Q3 2023 Granite Ridge Resources Inc Earnings Call
First Speaker: Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Granite Ridge Resources third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the granite Ridge resources third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session if you'd like to ask.
Speaker Change #7: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Wes Harris, Investor Relations Representative for Granite Ridge, you may begin your conference.
A question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige Starwood. Thank you Wes Harris Investor Relations representative for Granite Ridge you May begin your conference.
West Harris: Thank you, operator, and good morning, everyone. We appreciate your interest in Granite Ridge resources.
Thank you operator, and good morning, everyone. We appreciate your interest in granite Ridge resources.
Speaker Change #5: We will begin our call with comments from Luke Brandenburg, our president and chief executive officer, who will provide an overview of key matters for the third quarter and our outlook for the remainder of 2023.
We will begin our call with comments from loop Brandenburg are president and Chief Executive Officer, who will provide an overview of key matters for the third quarter and our outlook for the remainder of 2023.
We will then turn the call over to Tyler Ferguson, Our Chief Financial Officer, who will review our financial results.
Speaker Change #3: We will then turn the call over to Tyler Farquharson, our Chief Financial Officer, who will review our financial results.
Speaker Change #2: Luke will then return to provide some closing comments before we open up the call for questions.
Luke will then return to provide some closing comments before we open up the call for questions.
Speaker Change #3: Today's conference call contains certain projections and other forward-looking statements within the meaning of federal securities law.
Today's conference call contains certain projections and other forward looking statements within the meaning of federal Securities laws.
First Speaker: These statements are subject to risks and uncertainties that may cause actual results that differ from those expressed or implied in these statements.
These statements are subject to risks and uncertainties that may cause actual results to differ from those expressed or implied in these statements. We would ask that you also review the cautionary statement in our earnings release.
First Speaker: We would ask that you also review the cautionary statement in our earnings release.
Speaker Change #10: 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. Accordingly, you should not place undue reliance on forward-looking statements.
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 accordingly, you should not place undue reliance on forward looking statements. These and other risks are described in yesterday's press release, and our filings with the Securities and Exchange Commission.
First Speaker: These and other risks are described in yesterday's press release and our filings with the Securities and Exchange Commission.
This conference call also includes references to certain non-GAAP financial measures.
First Speaker: This conference call also includes references to certain non-GAAP financial measures.
Speaker Change #7: 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.
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.
First Speaker: Finally, as a reminder, this conference call is being recorded. A replay and transcript will be made available on our website following today's call. So, with that, I'll turn the call over.
Finally, as a reminder, this conference call is being recorded a replay and transcript will be made available on our website following today's call.
That I will turn the call over to Luke Luke.
Speaker Change #11: Thank you, Wes, and thanks to everyone for joining our third quarter call.
Thank you Liz and thanks to everyone for joining our third quarter call.
First Speaker: A lot of excitement over here as we crossed the one-year mark as a public company a couple weeks ago. By dialing into this call, you are all part of the celebration. And I hope that you'll join me in one thanking our team for all their hard work to continue to grow the business and to complete the transition from private to public. Our legal, accounting, and banking partners for keeping the wheels of capitalism turning. The folks on the research and IR side are helping us to spread the Granite Ridge story.
A lot of excitement over here as we crossed the one year Mark as a public company a couple of weeks ago.
Dialing into this call you are all part of the celebration and I hope that you'll join me and one thanking our team for all their hard work to continue to grow the business and complete the transition from private to public.
Our legal accounting and banking partners for keeping the wheels of capitalism turning.
On the research and IR side are helping us to spread the granite Ridge story.
First Speaker: our operating partners for fighting the good fight in the field every day and finally for our investors for trusting us to be good stewards of your capital. Now this is one of those
Our operating partners for fighting the good fight in the field everyday and finally for our investors for trusting us to be good stewards of your capital.
Now this is one of those quarters to talk about.
First Speaker: On the asset side, we outperformed our internal expectations. On the business side, we're firing on all cylinders. And on the corporate side, the company is more investable than ever. My plan for this morning is to walk through each of those in a little more detail than to discuss how this impacts the remainder of 2023.
On the asset side, we outperformed our internal expectations on the business side, we're firing on all cylinders and on the corporate side. The company is more investable than ever.
My plan for this morning is to walk through each of those in a little more detail and to discuss how this impacts the remainder of 2023.
First Speaker: While we plan to issue 2024 guidance when we report year-end earnings in March, I would also like to share a bit about where we see 2024 heading.
And while we plan to issue 2024 guidance. When we report year end earnings in March I would also like to share a bit about where we see 2024 heading.
First Speaker: Starting with the assets, we want to give credit where credit is due to our operating partners for a great quarter of execution. These folks turned 77 gross, or just over 8.5 net wells to sales this quarter, which drove over 20% quarter-over-quarter production growth. A lot of moving pieces in 77 gross wells, but ultimately, two development units led to this.
Starting with the assets, we want to give credit where credit is due to our operating partners for a great quarter of execution.
Please folks turned 77 gross or just over eight five net wells to sales this quarter, which drove over 20% quarter over quarter production growth.
A lot of moving pieces in 77 gross wells, but ultimately to development you have led to the beat.
First Speaker: We had three and a half net wells in a core Delaware unit that turned to sales a month earlier than expected and came in under budget. Additionally, we had one net well in a Haynesville unit that hit the trifecta by coming in about a month early, exceeding internal production expectations, and coming in significantly under AFE. Now, before I shift to the business, I should mention something about costs. While we have seen green shoots of costs coming in below expectations, we are not modeling in cost declines going forward.
We have three five net wells in our core Delaware unit, but it turned to sales a month earlier than expected and came in under budget.
Additionally, we have one net well in the Haynesville unit that hit the trifecta by coming in about a month early.
<unk> internal production expectations or coming in significantly under ASC.
Now before I shift to the business I should mentioned something about costs, while we have seen green shoots of costs coming in below expectations. We are not modeling in cost declines going forward.
First Speaker: On the business side, the opportunity set continues to be robust, both on the traditional non-op or burgers and beers front, as well as the controlled CapEx or strategic partnerships.
On the business side the opportunity set continues to be robust both on the traditional non op or burgers and beers fraud, as well as the control capex or strategic partnerships.
First Speaker: We've closed on 23 transactions year to date and have another handful that we expect to close by the end of the year.
We have closed on 23 transactions year to date and have another handful that we expect to close by the end of the year.
First Speaker: These deals represent a nice blend of flowing production, near-term development, and longer-dated inventory.
These deals represent a nice blend of flowing production near term development and longer dated inventory.
First Speaker: Seven of these are in the controlled capex or strategic partnership leg of our business development stool. As a reminder, these are opportunities where we take a controlling interest in well-defined areas through direct partnership of proven operators. These are higher concentration investments, and we mitigate that concentration risk with higher expected returns and full control over development timing.
Seven of these are in the controlled capex or strategic partnership leg of our business development stool. As a reminder, these are opportunities, where we take a controlling interest and well defined areas through direct partnership with proven operators, there's a higher concentration of investments when we mitigate that concentration risk with higher expected returns and full control.
A lot of development timing.
Finally, I'll turn to the corporate side.
First Speaker: Finally, I'll turn to the corporate side. Our big event for the quarter was a secondary sale of about 8 million shares from our largest shareholder.
A big event for the quarter was the secondary sale of about 8 million shares from our largest shareholder.
First Speaker: As this was all secondary, Granite Ridge did not make the determination to sell, nor did we receive any proceeds, but the offering did a lot to make GRNT more investable. We've seen a material increase in trading volume. We added over 40 new investors, and we've significantly increased research coverage with Bank of America, Watertower, and Stevens picking up coverage post-offering.
As this was all secondary branded rich did not make the determination to sell nor did we receive any proceeds but the offering did a lot to make <unk> more investable.
We have seen a material increase in trading volume.
We added over 40, new investors and we significantly increased research coverage with bank of America water tower, and Stevens picking up coverage post offering Phillips.
Speaker Change #7: Philips at Capital One was a bit lonely as a consensus of one and we sure appreciate all of you sharing your time in Mindshare.
Philips to capital one was a bit lonely as a consensus of one and we sure. Appreciate all of you sharing your time in mind share with us.
First Speaker: Now all these benefits did not come without a cost. While we've recovered a bit, the secondary pricing was painful. But in addition to the trading volume increase, broader investor base, and increase in research coverage, the offering demonstrated that our largest shareholder continues to be willing to make the hard decisions in order to make Granite Ridge more investable.
Now all of these benefits did not come without a cost while we've recovered a bit the secondary pricing was painful but in addition to the trading volume increase broader investor base and increase in research coverage the offering demonstrated that our largest shareholder continues to be willing to make the hard decisions in order to make granite Ridge more festival.
Turning our attention to our updated outlook for full year 2023, we're making some adjustments to the full year to account for the third quarter outperformance.
First Speaker: Turning our attention to our updated outlook for full year 2023, we're making some adjustments to the full year to account for the third quarter outperformance.
First Speaker: The first one is production, where we are increasing both the low and the high end of our 2023 production guidance by 1,000 barrels of oil equivalent per day. This takes the midpoint up to 23,250 barrels of oil equivalent per day, or about an 18% increase over the full year 2022, and a 4% higher than the midpoint of our previous full year 2023 guidance.
The first one is production, where we are increasing both the low and the high end of our 2023 production guidance by 1000 barrels of oil equivalent per day.
This takes the midpoint up to 23250 barrels of oil equivalent per day or about an 18% increase over the full year 2022.
4% higher than the midpoint of our previous full year 2023 guidance.
First Speaker: A couple of things to keep in mind here. First, while some of the third quarter production beat was due to outperformance, some of it was due to acceleration, meaning less volumes from those wells in the fourth quarter.
A couple of things to keep in mind here first while some of the third quarter production beat was due to outperformance some of it was due to acceleration, meaning less volumes from those wells in the fourth quarter.
First Speaker: We mentioned in a previous call that the third quarter will be the high point for the year. Internally, we're looking at about a 7% production decline from the third to the fourth quarter.
We mentioned in our previous call that the third quarter will be the high point for the year internally, we're looking at about a 7% production decline from the third to the fourth quarter.
First Speaker: The second thing I would point out is while our oil production outperformed expectations a bit year-to-date, the outperformance has primarily been on the gas side. With that, we are taking our oil waiting for the year down to 47%.
The second thing I would point out is while our oil production outperformed expectations a bit year to date. The outperformance is primarily been on the gas side with that we are taking our oil weighting for the year down to 47%.
First Speaker: On the 2023 CAPEX side, we are increasing our inventory acquisition and producing property acquisition bucket up from $50 million to $90 million. As a reminder, we only guide the transactions that are either closed or in definitive docs, not the future deals. But the incremental $40 million is new deals since the last call that we have closed or expect to close by year end.
On the 2023 Capex side, we are increasing our inventory acquisition and producing property acquisition bucket up from 50 million to $90 million. As a reminder, we only guide to transactions that are either closed or in definitive docs not the future deals.
The incremental $40 million is new deals since the last call that we have closed or expect to close by year end.
About half of the $40 million increase is one acquisition in the Haynesville and roughly a quarter of the increase is a couple of opportunistic diversified DDP buys.
Speaker Change #7: About half of the $40 million increase is one acquisition in the Hainesville, and roughly a quarter of the increase is a couple of opportunistic diversified PDP buys.
First Speaker: And while we are not typically buyers of PDP, part of the thesis for going public was that there may be some long-in-the-tooth funds that may need to divest assets.
Now, while we are not typically buyers of PDP.
Part of the thesis for going public was that there may be some long in the tooth funds that may need to divest of assets, we were able to offer ease and certainty of close and exchange for an attractive valuation.
First Speaker: we were able to offer ease and certainty of close in exchange for an attractive valuation.
On the drilling side, we are taking the midpoint up $15 million. This was due primarily to beginning operations with a strategic partner during the fourth quarter as well as some acceleration of wells that we thought would come online in 2024, but we now expect in 2023.
First Speaker: On the drilling side, we are taking the midpoint up $15 million. This is due primarily to beginning operations with a strategic partner during the fourth quarter, as well as some acceleration of wells that we thought would come online in 2024, but that we now expect in 2023.
First Speaker: That acceleration has the impact of increasing 2023 net turn to sales, but we do not expect much in the way of production from this increase in well activity if they will be turned on so late in the year.
That acceleration has the impact of increasing 2023, and net turned to sales, but we do not expect much in the way of production from this increase well activity. If they will be turned on so late in the year.
Before I pass the ball to Tyler I'll wrap up with a few thoughts on 2024.
Speaker Change #7: Before I pass the ball to Tyler, I'll wrap up with a few thoughts on 2024.
Tyler: From a capital allocation standpoint, we previously mentioned that our normal course of business debt target is half a turn of leverage. We are sitting at about a quarter turn now. So long as the opportunity set justifies it, our board has been supportive of reinvesting all of our post-dividend cash flow and borrowing to fund compelling new opportunities.
From a capital allocation standpoint, we've previously mentioned that our normal course of business that target. This half a turn of leverage we're sitting at about a quarter turn now.
So long as the opportunities that justifies it our board has been supportive of reinvesting all of our post dividend cash flow and borrowing to fund compelling new opportunities.
First Speaker: Once we get closer to that half a turn of leverage, I expect that you'll see us live within cash flow. The other thing I would note...
Once we get closer to that half a turn of leverage I expect that youll see us live within cash flow.
The other thing I would note is we're drilling dollars are going.
First Speaker: As our strategic partnership program continues to gain traction, we will begin to have full control over the timing of some of our drilling capital. If we want to pause, we can pause. If we believe the conditions are right to accelerate, we can accelerate. Based on what we're seeing for 2024, we expect that roughly a quarter of our drilling dollars will be controlled. And with success, we hope to increase that in future years.
As our strategic partnership program continues to gain traction we will begin to have full control over the timing of some of our drilling capital. If we want to pause we can pause if we believe the conditions are right to accelerate we can accelerate.
Based on what we're seeing for 2024, we expect that roughly a quarter of our drilling dollars will be control and with success, we hope to increase that in future years.
Tyler: So with that, I'll turn it over to Tyler to discuss our financial results in more detail. Tyler.
So with that I'll turn it over to Tyler to discuss our financial results in more detail Tyler.
Tyler: Thanks, Luke, and good morning, everyone. During the third quarter, our Q3 average daily production was above the high end of our internal estimates at 26,433 BOE per day, a 20% increase compared to Q3 of 2022, and 23% higher than this year's second quarter.
Thanks, Luke and good morning, everyone. During the third quarter. Our Q3 average daily production was above the high end of our internal estimates at 26433 Boe per day a.
A 20% increase compared to Q3 of 2022 and 23% higher than this year's second quarter.
First Speaker: both oil and natural gas volumes were higher versus Q2 as we experienced favorable timing adjustments on key wells in the Permian and Haynesville and production outperformance on gas wells recently turned to sales in the Haynesville.
Both oil and natural gas volumes were higher versus Q2, as we experienced favorable timing adjustments on key wells in the Permian and Haynesville and production.
Outperformance on gas wells recently turned to sales in the Haynesville.
Speaker Change #7: As Luke mentioned, we increased our full year 2023 production midpoint of guidance to 23,250 BOE per day, which represents 18% growth compared to last year.
As Luke mentioned, we increased our full year 2023 production mid point of guidance to 23250 Boe per day, which represents 18% growth compared to last year.
First Speaker: Our adjusted EBITDA was $83.2 million in Q3, up 19% from this year's second quarter.
Our adjusted EBITDA was $83 2 million in Q3 up 19% from this year's second quarter.
First Speaker: Adjusted EPS was 21 cents per diluted share for the quarter
Adjusted EPS was <unk> 21 per diluted share for the quarter.
Speaker Change #20: Non-cash depletion and accretion expense for the third quarter totaled $44.3 million, impacting adjusted EPS by $0.33 per share.
Noncash depletion and accretion expense for the third quarter totaled $44 3 million impacting adjusted EPS by <unk> 33 per share.
Speaker Change #20: Third quarter oil differential of negative $3.89 per barrel was higher than our historical trend due to less favorable local market pricing in the box.
Third quarter oil differential of negative $3 89 per barrel was higher than our historical trend due to less favorable local market pricing in the Bakken.
First Speaker: Natural gas price realizations during the quarter were 99% of benchmark prices, lower than our historical trend and a result of weaker shoulder month pricing and lower NGL value net of processing costs.
Natural gas price realizations during the quarter were <unk>, 99% of benchmark prices lower than our historical trend and a result of weaker shoulder month pricing and lower NGL value net of processing costs.
Per unit lease operating costs were $6 96 per Boe.
Speaker Change #20: Per-unit lease operating costs were $6.96 per BOE, a 5% decrease compared to the second quarter, and within our guided range of $6.50 to $7.50 per BOE.
A 5% decrease compared to the second quarter and within our guided range of $6 50 to $7 50 per Boe.
Production and AD valorem taxes were 7% of sales with our view for the remainder of 2023 unchanged at 7% to 8% of sales.
Speaker Change #20: Production and ad valorem taxes were 7% of sales, with our view for the remainder of 2023 unchanged at 7% to 8% of sales.
G&A expense for the third quarter was $2 16 per Boe.
First Speaker: G&A expense for the third quarter was $2.16 per BOE. Included in our third quarter G&A expense was $379,000 of non-cash stock-based compensation.
Included in our third quarter G&A expense was $379000 of noncash stock based compensation.
Speaker Change #14: Adjusting for this, our recurring cash G&A expense was $4.9 million, or $2 per BOE. We continue to expect full year 2023 recurring cash G&A to be in the range of $20 to $22 million, excluding the $2.5 million in warrant exchange transaction costs incurred in the second quarter.
Adjusting for this our recurring cash G&A expense was $4 9 million or $2 per Boe.
We continue to expect full year 2023 recurring cash G&A to be in the range of 20% to $22 million, excluding the $2 $5 million in warrant exchange transaction costs incurred in the second quarter.
Our operating partners completed and placed on production a total of 77 gross or eight six net wells.
First Speaker: Our operating partners completed and placed on production a total of 77 gross, or 8.6 net, wells, with nearly two-thirds of the activity occurring in the Permian Basin.
With nearly two thirds of the activity occurring in the Permian basin.
An additional 196 gross or $10 six net wells were in progress at quarter end.
First Speaker: We are increasing our full year expectation by two net wells on the low and high end to now target 21 to 23 net wells placed on production during full year 2023.
We are increasing our full year expectation by two net wells on the low and high end to now target, 21% to 23 net wells placed on production during full year 2023.
Capital spending during the quarter was $95 1 million, including $20 $1 million of acquisitions.
Speaker Change #32: Capital spending during the quarter was $95.1 million, including $20.1 million of acquisition.
Speaker Change #20: year-to-date are spending totals $284.6 million, including $62.4 million of acquisition.
Year to date, our spending totals $284 6 million, including $62 $4 million of acquisitions.
Primarily to reflect an increased level of company acquisitions as well as the expanded development efforts by our operating partners on their respective acreage, we're increasing the midpoint of our annual capital guidance by $55 million.
luke: Primarily to reflect an increased level of company acquisitions as well as the expanded development efforts by our operating partners on their respective acreage, we're increasing the midpoint of our annual capital guidance by 55 million.
Speaker Change #20: Our total capital spending guidance is now $345 million to $355 million for 2023.
Our total capital spending guidance is now 345 million to $355 million for 2023.
luke: We also continued our ongoing quarterly cash dividend. During the quarter, the board declared an 11 cent per share dividend that on an annualized basis represents a 7.2 percent dividend yield measured against Wednesday's closing price.
We also continued our ongoing quarterly cash dividend during.
During the quarter the board declared an <unk> 11 per share dividend that on an annualized basis represents a seven 2% dividend yield measured against Wednesday's closing price.
First Speaker: In addition, we also repurchased 869,000 shares at an aggregate cost of $6.3 million during the quarter.
In addition, we also repurchased 869000 shares at an aggregate cost of $6 $3 million during the quarter.
First Speaker: As of September 30, we have repurchased a total of 1.8 million shares at a cost of approximately 12.3 million.
As of September 30, we have repurchased a total of $1 8 million shares at a cost of approximately $12 3 million.
Speaker Change #14: Subsequent to quarter end, we completed our semi-annual bank redetermination, increasing our elected commitment amount from $150 million to $240 million. Pro forma for this redetermination, our liquidity at the end of Q3 was $161 million with $85 million drawn on our revolving credit facility. Our leverage ratio at quarter end was approximately a quarter of a turn and below our half-turn target.
Subsequent to quarter end, we completed our semiannual bank redetermination, increasing our elected commitment amount from $150 million to $240 million.
Pro forma for those Redetermination, our liquidity at the end of Q3 was $161 million with $85 million drawn on our revolving credit facility our leverage ratio at quarter end was approximately a quarter of a turn and below our half turn target.
Speaker Change #19: Finally, over the past months we have added a number of defensive hedges to where we now have approximately 75 percent of our current PDP hedged for 2024 oil and gas. I'll now hand it back to Luke for his closing.
Finally over the past months, we have added a number of defensive hedges to where we now have approximately 75% of our current PDP hedged for 2020 for oil and gas.
I'll hand, it back to Luc for his closing comments Luke.
luke: Thank you, Tyler. To sum it up, we are pleased with our third quarter results and believe we are strongly positioned as we enter 2024.
Thank you Tyler to sum it up we're pleased with our third quarter results and believe we are strongly positioned as we enter 2024.
First Speaker: While it may sound like a broken record, I do think it is worth repeating that we believe Granite Ridge's investment thesis for a non-op oil and gas company is differentiated, as practically we are a hybrid oil and gas company and investment firm. Our objective is to tighten the band of outcomes in oil and gas investing with high diversification, low leverage, and disciplined investment decision-making.
And while it may sound like a broken record I do think it is worth repeating we believe granite ridge the investment thesis for non op oil and gas companies differentiate it practically we are hybrid oil and gas company an investment firm. Our objective is to tighten the band of outcomes in oil and gas investing with high diversification low leverage and disciplined investment decision.
Bank.
First Speaker: While many of our small cap peers trade more like an asset than a business.
While many of our small cap peers trade more like an asset and we look forward to demonstrating in the public space as we have in the private space for a decade that there is real value in the granite ridge business above and beyond our asset value.
First Speaker: We look forward to demonstrating in the public space, as we have in the private space for a decade, that there is real value in the Granite Ridge business above and beyond our asset value.
luke: I'd also like to make the distinction that while we had a decline in stock price from the secondary, we did not have a decline in stock value. This decline in stock price did not increase risk, it decreases it. We have something special here.
I would also like to make the distinction and while we had a decline in stock price from the secondary we did not have a decline in stock value. This decline in stock price did not increase risk decreases that.
We have something special here, particularly at this price point.
I'll wrap up by thanking all of our shareholders. Once again for your continued support we appreciate it and with that we're happy to answer any questions folks might have on today's call operator.
First Speaker: I'll wrap up by thanking all of our shareholders once again for your continued support. We appreciate it. And with that, we're happy to answer any questions folks may have on today's call. Operator?
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker Change #15: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Speaker Change #14: And your first question comes from the line of Michael Cielo from Stevens. Your line is open.
And your first question comes from the line of Michael <unk> from Stephens. Your line is open.
Okay.
Michael Cielo: Hi, good morning guys. Luke, you mentioned talking or you mentioned.
Yeah, Hi, good morning, guys.
Luke you mentioned talking you mentioned.
You've got control of 25% of expenditures or you think you're going to for next year. I guess, based on where strip prices are now, when do you think you would hit that leverage target of 0.5 times and what does that imply for growth next year relative to call it the high teens you'll do this year?
You've got control of 25% of expenditures or you think youre going to for next year I guess.
On where strip prices are now when do you think you would hit that leverage target of 0.5 times.
What does that imply for growth next year relative to call. It the high teens, you'll do this year.
Speaker Change #15: Yeah, more to my good question. So, from a leverage perspective. At the pace that we're going, I'd anticipate that we would hit that half term target somewhere.
Hey, good morning, Mike Good question, so from a leverage perspective.
At the pace that were going I would anticipate that we would hit that have term target somewhere.
Call it middle of the year.
First Speaker: call it middle of the year. That would be the best guess at this time. Again, prices will play a pretty big impact on that, as will acceleration on that control capital or strategic partnership side. As I mentioned, we'll be picking up a rig, actually two rigs for a short period of time this year, but we're practically looking at about a rig full-time next year, and so that'll certainly play a role in.
B the best guess at this time again prices will play a pretty big impact on that as will acceleration on that drove capital or strategic partnership side as I mentioned, we'll be picking up a rig.
Actually two rigs for a short period of time this year, but we're practically looking at about a rig full time next year and so that will certainly play a role in it.
Okay, and can you characterize kind of the percentage.
Speaker Change #18: Okay, and can you characterize kind of the percentage of working interest you take in those strategic partnerships versus your typical burgers and beer? And what's the pipeline of opportunities look like for for more of the strategic partnerships?
Working interest you've taken those strategic partnerships versus your typical burgers and beer, what's the pipeline of opportunities look like for for more of the strategic partnerships yes.
Speaker Change #14: Yeah, great question. So, on the burgers and beer side, that varies quite a bit from, you know, the D. J. F. A. S. M.
Yes, great question, so on the burden of the beer side.
Quite a bit from the DJ basin, where we brought on 32 wells, but only 0.07 debt. So very small working interest generally across the DJ.
Speaker Change #18: We brought on 32 wells, but only 0.07 net, so very small working interest generally across the DJ.
First Speaker: Um, and, you know, some areas of the premium, we may be closer to 10%, but on the strategic partnership side.
And some areas of the Permian, we may be closer to 10%, but on the strategic partnership side. So that gets a lot higher that's much more concentrated investments and so generally speaking when we partnered with the group we may we being granite ridge, maybe 95% of the capital.
First Speaker: So that gets a lot higher. That's much more concentrated investments. And so generally speaking, when we partner with a group, we may, we being Granite Ridge, maybe 95% of the capital.
First Speaker: In that partnership now, we generally have 100% control of the drilling unit. So maybe we're. You know, 60, 70% of that, but net degree of rich. So, if you look at the drilling unit, you know, we're probably somewhere between 50 and 60% typically. So much more concentration.
In that partnership and that would generally have a 100% control of the drilling unit, so maybe where 60, 70% of that but net to granite ridge. So if you look at the drilling unit, we're probably somewhere between 50 and 60% typically so I'm much more concentration there.
Speaker Change #20: talked about. We really like the balance there. You have higher concentration, but we expect higher rates of return there. And then also just that control piece, I think it's really differentiated for what we're doing. This gives us the ability to pause if it makes sense, accelerate if it makes sense, and just look a lot more like an operator from that perspective.
We talked about.
We really like the.
The balance there yet higher concentration, but we expect higher rates of return there and then also just that control piece I think is really a.
French later for what we're doing this gives us the ability to deposit it makes sense accelerated it makes sense and just look a lot more like an operator from that perspective.
Yeah.
Speaker Change #15: Great and then just one more if I could. You mentioned you're seeing some green shoots on pricing. You're not ready to change your official, I guess, well costs for next year, but anything you can say in general and where you think well costs are heading based on what you've seen with AFE so far relative to 2023?
Great and then just one more if I could.
You mentioned, you're seeing some green shoots on.
Pricing youre not ready to change your.
Official I guess.
Well costs for next year, but anything you can say.
In general and where you think well costs are heading based on what you've seen with ASC, so far relative to 2023.
First Speaker: Yeah, I think basin-by-basin changes a lot. Where we've seen the best beats, if you will, is in the Haynesville, and I think a big factor of that was you probably just had a pretty big swing on the pendulum when prices for drilling really ramped in late 22, and a lot of folks just got bit by that.
Yes.
Based on my based on changes a lot where we've seen the.
Best beat if you will is in the Haynesville.
And I think a big factor that was probably just had a pretty big swing on the pedal and win.
Prices for drilling really ramped in late 'twenty, two and I think a lot of folks.
Got bit by that.
First Speaker: company is probably at AFE a little bit more to make up for that, and we've seen them come in under. I mean, in one case, we were – gosh, we were almost 20 percent under, which was tremendous, and certainly happy to be partnered with that operator there. But that said, it's – I could tell you a handful of data points where we beat, but the majority of them were really coming in line pretty darn close to AFE. So, again, there are some green shoots, but rigs are getting a bit tighter in the perming than they were six months ago.
You saw company is probably at ease a little bit more to make up for that and we've seen them come in under I mean in one case, we were gosh, we were almost 20% under which was tremendous and certainly happy to be partnered with that operator, there, but that said I can tell you a handful of data points, where we beat but the majority.
We're really coming in line pretty darn close to ASC. So again, there are some green shoots but.
Rigs are getting a bit tighter in the Permian than they were six months ago.
First Speaker: And so you're seeing some regrades that are approaching the low $30,000 a day.
So youre seeing some rig rates that are approaching the low 30 thousands of dollars a day.
Speaker Change #14: So I don't know that we're seeing any relief there. So I'd say steady as she goes is our expectation as we look towards 24.
So I don't know that were seeing any relief there. So I'd say steady as she goes as our expectation as we look towards 2004.
I appreciate that thanks Luke.
Alright, thank you.
Speaker Change #16: Your next question comes from the line of Jeff Robertson from Watertower Research. Your line is open.
Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is open.
Thanks, and good morning.
Jeff Robertson: Thank you. Good morning. Luke, with what you all have going on, closing out the year with some of the incremental acquisitions, will that give you some production momentum as you start up in or as you head into the first quarter of 2024?
With what you all have going on closing out the year with some of the incremental acquisitions will that give you. Some production momentum as you startup in or as you head into the first quarter of 2024.
Yeah, Good morning, Jeff So.
First Speaker: say maybe a little bit, but most of the acquisitions, you know, I referenced the one in the Haynes build, it was, you know, plus or minus 20 million bucks. That was a little bit of production, but the vast majority of that is inventory weighted. That said, the group that we partnered with there, they'll actually be completing some wells late this year. And so I'd say we could see a little bit of acceleration, if you will, or increase going into 24 from the $40 million increase.
It may be a little bit, but most of the acquisitions and I referenced the one in the Haynesville that was closer.
Plus or minus 20 million Bucks that was a little bit of production, but the vast majority of that is inventory weighted that said.
With that we partner with their they'll actually be completing some wells.
This year and so I'd say, we could see a little bit.
The acceleration, if you will or increase going into 'twenty four from the $40 million increase.
luke: but I don't think it's going to be a ton. Most of that is really inventory weighted.
But I don't think its going to be a ton.
Most of that is really inventory weighted.
First Speaker: where we may start drilling that next year at some point, but not necessarily immediately. We did have a little bit of a production buy that also mentioned.
We may start drilling that next year at some point, but not necessarily immediately we did have a little bit of a production by that also mentioned.
First Speaker: I guess it was through two transactions that we were just fortunate to really get to capitalize on, hey, there's some late life funds and they may need to get out of assets, good funds, the fund made money, they just need to exit, and we were just a natural buyer and could make it real easy for them. And so we did buy a little bit of production there, valuations that we're very happy with, but it's, it's really de minimis in the big scheme of things.
So it was through two transactions.
We're just fortunate to really get to capitalize on hey, there's some late life bonds and they may need to get out of assets.
Good bonds unmade money, they just need to exit and we were just a natural buyer and can make it really easy for them and so we did buy a little bit of production there at valuations that were very happy with that.
It's really de Minimis in the big scheme of things.
Speaker Change #20: Is the Hainesville acquisition in nearby to the well that was brought in recently under budget and overperforming in terms of production? No, not particularly this one.
Does the Haynesville acquisition in nearby the well that was brought in recently under budget over performing in terms of production.
No not particularly this one is going to be on the Texas side.
Speaker Change #20: Lastly, a question on the partnerships. I think you said you'd like to have one rig year in 2024. Is that one partnership, Luke, or would that be spread over a couple of different
Lastly.
A question on the partnerships I think you said you'd like to have one rig year. In 2024 is that one partnership Luca would that be spread over a couple of different.
Speaker Change #28: projects? Yeah, good question. Glad you asked that. So, the goal is for each partnership to have effectively a rig full-time. Now, that may not be a whole rig, again, if we're, you know, call it 70 percent of the unit.
Projects Yeah. Good question glad you asked that so the goal is for each partnership to have effectively a rig full time now that may not be a whole rig again, if we're call it 70% of the unit.
Youre not multiple full rig rate times 365 days.
Speaker Change #20: You're not multiplying the full rig rate times 365 days, but it is one per group. Really, the objective is these guys are putting together deals, or get creative, getting scrappy, and putting together drilling units, and stacking one on top of the other, such that they can run a rig full-time, and just really try to get some of the benefits of keeping a rig running as opposed to picking it up and putting it down.
But it is one per group and so it really the objective is these guys are putting together deals or get creative getting scrappy and put together drilling units and stacking one on top of the other such that they can run a rig full time and just really try to get some of the benefits of keeping a rig running supposed to pick it up and put it down.
Thank you.
Yes, Sir thanks for the questions.
Speaker Change #38: Again, it is star one to ask a question. Your next question comes from a line of John Abbott from Bank of America. Your line is open. Good morning and thank you for taking our questions.
Again star one to ask a question. Your next question comes from the line of John Abbott from Bank of America. Your line is open.
Good morning, and thank you for taking our questions.
Just sticking with us.
Sticking with the strategic partnerships so.
If I understand it could be about one rig next year.
related to basically one partnership, 25% of CapEx. These partnerships.
Related to basically one partnership 25% of Capex These partnerships.
You know, it's it requires a little bit since you have a higher working interest requires a bit more capital.
It requires a little bit since you have a higher working interest requires a bit more capital.
Speaker Change #28: I guess just starting off here, I'm starting off here, and I know you want to grow that over time, but.
I guess, just starting off here starting off trying I know you want to grow that over time, but.
Speaker Change #20: As you sort of think about, I mean, how quickly do you want to grow that strategic partnership capital?
As you sort of think about I mean, how quickly do you want to grow.
That strategic partnership capital.
Speaker Change #20: since it is a bit more chunky and you do, you would be looking at a dedicated rig per partnership, you know, do you want to grow that gradually at 25% and like 50% and 175% you want to grow that over a multi-year basis. How do you think about comfortably as you grow the business, how much strategic capital do you want out there?
Since it is a bit more chunky and you do you would be looking at a dedicated rig per partnership.
Do you want to grow that gradually at 25%, 50% and 175% you want to grow that over a multiyear basis. How do you think about comfortably as you grow the business how much strategic capital do you want out there.
Yes, it's a great question, but the way that we look at it I would say truth be told that less of a plan of hey, let's try to get one a year an increase from $25 50 to 75, it's really more opportunity driven and so on.
Speaker Change #40: Yeah, it's a great question, but the way that we look at it, I'd say, truth be told, it's less of a plan of, hey, let's try to get, you know, one a year and increase, you know, from twenty five to fifty to seventy five. It's really more opportunity driven. And so, you know, our partners here, these are really unique opportunities in the sense that, you know, we're not, we're not here trying to replace your large private equity firms. That's not the role that we play. It's really for folks who are,
Our partners here is a really unique opportunities in a sense that.
We're not we're not trying to replace your large private equity firms thats not the role that we play is.
Really for folks who are more focused on putting together kind of a drilling unit drilling unit not the large format acquisitions and there are several criteria. It really make a good partner for us and allow us to be a good partner for them and a lot of these folks that they need to be proven moneymakers and thats for two reasons one.
Speaker Change #20: more focused on putting together kind of drilling unit by drilling unit, not the large format acquisitions. And there are several criteria to really make a good partner for us and allow us to be a good partner for them. A lot of these folks, they need to be proven moneymakers, and that's for two reasons. One,
Speaker Change #28: from risk management for us. We know that they know how to build a business, they know how to execute. But the other point is, we're not necessarily covering all the overhead of these groups. So these are folks that are willing to put their own money in a deal, real substantial dollars.
From a risk management for us we know that they know how to build the business I know how to execute but the other point is we're not necessarily covering all the overhead of these groups. So these are folks that are willing to put their own money in a deal real substantial dollars.
Speaker Change #32: You know, if they're, you know, 5 plus percent, we were running rigged full time, that's over $5 million a year that they're reinvesting. So it's real dollars. So that's a, that's a criteria. The other piece is, again, we're, we're not really competing with private equity in the sense of backing teams.
The five plus percent, we're running a rig full time, that's over $5 million a year that theyre reinvesting so.
Its real dollars so.
That is a criteria at the other pieces.
We're not really competing with private equity and incentive banking teams.
Speaker Change #32: And so, a lot of this is really opportunity-driven, you know, they're not finding opportunities to keep a rig running full-time. You know, those are multi-hundred-million-dollar deals that are generally the world of the, you know, the Smittcap guys or the larger private equity firms. These are kind of unit by unit. So, when I look at next year, well, maybe that's for one. We anticipate running a rig basically full-time next year, but we've been working with this team for over a year to get that drill schedule built.
So a lot of this is really opportunity driven they're not finding opportunities to keep a rig running full time.
Those are multi $100 million deals that are generally in the world.
The smid cap guys or the larger private equity firms.
These are kind of unit by unit. So when I look at next year well, maybe it was for one we anticipate running a rig basically full time next year, but we've been working with his team broker a year to get that drill schedule built out. So if today, we found a team. It was a great partnership both sides are really excited about it and we hit.
Speaker Change #20: So, if today we found a team, it was a great partnership, both sides are really excited about it and we hit the ground running, they might have identified an initial opportunity, but you're, you're probably a year plus away from really running full time. So.
The ground running they might have identified an initial opportunity, but youre, probably a year plus away from really running a rig full time so.
Speaker Change #28: That's a bounce around with you there, but ultimately, I'd say it's more opportunity driven than it is a specific formula for layering and one every year. And, you know, we're talking to groups and in the balkan in the middle of base and particular. Those are areas where I think there.
That's bounced around with you there, but ultimately I would say, it's more opportunity driven.
And then it is a specific formula for layering in one every year and we're talking to groups and in the Bakken in the Midland Basin and in particular those are areas, where I think it.
Speaker Change #20: could be opportunities to put together units from folks that have had experience there and have deep relationships there. But I wouldn't anticipate, you know, next year's capital doubling, even if we shook hands with the team today, that would probably be later next year to early 2025, that you're really putting dollars to work on that.
It could be opportunities to put together units from folks that have had experience there and have deep relationships, there, but I wouldn't anticipate.
Next year's capital doubling even if we shook hands with a team today that would probably be later next year to early 'twenty five that you're really fun.
To work with that second tier.
Appreciate that color and then the next question I think goes to hear to Tyler.
Speaker Change #39: Appreciate that color and then the next question I think goes here to Tyler.
And it's really on liquidity and strategic partnerships as well so.
Speaker Change #20: And it's really on liquidity and it's strategic partnerships as well. So now the opportunity of the strategic partners is more control, more visibility on cash flow, but cash flow can be lumpier and you have to spend money for these calls. You have to wait for them to come online.
Now the opportunity of the strategic partners is more control more visibility on cash flow, but cash flow can be lumpier.
Have to spend money for these calls you have to wait for them to come online.
Speaker Change #28: And so when you sit and looking at it looks like you increased your credit facility up to about 240 mil.
So when you sit down and looking at it looks like you increased your credit facility up to about 240 mill.
Speaker Change #20: So I guess when you sort of think about the strategic partnership sort of model and.
So I guess when you sort of think about the strategic partnership sort of model in your house.
How you think about liquidity that you want to maintain.
Speaker Change #28: How do you think about liquidity that you want to maintain? And how do you think about the possibility of further expansion to your revolver over time?
And how do you think about the possibility of further expansion to your revolver overtime.
Yeah, so you're right. We did increase our revolver by.
Yes, so youre right, we did increase our revolver by.
Uh, 90Million dollars added, uh, liquidity post a quarter and, you know, that that's that's exactly why we did that. We wanted to get. I had the big ramp up and strategic partnership capital that we expect next year.
$90 million added.
Liquidity post quarter end.
But that's exactly why we did that we wanted to get.
Ahead of the big ramp up in strategic partnership capital that we expect next year.
Speaker Change #20: So I think we're comfortable there in that kind of $250 million range that that allows us to.
So I think we're comfortable there and that kind of $250 million range that allows us to start to fund those strategic partnerships.
Speaker Change #20: start to fund those strategic partnerships and gives us the opportunity to get to our half-term leverage target while still giving us enough capacity to where if we do end up maybe getting a second team or deploying a team in the bucket or somewhere else, we'd have the capacity to start that process as well. And then I think if we were successful on getting a second strategic partnership, we'd have to go back to market to increase our RBL at that point.
And gives us the opportunity to get to our <unk> leverage target, while still giving us enough capacity to where if we do end up.
Maybe getting a second team are deploying.
Our team in the Bakken or somewhere else, we would have the capacity to start that process as well.
If we did we're successful on.
Getting a second strategic partnership we'd have to go back to market.
To increase our RV all at that point.
Speaker Change #33: Understood, maybe just a quick follow up on that. So, if you got a second, so the goal, not the goal, but one of the one of the thresholds you've talked about is getting up to 0.5 times.
Understood and maybe just a quick follow up on that so if you've got a second so the goal not the goal but.
One of the.
Thresholds you would talk about is getting up to 0.5 times.
Speaker Change #20: leverage. If you got another strategic partner, would that be a situation where you could possibly take leverage up to one time? Or would that be a situation where you could possibly take
Leverage if you've got a strategic other strategic partner.
Would that be a situation, where you could possibly take leverage up two one times.
Or would that not qualify that.
Speaker Change #28: It could. I think we really view, though, going up to one times being more of a consolidation opportunity, so maybe a larger format transaction where we'd take it up to one times if it had a clear pathway back down to our half-turn target.
It could I think we really view, though going up to one times being more.
A consolidation opportunity so maybe a larger format transaction.
We'd take it up to one times, if it had a clear pathway back down to a half turn target.
Speaker Change #35: The only thing that I would add on is that if you think about adding a rig, just picking up a rig, right, you get a negative cash flow for a period of time and you get to be cash flow neutral. And so just depending on timing of those 2 partnerships or 3.
Yes, the only thing that I would add on that.
But if.
If you think about adding a rig just picking up a rig right you're getting negative cash flow for a period of time and you get to be cash flow neutral and so just depending on timing of those two partnerships are three.
I think you could paint a picture where you certainly would go over half a turn but you would want to have real clear line of sight and frankly, you would hear us talk about it on calls or in some sort of press release of.
Speaker Change #20: Now, I think you could paint a picture where you certainly would go over half a turn, but you'd want to have real clear line of sight. And frankly, you'd hear us talk about it on calls or in some sort of press release of, you know, hey, we've talked about half a term. We're going above that now. But here's the line of sight to get back to that comfortable level. And the other piece of it too.
We've talked about half a term or going above that now but here is a line of sight to getting back to that comfortable level and then the other piece of it too.
Yeah.
Speaker Change #20: A neat thing about the non-op space is, because we have control over these, but we're still non-op, if we get to a point where we've got more concentration and more capital than we're comfortable with, you can always sell down a piece.
Neat thing about the dominoes spaces, because we have control over these but were still manav.
You get to a point, where we've got more concentration with more capital than we're comfortable with you can always still down a piece of that that's one of my favorite things about non op visits incidentally the visible if I want to go sell down 20% and a well that we're about to spud.
Speaker Change #20: That's 1 of my favorite things about mob is it's, you know, infinitely divisible. If I want to go set on 20% in a well that we're about to spud, there's, there's a great market for that. And we know those folks. Well, we compete with them day in and day out. And it's a great way to lay off some capital to make sure that we're right sizing our exposure in a.
A great market for that.
Bodes well, we compete with them day in day out.
Great way to lay off some capital to make sure that we're right sizing our exposure in a quick.
Quick way.
Appreciate it very very helpful. Thank you guys.
Speaker Change #28: Appreciate it. Very, very helpful. Thank you guys. You got it. Thank you. Have a great weekend.
You got it thank you a great weekend.
Speaker Change #32: Your next question comes from the line of Jeff Robertson from Watertower Research. Your line is open.
Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is open.
Thanks.
Jeff Robertson: Thanks. Just to follow up on the discussion around partnerships, Luke, why do you think Granite Ridge's capital is a better source of capital for some of the people you all are discussing opportunities with and some of the some of the alternatives they have?
Just to follow up on the discussion around partnerships look why do you think granite Ridge is capital is it better source of capital for some of the people you are discussing opportunities with some of the some of the alternatives they have.
Speaker Change #20: Yeah, it's a great question because, look, I talked about the characteristics of a good strategic partner, and most private equity firms would probably be chomping at the bit to get to partner with these folks as well. So it's a really good question. The few things that Granite Ridge really offers when we think about how we can be a better partner to these folks are, you know, one, if you think about a partnership with a private equity firm, a lot of times the private equity firms, they not only control the assets, but they also control the company. And most importantly, that means, you know, they control when to sell. With our partnerships, everything.
Yes, it's a great question, because look I talked about the characteristics of a good strategic partner in <unk>.
Most private equity firms would probably be chomping at the bit to get to partner with these folks as well. So it's really a good question that the few things that great. Originally offers.
Think about.
How we can be a better partner to these folks are.
One if you think about a partnership with a private equity firm what are the types of private equity firms they not only control the assets, but they also control the company and most importantly that means they control when to sell.
With our partnerships.
Is that the asset level and so while we control the asset.
Speaker Change #32: And so while we control the asset, we can't never make the group sell. They can sell when they want to or they can hold on to the asset forever, which for a lot of these folks that, again, have proven moneymakers, that really created some value. They want to build a long term oil and gas company. We're differentiated.
Never make the groups. So they can sell when they want to where they can hold onto the assets forever, which for a lot of these folks. It again, a proven moneymakers that really created some value they want to build a long term oil and gas company.
Differentiated.
Speaker Change #28: Now, the other thing that we do that we really think is important and different to teams really stands out is when we talk about a deal with a group, it's really almost a drilling unit by drilling unit basis, and each of those drilling units are their own project.
Group one the other thing that we do that we really think is important is different the teams really stands out is when we talk about deal with.
With a group, it's really almost a drilling unit by drilling unit basis in each of those drilling units are their own project.
Speaker Change #20: And so the management teams have the opportunity to, you know, to create value to get into the, the.
The management teams have the opportunity to create value to get into that.
Speaker Change #28: incentive piece of it on a unit-by-unit basis versus having to wait for an exit for an entire vehicle. That's a real differentiator and I think something that separates us and manager teams really like is that they can effectively get funding on a project-by-project basis. We get comfortable with that because one, we're focused on proven areas and two, you know, we're doing a lot of these in addition to strategic partnerships, you know, we're in
Incentive piece of it on a unit by unit basis versus having to wait for an exit from entire equal.
It is a real differentiator and I think something that separates us and management teams really like as if they can effectively get funding on a project by project basis.
We get comfortable with that because one we're focused on proven areas.
Two we're doing a lot of these in addition to the strategic partnerships where in many wells over the course of the year. So we're able to diversify our risk across our portfolio. So.
Speaker Change #20: many wells over the course of the year. So we're able to diversify our risk across our portfolio. So again, two main reasons, more control over the company.
Two main reasons more control over the company.
Also, getting the opportunity for project by project payout.
Also getting the opportunity for project by project payouts.
I think those are two reasons that we can really be a better partner for the right folks.
I think those are two reasons that we can really be a better partner for the right folks.
Speaker Change #32: Then just to follow up for Tyler, I think you said, Tyler, about 75% of 2024 PDP production is hedged today. Will Granite Ridge's hedging strategy change as you approach the half a turn of leverage or will it pretty much stay consistent with what it is today?
Okay.
Just a follow up for Tyler I think you said, China, you're about 75% of 2020 for PDP production is hedged today.
We'll granite ridge is hedging strategy change as you approach the half a turn of leverage or will it pretty much.
Stay consistent with what it is today.
Tyler: No, I think we like is, you know, even at half internal leverage, that's pretty low leverage. So, I think that, you know, we'd have to go quite a bit higher on the leverage side before we'd consider really adding a lot more hedges and thinking about moving into, you know, hedging some of the development opportunities as well. So, I think what you'll see from us is just consistency in that 50 to 75 percent range of current PDP.
No I think we I think we like us.
That half a turn of leverage that's pretty low leverage. So I think that we would have to go quite a bit higher on the leverage side before we would consider really adding a lot more hedges in thinking about <unk>.
In the hedging some of the development opportunities as well so I think what youll see from US is just consistency.
That 50% to 75% range of current PDP.
Thanks for taking my follow ups.
You got it.
Okay.
Speaker Change #41: There are no further questions at this time. Mr. Luke Brandenburg, I turn the call back over to you for some final closing remarks.
There are no further questions at this time, Mr. Loeb Brandenburg I turn the call back over to you for some final closing remarks.
Excellent. Thanks Robin. Just want to say thank you to everyone on the call. This is a neat quarter for us. It's fun to talk about and sure appreciate everyone's interest. You know, Tyler and I are, we're perpetually on the road and we're always around and so please don't ever.
Excellent. Thanks, Robyn just wanted to say thank you to everyone on the call. This is a unique quarter for us its fun to talk about and I appreciate everyone's interest tolerant.
<unk> on the road and we're always around and so please don't ever had.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change #32: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Yeah.
Okay.
[music].
Yeah.
Yeah.