midpoint .
  • Near-term trading lens: EPS beat and reaffirmed guide likely constructive; EBITDA miss vs S&P and capex above consensus could limit multiple expansion until quarterly cadence proves through 1H25 .
  • Medium-term thesis: Operated Partnerships scaling with targeted >25% returns, improving cost structure, and option value in gas-weighted inventory (Haynesville/dry gas EF) create a path to sustained cash flow growth and continued shareholder returns .

Appendix: Additional Data

  • Cash flow: Net cash from operations $76.1M; OCF before working capital $86.7M .
  • Taxes and other items: Production & ad valorem taxes were 6.8% of sales; GAAP losses on derivatives ($14.9M) and equity investments ($10.0M) affected GAAP EPS .
  • Dividend: Board declared $0.11 per share payable June 13, 2025 (record May 30, 2025) .

Disclosure on standardized data: Values marked with asterisks (*) are retrieved from S&P Global and may reflect standardized definitions that differ from company presentations. Values retrieved from S&P Global.