Good morning, everyone. My name is Jack Greenberg with the Southwest Ideas Conference hosted by Three Part Advisors. Thank you all for coming today. Next presentation will begin shortly with Granite Ridge Resources, traded on the New York Stock Exchange under the symbol GRNT. Presenting on their behalf today is Luke Brandenberg, their President and CEO. With that, I'll hand it off to Luke.
Thank you. Thanks, everyone, for being here. I need to be able to go to Investor Conference in my hometown, so this is fun. I appreciate everyone coming. We're starting a little bit late, and I know immediately before lunch will likely be a mad rush to get in line. I'll try to be relatively brief with my comments, but love any Q&A. If there's anything I'm missing, please don't hesitate to raise your hand or just holler out a question. Thank you also for emphasizing the T on the ticker, GRNT. One funny thing about our business: we went public just over two years ago, and we went public, I think it was a week or two before, a company with a very similar ticker, GRND, Grindr, which is a very different business model than what we operate at Granite Ridge Resources.
So what my plan for today is, I want to tell you a little bit about where we are at Granite Ridge, and then we'll talk about what we do, and then I'll talk about where we're going. And so I'll kick off with where we are. What is Granite Ridge at the highest level? What Granite Ridge practically is? It's a publicly traded oil and gas private equity firm. We'll talk more about that in a minute, but we'll start off with what do we look like today. Today, Granite Ridge, about an $850 million market cap company, just over a $1 billion dollar enterprise value. We have oil and gas assets in most major producing areas in the U.S. You can see on the map here, we're in the Permian.
That's really our primary focus, but also have assets in the Bakken, Eagle Ford, Haynesville, DJ, and most recently targeting the Utica up in Ohio. We're just under $300 million cash flow on a trailing basis, so trading about, call it 3.5x . And the big thing about our business, we've got a dividend that's just under 7%. So one neat thing I think you're going to see as you talk about Granite Ridge, and I actually really enjoy this conference because a lot of conferences I go to, it's just energy focused folks. And so I like to put in context Granite Ridge. So we're a company that has over 7% dividend yield. We're maybe 0.6 times levered, so very lightly levered, and we're also growing year- over- year, focused on production growth. So compelling dividend growth and lightly levered, and we trade at barely 3x .
So very, very cheap relative to most companies that fit that dynamic. One thing about Granite Ridge that I think is pretty important, and you'll see this on this slide and a couple others, is diversification. We think that diversification is a key part of an investment strategy as a private equity firm, and that diversification is across several factors. One, you look at here, just assets. Again, we're diversified across the U.S. We're roughly 50/50 oil and gas by kind of hydrocarbons in place. Again, diversified pretty well across the different basins. But another thing I like to point out is we're diversified under different oil and gas operators. I think that's an important thing. I think about our business, we don't want to put all our chips in one basket.
So as you look across this page, this is a snapshot of some of the operators that we partner with in the oil and gas space. Some of these names you're going to recognize. You're probably going to recognize ExxonMobil. Some of these names you may not recognize. Some of these names are Admiral Permian, Greenl ake, Silver Hill. One of the neat things about our strategy is, and we'll talk about it again more in detail in a moment, but as a capital allocator, we think it's important to get exposure to a wide aperture of opportunities. The way that we think you make the highest rates of return, certainly on a risk-adjusted basis, broad opportunity set, but having the ability to evaluate and the conviction to allocate to somewhere where you see a potential for outsized returns.
And so we like having a diverse group of operators that we could partner with. And there's a reason for that. You think about an ExxonMobil or maybe some of these bigger guys like an Oxy. There are a lot of benefits to partnering with big oil and gas companies, and a lot of it comes down to efficiencies. So if you're ExxonMobil and you're in an inflationary price environment, it's good to be partnered with Exxon because one thing Exxon has is just yards and yards full of things like drill pipe. So when the cost of drill pipe goes through the roof, they're pretty insulated from that because they've got yards and yards full of it. Versus if you're partnered with a smaller operator, you're more at the whim of the market. You're paying spot price, whatever that is.
But one thing we always like to point out: Shell. Shell's really the big driver of U.S. oil and gas production growth. Shell wasn't brought to you by Exxon. Shell was brought to you by four guys in a rusty pickup truck. It was brought to you by the small companies, the entrepreneurs, the guys that said, "Hey, there's got to be a better way," or, "I can try this," or, "I can try that." We like to have the exposure to both sides of that equation, and so that's a neat thing about our business model. One thing that we talk about, or the most important thing, I think, for an investment firm is to be able to rapidly adapt to whatever, where the market is, but then also to where it's going.
That's something that's very, very important to us is to stay nimble and be able to quickly adapt. And so we like this diverse asset base. You'll see that as you look at what we've done as a company. I just think about where we're allocating capital. We're roughly 50/50 oil and gas right now. Four years ago, we were weighted towards oil. And then in 2022, gas started trading at $10-$12 in MCF. So we were able to quickly adapt, allocate capital towards that. We got a little bit gas heavy. Now gas has been in the doldrums for a bit, and we're really allocating more capital towards oil. So I think that's a neat thing as you think about an investment firm and having that diversified portfolio is you can capitalize on whatever the market's giving you.
That's just a big piece of what we do day in and day out. I'll tell you, it's not a science. We don't come out with our budget every year and say, "All right, we're going to allocate 50% of our capital towards oil or gas." We're really economic animals, is what we say at the end of the day. We're always looking for opportunities to compete for capital based on project-level returns. So what are we? I said we're an oil and gas private equity firm. What the heck is an oil and gas private equity firm? Well, what that means to us is I've got this asset base that I showed you earlier. We're producing about 25,000 barrels of oil equivalent a day. Our job is not to manage those wells. The guys actually operating those wells are Exxon or EOG or folks like that.
Our job is to take the cash flow that comes off of those wells, to source opportunities, evaluate them, and then allocate capital to the opportunities of the best risk-adjusted returns. So that's what I say when we're an oil and gas private equity firm, just with a publicly traded stock, with an evergreen fund, if you will. So yes, we have a working interest in the wells. We have a working interest in the leases. So that's a real property interest, but we're not the ones actually working on it. So maybe Exxon drilled the well, and maybe we own 20% of it. So they're the one actually out there doing the work, and we get the same economics that they do. We're just a minority interest owner in most of what we do.
But I'm glad you mentioned that because we're going to hit on a bit of a pivot from that strategy. So maybe I'll start with what does our company look like? If you walk up and down our halls, who do you see? Well, you're really going to see two groups of people. You're going to see an investment group, and you're going to see an oil and gas company. And we're all in the same shop. So you walk up and down, it's oil and gas engineers that are evaluating opportunities, oil and gas accountants, oil and gas land folks generating deals. And then it's also oil and gas investment professionals, finance folks that have background in investing in oil and gas. My background is all on the private equity side. I spent a decade doing oil and gas private equity.
And so we're this neat hybrid where you've got the private equity firm, the investment folks, and the oil and gas company all in one. So that's really our day in, day out. Source deals, evaluate them, and allocate capital to the best ones. And so there's a few ways to win with Granite Ridge. Again, I mentioned earlier, we're a bit unique in the sense that we have a compelling dividend. If you look at just oil and gas companies broadly, 6.9% or just south of that now, that's pretty darn high. That's higher than what you're generally going to see. Now, I think it's too high because I think our stock price is too low. But one way to win right out of the gate is through that cash dividend. That's a fixed dividend, $0.44 a share that we've had since inception.
Another way to win is asset growth. So year over year, we're allocating capital to continue to grow the asset base. We had a pretty big growth year in 2023 over 2022. This year, we're looking at about 7% asset growth from 2024 over 2023. And next year, I mentioned on our last earnings call, we're looking for, call it mid-teens growth again. So you've got a mid-teens growth, you've got a 7% dividend. Additionally, there's a big focus of ours right now is we have a very tightly held shareholder base. And I view that as a technical challenge. It's a challenge, but it's also an opportunity. We have a tightly held shareholder base. So we're trading $3 million or so a day, which is pretty small for a billion-dollar company.
But the primary reason is we were a private equity firm that went public, and so a lot of our shares are very tightly held. That's getting better over time. That continues to increase, but it's keeping out a lot of potential buyers. I mentioned I like coming to these generalist conferences. That's a fun thing for me to get to compare how we stack up versus other industries. But a lot of my conferences are oil and gas focused. So we'll go to New York, we'll meet with these big old hedge funds. And what a lot of them say is, "Listen, I actually buy what you're selling. I do think that you're undervalued, but I need you to trade $5 million a day for me to be able to build a position." So that's one of the challenges that we face.
I also view it as an opportunity because over time we're working towards that. And as we do continue to increase trading volume as we transition that shareholder base, you get larger, but you're opening your market up to more buyers. And supply demand, more buyers, we believe that that'll be a tailwind for the stock. A lot of these guys, it's pretty funny. They'll say, "Look, I can't buy you in my fund right now, but I bought you in my personal account." And half of them, probably 80% of them are full of it, but some of them I actually believe them. I think that they really are doing that because they say, "I can't buy you until you do $10 million a day." I'm thinking, "Why are you wasting your time on me?" I think they actually own us, which is kind of fun.
The big thing, so that's kind of what we look like, what we do day in and day out. But I want to talk to you about where we're taking this business because if you google Granite Ridge, you're going to see the word non-op company, which is true. So again, our assets, we don't control, and I'm not going out to the well to turn knobs. That's a guy that works for Exxon or works for Chevron or works for EOG. That's not our job. Our job is more on the capital allocation side. But what we've recognized is there's really an opportunity to continue to broaden the opportunity set and also to give us more control over timing. So let's maybe talk about how do we evaluate a deal? How do I decide if a deal is good and it's going to compete for capital?
So the way it works is this. So our land guys are all hustling. They're out in Midland, they're out in Oklahoma City. We call our business development our burgers and beer strategy because our business is not buying deals that an investment bank is selling. That's just not our strategy. Part of the reason is these investment bankers are just too darn good at what they do, and the price gets pretty high, and we always lose. So we stopped doing that. We focus on this burgers and beer. So that's deals done over burgers and beer in Midland, in Denver, in Houston, Oklahoma City, and Tulsa. So we just think internally, it's kind of a joke, but burgers and beer, it's fun. That's how we're going to get deals. We're going to go to places that other people aren't taking the time. So what do we do?
Our land guys find these deals, they bring them in, and then our engineering team really is who spearheads the initial evaluation. There's three parts to the evaluation. One, if a well gets drilled here, what's the productivity? How much oil and gas is going to come out of the ground? Two, how much is it going to cost to drill that well? And then three, when do we think that well gets drilled? You think about a dollar per acre. It's what we talk about in oil and gas space. What's this acre worth for me to go buy or lease? Well, think about the core of the Permian Basin, the best rock you can find. Well, that acre is worth somewhere between, I don't know, $200,000 an acre and zero. Because if nobody ever drills on that acre, well, the NPV is zero.
It's just going to sit there, and it's going to be dead money, so the third leg of the stool of evaluation is, when is this well going to get drilled? Well, that's been our business historically, but what we're really doing is we're looking at a bit of a shift. We saw a real opportunity in the space, so private equity firms broadly, for anybody that follows the oil and gas private equity space, man, they really had their heyday from, oh, 2006, 2007. You really saw the beginning of funds starting to creep up, and really, the late teens, the funds kind of peaked in size. I'll give you an example. I started with a group in 2010. We were investing out of a $2.5 billion fund. Then we raised a $3.5 billion, then a $5 billion, then a $6.5 billion, then a $7 billion, all in a decade.
Just an immense amount of capital. Every other year, we're raising a larger and larger fund. Well, then COVID happened. And COVID really did a couple of things. One, it slowed the sale of private equity-backed assets. So a lot of these investors would say, "Look, I'll give you money. You go deploy it, you sell, you make a bunch of money. You give me the money back, I'll go put that in your next fund." That was the business model. But then these private equity firms weren't selling. The market wasn't there. The investors didn't get their money back, so they didn't have new dollars to put in the new fund. Two, COVID really didn't bring about, it wasn't a causation, but certainly a correlation with the broader ESG movement.
And what that meant is you had a lot of folks who were no longer allocating capital to oil and gas, not necessarily for financial reasons, but for environmental reasons, for constituents' reasons. You had colleges that said, "Oil and gas is evil. We're not going to invest in oil and gas." It's kind of an odd dynamic, and we have a lot of arguments on why that's not necessarily the case. But the point is private equity fundraising fell off a cliff. And so what you were left with, you were left with a lot of these scrappy four guys in a pickup truck, these management teams in a vintage shale that were continuing to push the edge, that were finding scrappy deals that the larger companies were too slow to find that didn't have a capital source. They had good ideas. They had a proven track record.
They'd made a bunch of money, but they didn't make enough money to start an oil and gas company. Drilling oil and gas wells is a pretty expensive hobby. You could think of one section of land, so one square mile of land. We looked at a deal the other day. If we win this deal, we're going to put $80 million in one square mile. It's a real expensive hobby drilling oil and gas wells. So you've got guys who are really good, proven track record, great at finding opportunities that don't have a partner. And we said, "Man, we could come in, and we could be a differentiated partner for you." One of the challenges that these guys had was they partnered with a private equity firm, and they'd go start this business.
They would have to build this company and then sell the whole thing before the management team really got a payday. Well, we went to them and said, "What if we developed a different mousetrap? What if we'd partner with you at the asset level?" And so it's more of a deal by deal. So whenever you go find an opportunity, we'll be your capital behind it. And whenever that thing makes money, we'll split in the economics. And the benefit to us is now, instead of somebody else controlling the development timing, we control the development timing. So we call this our Controlled Capital Program. So it's doing what we've done before. Look, finding an opportunity, figuring out how much it's going to produce, what do we think it's going to cost.
But instead of guessing when that well gets drilled, we control when that well gets drilled because we're the largest owner. So we call it controlled capital. So we've partnered with a couple of folks right now where this is a primary strategy for us. It's, again, not changing our stripes. It's doing what we've done before. It's just mitigating the timing risk and along the way, achieving better rates of return. So what does that mean for us? We can break our deal flow into two businesses. Our traditional non-op, that's 10% under EOG or Exxon in a good area. Our controlled capital is, call it 60% or so, with partners that we have in defined areas. So this way, because we're the majority owner, we get to control it.
If you look at where we're allocating capital in 2024, approaching 40%-50% of our dollars are in this controlled bucket. If you look at next year, it's probably going to approach 60%. So we're allocating more and more capital. So if you look at Granite Ridge over time, we're increasing control over where our dollars are going. And we're doing that in a way where we think we're seeing better rates of return. So one thing that I think is important as we talk about our strategy, we talk about being an oil and gas private equity firm, is if our only real job is to source deals and evaluate them, the question is, well, how do we know you're any good? How do we know you're any good at evaluating deals? And so we're really a data-driven shop, and this is an example of that data-driven shop.
We went back and said, "Okay, let's look at 1,000 wells." These were wells that were not yet drilled. They were proposed. Somebody said, "I'm going to go drill this well." Our engineering team came up and said, "Okay, this is what we think this well is going to produce. How much gas it's going to produce, how much oil it's going to produce." So this is just 1,000 wells set, but that 1,000 wells set represents over $7 billion of capital, and we compared how did our engineers do versus what did the well actually produce, and we were about 99% accurate, which is good enough for government work in my book. I think we do a really, really good job at what we do. Some of those wells we were under, some we were over, but 99%.
So is that on your wells or just wells you looked at?
Wells we looked at. Yep, wells we looked at. So wells we underwrote.
So you didn't participate in all of them?
So we didn't participate in all of them. No, we didn't participate in all of them. These are just ones that we underwrote and then we went back and checked. That's a good question. We do have interest in over 3,000 wells across the U.S. All of these were not necessarily ones that we were in, but that we were able to get data on. And so I just think this is kind of a neat stat. And frankly, I haven't seen anybody else put a stat out like this. And primarily, look, in the oil and gas space, we lost a lot of investor confidence in the teens.
Part of it was just irrational exuberance, I'd say, about shale and about what these wells were going to do. We were all focused on rate of return and kind of tried to confuse investors with rate of return versus yield. Anyways, the point is we got a reputation as an industry for, "Hey, they're full of it. I'm going to cut whatever they say in half." This is something that we really try to do, and we want to do it differently. We're going to have to build a track record of demonstrating this over time, but that's the plan.
If you look at our space right now, I mentioned earlier, if you look at where we trade relative to a company that looks like us in any other industry, high yield, with growth, and lightly levered, we trade at a very big discount to what you'd seen in other industries. And the reason why, I think, is that we're in a proven mode. Nobody's giving oil and gas companies the benefit of the doubt anymore. And frankly, we don't deserve it. We have demonstrated that we're not the most trustworthy. Well, that's something that we really set out to do is to try to change that. I think you're seeing it across the industry, but that's why we want to put out information like this.
That's why we track information like this to show, "Hey, we really are hitting the results that we talk about." You're going to see more of this coming, so I mentioned we're in this transition period, this transition of this controlled capital program. As you look over the next several months, we want to roll out a lot more information on that. Because if we're telling you we're shifting our capital allocation towards this strategy, I need to show you that it's working. I need to show you that it's getting better returns, so stay tuned on more and more information from that, but this is really where I kind of think about where we are, where we're going. We were all traditional non-op. Now we're a blend, still traditional non-op focused.
We're about 50/50, but we're going more toward this controlled capital program where you're going to see us have more control over development timing and, we believe, higher expected returns. So it's a fun business. This is a really cool time for our company. We've been talking about this controlled capital program, if you've followed us over the past two years, and about how this is going to be kind of a game changer for us. We're going to see that in the first quarter of next year. That's really when the results from our initial pads, where we're taking this more concentrated controlled working interest, starts to show up. And so around the office, this is a pretty darn exciting time because it's everything we've talked about. It's everything we're doing. We believe we're doing something different.
We're in a neat spot right now where it's hard to find a comp for us. The natural instinct is to comp us towards non-op companies because that's what most of our interests are non-operated. That is a factual statement, but to me, if you're thinking about valuing a company, I mean, valuing it on the assets as they exist today is one thing, but as an investor, you're looking at what are you doing next, so you're looking at where's the next dollar allocated, well, for us, the majority of the next dollars allocated are controlled. That's where most of the dollars are going, and so we kind of pulled some stats on what should we look like, well, if you look at publicly traded non-op companies, and you look at this as a value on next 12 months EBITDA, we trade at kind of low fours.
But if you look at it as operated companies, they get a premium, or said another way, there's historically a non-op discount. Our goal is to change the narrative on Granite Ridge and to prove to investors that we really do have control, and we shouldn't get that non-op discount, that over time we should work our way and be viewed more as an operator because the majority of our capital truly is controlled. And what does that mean? I can take it to zero with a phone call. Now, that's obviously more complicated than that. But you can't, if you're drilling your rig, you're sitting there turning, and you go tell the guys that are running the rig to stop right away, you're going to get some four-letter words back at you. And they're pretty scary sometimes. But it's really a big that ability to control is huge.
It's something that we really think is going to differentiate us going forward, and we're going to demonstrate that we have that ability. I say that. The flip side is, when do we demonstrate we have the ability to fully control? Well, it's really two things. It's when oil goes really high, in which case we're going to step on the accelerator, or it's when oil or gas goes really low and we want to really slow down. So in a normal environment, control is a little bit harder to see. But if we do see swings, look, this has been a cyclical business historically. I'm certainly not going to sit here and predict anything different in the future. But we will have more control over this. We think that's a lot of fun. It's going to be a difference. And it creates a lot more fun conversations, too.
One of the things that I really enjoy is we're sitting there talking about where should the rig go next. It's those kind of conversations, and we're thinking about, okay, how do we think about efficiencies between the rig going here, here? What is the different cost of drilling these two, which maybe that doesn't make the most sense, but infrastructure-wise, these are the kind of conversations we're having internally. This is the conversations operators have. So you'll see more and more of that. I'll kind of wrap it up with this. Again, there's a lot of ways to win with Granite Ridge. A yield that's compelling in the oil and gas sector, but I believe pretty compelling across any sector. That's also combined with asset growth, and that's underpinned by conservative leverage. Again, we're, I think, 0.6x right now.
We think of a target, maybe half a turn to a turn, call it 0.75 is really where we want to focus. Because look, the way that you blow up an investment firm is by getting overlevered. And that's something that we do not want to do. We want to learn from our forefathers in the business. The other thing is, when I go back, you talk about a cyclical business, there's two ways to make money in oil and gas. One is just to continue to recycle dollars, well, maybe three, recycle dollars over and over again in compelling deals, grow that way. One is to, really, the other way is to buy low, sell high. Buy low, sell high. Well, the thing about a lot of oil and gas companies, take COVID, for example.
If you had two times levered going into COVID, with most other industries, two times leverage seems pretty conservative. No one's getting concerned about being two times levered. Well, in the oil and gas space, when it's an opportunity, or I'm going to say not an opportunity, when something like COVID happens, your two times levered becomes four times overnight. You're still not in a bind, but you are very focused on your own balance sheet. Where one of our things that we did during COVID, and I'm really excited about, is we were very lightly levered going into COVID. And so whenever COVID happened, prices collapsed, some folks got in a bind, we could be on the offensive because buy low and sell high is an old-fashioned way to make money, and we want to make sure we're always positioned for that.
So that's a high level on Granite Ridge. We're really excited about where this thing's going. I think next year is just going to be a huge year for us. I think we're going to prove what we're talking about. If you look at just simple, I'm not a metrics guy. I like to look at, okay, let's look at the assets, let's look at the cash flow. But the public market metrics are an easy way to try to compare companies. And if you're focused on value to cash flow or value to production, on practically any metric you look at, this thing's going to be worth a lot more next year based on the growth that we're telling the street that we're going to have. And so as long as we don't overlever it, we'll be in a good spot.
That's actually one thing I'll leave you with that one investor told me, "Gosh, this was right when we started." He said, "Luke," he said, "Look, I buy what you're selling. I see you've got these issues that you got this private equity overhang thing. I get that. You're getting this new strategy. I don't know that I understand it, but it seems like it makes sense. You seem like you know what you're doing." But he said, "Here's what you are to me. I'm going to buy this stock, and I'm going to put it in a drawer. And I'm going to open that drawer in two years. And I'm going to have a stack of dividends.
I think the stock price is going to be higher." And he said, "As long as you don't overlever this thing, this is the kind of company that I'll own for a long, long time." And I just loved the way that he told that story, and it really stuck with me. And so we're here to prove it. We're really excited. We think next year is early steps of that, and we're having a lot of fun doing it. So I'll wrap up with that. I'd love to have any questions, share any more that we can about our company. Yes, sir.
Is there a metric again, kind of an average? And I know averages are averages, mean nothing. But what is your target for cycle time from getting into a controlled capital investment and that thing starting to generate cash flow?
That's a great question because I do think that's something. So I'll repeat the question because I got a big sign here that says repeat the question. What is the cycle time between getting into a controlled capital partnership and really seeing the cash flow from that? And it's a good question because I do think that's something that, say, the research analysts that covered us, we've got a lot of great research analysts that cover us, are maybe missing a little bit. So one thing we're focused on, we talked about efficiencies and how that's good with a big company and how smaller companies may not have those. But a big focus for us in this controlled capital strategy is how can we get the most efficiencies we can?
So we partnered with a team out in West Texas, who are based out of Midland, been in the business a long time, created a ton of value. We partnered with them in early 2023. Our first pad with them, our first wells didn't come online until May or June of 2024. Okay, so why is that? Well, one of our ideas was we want to keep a drilling rig running full-time because there are a lot of efficiencies gained by keeping one rig going versus up, down, up, down, find a new crew, find a new rig. And so our idea was we partnered with these guys. We wanted to build an inventory such that we could keep it going for at least a year before we picked it up to get some of those synergies.
And so that timeline, practically speaking, in that deal looked like from January of 2023, when we first signed on the dotted line with them, production came online in May. And so that was kind of a 15, I guess, 17-month timeline. I think that's something that a lot of the research guys have missed when they're looking at our company is they're not seeing anything. And so they're thinking, "Okay, this actually isn't the growth engine that these guys are saying, or at least we're not getting credit for it." Now that those guys are really ramping, we started, call it June, and that drilling rig has kept going. And so we really think we're going to see a big jump from the Controlled Capital Program in first quarter of next year. But that's what I would look at. There's another deal. It's actually slightly.
Can I just say 18 months' time? That plan?
If they come out with small deals, yes, because it took us, call it a year, to get together enough assets to want to build up, to keep that rig running full-time. We've got another partner that's focused on the northern Midland Basin. They actually came to us with a deal that had, depending on what you count, 10 or 11 net locations. And so that one, we partnered with them in July. We'll pick that rig up probably early next year. And so that cycle time from partnership to flowing is probably closer to 12 months. And so it really depends on what that first anchor deal is. We're not partnering with folks unless they have a deal that we can really underwrite to.
But I'd call it 12-18 months would be a pretty fair way to look at it.
And once you punch the hole and get production going, that can go on for years.
Can go on for years. And the idea is you're continuing to recycle those dollars over and over and over again. And so that's one of the ways to make money. Just do that over and over. And the big piece is the hardest thing, frankly, in this business is who can find a good deal. I mentioned it earlier, and you see a lot of these oil and gas guys love to tell this, "Oh, capital raising is just capital's down. Capital's down, 75%-80%, whatever it is." And they're trying to paint the picture that that means there's just this flowing opportunity set, and we're all going to mint money. Well, capital is down.
That's true. But I'll tell you what, if capital's down 80%, good deals are down 90%. It is really, really hard to find good deals. The low-hanging fruit has not all been picked, but a lot of it has over the past few years. So who can find the good deals? And that's really what we're looking for as a partner.
I know this is a forecast. And you hate this question, but if somebody claims they could stop the Ukraine war in 24 hours and Russian gas and oil comes back on the market full-blown, what does that do for global pricing?
On the gas side? Well, gas pricing can't get a whole heck of a lot worse, to be honest with you. So gas to us is, frankly, well, okay, let's talk about gas.
So gas, most gas, especially in West Texas, has a liquid stream as part of it. And so we actually, in West Texas for most of 2024, we've paid somebody to take our gas. So we produce that, but to get somebody to take it, we have to pay them to do it. Now, the good thing is we could strip out the liquid stream from that, and we can get paid for that. So on the whole, it's still a positive. But the gas piece for us, while we're like 50/50 roughly from a production standpoint, from a revenue standpoint, just actual gas is, I mean, 20%. It's a small piece of what we do. And so I would think that, well, I guess I'm not a geopolitics guy.
I don't know if people all of a sudden are going to trust Russia again and actually want to buy Russian gas. A lot of folks over the past two, three years have done a lot to get redundancies in their ability to get gas. And so whether that's LNG or what have you. So I don't, and I shouldn't make predictions. I don't know that it would have a huge impact because it just can't get a lot worse in the sense that you're at marginal prices for drilling new wells. And as we always say, the best cure for high oil prices, high oil prices, the best cure for low gas prices, low gas prices.
What do you see as the break-even oil price per barrel?
That's a great question because I think that's what should the price of oil be?
You're going to have short-term events here and there. But to me, the price of oil should be the price such that the producers make money to compensate for their risk. The service companies are making enough money to keep their equipment maintained. And the price at the pump is not so high that it has demand destruction. So what's the fair price where everyone's making enough money, but no one's getting ridiculously rich? And for oil, for me, I think that's probably something in the 70s. If you get down into the high 60s like we are right now, some of your service companies start to defer some maintenance. In the low 60s, you're going to have a lot of deferred maintenance because the operators are going to squeeze the service providers. When you get into the 80s, which look, I'm happy to have the 80s.
We're making a lot of money there, but we're probably making too much money in the sense that you're going to start to see an impact on demand. So to me, probably somewhere in the 70s. A lot of people, I'm certain, would disagree with me on that, but based on the risk profile that we see and what we're doing right now. Now, I will tell you, that number is going to continue to creep up because we are focused on drilling our best inventory right now. Most folks are focused on their best inventory, and so you are approaching. I don't want to call shale exhaustion, but you are approaching the period where the next well is going to be less productive than the well before it, and as you do that, that will increase the price because you're going to have that compression of returns.
But right now, somewhere in the mid-70s. Yes, sir.
There are risks. This is a unique model to a lot of the other oil and gas operators. But on the acquisition side, you're competing not only with the six or seven of those guys, you're also competing with Devon and PE. So how do you, how is your sourcing different? I mean, the acquisition side is kind of a commodity business, not a commodity business. Is that a correct perception, and if so, how do you differentiate yourself? Because everybody knows where every well is, every county, every acreage.
Yep. No, it's a great question. I mean, how we're, I said we're broadening the aperture of opportunity set, right? Well, I'm also broadening the competition. Right now, I'm competing with operators as well, and so how do we compete? How do we do that?
And that really is - that's where we focus on finding the right partners on the controlled capital side because good deals are hard to find. And it's the guys who can get creative and the guys who can hustle. But creativity has really become the name of the game because if everyone has the same treasure map, they're all looking at the same stuff, right? Anybody can look at the map and say, "Oh, there's no wells in this area. This is a good spot. I'm going to go drill there." Well, that person already got a million calls. There's a reason there's no wells. So who can get creative? What we're doing a lot of right now is finding a way to partner with operators, some of these larger operators that have a problem. So maybe think of us like a special team's force.
And so one thing, you hear a theme of consolidation. Okay, a lot of these operators, one operator buys the other, and they consolidate. Well, what we're doing now, what you're seeing the industry do is because we want to beat this capital discipline drum, making up numbers. But operator A is running five rigs. Operator B is running five rigs. They combine, and now they're running eight. Okay, that capital discipline is great. Well, now there may be some leases that are going to expire. There may be some obligations that they need to meet that they can't meet because now they only have eight rigs versus 10. So that's one of the ways that we've really come in. And I say we, I shouldn't take credit for that.
These deals are being made by our partners on the controlled capital side that are building the relationships with the operators and saying, "Hey, we can be your problem solver. Let's find a way for us to solve your problem where you can meet that obligation. We'll go out and we'll drill that well for you, and we'll come up with a fair split of that," and so who can do that? I mean, every single Pioneer, or I guess they're gone now, Diamondback, gets a thousand calls a week from somebody trying to farm into their acreage, do a deal with them. This is kind of neat because deals like that have gone back to being a relationship deal. You always used to joke that Midland deals, it was like Midland Country Club, right?
I always say, "If a Midland deal made it to Dallas, you knew you were getting skinned because it probably never left Midland, and it darn sure didn't get through Fort Worth. You knew you were getting skinned." Well, then private equity really came to be, right? And especially like this New York private equity money. So much money came in the space and came into Midland that that dynamic changed a little bit. It was, "Hey, these people are paying silly money. We'll sell to whoever it is." You've kind of gone back full circle in a way because now, say we cut a deal with Diamondback, okay? And they've got wells in the Wolfcamp A, right? Maybe the top zone here, Bone Springs and Wolfcamp A. But maybe they need to drill the Wolfcamp B and the Wolfcamp C because that's going to expire.
It'll be Pugh'd out, as we say. We'll go cut a deal to drill with them, but they're real focused on who's coming in. They're not just focused on the top dollar because there's some real risks. We're drilling underneath their existing wells. We're going to use some of their existing infrastructure, and so they're really focused on, "Hey, who do I know? Who do I trust?" And in a lot of ways, that's gone back to who has the relationships, who has the operational and execution track record. And that's been a big piece of that business development sourcing is, "Hey, we'll go do one-off wells over here. We'll go do one-off wells over there." People say, "Oh, well, that's not as efficient." That's probably right, but we can price that in, right?
We're just going to pay less if it's a one-off pad over here than if it's 10,000 acres altogether. We'll just price that in to get to the same target rate of return. But it really is, it's a relationship and then a long track record of execution, which is why we've been successful in that particular strategy. That won't work forever, right? When we started doing this, not necessarily the exact structure that we have, but this, "Hey, special ops force, we'll go solve problems for some of these big operators." There were three, four people doing it. Now there's probably seven or eight. And if we make money, that number is going to continue to increase. So we're always going to have to look for the next thing. But we think we've got a pretty good runway on that way.
The other side of that coin is, while there's more competition, there's also more interest in our assets, right? I think that's something that's kind of neat as you think about what's our company worth. Well, a company, maybe it's worth the sum of its discounted cash flows. That's one way to look at a company. But ultimately, it's kind of like baseball cards when I was growing up. I would say, "No, Dad, I've got this Ken Griffey Jr. rookie card. It's worth $150." And he said, "Well, is anybody going to give you $150 for it?" And I said, "No." And he said, "Well, it ain't worth $150. It's worth what somebody's going to pay you for it. And if there's a small market, there's not many.
You may be worth less," and in the non-op space, when we were a $800 million non-op company, there's only a few folks that could pay $800 million for a non-op company. Now, as we start to build out this controlled inventory, the buyer universe has dramatically expanded for what we're worth. Not that we're out looking to sell the business. We think we've got a cool mousetrap. We want to continue to grow. Our business is worth more because there are more potential buyers for what we've built as we build out this controlled capital program. There is kind of a neat sum of the parts benefit as well. That is a real long-winded way of answering that question. That was an interesting deal, to be honest with you.
We saw a ton of, let's call it, the northeast side of where they were pushing the play in the New Mexico side of the Delaware Basin. We started to see a lot of Franklin Mountain would go propose a well, and other people just weren't as sure about that area, so they would look to sell their interest in that well. We didn't have a lot of capital deployed there because it was still an emerging area. We're more focused on more proving areas, but the price they paid, they've got a lot of conviction about it, and just a data point on that, I think I read somewhere that they paid, what was it, $8 million in net location is what one of the research reports said.
We've got, I'll call it 44, 45 net locations that are operated that we fully control that we're in for less than $2 million a location. And so just on that alone, an 18-month period, we could have made a 4x on those locations, and we could sell them. It's up to us to sell. So deals like that are pretty darn interesting. I hope it works, right? For us, the more areas that work, the better, right? As people push the edge of the envelope, that opens up opportunities for us. We're not the guys doing the science wells, but we're real fast followers. And so deals like that are great. It's going to increase development there. I hope it works because that's just more opportunity set for us. All right.
I think I went way, way beyond my… I'm going to be short and let you guys get to lunch, so I apologize for that, but I sure do appreciate y'all taking the time to hear about Granite Ridge.