As filed with the Securities and Exchange Commission on January 10, 2023

Registration No. 333-268478​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2
TO

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933​

Granite Ridge Resources, Inc.

(Exact Name of Registrant as Specified in Its Charter)​

5217 McKinney Avenue, Suite 400
Dallas, Texas 75205
(214) 396-2850

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Attn: Luke Brandenberg
President and Chief Executive Officer
5217 McKinney Avenue, Suite 400
Dallas, Texas 75205
(214) 396-2850

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Amy R. Curtis
Jeremiah M. Mayfield
Holland & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas 75201
(214) 969-1763

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”) check the following box: ☒

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the SEC, acting pursuant to Section 8(a) of the Securities Act, may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell, nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated January 10, 2023.

PRELIMINARY PROSPECTUS

Granite Ridge Resources, Inc.

128,233,953 Shares of Common Stock
10,349,975 Shares of Common Stock issuable
upon the exercise of Warrants

This prospectus relates to the issuance by Granite Ridge Resources, Inc. (“Granite Ridge” or the “Company”) of up to an aggregate of 10,349,975 shares of common stock, $0.0001 par value (the “Granite Ridge common stock”) that may be issued upon exercise of warrants to purchase Granite Ridge common stock at an exercise price of $11.50 per share (the “Granite Ridge warrants”).

This prospectus also relates to the offer and sale from time to time by the selling securityholders named in this prospectus (the “Selling Securityholders”), or their permitted transferees, of up to 128,233,953 shares of Granite Ridge common stock.

The shares of Granite Ridge common stock offered for resale under this prospectus were issued to the Selling Securityholders (as applicable to each) in accordance with the terms of, and transactions contemplated by, the Business Combination Agreement, dated as of May 16, 2022 (the “Business Combination Agreement”), by and among Executive Network Partnering Corporation, a Delaware corporation (“ENPC”), Granite Ridge, ENPC Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Granite Ridge (“ENPC Merger Sub”), GREP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Granite Ridge (“GREP Merger Sub”), and GREP Holdings, LLC, a Delaware limited liability company (“GREP”). The Granite Ridge common stock registered hereunder represents the securities issued to the Selling Securityholders pursuant to the terms of the Business Combination Agreement, as applicable to each Selling Securityholder, concurrently with the closing of the Business Combination.

The Business Combination is described in greater detail in this prospectus. See “Prospectus Summary — Business Combination.”

The 128,233,953 maximum amount of shares of Granite Ridge common stock offered for resale under this prospectus consist of (a) 1,238,393 shares of Granite Ridge common stock (the “Sponsor Shares”), of which 1,174,106 shares of Granite Ridge common stock were issued to ENPC Holdings II, LLC (“Holdco”) and 64,287 shares of Granite Ridge common stock were issued to the former independent directors of ENPC, in the Business Combination as merger consideration in connection with the exchange or forfeiture of securities of ENPC, as described below; and (b) 126,995,560‬ shares of Granite Ridge common stock issued to the other Selling Securityholders named herein in connection with the Business Combination as merger consideration based on a share value at the time the Business Combination Agreement was executed of $10.00 per share.

In connection with the initial public offering of ENPC, ENPC Holdings, LLC (“Sponsor”) acquired (and later assigned to Holdco and the former independent directors of ENPC) (i) 828,000 shares of ENPC Class F common stock (giving effect to a stock split effected by ENPC) for a capital contribution of $6,250, or for approximately $0.008 per share, (ii) 300,000 shares of Class B ENPC Common Stock (giving effect to the Forward Split (as defined herein)) for a capital contribution of $18,750, or for approximately $0.06 per share, and (iii) 614,000 CAPS™ (after giving effect to the Forward Split), each consisting of one share of Class A common stock and one-quarter of one ENPC warrant, originally purchased by the Sponsor for $6,140,000 in a private placement, or for approximately $10.00 per each ENPC CAPS™. At the effective time of the transactions contemplated by the Business Combination Agreement, (i) 495,357 shares of ENPC Class F common stock were converted to 1,238,393 shares of ENPC Class A common stock (of which 371,518 of those shares are, upon conversion to Granite Ridge common stock, subject to certain vesting and forfeiture provisions set forth in the Sponsor Agreement (as defined herein)) and the remaining shares of ENPC Class F common stock outstanding were automatically cancelled for no consideration (the “ENPC Class F Conversion”) (ii) all other remaining shares of ENPC Class A common stock held by Holdco were automatically cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding were deemed transferred to ENPC and surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPS™, which were composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, were automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPS™ was deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant (the “CAPS™ Separation”). As noted, the constituent ENPC Class A common stock was converted or canceled pursuant to the Business Combination Agreement and all ENPC warrants held by Holdco, including

all of the ENPC private placement warrants were canceled. Following the ENPC Class F Conversion, the Sponsor Share Cancellation, the ENPC Class B Contribution and the CAPS™ Separation, each share of ENPC Class A common stock outstanding was automatically converted into one share of Granite Ridge common stock.

As a result, upon giving effect to the CAPS™ Separation, ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, the Sponsor’s total aggregate investment of $6.935 million (which amount represents the total risk capital contributed to ENPC by or on behalf of the Sponsor, including working capital loans that were forgiven) for 1,238,393 shares of Granite Ridge common stock held by Holdco and the former independent directors of ENPC following the Business Combination resulted in a per share purchase price of approximately $5.60 per share (assuming all 371,518 shares subject to vesting or forfeiture are fully vested) or approximately $8.00 per share (excluding all 371,518 shares subject to vesting or forfeiture).

In connection with the Business Combination, holders of 39,343,496 shares of ENPC Class A common stock, or 93.6% of the outstanding shares of ENPC Class A Common Stock, exercised their rights to have those shares redeemed for cash at a redemption price of approximately $10.07 per share, or an aggregate of approximately $396.1 million. The shares of Granite Ridge common stock being offered for resale pursuant to this prospectus by the Selling Securityholders represent approximately 96% of the outstanding shares of Granite Ridge common stock as of the date of this prospectus. Given the substantial number of shares of Granite Ridge common stock being registered for potential resale by Selling Securityholders pursuant to this prospectus, the sale of shares by the Selling Securityholders, or the perception in the market that the Selling Securityholders intend to sell shares, could increase the volatility of the market price of Granite Ridge common stock or result in a significant decline in the public trading price of Granite Ridge common stock. Even if our trading price is significantly below $10.00, the offering price for the CAPS™ offered in ENPC’s initial public offering, certain of the Selling Securityholders may still have an incentive to sell shares of Granite Ridge common stock because the purchase price or cost basis for the underlying securities were lower than the cost basis or purchase price for the public investors or the current trading price of Granite Ridge common stock (who may not experience a similar rate of return at the same trading price). For example, subject to the satisfaction of various conditions pursuant to the Sponsor Agreement and based on the closing price of Granite Ridge common stock of $9.13 as of January 9, 2023, Holdco and other holders of the Sponsor Shares could realize profits no higher than approximately $3.53 per share, or approximately $4.37 million in the aggregate (assuming, for simplicity, that all 371,518 shares subject to vesting or forfeiture are fully vested, but acknowledging fewer shares are likely to vest given a closing price of $9.13).

Pursuant to this prospectus, the Selling Securityholders are permitted to offer the securities from time to time, if and to the extent as they may determine, through public or private transactions or through other means described in the section of this prospectus entitled “Plan of Distribution” at prevailing market prices, at prices different than prevailing market prices or at privately negotiated prices. The Selling Securityholders may sell shares through agents they select or through underwriters and dealers they select. The Selling Securityholders also may sell their securities directly to investors. If the Selling Securityholders use agents, underwriters or dealers to sell their shares, we will name such agents, underwriters or dealers and describe any applicable commissions or discounts in a supplement to this prospectus if required.

We have agreed to bear all of the expenses incurred in connection with the registration of these securities. The Selling Securityholders will pay or assume underwriting fees, discounts and commissions or similar charges, if any, incurred in the sale of securities by them.

The Selling Securityholders identified in this prospectus may offer, sell or distribute all or a portion of the Granite Ridge common stock included under this prospectus (as applicable to each Selling Securityholder) in the section entitled “Selling Securityholders.” We will not receive any proceeds from the sale of securities by the Selling Securityholders. We will receive the proceeds from the exercise of any Granite Ridge warrants for cash. The exercise price of Granite Ridge warrants is $11.50 per warrant. We believe the likelihood that Granite Ridge warrant holders will exercise their Granite Ridge warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of Granite Ridge common stock. If the trading price for Granite Ridge common stock continues to be less than $11.50 per share, we believe holders of Granite Ridge warrants will be unlikely to exercise their warrants.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required.

Granite Ridge common stock and Granite Ridge warrants are listed on the New York Stock Exchange under the symbols “GRNT” and “GRNT WS,” respectively. On January 9, 2023, the closing price of Granite Ridge common stock was $9.13 per share and the closing price of Granite Ridge warrants on January 9, 2023 was $1.09 per warrant.

We are an “emerging growth company” and a “smaller reporting company” as those terms are defined under applicable federal securities laws, and as such, are subject to certain reduced public company reporting requirements.

AN INVESTMENT IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 15 OF THIS PROSPECTUS BEFORE YOU MAKE YOUR DECISION TO INVEST IN OUR COMMON STOCK.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is            , 2023

 

TABLE OF CONTENTS

You should rely only on the information provided in this prospectus. Neither we nor the Selling Securityholders have authorized anyone to provide you with different information. Neither we nor the Selling Securityholders are making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date hereof. Since the date of this prospectus, our business, financial condition, results of operations and prospects may have changed.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using the “shelf” registration process. Under this shelf registration process, the Selling Securityholders may, from time to time, sell the securities offered by them described in this prospectus. We will not receive any proceeds from the sale by such Selling Securityholders of the securities offered by them described in this prospectus. We may also use the shelf registration statement to issue 10,349,975 shares of our common stock, $0.0001 par value, that may be issued upon exercise of warrants to purchase common stock at an exercise price of $11.50 per share of common stock (the “Granite Ridge warrants”).

 

i

 

Neither we nor the Selling Securityholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or any applicable prospectus supplement or any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the Selling Securityholders take responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. Neither we nor the Selling Securityholders will make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

We may also provide a prospectus supplement or post-effective amendment to the registration statement to add information to, or update or change information contained in, this prospectus. You should read both this prospectus and any applicable prospectus supplement or post-effective amendment to the registration statement together with the additional information to which we refer you in the sections of this prospectus entitled “Where You Can Find Additional Information.”

 

ii

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made in this prospectus are “forward looking statements.” Statements regarding our expectations regarding the business are “forward looking statements.” In addition, words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include:

•

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, or our ability to raise additional capital;

​

•

changes in current or future commodity prices and interest rates;

​

•

supply chain disruptions;

​

•

infrastructure constraints and related factors affecting our properties;

​

•

expansion plans and opportunities;

​

•

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 Company’s reserves;

​

•

the outcome of any known and unknown litigation and regulatory proceedings;

​

•

limited liquidity and trading of Granite Ridge’s securities; and

​

•

acts of war or terrorism;

​

•

market conditions and global, regulatory, technical, and economic factors beyond Granite Ridge’s control, including the potential adverse effects of the COVID-19 pandemic, or another major disease, affecting capital markets, general economic conditions, global supply chains and Granite Ridge’s business and operations; and

​

•

other risks and uncertainties set forth in the section entitled “Risk Factors” included elsewhere in this prospectus.

​

The forward-looking statements contained in this prospectus and in any document incorporated by reference herein are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We may

 

iii

 

face additional risks and uncertainties that are not presently known to us, or that we deem to be immaterial, which may also impair our business, financial condition or prospects. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

iv

 

FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “Granite Ridge” and “the Company” refer to Granite Ridge Resources, Inc., a Delaware corporation. Furthermore, in this prospectus:

“Business Combination” means the Transactions contemplated by the Business Combination Agreement and the related agreements.

“Business Combination Agreement” means the Business Combination Agreement, dated as of May 16, 2022, as amended, by and among ENPC, Granite Ridge, ENPC Merger Sub, GREP Merger Sub, and GREP.

“CAPS™” means the securities offered in ENPC’s initial public offering, which consisted of one share of Class A common stock and one-quarter of one ENPC warrant.

“closing” means the closing of the Transactions.

“Closing Date” means October 24, 2022, the date on which the Business Combination was consummated.

“Code” means the Internal Revenue Code of 1986, as amended and restated from time to time.

“Combined Company” means Granite Ridge and its consolidated subsidiaries after giving effect to the Business Combination.

“Credit Agreement” means that certain senior secured revolving credit agreement dated October 24, 2022 among the Company, as borrower, Texas Capital Bank, as administrative agent, and the lenders from time to time party thereto.

“DGCL” means the General Corporation Law of the State of Delaware.

“ENPC Class A common stock” means the Class A common stock, par value $0.0001 per share, of ENPC prior to the Business Combination.

“ENPC Class B common stock” means the Class B common stock, par value $0.0001 per share, of ENPC prior to the Business Combination.

“ENPC Class F common stock” means the Class F common stock, par value $0.0001 per share, of ENPC prior to the Business Combination.

“ENPC common stock” means the ENPC Class A common stock, ENPC Class B common stock and ENPC Class F common stock prior to the Business Combination.

“ENPC initial stockholders” or “initial holders” means the Sponsor and any other holders of Founder Shares prior to the ENPC IPO (or their permitted transferees).

“ENPC IPO” means the ENPC initial public offering, consummated on September 18, 2020, in which ENPC sold 41,400,000 CAPS™ at $10.00 per CAPS™ (after giving effect to the Forward Split).

“ENPC Merger” means the merger of ENPC Merger Sub with and into ENPC, with ENPC being the surviving corporation in the merger and a wholly-owned subsidiary of Granite Ridge.

“ENPC Merger Sub” means ENPC Merger Sub, a Delaware corporation.

“ENPC public shares” means, prior to the Business Combination, the 41,400,000 shares of ENPC Class A common stock underlying the CAPS™ issued in the ENPC IPO (after giving effect to the Forward Split).

“ENPC public stockholders” means, prior to the Business Combination, holders of ENPC public shares, including ENPC initial stockholders to the extent ENPC initial stockholders held ENPC public shares.

“ENPC Warrant Agreement” means the Warrant Agreement, dated September 15, 2020, as amended by Amendment No. 1 dated March 24, 2021, between ENPC and Continental Stock Transfer & Trust Company, as warrant agent.

 

v

 

“ENPC warrants” means, prior to the Business Combination, ENPC’s warrants sold as part of the CAPS™ in the ENPC IPO (whether purchased in the ENPC IPO or thereafter in the open market) and as part of the private placement CAPS™.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing GREP Members” means the members of GREP as of the Closing Date.

“Forward Split” refers collectively to (i) the 2.5 for 1 forward stock split for each outstanding ENPC Class A common stock and ENPC Class B common stock, as effected by the first amendment to ENPC’s charter dated as of March 24, 2021, and (ii) the 2.5 for 1 forward warrant split for each outstanding ENPC Warrant, as effected by that certain Amendment No. 1 to Warrant Agreement, dated March 24, 2021, by and between ENPC and Continental Stock Transfer & Trust Company, a New York corporation.

“Founder Shares” means, prior to the Business Combination, the ENPC Class F common stock and the ENPC Class A common stock issued upon the automatic conversion thereof at the time of the Business Combination.

“Funds” or the “Grey Rock Funds” means, collectively, Fund I, Fund II and Fund III.

“Fund I” means Grey Rock Energy Fund, LP, a Delaware limited partnership.

“Fund II” means, collectively, Grey Rock Energy Fund II, L.P., Grey Rock Energy Fund II-B, LP, and Grey Rock Energy Fund II-B Holdings, L.P., each a Delaware limited partnership.

“Fund III” means, collectively, Grey Rock Energy Fund III-A, LP, Grey Rock Energy Fund III-B, LP, and Grey Rock Energy Fund III-B Holdings, LP, each a Delaware limited partnership.

“GAAP” means generally accepted accounting principles in the United States.

“Granite Ridge” means Granite Ridge Resources, Inc., a Delaware corporation.

“Granite Ridge Board” means the board of directors of Granite Ridge.

“Granite Ridge common stock” means the common stock, par value $0.0001 per share, of Granite Ridge.

“Granite Ridge Warrant Agreement” means the ENPC Warrant Agreement, as assigned and amended by the by that certain Assignment, Assumption and Amendment Agreement, dated October 24, 2022, by and among the Company, ENPC and Continental Stock Transfer & Trust Company.

“Granite Ridge warrants” means the ENPC warrants that were converted into warrants to purchase Granite Ridge common stock upon consummation of the Business Combination

“GREP” means GREP Holdings, LLC, a Delaware limited liability company.

“GREP Merger” means the merger of GREP Merger Sub with and into GREP with GREP being the surviving company in the merger and a wholly-owned subsidiary of Granite Ridge.

“GREP Merger Sub” means GREP Merger Sub, LLC, a Delaware limited liability company.

“Grey Rock” means Grey Rock Energy Management, LLC, a Delaware limited liability company.

“Holdco” means ENPC Holdings II, LLC, a Delaware limited liability company.

“Incentive Plan” means the Granite Ridge 2022 Omnibus Incentive Plan.

“IRS” means the U.S. Internal Revenue Service.

“Manager” means Grey Rock Administration, LLC, a Delaware limited liability company, or its permitted assignee.

“Mergers” means, collectively, the ENPC Merger and the GREP Merger.

 

vi

 

“MSA” means the Management Services Agreement, dated October 24, 2022 by and between Granite Ridge Resources, Inc. and Grey Rock Administration, LLC.

“NYSE” means the New York Stock Exchange.

“private placement” means the private sale of private placement CAPS™ that occurred simultaneously with the consummation of the ENPC IPO for total gross proceeds of $6,140,000.

“private placement CAPS™” means, prior to the Business Combination, the 614,000 CAPS™ purchased by the Sponsor in the private placement (after giving effect to the Forward Split), each consisting of one share of ENPC Class A common stock and one-quarter of one private placement warrant.

“private placement warrants” means, prior to the Business Combination, the 153,500 warrants underlying the private placement CAPS™ purchased by the Sponsor in the private placement (after giving effect to the Forward Split), each of which is exercisable for one share of ENPC Class A common stock in accordance with its terms.

“Securities Act” means the Securities Act of 1933, as amended.

“Selling Securityholders” means selling securityholders named in this prospectus and donees, transferees, assignees, successors, designees and others who later come to hold any of the Selling Securityholders’ interest in the Granite Ridge common stock other than through a public sale.

“Sponsor” means ENPC Holdings, LLC, a Delaware limited liability company.

“Sponsor Agreement” means that certain Sponsor Agreement, dated May 16, 2022, by and among Sponsor, Holdco, ENPC, Granite Ridge, GREP and certain other parties named therein.

“Sponsor Shares” means the 1,238,393 shares of Granite Ridge common stock offered for resale under this prospectus, of which 1,174,106 shares of Granite Ridge common stock were issued to Holdco and 64,287 shares of Granite Ridge common stock were issued to the former independent directors of ENPC in the Business Combination as merger consideration.

“Transactions” means, collectively, the Mergers, Business Combination and the other transactions contemplated by the Business Combination Agreement.

“Transfer Agent” means Continental Stock Transfer & Trust Company, a New York corporation.

“Treasury regulations” means the regulations promulgated by the U.S. Treasury Department under the Code.

“Trust Account” means the trust account into which the net proceeds of the ENPC IPO and the private placement were deposited for the benefit of the ENPC public stockholders and which held total assets of approximately $414.5 million prior to the Business Combination.

“Warrant Agreement Amendment and Assignment” means that certain Assignment, Assumption and Amendment Agreement, dated October 24, 2022, by and among the Company, ENPC and Continental Stock Transfer & Trust Company, which assigned the ENPC Warrant Agreement to the Company.

 

vii

 

1

 

2

 

3

 

4

 

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5

 

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Three Months Ended September 30,

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Nine Months Ended September 30,

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Year Ended December 31,

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(in thousands)

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2022

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2021

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2022

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2021

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​

2021

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2020

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​

2019

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Statement of Operations Information:

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Revenues

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​

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​

​

​

​

Oil, natural gas, and related product sales

​

​

​

$

90,194

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​

​

​

$

55,717

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​

​

​

$

263,263

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​

​

​

$

142,632

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​

​

​

$

197,546

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​

​

​

$

28,290

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​

​

​

$

23,283

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​

Operating expenses

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​

​

​

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​

Lease operating expenses

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​

6,368

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​

​

​

​

3,621

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​

​

​

​

15,840

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​

​

​

​

8,407

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​

​

​

​

12,362

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​

​

​

​

5,147

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​

​

​

​

2,669

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​

Production taxes

​

​

​

​

5,053

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​

​

​

​

2,506

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​

​

​

​

14,628

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​

​

​

​

7,737

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​

​

​

​

10,808

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​

​

​

​

1,815

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​

​

​

​

1,369

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Depletion and accretion expense

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​

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​

39,868

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​

​

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​

15,794

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​

​

​

​

70,529

​

​

​

​

​

45,798

​

​

​

​

​

60,534

​

​

​

​

​

22,130

​

​

​

​

​

17,100

​

​

Professional fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

1,552

​

​

​

​

​

790

​

​

​

​

​

939

​

​

Management fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

3,878

​

​

​

​

​

3,878

​

​

​

​

​

3,878

​

​

General and administrative

​

​

​

​

1,776

​

​

​

​

​

1,764

​

​

​

​

​

4,880

​

​

​

​

​

4,978

​

​

​

​

​

832

​

​

​

​

​

498

​

​

​

​

​

144

​

​

Organizational expense

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

21

​

​

Total expenses

​

​

​

​

53,065

​

​

​

​

​

23,685

​

​

​

​

​

105,877

​

​

​

​

​

66,920

​

​

​

​

​

89,966

​

​

​

​

​

34,258

​

​

​

​

​

26,120

​

​

Net operating income (loss)

​

​

​

​

37,129

​

​

​

​

​

32,032

​

​

​

​

​

157,386

​

​

​

​

​

75,712

​

​

​

​

​

107,580

​

​

​

​

​

(5,968)

​

​

​

​

​

(2,837)

​

​

Other (expense) income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gain (loss) on derivative contracts

​

​

​

​

6,082

​

​

​

​

​

(6,558)

​

​

​

​

​

(19,147)

​

​

​

​

​

(18,115)

​

​

​

​

​

(17,315)

​

​

​

​

​

2,928

​

​

​

​

​

137

​

​

Interest expense

​

​

​

​

(476)

​

​

​

​

​

(353)

​

​

​

​

​

(1,193)

​

​

​

​

​

(926)

​

​

​

​

​

(1,399)

​

​

​

​

​

(428)

​

​

​

​

​

(509)

​

​

Total other income (expense)

​

​

​

​

5,606

​

​

​

​

​

(6,911)

​

​

​

​

​

(20,340)

​

​

​

​

​

(19,041)

​

​

​

​

​

(18,714)

​

​

​

​

​

2,500

​

​

​

​

​

(372)

​

​

Net income (loss)

​

​

​

$

42,735

​

​

​

​

$

25,121

​

​

​

​

$

137,046

​

​

​

​

$

56,671

​

​

​

​

$

88,866

​

​

​

​

$

(3,468)

​

​

​

​

$

(3,209)

​

​

6

 

​

​

​

Nine Months Ended September 30,

​

​

Year Ended December 31,

​

​

​

​

2022

​

​

2021

​

​

2021

​

​

2020

​

​

2019

​

Statement of Cash Flow Information;

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cash provided by operating activities

​

​

​

$

179,662

​

​

​

​

$

91,900

​

​

​

​

$

131,715

​

​

​

​

$

14,085

​

​

​

​

$

8,670

​

​

Net cash used in investing activities

​

​

​

​

(150,655)

​

​

​

​

​

(124,786)

​

​

​

​

​

(194,014)

​

​

​

​

​

(80,868)

​

​

​

​

​

(83,707)

​

​

Net cash (used in) provided by financing activities

​

​

​

​

(29,916)

​

​

​

​

​

44,074

​

​

​

​

​

66,980

​

​

​

​

​

66,447

​

​

​

​

​

69,815

​

​

​

​

​

As of September 30,

​

​

As of December 31,

​

​

​

​

2022

​

​

2021

​

​

2020

​

Balance Sheet Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash

​

​

​

$

6,410

​

​

​

​

$

7,319

​

​

​

​

$

2,638

​

​

Property and equipment, net

​

​

​

​

381,861

​

​

​

​

​

278,391

​

​

​

​

​

172,481

​

​

Total assets

​

​

​

​

478,121

​

​

​

​

​

356,190

​

​

​

​

​

192,862

​

​

Credit facilities

​

​

​

​

—

​

​

​

​

​

29,938

​

​

​

​

​

9,897

​

​

Total partner’s capital

​

​

​

​

451,342

​

​

​

​

​

314,296

​

​

​

​

​

178,429

​

​

7

 

​

​

​

Nine Months Ended September 30,

​

​

Year Ended December 31,

​

(in thousands)

​

​

2022

​

​

2021

​

​

2021

​

​

2020

​

​

2019

​

Statement of Operations Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil, natural gas, and related product sales

​

​

​

$

7,806

​

​

​

​

$

8,182

​

​

​

​

$

10,257

​

​

​

​

$

9,791

​

​

​

​

$

13,440

​

​

Operating expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Lease operating expenses

​

​

​

​

1,216

​

​

​

​

​

1,426

​

​

​

​

​

1,799

​

​

​

​

​

2,156

​

​

​

​

​

2,980

​

​

Production taxes

​

​

​

​

512

​

​

​

​

​

506

​

​

​

​

​

627

​

​

​

​

​

619

​

​

​

​

​

865

​

​

Depletion and accretion expense

​

​

​

​

1,611

​

​

​

​

​

2,533

​

​

​

​

​

3,038

​

​

​

​

​

9,837

​

​

​

​

​

7,262

​

​

Impairment expense

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

5,725

​

​

​

​

​

—

​

​

Professional fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

218

​

​

​

​

​

302

​

​

​

​

​

665

​

​

Management fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

585

​

​

​

​

​

700

​

​

General and administrative

​

​

​

​

158

​

​

​

​

​

360

​

​

​

​

​

171

​

​

​

​

​

383

​

​

​

​

​

202

​

​

Gain on disposal of oil and natural gas properties

​

​

​

​

—

​

​

​

​

​

(1,011)

​

​

​

​

​

(1,341)

​

​

​

​

​

(597)

​

​

​

​

​

(4,910)

​

​

Total expenses

​

​

​

​

3,497

​

​

​

​

​

3,814

​

​

​

​

​

4,512

​

​

​

​

​

19,010

​

​

​

​

​

7,764

​

​

Net operating income (loss)

​

​

​

​

4,309

​

​

​

​

​

4,368

​

​

​

​

​

5,745

​

​

​

​

​

(9,219)

​

​

​

​

​

5,676

​

​

Other (expense) income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Loss) gain on derivative contracts

​

​

​

​

(576)

​

​

​

​

​

(1,832)

​

​

​

​

​

(1,842)

​

​

​

​

​

1,714

​

​

​

​

​

(1,371)

​

​

Interest expense

​

​

​

​

(22)

​

​

​

​

​

(116)

​

​

​

​

​

(138)

​

​

​

​

​

(245)

​

​

​

​

​

(665)

​

​

Total other (expense) income

​

​

​

​

(598)

​

​

​

​

​

(1,948)

​

​

​

​

​

(1,980)

​

​

​

​

​

1,469

​

​

​

​

​

(2,036)

​

​

Net income (loss)

​

​

​

$

3,711

​

​

​

​

$

2,420

​

​

​

​

$

3,765

​

​

​

​

$

(7,750)

​

​

​

​

$

3,640

​

​

​

​

​

Nine Months Ended September 30,

​

​

Year Ended December 31,

​

​

​

​

2022

​

​

2021

​

​

2021

​

​

2020

​

​

2019

​

Statement of Cash Flow Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cash provided by operating activities

​

​

​

$

3,977

​

​

​

​

$

4,544

​

​

​

​

$

5,473

​

​

​

​

$

8,152

​

​

​

​

$

6,426

​

​

Net cash (used in) provided by investing activities

​

​

​

​

(1,584)

​

​

​

​

​

19,454

​

​

​

​

​

21,280

​

​

​

​

​

(6,455)

​

​

​

​

​

8,154

​

​

Net cash used in financing activities

​

​

​

​

(1,100)

​

​

​

​

​

(24,300)

​

​

​

​

​

(27,300)

​

​

​

​

​

(2,500)

​

​

​

​

​

(13,241)

​

​

8

 

​

​

​

As of September 30,

​

​

As of December 31,

​

​

​

​

2022

​

​

2021

​

​

2020

​

Balance Sheet Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash

​

​

​

$

2,033

​

​

​

​

$

740

​

​

​

​

$

1,287

​

​

Property and equipment, net

​

​

​

​

14,959

​

​

​

​

​

15,046

​

​

​

​

​

37,711

​

​

Total assets

​

​

​

​

19,687

​

​

​

​

​

16,999

​

​

​

​

​

40,784

​

​

Credit facilities

​

​

​

​

—

​

​

​

​

​

1,100

​

​

​

​

​

6,400

​

​

Total partner’s capital

​

​

​

​

18,685

​

​

​

​

​

14,974

​

​

​

​

​

33,209

​

​

9

 

​

​

​

Nine Months Ended September 30,

​

​

Year Ended December 31,

​

(in thousands)

​

​

2022

​

​

2021

​

​

2021

​

​

2020

​

Statement of Operations Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Oil, natural gas, and related product sales

​

​

​

$

110,013

​

​

​

​

$

59,822

​

​

​

​

$

82,391

​

​

​

​

$

49,017

​

​

Operating expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Lease operating expenses

​

​

​

​

13,662

​

​

​

​

​

8,122

​

​

​

​

​

13,128

​

​

​

​

​

13,760

​

​

Production taxes

​

​

​

​

5,171

​

​

​

​

​

4,505

​

​

​

​

​

5,675

​

​

​

​

​

3,564

​

​

Depletion and accretion expense

​

​

​

​

26,038

​

​

​

​

​

24,109

​

​

​

​

​

31,090

​

​

​

​

​

47,980

​

​

Professional fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

541

​

​

​

​

​

992

​

​

Management fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

2,315

​

​

​

​

​

2,185

​

​

General and administrative

​

​

​

​

2,709

​

​

​

​

​

2,904

​

​

​

​

​

672

​

​

​

​

​

495

​

​

Gain on disposal of oil and natural gas properties

​

​

​

​

—

​

​

​

​

​

(955)

​

​

​

​

​

(938)

​

​

​

​

​

(51)

​

​

Total expenses

​

​

​

​

47,580

​

​

​

​

​

38,685

​

​

​

​

​

52,483

​

​

​

​

​

68,925

​

​

Net operating income (loss)

​

​

​

​

62,433

​

​

​

​

​

21,137

​

​

​

​

​

29,908

​

​

​

​

​

(19,908)

​

​

Other (expense) income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Loss) gain on derivative contracts

​

​

​

​

(11,064)

​

​

​

​

​

(13,713)

​

​

​

​

​

(13,232)

​

​

​

​

​

8,363

​

​

Interest expense

​

​

​

​

(489)

​

​

​

​

​

(611)

​

​

​

​

​

(848)

​

​

​

​

​

(1,167)

​

​

Total other (expense) income

​

​

​

​

(11,553)

​

​

​

​

​

(14,324)

​

​

​

​

​

(14,080)

​

​

​

​

​

7,196

​

​

Net income (loss)

​

​

​

$

50,880

​

​

​

​

$

6,813

​

​

​

​

$

15,828

​

​

​

​

$

(12,712)

​

​

​

​

​

Nine Months Ended September 30,

​

​

Year Ended December 31,

​

​

​

​

2022

​

​

2021

​

​

2021

​

​

2020

​

Statement of Cash Flow Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cash provided by operating activities

​

​

​

$

67,718

​

​

​

​

$

34,209

​

​

​

​

$

43,990

​

​

​

​

$

44,569

​

​

Net cash used in investing activities

​

​

​

​

(22,824)

​

​

​

​

​

(11,344)

​

​

​

​

​

(13,288)

​

​

​

​

​

(29,420)

​

​

Net cash used in financing activities

​

​

​

​

(20,000)

​

​

​

​

​

(22,084)

​

​

​

​

​

(31,191)

​

​

​

​

​

(11,876)

​

​

10

 

​

​

​

As of September 30,

​

​

As of December 31,

​

​

​

​

2022

​

​

2021

​

​

2020

​

Balance Sheet Information:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash

​

​

​

$

28,688

​

​

​

​

$

3,794

​

​

​

​

$

4,283

​

​

Property and equipment, net

​

​

​

​

151,240

​

​

​

​

​

155,336

​

​

​

​

​

173,600

​

​

Total assets

​

​

​

​

204,410

​

​

​

​

​

173,541

​

​

​

​

​

186,897

​

​

Credit facilities

​

​

​

​

—

​

​

​

​

​

20,000

​

​

​

​

​

22,093

​

​

Total partners’ capital

​

​

​

​

196,541

​

​

​

​

​

145,661

​

​

​

​

​

158,918

​

​

11

 

12

 

​

13

 

​

14

 

RISK FACTORS

The following risk factors apply to our business and operations. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to our business, financial condition and prospects. You should carefully consider the following risk factors in addition to the other information included in this prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements” and the financial statements and notes to the financial statements included herein. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein. As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to Granite Ridge, unless the context clearly indicates otherwise.

Risks Related to Granite Ridge’s Business and Operations

As a non-operator, Granite Ridge’s development of successful operations relies extensively on third parties, which could have a material adverse effect on Granite Ridge’s results of operation.

Granite Ridge has only participated in wells operated by third parties. The success of Granite Ridge’s business operations depends on the timing of drilling activities and success of Granite Ridge’s third-party operators. If Granite Ridge’s operators are not successful in the development, exploitation, production, and exploration activities relating to Granite Ridge’s leasehold interests, or are unable or unwilling to perform, Granite Ridge’s financial condition and results of operation would be materially adversely affected.

Granite Ridge’s operators will make decisions in connection with their operations (subject to their contractual and legal obligations to other owners of working interests), which may not be in Granite Ridge’s best interests. The Company may have no ability to exercise influence over the operational decisions of its operators, including the setting of capital expenditure budgets and drilling locations and schedules. Dependence on third-party operators could prevent Granite Ridge from realizing target returns for those locations. The success and timing of development activities by Granite Ridge’s operators will depend on a number of factors that will largely be outside of the Company’s control, including oil and natural gas prices and other factors generally affecting the industry operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any.

These risks are heightened in a low commodity price environment, which may present significant challenges to Granite Ridge’s operators. The challenges and risks faced by Granite Ridge’s operators may be similar to or greater than Granite Ridge’s own, including with respect to their ability to service their debt, remain in compliance with their debt instruments and, if necessary, access additional capital. Commodity prices and/or other conditions have in the past and may in the future cause oil and gas operators to file for bankruptcy. The insolvency of an operator of any of the Properties, the failure of an operator of any of the Properties to adequately perform operations or an operator’s breach of applicable agreements could reduce Granite Ridge’s production and revenue and result in Granite Ridge’s liability to governmental authorities for compliance with environmental, safety and other regulatory requirements, to the operator’s suppliers and vendors and to royalty owners under oil and gas leases jointly owned with the operator or another insolvent owner. Finally, an operator of the Properties may have the right, if another non-operator fails to pay its share of costs because of its insolvency or otherwise, to require Granite Ridge to pay its proportionate share of the defaulting party’s share of costs.

The inability of one or more of Granite Ridge’s operating partners to meet their obligations to Granite Ridge may adversely affect Granite Ridge’s financial results.

Granite Ridge’s exposures to credit risk, in part, are through receivables resulting from the sale of Granite Ridge’s oil and natural gas production, which operating partners market on Granite Ridge’s behalf to energy marketing companies, refineries, and their affiliates. Granite Ridge is subject to credit risk due to the relative concentration of Granite Ridge’s oil and natural gas receivables with a limited number of operating partners. This may impact Granite Ridge’s overall credit risk since these entities may be similarly affected by changes in economic and other conditions. A low commodity price environment may strain Granite

 

15

 

Ridge’s operating partners, which could heighten this risk. The inability or failure of Granite Ridge’s operating partners to meet their obligations to Granite Ridge or their insolvency or liquidation may adversely affect Granite Ridge’s financial results.

Granite Ridge’s business depends on third-party transportation and processing facilities and other assets that are owned by third parties.

The marketability of Granite Ridge’s oil and natural gas depends in part on the availability, proximity and capacity of pipeline systems, processing facilities, oil trucking fleets and rail transportation assets owned by third parties. The lack of available capacity on these systems and facilities, whether as a result of proration, growth in demand outpacing growth in capacity, physical damage, adverse weather events or natural disasters, equipment malfunctions or failures, scheduled or unscheduled maintenance, legal or other reasons, could result in a substantial increase in costs, declines in realized commodity prices, the shut-in of producing wells, or the delay or discontinuance of development plans for the Properties. In many cases, operators are provided only with limited, if any, notice as to when these circumstances will arise and their duration. In addition, Granite Ridge’s wells may be drilled in locations that are serviced to a limited extent, if at all, by gathering and transportation pipelines, which may or may not have sufficient capacity to transport production from all of the wells in the area. As a result, Granite Ridge may rely on third-party oil trucking to transport a significant portion of Granite Ridge’s production to third-party transportation pipelines, rail loading facilities, and other market access points.

In addition, the third parties on whom operators rely for transportation services are subject to complex federal, state, tribal, and local laws that could adversely affect the cost, manner, or feasibility of conducting business on the Properties. Further, concerns about the safety and security of oil and gas transportation by pipeline may result in public opposition to pipeline development and increased regulation of pipelines by PHMSA, and therefore less capacity to transport Granite Ridge’s products by pipeline. Any significant curtailment in gathering system or transportation, processing, or refining-facility capacity could reduce Granite Ridge’s operating partners’ ability to market oil production and have an adverse effect on Granite Ridge. Operators’ access to transportation options and the prices they receive can also be affected by federal and state regulation — including regulation of oil production, transportation, and pipeline safety — as well by general economic conditions and changes in supply and demand.

The loss of a key member of the Manager’s management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise Granite Ridge relies, could diminish the Company’s ability to conduct its operations and harm its ability to execute its business plan.

Granite Ridge relies on continued contributions of the members of the Manager’s management team by virtue of its reliance on the MSA. Granite Ridge’s success depends heavily upon the continued contributions of those members of the Manager’s management team whose knowledge, relationships with industry participants, leadership, and technical expertise would be difficult to replace. In particular, Granite Ridge’s ability to successfully acquire additional properties, to increase its reserves, to participate in drilling opportunities, and to identify and enter into commercial arrangements depends on developing and maintaining close working relationships with industry participants. In addition, Granite Ridge’s ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment is dependent on the Manager’s management team’s knowledge and expertise in the industry. To continue to develop its business, Granite Ridge relies on the Manager’s management team’s knowledge and expertise in the industry and will use the Manager’s management team’s relationships with industry participants to enter into strategic relationships. The members of the Manager’s management team may terminate their employment with the Manager at any time. If the Manager were to lose key members of its management team, neither the Manager nor Granite Ridge may be able to replace the knowledge or relationships that they possess, and the Company’s ability to execute its business plan could be materially harmed. As a result, Granite Ridge’s operations and financial condition could suffer.

Oil and natural gas prices are volatile. Extended declines in such prices have adversely affected, and could in the future adversely affect, Granite Ridge’s business, financial position, results of operations and cash flow.

The oil and natural gas markets are very volatile, and the Company cannot predict future oil and natural gas prices. Oil and natural gas prices have fluctuated significantly, including periods of rapid and

 

16

 

material decline, in recent years. The prices Granite Ridge receives for the oil and natural gas production associated with its working interests heavily influence Granite Ridge’s production, revenue, cash flows, profitability, reserve bookings and access to capital. Although Granite Ridge seeks to mitigate volatility and potential declines in commodity prices through derivative arrangements that hedge a portion of the expected production associated with Granite Ridge’s working interests, this merely seeks to mitigate (not eliminate) these risks, and such activities come with their own risks.

The prices Granite Ridge receives for the production and the levels of the production associated with its working interests depend on numerous factors beyond the Company’s control. These factors include, but are not limited to, the following:

•

changes in global supply and demand for oil and natural gas;

​

•

the actions of OPEC and other major oil producing countries;

​

•

worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics (such as the global COVID-19 coronavirus outbreak);

​

•

the price and quantity of imports of foreign oil and natural gas;

​

•

political and economic conditions, including embargoes, in oil-producing countries or affecting other oil-producing activity, particularly those in the Middle East, Russia, South America and Africa;

​

•

the outbreak or escalation of military hostilities, including between Russia and Ukraine, and the potential destabilizing effect such conflicts may pose for the European continent or the global oil and natural gas markets;

​

•

the level of global oil and natural gas exploration, production activity and inventories;

​

•

changes in U.S. energy policy;

​

•

weather conditions and outbreak of disease;

​

•

technological advances affecting energy consumption;

​

•

domestic and foreign governmental taxes, tariffs and/or regulations;

​

•

proximity and capacity of processing, gathering, storage, oil and natural gas pipelines and other transportation facilities;

​

•

the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and

​

•

the price and availability of alternative fuels.

​

These factors and the volatility of the energy markets make it extremely difficult to predict oil and natural gas prices. A substantial or extended decline in oil or natural gas prices, such as the significant and rapid decline that occurred in 2020, has resulted in and could result in future impairments of Granite Ridge’s proved oil and natural gas properties and may materially and adversely affect Granite Ridge’s future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures. To the extent commodity prices received from production are insufficient to fund planned capital expenditures, Granite Ridge may be required to reduce spending or borrow or issue additional equity to cover any such shortfall. Lower oil and natural gas prices may limit Granite Ridge’s ability to comply with the covenants under any credit facilities (or other debt instruments) and/or limit Granite Ridge’s ability to access borrowing availability thereunder, which is dependent on many factors including the value of Granite Ridge’s proved reserves.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect Granite Ridge’s financial condition or results of operations.

Granite Ridge’s operating partners’ drilling activities are subject to many risks, including the risk that they will not discover commercially productive reservoirs. Drilling for oil or natural gas can be uneconomical, not only from dry holes, but also from productive wells that do not produce sufficient revenues to be

 

17

 

commercially viable. In addition, drilling and producing operations on Granite Ridge’s acreage may be curtailed, delayed, or canceled by the operators of the Properties as a result of other factors, including:

•

declines in oil or natural gas prices, as occurred in 2020 in connection with the COVID-19 pandemic;

​

•

infrastructure limitations, such as gas gathering and processing constraints;

​

•

the high cost, shortages or delays of equipment, materials and services;

​

•

unexpected operational events, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents;

​

•

title problems;

​

•

pipe or cement failures and casing collapses;

​

•

lost or damaged oilfield development and service tools;

​

•

compliance with environmental, health, safety and other governmental requirements;

​

•

increases in severance taxes;

​

•

regulations, restrictions, moratoria and bans on hydraulic fracturing;

​

•

unusual or unexpected geological formations, and pressure or irregularities in formations;

​

•

loss of drilling fluid circulation;

​

•

environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas;

​

•

fires, blowouts, craterings and explosions;

​

•

uncontrollable flows of oil, natural gas or well fluids; and

​

•

pipeline capacity curtailments.

​

In addition to causing curtailments, delays and cancellations of drilling and producing operations, many of these events can cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment, pollution, environmental contamination, loss of wells, regulatory penalties and third party claims. Granite Ridge ordinarily maintains insurance against various losses and liabilities arising from its operations; however, insurance against all operational risks is not available to Granite Ridge. Additionally, Granite Ridge may elect not to obtain insurance if it believes that the cost of available insurance is excessive relative to the perceived risks presented. Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material adverse impact on Granite Ridge’s business activities, financial condition and results of operations.

Certain of Granite Ridge’s undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established or operations are commenced on units containing the acreage or the leases are extended.

A portion of Granite Ridge’s acreage is not currently held by production or held by operations. Unless production in paying quantities is established or operations are commenced on units containing these leases during their terms, the leases will expire. If Granite Ridge’s leases expire and it is unable to renew the leases, Granite Ridge will lose its right to participate in the development of the related Properties. Drilling plans for these areas are generally in the discretion of third-party operators and are subject to change based on various factors that are beyond the Company’s control, such as: the availability and cost of capital, equipment, services and personnel; seasonal conditions; regulatory and third-party approvals; oil and natural gas prices; results of title work; gathering system and other transportation constraints; drilling costs and results; and production costs. As of December 31, 2021, the Company estimates that the Funds, and following the Business Combination, Granite Ridge, had leases that were not developed that represented 504 net acres potentially expiring in 2022, 1,543 net acres potentially expiring in 2023, 3,040 net acres potentially expiring in 2024, and 0 net acres potentially expiring in 2025 and beyond.

 

18

 

Granite Ridge could experience periods of higher costs as activity levels fluctuate or if commodity prices rise. These increases could reduce Granite Ridge’s profitability, cash flow, and ability to complete development activities as planned.

An increase in commodity prices or other factors could result in increased development activity and investment in Granite Ridge’s areas of operations, which may increase competition for and cost of equipment, labor and supplies. Shortages of, or increasing costs for, experienced drilling crews and equipment, labor or supplies could restrict Granite Ridge’s operating partners’ ability to conduct desired or expected operations. In addition, capital and operating costs in the oil and natural gas industry have generally risen during periods of increasing commodity prices as producers seek to increase production in order to capitalize on higher commodity prices. In situations where cost inflation exceeds commodity price inflation, Granite Ridge’s profitability and cash flow, and Granite Ridge’s operators’ ability to complete development activities as scheduled and on budget, may be negatively impacted. Any delay in the drilling of new wells or significant increase in drilling costs could reduce Granite Ridge’s revenues and cash flows.

New technologies may cause the current exploration and drilling methods of Granite Ridge’s operating partners to become obsolete, and such operators may not be able to keep pace with technological developments in the oil and gas industry.

The oil and natural gas industry is subject to rapid and significant advancements in technology, including the introduction of new products and services using new technologies. As competitors use or develop new technologies, Granite Ridge may be placed at a competitive disadvantage, and competitive pressures may force Granite Ridge’s operating partners to implement new technologies at a substantial cost. In addition, competitors may have greater financial, technical and personnel resources that allow them to enjoy technological advantages, and that may in the future, allow them to implement new technologies before Granite Ridge or its operating partners can. Granite Ridge cannot be certain that it or its operators will be able to implement technologies on a timely basis or at a cost that is acceptable to Granite Ridge. If Granite Ridge’s operators are unable to maintain technological advancements consistent with industry standards, Granite Ridge’s business, results of operations and financial condition may be materially adversely affected.

Due to previous declines in oil and natural gas prices, the Funds have in the past taken writedowns of the properties that constitute Granite Ridge’s oil and natural gas properties. Granite Ridge may be required to record further writedowns of its oil and natural gas properties in the future.

In 2020, the Funds were required to write down the carrying value of certain of the properties that constitute Granite Ridge’s oil and natural gas properties, and further writedowns could be required by Granite Ridge in the future. Under the successful efforts method of accounting, capitalized costs related to proved oil properties, including wells and related support equipment and facilities, are evaluated for impairment on an annual basis. If undiscounted cash flows are insufficient to recover the net capitalized costs, an impairment charge for the difference between the net capitalized cost of proved properties and their estimated fair values is recognized. A substantial or extended decline in oil or natural gas prices, could result in future impairments of Granite Ridge’s proved oil and natural gas properties.

Granite Ridge’s estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of Granite Ridge’s reserves.

Determining the amount of oil and natural gas recoverable from various formations involves significant complexity and uncertainty. No one can measure underground accumulations of oil or natural gas in an exact way. Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil and/or natural gas and assumptions concerning future oil and natural gas prices, production levels, and operating, exploration and development costs. Some of Granite Ridge’s reserve estimates are made without the benefit of a lengthy production history and are less reliable than estimates based on a lengthy production history. As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate.

Granite Ridge routinely makes estimates of oil and natural gas reserves in connection with managing its business and preparing reports to its lenders and investors, including estimates prepared by the Company’s

 

19

 

independent reserve engineering firm. Although the reserve information contained herein is reviewed by the Company’s independent reserve engineers, estimates of crude oil and natural gas reserves are inherently imprecise. The process also requires economic assumptions about matters such as oil and natural gas prices, development schedules, drilling and operating expenses, capital expenditures, taxes and availability of funds. Some of these assumptions are inherently subjective, and the accuracy of Granite Ridge’s estimated reserves relies in part on the ability of the Manager’s reserve engineers to make accurate assumptions. Any significant variance from these assumptions by actual figures could greatly affect Granite Ridge’s estimated reserves, the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, the classifications of reserves based on risk of recovery, and estimates of the future net cash flows. Numerous changes over time to the assumptions on which Granite Ridge’s estimated reserves are based result in the actual quantities of oil and natural gas Granite Ridge’s operating partners ultimately recover being different from Granite Ridge’s estimated reserves. Any significant variance could materially affect the estimated quantities and present value of reserves shown in this prospectus, subsequent reports Granite Ridge files with the SEC or other company materials.

The present value of future net cash flows from Granite Ridge’s proved reserves is not necessarily the same as the current market value of Granite Ridge’s estimated proved reserves.

The Company bases the estimated discounted future net cash flows from its proved reserves using specified pricing and cost assumptions. However, actual future net cash flows from Granite Ridge’s oil and natural gas properties will be affected by factors such as the volume, pricing and duration of Granite Ridge’s oil and natural gas hedging contracts; actual prices Granite Ridge receives for oil and natural gas; Granite Ridge’s actual operating costs in producing oil and natural gas; the amount and timing of Granite Ridge’s capital expenditures; the amount and timing of actual production; and changes in governmental regulations or taxation. In addition, the 10% discount factor Granite Ridge uses when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with Granite Ridge or the oil and natural gas industry in general. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of Granite Ridge’s reserves, which could adversely affect its business, results of operations and financial condition.

Granite Ridge’s future success depends on its ability to replace reserves that Granite Ridge’s operators produce.

Because the rate of production from oil and natural gas properties generally declines as reserves are depleted, Granite Ridge’s future success depends upon its ability to economically find or acquire and produce additional oil and natural gas reserves. Except to the extent that Granite Ridge acquire additional properties containing proved reserves, conduct successful exploration and development activities or, through engineering studies, identify additional behind-pipe zones or secondary recovery reserves, Granite Ridge’s proved reserves will decline as Granite Ridge’s reserves are produced. Future oil and natural gas production, therefore, is highly dependent upon Granite Ridge’s level of success in acquiring or finding additional reserves that are economically recoverable. Granite Ridge cannot assure you that it will be able to find or acquire and develop additional reserves at an acceptable cost.

Granite Ridge may acquire significant amounts of unproved property to further its development efforts. Development and exploratory drilling and production activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. Granite Ridge seeks to acquire both proved and producing properties as well as undeveloped acreage that it believes will enhance growth potential and increase Granite Ridge’s earnings over time. However, Granite Ridge cannot assure you that all of these properties will contain economically viable reserves or that it will not abandon its initial investments. Additionally, the Company cannot assure you that unproved reserves or undeveloped acreage that it acquires will be profitably developed, that new wells drilled on the Properties will be productive or that the Company will recover all or any portion of its investments in the Properties and its reserves.

Extreme weather conditions could adversely affect operators’ ability to conduct drilling activities in some of the areas where the Properties are located.

Drilling and producing activities and other operations in some of Granite Ridge’s operating areas could be adversely affected by extreme weather conditions, such as floods, lightning, drought, ice and other

 

20

 

storms, prolonged freeze events, and tornadoes, which may cause a loss of production from temporary cessation of activity, or lost or damaged facilities and equipment on the part of Granite Ridge’s operating partners. Such extreme weather conditions could also impact other areas of operations for Granite Ridge’s operating partners, including access to drilling and production facilities for routine operations, maintenance and repairs and the availability of, and access to, necessary third-party services, such as electrical power, water, gathering, processing, compression and transportation services. These constraints and the resulting shortages or high costs could delay or temporarily halt operations on the affected Properties and materially increase operation and capital costs, which could have a material adverse effect on Granite Ridge’s business, financial condition and results of operations.

The development of Granite Ridge’s proved undeveloped reserves may take longer and may require higher levels of capital expenditures than it currently anticipates. Therefore, Granite Ridge’s undeveloped reserves may not be ultimately developed or produced.

Approximately 53% of Granite Ridge’s estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2021. Development of these reserves may take longer and require higher levels of capital expenditures than the Company currently anticipates. Delays in the development of Granite Ridge’s reserves or increases in costs to drill and develop such reserves will reduce the PV-10 value of its estimated proved undeveloped reserves and future net revenues estimated for such reserves and may result in some projects becoming uneconomic. In addition, delays in the development of reserves could cause Granite Ridge to have to reclassify its proved reserves as unproved reserves.

The Company’s acquisition strategy will subject it to certain risks associated with the inherent uncertainty in evaluating properties for which the Company has limited information.

The Company intends to continue to expand its operations in part through acquisitions. The Company’s decision to acquire a property will depend in part on the evaluation of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic and other information, the results of which are often inconclusive and subject to various interpretations. Also, Granite Ridge’s reviews of acquired properties are inherently incomplete because it generally is not economically feasible to perform an in-depth review of the individual properties involved in each acquisition. Even a detailed review of records and properties may not necessarily reveal existing or potential problems, nor will it permit the Company to become sufficiently familiar with the properties to fully assess their deficiencies and potential. Inspections are often not performed on properties being acquired, and environmental matters, such as subsurface contamination, are not necessarily observable even when an inspection is undertaken. Any acquisition involves other potential risks, including, among other things:

•

the validity of Granite Ridge’s assumptions about reserves, future production, revenues and costs;

​

•

a decrease in Granite Ridge’s liquidity by using a significant portion of its cash from operations or borrowing capacity to finance acquisitions;

​

•

a significant increase in Granite Ridge’s interest expense or financial leverage if it incurs additional debt to finance acquisitions;

​

•

the ultimate value of any contingent consideration agreed to be paid in an acquisition;

​

•

the assumption of unknown liabilities, losses or costs for which Granite Ridge is not indemnified or for which its indemnity is inadequate;

​

•

“geological risk,” which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically;

​

•

an inability to hire, train or retain qualified personnel to manage and operate Granite Ridge’s growing business and assets; and

​

•

an increase in Granite Ridge’s costs or a decrease in its revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.

​

 

21

 

Granite Ridge may also acquire multiple assets in a single transaction. Portfolio acquisitions via joint-venture or other structures are more complex and expensive than single project acquisitions, and the risk that a multiple-project acquisition will not close may be greater than in a single-project acquisition. An acquisition of a portfolio of projects may result in Granite Ridge’s ownership of projects in geographically dispersed markets which place additional demands on Granite Ridge’s ability to manage such operations. A seller may require that a group of projects be purchased as a package, even though one or more of the projects in the portfolio does not meet Granite Ridge’s investment criteria. In such cases, Granite Ridge may attempt to make a joint bid with another buyer, and such other buyer may default on its obligations.

Further, Granite Ridge may acquire properties subject to known or unknown liabilities and with limited or no recourse to the former owners or operators. As a result, if liability were asserted against Granite Ridge based upon such properties, Granite Ridge may have to pay substantial sums to dispute or remedy the matter, which could adversely affect Granite Ridge’s cash flow. Unknown liabilities with respect to assets acquired could include, for example: liabilities for clean-up of undiscovered or undisclosed environmental contamination; claims by developers, site owners, vendors or other persons relating to the asset or project site; liabilities incurred in the ordinary course of business; and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the asset or project sites.

Granite Ridge may not be able to successfully integrate future acquisitions or realize all of the anticipated benefits from its future acquisitions, and Granite Ridge’s future results will suffer if it does not effectively manage its expanded operations.

Granite Ridge’s growth strategy will, in part, rely on acquisitions. The Company has to plan and manage acquisitions effectively to achieve revenue growth and maintain profitability in its evolving market. Granite Ridge’s future success will depend, in part, upon its ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and basins and associated increased costs and complexity. Granite Ridge may also face increased scrutiny from governmental authorities as a result of increases in the size of its business. There can be no assurances that Granite Ridge will be successful or that it will realize the expected benefits currently anticipated from its acquisitions. In addition, the process of integrating Granite Ridge’s operations could cause an interruption of, or loss of momentum in, the activities of Granite Ridge’s business. Members of the Company’s and the Manager’s management may be required to devote considerable amounts of time to this integration process, which decreases the time they have to manage Granite Ridge’s business. If management is not able to effectively manage the integration process, or if any business activities are interrupted as a result of the integration process, Granite Ridge’s business could suffer.

Deficiencies of title to Granite Ridge’s leased interests could significantly affect Granite Ridge’s financial condition.

Prior to drilling an oil or natural gas well, it is the normal practice in the oil and natural gas industry for the person or company acting as the operator of the well to obtain a preliminary title review of the spacing unit within which the proposed oil or natural gas well is to be drilled to ensure there are no obvious deficiencies in title to the well. Frequently, as a result of such examinations, certain curative work must be done to correct deficiencies in the marketability of the title, such as obtaining affidavits of heirship or causing an estate to be administered. Such curative work entails expense, and the operator may elect to proceed with a well despite defects to the title identified in the preliminary title opinion. Furthermore, title issues may arise at a later date that were not initially detected in any title review or examination. Any one or more of the foregoing could require Granite Ridge to reverse revenues previously recognized and potentially negatively affect Granite Ridge’s cash flows and results of operations. While Granite Ridge typically conducts title examination prior to its acquisition of oil and natural gas leases or undivided interests in oil and natural gas leases or other developed rights, any failure to obtain perfect title to Granite Ridge’s leaseholds may adversely affect its current production and reserves and its ability in the future to increase production and reserves.

Granite Ridge’s derivatives activities could adversely affect its cash flow, results of operations and financial condition.

To achieve more predictable cash flows and reduce Granite Ridge’s exposure to adverse fluctuations in the price of oil and natural gas, Granite Ridge enters into derivative instrument contracts for a portion of

 

22

 

Granite Ridge’s expected production, which may include swaps, collars, puts and other structures. In accordance with applicable accounting principles, Granite Ridge is required to record its derivatives at fair market value, and they are included on Granite Ridge’s balance sheet as assets or liabilities and in Granite Ridge’s statements of income as gain (loss) on derivatives, net. Accordingly, Granite Ridge’s earnings may fluctuate significantly as a result of changes in the fair market value of its derivative instruments. In addition, while intended to mitigate the effects of volatile oil and natural gas prices, Granite Ridge’s derivatives transactions may limit its potential gains and increase its potential losses if oil and natural gas prices were to rise substantially over the price established by the hedge.

Granite Ridge’s actual future production may be significantly higher or lower than it estimates at the time it enters into derivative contracts for such period. If the actual amount of production is higher than the Company estimates, it will have greater commodity price exposure than it intended. If the actual amount of production is lower than the notional amount that is subject to Granite Ridge’s derivative financial instruments, Granite Ridge might be forced to satisfy all or a portion of its derivative transactions without the benefit of the cash flow from its sale of the underlying physical commodity, resulting in a substantial diminution of Granite Ridge’s liquidity. As a result of these factors, Granite Ridge’s hedging activities may not be as effective as it intends in reducing the volatility of Granite Ridge’s cash flows, and in certain circumstances may actually increase the volatility of Granite Ridge’s cash flows. In addition, such transactions may expose Granite Ridge to the risk of loss in certain circumstances, including instances in which a counterparty to its derivative contracts is unable to satisfy its obligations under the contracts; Granite Ridge’s production is less than expected; or there is a widening of price differentials between delivery points for Granite Ridge’s production and the delivery point assumed in the derivative arrangement.

Decommissioning costs are unknown and may be substantial. Unplanned costs could divert resources from other projects.

Granite Ridge may become responsible for costs associated with plugging, abandoning and reclaiming wells, pipelines and other facilities that its operators use for production of oil and natural gas reserves. Abandonment and reclamation of these facilities and the costs associated therewith is often referred to as “decommissioning.” Granite Ridge accrues a liability for decommissioning costs associated with its wells, but have not established any cash reserve account for these potential costs in respect of any of the Properties. If decommissioning is required before economic depletion of the Properties or if the Company’s estimates of the costs of decommissioning exceed the value of the reserves remaining at any particular time to cover such decommissioning costs, it may have to draw on funds from other sources to satisfy such costs. The use of other funds to satisfy such decommissioning costs could impair Granite Ridge’s ability to focus capital investment in other areas of its business.

Granite Ridge is not insured against all of the operating risks to which its business is exposed.

In accordance with industry practice, Granite Ridge maintains insurance against some, but not all, of the operating risks to which its business is exposed. Granite Ridge insures some, but not all, of the Properties from operational loss-related events. Granite Ridge has insurance policies that include coverage for general liability, operational control of well, oil pollution, workers’ compensation and employers’ liability and other coverage. Granite Ridge’s insurance coverage includes deductibles that have to be met prior to recovery, as well as sub-limits or self-insurance. Additionally, Granite Ridge’s insurance is subject to exclusions and limitations, and there is no assurance that such coverage will adequately protect it against liability from all potential consequences, damages or losses.

Granite Ridge may be liable for damages from an event relating to a project in which Granite Ridge owns a non-operating working interest. Such events may also cause a significant interruption to Granite Ridge’s business, which might also severely impact Granite Ridge’s financial position. Granite Ridge may experience production interruptions for which it does not have production interruption insurance.

Granite Ridge intends to reevaluate the purchase of insurance, policy limits and terms annually. Future insurance coverage for Granite Ridge’s industry could increase in cost and may include higher deductibles or retentions. In addition, some forms of insurance may become unavailable in the future or unavailable on terms that the Company believes are economically acceptable. No assurance can be given that Granite Ridge will be able to maintain insurance in the future at rates that it considers reasonable, and it may elect

 

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to maintain minimal or no insurance coverage. Granite Ridge may not be able to secure additional insurance or bonding that might be required by new governmental regulations. This may cause Granite Ridge to restrict its operations, which might severely impact its financial position. The occurrence of a significant event, not fully insured against, could have a material adverse effect on Granite Ridge’s financial condition and results of operations.

Granite Ridge conducts business in a highly competitive industry.

The oil and natural gas industry is highly competitive. The key areas in respect of which Granite Ridge faces competition include: acquisition of assets offered for sale by other companies; access to capital (debt and equity) for financing and operational purposes; purchasing, leasing, hiring, chartering or other procuring of equipment by Granite Ridge’s operators that may be scarce; and employment of qualified and experienced skilled management and oil and natural gas professionals.

Competition in Granite Ridge’s markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships with the relevant authorities.

Granite Ridge’s competitors also include entities with greater technical, physical and financial resources. Finally, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect Granite Ridge’s business. If Granite Ridge is unsuccessful in competing against other companies, its business, results of operations, financial condition or prospects could be materially adversely affected.

The ongoing military conflict between Ukraine and Russia has caused unstable market and economic conditions and is expected to have additional global consequences, such as heightened risks of cyberattacks. Granite Ridge’s business, financial condition, and results of operations may be materially adversely affected by the negative global and economic impact resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a large-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led and could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in credit and capital markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage. Various of Russia’s actions have led to sanctions and other penalties being levied by the U.S., the European Union, and other countries, as well as other public and private actors and companies, against Russia and certain other geographic areas, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system, expansive bans on imports and exports of products to and from Russia (including imports of Russian oil, liquefied natural gas and coal) and a ban on exportation of U.S denominated banknotes to Russia or persons located therein. These disruptions in the oil and gas markets have caused, and could continue to cause, significant volatility in energy prices, which could have a material effect on Granite Ridge’s business. Additional potential sanctions and penalties have also been proposed and/or threatened.

In addition, the United States and other countries have imposed sanctions on Russia which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. On March 21, 2022, the Biden Administration issued warnings about the potential for Russia to engage in malicious cyber activity against the United States in response to the economic sanctions that have been imposed.

The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Prolonged unfavorable economic conditions or uncertainty as a result of the military conflict between Russia and Ukraine may adversely affect Granite Ridge’s business,

 

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financial condition, and results of operations. Any of the foregoing may also magnify the impact of other risks described in this prospectus.

Inflation could adversely impact Granite Ridge’s ability to control its costs, including the operating expenses and capital costs of its operating partners.

Although inflation in the United States has been relatively low in recent years, it has risen significantly beginning in the second half of 2021. This is believed to be the result of the economic impact from the COVID-19 pandemic, including the effects of global supply chain disruptions and government stimulus packages, among other factors. Global, industry-wide supply chain disruptions caused by the COVID-19 pandemic have resulted in shortages in labor, materials and services. Such shortages have resulted in inflationary cost increases for labor, materials and services and could continue to cause costs to increase as well as scarcity of certain products and raw materials. To the extent elevated inflation remains, Granite Ridge’s operating partners may experience further cost increases for their operations, including oilfield services and equipment as increasing oil and natural gas prices increase drilling activity in Granite Ridge’s operating partners’ areas of operations, as well as increased labor costs. An increase in oil and natural gas prices may cause the costs of materials and services to rise. The Company cannot predict any future trends in the rate of inflation and any continued significant increase in inflation, to the extent Granite Ridge is unable to recover higher costs through higher commodity prices and revenues, would negatively impact Granite Ridge’s business, financial condition and results of operation.

The COVID-19 pandemic has had, and may continue to have, a material adverse effect on Granite Ridge’s financial condition and results of operations.

Granite Ridge faces risks related to public health crises, including the COVID-19 pandemic. The effects of the COVID-19 pandemic, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing in addition to other actions taken by both businesses and governments, resulted in a significant and swift reduction in international and U.S. economic activity. The collapse in the demand for oil caused by this unprecedented global health and economic crisis contributed to the significant decrease in crude oil prices in 2020 and had and could in the future continue to have a material adverse impact on Granite Ridge’s financial condition and results of operations.

Since the beginning of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded. However, the Company continues to monitor the effects of the pandemic on its operations. As a result of the ongoing COVID-19 pandemic, Granite Ridge’s operations, and those of Granite Ridge’s operating partners, have and may continue to experience delays or disruptions and temporary suspensions of operations. In addition, Granite Ridge’s results of operations and financial condition have been and may continue to be adversely affected by the ongoing COVID-19 pandemic.

The extent to which Granite Ridge’s operating and financial results are affected by COVID-19 will depend on various factors and consequences beyond its control, such as the emergence of more contagious and harmful variants of the COVID-19 virus, the duration and scope of the pandemic, additional actions by businesses and governments in response to the pandemic, and the speed and effectiveness of responses to combat the virus. COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors that the Company identifies herein. While the effects of the COVID-19 pandemic have lessened recently in the United States, the Company cannot predict the duration or future effects of the pandemic, or more contagious and harmful variants of the COVID-19 virus, and such effects may materially adversely affect its results of operations and financial condition in a manner that is not currently known to the Company or that it does not currently consider to present significant risks to its operations.

Granite Ridge’s operating partners depend on computer and telecommunications systems, and failures in those systems or cybersecurity threats, attacks and other disruptions could significantly disrupt Granite Ridge’s business operations.

The Company and the Manager have entered into agreements with third parties for hardware, software, telecommunications and other information technology services in connection with Granite Ridge’s business.

 

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In addition, the Company and the Manager have developed or may develop proprietary software systems, management techniques and other information technologies incorporating software licensed from third parties. It is possible that the Company, the Manager, or these third parties, could incur interruptions from cybersecurity attacks, computer viruses or malware, or that third-party service providers could cause a breach of Granite Ridge’s data. The Company believes that it and the Manager have positive relations with their information technology vendors and maintain adequate anti-virus and malware software and controls; however, any interruptions to the Company’s or the Manager’s arrangements with third parties for their computing and communications infrastructure or any other interruptions to, or breaches of, their information systems could lead to data corruption, communication interruption, loss of sensitive or confidential information or otherwise significantly disrupt Granite Ridge’s business operations. Although the Company and the Manager utilize various procedures and controls to monitor these threats and mitigate their exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing. Furthermore, various third-party resources that Granite Ridge or the Manager rely on, directly or indirectly, in the operation of Granite Ridge’s business (such as pipelines and other infrastructure) could suffer interruptions or breaches from cyber-attacks or similar events that are entirely outside the control or Granite Ridge or the Manager, and any such events could significantly disrupt Granite Ridge’s business operations and/or have a material adverse effect on its results of operations. Granite Ridge has not, to its knowledge, experienced any material losses relating to cyber-attacks; however, there can be no assurance that Granite Ridge will not suffer material losses in the future.

In addition, Granite Ridge’s operating partners face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable, threats to the security of their facilities and infrastructure or third-party facilities and infrastructure, such as processing plants and pipelines, and threats from terrorist acts. If any of these security breaches were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to Granite Ridge’s operations and could have a material adverse effect on Granite Ridge’s financial position, results of operations or cash flows. The U.S. government has issued warnings that U.S. energy assets may be the future targets of terrorist organizations. These developments subject Granite Ridge’s operations to increased risks. Any future terrorist attack at Granite Ridge’s operating partners’ facilities, or those of their purchasers or vendors, could have a material adverse effect on Granite Ridge’s financial condition and operations.

A variety of stringent federal, tribal, state, and local laws and regulations govern the environmental aspects of the oil and gas business, and noncompliance with these laws and regulations could subject Granite Ridge to material administrative, civil or criminal penalties, injunctive relief, or other liabilities.

A variety of stringent federal, tribal, state, and local laws and regulations govern the environmental aspects of the oil and gas business. Any noncompliance with these laws and regulations could subject Granite Ridge to material administrative, civil or criminal penalties, injunctive relief, or other liabilities. Additionally, compliance with these laws and regulations may, from time to time, result in increased costs of operations, delay in operations, or decreased production, and may affect acquisition costs. Examples of laws and regulations that govern the environmental aspects of the oil and gas business include the following:

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the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources, imposes various pre-construction, operating, permitting monitoring, control, recordkeeping, and reporting requirements and is relied upon by the U.S. Environmental Protection Agency (“EPA”) as an authority for adopting climate change regulatory initiatives, including relating to GHG emissions;

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the Clean Water Act (“CWA”), which regulates discharges of pollutants and dredge and fill material to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction as protected waters of the United States;

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the Oil Pollution Act (“OPA”), which requires oil spill prevention, control, and countermeasure planning and imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States;

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the Safe Drinking Water Act (“SDWA”), which protects the quality of the nation’s public drinking water sources through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations;

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•

the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability without regard to fault on certain categories of potentially responsible parties including generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as on present and certain past owners and operators of sites were hazardous substance releases have occurred or are threatening to occur;

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•

the Resource Conservation and Recovery Act (“RCRA”), which imposes requirements for the generation, treatment, storage, transport, disposal and cleanup of non-hazardous and hazardous wastes;

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the Endangered Species Act (“ESA”), which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas. Similar protections are afforded to migratory birds under the Migratory Bird Treaty Act (“MBTA”) and bald and golden eagles under the Bald and Golden Eagle Protection Act (“BGEPA”);

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the Emergency Planning and Community Right-to-Know Act (“EPCRA”), which requires certain facilities to report toxic chemical uses, inventories, and releases and to disseminate such information to local emergency planning committees and response departments; and

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the Occupational Safety and Health Act (“OSHA”) and comparable state statutes, which impose regulations related to the protection of worker health and safety, including requiring employers to implement a hazard communication program and disseminate hazard information to employees.

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These U.S. laws and their implementing regulations, as well as state counterparts, generally restrict or otherwise regulate the management of hazardous substances and wastes, the level of pollutants emitted to ambient air, discharges to surface water, and disposals or other releases to surface and below-ground soils and groundwater, including through permitting requirements, monitoring and reporting requirements, limitations or prohibitions of operations on certain protected areas, requirements to install certain emissions monitoring or control equipment, spill planning and preparedness requirements, and the application of specific worker health and safety criteria. Failure to comply with applicable environmental laws and regulations by Granite Ridge or third-party operators or contractors could trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements or other corrective measures, and the issuance of orders enjoining existing or future operations. In addition, Granite Ridge or its operating partners may be strictly liable under state or federal laws for environmental damages caused by the previous owners or operators of properties they purchase, without regard to fault.

Environmental laws and regulations change frequently and tend to become more stringent over time, and the implementation of new, or the modification of existing, laws or regulations could adversely affect Granite Ridge’s business. For example, in recent years, the EPA published final rules that establish new air emission control requirements, among other requirements, for oil and natural gas production, processing, transportation, and storage activities to address emissions of methane and VOCs. Among these requirements is the reduction of methane and VOC emissions from oil and gas wells through the use of reduced emission completions or “green completions” on all hydraulically fractured wells subject to the rule. These New Source Performance Standards (“NSPS”), as so referred, also impose requirements for leak detection and repair at well sites and natural gas transmission compressor stations and professional engineer certifications of emission control systems installed to comply with the rule. These rules have been heavily litigated and some aspects of them continue to be subject to various challenge, rescission, and proposal actions. Accordingly, the final implementation and scope of these requirements remains uncertain, but the imposition of these requirements on certain sources of air emissions in the oil and gas industry that were constructed, reconstructed, or modified on or after August 23, 2011, will likely result in increased costs for oil and natural gas exploration and production activities. Furthermore, EPA in November 2021 proposed a suite of NSPS rules, known as Subparts OOOOb and OOOOc that, if adopted, will further impact the upstream and midstream oil and gas sectors. As proposed, Subparts OOOOb and OOOOc would impose requirements on new, modified, existing and/or reconstructed sources in the oil and natural gas sector. The proposed regulations include additional inspections, emission control requirements, additional financial

 

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assurance for plugged and abandoned wells, and emissions guidelines to assist states in the development of plans to regulate methane emissions from certain existing sources. The proposed rules for new and modified facilities are currently estimated to be finalized by the end of 2022, while any standards finalized for existing facilities will require further state rulemaking actions over the next several years before they become effective. The proposed rules and any state standards, if implemented, could further increase the cost of development and operation of the Properties.

Additionally, some states in which the Properties are located, such as Colorado and New Mexico, have adopted stringent rules and regulations to reduce methane emissions and emissions of other hydrocarbons, VOCs, and nitrogen oxides associated with oil and gas facilities. For example, the Colorado Department of Public Health and Environment’s Air Quality Control Commission (“AQCC”) recently adopted more stringent standards for leak detection and repair inspection frequency, pipeline and compressor station inspection and maintenance frequencies, the development of pre-production air monitoring plans at certain oil and gas facilities, enclosed combustion device testing, a methane intensity reduction requirement based on statewide volume of production and additional measures for reducing and eliminating emissions from pneumatic devices. AQCC is expected to undertake several additional rulemaking efforts to further reduce emissions over the next several years. State rules and regulations such as these could significantly increase the costs to develop and operate the Properties, result in a delay in operations or decreased production, and may affect acquisition costs.

Granite Ridge anticipates that hydraulic fracturing will be engaged in by some or all opportunities in which it invests, which could be adversely affected by regulatory initiatives related to hydraulic fracturing.

Hydraulic fracturing is an important and commonly used process that Granite Ridge anticipates will be engaged in by some or all opportunities in which it invests. Hydraulic fracturing is used to stimulate production of natural gas and/or oil from dense subsurface rock formations.

The EPA has asserted authority over certain hydraulic-fracturing activities that use diesel fuel under the SDWA. In addition, legislation such as the Fracturing Responsibility and Awareness of Chemicals Act and similar proposals have been repeatedly introduced before Congress to provide for federal regulation of hydraulic fracturing, such as through disclosure requirements for chemical additives used in hydraulic fracturing fluids. Certain states (including states in which the Properties are located) have adopted, and other states are considering adopting, regulations that could impose more stringent permitting and well construction requirements on hydraulic-fracturing operations or seek to ban fracturing activities altogether. For example, Colorado Senate Bill 19-181 amended state law to give municipalities and counties greater local control over siting and permitting of oil and gas facilities, and some municipalities within the state have implemented regulations within their jurisdictions. In the event federal, tribal, state, local, or municipal legal restrictions are adopted in Granite Ridge’s target areas, the investments may incur significant additional compliance costs, experience delays in exploration, development, or production activities, and perhaps even be precluded from the drilling of wells. A number of governmental bodies, including the EPA, a committee of the U.S. House of Representatives, the U.S. Department of Energy, and a number of other federal agencies have from time to time analyzed, or have been requested to review, a variety of environmental issues associated with hydraulic fracturing. As these studies proceed, and depending on their scope and results, they could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory programs. This, in turn, could lead to operational delays or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult to perform hydraulic fracturing, which could adversely affect the investments.

Seismicity concerns associated with injection of produced water and certain other field fluids into disposal wells has led to increased regulation of saltwater injection and disposal wells in certain areas of states in which the Properties are located, which could increase the cost of, or limit the number of facilities available for, disposal of produced water from oil and gas exploration and production operations at the Properties.

Flowback and produced water or certain other field fluids gathered from oil and natural gas exploration and production operations are often injected or disposed of in underground disposal wells. This disposal process has been linked to increased induced seismicity events in certain areas of the country. Certain states (including states in which the Properties are located) have begun to consider or adopt laws and regulations

 

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that may restrict or otherwise prohibit oilfield fluid disposal in certain areas or in underground disposal wells, and state agencies implementing these requirements may issue orders directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations or impose standards related to disposal well construction and monitoring. For example, the Colorado Oil and Gas Conservation Commission adopted regulations in November 2020 that impose various new requirements on the underground injection of fluid wastes to further seismic safety and protection of the environment. In addition, in 2014, the Railroad Commission of Texas (“RRC”) published a final rule governing permitting or re-permitting of disposal wells that would require, among other things, the submission of information on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections and structure maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails to demonstrate that the injected fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity, then the RRC may deny, modify, suspend or terminate the permit application or existing operating permit for that well. Furthermore, in response to a number of earthquakes in recent years in the Midland Basin, in September 2021 the RRC announced that it will not issue any new saltwater disposal (“SWD”) well permits in an area known as the Gardendale Seismic Response Area (“SRA”), and will require existing SWD wells in that area to reduce their maximum daily injection rate to 10,000 barrels per day per well. In December 2021, the RRC went on to suspend all well activity in deep formations in the Gardendale SRA, effectively terminating 33 disposal well permits. And in October 2021 and January 2022, respectively, the RRC identified two additional SRAs: the Northern Culberson-Reeves SRA and the Stanton SRA. Operators in the Northern Culberson-Reeves and Stanton SRAs were required to develop and implement seismic response plans, which include expanded data collection efforts, contingency responses for future seismicity, and scheduled checkpoint updates with RRC staff. Such restrictions and requirements could limit oil and gas well exploration and production activities underlying the investments or increase the cost of those activities if wastewater disposal options become limited.

Specific climate legislation and regulation regarding emissions of carbon dioxide, methane, and other greenhouse gases may develop or be enacted, which could adversely affect the oil and gas industry and demand for the oil and gas produced from the Properties.

The energy industry is affected from time to time in varying degrees by political developments and a wide range of federal, tribal, state and local statutes, rules, orders and regulations that may, in turn, affect the operations and costs of the companies engaged in the energy industry. In response to findings that emissions of carbon dioxide, methane, and other greenhouse gases (“GHGs”) present an endangerment to public health and the environment, the EPA has adopted regulations under existing provisions of the CAA that, among other things, require preconstruction and operating permits for GHG emissions from certain large stationary sources that already emit conventional pollutants above a certain threshold. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and gas production sources in the United States on an annual basis, which may include operations on the Properties. Further, the Inflation Reduction Act (“IRA”), which the U.S. Congress passed in August 2022, includes a charge for methane emissions from specific types of facilities that emit 25,000 metric tons of carbon dioxide equivalent or more per year, and although the IRA generally provides for a conditional exemption under certain circumstances, the change applies to emissions that exceed an established emissions threshold for each type of covered facility. The charge starts at $900 per metric ton of methane in 2025 (using 2024 data), and increases to $1,500 after two years. Additional GHG regulation could also result from the agreement crafted during the United Nations climate change conference in Paris, France in December 2015 (the “Paris Agreement”). Under the Paris Agreement, the United States committed to reducing its GHG emissions by 26 – 28% by the year 2025 as compared with 2005 levels. Moreover, in November 2021, at the U.N. Framework Convention on Climate Change 26th Conference of the Parties, the U.S. and the European Union advanced a Global Methane Pledge to reduce global methane emissions at least 30% from 2020 levels by 2030, which over 100 countries have signed. While Congress has from time to time considered legislation to reduce emissions of GHGs, comprehensive legislation aimed at reducing GHG emissions has not yet been adopted at the federal level.

In the absence of comprehensive federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking or reducing GHG emissions by means of cap and trade programs. These

 

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programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact Granite Ridge, any future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, operators’ equipment and operations could require them to incur costs to reduce emissions of GHGs associated with their operations. In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and gas produced from the Properties. Restrictions on emissions of methane or carbon dioxide, such as restrictions on venting and flaring of natural gas, that may be imposed in various states, as well as state and local climate change initiatives, such as increased energy efficiency standards or mandates for renewable energy sources, could adversely affect the oil and gas industry, and, at this time, it is not possible to accurately estimate how potential future laws or regulations addressing GHG emissions would impact oil and gas assets. Finally, it should be noted that climate changes may have significant physical effects, such as increased frequency and severity of storms, freezes, floods, drought, hurricanes and other climatic events; if any of these effects were to occur, they could have an adverse effect on Granite Ridge.

In addition, spurred by increasing concerns regarding climate change, the oil and natural gas industry faces growing demand for corporate transparency and a demonstrated commitment to sustainability goals. Environmental, social, and governance (“ESG”) goals and programs, which may include extralegal targets related to environmental stewardship, social responsibility, and corporate governance, have become an increasing focus of investors and stakeholders across the industry, and companies without robust ESG programs may find access to capital and investors more challenging in the future. Further, while reporting on most ESG information is currently voluntary, in March 2022, the SEC issued a proposed rule that would require public companies to disclose certain climate-related information, including climate-related risks, impacts, oversight and management, financial statement metrics and emissions, targets, goals and plans. While the proposed rule is not yet effective and is expected to be subject to a lengthy comment process, compliance with the proposed rule as drafted could result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.

Fuel and energy conservation measures, technological advances and negative shift in market perception towards the oil and natural gas industry could reduce demand for oil and natural gas.

Fuel and energy conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and the increased competitiveness of alternative energy sources could reduce demand for oil and natural gas. Additionally, the increased competitiveness of alternative energy sources (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could reduce demand for oil and natural gas and, therefore, Granite Ridge’s revenues.

Additionally, certain segments of the investor community have recently expressed negative sentiment towards investing in the oil and natural gas industry. Recent equity returns in the sector versus other industry sectors have led to lower oil and natural gas representation in certain key equity market indices. Some investors, including certain pension funds, university endowments and family foundations, have stated policies to reduce or eliminate their investments in the oil and natural gas sector based on social and environmental considerations. Furthermore, certain other stakeholders have pressured commercial and investment banks to stop funding oil and gas exploration and production and related infrastructure projects. With the continued volatility in oil and natural gas prices, and the possibility that interest rates will continue to rise in the future, increasing the cost of borrowing, certain investors have emphasized capital efficiency and free cash flow from earnings as key drivers for energy companies, especially shale producers. This may also result in a reduction of available capital funding for potential development projects, further impacting Granite Ridge’s future financial results.

The impact of the changing demand for oil and natural gas services and products, together with a change in investor sentiment, may have a material adverse effect on Granite Ridge’s business, financial condition, results of operations and cash flows.

 

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Increased attention to environmental, social and governance (“ESG”) matters may impact Granite Ridge’s business.

Increasing attention to climate change, fuel conservation measures, alternative fuel requirements, incentives to conserve energy or use alternative energy sources, increasing consumer demand for alternatives to oil and natural gas, and technological advances in fuel economy and energy generation devices may result in increased costs, reduced demand for Granite Ridge’s products, reduced profits, increased investigations and litigation, and negative impacts on Granite Ridge’s access to capital markets. Increasing attention to climate change and any related negative public perception regarding Granite Ridge and/or its industry, for example, may result in demand shifts for our products, increased litigation risk for Granite Ridge, and increased regulatory, legislative and judicial scrutiny, which may, in turn, lead to new state, local, tribal and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward Granite Ridge and its industry and to the diversion of investment to other industries, which could have a negative impact on Granite Ridge’s access to and costs of capital. Also, institutional lenders may, of their own accord, elect not to provide or place additional restrictions on funding for fossil fuel energy companies based on climate change related concerns, which could affect Granite Ridge’s access to capital for potential growth projects.

Granite Ridge relies on the Manager for various certain key services under the MSA, which could result in conflicts of interest and other unforeseen risks.

At the closing of the Business Combination, Granite Ridge entered into the MSA with the Manager, pursuant to which the Manager supplies land, accounting, engineering, finance, and other back-office services to Granite Ridge in connection with continued management of the Properties contributed to Granite Ridge as part of the proposed Business Combination. Under this arrangement, the success of Granite Ridge depends upon the Manager who will have overall supervision and control certain business affairs of Granite Ridge’s and its investment activities. Further, the employees of the Manager and its respective principals and managers (as applicable) will devote a portion of their time to the affairs of Granite Ridge necessary for the proper performance of their duties. However, other investment activities of the Manager are likely to require those individuals to devote substantial amounts of their time to matters unrelated to the business of Granite Ridge. Pursuant to the MSA, Granite Ridge will be offered the opportunity to participate in certain of these activities.

Subject to the provisions of the MSA that provides for the Manager to offer Granite Ridge the opportunity to participate in certain investments made by funds affiliated with the Manager and for Granite Ridge to offer such funds the opportunity to participate in certain investments made by Granite Ridge, the Manager may make investments on behalf of its funds not a part of the Business Combination or in which such funds may co-invest with Granite Ridge, any such transactions may involve conflicts of interest among Granite Ridge, the Manager, and their affiliates, some or all of which may not be thought of or taken into account in reviewing and approving such transactions. In certain events, the Manager may not be in a position unilaterally to control such investments or exercise certain rights associated with such investments. Granite Ridge may be subject to conflicts of interest involving the Manager and its affiliates, and the Manager may enter into relationships with developers, co-owners or other affiliates, some of which may give rise to conflicts of interest. To the extent not addressed by the MSA, the Manager and Granite Ridge intend to implement policies as necessary or appropriate to deal with such potential conflicts.

Investment analyses and decisions by the Manager may frequently be required to be undertaken on an expedited basis to take advantage of investment opportunities. In such cases, the information available at the time of making an investment decision may be limited, and the Manager may not have access to complete information regarding the investment. Therefore, no assurance can be given that the Manager will have knowledge of all circumstances that may adversely affect an investment. In addition, the Manager expects to rely upon specialized expert input by various third-party consultants and service providers in connection with its evaluation of proposed investments.

 

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Additionally, if the MSA is terminated or not renewed upon the end of its term, it may be difficult for Granite Ridge to hire the necessary personnel in a timely manner to handle the matters and services being provided by Manager, which could have a material adverse effect on Granite Ridge’s business and results of operations.

Granite Ridge relies to a large degree on the Manager to maintain an effective system of internal control over financial reporting and Granite Ridge may not be able to accurately report its financial results or prevent fraud.

Under the terms of the MSA, Granite Ridge must rely to a large extent on the internal controls and financial reporting controls of the Manager, and the Manager’s failure to maintain effective controls or comply with applicable standards may adversely affect Granite Ridge. Any failure of the Manager to maintain adequate internal controls over financial reporting or to implement required, new or improved controls, or difficulties encountered in their implementation, could cause material weaknesses or significant deficiencies in Granite Ridge’s financial reporting and could result in errors or misstatements in Granite Ridge’s consolidated financial statements that could be material. Any third-party failure to achieve and maintain effective internal controls could have a material adverse effect on Granite Ridge’s business, its ability to access capital markets and investors’ perception of Granite Ridge. Additionally, if Granite Ridge or its independent registered public accounting firm were to conclude that third-party internal controls over financial reporting were not effective, any material weaknesses in such internal controls could require significant expense and management time to remediate.

The relative lack of public company experience by Granite Ridge’s management team may put Granite Ridge at a competitive disadvantage.

As a company with a class of securities that are registered under the Exchange Act, Granite Ridge is subject to reporting and other legal, accounting, corporate governance, and regulatory requirements imposed by the Exchange Act or the Sarbanes-Oxley Act. With the exception of Granite Ridge’s Chief Financial Officer, Tyler Farquharson, Granite Ridge’s management team lacks public company experience, which could impair Granite Ridge’s ability to comply with these legal, accounting, and regulatory requirements. Such responsibilities include complying with securities laws and making required disclosures on a timely basis. Granite Ridge’s senior management may not be able to implement and effect programs and policies in an effective and timely manner that adequately respond to such increased legal and regulatory compliance and reporting requirements. Granite Ridge’s failure to do so could lead to the imposition of fines and penalties and negatively impact Granite Ridge’s business and operations.

The borrowing base under Granite Ridge’s Credit Agreement may be reduced in light of commodity price declines, which could limit Granite Ridge in the future.

At the closing of the Business Combination, Granite Ridge entered into a senior secured revolving credit agreement dated October 24, 2022 among the Company, as borrower, Texas Capital Bank, as administrative agent, and the lenders from time to time party thereto (the “Credit Agreement”), secured by a first priority mortgage and security interest in substantially all assets of Granite Ridge and its restricted subsidiaries. Availability under the Credit Agreement is limited to the aggregate commitments of the lenders, which is the least of the aggregate maximum credit amounts of the lenders, the borrowing base and the elected commitment amount chosen by Granite Ridge. Granite Ridge’s borrowing base under the Credit Agreement will depend on, among other things, the value of the proved reserves attributed to, and projected revenues from, the oil and natural gas properties securing Granite Ridge’s Credit Agreement, many of which factors are beyond Granite Ridge’s control. Accordingly, lower commodity volumes and prices may reduce the available amount of Granite Ridge’s borrowing base under the Credit Agreement. Granite Ridge’s borrowing base is determined at the discretion of the lenders party to the Credit Agreement and is subject to semi-annual redeterminations, as well as any special redeterminations described in the Credit Agreement. Granite Ridge may reset the elected commitment amount under the Credit Agreement in conjunction with each borrowing base redetermination. Upon a redetermination of the borrowing base, if borrowings in excess of the revised borrowing capacity are outstanding, Granite Ridge would be required to repay the excess or otherwise remedy the deficiency in accordance with the terms of the Credit Agreement. Granite Ridge may not have sufficient funds to make such repayments, and may not have access to the equity or debt capital markets, at the time such repayment obligations are due. If Granite Ridge does not have sufficient

 

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funds and it is otherwise unable to raise sufficient funds, negotiate renewals of its borrowings or arrange new financing, Granite Ridge may have to sell significant assets. Any such sale could have a material adverse effect on Granite Ridge’s business and financial results. Please see the section entitled “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Liquidity and Capital Resources — Fund III (Predecessor), Fund I and Fund II — Credit Agreement” for more information.

Risks Relating to Ownership of Granite Ridge Common Stock

Sales of the Granite Ridge common stock by the Selling Securityholders (or the perception that such shares may be sold) or issuances by Granite Ridge may cause the market price of Granite Ridge’s securities to drop significantly, even if Granite Ridge’s business is doing well.

The sale of shares of Granite Ridge common stock in the public market or otherwise, including sales pursuant to this prospectus, or the perception that such sales could occur, could harm the prevailing market price of shares of Granite Ridge common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for Granite Ridge to sell equity securities in the future at a time and at a price that it deems appropriate.

In connection with the Business Combination, Holdco and the former independent directors of ENPC received 1,238,393 shares of Granite Ridge common stock and the Existing GREP Members and their direct and indirect members were issued 130.0 million shares of Granite Ridge common stock. Pursuant to the terms and subject to the conditions of the RRA and Lock-up Agreement, Fund III will not be able to sell any of the shares of Granite Ridge common stock that it received as a result of the Business Combination (subject to limited exceptions) until 180 days after the consummation of the Business Combination. In connection with and in order to facilitate the closing of the Business Combination and subsequent to the closing of the Business Combination, the Company granted waivers of the lock-up restriction with respect to certain shares other than shares held by Fund III. Please see the section entitled “Certain Relationships and Related Party Transactions — Registration Rights and Lock-Up Agreement” for more information.

The Selling Securityholders other than Fund III may sell, and upon expiration of the applicable lock-up periods and subject to applicable securities laws, Fund III may sell large amounts of shares of Granite Ridge common stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in Granite Ridge’s stock price or putting significant downward pressure on the price of Granite Ridge common stock. The shares beneficially owned by the Existing GREP Members who are Selling Securityholders hereunder represent more than 89% of the total outstanding shares of Granite Ridge common stock and all of the shares that may be offered by the Selling Securityholders collectively represent more than 96% of the total outstanding shares of Granite Ridge common stock, and these holders will have the ability to sell or distribute all of their shares pursuant to the registration statement of which this prospectus forms a part so long as it is available for use. The sale of the securities being registered in this prospectus therefore could result in a significant decline in the public trading price of Granite Ridge common stock and potentially hinder our ability to raise capital. Please see the section entitled “Selling Securityholders” for the number of shares of Granite Ridge common stock that may be sold hereunder.

As restrictions on resale end, the market price of shares of Granite Ridge common stock could drop significantly if the Selling Securityholders sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for Granite Ridge to raise additional funds through future offerings of shares of Granite Ridge common stock or other securities.

The 128,233,953 maximum amount of shares of Granite Ridge common stock offered for resale under this prospectus consist of (a) 1,238,393 shares of Granite Ridge common stock (the “Sponsor Shares”), of which 1,174,106 shares of Granite Ridge common stock were issued to ENPC Holdings II, LLC (“Holdco”) and 64,287 shares of Granite Ridge common stock were issued to the former independent directors of ENPC, in the Business Combination as merger consideration in connection with the exchange or forfeiture of securities of ENPC, as described below; and (b) 126,995,560‬ shares of Granite Ridge common stock issued to the other Selling Securityholders named herein in connection with the Business Combination as merger consideration based on a share value at the time the Business Combination Agreement was executed of $10.00 per share.

 

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In connection with the initial public offering of ENPC, ENPC Holdings, LLC (“Sponsor”) acquired (and later assigned to Holdco and the former independent directors of ENPC) (i) 828,000 shares of ENPC Class F common stock (giving effect to a stock split effected by ENPC) for a capital contribution of $6,250, or for approximately $0.008 per share, (ii) 300,000 shares of Class B ENPC Common Stock (giving effect to the Forward Split (as defined herein)) for a capital contribution of $18,750, or for approximately $0.06 per share, and (iii) 614,000 CAPS™ (after giving effect to the Forward Split), each consisting of one share of Class A common stock and one-quarter of one ENPC warrant, originally purchased by the Sponsor for $6,140,000 in a private placement, or for approximately $10.00 per each ENPC CAPS™. At the effective time of the transactions contemplated by the Business Combination Agreement, (i) 495,357 shares of ENPC Class F common stock were converted to 1,238,393 shares of ENPC Class A common stock (of which 371,518 of those shares are, upon conversion to Granite Ridge common stock, subject to certain vesting and forfeiture provisions set forth in the Sponsor Agreement (as defined herein)) and the remaining shares of ENPC Class F common stock outstanding were automatically cancelled for no consideration (the “ENPC Class F Conversion”) (ii) all other remaining shares of ENPC Class A common stock held by Holdco were automatically cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding were deemed transferred to ENPC and surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPS™, which were composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, were automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPS™ was deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant (the “CAPS™ Separation”). As noted, the constituent ENPC Class A common stock was converted or canceled pursuant to the Business Combination Agreement and all ENPC warrants held by Holdco, including all of the ENPC private placement warrants were canceled. Following the ENPC Class F Conversion, the Sponsor Share Cancellation, the ENPC Class B Contribution and the CAPS™ Separation, each share of ENPC Class A common stock outstanding was automatically converted into one share of Granite Ridge common stock.

As a result, upon giving effect to the CAPS™ Separation, ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, the Sponsor’s total aggregate investment of $6.935 million (which amount represents the total risk capital contributed to ENPC by or on behalf of the Sponsor, including working capital loans that were forgiven) for 1,238,393 shares of Granite Ridge common stock held by Holdco and the former independent directors of ENPC following the Business Combination resulted in a per share purchase price of approximately $5.60 per share (assuming all 371,518 shares subject to vesting or forfeiture are fully vested) or approximately $8.00 per share (excluding all 371,518 shares subject to vesting or forfeiture).

In connection with the Business Combination, holders of 39,343,496 shares of ENPC Class A common stock, or 93.6% of the outstanding shares of ENPC Class A Common Stock, exercised their rights to have those shares redeemed for cash at a redemption price of approximately $10.07 per share, or an aggregate of approximately $396.1 million. The shares of Granite Ridge common stock being offered for resale pursuant to this prospectus by the Selling Securityholders represent approximately 96% of the outstanding shares of Granite Ridge common stock as of the date of this prospectus. Given the substantial number of shares of Granite Ridge common stock being registered for potential resale by Selling Securityholders pursuant to this prospectus, the sale of shares by the Selling Securityholders, or the perception in the market that the Selling Securityholders intend to sell shares, could increase the volatility of the market price of Granite Ridge common stock or result in a significant decline in the public trading price of Granite Ridge common stock. Even if our trading price is significantly below $10.00, the offering price for the CAPS™ offered in ENPC’s initial public offering, certain of the Selling Securityholders may still have an incentive to sell shares of Granite Ridge common stock because the purchase price or cost basis for the underlying securities were lower than the cost basis or purchase price for the public investors or the current trading price of Granite Ridge common stock (who may not experience a similar rate of return at the same trading price). For example, subject to the satisfaction of various conditions pursuant to the Sponsor Agreement and based on the closing price of Granite Ridge common stock of $9.13 as of January 9, 2023, Holdco and other holders of the Sponsor Shares could realize profits no higher than approximately $3.53

 

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per share, or approximately $4.37 million in the aggregate (assuming, for simplicity, that all 371,518 shares subject to vesting or forfeiture are fully vested, but acknowledging fewer shares are likely to vest given a closing price of $9.13).

In the future, Granite Ridge may also issue its securities in connection with investments or acquisitions. The amount of shares of Granite Ridge common stock issued in connection with an investment or acquisition could constitute a material portion of Granite Ridge’s then-outstanding shares of Granite Ridge common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to the Granite Ridge’s stockholders.

We expect to issue additional shares of common stock under our equity incentive plan. Any such issuances would dilute the interest of our shareholders and likely present other risks.

The shares of Granite Ridge common stock reserved for future issuance under the Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting requirements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144. The number of shares of Granite Ridge common stock expected to be reserved for future issuance under its equity incentive plans is 6,500,000, which represents approximately 4.9% of the shares of Granite Ridge common stock that are outstanding following the consummation of the Business Combination. Granite Ridge expects to file one or more registration statements on Form S-8 under the Securities Act to register shares of Granite Ridge common stock or securities convertible into or exchangeable for shares of Granite Ridge common stock issued pursuant to the Incentive Plan. Accordingly, shares registered under such registration statements will be available for sale in the open market.

Any such issuances of additional shares of common stock may significantly dilute the equity interests of our investors and may adversely affect prevailing market prices for our common stock.

The market price of shares of Granite Ridge common stock may be volatile.

Fluctuations in the price of Granite Ridge’s securities could contribute to the loss of all or part of your investment. The trading price of Granite Ridge’s securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Price volatility may be greater if the public float and trading volume of Granite Ridge common stock is low.

Any of the factors listed below could have a material adverse effect on your investment Granite Ridge’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Granite Ridge’s securities may not recover and may experience a further decline. Factors affecting the trading price of Granite Ridge’s securities may include:

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actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to Granite Ridge;

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changes in the market’s expectations about Granite Ridge’s operating results;

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success of competitors;

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lack of adjacent competitors;

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Granite Ridge’s operating results failing to meet the expectation of securities analysts or investors in a particular period;

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changes in financial estimates and recommendations by securities analysts concerning Granite Ridge or the industries in which Granite Ridge operates in general;

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operating and stock price performance of other companies that investors deem comparable to Granite Ridge;

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announcements by Granite Ridge or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

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changes in laws and regulations affecting Granite Ridge’s business;

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commencement of, or involvement in, litigation involving Granite Ridge;

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•

changes in Granite Ridge’s capital structure, such as future issuances of securities or the incurrence of additional debt;

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the volume of shares of Granite Ridge common stock available for public sale, including the significant percentage of shares of Granite Ridge common stock being offered for resale pursuant to this prospectus;

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any significant change in Granite Ridge’s board of directors or management;

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sales of substantial amounts of Granite Ridge common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur;

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general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism; and

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changes in accounting standards, policies, guidelines, interpretations or principles.

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Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and the NYSE have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If Granite Ridge is involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from Granite Ridge’s business regardless of the outcome of such litigation.

Granite Ridge qualifies as an “emerging growth company” within the meaning of the Securities Act and avails itself of certain exemptions from disclosure requirements available to emerging growth companies, which could make its securities less attractive to investors and may make it more difficult to compare Granite Ridge’s performance to the performance of other public companies.

Granite Ridge qualifies as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, Granite Ridge is eligible for and takes advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including, but not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in Granite Ridge’s periodic reports and proxy statements and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, Granite Ridge’s stockholders may not have access to certain information they may deem important. Granite Ridge will remain an emerging growth company until the earliest of the last day of the fiscal year (a) following September 18, 2025, (b) in which Granite Ridge has total annual gross revenue of at least $1.07 billion or (c) in which Granite Ridge is deemed to be a large accelerated filer, which means (1) the market value of its common stock that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter (2) has been subject to compliance with periodic reporting requirements for a period of at least 12 months, and (3) the date on which Granite Ridge has issued more than $1.0 billion in non-convertible debt securities during the prior three year period. We cannot predict whether investors will find Granite Ridge’s securities less attractive because it will rely on these exemptions. If some investors find Granite Ridge’s securities less attractive as a result of its reliance on these exemptions, the trading prices of Granite Ridge’s securities may be lower than they otherwise would be, there may be a less active trading market for Granite Ridge’s securities and the trading prices of Granite Ridge’s securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting

 

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standards. Granite Ridge takes advantage of the benefits of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, it, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Granite Ridge’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of Granite Ridge common stock may decline.

The market price of Granite Ridge common stock may decline if Granite Ridge does not achieve the perceived benefits of the Business Combination as rapidly, or to the extent anticipated by, financial analysts or the effect of the Business Combination on Granite Ridge’s financial results is not consistent with the expectations of financial analysts. Accordingly, holders of Granite Ridge common stock may experience a loss as a result of a decline in the market price of Granite Ridge common stock. In addition, a decline in the market price of Granite Ridge common stock could adversely affect Granite Ridge’s ability to issue additional securities and to obtain additional financing in the future.

Future issuances of debt securities and/or equity securities may adversely affect Granite Ridge, including the market price of Granite Ridge common stock, and may be dilutive to existing Granite Ridge stockholders.

In the future, Granite Ridge may incur debt and/or issue equity ranking senior to the Granite Ridge common stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting Granite Ridge’s operating flexibility. Additionally, any convertible or exchangeable securities that Granite Ridge issues in the future may have rights, preferences and privileges more favorable than those of the Granite Ridge common stock. Because Granite Ridge’s decision to issue debt and/or equity in the future will depend, in part, on market conditions and other factors beyond Granite Ridge’s control, it cannot predict or estimate the amount, timing, nature or success of Granite Ridge’s future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Granite Ridge common stock and be dilutive to existing Granite Ridge stockholders. In addition, our ability to raise additional capital through the sale of equity or debt securities could be significantly impacted by the resale of shares of Granite Ridge common stock by Selling Securityholders pursuant to this prospectus which could result in a significant decline in the trading price of Granite Ridge common stock and potentially hinder our ability to raise capital at terms that are acceptable to us or at all.

The exercise of the Granite Ridge warrants would increase the number of shares eligible for future resale in the public market and result in dilution to holders of Granite Ridge common stock.

In addition, outstanding Granite Ridge warrants to purchase an aggregate 10,349,975 shares of Granite Ridge common stock will become exercisable in accordance with the terms of the Granite Ridge Warrant Agreement. To the extent such warrants are exercised, additional shares of Granite Ridge common stock will be issued, which will result in dilution to the holders of Granite Ridge common stock and may increase the number of shares eligible for resale in the public market. We believe the likelihood that Granite Ridge warrant holders will exercise their Granite Ridge warrants is dependent upon the trading price of Granite Ridge common stock. If the trading price for Granite Ridge common stock continues to be less than $11.50 per share, we believe holders of Granite Ridge warrants will be unlikely to exercise their warrants. To the extent warrants are exercised, sales of substantial numbers of such shares in the public market could adversely affect the market price of Granite Ridge common stock.

The Granite Ridge warrants may never be in the money, and they may expire worthless and the terms of the Granite Ridge warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment.

The exercise price for Granite Ridge warrants is $11.50 per share of Granite Ridge common stock. We believe the likelihood that Granite Ridge warrant holders will exercise their Granite Ridge warrants, and

 

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therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of Granite Ridge common stock. If the trading price for Granite Ridge common stock continues to be less than $11.50 per share, we believe Granite Ridge warrant holders will be unlikely to exercise their Granite Ridge warrants. There is no guarantee that the Granite Ridge warrants will be in the money prior to their expiration, and as such, the warrants may expire worthless. Our warrants became exercisable on November 23, 2022.

The warrants were issued under the Granite Ridge Warrant Agreement (as defined herein). The Granite Ridge Warrant Agreement provides that the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or to correct any defective provision or mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement, (ii) adjusting the provisions relating to cash dividends on shares of common stock as contemplated by and in accordance with the Granite Ridge Warrant Agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the Granite Ridge Warrant Agreement as the parties to the Granite Ridge Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then outstanding public warrants that vote to amend the Granite Ridge Warrant Agreement, after at least 10 days’ notice that an amendment is being sought, is required to make any change that adversely affects the interests of the registered holders of public warrants. Although our ability to amend the terms of the Granite Ridge warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Granite Ridge warrants, convert the Granite Ridge warrants into cash, shorten the exercise period or decrease the number of shares of Granite Ridge common stock purchasable upon exercise of a Granite Ridge warrant.

Anti-takeover provisions in the Granite Ridge organizational documents could delay or prevent a change of control.

Certain provisions of Granite Ridge’s amended and restated certificate of incorporation and Granite Ridge’s amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by Granite Ridge’s stockholders. These provisions, among other things:

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establish a staggered board of directors divided into three classes serving staggered three-year terms, such that not all members of the Granite Ridge Board will be elected at one time;

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authorize the Granite Ridge Board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to existing common stock;

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eliminate the ability of stockholders to call special meetings of stockholders;

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eliminate the ability of stockholders to fill vacancies on the Granite Ridge Board;

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establish advance notice requirements for nominations for election to the Granite Ridge Board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings;

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permit the Granite Ridge Board to establish the number of directors;

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provide that the Granite Ridge Board is expressly authorized to make, alter or repeal the amended and restated bylaws of Granite Ridge;

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provide that stockholders can remove directors only for cause; and

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limit the jurisdictions in which certain stockholder litigation may be brought.

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These anti-takeover provisions could make it more difficult for a third-party to acquire Granite Ridge, even if the third party’s offer may be considered beneficial by many of Granite Ridge’s stockholders. As a result, Granite Ridge’s stockholders may be limited in their ability to obtain a premium for their shares. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders

 

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to elect directors of your choosing and to cause Granite Ridge to take other corporate actions you desire. Please see the section entitled “Description of Securities” for more information.

Granite Ridge’s amended and restated certificate of incorporation contains a provision renouncing its interest and expectancy in certain corporate opportunities.

Granite Ridge’s amended and restated certificate of incorporation provides that Granite Ridge, to the fullest extent provided by law, renounces any expectancy that the directors or officers of Granite Ridge will offer to Granite Ridge any corporate opportunity to which it becomes aware, except to the extent such corporate opportunity was offered to such person solely in his or her capacity as a director or officer of Granite Ridge. Officers and directors, including those nominated by the Existing GREP Members or their affiliates, may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to Grey Rock (subject to the MSA that sets forth an allocation of certain acquisition opportunities between Granite Ridge and funds associated with Grey Rock) or other businesses in which they have invested or are otherwise associated, in which case Granite Ridge may not become aware of or otherwise have the ability to pursue such opportunity. Further, such businesses may choose to compete with Granite Ridge for these opportunities, possibly causing these opportunities to not be available to Granite Ridge or causing them to be more expensive for Granite Ridge to pursue. In addition, Grey Rock and its affiliates, may dispose of properties or other assets in the future, without any obligation to offer Granite Ridge the opportunity to purchase any of those assets. As a result, Granite Ridge’s renouncing of its interest and expectancy in any business opportunity that may be from time to time presented its officers and directors, could adversely impact our business or prospects if attractive business opportunities are procured by such parties for their own benefit rather than for Granite Ridge. We cannot assure you that any conflicts that may arise between Granite Ridge and any of such parties, on the other hand, will be resolved in Granite Ridge’s favor. As a result, competition from Grey Rock and its affiliates or businesses associated with our other officers and directors could adversely impact Granite Ridge’s results of operations.

The amended and restated certificate of incorporation of Granite Ridge designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Granite Ridge’s stockholders, which could limit Granite Ridge’s stockholders’ ability to obtain a favorable judicial forum for disputes with Granite Ridge or its directors, officers, employees or stockholders.

The amended and restated certificate of incorporation of Granite Ridge provides that, unless Granite Ridge consents in writing to the selection of an alternative forum, that the Court of Chancery shall, to the fullest extent permitted by law, be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring any derivative action on behalf of Granite Ridge, any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Granite Ridge, any action asserting a claim against Granite Ridge, its directors, officers or employees arising pursuant to any provision of the DGCL or amended and restated certificate of incorporation of Granite Ridge or the Granite Ridge amended and restated bylaws, or any action asserting a claim against Granite Ridge, its directors, officers or employees governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over any indispensable parties (or such parties consent to the personal jurisdiction of the Court of Chancery within ten days following the Court of Chancery’s determination as to such personal jurisdiction) and subject matter jurisdiction over the claim. The foregoing forum selection provision shall not apply to claims arising under the Exchange Act, the Securities Act, or any other claim for which the federal courts have exclusive jurisdiction.

In addition, the amended and restated certificate of incorporation of Granite Ridge provides that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision. Although we believe these provisions benefit Granite Ridge by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against us or our directors and officers. Alternatively, if a court were to find the choice of forum provision contained in the amended and restated certificate of incorporation of Granite Ridge to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition, and operating results. For example, under the Securities Act, state and federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act,

 

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and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in Granite Ridge’s common stock shall be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Granite Ridge is a “controlled company” under the corporate governance rules of the NYSE and, as a result, qualifies for exemptions from certain corporate governance requirements. Granite Ridge relies on certain of these exemptions, which means you will not have the same protections afforded to stockholders of companies that are subject to such requirements.

Grey Rock Energy Fund III-A, LP, Grey Rock Energy Fund III-B, LP, and Grey Rock Energy Fund III-B Holdings, LP and their affiliates (collectively, “Grey Rock Fund III”) collectively own a majority of Granite Ridge’s voting common stock. As a result, following the Business Combination, Granite Ridge is a “controlled company” within the meaning of the corporate governance standards of the rules of the NYSE. Under these rules, a listed company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of its board of directors consist of independent directors;

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the requirement that its director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is comprised entirely of independent directors and that it adopt a written charter or board resolution addressing the nominations process; and

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the requirement that it have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

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As long as Granite Ridge remains a “controlled company,” Granite Ridge may elect to take advantage of any of these exemptions. Granite Ridge’s board of directors does not have a majority of independent directors, Granite Ridge’s compensation committee does not consist entirely of independent directors and does not have a nominating committee. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the rules of the NYSE.

Granite Ridge could be adversely affected by changes in applicable tax laws, regulations, or administrative interpretations thereof in the United States or other jurisdictions.

Granite Ridge could also be adversely affected by changes in applicable tax laws, regulations, or administrative interpretations thereof in the United States or other jurisdictions and changes in tax law could reduce Granite Ridge’s after-tax income and adversely affect our business and financial condition. For example, the U.S. federal tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), enacted in December 2017, resulted in fundamental changes to the Code, as amended, including, among many other things, a reduction to the federal corporate income tax rate, a partial limitation on the deductibility of business interest expense, a limitation on the deductibility of certain director and officer compensation expense, limitations on net operating loss carrybacks and carryovers and changes relating to the scope and timing of U.S. taxation on earnings from international business operations. In addition, other changes could be enacted in the future to increase the corporate tax rate, limit further the deductibility of interest, or effect other changes that could have a material adverse effect on Granite Ridge’s financial condition. Such changes could also include increases in state taxes and other changes to state tax laws to replenish state and local government finances depleted by costs attributable to the COVID-19 pandemic and the reduction in tax revenues due to the accompanying economic downturn.

In addition, Granite Ridge’s effective tax rate and tax liability are based on the application of current income tax laws, regulations and treaties. These laws, regulations and treaties are complex and often open to interpretation. In the future, the tax authorities could challenge Granite Ridge’s interpretation of laws, regulations and treaties, resulting in additional tax liability or adjustment to our income tax provision that could increase Granite Ridge’s effective tax rate. Changes to tax laws may also adversely affect Granite Ridge’s ability to attract and retain key personnel.

 

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USE OF PROCEEDS

We are filing the registration statement of which this prospectus is a part to permit the Selling Securityholders to resell Granite Ridge common stock. We will not receive any proceeds from the sale of Granite Ridge common stock to be offered by the Selling Securityholders pursuant to this prospectus.

We would receive up to an aggregate of approximately $119.0 million from the exercise of the Granite Ridge warrants, assuming the exercise in full of all of the Granite Ridge warrants for cash. We expect to use any net proceeds from the exercise of the Granite Ridge warrants for general corporate purposes. We will have broad discretion over any use of proceeds from the exercise of the Granite Ridge warrants. There is no assurance that the holders of the Granite Ridge warrants will elect to exercise any or all of such Granite Ridge warrants. The exercise price of Granite Ridge warrants is $11.50 per warrant. We believe the likelihood that Granite Ridge warrant holders will exercise their Granite Ridge warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of Granite Ridge common stock. If the trading price for Granite Ridge common stock continues to be less than $11.50 per share, we believe holders of Granite Ridge warrants will be unlikely to exercise their Granite Ridge warrants. To the extent that the Granite Ridge warrants are exercised on a “cashless basis,” the amount of cash we would receive from the exercise of the Granite Ridge warrants will decrease.

 

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SECURITIES MARKET INFORMATION

Market Information

In connection with the closing of the Business Combination, Granite Ridge common stock and Granite Ridge warrants are currently listed on the New York Stock Exchange under the symbols “GRNT” and “GRNT WS,” respectively.

Each whole warrant of Granite Ridge entitles the holder to purchase one share of Granite Ridge common stock at an exercise price of $11.50 per share. The warrants became exercisable at any time commencing November 23, 2022. The warrants will expire on October 24, 2027, or five years after the consummation of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

As of January 5, 2023, there were approximately 109 holders of record of Granite Ridge common stock and 10 holders of record of Granite Ridge warrants.

Dividend Policy

Any determination to pay cash dividends will be at the discretion of the board of directors of Granite Ridge (the “Granite Ridge Board”) and will depend upon a number of factors, including Granite Ridge’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the Granite Ridge Board deems relevant.

Notwithstanding the foregoing, Granite Ridge expects to pay quarterly dividends on its common stock in amounts determined from time to time by the Granite Ridge Board. The Granite Ridge Board declared an initial dividend of $0.08 per share of common stock, payable on December 15, 2022 to stockholders of record on December 1, 2022. The declaration and payment of any future dividends by Granite Ridge will be at the sole discretion of the Granite Ridge Board, which may change Granite Ridge’s dividend policy at any time. The Granite Ridge Board will take into account:

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general economic and business conditions

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the Company’s financial condition and operating results;

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the Company’s free cash flow and current and anticipated cash needs;

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the Company’s capital requirements;

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legal, tax, regulatory and contractual (including under any credit facility entered into by the Company or its subsidiaries) restrictions and implications on the payment of dividends by the Company to its stockholders or by the Company’s subsidiaries to it

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such other factors as the Granite Ridge Board may deem relevant.

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Granite Ridge will not have a legal obligation to pay dividends at any rate or at all, and there is no guarantee that it will declare or pay quarterly cash dividends to its common stockholders. If Granite Ridge does not have sufficient cash at the end of each quarter, it may, but is under no obligation to, borrow funds to pay the dividends established by its dividend policy to its common stockholders.

The operating and financial restrictions and covenants in Granite Ridge’s Credit Agreement restrict, and any other future financing agreements by Granite Ridge likely will restrict its ability to pay dividends, finance future operations or capital needs, or engage, expand or pursue its business activities. Specifically, the current Granite Ridge Credit Agreement restricts its ability to make cash dividends or distributions to its shareholders (A) generally, unless the net leverage ratio does not exceed 1.50 to 1.00, availability under the credit facility is not less than 25% of the total revolving commitments, and no event of default then exists or would result from such payment; (B) generally, up to an amount not to exceed the greater of $15 million and 5% of the borrowing base then in effect, unless the net leverage ratio does not exceed 2.25 to 1.00, availability under the credit facility is not less than 10% of the total revolving commitments, utilization of the borrowing base under the credit facility is not more than 70%, and no event of default then exists or would result from such payment, and (C) up to an amount not to exceed Available Free Cash Flow (as defined in the

 

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Credit Agreement), unless the net leverage ratio does not exceed 2.25 to 1.00, availability under the credit facility is not less than 20% of the total revolving commitments, and no event of default then exists or would result from such payment (with all such financial metrics calculated after giving effect to such payment and any borrowing of loans in connection therewith). Granite Ridge’s ability to comply with these restrictions and covenants in the future is uncertain and will be affected by the levels of free cash flow and events or circumstances beyond its control, such as a downturn in Granite Ridge’s business or the economy in general or reduced oil and natural gas prices.

Furthermore, the amount of dividends Granite Ridge would be able to pay in any quarter may be limited by the DGCL, which provides that a Delaware corporation may pay dividends only (i) out of the corporation’s surplus, which is defined as the excess, if any, of net assets (total assets less total liabilities) over capital, or (ii) if there is no surplus, out of the corporation’s net profit for the fiscal year in which the dividend is declared, or the preceding fiscal year.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

On October 24, 2022, Executive Network Partnering Corporation, a Delaware corporation (“ENPC”), consummated its business combination by and among ENPC, Granite Ridge Resources, Inc., a Delaware corporation (“Granite Ridge”), ENPC Merger Sub, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Granite Ridge (“ENPC Merger Sub”), GREP Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Granite Ridge (“GREP Merger Sub” and, together with ENPC Merger Sub, the “Merger Subs”), and GREP Holdings, LLC, a Delaware limited liability company (“GREP”), which provides, among other things, that (i) ENPC Merger Sub merged with and into ENPC (the “ENPC Merger”), with ENPC surviving the ENPC Merger as a wholly-owned subsidiary of Granite Ridge and (ii) GREP Merger Sub merged with and into GREP (the “GREP Merger,” and together with the ENPC Merger, the “Mergers”), with GREP surviving the GREP Merger as a wholly-owned subsidiary of Granite Ridge.

The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of SEC Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Business” to aid you in your analysis of the financial aspects of the Transactions (as defined below) and is for informational purposes only. The unaudited pro forma condensed combined financial statements present the pro forma effects of the following transactions, collectively referred to as the “Transactions” for purposes of this section, and other related events as described in Note 1 to the accompanying notes to the unaudited pro forma condensed combined financial statements:

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the formation transaction of Fund III and its business combination with Fund I and Fund II (the “GREP Formation Transaction”); and

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the business combination of Grey Rock and ENPC, referred to in this section as the “Business Combination.”

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The unaudited pro forma condensed combined balance sheet as of September 30, 2022 (the “pro forma balance sheet”), and the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2022 and the year ended December 31, 2021 (the “pro forma statement of operations,” together with the pro forma balance sheet and the corresponding notes hereto, the “pro forma financial statements”) present the pro forma financial statements of Granite Ridge after giving effect to the Transactions.

The pro forma financial statements have been developed from and should be read in conjunction with the following historical financial statements and related notes of ENPC and Grey Rock Energy Fund III, Grey Rock Energy Fund, LP and Grey Rock Energy Fund II:

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unaudited financial statements of ENPC as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021 and the related notes included elsewhere in this prospectus and the audited financial statements of ENPC as of and for the fiscal year ended December 31, 2021 and the related notes included elsewhere in this prospectus,

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unaudited consolidated financial statements of Grey Rock Energy Fund, LP and Subsidiaries as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021 and the related notes included elsewhere in this prospectus and audited consolidated financial statements of Grey Rock Energy Fund, LP and Subsidiaries as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 and the related notes included elsewhere in this prospectus,

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•

unaudited combined financial statements of Grey Rock Energy Fund II as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021, and the related notes included elsewhere in this prospectus and audited combined financial statements of Grey Rock Energy Fund II as of and for the years ended December 31, 2021 and 2020, and the related notes included elsewhere in this prospectus, and

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•

unaudited combined financial statements of Grey Rock Energy Fund III as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021, and the related notes included elsewhere in this prospectus and audited combined financial statements of Grey Rock Energy Fund III as of December 31, 2021 and 2020 and for the years ended December 31, 2021, 2020 and 2019 and the related notes included elsewhere in this prospectus.

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GREP Formation Transaction

The GREP Formation Transaction is accounted for consistent with that of a common control transaction pursuant to the guidance in ASC 805-50, recognizing the assets and liabilities received in the transaction at their historical carrying amounts. Fund III has been identified as the acquirer and “predecessor” to Granite Ridge. As control of each Fund will remain with its respective general partner and there will not be a substantive economic change with respect to the Funds pre and post the GREP Formation Transaction, the transaction is accounted for consistent with that of a common control transaction and the GREP Formation Transaction combined Fund III, Fund I and Fund II at historical cost.

The pro forma balance sheet as of September 30, 2022 assumes that the GREP Formation Transaction occurred on September 30, 2022. The pro forma statement of operations for the nine months ended September 30, 2022 and the year ended December 31, 2021 gives pro forma effect to the GREP Formation Transaction as if they had occurred on January 1, 2021.

Business Combination

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, ENPC is considered the “acquired” company for financial reporting purposes. Fund III is the accounting acquirer because Grey Rock, as a group, retained a majority of the outstanding shares of Granite Ridge as of the closing of the Business Combination, and they nominated all members of the board of directors as of the closing of the Business Combination.

The pro forma balance sheet as of September 30, 2022 assumes that the Business Combination and related transactions occurred on September 30, 2022. The pro forma statement of operations for the nine months ended September 30, 2022 and the year ended December 31, 2021 give pro forma effect to the Business Combination and related transactions as if they had occurred on January 1, 2021. ENPC and Grey Rock have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma financial statements are presented to reflect the Transactions and do not represent what ENPC’s financial position or results of operations would have been had the Transactions occurred on the dates noted above, nor do they project the financial position or results of operations of Granite Ridge following the Transactions. The transaction accounting adjustments are based on available information and certain assumptions that management believes are factually supportable and are expected to have a continuing impact on the results of operations with the exception of certain non-recurring charges to be incurred in connection with the Transactions, as further described below. In the opinion of management, all adjustments necessary to present fairly the pro forma financial statements have been made.

Certain non-recurring charges were incurred in connection with the GREP Formation Transaction and the Business Combination. Any such charge could affect the future results of Granite Ridge in the period in which such charges are incurred; however, these costs are not expected to be incurred in any period beyond 12 months from the effective date of the Business Combination, which closed the same day as the effective date of the transaction. Accordingly, the pro forma statement of operations for the nine months ended September 30, 2022 and for the year ended December 31, 2021 reflect the effects of these non-recurring charges.

As a result of the foregoing, the transaction accounting adjustments are preliminary and subject to change as additional information becomes available and additional analysis is performed. The transaction accounting adjustments have been made solely for the purpose of providing the pro forma financial statements presented below.

 

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The pro forma financial statements should be read together with the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical financial statements and related notes thereto of ENPC, Grey Rock Energy Fund III, Grey Rock Energy Fund, LP, and Grey Rock Energy Fund II included elsewhere in this prospectus.

 

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GRANITE RIDGE

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of September 30, 2022