Granite Ridge Resources, Inc. (GRNT)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered robust operational growth: production up 37% YoY to 31,576 Boe/d (51% oil), oil volumes +46%, gas +28%; GAAP net income was $25.1M ($0.19 diluted EPS) and Adjusted EPS was $0.11, with Adjusted EBITDAX of $75.4M .
• Guidance was raised materially: 2025 production to 31,000–33,000 Boe/d (from 28,000–30,000) and total capex to $400–$420M (from $300–$320M), adding ~74 net locations and three years of inventory; dividend maintained at $0.11 per share .
• Versus consensus: revenue modestly beat ($109.2M vs $108.1M*), Adjusted EPS missed ($0.11 vs $0.13*), and Adjusted EBITDAX was slightly above EBITDA consensus ($75.4M vs $74.2M*). The company also booked a $23.9M derivative gain and a $5.8M equity investment loss that influenced GAAP results . Values marked with * retrieved from S&P Global.
• Strategic catalysts: acceleration in Permian operated partnerships (three rigs running), strong Utica non-op outperformance, and explicit intent to explore credit markets (RBL upsizing and potential terming-out via high yield or private credit), positioning for continued scale in 2026 .

What Went Well and What Went Wrong

What Went Well

• Production growth and mix: 37% YoY growth to 31,576 Boe/d driven by +46% oil and +28% gas; GAAP net income up sharply to $25.1M ($0.19) and Adjusted EBITDAX reached $75.4M, underscoring operational execution .
• Guidance raised and inventory extended: 2025 production guidance increased ~10% at midpoint and total capex lifted to fund acquisitions, adding ~74 net locations and ~3 years of inventory at ~$1.7M per location .
• Management commitment to value creation: “Our quarterly results continue to validate our business model... We allocate capital to the highest risk-adjusted returns... driving consistent and attractive full-cycle returns,” said CEO Tyler Farquharson .

What Went Wrong

• Cost inflation: LOE rose to $20.1M ($7.00/boe) vs $13.7M ($6.50/boe) in Q2 2024, driven by service cost pressures, notably saltwater disposal, pressuring unit economics .
• Lower realized prices and investment losses: Realized oil price fell to $61.41/bbl (from $69.18 in Q1 and $65.53 in Q4), and the company recorded a $5.8M loss on equity investments in the quarter .
• Outspend and leverage drift: Long-term debt increased to $275.0M with leverage at 0.8x Net Debt/TTM Adjusted EBITDAX (still conservative), and management acknowledged continuing to outspend cash flow while leaning into growth and inventory additions .

Financial Results

Core Performance vs Prior Quarters

Values marked with * retrieved from S&P Global.

KPIs

Wells TIL by Basin (Q2 2025)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO tone on strategy and returns: “We allocate capital to the highest risk-adjusted returns across a diverse portfolio of oil and natural gas assets, driving consistent and attractive full-cycle returns. This compounding effect is accelerating our growth momentum.”
• Operated partnerships and hedging: “Our diversified production mix... provides a natural balance, and our hedging program, covering approximately 75% of current production, protects our cash flows.”
• Capital plan and inventory additions: “We are raising our full-year production guidance... and increasing our capital expenditure guidance to $400–$420 million... anticipate deploying approximately $120 million in acquisition capital, adding 74 net locations... at an attractive entry cost of $1,700,000 per location.”
• CFO on costs and special items: “LOE was $20.1M or $7/boe... G&A rose to $8.5M or $2.96/boe, driven by $1.7M severance and $1.1M capital markets expenses.”

Q&A Highlights

• Leverage and outspend cadence: Management reiterated comfort at 1.0–1.25x Net Debt/Adj. EBITDA and willingness to outspend cash flow near term to add duration; leverage ended Q2 at 0.8x .
• Credit strategy: Company is pursuing another borrowing base increase in the fall and evaluating terming-out via high yield or private credit to optimize the debt stack .
• Rig program outlook: Running three rigs now; four rigs in 2026 is plausible as new partners aggregate inventory; operated capital mix may tick up, with continued non-op opportunities in Appalachia .
• Oil mix/path through 2H: Oil cut expected ~52%; growth driven predominantly by Permian (oilier) with some gas acceleration in Haynesville-related projects .

Estimates Context

Interpretation: Revenue was a modest beat, Adjusted EPS a slight miss, and Adjusted EBITDAX above EBITDA consensus, aided by derivative gains and stronger production; consensus inputs suggest near-term estimate revisions for production/capex trajectory and mix. Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Production inflection with raised 2025 guidance signals durable growth into 2H and 2026, underpinned by operated partnerships and Utica non-op strength .
• Near-term EPS may be impacted by higher LOE/service costs and nonrecurring G&A; monitoring unit costs and normalization of G&A is prudent for margin trajectory .
• Balance sheet remains flexible (0.8x leverage), and management is proactively pursuing RBL upsizing and potential terming-out—supports continued inventory acquisition without equity dilution .
• Hedge coverage (~75%) and diversified commodity mix de-risk cash flows amid oil price volatility; gas strength provides counterbalance .
• Stock reaction catalysts: guidance raise, operated partnership scaling (rig count trajectory), and financing steps (RBL/high-yield) that clarify growth runway and reduce funding risk .
• Estimate implications: modest revenue/EBITDA beat vs consensus but Adjusted EPS miss; sell-side models may lift production and capex assumptions while trimming near-term EPS for cost inflation and nonrecurring items . Values marked with * retrieved from S&P Global.
• Watch list: LOE trends in Delaware, equity investment activity, derivative impacts, and oil cut evolution toward ~52% in 2H .

Disclaimer: Consensus estimates and margin metrics marked with * were retrieved from S&P Global.