Granite Ridge 2025 Q3 Earnings Misses Estimates Despite 60.4% Net Income Growth

Granite Ridge (GRNT) reported Q3 2025 earnings that missed analyst estimates despite robust net income growth. The company’s adjusted EPS of $0.09 fell short of the $0.12 consensus, while net income surged 60.4% to $14.52 million. Guidance for 2025 production and capital expenditures remains unchanged, with full-year output targeting 31,000–33,000 BOE/day.

Revenue

Granite Ridge’s total revenue rose 19.8% to $112.67 million in Q3 2025, surpassing the prior year’s $94.08 million. This growth reflects expanded production and operational efficiency across key basins.

Earnings/Net Income

The company’s EPS increased by 57.1% to $0.11, driven by a 60.4% rise in net income to $14.52 million. This marks four consecutive years of profitability, underscoring stable business performance. The EPS growth, though strong, fell below expectations, highlighting mixed investor sentiment.

Price Action

Post-earnings, Granite Ridge’s stock experienced a 0.59% intraday gain but declined 2.46% for the week and 7.37% month-to-date. The mixed price action reflects cautious optimism amid broader market volatility.

CEO Commentary

CEO Tyler Farquharson emphasized the company’s 27% YoY production increase to 31,900 BOE/day and $78.6M adjusted EBITDAX. Strategic partnerships, including Admiral Permian’s 23% production contribution, are central to growth. The CEO highlighted a $225M CapEx floor if oil dips below $55/bbl and a 0.9x leverage ratio as key strengths.

Guidance

Granite Ridge anticipates 2026 growth above $60 oil with $225M maintenance CapEx if prices fall below $55/bbl. Q4 2025 production growth is projected in the high single digits, with full-year guidance of 31,000–33,000 BOE/day. The company plans to allocate 50% of 2025 CapEx ($400–420M) to partnerships.

Additional News

Granite Ridge recently issued $350M in senior unsecured notes at 8.875%, enhancing liquidity to $422M. The CEO transition from Luke Brandenberg to Tyler Farquharson was announced in June 2025, with Farquharson emphasizing disciplined capital allocation. The board declared a $0.11 quarterly dividend, payable December 15, 2025, reaffirming its commitment to shareholder returns.

Post-Earnings Price Action Review

Despite missing earnings estimates, Granite Ridge’s stock maintained a “buy” consensus from analysts, with a median 12-month price target of $6.90 (21.7% above the $5.40 closing price). The company’s 27% production growth and $350M debt issuance bolstered liquidity, positioning it for potential upside in 2026. However, near-term risks, including oil price volatility and a 7.37% MTD decline, suggest cautious optimism among investors.

Earnings Call Insights

Management reiterated confidence in the operator partnership model, with Admiral Permian and Petrolegacy driving 28.1 net producing wells and 30.1 net undeveloped locations. Tyler Farquharson noted a $375M borrowing base reaffirmation and a 0.9x leverage ratio, underscoring balance sheet flexibility. The company’s 75% production hedging and just-in-time inventory model were cited as strategic advantages.

Capital Allocation

Granite Ridge invested $80.5M in Q3 2025, with $64M in development and $16.5M in acquisitions. The company plans to deploy $120M in acquisition capital to secure 74 net locations, primarily in the Permian Basin, extending its inventory beyond 2025.

Liquidity and Debt

Post-earnings, Granite Ridge’s liquidity stood at $422M, combining $375M in committed availability and $47M in cash. The $350M senior notes issuance at 96% of par extended financial flexibility, supporting 2026 growth initiatives.

Dividend Policy

The board’s $0.11 quarterly dividend, consistent with prior payouts, reflects a 6.9% annualized yield. Analysts highlighted the dividend’s sustainability, given the company’s 0.9x leverage ratio and $422M liquidity.

Strategic Outlook

Granite Ridge’s 2026 strategy hinges on inventory aggregation and partnership scaling, with Petrolegacy contributing midyear. Management emphasized agility via 75% hedging and a just-in-time inventory model, positioning the company to navigate cyclical energy market shifts.