Granite Ridge posts $10.1 million loss despite adjusted income rising to $22.6 million
Key Facts
Granite Ridge Resources swung to a net loss of $10.1 million, or $0.08 per share, in the third quarter of 2026, after posting net income of $14.5 million, or $0.11 per diluted share, a year earlier. Adjusted net income, by contrast, was $22.6 million, or $0.17 per diluted share, the company said. Adjusted EBITDAre was $107.3 million, compared with $78.6 million in the third quarter of 2025. Cash flow from operations reached $87.7 million, including $8.9 million from changes in working capital, while adjusted free cash flow was $13.7 million. The figures put operating performance growth alongside a net accounting loss for the period.
Derivative losses were the main factor behind the gap between net results and adjusted income: the company recorded a $52.698 million loss on commodity derivatives in the third quarter, compared with a $5.224 million gain a year earlier. Interest expense rose to $11.902 million from $6.069 million in the year-earlier period. On pricing, the average realized oil price, excluding the impact of commodity derivatives, rose to $84.41 per barrel from $61.62. The realized gas price also climbed to $3.46 per thousand cubic feet, compared with $2.39 a year earlier. These prices showed an improvement in realized returns from production, while derivative losses and interest expense weighed on the quarter's net result.
Lease operating expenses were $30.1 million, or $9.43 per barrel of oil equivalent, up 17% per unit from the third quarter of 2025. The company attributed the increase to higher saltwater disposal costs as produced water volumes rose, well flowback operations, surface equipment rentals and contract labor. Capital spending during the quarter was $109.9 million, including $90.8 million for drilling and completion and $19.0 million for asset purchases. The company closed 20 acquisitions, concentrated mainly in the Permian and Appalachia basins, adding 8.0 net undeveloped locations to its inventory. The spending and acquisitions came in a period when the company also reported growth in adjusted operating earnings and cash flow.
On operational expansion, the company added Arete Creek Resources to its partnership platform. The Midland-based operator focuses on the Midland Basin. Granite Ridge said the Arete Creek team has drilled and produced more than 200 horizontal wells and established five prior ventures in the Permian Basin. The first well under the partnership began in October, according to the statement. Granite Ridge expects to operate one drilling rig under the partnership in 2027. The agreement adds new activity to the company's portfolio, which included acquisitions in the Permian and Appalachia during the quarter.
The company kept its 2026 annual guidance at production of 34,000 to 35,000 barrels of oil equivalent per day, with oil expected to account for 51.5% to 52.5% of sales volumes. It estimated total capital spending for the year at $345 million to $385 million. The chief executive said the company expects 2027 results to benefit from the expiration of lower-priced hedges in 2026, alongside expected production growth and a higher oil share. He added that adjusted free cash flow, based on current futures prices, is expected to cover distributions and support business growth. The outlook reflects management's link between production mix, hedges and spending in shaping future results.
In a move affecting shareholder returns, the board approved a program on November 4, 2026, to repurchase up to $35 million of common stock, effective through December 31, 2027. The company said it is not obligated to make purchases under the program. It also declared a quarterly dividend of $0.11 per share, payable on December 14 to shareholders of record on November 27. In the November 4 session, GRNT shares ranged from $4.60 to $5.06 and closed at $4.63, according to trading data. The stock closed at $4.67 on November 5, according to EL7 daily data. Granite Ridge scheduled a call to discuss results for November 6, 2026, at 10 a.m. Central Time, followed by a question-and-answer session.