October 9, 2023, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) has published an Initiation of Coverage Report on Granite Ridge Resources, Inc. (NYSE: GRNT) titled, “Private Equity Growth Strategy in a Public E&P Company”. The report can be accessed here.

Granite Ridge was formed in 2022 to execute a private equity investment strategy in a public company vehicle. The strategy is to allocate capital to non-operated oil and natural gas development opportunities in order to grow the company’s underlying asset base and support its common stock dividend. Grey Rock Investment Partners contributed the assets of three investment funds to facilitate Granite Ridge’s business combination transaction with Executive Network Partnering Corporation (ENPC). Grey Rock grew production on the contributed assets to ~22,000 BOE/d in 4Q22 from zero when it began deploying capital in its first fund in 2014.

Grante Ridge owns a diverse set of assets in five major US onshore producing regions, including the Permian, Eagle Ford, Bakken, Haynesvillle, and DJ Basin. Operators include a who’s who list of premier public and private companies. Proved reserves at year-end 2022 totaled 50.5 MMBOE (50% oil/61% natural gas), with a PV-10 value of ~$1.6 billion. The Permian Basin accounted for 45% of production and 58% of revenue during 2Q23.

The shares are trading at 2.8x/2.5x our FY23/FY24 adjusted EBITDA estimates. The current annualized dividend of $0.44/share equates to a 7.4% yield. Based on FactSet consensus estimates, Granite Ridge trades at a discount to a group of peers on an EV/EBITDA multiple basis.

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