Granite Ridge Resources Q2 2026 Earnings Report

Granite Ridge Resources EPS Results

• Actual EPS: $0.09
• Consensus EPS: $0.08
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Granite Ridge Resources Revenue Results

• Actual Revenue: $149.27 million
• Expected Revenue: $139.44 million
• Beat/Miss: Beat by +$9.83 million
• YoY Revenue Growth: N/A

Granite Ridge Resources Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 11:00AM ET

Granite Ridge Resources (NYSE:GRNT) operates as a non-operated oil and gas exploration and production company. It owns a portfolio of wells and acreage across the Permian and other unconventional basins in the United States. Granite Ridge Resources, Inc. is based in Dallas, Texas.

Granite Ridge Resources Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Management reaffirmed a 2027 free-cash-flow inflection, targeting a double-digit free-cash-flow yield, approximately 1.25x dividend coverage, high-single-digit production growth, and leverage near 1.25x at $65 oil.
• Positive Sentiment: The operated partnership platform added 21.9 net undeveloped locations through 27 transactions for approximately $28 million of committed capital, while 78% of first-half deal capital came through operator partnerships and was underwritten to returns above 25% at strip pricing.
• Negative Sentiment: Lease operating expense remained above plan, prompting the company to raise full-year LOE guidance to $8.25-$9.25 per BOE from elevated Permian water-handling costs, higher early-life pad expenses, and gas-related shut-ins.
• Positive Sentiment: Management expects production to increase modestly in the third quarter and more substantially in the fourth, with improving Permian takeaway and basis hedges expected to support natural-gas revenue; gas sales could exceed $30 million in the third quarter before hedge settlements if current basis holds.
• Neutral Sentiment: Granite Ridge expects Grey Rock to distribute shares to limited partners over the next six to nine months, reducing its ownership below 50%; management views the move as improving public float and liquidity, though the distribution could create a temporary supply overhang.

Presentation

[Operator]

Good day. Welcome to the Granite Ridge Resources Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star one one on your touchtone phone. Please note this call is being recorded. I would like to turn the call over to James Masters, Vice President, Investor Relations. Please go ahead.

[James Masters, VP of Investor Relations at Granite Ridge Resources]

Thank you, operator. Good morning, everyone. We appreciate your interest in Granite Ridge Resources. We will begin our call with comments from Tyler Farquharson, our President and Chief Executive Officer, who will review the quarter's results and company strategy. He'll then turn the call over to Kyle Kettler, our Chief Financial Officer, to review our financial results in greater detail. Tyler will then return to provide closing comments before we open the call for questions. Today's conference call contains certain projections and other forward-looking statements within the meaning of federal securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ from those expressed or implied. We ask that you review the cautionary statement in our earnings release. Granite Ridge disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

[James Masters, VP of Investor Relations at Granite Ridge Resources]

Accordingly, you should not place undue reliance on these statements. These and other risks are described in our press release and our filings with the Securities and Exchange Commission. This call also includes references to certain non-GAAP financial measures. Information reconciling these measures to the most directly comparable GAAP measures is available in our earnings release on our website. Finally, this call is being recorded. A replay and transcript will be available on our website following today's call. With that, I'll turn the call over to Tyler.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Thank you, James. Good morning, everyone. Let me start with the most important takeaway. 2026 is the last year we plan to invest ahead of our free cash flow. Every dollar we are putting to work is building towards the free cash flow inflection we have laid out for 2027. This quarter advanced that plan on the fronts that matter most. We brought new wells online. We added high return inventory to feed our growth. We kept our balance sheet strong while maintaining our dividend. The quarter's numbers reflect that progress. Production was 32,044 bbls of oil equivalent per day, 51% oil, and we generated $79.6 million of Adjusted EBITDA with strong early results from the 7.2 net wells we turned in line late in the quarter. The real story is not the quarter, it's the trajectory.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

We are getting closer to that inflection. We are executing the plan to get there. Our operated partnership platform continues to be the standout. The advantage starts with how the deals are sourced. Through Admiral Permian Resources and our other operating partners, we fund development on acreage that is captured through our partners' own leasing, ground game, and operator relationships, rather than competing for it in broadly marketed packages where prices get bid up. Because we bring the capital and our partners bring the operational footprint and the local deal flow, we see opportunities that never reach an auction. We underwrite each one directly to our return threshold before we ever commit a dollar. That is what lets us add inventory at entry cost well below what marketed deals command. Unlike a traditional non-operator, we control the pace and the capital.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

We are not simply along for the ride on someone else's drilling schedule. We capture operator-level economics and inventory without carrying a full standalone operating cost structure. That combination, proprietary sourcing plus real control, is what separates us from a passive non-op and is difficult for others to replicate. During the quarter, we closed 27 transactions, primarily across the Permian and Utica for $28 million, including future carry obligations. We added 21.9 net undeveloped locations to our inventory. We ended the period with 175 gross, or 14 net wells in process. Let me put one of those deals in context, because it really shows what our flagship operating partner, Admiral, actually does. Large public producers in the Permian regularly end up with development work that must get done well and on a firm timeline, but that does not fit neatly into their own rig schedule or capital plans.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Rather than pull their rigs and crews off other priorities, they hand the work to a partner who can execute it for them. Admiral is that partner. We provide the capital behind it. In the first half of the year, Admiral took on a project for a large Permian operator that called for nine long lateral wells, each stretching 10,000 to 15,000 ft, or roughly two to three miles. All of which had to be drilled, completed, and producing by the end of 2026. That is a very aggressive schedule. Using two rigs Admiral already had running, they folded the project into their existing program and built the facility and infrastructure plan to hit the deadline. We believe that ability, taking on a large, complex development and delivering it quickly and reliably is what make operators want to work with Admiral. It is a differentiated strength of the partnership.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

This is exactly the repeatable, high-graded deal flow the platform was built to generate. Our sourcing funnel did exactly what it was built to do in the first half of 2026. We reviewed 363 opportunities, advanced 84 to underwriting. We closed 44, a conversion of about 12% that shows we are holding our screening discipline in the face of abundant deal flow. Our operator partnerships did the heavy lifting, driving about 78% of our first half deal capital, led by Admiral in the Delaware, alongside a steady non-operated ground game that layered in smaller, high return interest in the Utica. This is the low-cost inventory replacement we have built this company around. We are adding high-quality locations faster than we drill them at entry costs that support returns above our 25% threshold at the strip. Two items worth addressing directly. Both are ones we understand and are actively managing.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

First, lease operating expense. For the second quarter in a row, LOE ran above plan, driven primarily by water handling in the Permian and by higher early life cost on our newer pads. We are resetting our full-year LOE guidance higher. Kyle will take you through the new range and the path we see toward lower per unit costs as second half volumes come online and our newer areas mature. Second, natural gas. Permian realization stayed soft this quarter on continued Waha basis weakness, which we expected. The more important point is what is happening underneath. New takeaway is finally catching up to Permian gas supply. The Hugh Brinson Pipeline began moving gas midyear and continues to ramp towards full service, with additional large-scale capacity following behind it. Waha prices have already firmed off their lows as these projects have come online.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Supply also keeps growing, we're not calling the problem solved, Permian takeaway is clearly improving, and as that basis firms, we expect our natural gas revenue to strengthen throughout the back half of the year. We have hedged our basis through the first quarter of 2028, protecting our downside risk. Neither item changes our trajectory, both are moving in the right direction. Let me also give you our read on the macro because it frames how we are built to compete. Public markets are largely pricing oil to revert to a lower long-term level, energy equities broadly reflect that skepticism. We do not need to win that debate to win. We underwrite every acquisition and every operator partnership well at the strip to a full cycle return above 25%.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

If prices simply hold near current levels longer than the market expects, that is upside embedded in our portfolio that we did not pay for. If prices fall, our hedge book protects our cash flow, our balance sheet and our dividend. Beyond our hedges, the program itself is built to flex in both directions. Given the macro uncertainty, we believe this flexibility is critically important. If oil were to weaken and hold below roughly $65, we could pull back an estimated 40%-50% of our development budget while protecting our base business and our dividend. If conditions warranted leaning in, we have the ability to accelerate. Every incremental well still has to clear our full cycle return hurdle at the strip before we fund it. That discipline is what lets us stay on offense through a volatile tape instead of reacting to it.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Stepping back, our strategy is working. Our traditional non-operated business continues to generate steady cash flow from an asset base that affords diversification and optionality, while our operated partnerships are compounding our inventory and our growth. We are in a position of strength, every dollar we are deploying is building that base that carries us towards our 2027 framework: durable growth, double-digit free cash flow yield, and a sustainable dividend. Let me be specific about why 2027 is the term. The capital we are investing this year builds a production base that steps up meaningfully next year. As those volumes come online, covering gas realizations and lower per unit costs widen our cash margins. Our free cash flow grows faster than our capital program.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

That combination, more production at wider margins against a roughly steady level of investment, is what converts this year's outspend into sustainable free cash flow in 2027. That is the inflection. Everything we did this quarter advanced it. As our free cash flow builds, we expect to keep our balance sheet strong with leverage trending lower as our cash flow grows while continuing to deploy capital into high return acquisitions. With that, I'll turn it over to Kyle.

[Kyle Kettler, CFO at Granite Ridge Resources]

Thank you, Tyler, and good morning, everyone. We had a solid quarter financially with strong cash generation and a balance sheet that gives us real flexibility. Oil and natural gas sales were $149.3 million. On a GAAP basis, net income was $30 million, or $0.23 per diluted share, up from $0.19 a year ago. Adjusted net income was $11.1 million or $0.09 per diluted share. Adjusted EBITDAx was $79.6 million, up from $75.4 million a year ago. We generated $55.6 million of cash flow from operations or $69.5 million before working capital changes. Our unhedged realized price was $51.19 per BOE and $43.39 per BOE, including hedged settled derivatives. LOE was $30 million, or $10.27 per BOE. This compares with $9.57 per BOE during the first quarter. Combined for the first half of 2026, LOE was $9.91 per BOE.

[Kyle Kettler, CFO at Granite Ridge Resources]

We're focused on our operating cost structure and working closely with our operating partners on the details. We're seeing operating costs decline on wells that were turned to production during the end of the quarter, as a result, we expect per unit cost to trend lower over the second half. However, based on what we've seen so far, we're increasing our LOE guidance for the year to $8.25-$9.25 per BOE. Looking further out, we expect lower per unit costs as we scale into 2027, which is a contributing factor to the free cash flow inflection Tyler mentioned. Production and ad valorem taxes were $9.3 million, or 6% of sales, in line with guidance. G&A was $92.2 million or $3.14 per BOE, including $1.3 million of non-cash stock-based compensation. We invested $78.5 million in drilling and completions capital and $16.7 million of acquisition capital during the quarter.

[Kyle Kettler, CFO at Granite Ridge Resources]

That $16.7 million reflects the cash we deployed to close 27 transactions, primarily in the Permian and Utica. Including roughly $11 million of associated carry we expect to fund as these wells are developed, our total committed capital is about $28 million, which added 21.9 net undeveloped locations to our inventory, all of it sourced through our operating partners and our ongoing ground game and underwritten to our full cycle return threshold at the strip. Simply put, we're replacing and extending high-quality inventory as we develop it, which is how we sustain growth without paying up and warehousing long-dated drilling inventory. We end the quarter with $44.1 million of cash, $125 million drawn on our revolving credit facility, and $350 million of principal outstanding on our 8 and 7/8ths senior unsecured notes for net debt of $418 million. Leverage remains conservative at approximately 1.4 times.

[Kyle Kettler, CFO at Granite Ridge Resources]

Before I hand it back, let me offer some color on the second half. On volumes, we expect production to step up modestly in the third quarter and more meaningfully in the fourth as the wells from our first half of the program come online, with oil rounding out at about 52% of the mix. For the year, we expect volumes within the guidance range, but trending towards the lower end due to shifts in timing, providing a large positive impact to the first quarter of 2027 than initially expected. On cost, we expect per unit LOE to improve sequentially as new volumes dilute our fixed base. Finally, the third quarter will be the heaviest spending quarter of the year, reflecting the pace of our operated development and continued inventory additions before moderating in the fourth quarter.

[Kyle Kettler, CFO at Granite Ridge Resources]

As it relates to pricing, Waha basis was the weakest we've seen it on record, and that is what you see in our $1.12 per Mcf realization. We believe the second quarter is the low point and all things being equal, we expect gas will be a big swing factor in the second half. Gas sales were $9.6 million in the second quarter. If basis holds where it is today, we expect to be north of $30 million in the third quarter before hedge settlements. The fourth quarter is even better. Our basis hedges improved materially, and we have less volume hedged than in the third quarter. Altogether, ramping production and healthy price realization set the stage for a compelling 2027. With that, I'll turn it back to you, Tyler.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Thanks, Kyle. Let me close with three points. First, our operated partnership platform is delivering. It is giving us proprietary access to high-return inventory and executing it well, and is the engine of our growth. Second, we are well-positioned to execute the remainder of our 2026 plan. Our leverage remains within our target range. Our liquidity is ample, and we have paid a dividend every quarter since becoming a public company. Everything we are doing this year is building towards our 2027 framework of attractive growth, a double-digit free cash flow yield, and sustainable dividend coverage. We expect strong exit production approaching 40,000 BOE per day, continued improvement in our per-unit costs, and steady progress toward the point where this platform funds itself. We are confident in where we are headed, and we are looking forward to delivering.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Third, Grey Rock has advised us that it intends to distribute a portion of its Granite Ridge shares to its limited partners in the third quarter. If that distribution is completed, Grey Rock's ownership will fall below 50%, and Granite Ridge will no longer be a controlled company. We view that as a positive development. It broadens our shareholder base, increases our public float and trading liquidity, completes our transition to a fully independent governance structure. We will provide additional details on size and timing as those are finalized. With that, operator, we'll open the line for questions.

[Operator]

Thank you. As a reminder, if you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from John Annis with Texas Capital. Your line is open.

[John Annis, Analyst at Texas Capital]

Hey. Good morning, guys. Thanks for taking my questions. For my first one, you've reaffirmed that 2026 should be the final outspend year before a free cash flow inflection in 2027. I wanted to ask, what are the most important assumptions underlying that outlook, and what commodity prices do you need to generate that double-digit free cash flow yield outlined in the presentation?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Morning, John. Thanks for the question. Yeah, 2027, the way we're thinking about 2027 from a commodity perspective is $65 oil. We're north of that now. 2027 is in the low 70s right now. We've got some cushion there. $65 oil to be able to deliver what we've laid out, which is 10% free cash flow yield, one and a quarter coverage on our dividend

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Leverage in the one and a quarter range, production growth in the high single-digits.

[Kyle Kettler, CFO at Granite Ridge Resources]

I'll add in, the high single-digit production growth couples with, we have substantial hedge losses in 2026. We expect those to go away in 2027, so that should be a pick-up there. As you probably saw in our results, the Waha basis differential has been pretty rough for the first half of the year. That's subsiding, and it looks like that's going to stay about the same through 2027, expanding gas revenues.

[John Annis, Analyst at Texas Capital]

Got it. I appreciate the color. Maybe for my follow-up, digging more into your prepared remarks, one of the advantages you've highlighted with the operated partnership strategy is greater control of capital allocation and development timing. If commodity prices were to move materially higher or lower, how quickly and maybe to what extent could you flex activity levels up or down within the operated portfolio?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah. I think very quickly. We have additional inventory on the upside. There's additional inventory that we have scheduled out for out years that we can pull forward, add a rig, pull forward some inventory. I think that's an exercise that could happen very quickly. It's obviously harder to slow down activity, but what we've looked at so far, at least for 2027, we have plenty of capacity to be able to pull down our inventory or our spend rate below our maintenance capital level of $250 million. I think there's flexibility on both sides, and it's something we keep an eye on, especially with all the volatility right now on the commodity price.

[John Annis, Analyst at Texas Capital]

I appreciate the time. Great update.

[Operator]

Thank you. Our next question comes from Jeff Grampp with Northland Capital Markets. Your line is open.

[Jeff Grampp, Analyst at Northland Capital Markets]

Good morning, guys. Thanks for the time.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Sure.

[Jeff Grampp, Analyst at Northland Capital Markets]

With the transition to free cash expected next year, how do you anticipate that affecting the inventory capture strategy that you guys have been so successful at? Does that kind of artificially put a ceiling on the amount of capital you guys would be willing to put to work in that market? Or should we view that as kind of a, I don't know, secondary discretionary bucket of capital allocation outside of the free cash goal that's maybe more tied to development-oriented CapEx?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah. There's somewhat of a ceiling that gets put on it. Right now we've been very successful on that front. We've added inventory at about a two to one rate versus what we're developing. It's been very successful. I'd continue to expect that we'd be spending on extending our inventory. We probably have five to six years of inventory right now. That's a pretty good level for us. I don't really want to get too long inventory and have to warehouse that on the balance sheet. But if we did add another couple years of inventory, I think that would be great for the business. We had a big spend on acquisition activity in 2025. We spent over $125 million in 2025. This year, we'll probably spend about $50 million.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Next year, I'd probably expect to spend on a similar level.

[Jeff Grampp, Analyst at Northland Capital Markets]

Got it. That's really helpful. I appreciate that. I guess sticking on the acreage capture opportunity, it seems like you guys continue to be really active in the Utica, kind of backstopping the operated partnership model. Can you talk about the runway there, in terms of, I guess, continued opportunities at prices that make sense for you guys? Is that an area we should continue to expect to be a focus?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah, absolutely. That's our number one spot for our traditional non-op spending. 90% of our business, capital spending-wise, has been going into operated partnerships over the past few quarters. The rest of that has almost been exclusively going to Utica. That's been tremendous for us over the past 18 months. I think we're close to 6,000 net acres now in that basin, across that 18-month build. And it's a spot where we're continuing to see lots of deal flow. We kind of look at them in groups of closings. We had four separate closings in the second quarter that included multiple transactions in each one of those closings. Still seeing tons of deal flow in Utica. We added a couple net wells, a few hundred net acres.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Those economics look great. The well performance has been great. We now have, I think, over 80 wells online, in our portfolio up there, with at least a year and a half of data. And everything is looking good from the productivity standpoint. Yes, it's an area where we'd like to continue to spend dollars in the non-op business, and where we expect to have continuing success.

[Jeff Grampp, Analyst at Northland Capital Markets]

All right. Sounds great. I appreciate those details. I'll turn it back. Thank you, guys.

[Operator]

Thank you. Our next question comes from Phillips Johnston with Capital One. Your line is open.

[Phillips Johnston, Analyst at Capital One]

Hey, thanks for the time. I appreciate the details on slide nine about your lower entry prices in the Permian. It's pretty compelling. Just one question from me as a follow-up on the uptick in LOE that Kyle walked through. The updated guidance implies the run rate should tick down to around 750-850 per BOE in the back half of the year from around 10 or so in the first half. You've obviously cited a few factors for the uptick. You've referenced that production is expected to ramp in the second half, which should obviously help on that fixed cost component. What gives you the confidence that those unit costs should moderate through the remainder of the year? Can you also maybe talk about which regions specifically drove the elevated cost in the first half of the year?

[Kyle Kettler, CFO at Granite Ridge Resources]

Sure, of course. We're seeing a few things. I think, first of all, just to be open with you, we are seeing elevated costs. We've increased guidance over the course of the year by $1.50 per BOE, which is a little over 20%. We are seeing some increased costs on the lease operating expense front. We're seeing a couple of other things which give us confidence that that run rate we saw in the first half will come off. We've been working pretty close with our operating partners to understand the intricacies of the cost structure there. We're already seeing lease operating costs on a barrel equivalent coming down. On top of that, there's a denominator issue in the first half of the year. WAHA went significantly negative. We saw some shut-ins for high GOR areas and some gas-oriented areas.

[Kyle Kettler, CFO at Granite Ridge Resources]

That's created a bit of a denominator effect, which we've seen, and we're pulling that out and thinking about what it looks like for the second half of the year. Those two items give us comfort that we'll see it coming off sequentially.

[Phillips Johnston, Analyst at Capital One]

Okay, great. That makes sense. I think last quarter you guys referenced some non-recurring recognition of MBC delinquencies. How big of a factor was that?

[Kyle Kettler, CFO at Granite Ridge Resources]

That is in our first quarter numbers. Yes, there was a write-off of an MBC that impacted LOE. It flowed through LOE.

[Phillips Johnston, Analyst at Capital One]

Okay. That was a first quarter event and it didn't affect Q2?

[Kyle Kettler, CFO at Granite Ridge Resources]

That's correct.

[Phillips Johnston, Analyst at Capital One]

Okay. Thanks, guys. Appreciate it.

[Kyle Kettler, CFO at Granite Ridge Resources]

Thank you.

[Operator]

Thank you. Our next question comes from Michael Scialla with Stephens. Your line is open.

[Michael Scialla, Analyst at Stephens]

Hi, good morning. You gave a lot of really good detail on Admiral in the slide deck. I wanted to see if you could talk to whatever extent you could on the third and fourth partnerships, where those are, and when we might learn a little bit more about them.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah. I think probably later this year. We'll be in a position to share a lot more information on those partners. We've generally talked about what they're doing, I can walk you through the strategy, at least for each one of them. They're both Permian-based or Permian-focused. One of the teams is a emerging play, geo-led team, looking at things in the Permian Basin emerging, within the basin. They've put together a pretty nice acreage block. They're doing some appraisal work on that acreage block now, we hope to have some results for you later this year on that team. Team 4, we added in Q4 of 2025. They're brand new. They're roughly six to nine months in. They are an inventory aggregation development play team. It's very similar to what Admiral is.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

They're focused mainly on the Midland Basin, but they are looking across the Permian. Should be mainly Midland-based activity. I'd say they're actually ahead of where we expected from an inventory capture standpoint. Some of the deals that we closed this quarter were actually with that Team 4. We typically like to see a year to 18 months worth of inventory ahead of team before we want to really talk about them in the public domain. Also, that's the minimum threshold that we'd need to see in order to think about picking up a rig with a team, so that they can keep it continuously running for a year. I think that typically, depending on the teams, can take up to a year, but our Team 4 seems to be ahead of that schedule, hopefully we'll have some information on them later this year.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

What we have potentially planned for them from a development standpoint in 2027.

[Michael Scialla, Analyst at Stephens]

I appreciate that detail. I wanted to ask on, Tyler, if the free cash flow inflection plays out next year as you expect, how you're thinking you would prioritize that free cash flow for next year?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah. Continue to pay our dividend. We've paid our dividend every quarter since we've been public, 14 quarters now. Balance sheet, we'll maintain the balance sheet at roughly one and a quarter. That's our long-term target range. Beyond that, we'd look to either expand the business through additional inventory acquisitions. That's opportunistic, that's market-based. Depending on what the market looks like at the time, some could go to asset expansion. Depending on commodity price, development activity to either accelerate the business or continue at the current pace.

[Michael Scialla, Analyst at Stephens]

Sounds good. Thank you.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yes, sir.

[Operator]

Thank you. Our next question comes from Chris Baker with Evercore ISI. Your line is open.

[Chris Baker, Analyst at Evercore ISI]

Hey, guys. Thanks for the time. Tyler, just another follow-up question on 27. I guess, just as you guys think about that CapEx envelope, I'm curious, as you all have progressed these operated partnerships, how much of that spend is for third party versus the controlled piece?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

How much is inside of operator partnerships do we expect next year?

[Chris Baker, Analyst at Evercore ISI]

Yeah. What's the rough split? I'm just curious in terms of what you can control.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah. It'll probably be north of 75%. Right now, it's been, I think this most recent quarter, we were something like 93% of our development capital went into operative partners. The balance of it was traditional non-op in Utica. I'd expect it to maybe not be that high, but certainly higher than 75% would be going into operative partnerships next year.

[Chris Baker, Analyst at Evercore ISI]

Okay. The vast majority. Okay, that's great. As a follow-up, would love to get any thoughts you're able to share on the Grey Rock distribution in kind. Anything you can share in terms of cost basis, ability to support the stock. It looks like just on some simple math that the amount of shares being distributed would be upwards of 40% of value traded between now and the end of April. Just any color there would be helpful. Thanks.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah, you bet. I can share what I can. This is obviously a Grey Rock decision, Grey Rock partnership decision. We don't control that here at the company. From what we understand, their fund life is up in the next six to nine months. This will be a methodical distribution of shares over that six to nine months. We're excited about it from a Granite perspective, increases daily trading volume, liquidity, removes the overhang. We're excited to get these shares into the public's hands. Grey Rock has distributed shares before, they made a large distribution in 2023 to these same LPs that will be getting shares over the next six to nine months. The LPs are used to getting these shares, have received these shares in the past. I think something like 40% of this remaining fund has already been distributed.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

Yeah, we're excited to get started, get these shares moving into the market. We think this will be done in a methodical manner, multi-distributions over the next six to nine months.

[Chris Baker, Analyst at Evercore ISI]

Okay. Just any sense on cost basis? Is it above where the stock's trading today?

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

No, I don't know exactly. I know these have been very successful funds. Their cost basis I know is low. I don't know exactly where it is, if it's above or below where we're trading now, but it is a low number.

[Chris Baker, Analyst at Evercore ISI]

Okay. Thank you.

[Tyler Farquharson, President and CEO at Granite Ridge Resources]

You bet.

[Operator]

Thank you. I'm showing no further questions at this time. This concludes the question and answer session, and you may now disconnect. Thank you for your participation. Good day.

Participants

Executives

• James Masters, VP of Investor Relations
• Tyler Farquharson, President and CEO
• Kyle Kettler, CFO

Analysts

• John Annis, Analyst at Texas Capital
• Jeff Grampp, Analyst at Northland Capital Markets
• Phillips Johnston, Analyst at Capital One
• Michael Scialla, Analyst at Stephens
• Chris Baker, Analyst at Evercore ISI