Former Speaker of the House Paul Ryan, chairman of the Executive Network Partnering Corporation, and Luke Brandenberg, CEO of Granite Ridge, joined Yahoo Finance Live from New York Stock Exchange. They announced the launch of Granite Ridge Resources and discussed the oil and gas industry, the midterm elections, and Trump as the GOP nominee for the 2024 presidential election.
Executive Network Partnering, which is a SPAC managed by U.S. House Speaker Paul Ryan, disclosed that its shareholders voted to combine Grey Rock Investment Partners to form a newly-named company, Granite Ridge Resources. Redemptions totaling $393.4 million wiped out 95% of the SPAC’s $414 million cash in trust.
During the initial announcement in May 2022, the deal was estimated to be valued at $1.3 billion. The terms included Grey Rock contributing oil and gas assets currently held in fund I, II, and III portfolios to Granite Ridge in exchange for equity.
Grey Rock will not receive cash proceeds as part of the transaction and will roll all equity into the new company. There was no minimum cash condition to close. However, Granite Ridge intends to modify its annual dividend proportionate to the SPAC’s share redemptions.
Granite Ridge and Grey Rock have come to the conclusion that during the term of the services agreement, Granite Ridge and additional oil and gas-focused funds managed by Grey Rock will have the opportunity to jointly participate in investment opportunities for upstream oil and gas assets– 75% of any future transactions will be allocated to Granite Ridge, and 25% of future transactions will be allocated to gas and oil funds managed by Grey Rock.
AKIKO FUJITA: Moving now to the New York Stock Exchange. Oil and gas investment vehicle, Granite Ridge, making its market debut today via a SPAC. The company, backed by former House Speaker Paul Ryan, rang the opening bell this morning. And joining us to discuss, we’ve got Paul Ryan, of course, former speaker of the House and chairman of the Executive Network Partnering Corporation SPAC. We’ve also got Luke Brandenberg, who’s Granite Ridge CEO. And it’s great to have both of you on today.
Speaker, I want to start with you first because it’s been a rough patch coming here. We were just alluding to some of the big exodus that you saw in terms of investors when they saw that you were partnering up with Granite. Talk to me about how you’re thinking about this as you mark this milestone moving forward.
PAUL RYAN: Yeah, well, it’s a pretty tough market for any company trying to go public. So we were very careful in who we chose as partners because we wanted to get it done and stick the landing like we did today. So that’s why we’re very excited to be partnering with these Granite Ridge guys. We wanted to find a business that had very good balance sheet.
These guys are unlevered. They got good free cash flow. And it’s in a very, very attractive sector of oil and gas. They’re not operating oil and gas platform company. So we wanted to find somebody that we knew should go public and would be able to make it to the distance, so that we’re really excited to partner with these guys.
AKIKO FUJITA: Luke, when you think about the space; oil and gas certainly been very lucrative this year. We have seen some of these big oil majors hit key records in earnings. As we look ahead to the winter and looking at the headwinds, whether it’s within the US but globally on demand as well as supply, how do you think about the investment environment in the space right now?
LUKE BRANDENBERG: I think we’re starting to see just a lot more positive investor sentiment than we had for quite some time. I think that the storyline about oil and gas is really changing. And you’re seeing that transition to how important energy security is, energy reliability both on the national and even more so now on the international scale.
And so it’s been great. I’d say investor inbounds we’re quite quiet for some time. But we’re starting to see that pickup and folks that are really more interested in what we’re doing. And so it’s certainly something that’s great to see on the day that you’re ringing the bell on the exchange.
AKIKO FUJITA: And Luke, to what extent do you see that accelerating going into the winter where we’re really expecting to see a crunch of supply?
LUKE BRANDENBERG: Well, I think that it’s a great question, Akiko. And I really think that this is a defining moment. The fact of the matter is a really cold winter will create immense pressure on the global energy supply chain. And I think a lot of investors are looking at that. They want to prepare for it. And I hope that the takeaway is that this is something that we need to focus on for the long term and that we’re able to have some resilient investors in the space that are willing to stay in and truly understand what we can do in the big picture.
AKIKO FUJITA: Speaker, now that we have you on, we do have to talk about the midterms or what, just two weeks out exactly from where things stand. It felt like a month ago; we were talking about this momentum for Democrats on some of the social issues, including abortion. The latest polls show a big swing in favor of Republicans and the economy. What do you think shifted in the last month?
PAUL RYAN: The economy. I think yours– look, everybody knows we’re in or headed to an inflation, to a recession. The last headline, inflation numbers– core inflation numbers were really high. So I think people got more concerned about their pocketbooks, about jobs, about what the economy is going to look like than they were about social issues. And I think you’re right. I think the Democrats peaked probably in August, maybe early September. But now, I think people are much, much more concerned about the direction of the economy.
Democrats are not– they don’t poll nearly as well on the economy. I think they tried to wreck it basically with Build Back Better. I’m not a big fan of the Inflation Reduction Act. And they try to do much worse tax policy. They didn’t. So I think what voters want to do is send a check on Washington. They don’t want one party rule by the left.
And that’s why I really feel pretty confident in saying that we’re going to win the House. And I think we got a really good chance of winning the Senate. And I think in large measure because voters want to check on all this leftward lurch. And they want some calm economic policies. And so that’s why I think we’re peaking at the right time. That’s why I think the momentum is with us right now. And so yeah, two weeks out, I feel very good, much better than I felt, say, back in August.
AKIKO FUJITA: Obviously, we watch the midterms always to see a gauge of where things could go two years from now in the presidential election. And you made some headlines recently where you said that you believe that former President Trump would be unelectable come 2024. And yet, we’re looking at some very competitive races in places like Arizona, places like Pennsylvania, where there are Trump-backed candidates who are polling pretty well. So what do you make of that disconnect there? I mean, why do you think that’s been the case if you don’t believe that his–
PAUL RYAN: They are not him. And look, we lost the House, the Senate, and the White House in the span of two years with Trump. Never before has my party lost this much that fast. So my point is come 2024, we want to win. We want to beat Biden or the Democrats, whoever they’re running. And we know it’s just a factual statement polling-wise. We are worse off with Trump as our nominee than with somebody else.
So I just think it’s going to be palpable in 2024 that because we want to win and beat the Democrats, we know as a party we’re better off with somebody else to be our nominee to more guarantee a victory because we know we lose with Trump. It’s the suburban voter. They’re the big difference-maker. I can tell you in Wisconsin, 64,000 Wisconsinites voted for all the Republicans on the ballot and not Donald Trump.
That gets translated across the country in the swing states. It’s a huge difference-maker. So I just think from just winning, we are going to want to win come 2024. And that means we need to elect somebody to be our nominee that’s going to better deliver a victory. And I think it’s going to be pretty well known at that time.
AKIKO FUJITA: Luke, when you think about what’s been playing out in the energy space, there’s been a lot made of some tensions between the Biden administration as well as the oil and gas companies in terms of the lack of investment or at least as the White House sees it. If, in fact, these predictions hold, we’re talking about a Republican majority in the House, potentially in the Senate. How do you see that shifting, the strategy around energy moving forward?
LUKE BRANDENBERG: I think the goal and what we really hope to accomplish is just a rational conversation about energy. What you’re seeing and particularly midterm season, you just have folks that are taking one extreme side one or the other. Either hydrocarbons need to go away forever, or hydrocarbons need to stay forever. The fact of the matter is– and Speaker Ryan has said this before– we needed all of the above strategy. And to get there, we just need a rational conversation. I’d say that’s the most frustrating part for folks that are in the industry.
You’ve got hundreds of thousands, millions of people that are coming to work every day, working hard trying to create oil and gas to create energy, to provide energy security and reliability. And then you go out. And the president of your country is condemning you for doing that. And it’s not fun. I really hope that we can create a more just practical conversation where we can have a real dialogue about what is the best way 10 years, 20 years, 30 years to power this country and to power the world and the growth that we anticipate seeing.
PAUL RYAN: Yeah, I would just say, Akiko, look, American oil and gas producers are the cleanest producers. They’re the most efficient producers. This is really good for American jobs. It’s good for bringing inflation down. And it’s very good for foreign policy to be able to give our allies access to our oil and gas. And by the way, gas is a great bridge fuel to a lower carbon future.
So I think it’s an attractive sector. I think it’s very good for America. And I do believe that my friends in Congress, when they take the majority, which I think they will understand this. And they’re going to bring some more common sense conversation to the whole energy discussion.
AKIKO FUJITA: Let’s talk about one more thing that could potentially flare up again depending on the outcome, we should say, of the midterms– the debt ceiling. This is another fight that could potentially emerge as a flashpoint come 2023. You’re a veteran of that. And I wonder how you’re thinking about the Republicans using this as leverage. Do you think they should be? Or is it time to abolish the debt ceiling altogether?
PAUL RYAN: I’ve been through so many debts. I can’t even count how many debt ceiling fights I’ve been through. America’s going to keep its full faith and credit. We’re not going to renege on the debt. And, yet, always, Democrats have done this for Republicans. Republicans have done this to Democrats. It’s a moment for a fiscal. It’s a fiscal impasse moment where you should get a down payment on good fiscal policy.
I was on the Bowles-Simpson commission, which Democrats held hostage in order to get a commission during the debt limit debate. So we’ve had spending caps on debt limit debates. We’ve had so many fiscal policies being attached to the debt limit because you don’t want to just keep rubber-stamping more borrowing. You want to try and get some kind of policy in place.
To get the curve in going in the right direction, try and bend the curve on debt; we will have a debt crisis in this country in the not-too-distant future if we don’t get our fiscal house in order. And so I think it’s a very important point. Having said all of that, I am very confident that the US dollar is secure and that our bonds will be paid, and that the full faith and credit the United States government is going to be intact in this divided government that we’re likely to have in the future.
AKIKO FUJITA: Paul Ryan, former speaker of the House and chairman of the Executive Network Partnering Corporation SPAC, and Luke Brandenberg, Granite Ridge CEO. Thanks to both of you today, really appreciate the time.
PAUL RYAN: Thank you.
LUKE BRANDENBERG: Thanks, Akiko.