Good morning, and welcome, everyone to Granite Ridge Resources Fourth Quarter and Full-Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I would now turn the call over to Wes Harris, Investor Relations Representative for Granite Ridge.

Thank you, operator, and good morning, everyone. We appreciate your interest in Granite Ridge Resources. We will begin our call with comments from Luke Brandenberg, President and Chief Executive Officer, who will provide an overview of key matters for the fourth quarter and full-year 2022. We will then turn the call over to Tyler Farquharson, Chief Financial Officer, who will review our financial results. Luke will then return to discuss our future plans and outlook before we open up the call for questions. I would also note that we have posted an updated company presentation to our website. 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 in these statements. Additional information on factors that could cause results to differ is available in the Company's 10-K, that was filed yesterday. We would ask that you review it in the cautionary statement in our earnings release, a replay and transcript will be made available on our website following today's call. Granite Ridge disclaims any intention or obligation to update or review or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, you should not place undue reliance on forward-looking statements. These and other risks are described in the yesterday's press release and in our filings with the SEC. This conference call also includes references to certain non-GAAP financial measures. Information reconciling non-GAAP financial measures discussed to the most directly comparable GAAP financial measures is available in our earnings release that is posted on our website. Finally, as a reminder, this conference call is being recorded. So with that, I'll turn the call over to Luke Brandenberg, our President and Chief Executive Officer. Luke?

Thank you, Wes, and good morning, everyone. Before I jump into our results, I'd like to say that we really do appreciate you joining us for today's call. We are a young public company with a lot of work to do to get our story out. What a great story it is. 2023 marks our 10-year anniversary of pursuing a non-op strategy. We were one of the first groups to do so with institutional capital, specifically in areas like the Permian and Eagle Ford. So while we are new to the public, we have been creating value for private investors and non-op for years. Our business is built on a solid foundation. The opportunity set is there and we have the right team on the field to execute. The future is bright for Granite Ridge. With that, we are pleased to report outstanding fourth quarter and full-year results for 2022. Our outperformance is a direct result of the hard work of our network of proven operators across the country and our dedicated team of professionals that I am fortunate to work. To all I say, thank you for your continued focus and dedication. Our 2022 fourth quarter was successful on many fronts and we look forward to leveraging that success as we execute on our 2023 business plan. Highlights for the fourth quarter include a 45% year-over-year increase in net production to just under 22,000 barrels of oil equivalent per day, including 52% of oil. Revenue growth of 46% from the prior year period and year-over-year growth and adjusted EBITDAX and adjusted net income of 59%, 72%, respectively. During the fourth quarter, our operating partners turned 88 wells to sales, which equated to 6.2 net wells for Granite Ridge. On a full-year basis, our operating partners turned 265 wells to…

Thank you, Luke, and good morning, everyone. Echoing Luke's comments, we were very pleased with our financial results for the fourth quarter and full-year 2022 and look forward to our continued growth in 2023. During the fourth quarter, our average daily production was 22,031 barrels of oil equivalent per day, an increase of 45% and 17% compared to the fourth quarter of 2021 and sequentially over the last quarter respectively. As a reminder, we report our production on a two-stream basis rolling the revenue realized from natural gas liquid sales into our natural gas revenue. We realized oil prices of $83.32 per barrel or approximately 101% of the benchmark WTI average for the quarter and natural gas prices of $4.97 per Mcf, which was approximately 80% of the average Henry Hub price for the quarter. This was moderately lower than our realized natural gas pricing for the third quarter due to widening gas basis differentials, weaker NGL prices and a larger percentage of gas production coming from the Haynesville. The overall result was oil and natural gas revenues of $116.3 million for the quarter, which was 46% higher than the fourth quarter of 2021. Turning to cost for the fourth quarter and our expectations for 2023. Lease operating expenses were $14.4 million or $7.11 per BOE. For 2023, we are looking at LOE of $6.50 to $7.50 per BOE. Production and ad valorem taxes were $9.8 million or $4.86 per BOE or 8% of sales. For 2023, we expect them to be in the range of 7% to 8% of sales and depletion and accretion expense was $21.7 million or $10.68 per BOE. Our cash G&A expense for the fourth quarter was $6.5 million or $3.19 per BOE. Our cash G&A for the fourth quarter included $2.1 million of non-recurring…

Thanks, Tyler. It has been a busy handful of months since we went public in late October, and market sentiment continues to evolve as it relates to the energy industry. During this period, I have been pleased to have a significant number of conversations with current and prospective shareholders about why we believe Granite Ridge is a differentiated investment vehicle for capitalizing on the significant benefits afforded by the upstream oil and gas sector. We believe Granite Ridge is uniquely positioned on multiple fronts. First and foremost, our non-op business model materially decreases risks for investors as we participate in a smaller portion of a larger number of wells as compared to operators in the business. This provides the opportunity to materially diversify our asset position in premier basins across the U.S. The execution of that strategy has resulted in our current ownership interest in more than 2,350 wells across the Permian, Eagle Ford, Haynesville, Bakken and DJ. Our business development efforts are focused on high quality, near-term drilling inventory that drives more immediate value to our shareholders than long-dated inventory. Finally, our non-op business model allows us to carry less overhead as we partner with the best operators in each basin versus building an internal operations team. Our fortress balance sheet is also key for the company. We are committed to ensuring that we maintain a conservative leverage profile which serves us well given the cyclical nature and inherent volatility of the oil and gas sector. As a non-op, we have the ability to elect to participate in development activity on a well-by-well basis, and we are not burdened by long-term contracts for drilling obligations common to operators. We also enjoy increased flexibility related to hedging obligations. We continue to view Granite Ridge as unique given the small number…

[Operator Instructions] Our first question will come from the line of Phillips Johnston with Capital One. Please go ahead.

Hey, guys. Thanks. Just a few questions about the CapEx guidance for 2023. First, just on the $92 million D&C budget. What are you guys assuming for well cost inflation this year? Whether it's relative to the full-year 2022 average or the Q4 exit rate?

Hey. Good morning, Phillips, and thanks for being the inaugural question for Granite Ridge earnings call. [Appreciate that question]. On the inflation side, it's pretty interesting, we're doing analysis of that this morning and really looking at kind of D&C CapEx inflation really on an annual basis over the past several years and we saw a pretty material increase as you'd expect 2020 to 2021 to 2022. The interesting piece is when we looked at CapEx inflation from 22 wells versus AFEs, that we have in hand right now for wells that are in process. And those are up quite a bit in areas like the Haynesville and then we're seeing still upwards of 20% from 2022 numbers, but they're really starting to flatten out in the Permian. On average it maybe a high-single-digit inflation at most. But then you see in other areas are [Bakken] have actually come out quite a bit. So on the whole, I think that the number that you'd see is slightly up. But it's a single-digit type number when comparing to what we actually saw in 2022.

Okay, perfect. That's helpful. And then just for the 18 to 20 net wells planned for the year, pretty similar to last year's well count, just wondering about the mix maybe by region. Would you expect it to be fairly similar to last year at around 60-ish percent for Permian and call it, 15% to 20% for both Eagle Ford and Haynesville with the rest kind of split between the Bakken…

Yes. Good question. So Permian, we expect to be a little north of 60%, maybe 65%, best guess at this time. Eagle Ford, our Eagle Ford operations are interesting because our real main driver there is one of the strategic partnerships that we have. And so we have chunked your working interest there. So I think that your Eagle Ford wells could be closer to 15-ish percent. And then your delta is going to be some Haynesville wells are coming online early this year, some in the Bakken maybe a little over in net well, but really our Midland basin has dropped off a lot. We are going to be less than one net well there. Really that's just a factor of the continued consolidation in the Midland. There are a lot of good folks out there doing that. So our – I'd say burgers and beer strategy has slowed down in the Midland relative to Delaware.

Yes. Okay. And then if I could maybe sneak one more in for Tyler. The $46 million acquisitions and opportunity capture budget. I think you mentioned that's kind of what's been spent or committed year-to-date. So obviously that number is going to creep higher throughout the year. How should we think about what that number might eventually grow to by the end of this year?

Yes. So that number does have opportunity capture that's occurred basically through the end of the first quarter. There was a larger acquisition included in that number that we closed in January. Then our typical opportunity capture, as well as it also includes any additional carry or wells that are expected to [turn] sales throughout the year. So we'd expect it to move up. I don't think it's – I would not expect that to be our quarterly run rate. So I think for the full-year, it would increase, but I wouldn't expect it to radically increase with what we saw in Q4. I think for that number [indiscernible] expected cash flow is for the year. So I think that would be the first spot where we were going to maybe shift some of our spending to outer years versus spending more in the current period.

Great. Thanks guys. Appreciate it.

Okay. Thank you.

[Operator Instructions] Your next question will come from the line of Jeff Grampp with Alliance Global Partners. Please go ahead.

Good morning, guys. Thanks for the time. Maybe building on the last topic on the acquisitions, any detail you guys would be comfortable sharing in terms of the location of the assets, any production or kind of near-term development expectations, anything you guys could – would care to share would be helpful?

Yes. I'd say most of our acquisition dollars – and good morning by the way, look forward to seeing you in [indiscernible] California next week. Most of our real burgers and beer strategy, you're going to see us active where the rates are, and so most of that will be in play in West Texas, specifically in the Delaware basin. And really what we're targeting, Jeff, is assets where we anticipate development within the next couple of years. One of the challenges about non-op, just difficult for us to get proved reserve credit for any inventory and must be on one year, but certainly beyond two. And so that's really our focus is where can we get high quality and near-term inventory. Most of that's in the Delaware. Another place we put a little bit of capital is really the DJ basin. You have less competition up there. The competition is very high quality, and so it doesn't mean you're stealing things up there. But we are seeing some opportunities that are maybe shorter in terms of cycle time. So whereas in the Permian, we may be buying acreage from wells, we hope it'll be online in 12 months. And the DJ basin occasionally, you may be buying inventory under units that are – have a rig onsite, and so shorter cycle time there. Really the biggest driver for us though is again, buying in front of the drill bit. And so while we've done some smaller production acquisitions, that's not really a primary focus going forward especially these hydrocarbon prices on the oil side.

Got it. That's really helpful. And sticking on the Delaware, I think the slide deck referenced a strategic partnership. Can you discuss that a bit more? I mean, it sounds like that's kind of part of the broader acquisition strategy. But maybe just give us some more details to the extent – you guys can share any details there? Thank you.

Yes. You got it, Jeff. That's really our – I'd say a primary growth focus for us is the strategic partnerships. So really what that looks like is finding a capital partner, an operator that we're excited about that we know and have known for a long time, that is looking for a different source of capital or maybe a more flexible source of capital. And really the goal is, can we provide a creative constructive solution for them. And so what we did is we found a group out in – based out of Midland, a really high quality team that's been doing this for a long time. They were historically private equity backed and had a lot of success. They were looking for a bit of a different source of capital. The private equity fundraising has really fallen off a cliff over the past five years. And on the strategy shift, well, we still have some fantastic assets and private equity backed companies. But the strategy has been more of a – build larger businesses and there's still folks out there that are focused on the smaller unit-by-unit development. This was really an opportunity to partner with one of those. And so what it looks like for us, you pick the team, you are side-by-side as you're evaluating opportunities and then you work together to come up with a drilling plan. And so from a non-op perspective, we're really able to mitigate a lot of the historical challenges with non-op, we're able to have more control over the timing, more control over the development pace and also the zones that we're drilling. So look, we can't do a lot of those, but they're really strategic bets that we're making with teams we like and areas we like. So that's an exciting area for us. And really what it looks like for the public investor, it kind of looks like private equity exposure except with daily liquidity and frankly more inline with the investor. And so that's a neat strategy. That's one that Tyler and I spent a lot of our time on is how can we grow that because the base business, our burgers and beer strategy, that's just a great mouse trap that's been built over the past decade. And we're not going to come in and dramatically change that, but we can focus a lot on the strategic partnerships and I think it'll be a real driver of growth for us.

Understood. That's really helpful. Do those typically, are those – do those tend to be bespoke to the needs of the operator or is there a particular structure in terms of – are you guys acquiring a working interest across a specified amount of acreage? Are you acquiring other strategic partnerships like [indiscernible] on undeveloped locations or just kind of curious how you guys tend to structure those if [you could share]?

Yes. So it's bespoke to the operator and what I'd really look at that, it's kind of interesting, if you look over the course of private equity, private equity did more project financing and then really went to a model that was more corporate level, they wanted to be involved in everything the management team is doing. These strategic partnerships can be more project than nature, but the difference is, if these projects are a drilling unit, for example, you're often developing the whole thing on day one. And so as a result, it's project finance, but it's really a 100% of what they're doing in that unit. So it's kind of a neat hybrid there. Our objective is to always stay at the working interest level and provide a structure that allows, I mean, our partner operators to have their own interest, they control their company. Again, we agree on capital spending upfront. We agree on the plan upfront. And so they're really though are to hit the [indiscernible], the asset level partnerships and they're generally on a project basis, but we may have a, area of interest with the operator to where the opportunities that they see in any particular area may come to us.

Got it. Understood. That's really helpful. I appreciate the time guys.

You got it.

We have no further questions at this time. I'll turn the conference back to management for any closing remarks.

Thank you, Regina. Just want to again, thank everybody for being on our call. This is an exciting time for us. Our first public earnings call to take Q&A. So just very much appreciate your time. I appreciate your interest in Granite Ridge and – look, we'd love to chat with you, we'd love to come see if you have any questions and look forward to many more calls in the future.

Ladies and gentlemen, that will conclude today's meeting. Thank you all for joining. You may now disconnect.