Good afternoon, everyone, and welcome back to Sidoti's Virtual Investor Conference. We are about to kick it off with our final presentation of the two days, and maybe we saved the best for last. So happy to be joined by Granite Ridge Resources. The ticker is GRNT. Before I turn it over to the presenters, let me remind everyone, if you have questions, we do expect to have time available after the presentation. Press that Q&A button at the bottom of your screen and type in the questions, and we will get to as many as we can. That being said, so happy to welcome CEO Tyler Farquharson and CFO Kyle Kettler. Tyler, let me turn it over to you. Great. Thanks, Steve. Afternoon, everyone. I know we are the last presentation here of a busy couple of days, so hopefully leave on a good note here. I will spend a few minutes and walk through what Granite Ridge does at the highest level, where we focus our time and effort. Then we have got a pretty interesting story that is in transition right now, and there is a handful of reasons why we think we trade at a pretty significant discount to our peers. I want to spend the bulk of the time today walking through what those are and why we think there is some catalysts coming up that really change the narrative on Granite Ridge. Starting on page three, if we go to the next page. What are we? We are an energy investment firm. We primarily invest via two different strategies. We invest via a traditional non-op strategy, which is a passive strategy, and then also via an operator partnership strategy, which is controlled capital, controlled investments. I will spend a few minutes on those in a second. But on the prior slide, just giving you a footprint of where we are. Production-wise, we generate about 35,000 BOE a day. That was in Q1 of this year. We operate over, or we have an interest in over 3,600 gross wells across six different basins in the country. These are all leading shale basins. We are unconventional-focused, so a bulk of it is in the Permian. 58% of our production comes from the Permian. But we also have really nice positions in the Eagle Ford, Bakken, Haynesville, DJ, and Utica shales across the U.S. So very diversified portfolio with concentration in the Permian. And it is about 50/50 from an oil and gas perspective. Balance sheet. Leverage ratio is 1.3x, so very conservatively levered. Production growth, we generate about 10% production a year. And we deliver a significant income component here. This is dated. This says 7.7. I think we are over 9% yield right now on our current dividend and share price. And we trade at a discount. This said 2.8, it is actually a little bit lower than that now. This is about a full turn lower than mid-cap oily peers that we comp ourselves to. And we think that is for three primary reasons, all related to the transition of Granite Ridge's story here over the past year or so. Item one is we are perceived as a passive non-op investor. I mentioned there are two strategies that we invest through. One is the passive non-op strategy, the other one's a very controlled strategy that we call operative partnerships, where we control all aspects of timing, capital allocation decisions, et cetera. That business, that operator partnership business now accounts for 90% of our capital that we deploy. That's changed very significantly over the past two years. Last year, we deployed probably 50%-60% of our capital in this bucket. This year, it's up to 90%. The business is transitioning rapidly. That's starting to show up in our financial results, and it will become clear to the market as we post the next handful of quarters results that will feature very significant investing in the operative partnership platform. Both of these strategies, by the way, we underwrite to a 25% full cycle IRR. That's item number one, the perceived non-op nature, passive nature of our business just simply isn't true. Item two, we're transitioning to free cash flow. Our business, we came out, we went public in 2022 with zero debt on the balance sheet. We were very transparent with the market and said that there is a reasonable and appropriate amount of leverage, and we want to get to that by investing in projects that are north of our investment threshold, gain some scale, get to an appropriate leverage profile of what we think one and a quarter to one and a half times leverage. We've done that over the past few years. We've heavily invested in the business. We've grown the business. We've doubled the size of the business since we went public. We've now gotten to a point where we have much more scale, and we've gotten to our leverage goal, which is about one and a quarter to one and a half times. What that's done now is allowed us to have sufficient scale to transition to the next step, which is continue to grow the business at a lower rate, at 10% per year versus 20%+ per year over the past few years. Slightly less production growth. Now with the ability to continue to pay our dividend with coverage now, one and a quarter coverage, show production growth of 10%. Deliver free cash flow yield of at least 10% annually. Doing that all while maintaining leverage at this one in a quarter to one and a half time frame or size. That transition happens next year. We've forecasted this in a $65 oil world, which is where we are now, for 2027. We see this starting in 2027. We don't see the market giving us any value for this transition as of this point. That's on the horizon in the next year or so. The last thing is shareholder transition. We went public via de-SPAC transaction. At the time of de-SPAC, the private equity sponsor owned 98% of the common stock. That number is now 51%. By this time next year, that number will be about 10%. It'll be fully distributed by this time next year. That's great because it removes the stock overhang from the private equity sponsor. It removes the controlled aspect. It gets more daily trading volume and liquidity out there for us and increases that. I think the market thinks we're going to do a large secondary, which we're not going to do. It eliminates that from the story as well. The way we expect these shares to be distributed is starting this summer, in an orderly fashion, over the next handful of quarters, distribute shares directly to the beneficial LPs versus doing secondaries. Those are the three reasons we think we trade at this discount. None of these are business strategy-related issues. The business plan is working great. These are things that are going to clear themselves up over the next few quarters. If we're able to close that gap, that roughly one-term gap to this mid-cap oil universe, this is an $8-$10 stock just based on that, without any sort of fundamental change to our business. In the meantime, right now, we're paying a 9%+ yield, while we're waiting for all these catalysts to materialize over the next few quarters. I think that's for me, that's the bulk of, I think, what I wanted to cover. James, Kyle, I don't know if there was anything that we missed on it. Otherwise, if there are questions, Steve, would love to turn it over to questions. Yes. As a reminder, if you have any questions, we have a handful in the queue right now, if you have any questions, press that Q&A button at the bottom of your box, type them in, we'll get to as many as we can. First question is, "Can you rank or list or order rank the risks to achieving your 2027 goals? Free cash flow generation is probably the biggest risk, that's due to price, right? Yeah. Commodity price is obviously a significant factor in that free cash flow math. Couple things that help protect us there. One, we made this projection to free cash flow next year before all of this Iran stuff happened earlier this year. This is not because of Iran. We didn't say this because of Iran. We said this before Iran. This is planned at a $65 oil world, which is roughly where the strip is next year. It's a little higher than that. Yeah. We're pretty significantly hedged. We do maintain a hedging program to cover oil and gas production for the next 18 months. We significantly hedge the wellbores that are producing now. We'll hedge 75%-90% of those wellbores. Obviously, the production that's coming on from new developed wells is not hedged. If you look at our total expected production for next year, we're probably about 50% hedged. Of current wellbores producing, we're 75%-90% hedged. Got it. Question about if you can compare the operator partnership model to your previous strategy. Yeah. The couple few things that we really like about it. One is we now have access to a lot broader set of deal flow and deal opportunity. This shop I mentioned, we are an energy investor, right? We're an energy investment platform. What we're doing is we want to see and evaluate lots of deal flow. We evaluate over 1,000 deals a year. We close on about 50 a year. In order to generate the entry points and the style of returns that we are investing in, you have to look at a lot of deals. You have to lose a lot of deals in order to find those deals that do hit our investment thresholds. By adding the operator partnerships, we're now able to look at operated style investment, operated deals in addition to just non-op deals. We're able to look at the entire pie of opportunity set in the oil and gas world versus just looking at a slice of it. That's one difference that we like. Another difference is the control aspect. In non-op investing, you don't control the timing of when the operator is going to develop the asset. You could own property that's not a priority for the operator. The operator might deprioritize that and move it to the end of their rig schedule five-plus years from now, which would hurt returns a lot. In the operator partnership model, that's not the case. We control the operator. We back the management team through a structure. In that structure, we control all aspects of investment decisions, development timing, et cetera. If we want to slow down or reduce rig count, we can do that. If we want to add rigs and accelerate activity, we can do that. If we don't like the investment opportunities that the teams are bringing to us, we don't have to invest in them. They are captive to us, so they have to bring us all the deal flow that they generate. That doesn't mean that we have to do all those deals. We can say no. Those are the two big differences and the reasons that we like the operated style investment. I still think that this is, because it's been changing so rapidly for us over the past year or so, I think this is something that the public has failed to pick up on. Got it. A couple of questions around free cash flow discipline, how you balance that with acquisitions and opportunities, and does it shift at all given what's been, an understatement, a very volatile commodity price environment? Yeah. I don't know, Kyle, if you want to take a crack at that one. Yeah, I'd love to. The volatile commodity price environment does create a wrinkle, we haven't leaned into that. We've kept the course with our business plan. We do have a suite of properties that we can invest in and drill. We look at all that through the lens of about a $65 a barrel oil price. While commodity price has gone up on the front end all the way up to $100, we've stayed the course on the discipline of keeping with our drilling program. We think that makes sense. We do have a lot of opportunity in front of us, we also think it makes sense after several years of hypergrowth to bring our metrics in line with a lot of other publicly traded companies. That we can then comp out and be valued consistently with them. Okay. Since you jumped in here, Kyle, we do have a specific question asking, can you discuss the priorities of the newly announced CFO? Very good. Yes. Priority number one was to understand the assets through and through. Priority number two, which I could get from the outside looking in, is understanding the balance sheet, which I feel like I know as well. Right now it is all about helping the team generate 25%+ rates of return on their assets, turning every knob we can to make sure that happens. Got it. As you've adopted the operator platform, is there a learning curve to it? Are you learning with each partnership? We do a lot of diligence on the teams that we want to partner with. Part of that diligence, one is, do they have access to the proprietary deal flow? Right. Business development networks, et cetera. That's just a minimum. What we're really looking at is how they view risk. We have a full staff of investment professionals, oil and gas professionals that underwrite everything separately from our team's underwriting. The team will underwrite the opportunity, but we'll come alongside and create our own independent underwriting. We spend a lot of times when we're vetting teams, making sure that their view of risk and how they view risk is similar to how we view risk. If not, we're never going to get a deal done with them. They're always going to think the deals are better than how we underwrite deals. We spend a lot of time. Because we do that, I think we get teams. We call out a lot of the teams where it would be difficult for us to work with them moving forward. The learning curve really isn't very high, because we take all of this time on the front end to make sure that we're going to see risk very similarly. As far as operating, are they up the curve on operating capabilities? Yes. That would be a huge learning curve to come up if they didn't have the operating experience that they do. Another requirement when we back a team is that they've had success before. They've been at a traditional private equity investment firm, [PortCo] team, where they've had a successful monetization or two monetizations via traditional private equity. They have direct experience in operating assets. Okay. We do have a couple of questions regarding the valuation discrepancy. One person is asking whether, given that you're going to be moving into a positive cash flow, would you ever consider buying back shares if the discrepancy continues? Yeah. We would consider buying back shares. We look at shares as an investment opportunity, just like we look at asset investments. We compare the two together. Our minimum threshold for investing is a 25% rate of return. We look at both, and with additional free cash flow and additional capacity, buying shares, especially at depressed prices like where we are right now, could make a lot of sense. The flip side being, as you noted, part of the discount is almost certainly coming from the lack of liquidity. You'd certainly like to see more shares out there, which might reduce the discrepancy. Could you just walk through what the steps are going forward? Yeah That's going to get you to that? Yeah, that's getting better. We trade about 1 million shares a day now. That's pretty dramatically improved over the past- Yeah - year. We came out in 2022, it was literally zero. 1,000 shares or something. It was pretty slow to climb. It's really climbed as the private equity firm has pushed shares out. They're now at 51%. We're starting to see a lot of those shares, a lot of that supply actually come to the market as it's kind of turning over. I would expect the move to the first million took us about three years. I certainly wouldn't expect us, the move to the next million, to take us that long. Because of that, the pushback on buybacks of, "Well, you're buying back. This doesn't make sense to me, Tyler. You just told me you want more liquidity, now you're buying back the little bit of liquidity you have." That becomes less of an impact, I think, as the private equity fund pushes out the rest of the shares to market. Got it. Are there any other steps you think you guys can do to shrink that discount? The valuation gap? Yeah. As we think through, that's the feedback that we get most from Yeah investors. Yeah, there's probably others. I don't think they're as impactful, and they're certainly not as consistently discussed. There's hedges. Some people like hedges, some people don't like it. There's a million little things picking around the edges. Are we in too many basins? Yeah. Are we not? This, that, and the other. I don't think those matter. Yep. This is what we hear most consistently from investors on potential drawbacks to why they can't invest in us. Ultimately, liquidity's expanding. You're going to be moving to positive cash flow. Both can be hugely helpful, right? Absolutely. Yeah. Also think through our reporting over the next several quarters, we're talking about this in our investor decks, but you'll be able to see it in the financial results. Yeah. We're able to add inventory at $2 million or less per location. In the market, the broader market is basically paying $4 million plus. We've seen some prints that are as high as $8 million. These operated partners, we have got four of them. They're very nimble. They're very active. They're Midland-based folks that are in the field helping us find opportunity at a very low cost basis. That's going to show up in returns. This is different. That's why we like these conversations that we have with investors so much because it does take some explaining of our story. There is no direct comp to us, right? Right. There is no other private equity style investment, publicly traded firm out there. This takes some explaining to do. Once we go through slides like this, right, slide nine here. Yeah very powerful. Why were we able to add inventory of $1.4 million per net location? It's because we look at over 1,000 deals. We are a deal sourcing and evaluation shop. We are not a shop that's focused on having to chase a drilling rig and the actual manufacturing and execution of oil and gas opportunities. We have teams that do that for us. What we're focused on is sourcing this stuff at really low cost, really attractive entry points, and we're doing it through cycle. We did 107 deals last year. There's a slide somewhere in this deck that shows where we've done deals over the past 10 years, and we're consistently doing north of 50 deals a year. We're investing through cycles. We're investing all the time. We love that. What's driving the deal flow these days? Well, it's up a lot because we can now look at operated stuff. Yeah. Okay. What we're seeing a lot of right now, one, we're seeing a lot of PDP oil-focused assets, that small companies have tried to rush into market with oil prices higher. Those are all things that we're not going to look at. We're not chasing producing properties all that much. We're not chasing marketed A&D bidded processes. We're looking for near-term drilling and stuff that's off-market. Okay. Seeing a lot of that cross our desk. We've seen some interesting things with some of the larger independent public Permian-based operators who don't want to increase their capital budget. They don't want to publicly say, "I'm increasing my capital budget." They would like to see some accelerated production into this higher price window. One way they can accomplish that is doing something called a carry deal, where basically they'll look for people like us, that have capital, that have an operating team that can come in and take a project that they already have on their schedule, accelerate it, carry their capital, so they won't have to report the capital. We, in exchange for paying for their capital, extract a huge portion of the return that they have in that project moving forward. We love it. Yeah because they're great projects to invest in. It's really good stuff in the hearts of the Delaware and Midland Basin. We've had a few of these very large operators come to us, and that opportunity exists because they don't want to show the public that they're increasing their capital budget because that will hurt their share price. That makes a lot of sense. Let me follow on to what Tyler's saying. He's giving you a lot of really examples of the things we're looking at, and they're very interesting. The reason this bigger situation exists is because Lower 48 oil and gas private equity has shrunk by a dramatic amount. The amount of smaller oil and gas private equity-backed firms in the Lower 48 has been decimated. Yeah. The public companies have consolidated, they've gotten larger, and the private equity firms that still exist have basically uptiered because they're basically trying to create businesses that can now sell to multi-billion dollar companies. They've left things below a billion dollars open. All these anecdotes that Tyler gave you, they're fantastic. They're not traffic in like our operator partners are trafficking in now. The window's just been cut wide open for us. You would argue that the massive consolidation over the last 5- 10 years is actually a boon for companies like yours? Precisely. Yeah, absolutely. Got it. In terms of when you're sourcing deals, are you commodity agnostic- Yes basin agnostic? Yes. Yep. Short answer is yes. Our portfolio is roughly 50/50 oil and gas. That's not on purpose. That's all returns driven. Interesting. Yeah. We've run through the questions. We've covered a lot of ground. We are close to running out of time. Tyler, Kyle, any closing thoughts you want to leave folks? Look, we know it's the end of the week here. I got two minutes. I won't keep you long. We're super excited about where we're headed. We believe it. We've been investing in all the open windows. You can go back and look at all the Form 4s that have been filed by management and by the board of directors, both the insiders and the outside board of directors. It's a story we really believe in, and we're putting our money where our mouth is. We're happy to follow up at any point with additional questions, but thanks for the time today. Okay. That's Tyler Farquharson and Kyle Kettler from Granite Ridge. Really interesting story. Hope everyone stuck around right till the end of the conference. I told you we saved maybe the best for last. I guess I can't say, I can't insult the other companies. Gentlemen, thanks so much for being here, and everyone who joined us for the two days of the Sidoti Virtual Investor Conference. Thanks again. We'll be back in just two short months. We'll be doing this again in August. Thanks everyone for being part of our conference. Tyler, Kyle, thanks so much. Thanks, guys. Bye.