Granite Ridge Announces Expansion of Revolving Credit Facility

Rhea-AI Summary

Granite Ridge Resources, Inc. (GRNT) announced the successful completion of its semi-annual borrowing base redetermination and entry into the third amendment to the Company's existing credit agreement. The borrowing base was increased from $275 million to $300 million, with the aggregate elected commitments also raised by 25% to $300 million. Bank of America, N.A. was appointed as the successor Administrative Agent and L/C Issuer, and the lender syndicate was expanded by adding nine new banks. The next bank redetermination is scheduled for fall 2024.

Insights

Financial Analyst

The announcement by Granite Ridge Resources, Inc. regarding the increase in their borrowing base and elected commitments represents a positive signal to the market about the company's creditworthiness and financial stability. From a financial perspective, the expansion of the borrowing base from $275 million to $300 million provides the firm with additional liquidity, which can be leveraged for capital investments, debt refinancing, or operational expansion. The appointment of Bank of America as the Administrative Agent and L/C Issuer might also streamline financial operations and enhance credit facilities.

The addition of nine new banks to the lender syndicate is indicative of broadening institutional support and could potentially lower the cost of capital due to competitive lending rates. Investors should note that these developments could lead to an improved financial leverage ratio and possibly a more aggressive growth strategy, which might impact the company's stock performance positively in the medium to long term, assuming effective utilization of the increased capital.

Market Research Analyst

The strategic financial move by Granite Ridge Resources, Inc. reflects a broader industry trend where energy companies are looking to secure more capital amidst fluctuating market conditions. By increasing their borrowing base and commitments, the company is positioning itself to take advantage of potential market opportunities or to cushion against volatility in commodity prices. The market's response to such news typically hinges on the perceived ability of the company to generate returns on the newly acquired capital.

Given that the energy sector is capital intensive, the ability to secure a larger credit facility is often seen as a sign of confidence by lenders in the company's management and business model. This could potentially attract more investors, leading to a positive impact on the company's share price. However, stakeholders should monitor the company's subsequent financial statements for how the additional liquidity is being allocated to ensure that the increased debt leads to value creation rather than just an expanded balance sheet.

Energy Sector Analyst

The redetermination of Granite Ridge's borrowing base is particularly relevant in the context of the energy sector's cyclical nature and capital requirements. The company's ability to secure a higher borrowing base suggests a robust valuation of its underlying assets, likely its reserves and production capabilities, which are essential for its operations and growth. It is also a sign that the company's risk profile is favorable in the eyes of its banking partners.

The timing of the next bank redetermination in fall 2024 provides a window into the company's financial planning horizon. This timeline suggests that Granite Ridge anticipates a stable or improving financial position over the next year and a half. Stakeholders should consider how the company's strategies align with industry trends, such as the transition to renewable energy sources and how they manage the risks associated with environmental regulations and market demand shifts.

DALLAS--(BUSINESS WIRE)-- Granite Ridge Resources, Inc. (“Granite Ridge” or the “Company”) (NYSE: GRNT) today announced the successful completion of its semi-annual borrowing base redetermination and entry into the third amendment to the Company’s existing credit agreement (the “Third Amendment”).

Key Highlights

• Increased the borrowing base from $275 million to $300 million;
• Raised the aggregate elected commitments by 25% to $300 million;
• Appointed Bank of America, N.A. as successor Administrative Agent and L/C Issuer; and
• Expanded the lender syndicate by adding nine new banks.

The next regularly scheduled bank redetermination for the Company is scheduled to occur during the fall of 2024.

Luke Brandenberg, President and CEO, commented, “Today marks a significant milestone for Granite Ridge as we announce increases in our borrowing base and elected commitments of 9% and 25%, respectively, and the addition of nine banks to our syndicate. This expansion is a testament to our financial strength and provides additional liquidity and flexibility to support our growing business. We appreciate the confidence of our existing banking relationships, and we are excited to welcome our new banking partners.”

About Granite Ridge

Granite Ridge is a scaled, non-operated oil and gas exploration and production company. We own a portfolio of wells and top-tier acreage across the Permian and four other prolific unconventional basins across the United States. Rather than drill wells ourselves, we increase asset diversity and decrease overhead by investing in a smaller piece of a larger number of high-graded wells drilled by proven public and private operators. We create value by generating sustainable full-cycle risk adjusted returns for investors, offering a rewarding experience for our team, and delivering reliable energy solutions to all – safely and responsibly. For more information, visit Granite Ridge’s website at www.graniteridge.com.

Forward-Looking Statements and Cautionary Statements

This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release, including, without limitation, statements concerning Granite Ridge’s 2024 outlook, financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance, are forward-looking statements. When used in this release, 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 and sales, market size, collaborations, 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 Granite Ridge’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: the ability to recognize the anticipated benefits of the business combination, Granite Ridge’s financial performance following the business combination, changes in Granite Ridge’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans, changes in current or future commodity prices and interest rates, supply chain disruptions, infrastructure constraints and related factors affecting our properties, potential or pending acquisition transactions and the ability to acquire additional development opportunities, as well as the effects of such acquisitions on the Company’s cash position and levels of indebtedness, changes in 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 the Granite Ridge’s 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, including from the Houthi rebels in Yemen, and any associated armed conflicts or related sanctions which may disrupt commodity prices and create instability in the financial markets, and market conditions and global, regulatory, technical, and economic factors beyond Granite Ridge’s control, including the potential adverse effects of world health events, such as the COVID-19 pandemic, affecting capital markets, general economic conditions, global supply chains and Granite Ridge’s business and operations, and increasing regulatory and investor emphasis on, and attention to, environmental, social and governance matters.

Granite Ridge has based these forward-looking statements on its current expectations and assumptions about future events. While 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 Granite Ridge’s control. Granite Ridge does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240404350133/en/

Investor and Media Contact: IR@GraniteRidge.com – (214) 396-2850

Source: Granite Ridge Resources, Inc.

FAQ

What is the ticker symbol for Granite Ridge Resources, Inc.?

The ticker symbol for Granite Ridge Resources, Inc. is GRNT.

What was the increase in the borrowing base announced by Granite Ridge Resources, Inc.?

Granite Ridge Resources, Inc. increased its borrowing base from $275 million to $300 million.

Who was appointed as the successor Administrative Agent and L/C Issuer by Granite Ridge Resources, Inc.?

Bank of America, N.A. was appointed as the successor Administrative Agent and L/C Issuer by Granite Ridge Resources, Inc.

When is the next bank redetermination scheduled for Granite Ridge Resources, Inc.?

The next bank redetermination for Granite Ridge Resources, Inc. is scheduled to occur during the fall of 2024.