On Wednesday, Granite Ridge Resources (NYSE:GRNT) received a new Buy rating from Roth/MKM, with a set stock price target of $8.80. The initiation of coverage is based on a detailed net asset value analysis of the company's oil and gas reserves.
The valuation by Roth/MKM takes into account Granite Ridge Resources' total proved reserves as of December 31, 2023. It also includes an estimate of 25% of the company's probable reserves. The price estimates for West Texas Intermediate (WTI) crude oil are set at $81.98 per barrel for 2024, with a flat rate of $80.00 per barrel thereafter.
For Henry Hub natural gas, the price is estimated at $2.30 per million British thermal units (MMBtu) for 2024, rising to $3.00/MMBtu and remaining steady in subsequent years. These estimates are adjusted for anticipated differentials.
The analyst's approach reflects a comprehensive evaluation of Granite Ridge Resources' asset base, incorporating current market conditions and future projections for oil and gas prices. The stock price target suggests a level of confidence in the company's value proposition and its reserve base.
Investors may see the new coverage as a positive indicator for Granite Ridge Resources, as the Buy rating points to a potentially undervalued stock. The stock price target of $8.80 offers a quantified expectation for the stock's performance, based on the firm's analysis.
Granite Ridge Resources, with its focus on oil and gas, operates within an industry that is subject to price fluctuations influenced by global supply and demand dynamics. The stock price targets and estimates provided by Roth/MKM reflect a snapshot of the analyst's expectations for the energy sector and the company's position within it.
InvestingPro Insights
Granite Ridge Resources (NYSE:GRNT) has recently caught the attention of Roth/MKM analysts, and the InvestingPro platform offers additional insights that could be valuable for investors. With a market capitalization of $838.07M and a P/E ratio that has adjusted to 10.94 in the last twelve months as of Q1 2024, Granite Ridge Resources presents itself as a company with a solid valuation foundation.
The dividend yield of 6.86% as of the latest data, coupled with a price target of $8.80 by Roth/MKM, suggests that GRNT may offer a compelling mix of income and growth potential for investors.
InvestingPro Tips highlight that Granite Ridge Resources pays a significant dividend to shareholders and operates with a moderate level of debt. These factors, in conjunction with the company's profitability over the last twelve months, could be seen as indicators of financial stability and prudent management. Moreover, with analysts predicting profitability for the current year, the company's outlook appears optimistic.
For those seeking to delve deeper into Granite Ridge Resources' potential, InvestingPro provides an extensive range of additional tips. Currently, there are 5 more InvestingPro Tips available, which can be accessed by visiting https://www.investing.com/pro/GRNT. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering even more expert analysis and data to inform your investment decisions.
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