GRANITE RIDGE RESOURCES
I N V E S T O R P R E S E N T A T I O N | N O V E M B E R 2 0 2 3
Key Investment Highlights
Non-Op - A Better Way to Invest in Oil & Gas
- Decreased risk - participate with a smaller piece of a larger number of wells
- Asset diversity - own an interest in over 2,500 gross wells across Permian, Eagle Ford, Haynesville, DJ and Bakken
- Accelerated development - high-quality near- 1 term drilling rather than long-dated inventory
Conservative Balance Sheet | 3 |
• Conservative leverage - 0.26x net debt to TTM |
Adjusted EBITDAX at 9/30/2023
• Control of capital - elect to participate in drilling on a well-by-well basis
• Limited liabilities - not burdened by long-term contracts and drilling obligations common to operators
• Prepared for volatility - not forced to hedge at low
prices, allows for counter-cyclical investment opportunities
2
4
Access to Private Operators
- Broaden exposure - significant high-quality inventory is in the hands of private operators, particularly in the Permian
- Blue chip partners - anticipate 2023 new wells turned to sales from private operators including Admiral, Endeavor, Greenlake, Silver Hill, Mewbourne, and Rosewood
Total Shareholder Returns
- Capital returns
- Fixed dividend - annualized $0.44/share 1
- Stock buybacks - $50MM repurchase plan
- Responsible Growth
- Active operators - 18% production growth 2
- Highly scalable - cost structure largely fixed; growth has minimal impact on overhead
- Not "flooding the market" - increase in GRNT production does not necessarily grow U.S. production, just our share of it
Granite Ridge seeks to tighten the band of outcomes in oil & gas investing through high diversification,
low leverage and disciplined investment underwriting
1. | Future dividends are subject to approval by the Granite Ridge board of directors and credit agreement restrictions. | 2 | |||
2. | At midpoint of guidance. |
Overview | Assets | Strategy & Execution | Appendix | |||
3Q '23 Highlights
- Paid dividend of $15MM
- Initiated $50MM stock buyback in 4Q2022 and repurchased 868,726 shares ($6.3MM) in 3Q '23
-
$83MM of 3Q '23 Adjusted
EBITDAX 1 -
20% production growth 3Q
'23 over 3Q '22 - 3Q '23 - 77 gross (8.58 net) wells turned to sales
- TTM - 322 gross (26.23) net wells turned to sales
- Closed $8MM of Proved Property Acquisition and $12MM of Inventory Acquisition 2 and deployed $95MM of total capital
3Q2023 | TTM | |
Production | ||
Avg Daily Production (Boe/d) | 26,433 | 23,304 |
% Oil | 46% | 48% |
Gross / Net Wells Turned to Sales | 77 / 8.58 | 322 / 26.23 |
Cash Flow & Income ($MM) | ||
Total Revenue (Excl. Hedges) | $108.4 | $403.6 |
Adjusted EBITDAX 1 | $83.2 | $306.8 |
D&C Capex | $75.7 | $314.7 |
Inventory Acquisition 2 | $11.9 | $37.3 |
Unit Costs ($/Boe) | ||
Lease Operating Expense | $6.96 | $7.00 |
Production & Ad Val Taxes | $3.20 | $3.49 |
Balance Sheet and Liquidity ($MM) as of 9/30/23 | ||
Cash & Cash Equivalents | $6 | |
Total Debt | $85 | |
Net Debt 1 | $79 | |
Liquidity 3 | $161 |
- Non-GAAPfinancial measure, which is defined and reconciled in the Appendix.
- Includes costs to acquire additional development opportunities and undeveloped acreage acquisitions.
- Proforma for fall bank redetermination.
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OverviewAssetsStrategy & ExecutionAppendix
Strong Liquidity & Conservative Balance Sheet
Key Company Statistics | As of |
($MM, except per share data) | 11/8/23 |
Ticker | GRNT |
Share Price | $6.08 |
Fully Diluted Market Cap | $820 |
Enterprise Value (9/30/23 Debt & Cash) 1 | $899 |
TTM Adjusted EBITDAX (Q4'22-Q3'23)2 | $307 |
Q3 '23 Adjusted EBITDAX 2 | $83 |
EV / TTM Adjusted EBITDAX 2 | 2.9x |
EV / Q3 '23 Adjusted EBITDAX 2 Annualized | 2.7x |
Annualized Current Dividend per Share 3 | $0.44 |
Implied Dividend Yield | 7.2% |
Capitalization | As of |
($MM) | 9/30/23 |
Cash | $6 |
RBL Balance ($275MM Borrowing Base 6) | $85 |
Total Debt | $85 |
Total Net Debt 2 / (Cash) | $79 |
Net Debt 2 to / TTM Adjusted EBITDAX 2 | 0.26x |
Elected RBL Commitment 6 | $240 |
Less: Borrowings & LOC | ($85) |
Plus: Cash | $6 |
Total Liquidity 6 | $161 |
Net Acres (36,661) 4 | Q3 '23 Production (26,433 Boe/d) | Average Working Interest 5 | ||||||||||
Eagle Ford 17% | Eagle Ford 11% | Permian, 9.0% | ||||||||||
Permian 29% | DJ, 1.8% | |||||||||||
Haynesville 6% | ||||||||||||
Haynesville 22% | Permian 48% | Bakken, 3.9% | ||||||||||
DJ 6% | Haynesville, 13.9% | |||||||||||
Bakken 10% DJ 9% | Eagle Ford, 15.2% | |||||||||||
Bakken 41% | ||||||||||||
YE 2022 SEC PV-10 ($1,559 MM) 2 | Average 8/8ths Net Royalty Interest 5 | |||||||||||
Eagle Ford 16% | Permian, 75.4% | |||||||||||
Haynesville 10% | DJ, 78.8% | |||||||||||
Permian | Bakken, 80.3% | |||||||||||
Haynesville, 94.9% | ||||||||||||
Bakken 10% | 57% | |||||||||||
Eagle Ford, 75.4% | ||||||||||||
DJ 7% | ||||||||||||
- Enterprise Value is calculated as the sum of total market capitalization as of 11/8/2023 and net debt as of 9/30/2023. Net debt is a non-GAAP financial measure. Please see the Appendix for a reconciliation to the nearest GAAP measure.
- Non-GAAPfinancial measure. Please see the Appendix for a reconciliation to the nearest GAAP measure.
- Based on last three dividends paid to date.
4. | As of 9/30/2023. | 4 |
5. | Average Working Interest and Net Royalty Interest charts reflect a straight average of all wells included within our SEC Reserves Report as of 12/31/22. | |
6. | Proforma for fall bank redetermination. |
OverviewAssetsStrategy & Execution
Scaled, Diversified Asset Base
Appendix
DJ: 7% of PV-101
- LTM Spuds 2: 69
- # of Wells in Process 3: 53
- Net acreage 4,5: 2,086
- PV-101: $104MM
- Active Rigs 6: 14
Bakken: 10% of PV-101
- LTM Spuds 2: 35
- # of Wells in Process 3: 23
- Net acreage 4,5: 15,030
- PV-101: $155MM
- Active Rigs 6: 33
Permian: 57% of PV-101
- LTM Spuds 2: 128
- # of Wells in Process 3: 101
- Net acreage 4,5: 10,806
- PV-101: $894MM
- Active Rigs 6: 312
Eagle Ford: 16% of PV-101
- LTM Spuds 2: 21
- # of Wells in Process 3: 11
- Net acreage 4,5: 6,365
- PV-101: $250MM
- Active Rigs 6: 49
Haynesville: 10% of PV-101
- LTM Spuds 2: 12
- # of Wells in Process 3: 8
- Net acreage 4,5 : 2,374
- PV-101: $157MM
- Active Rigs 6: 39
Outlined counties contain assets or acreage screened and/or evaluated by Granite Ridge
- Based on 12/31/2022 SEC reserves. PV-10 is a Non-GAAP financial measure, which is defined and reconciled in the Appendix.
- Gross spuds 7/1/2022 to 9/30/2023.
- Defined as gross wells spud, but not producing as of 9/30/23.
- As of 9/30/2023.
- Excludes shallow zone acreage.
- As of 9/29/2023. Source: Baker Hughes
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OverviewAssetsStrategy & ExecutionAppendix
Highly Diversified Upstream Portfolio
Basin
Operator Sample
% Private 1
Oil 2
Gas 2
Permian | 27% | 60% | 40% |
DJ | 1% | 33% | 67% |
Bakken | 31% | 76% | 24% |
Eagle Ford | 80% | 58% | 42% |
Haynesville | 51% | 0% | 100% |
Total | 36% | 50% | 50% |
Company | |||
- Based on current production.
- Based on 12/31/2022 SEC net reserves.
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Overview | Assets | Strategy & Execution | Appendix | |||
Benefits of Non-Op
Granite Ridge increases asset diversity and scales overhead by investing in a smaller piece
of a larger number of high-graded wells drilled by proven public and private operators
Access Entire Upstream Universe
The Granite Ridge "mousetrap" can quickly pivot to pursue high- quality near-term drilling inventory with the best risk adjusted returns across all basins and operators
Quick to Adapt
Non-op strategies avoid long-term contracts and quickly adapt to technological advances, hydrocarbon pricing, cost trends, basin expansions, new plays, etc.
Leveraging Technology and Partners - Highly Scalable
Rather than hire an ops team, we partner with the best operators in each basin and leverage our tech- enabled platform to manage significant asset growth with a minimal increase in overhead
Infinite Divisibility = Opportunistic Growth or Exit
Non-operated interests can be sold, promoted or purchased quickly allowing us to grow, lock-in returns or shed obligations to better align with our strategic objectives and stockholder returns
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OverviewAssetsStrategy & ExecutionAppendix
Capital Allocation Framework
Capital Allocation Strategy
Prioritize Highest Shareholder Returns
Sources
Cash Flow
-
0.5x
Leverage
Uses
Annual
Dividend 1
Defend
Balance Sheet
Maintain
Production
Discretionary
Pursue "burgers & beer"
Responsible opportunities and strategic
Growthpartnerships where risk-adjusted returns exceed returns threshold
Consolidation | Evaluate accretive acquisitions |
Opportunities | |
$50MM stock repurchase
Buybacks program announced in December 2022
Dividend | Consider increase of cash returns |
Growth 1 | to stockholders |
Dividend structure provides strong cash returns with upside growth potential
1. Future dividends are subject to approval by the Granite Ridge Board of Directors and credit agreement restrictions.
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Overview | Assets | Strategy & Execution | Appendix | |||
Opportunity Set Overview
GRNT Strategy
Format
Average
Investment
Average
Working Interest
Investment Type
• Core growth engine to | |||||
consolidate the | |||||
fragmented non-op | |||||
Ground Game or | market | $2-6MM entry with | Leasing and short | ||
• | Smaller, relationship driven | D&C capex of 2-3x | <5% | cycle, drill ready | |
"Burgers & Beer" | |||||
deals that come from | entry | opportunities | |||
years of "boots on the | |||||
ground" in our primary | |||||
focus areas | |||||
• | Concentrated | ||||
investments with leading | |||||
Strategic | operators | $20-100MM for | Short cycle, drill | ||
• | Asset-level partnerships | acquisition & | 20-60% | ready | |
Partnerships | |||||
that provide for more | development | opportunities | |||
control over drilling plans | |||||
and development timing | |||||
• | "Consolidating the | ||||
consolidators" | Large PDP + | ||||
Acquisitions | • | Purchasing portfolios from | >$50MM | <2% | diversified |
private or PE-backed | operator inventory | ||||
sellers | |||||
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Overview | Assets | Strategy & Execution | Appendix | |
Rigorous Deal Sourcing & Evaluation Process | ||||
01 | 02 | 03 | 04 | 05 |
Business Development | Deal Sourcing | Initial Screen On | Detailed Engineering Final Negotiations | |
Basin, Size, Operator / Finance DD |
Employ a boots-on-the-ground and all- hands-on-deck approach to deal sourcing
Screen an average of nine new deals each week
Very selective: closed ~4% of opportunities screened
1,364
Screened
Deal Funnel
2021 - 2023 YTD | Mixed Measures
1,079
Passed
77
No Offer
Permian accounts for ~65% of deal flow
Engineering, finance and land department collaboration paired with powerful, integrated data analytics results in holistic, systematic deal evaluation
16 | 118 | |
Active Evaluations | ||
Lost | ||
285 | 14 | |
"Double Clicked" | 192 | Offers Outstanding |
Offers Issued | 60 | |
Transactions Closed |
GRNT's focus on full cycle returns results in a highly selective investment process
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Disclaimer
Granite Ridge Resources Inc. published this content on 09 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2023 14:30:07 UTC.