Granite Ridge Resources (NYSE:GRNT) reported higher production in the fourth quarter and full year 2025, while emphasizing a strategic shift toward capital-efficient development and a goal of reaching sustainable free cash flow in 2027. Management also introduced newly appointed Chief Financial Officer Kyle Kettler, who joined after a six-month search.
Production growth and 2025 financial results
President and CEO Tyler Ferguson said Granite Ridge delivered its “third full year as a public company” and highlighted the company’s evolution from a diversified, non-operated investment model to a Permian-focused capital allocator backing operator teams.
In the fourth quarter, Granite Ridge posted oil and natural gas sales of $105.5 million. Kettler said revenue was essentially flat versus the prior-year quarter due to commodity pricing, despite the 27% production increase. Adjusted EBITDAX was $69.5 million for the quarter, and operating cash flow totaled $64.5 million.
For the full year, oil and natural gas sales were $450.3 million, Adjusted EBITDAX was $315 million, and operating cash flow was $296.4 million.
Pricing headwinds and cost trends
Management attributed weaker fourth-quarter revenue and cash flow primarily to realized price pressure, particularly for natural gas in the Permian Basin. Granite Ridge’s average realized oil price in the fourth quarter was $55.49 per barrel, down from $65.53 per barrel in the same period last year. Natural gas averaged $1.81 per Mcf, which Kettler said equated to 48% of Henry Hub.
On the Q&A, Kettler said weak natural gas realizations were driven by Waha pricing and widening basis during the quarter. He added that the company is using the Waha strip to model expected pricing, describing a forward curve that is “pretty low early in the year” and tightens later, with 2027 strip pricing “much better,” though still negative by roughly $1. On the oil side, he said there was not anything that “particularly” stood out beyond a modest negative difference between realized and benchmark prices already reflected in modeling.
Costs also reflected the company’s increasing Permian exposure. Lease operating expense (LOE) was $7.72 per BOE in the fourth quarter and averaged $7.27 per BOE for the full year. Kettler said higher Permian service costs—particularly saltwater disposal—were a key driver and described the dynamic as “structural in the basin.” Granite Ridge’s 2026 LOE guidance is $6.75 to $7.75 per BOE. Production and ad valorem taxes were just under 6% of revenue in the quarter, and fourth-quarter G&A was $8 million, including $1.4 million of non-cash stock compensation. The company reaffirmed annual guidance for production taxes of 6% to 7% of revenue and cash G&A of $25 million to $27 million.
Capital spending, inventory capture, and partnership model
Granite Ridge reported fourth-quarter capital expenditures of $127.5 million, split about evenly between development spending and inventory acquisitions. Full-year capital spending was $401 million, including $279 million of drilling and completion spending and $122 million of property acquisitions.
Ferguson and Kettler emphasized that the acquisition spending was not large-format M&A but rather “nimble,” unit-by-unit inventory capture, underwritten at strip pricing. Ferguson said the company reviewed nearly 700 opportunities last year with a capture rate of about 15% and invested $122 million across 107 transactions in 2025, securing about 20,500 net acres and 331 gross (77.2 net) locations, primarily in two areas: non-operated Utica and operated partnerships in the Permian.
Ferguson said Granite Ridge’s average acquisition cost per net location in the Permian was $1.4 million, which he characterized as well below recent public market transaction levels. He also said the company targets 25% full-cycle returns at strip pricing and emphasized balance-sheet discipline as a downside protection tool.
Operationally, the company placed 67 gross wells online during the fourth quarter and 322 gross wells during the year, supporting 2025’s production growth.
2026 outlook: moderating growth and aligning capital with cash flow
Management framed 2026 as a “year of transition,” with moderating production growth and development capital aligning more closely with expected cash flow. Ferguson said that at current strip prices, Granite Ridge expects to achieve free cash flow from operations in 2027.
- Production: 2026 average production guidance of 34,000 to 36,000 BOE per day (midpoint 35,000), representing about 9% growth versus 2025. Oil volumes are expected to be about 51% of total production, with management noting oil growth of 12% from fourth-quarter 2025 to fourth-quarter 2026.
- Capital spending: Development capital projected at $300 million to $330 million (Ferguson cited $315 million midpoint), with total capital of $320 million to $360 million including acquisitions. Ferguson said an additional $20 million to $30 million of acquisitions are currently in the pipeline, and roughly 90% of 2026 capital will be focused on operated projects.
- Activity: Management expects about 29 net wells to come online in 2026, compared with 38 net wells brought online in 2025. Ferguson said the mix should tilt more toward oil as 2026 progresses due to increased Permian activity.
- Dividend: The company reiterated it will maintain its quarterly dividend of $0.11 per share through the transition.
Ferguson said Granite Ridge estimates maintenance capital at about $250 million, which he said leaves room for disciplined growth spending above that level. He also noted the company added oil hedges in response to recent geopolitical shocks and said Granite Ridge retains flexibility with partners to adjust development activity if oil prices fall below $60 per barrel for a sustained period.
Balance sheet, leverage targets, and new initiatives
Granite Ridge ended the year with $350 million outstanding on 2029 senior notes and $50 million drawn on its revolver, with year-end liquidity of $339.5 million. Net debt to Adjusted EBITDAX was 1.2x, which management said remains within its long-term range.
During the Q&A, Ferguson said the company’s free cash flow objective is driven by leverage targets rather than a lack of investment opportunities. He reiterated a base business plan leverage framework of roughly 1x to 1.25x, with willingness to go higher for something “more strategic.”
Management also discussed two recent announcements:
- ERCOT power project: Alongside Diamondback Energy, Granite Ridge partnered with Conduit Power to support development of 200 MW of natural gas-fired power generation in ERCOT, expected to be fully online in 2027. Ferguson said the arrangement is expected to provide a “synthetic hedge” to Permian gas realizations and could enhance value by approximately $1 to $2 per Mcf on gas exposed to the contract.
- CFO appointment: Ferguson said Kettler brings capital markets experience and strategic perspective intended to support Granite Ridge’s transition toward sustainable free cash flow.
Ferguson also provided additional detail on operated partnerships. He said the Admiral Permian Resources partnership remains the most mature, focused on unit-by-unit inventory capture in the Delaware Basin. He said PetroLegacy (the second publicly referenced partner) is focused on the Northern Midland Basin Dean play, with selective development expected to begin this year. He described a third undisclosed team pursuing emerging Permian plays such as Woodford and Barnett, with a more appraisal-oriented approach that could add “medium term inventory” for development in 2028 and beyond. A fourth, newer Midland-based team is focused on Midland Basin unit-by-unit opportunities and is still early in inventory capture.
About Granite Ridge Resources (NYSE:GRNT)
Granite Ridge Resources, Inc 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.
