Granite Ridge Resources, Inc. — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported net income of $30.0 million ($0.23 per diluted share) for the second quarter of 2026, compared to $25.1 million ($0.19 per diluted share) in the prior year period.
• Adjusted Net Income (non-GAAP) totaled $11.1 million ($0.09 per diluted share), down from $14.0 million ($0.11 per diluted share) in the second quarter of 2025.
• Adjusted EBITDAX (non-GAAP) reached $79.6 million for the quarter, an increase from $75.4 million in the second quarter of 2025.
• Oil and natural gas sales were $149.3 million for the quarter, up from $109.2 million in the prior year period.
• Cash flow from operating activities was $55.6 million, including $14.0 million in working capital changes; Operating Cash Flow Before Working Capital Changes (non-GAAP) was $69.5 million.
• Net Debt to Trailing Twelve Months Adjusted EBITDAX (non-GAAP) was 1.4x as of June 30, 2026.
• Total debt consisted of $350.0 million in senior unsecured notes and $125.0 million outstanding under the senior secured revolving credit agreement.
• Liquidity totaled $293.8 million, comprising $249.7 million in committed borrowing availability and $44.1 million in cash on hand.
• Lease operating expenses were $30.0 million ($10.27 per Boe), a 47% increase per unit from the prior year period due to higher water cuts, flowback operations, and contract labor.
• Production and ad valorem taxes were $9.3 million, representing 6% of oil and natural gas sales.
• General and administrative expenses totaled $9.2 million ($3.14 per Boe), inclusive of $1.3 million in non-cash stock-based compensation.

Guidance and Future Outlook

• 2026 annual production guidance is set at 34,000 to 36,000 Boe per day.
• Oil is expected to comprise 50% to 52% of sales volumes for the full year.
• Full-year acquisition guidance is $45 million to $55 million.
• Development capital expenditures are guided at $300 million to $330 million.
• Total capital expenditures are guided at $345 million to $385 million.
• Lease operating expenses are guided at $8.25 to $9.25 per Boe.
• Production and ad valorem taxes are guided at 6% to 7% of total sales.
• Cash general and administrative expenses are guided at $25 million to $27 million.
• Management stated 2026 is the final year of investing ahead of cash flow, targeting a free cash flow inflection in 2027.
• The company aims to achieve durable growth, a double-digit free cash flow yield, and a well-covered dividend by 2027.

Business Segments and Product Lines

• Daily production grew 1% to 32,044 Boe per day (51% oil) in the second quarter of 2026, up from 31,576 Boe per day in the prior year period.
• Oil production averaged 16,341 barrels per day, a 2% increase from the prior year.
• Natural gas production averaged 94,220 Mcf per day, a 1% increase from the prior year.
• The company placed 7.2 net wells online during the quarter, compared to 4.9 net wells in the second quarter of 2025.
• Closed 27 acquisitions primarily in the Permian and Appalachian Basins, adding 21.9 net undeveloped locations.
• At June 30, 2026, the company had 175 gross (14.0 net) wells in process.
• Operated Partnership platform remains the principal differentiator, funding development on acreage sourced through partner operating relationships.
• Inventory replacement in the first half of 2026 exceeded development rates.

Market and Competitive Landscape

• Average realized oil price (excluding derivatives) was $93.93 per Bbl in the second quarter of 2026, compared to $61.41 per Bbl in the prior year.
• Average realized natural gas price (excluding derivatives) was $1.12 per Mcf in the second quarter of 2026, compared to $2.32 per Mcf in the prior year.
• Realized price on a Boe basis excluding settled commodity derivatives was $51.19 per Boe for the quarter.
• The company maintains a hedge program designed to protect cash flow across a range of commodity price outcomes.
• All underwritten opportunities target a full-cycle return above 25% at strip pricing.

Risks and Challenges

• Lease operating expenses per unit increased 47% year-over-year due to increased saltwater disposal costs from higher water cuts and flowback operations.
• Forward-looking statements are subject to risks including changes in commodity prices, interest rates, supply chain disruptions, infrastructure constraints, and operational risks.
• Reserve estimates depend on assumptions that may prove inaccurate, affecting quantities and present value.
• Potential impacts from geopolitical risks, including conflicts in the Middle East, Russia-Ukraine, and Iran, could disrupt commodity prices and financial markets.
• Regulatory and environmental matters, including potential tariffs and trade policies, may affect business operations.
• The Grey Rock Distribution could result in a transition to a non-controlled company status under NYSE standards if beneficial ownership drops below 50%.

Management Commentary and Tone

• President and CEO Tyler Farquharson stated the company advanced its plan to reach a free cash flow inflection in 2027.
• Management emphasized maintaining a conservative balance sheet and continuing the quarterly dividend.
• The strategy is described as not depending on a higher commodity price environment, relying instead on underwriting discipline and hedging.
• Management highlighted the Operated Partnership platform as a key differentiator for adding inventory at attractive entry costs while retaining capital control.

Other Key Points

• The Board of Directors declared a regular quarterly dividend of $0.11 per share payable on September 14, 2026, to shareholders of record as of August 28, 2026.
• A total of $78.5 million was invested in drilling and completions capital expenditures, and $16.7 million in acquisition capital.
• Grey Rock Investment Partners intends to distribute a portion of its shares to limited partners of an affiliated fund in the third quarter of 2026; this is an in-kind distribution with no proceeds to the Company.
• The company operates assets in six prolific unconventional basins across the United States.
• Conference call scheduled for August 7, 2026, at 10:00 a.m. CT to discuss results.
• Management will participate in the Enercom Denver Energy Investment Conference (August 18-19, 2026) and the Pickering Energy Partners PEP Energy Conference (September 28-30, 2026).