Granite Ridge Resources, a U.S. oil and gas exploration and production company, outlined plans to shift its business model from aggressive growth to cash generation at the EnerCom Denver conference on Tuesday. The company, which went public in 2022 after assets were contributed by private equity firm Grey Rock Investment Partners, has deployed more than $2 billion since inception.
The CFO, Kyle Kettler, emphasized the company’s production growth trajectory, noting a compounded annual growth rate of 13% since 2023. Granite Ridge operates in six major U.S. unconventional basins, including the Delaware Basin in New Mexico and Texas, with an average location acquisition cost of about $1.4 million. Development and completion costs are estimated at roughly $900 per foot, including facilities, while average well productivity stands at 56 barrels per foot on 10,000-foot laterals.
Kettler highlighted the company’s inventory of 238 gross locations (88 net locations), representing approximately $800 million in future spending over several years. Near-term capital expenditures are expected to remain in the high $300 million range, covering both development and acquisitions. Granite Ridge aims for a roughly 50/50 production mix of oil and natural gas.
The company’s enterprise value is estimated at about $1 billion, trading at a 2.7x EV/EBITDA multiple, below the 3.4x average for mid-cap peers and the 4.0x for Permian-focused players. Granite Ridge’s market capitalization stands at $688 million, with a dividend yield of 8.37%. Revenue grew 15% over the last twelve months, while gross profit margin reached 76%. However, current free cash flow yield remains negative at -15%.
By 2027, Granite Ridge targets a free cash flow yield above 10% and dividend coverage of at least 1.25 times. Kettler stated the company is now large enough to transition from outspending cash flow to prioritizing cash generation, with the shift expected to begin in 2027. The company also aims to improve its valuation multiple to align more closely with industry peers.
