grnt-20250331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-41537

___________________________________

GRANITE RIDGE RESOURCES, INC.

( Exact Name of Registrant as Specified in Its Charter )

___________________________________


Delaware						88-2227812
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

5217 McKinney Ave, Suite 400 Dallas, Texas						75205
(Address of principal executive offices)						(Zip Code)

(214) 396-2850

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

GRNT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 5, 2025, there were 131,113,060 shares of our common stock, par value $0.0001, outstanding.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We are including the following discussion to inform our existing and potential security holders generally of some of the risks and uncertainties that can affect our company and to take advantage of the “safe harbor” protection for forward-looking statements that applicable federal securities law afford.

From time to time, our management or persons acting on our behalf may make "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to inform existing and potential security holders about our company. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q (this "Report"), including, without limitation, statements regarding our financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, indebtedness covenant compliance, capital expenditures, production, cash flow, borrowing base under our Credit Agreement (as defined below), our intention or ability to pay or increase dividends on our capital stock, and impairment are forward-looking statements. When used in this Report, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future production, sales, market size, collaborations, cash flows, and trends or operating results also constitute such forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our company’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following:

•changes in current or future commodity prices and interest rates;

•supply chain disruptions;

•infrastructure constraints and related factors affecting our properties;

•our ability to acquire additional development opportunities and potential or pending acquisition transactions, as well as the effects of such acquisitions on our company’s cash position and levels of indebtedness;

•changes in our reserves estimates or the value thereof;

•operational risks including, but not limited to, the pace of drilling and completions activity on our properties;

•changes in the markets in which Granite Ridge competes;

•geopolitical risk and changes in applicable laws, legislation, or regulations, including those relating to environmental matters;

•cyber-related risks;

•the fact that reserve estimates depend on many assumptions that may turn out to be inaccurate and that any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves;

•the outcome of any known and unknown litigation and regulatory proceedings;

•limited liquidity and trading of Granite Ridge’s securities;

•acts of war, terrorism or uncertainty regarding the effects and duration of global hostilities, including the Israel-Hamas conflict, the Russia-Ukraine war, continued instability in the Middle East, and any associated armed conflicts or related sanctions which may disrupt commodity prices and create instability in the financial markets;

•market conditions and global, regulatory, technical, and economic factors beyond Granite Ridge’s control, including the potential adverse effects of world health events affecting capital markets, general economic

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conditions, global supply chains, uncertainties with respect to trade policies (including the imposition of tariffs) and Granite Ridge’s business and operations;

•increasing regulatory and investor emphasis on, and attention to, environmental, social, and governance matters;

•our ability to establish and maintain effective internal control over financial reporting; and

•other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K") under “Risk Factors,” as updated by any subsequent Quarterly Reports on Form 10-Q, including this Report, which we file with the United States Securities and Exchange Commission (“SEC”).

We have based any forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

Reserve engineering is a process of estimating underground accumulations of natural gas and oil that cannot be measured in an exact manner. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and the price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing and production activities, or changes in commodity prices, may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas and oil that are ultimately recovered.

Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the SEC which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

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TABLE OF CONTENTS


		PAGE
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
PART I – FINANCIAL INFORMATION		5
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Changes in Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II – OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GRANITE RIDGE RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited


(in thousands, except par value and share data)	March 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash	$	16,108	$	9,419
Revenue receivable	80,745		69,692
Advances to operators	4,350		19,959
Prepaid and other current assets	4,724		3,831
Derivative assets - commodity derivatives	621		537
Equity investments	21,812		31,783
Total current assets	128,360		135,221
Property and equipment:
Oil and gas properties, successful efforts method	1,646,260		1,540,021
Accumulated depletion	(691,277)		(643,051)
Total property and equipment, net	954,983		896,970
Long-term assets:
Derivative assets - commodity derivatives	183		—
Other long-term assets	3,910		4,288
Total long-term assets	4,093		4,288
Total assets	$	1,087,436	$	1,036,479
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	90,771	$	99,440
Derivative liabilities - commodity derivatives	15,569		1,822
Other liabilities	891		546
Total current liabilities	107,231		101,808
Long-term liabilities:
Long-term debt	250,000		205,000
Derivative liabilities - commodity derivatives	4,943		3,679
Asset retirement obligations	11,033		10,693
Deferred tax liability	82,816		79,946
Total long-term liabilities	348,792		299,318
Total liabilities	456,023		401,126
Stockholders' Equity:
Common stock, $0.0001 par value, 431,000,000 shares authorized, 136,824,466 and 136,417,677 issued at March 31, 2025 and December 31, 2024, respectively	14		14
Additional paid-in capital	656,125		655,472
Retained earnings	11,470		16,047
Treasury stock, at cost, 5,686,711 and 5,683,921 shares at March 31, 2025 and December 31, 2024, respectively	(36,196)		(36,180)
Total stockholders' equity	631,413		635,353
Total liabilities and stockholders' equity	$	1,087,436	$	1,036,479

The accompanying notes are an integral part to these condensed consolidated financial statements.

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GRANITE RIDGE RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited


	Three Months Ended March 31,
(in thousands, except per share data)	2025		2024
Revenues:
Oil and natural gas sales	$	122,931	$	88,996
Operating costs and expenses:
Lease operating expenses	16,240		15,479
Production and ad valorem taxes	8,368		5,749
Depletion and accretion expense	48,445		40,941
Impairments of unproved properties	—		732
General and administrative	7,463		6,492
Other, net	(120)		—
Total operating costs and expenses	80,396		69,393
Net operating income	42,535		19,603
Other income (expense):
Loss on derivatives - commodity derivatives	(14,857)		(3,161)
Interest expense, net	(5,015)		(3,159)
Gain (loss) on equity investments	(9,971)		7,779
Other income	—		2
Total other income (expense)	(29,843)		1,461
Income before income taxes	12,692		21,064
Income tax expense	2,880		4,837
Net income	$	9,812	$	16,227

Net income per share:
Basic	$	0.07	$	0.12
Diluted	$	0.07	$	0.12
Weighted-average number of shares outstanding:
Basic	130,336		130,136
Diluted	130,401		130,160

The accompanying notes are an integral part to these condensed consolidated financial statements.

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GRANITE RIDGE RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited


Three Months Ended March 31, 2025
	Common Stock Issued			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Total Stockholders' Equity
(in thousands)	Shares	Amount						Shares	Amount
As of January 1, 2025	136,418	$	14	$	655,472	$	16,047	(5,684)	$	(36,180)	$	635,353
Grants of restricted stock	413	—		—		—		—	—		—
Forfeitures of restricted stock	(7)	—		—		—		—	—		—
Stock-based compensation	—	—		653		—		—	—		653
Purchase of treasury stock	—	—		—		—		(3)	(16)		(16)
Common stock dividend declared ($0.11 per share)	—	—		—		(14,389)		—	—		(14,389)
Net income	—	—		—		9,812		—	—		9,812
As of March 31, 2025	136,824	$	14	$	656,125	$	11,470	(5,687)	$	(36,196)	$	631,413


Three Months Ended March 31, 2024
	Common Stock Issued			Additional Paid-in Capital		Retained Earnings		Treasury Stock			Total Stockholders' Equity
(in thousands)	Shares	Amount						Shares	Amount
As of January 1, 2024	136,041	14		653,174		54,782		(5,678)	(36,325)		671,645
Grants of restricted stock	383	—		—		—		—	—		—
Stock-based compensation	—	—		512		—		—	—		512
Purchase of treasury stock	—	—		—		—		(2)	(17)		(17)
Common stock dividend declared ($0.11 per share)	—	—		—		(14,349)		—	—		(14,349)
Net income	—	—		—		16,227		—	—		16,227
As of March 31, 2024	136,424	$	14	$	653,686	$	56,660	(5,680)	$	(36,342)	$	674,018

The accompanying notes are an integral part to these condensed consolidated financial statements.

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GRANITE RIDGE RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited


	Three Months Ended March 31,
(in thousands)	2025		2024
Operating activities:
Net income	$	9,812	$	16,227
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion and accretion expense	48,445		40,941
Impairments of unproved properties	—		732
Unrealized loss on derivatives - commodity derivatives	14,744		5,869
Stock-based compensation	653		512
Amortization of deferred financing costs	378		295
(Gain) loss on equity investments	9,971		(7,779)
Deferred income taxes	2,870		4,820
Other	(161)		(17)
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Revenue receivable	(11,053)		8,103
Accounts payable and accrued liabilities	1,213		(3,213)
Other receivable	(783)		530
Prepaid and other current assets	(27)		(1,551)
Other payable	29		3,187
Net cash provided by operating activities	76,091		68,656
Investing activities:
Capital expenditures for oil and natural gas properties	(66,728)		(69,660)
Acquisition of oil and natural gas properties	(34,692)		(2,627)
Refund of advances to operators	1,303		1,282
Proceeds from sale of oil and natural gas properties	120		—
Net cash used in investing activities	(99,997)		(71,005)
Financing activities:
Proceeds from borrowing on credit facilities	45,000		27,500
Deferred financing costs	—		(32)
Purchase of treasury shares	(16)		(418)
Payment of dividends	(14,389)		(14,349)
Net cash provided by financing activities	30,595		12,701

Net change in cash and restricted cash	6,689		10,352
Cash and restricted cash at beginning of period	9,419		10,730
Cash and restricted cash at end of period	$	16,108	$	21,082

Supplemental disclosure of non-cash investing activities:
Change in accrued capital expenditures included in accounts payable and accrued liabilities	$	14,118	$	9,168
Advances to operators applied to development of oil and natural gas properties	$	18,200	$	23,294
Cash and restricted cash:
Cash	$	16,108	$	20,782
Restricted cash included in other long-term assets	—		300
Cash and restricted cash	$	16,108	$	21,082

The accompanying notes are an integral part to these condensed consolidated financial statements.FT

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

1. Nature of Operations

Granite Ridge Resources, Inc. (together with its consolidated subsidiaries, “Granite Ridge” or the “Company”), a Delaware corporation, is a scaled energy company which aims to provide shareholders with exposure similar to energy private equity through operated partnerships and traditional non-operated assets in multiple basins throughout North America.

2. Summary of Significant Accounting Policies

A complete discussion of the Company’s significant accounting policies is included in the 2024 Form 10-K.

Interim Financial Statements, Basis of Presentation, Consolidation, and Significant Estimates

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the condensed consolidated balance sheet at December 31, 2024 is derived from audited consolidated financial statements. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments necessary to present fairly the Company’s condensed consolidated financial statements. All such adjustments are of a normal, recurring nature.

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates of reserves are used to determine depletion and to conduct impairment analysis. Estimating reserves is inherently uncertain, including the projection of future rates of production and the timing of development expenditures. Additional significant estimates include, but are not limited to, fair value of derivative financial instruments, fair value of equity investments, fair value of business combinations, asset retirement obligations, revenue receivable and income taxes. Actual results could differ from those estimates. The results for interim periods are not necessarily indicative of annual results.

Certain disclosures have been condensed in, or omitted from, these condensed consolidated financial statements. Accordingly, these notes to the condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s 2024 Form 10-K.

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Segment Reporting

The Company operates in one reporting segment, which is oil and natural gas development, exploration and production. All of the Company's operations are conducted in the geographic area of the United States. The reporting segment generates revenue through the sale of oil and natural gas. The Company’s chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, manages operations on a consolidated basis for purposes of evaluating operational performance and allocating resources. Net income, as reported within the Company’s condensed consolidated statement of operations, is used by the CODM to assess performance for the oil and natural gas development, exploration and production segment. Significant segment expenses are the same as those reported in the condensed consolidated statement of operations. Total assets, as reported within the Company’s condensed consolidated balance sheets, is the measure of segment assets.

Oil and Natural Gas Properties

The Company uses the successful efforts method of accounting for oil and natural gas producing activities, as further defined under Accounting Standards Codification ("ASC") 932, Extractive Activities - Oil and Gas (“ASC 932”). Costs to

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

acquire mineral interests in oil and gas properties, to drill and equip exploratory leases that find proved reserves, and to drill and equip development leases and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determinations of whether the wells have proved reserves. If the Company determines that the wells do not have proved reserves, the costs are charged to expense.

Capitalized leasehold costs relating to proved properties are depleted using the unit-of-production method based on proved reserves. The depletion of capitalized drilling and development costs and integrated assets is based on the unit-of-production method using proved developed reserves. The Company recognized depletion expense of $48.2 million and $40.8 million for the three months ended March 31, 2025 and 2024, respectively.

The Company reviews its long-lived assets to be held and used, including proved oil and natural gas properties, whenever events or circumstances indicate that the carrying value of those assets may not be recoverable; for instance, when there are declines in commodity prices or well performance. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. For each property determined to be impaired, an impairment loss equal to the difference between the carrying value of the properties and the estimated fair market value is recognized at that time. The fair value of impaired assets is determined using the market or income valuation approach. The income approach is calculated using a discounted cash flow model. Discounted future cash flows use a discount rate similar to that used by market participants, or comparable market value if available. Estimating future cash flows involves the use of judgments, including estimation of the proved and risk-adjusted unproved oil and natural gas reserve quantities, timing of development and production, expected future commodity prices, capital expenditures and production costs. There was no proved property impairment recorded for the three months ended March 31, 2025 or 2024.

Unproved oil and natural gas properties are periodically assessed for impairment by considering future drilling and exploration plans, results of exploration activities, commodity price outlooks, planned future sales and expiration of all or a portion of the projects. The Company recorded unproved oil and gas properties impairment of $0.7 million for the three months ended March 31, 2024 in the Permian Basin. There was no unproved property impairment recorded for the three months ended March 31, 2025.

Equity Investments

In December 2023, the Company completed the sale of certain of its Permian Basin assets to Vital Energy, Inc. ("Vital Energy") for consideration of 561,752 shares of Vital Energy's common stock and 541,155 shares of Vital Energy's 2.0% cumulative mandatorily convertible preferred securities. On June 4, 2024, the 2.0% cumulative mandatorily convertible preferred securities were converted into the equivalent number of shares of Vital Energy’s common stock. As of March 31, 2025, the Company held 1,027,907 shares of Vital Energy’s common stock.

The Company follows the guidance in ASC 321, Investments - Equity Securities ("ASC 321") for its investment in the common and preferred stock of Vital Energy. ASC 321 requires equity investments with readily determinable fair values to be measured at fair value, with unrealized holding gains and losses recorded as a gain or loss in the condensed consolidated statements of operations. For the preferred stock that did not have a readily determinable fair value, the Company did not elect the measurement alternative in ASC 321 and instead accounted for the preferred stock at fair value with unrealized gains and losses recorded through net income for the period until the preferred stock was converted into common stock. For the three months ended March 31, 2025 and 2024, an unrealized loss of $10.0 million and an unrealized gain of $7.8 million, respectively, is included in gain (loss) on equity investments within the condensed consolidated statements of operations that reflects the change in fair value of common and preferred stock.

Revenue Recognition

The Company’s revenues are primarily derived from its interests in the sale of oil and natural gas production. The Company recognizes revenue from its interests in the sales of oil and natural gas in the period that its performance obligations are satisfied.

Performance obligations are satisfied when the customer obtains control of the product, when the Company has no further obligations to perform related to the sale, when the transaction price has been determined, and when collectability is probable.

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

The Company receives payment from the sale of oil and natural gas production from one to three months after delivery. The transaction price is variable as it is based on market prices for oil and natural gas, less revenue deductions such as gathering, transportation, and compression costs. Management has determined that the variable revenue constraint is overcome at the date control passes to the customer since the variable consideration to be received can be reasonably estimated based on daily market prices and historical transportation charges. Revenue is presented net of these costs within the condensed consolidated statements of operations. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from customers are accrued in revenue receivable in the condensed consolidated balance sheets. Variances between the Company’s estimated revenue and actual payments are recorded in the month the payment is received; however, differences have been and are insignificant.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical expedient in accordance with ASC 606. The expedient, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

Take-in Kind Oil and Natural Gas Revenues

Under certain arrangements, the Company has the right to take a volume of unprocessed gas in kind at the operator's wellhead, representing its proportionate share of its natural gas production, in lieu of receiving a net payment from the operator. The Company currently takes certain natural gas volumes in kind in lieu of monetary settlement. When the Company elects to take volumes in kind, it pays third parties to transport the natural gas it took in kind to downstream delivery points, where it then sells to customers at prices applicable to those downstream markets. In such situations, revenues are recognized during the month in which control transfers to the customer at the delivery point and it is probable the Company will collect the consideration it is entitled to receive. Sales proceeds are generally received by the Company within one month after the month in which a sale has occurred. In these scenarios, gathering and processing costs and transportation expenses the Company incurs to transport the volumes to downstream customers are recorded in lease operating expenses in the condensed consolidated statements of operations.

Disaggregated Oil and Natural Gas Revenues

The Company’s disaggregated revenue has two primary sources: oil sales and natural gas sales. Substantially all of the Company’s oil and natural gas sales come from six geographic areas in the United States: the Eagle Ford Basin (Texas), the Permian Basin (Texas/New Mexico), the Haynesville Basin (Texas/Louisiana), the Denver-Julesburg “DJ” Basin (Colorado), the Bakken Basin (Montana/North Dakota), and Appalachian Basin (Ohio). The following tables present the disaggregation of the Company’s oil and natural gas revenues by basin for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(in thousands)	2025		2024
Oil	$	91,847	$	75,766
Natural gas	31,084		13,230
Total	$	122,931	$	88,996

Permian	$	81,644	$	49,946
Eagle Ford	10,984		13,408
Bakken	9,857		13,446
Haynesville	5,738		5,236
DJ	10,400		6,960
Appalachian	4,308		—
Total	$	122,931	$	88,996

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

Recently Issued and Applicable Accounting Pronouncements (Issued and Not Yet Adopted)

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 was effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company has not early adopted the standard and is currently assessing the effect that ASU 2023-09 will have on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires enhanced disclosure about specific types of expenses included in the expense captions presented on the face of the consolidated statement of operations as well as disclosures about selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company has not early adopted the standard and is currently assessing the effect that ASU 2024-03 will have on its disclosures.

3. Derivative Financial Instruments

The Company uses derivative financial instruments in connection with its oil and natural gas operations to provide an economic hedge of the Company’s exposure to commodity price risk associated with anticipated future oil and natural gas production. The Company does not hold or issue derivative financial instruments for speculative trading purposes.

The Company does not designate its derivative instruments to qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its condensed consolidated statements of operations as they occur.

Collar Option Contracts and Swaps

The Company’s derivative financial instruments consist of collar option contracts and swaps.

A collar option is established with the sale of a short call option (ceiling price) and the purchase of a long put option (floor price) set to expire at a predetermined date in the future. The options give the owner the right but not the obligation to exercise the option at the expiration date.

When the settlement price is below the established floor price, the Company receives an amount from its counterparty equal to the difference between the settlement price and the floor price multiplied by the hedged contract volume. When the settlement price is above the established ceiling price, the Company pays its counterparty an amount equal to the difference between the settlement price and the ceiling price multiplied by the hedged contract volume. When the settlement price is between the established floor and the ceiling, no amounts are due to or from the counterparty.

A swap contract allows the Company to receive a fixed price and pay a floating market price to the counterparty for the hedged commodity.

The Company has master netting agreements on individual derivative instruments with its counterparties and therefore certain amounts may be presented on a net basis in the condensed consolidated balance sheets.

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

Volume of Derivative Activities

The following table sets forth the Company’s outstanding commodity derivative contracts as of March 31, 2025.


	2025								2026
	Second Quarter		Third Quarter		Fourth Quarter		Total		Total
Collar (oil)
Volume (Bbl)	933,266		802,210		698,000		2,433,476		2,104,980
Weighted-average floor price ($/Bbl)	$	61.84	$	61.95	$	60.00	$	61.35	$	60.00
Weighted-average ceiling price ($/Bbl)	$	77.52	$	78.51	$	77.13	$	77.73	$	70.44
Collar (natural gas)
Volume (Mcf)	1,075,438		2,441,757		3,550,615		7,067,810		9,906,446
Weighted-average floor price ($/Mcf)	$	3.00	$	3.00	$	3.35	$	3.17	$	3.43
Weighted-average ceiling price ($/Mcf)	$	3.75	$	3.75	$	4.16	$	3.96	$	4.21
Swaps (natural gas)
Volume (Mcf)	4,391,520		2,288,450		710,350		7,390,320		3,641,400
Weighted-average price ($/Mcf)	$	3.44	$	3.59	$	3.60	$	3.50	$	3.64

The following table summarizes the amounts reported in the condensed consolidated statements of operations related to the commodity derivative instruments for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024
Gain (loss) on commodity derivatives
Oil derivatives	$	1,288	$	(7,279)
Natural gas derivatives	(16,145)		4,118
Total	$	(14,857)	$	(3,161)

The following table represents the Company’s net cash receipts (payments on) commodity derivatives for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024
Net cash receipts from (payments on) commodity derivatives
Oil derivatives	$	(66)	$	96
Natural gas derivatives	(47)		2,612
Total	$	(113)	$	2,708

4. Fair Value Measurements

The Company has adopted and follows ASC 820, Fair Value Measurements and Disclosures, for measurement and disclosures about fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

As required, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table presents the carrying amounts and fair values of the Company’s financial instruments as of March 31, 2025 and December 31, 2024:


	March 31, 2025				December 31, 2024
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Derivative instruments - commodity derivatives	$	804	$	804	$	537	$	537
Equity investments	$	21,812	$	21,812	$	31,783	$	31,783

Liabilities:
Revolving credit facilities	$	250,000	$	250,000	$	205,000	$	205,000
Derivative instruments - commodity derivatives	$	20,512	$	20,512	$	5,501	$	5,501

Revolving credit facilities — The carrying amounts of the revolving credit facilities approximate their fair values, as the applicable interest rates are variable and reflective of market rates.

Other financial assets and liabilities — The carrying amounts of the Company’s other financial assets and liabilities, such as revenue receivable and accrued liabilities, approximate their fair values because of the short maturity of these instruments.

Derivative instruments - commodity derivatives — The fair value of the Company’s derivative instruments is estimated by management considering various factors, including closing exchange and over-the-counter quotations and the time value of the underlying commitments. The fair value of the Company’s commodity derivative instruments is considered to be a Level 2 measurement. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. The Company’s valuation models are primarily industry-standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) current market and contractual prices for the underlying instruments, (iii) applicable credit-adjusted risk-free rate curves, as well as other relevant economic measures.

Equity investments — The fair value of the Company’s investment in Vital Energy's common stock was valued using the instrument's publicly listed trading price, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market. The fair value of the Company's investment in Vital Energy's preferred stock was estimated by management considering various factors, including the publicly listed trading price of Vital Energy's common shares and the present value of expected dividends prior to the conversion of the preferred shares. The fair value of the

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

investment in preferred stock was considered to be a Level 2 measurement. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

On June 4, 2024, the 2.0% cumulative mandatorily convertible preferred securities of Vital Energy were converted into 541,155 shares of common stock of Vital Energy. Prior to this conversion, the common shares of Vital Energy owned by the Company were not entitled to vote and bore a restricted legend to that effect. As of March 31, 2025 and December 31, 2024, the Company held 1,027,907 shares of Vital Energy’s common stock, for which the fair value is a Level 1 measurement.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following tables summarize (i) the valuation of each of the Company’s financial instruments by required fair value hierarchy levels and (ii) the gross fair value by the appropriate balance sheet classification, even when the derivative instruments are subject to netting arrangements and qualify for net presentation in the Company’s condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024. The Company nets the fair value of commodity derivative instruments by counterparty in the Company’s condensed consolidated balance sheets.


	March 31, 2025
	Fair Value Measurement Using
(in thousands)	Level 1		Level 2		Level 3		Total Fair Value		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Fair Value Presented in the Condensed Consolidated Balance Sheet
Equity investments – common stock	$	21,812	$	—	$	—	$	21,812	$	—	$	21,812

Assets (at fair value):
Commodity derivatives – current portion	$	—	$	1,364	$	—	$	1,364	$	(743)	$	621
Commodity derivatives – noncurrent portion	—		377		—		377		(194)		183
Liabilities (at fair value):
Commodity derivatives – current portion	—		(16,312)		—		(16,312)		743		(15,569)
Commodity derivatives – noncurrent portion	—		(5,137)		—		(5,137)		194		(4,943)
Net derivative instruments	$	—	$	(19,708)	$	—	$	(19,708)	$	—	$	(19,708)

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements


	December 31, 2024
	Fair Value Measurement Using
(in thousands)	Level 1		Level 2		Level 3		Total Fair Value		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Fair Value Presented in the Condensed Consolidated Balance Sheet
Equity investments - common stock	$	31,783	$	—	$	—	$	31,783	$	—	$	31,783

Assets (at fair value):
Commodity derivatives – current portion	$	—	$	2,053	$	—	$	2,053	$	(1,516)	$	537
Liabilities (at fair value):
Commodity derivatives – current portion	—		(3,338)		—		(3,338)		1,516		(1,822)
Commodity derivatives – noncurrent portion	—		(3,679)		—		(3,679)		—		(3,679)
Net derivative instruments	$	—	$	(4,964)	$	—	$	(4,964)	$	—	$	(4,964)

Fair Values – Nonrecurring

Asset retirement obligations — The fair value measurements of asset retirement obligations are measured on a nonrecurring basis when a well is drilled or acquired or when production equipment and facilities are installed or acquired using a discounted cash flow model based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the fair value measurement of asset retirement obligations include estimates of the costs of plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the surface of the land as well as estimates of the economic lives of the oil and natural gas wells and future inflation rates.

5. Acquisitions and Divestitures

Asset Acquisitions

During the three months ended March 31, 2025 and 2024, the Company acquired various oil and natural gas properties. The following table presents the cumulative adjusted purchase price of transactions accounted for as asset acquisitions in accordance with ASC Topic 805, Business Combinations (“ASC 805”) by basin included in oil and gas properties on the Company’s condensed consolidated balance sheets:


	Three Months Ended March 31,
(in thousands)	2025		2024
Permian	$	29,644	$	3,709




Appalachian	$	4,718	$	23
Total	$	34,362	$	3,732

In addition, during the three months ended March 31, 2024, the Company recorded closing adjustments that reduced the acquisition price of business combinations completed during 2023 by $1.1 million.

During the three months ended March 31, 2025, the Company divested unproved properties for proceeds of $0.1 million, for which a gain on sale was recorded and included in "Other, net" in the condensed consolidated statements of operations.

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

6. Stock Incentive Plan

The Granite Ridge Resources, Inc. 2022 Omnibus Incentive Plan (the “Plan”) provides the Company the ability to grant, among other award types, stock options, restricted stock awards, and performance stock units ("PSUs") to directors, officers, employees and consultants or advisors employed by or providing service to the Company.

During the first quarter of 2025 and 2024, the Company granted restricted stock awards, stock options, and PSUs. Stock-based compensation expense during the three months ended March 31, 2025 and 2024 was $0.7 million and $0.5 million, respectively.

Restricted Stock Awards - The Company grants service-based restricted stock awards to certain of its employees and consultants under the Plan, which vest ratably over a period of three years, and to non-employee directors, which vest in full after one year. Restricted stock awards are valued at the closing price of the Company's common stock on the date of grant. All restricted shares are legally issued and outstanding. If an employee terminates employment prior to the restriction lapse date, the awarded shares are forfeited and canceled and are no longer considered issued and outstanding. For restricted stock awards granted prior to March 2025, the holders of such unvested restricted stock awards have voting rights and the right to receive dividends. For restricted stock awards granted in March 2025 and thereafter, the holders of such unvested restricted stock awards do not have voting rights but do have the right to receive dividends. The Company recognizes compensation expense utilizing graded vesting whereby compensation expense is recognized over the service period for each separately vesting tranche.

PSUs - The Company grants PSUs to certain of its officers under the Plan. The PSUs cliff vest at the end of three years, generally subject to continued employment through the performance period. The total number of shares eligible to be earned may range from zero to 200% of the target number of PSUs granted, determined based upon achievement of certain "financial performance" and "market performance" criteria for the Company and individual performance criteria for the officers awarded PSUs. Financial performance is based on the Company's financial performance at the end of the applicable performance period, while market performance is based on the relative standing of total shareholder return achieved by the Company compared to a predetermined group of peer companies at the end of the applicable performance period. Individual performance criteria is based on the officers' performance relative to individual performance goals at the end of the performance period. The Company utilizes the Monte Carlo simulation method to determine the fair value of the PSUs based on market performance, while PSUs based on financial performance are valued using the closing price of the Company's common stock on the date of grant.

Stock Options - The Company grants stock options to certain of its officers under the Plan. The Company's outstanding stock options expire 10 years following the date of grant. Pursuant to the stock options granted under the Plan, 33% of the options vest immediately with an additional 33% to vest on each of the next two anniversaries of the date of the grant, generally subject to continued employment through each such vesting date. During the three months ended March 31, 2025, the Company granted 110,257 stock options with an exercise price of $5.61 per share. During the three months ended March 31, 2024, the Company granted 134,375 stock options with an exercise price of $6.06 per share.

Stock Awards - The Company may issue other awards to its employees and consultants under the Plan.

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GRANITE RIDGE RESOURCES, INC.

Notes to Condensed Consolidated Financial Statements

A summary of the Company's activity under the Plan for the restricted stock awards, PSUs and stock options for the three months ended March 31, 2025 is presented below:

Restricted Stock Awards

Performance Stock Units

Stock Options