Sign in

You're signed outSign in or to get full access.

GR

Granite Ridge Resources, Inc. (GRNT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was operationally solid but fell short vs consensus: revenue $112.7m and Adjusted EBITDAX $78.6m, with diluted EPS $0.11 and adjusted EPS $0.09; costs (LOE) ran hot on higher saltwater disposal and service costs, pressuring profitability despite 27% YoY production growth to 31,925 Boe/d .
  • Versus S&P Global consensus, revenue ($120.9m*), EBITDA ($83.5m*), and EPS ($0.14*) were modest misses; management maintained 2025 guidance (31–33k Boe/d, $400–$420m capex) and expects high-single-digit production growth into Q4 . Values retrieved from S&P Global.
  • Balance sheet flexibility improved post-quarter: issued $350m 8.875% senior notes due 2029, reaffirmed $375m borrowing base; pro forma liquidity ~ $422m, positioning GRNT to continue inventory additions while keeping leverage ~0.9x TTM EBITDAX .
  • Strategic narrative centers on scaling Operated Partnerships (notably Admiral Permian) and selective non-op in Appalachia; hedging remains robust (~75% of production, nearly 50% of 2026 volumes hedged) to support cycle-resilient execution .

What Went Well and What Went Wrong

  • What Went Well

    • Production and scale: Daily volumes rose 27% YoY to 31,925 Boe/d (51% oil), with 9.3 net wells turned in-line; Admiral Permian produced ~7,400 Boe/d net (23% of total) and continues to be a performance benchmark .
    • Cash generation and capital allocation: Adjusted EBITDAX $78.6m; OCF before working capital $73.1m; continued $0.11 dividend; expanded inventory with $16.5m acquisition capex and 17 acquisitions (Permian/Utica) .
    • Capital structure: Issued $350m 8.875% notes due 2029 and reaffirmed RBL at $375m, boosting pro forma liquidity to ~$422m; leverage at 0.9x TTM Adjusted EBITDAX .
    • Management quote: “Granite Ridge delivered another quarter of strong execution and disciplined growth... Our Operated Partnership platform continues to perform well...” .

  • What Went Wrong

    • Cost pressure: LOE rose to $8.03/Boe (vs $5.62/Boe LY) on higher saltwater disposal and service costs; management expects full-year LOE toward the high end of guidance .
    • Estimate misses: Revenue and EPS came in below S&P Global consensus (EPS $0.09 vs $0.14*; revenue $112.7m vs $120.9m*), likely reflecting pricing mix and cost headwinds; EBITDA slightly below as well . Values retrieved from S&P Global.
    • Gas basis risk: No Waha basis hedges currently; evaluating basis hedges and gas-to-power offtake solutions to mitigate Permian gas weakness into 2H26 .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Oil & Natural Gas Sales ($USD Millions)$94.1 $109.2 $112.7
Net Income ($USD Millions)$9.1 $25.1 $14.5
Diluted EPS ($)$0.07 $0.19 $0.11
Adjusted Net Income ($USD Millions)$18.5 $14.0 $11.8
Adjusted EPS ($)$0.14 $0.11 $0.09
Adjusted EBITDAX ($USD Millions)$75.4 $75.4 $78.6
OCF Before WC ($USD Millions)$70.7 $69.5 $73.1

Production, pricing and costs

KPIQ3 2024Q2 2025Q3 2025
Avg Daily Production (Boe/d)25,177 31,576 31,925
Oil Mix (% of volumes)51% 51% 51%
Realized Oil Price ($/Bbl)$73.44 $61.41 $61.62
Realized Gas Price ($/Mcf)$1.24 $2.32 $2.39
LOE ($/Boe)$5.62 $7.00 $8.03
G&A ($/Boe)$2.41 $2.96 $2.38
Wells TIL (net)5.2 4.9 9.3

Consensus vs Actual (S&P Global consensus; asterisk denotes S&P values)

MetricConsensus (Q3 2025)*Actual (Q3 2025)Beat/Miss
Revenue ($USD Millions)$120.9*$112.7 Miss
EPS ($/share)$0.14*$0.09 (Adj. EPS) (GAAP $0.11 )Miss
EBITDA/EBITDAX ($USD Millions)$83.5*$78.6 (Adj. EBITDAX) Miss

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious (Q2 2025)Current (Q3 2025)Change
Annual production (Boe/d)FY 202531,000–33,000 31,000–33,000 Maintained
Oil % of sales volumesFY 202551%–53% 51%–53% Maintained
Acquisitions ($m)FY 2025$120 $120 Maintained
Development capex ($m)FY 2025$280–$300 $280–$300 Maintained
Total capex ($m)FY 2025$400–$420 $400–$420 Maintained
LOE ($/Boe)FY 2025$6.25–$7.25 $6.25–$7.25 Maintained (Mgmt: high end)
Prod. & ad valorem taxes (% sales)FY 20256%–7% 6%–7% Maintained
Cash G&A ($m)FY 2025$25–$27 $25–$27 Maintained
Dividend (quarterly)Ongoing$0.11 $0.11 (12/15/25 pay date) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Operated Partnerships (Admiral, PetroLegacy, new partners)Q1: Program highlighted as key growth lever; ~75% hedged, capital flexibility . Q2: Four partners; three rigs in Permian; may add a fourth in 2026 .Admiral at ~7,400 Boe/d net (23% of GRNT); PetroLegacy drilling now (mid-2026 contribution); two partners aggregating; 28.1 net producing wells within partnerships .Accelerating scale and visibility.
Capex and outspend vs leverageQ2: Will outspend to add inventory; leverage comfort 1.0–1.25x .2025 capex $400–$420m maintained; comfortable outspend while keeping leverage ≤1.25x; pro forma liquidity bolstered .Outspend continues with balance sheet discipline.
LOE and service costsQ2: LOE $7.00/Boe on saltwater disposal and service cost inflation .LOE $8.03/Boe; expect high end of LOE guidance for 2025 .Cost pressure elevated.
Gas basis risk (Waha)Not emphasized in Q1/Q2 releases.No Waha basis hedges; evaluating basis hedges and gas-to-power options with premium to Waha .Addressing basis headwinds.
HedgingQ1 & Q2: ~75% production hedged through 2026 .Continue ~75% hedged; nearly 50% of expected 2026 volumes hedged .Stable hedge posture.
Production cadenceQ2: Modest Q3 growth; stronger Q4 .High-single-digit QoQ growth expected in Q4 2025 .Strong exit-rate setup.
Capital structureQ2: Exploring credit markets in fall 2025 .Issued $350m 8.875% notes due 2029; RBL reaffirmed at $375m .Liquidity extended; runway improved.

Management Commentary

  • Strategic message: “Our Operated Partnership platform continues to perform well… driving operational excellence and capital efficiency… we further strengthened our balance sheet through proactive refinancing… well positioned to build on this momentum [into] 2026.”
  • Operator partnership success: “Admiral now produces 7,400 BOE per day net… 23% of Granite Ridge’s total production… a blueprint for our other partnerships.”
  • Capital flexibility and hedging: “We also continue to actively hedge around 75% of production each quarter, with nearly 50% of expected 2026 volumes already hedged.”
  • Cost outlook: “LOE… higher than expected… primarily due to… saltwater disposal, contract labor, and other service costs… we will be towards the higher end of guidance for 2025 on a full-year basis.”
  • Q4 setup: “We do expect… high single-digits production growth from the third quarter to the fourth quarter.”

Q&A Highlights

  • Operated partnerships pipeline: Two new Permian-focused partnerships are aggregating inventory; initial development likely in 2026 with activity building as inventory accrues; PetroLegacy’s production contribution expected mid-2026 .
  • Q4 capex cadence: Q4 capex around ~$125m with a large component from acquisition closings shifted from Q3; full-year capex guidance unchanged .
  • LOE trajectory: Mix-driven LOE pressure (Permian water handling); management guiding to high end of LOE range for 2025; 2026 guidance pending .
  • Gas basis mitigation: No Waha basis hedges today; evaluating basis hedges and gas-to-power arrangements to achieve a premium to Waha .
  • Inventory philosophy: Target 3–5 years of controllable inventory via partnerships; content with current position; may seek more durability outside Permian .

Estimates Context

  • EPS: Reported adjusted EPS $0.09 vs S&P Global consensus $0.14*; GAAP diluted EPS $0.11 . Values retrieved from S&P Global.
  • Revenue: $112.7m vs S&P Global consensus $120.9m* . Values retrieved from S&P Global.
  • EBITDA/EBITDAX: Adjusted EBITDAX $78.6m vs S&P Global EBITDA consensus $83.5m* . Values retrieved from S&P Global.
  • Setup for revisions: Higher-than-expected LOE ($8.03/Boe) and modest revenue miss suggest small downward revisions to near-term EPS/EBITDA, partially offset by positive Q4 production cadence commentary (high-single-digit QoQ) and stronger liquidity supporting execution .

Key Takeaways for Investors

  • Near-term: Modest across-the-board miss vs consensus on revenue, EPS, and EBITDA amid LOE inflation; watch Q4 volumes (guide: high-single-digit QoQ growth) as a near-term catalyst .
  • Medium-term: Strengthened liquidity (8.875% notes; reaffirmed RBL) and ~0.9x leverage support continued inventory capture and measured growth into 2026 .
  • Strategy: Operator partnership model is scaling (Admiral, PetroLegacy, new partners), offering controllable, repeatable growth with diversified non-op cash flow (notably Appalachia) .
  • Cost focus: Elevated LOE tied to Permian water handling remains a headwind; management expects high end of LOE guidance—monitor service cost trends and water solutions in 2026 outlook .
  • Gas basis risk: No Waha hedges yet; basis hedging and gas-to-power options under evaluation could improve realizations in late-2026+ .
  • Hedge and pricing risk: ~75% hedged production and 50% of 2026 volumes hedged mitigate price volatility; realized oil prices remained ~low-$60s/Bbl in Q3 .
  • Capital returns: $0.11 quarterly dividend maintained; improved liquidity supports ongoing balanced approach to growth and cash returns .

Values retrieved from S&P Global for consensus metrics (marked with *).