Black Stone Minerals, L.P. Reports First Quarter Results
Black Stone Minerals, L.P. (NYSE: BSM) reports financial results for Q1 2024, with production at 38.1 MBoe/d, net income of $63.9 million, and Adjusted EBITDA of $104.1 million. The company announced a distribution decrease of 21% for the quarter, with no outstanding debt and $89 million cash on hand. Black Stone focuses on capital discipline and strategic acquisitions to weather commodity price cycles.
Net income of $63.9 million for Q1 2024.
Adjusted EBITDA of $104.1 million for the quarter.
Distributable cash flow of $96.4 million for the first quarter.
No outstanding debt and $89 million cash on hand as of May 3, 2024.
Focus on disciplined capital management and strategic acquisitions.
Decrease in distribution of 21% for Q1 2024.
Decrease in average realized price per Boe.
Loss on commodity derivative instruments of $11.3 million for Q1 2024.
Adjusted EBITDA decrease from the previous quarter.
Lowered total production guidance due to expected pressure on natural gas prices.
Insights
Financial and Operational Highlights
-
Mineral and royalty production for the first quarter of 2024 equaled 38.1 MBoe/d, a decrease of
2% from the prior quarter; total production, including working-interest volumes, was 40.3 MBoe/d for the quarter. -
Net income for the first quarter was
$63.9 million $104.1 million -
Distributable cash flow was
$96.4 million -
Black Stone announced a distribution of
$0.37 521% from the common distribution paid for the fourth quarter of 2023. Distribution coverage for all units was 1.22x. -
No outstanding debt at the end of the first quarter; as of May 3, 2024, total debt remained at zero with approximately
$89 million
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chairman, Chief Executive Officer and President, commented, "We previously announced the Company’s plan to decrease the first quarter 2024 distribution. We remain focused on disciplined capital management and staying the course of targeted, grass-roots mineral acquisitions that are accretive to our mineral positions in strategic basins. Because of decisions made by the Company in the past four years, we are well-positioned to stay focused on long-term decision-making, which we view as one of our most significant strategic advantages we have relative to our peers. With a comprehensive strategy focused on capital discipline, maintaining a strong balance sheet, thoughtful hedging and commercial strategy centered on organic growth, we are able to weather commodity price cycles for longer periods of time and stay focused on decisions that are best for the Company in the long term."
Quarterly Financial and Operating Results
Production
Black Stone Minerals reported mineral and royalty volumes of 38.1 MBoe/d (
Working-interest production for the first quarter of 2024 was 2.2 MBoe/d, representing the same volume generated in the quarter ended December 31, 2023, and a decrease of
Total reported production averaged 40.3 MBoe/d (
Realized Prices, Revenues, and Net Income
The Company’s average realized price per Boe, excluding the effect of derivative settlements, was
Black Stone reported oil and gas revenue of
The Company reported a loss on commodity derivative instruments of
Lease bonus and other income was
The Company reported net income of
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the first quarter of 2024 was
Financial Position and Activities
As of March 31, 2024, Black Stone Minerals had
Subsequent to quarter-end, Black Stone's borrowing base under the credit facility was reaffirmed at
First Quarter 2024 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of March 31, 2024, Black Stone had 78 rigs operating across its acreage position, an increase relative to the 63 rigs on the Company's acreage as of December 31, 2023, and in line with the 78 rigs operating on the Company's acreage as of March 31, 2023. The higher rig count at the end of the first quarter compared to the fourth quarter was driven primarily by an increase in activity in the Midland/
Shelby Trough Development Update
A significant portion of Shelby Trough development in recent years has been performed by Aethon Energy (“Aethon”) under the two Joint Exploration Agreements (“JEAs”) between the Company and Aethon. The JEAs outline Aethon’s development obligations and other rights and obligations of each party related to the Company’s core mineral positions in
As announced on December 22, 2023, Black Stone received notice that Aethon was exercising the “time-out” provisions under these JEAs. When natural-gas prices fall below specified thresholds, Aethon may elect to temporarily suspend its drilling obligations for up to nine consecutive months and a maximum of 18 total months in any 48-month period. Aethon has not previously invoked the time-out provisions under the JEAs. We continue working closely with Aethon to finalize development plans going forward and assess the effect of the temporary suspension of drilling obligations, and we are analyzing the potential impacts to the Company on an ongoing basis.
In April 2024, Aethon began curtailing production volumes on a small number of producing wells. This temporary decrease is expected to amount to approximately 800 Boe/d. Additionally, Aethon has indicated that it intends to curtail these wells and delay the initial production of an additional 10 wells until the second half of the year, when natural gas prices are forecast to improve.
Austin Chalk Update
Black Stone has entered into agreements with multiple operators to drill wells in the areas of the Austin Chalk in
Acquisition Activity
Black Stone’s commercial strategy since 2021 has been focused on attracting capital and securing drilling commitments on minerals already owned by the Company. Management made the decision to expand this growth strategy by adding to the Company’s mineral portfolio through strategic, targeted efforts primarily in the Gulf Coast region. In the first quarter of 2024 Black Stone acquired additional non-producing mineral and royalty interests totaling
Guidance Update
Because the Company expects continued pressure on natural gas prices will result in production curtailments and delays in drilling and completion of new wells, Black Stone's total production guidance is being lowered to a range of 38.5 MBoe/d to 40.5 MBoe/d, from the previously disclosed range of 40.0 MBoe/d to 42.0 MBoe/d.
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2024 and 2025. The Company's hedge position as of May 3, 2024 is summarized in the following tables:
Oil Hedge Position |
|
|
|
|
Oil Swap |
Oil Swap Price |
|
|
MBbl |
$/Bbl |
|
2Q24 |
570 |
|
|
3Q24 |
570 |
|
|
4Q24 |
570 |
|
|
1Q25 |
555 |
|
|
2Q25 |
555 |
|
|
3Q25 |
555 |
|
|
4Q25 |
555 |
|
|
Natural Gas Hedge Position |
||
|
Gas Swap |
Gas Swap Price |
|
BBtu |
$/MMbtu |
2Q24 |
10,465 |
|
3Q24 |
10,580 |
|
4Q24 |
10,580 |
|
1Q25 |
7,200 |
|
2Q25 |
7,280 |
|
3Q25 |
11,040 |
|
4Q25 |
11,040 |
|
More detailed information about the Company's existing hedging program can be found in the Quarterly Report on Form 10-Q for the first quarter of 2024, which is expected to be filed on or around May 7, 2024.
Conference Call
Black Stone Minerals will host a conference call and webcast for investors and analysts to discuss its results for the first quarter of 2024 on Tuesday, May 7, 2024 at 9:00 a.m. Central Time. Black Stone recommends participants who do not anticipate asking questions to listen to the call via the live broadcast available at http://investor.blackstoneminerals.com. Analysts and investors who wish to ask questions should dial (800) 343-5419 for domestic participants and (203) 518-9731 for international participants, the conference ID for the call is BSMQ124. A recording of the conference call will be available on Black Stone's website.
About Black Stone Minerals, L.P.
Black Stone Minerals is one of the largest owners of oil and natural gas mineral interests in
Forward-Looking Statements
This news release includes forward-looking statements. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “will,” “may,” “should,” “expect,” “anticipate,” “plan,” “project,” “intend,” “estimate,” “believe,” “target,” “continue,” “potential,” the negative of such terms, or other comparable terminology often identify forward-looking statements. Except as required by law, Black Stone Minerals undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this news release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. All forward-looking statements are qualified in their entirety by these cautionary statements. These forward-looking statements involve risks and uncertainties, many of which are beyond the control of Black Stone Minerals, which may cause the Company’s actual results to differ materially from those implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:
- the Company’s ability to execute its business strategies;
- the volatility of realized oil and natural gas prices;
- the level of production on the Company’s properties;
- overall supply and demand for oil and natural gas, as well as regional supply and demand factors, delays, or interruptions of production;
- conservation measures and general concern about the environmental impact of the production and use of fossil fuels;
- the Company’s ability to replace its oil and natural gas reserves;
- general economic, business, or industry conditions including slowdowns, domestically and internationally, and volatility in the securities, capital or credit markets;
- cybersecurity incidents, including data security breaches or computer viruses;
- competition in the oil and natural gas industry;
- the availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel; and
- the level of drilling activity by the Company's operators, particularly in areas such as the Shelby Trough where the Company has concentrated acreage positions.
BLACK STONE MINERALS, L.P. AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(Unaudited) |
|||||||
(In thousands, except per unit amounts) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
|
|
|
|
||||
REVENUE |
|
|
|
||||
Oil and condensate sales |
$ |
71,224 |
|
|
$ |
60,909 |
|
Natural gas and natural gas liquids sales |
|
42,011 |
|
|
|
57,423 |
|
Lease bonus and other income |
|
3,548 |
|
|
|
3,975 |
|
Revenue from contracts with customers |
|
116,783 |
|
|
|
122,307 |
|
Gain (loss) on commodity derivative instruments |
|
(11,290 |
) |
|
|
52,271 |
|
TOTAL REVENUE |
|
105,493 |
|
|
|
174,578 |
|
OPERATING (INCOME) EXPENSE |
|
|
|
||||
Lease operating expense |
|
2,432 |
|
|
|
2,668 |
|
Production costs and ad valorem taxes |
|
13,038 |
|
|
|
12,667 |
|
Exploration expense |
|
3 |
|
|
|
4 |
|
Depreciation, depletion, and amortization |
|
11,639 |
|
|
|
11,147 |
|
General and administrative |
|
14,090 |
|
|
|
12,648 |
|
Accretion of asset retirement obligations |
|
317 |
|
|
|
245 |
|
TOTAL OPERATING EXPENSE |
|
41,519 |
|
|
|
39,379 |
|
INCOME (LOSS) FROM OPERATIONS |
|
63,974 |
|
|
|
135,199 |
|
OTHER INCOME (EXPENSE) |
|
|
|
||||
Interest and investment income |
|
670 |
|
|
|
157 |
|
Interest expense |
|
(629 |
) |
|
|
(814 |
) |
Other income (expense) |
|
(88 |
) |
|
|
(99 |
) |
TOTAL OTHER EXPENSE |
|
(47 |
) |
|
|
(756 |
) |
NET INCOME (LOSS) |
|
63,927 |
|
|
|
134,443 |
|
Distributions on Series B cumulative convertible preferred units |
|
(7,367 |
) |
|
|
(5,250 |
) |
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
56,560 |
|
|
$ |
129,193 |
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
||||
General partner interest |
$ |
— |
|
|
$ |
— |
|
Common units |
|
56,560 |
|
|
|
129,193 |
|
|
$ |
56,560 |
|
|
$ |
129,193 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
||||
Per common unit (basic) |
$ |
0.27 |
|
|
$ |
0.62 |
|
Per common unit (diluted) |
$ |
0.27 |
|
|
$ |
0.60 |
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
||||
Weighted average common units outstanding (basic) |
|
210,654 |
|
|
|
209,941 |
|
Weighted average common units outstanding (diluted) |
|
210,654 |
|
|
|
224,910 |
|
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
|
Three Months Ended March 31, |
|||||
|
|
2024 |
|
2023 |
|||
|
|
|
|
|
|||
|
|
(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
|||||
Production: |
|
|
|
|
|||
Oil and condensate (MBbls) |
|
|
923 |
|
|
|
793 |
Natural gas (MMcf)1 |
|
|
16,470 |
|
|
|
16,452 |
Equivalents (MBoe) |
|
|
3,668 |
|
|
|
3,535 |
Equivalents/day (MBoe) |
|
|
40.3 |
|
|
|
39.3 |
Realized prices, without derivatives: |
|
|
|
|
|||
Oil and condensate ($/Bbl) |
|
$ |
77.17 |
|
|
$ |
76.81 |
Natural gas ($/Mcf)1 |
|
|
2.55 |
|
|
|
3.49 |
Equivalents ($/Boe) |
|
$ |
30.87 |
|
|
$ |
33.47 |
Revenue: |
|
|
|
|
|||
Oil and condensate sales |
|
$ |
71,224 |
|
|
$ |
60,909 |
Natural gas and natural gas liquids sales1 |
|
|
42,011 |
|
|
|
57,423 |
Lease bonus and other income |
|
|
3,548 |
|
|
|
3,975 |
Revenue from contracts with customers |
|
|
116,783 |
|
|
|
122,307 |
Gain (loss) on commodity derivative instruments |
|
|
(11,290 |
) |
|
|
52,271 |
Total revenue |
|
$ |
105,493 |
|
|
$ |
174,578 |
Operating expenses: |
|
|
|
|
|||
Lease operating expense |
|
$ |
2,432 |
|
|
$ |
2,668 |
Production costs and ad valorem taxes |
|
|
13,038 |
|
|
|
12,667 |
Exploration expense |
|
|
3 |
|
|
|
4 |
Depreciation, depletion, and amortization |
|
|
11,639 |
|
|
|
11,147 |
General and administrative |
|
|
14,090 |
|
|
|
12,648 |
Other expense: |
|
|
|
|
|||
Interest expense |
|
|
629 |
|
|
|
814 |
Per Boe: |
|
|
|
|
|||
Lease operating expense (per working-interest Boe) |
|
$ |
12.22 |
|
|
$ |
12.13 |
Production costs and ad valorem taxes |
|
|
3.55 |
|
|
|
3.58 |
Depreciation, depletion, and amortization |
|
|
3.17 |
|
|
|
3.15 |
General and administrative |
|
|
3.84 |
|
|
|
3.58 |
1 As a mineral-and-royalty-interest owner, Black Stone Minerals is often provided insufficient and inconsistent data on natural gas liquid ("NGL") volumes by its operators. As a result, the Company is unable to reliably determine the total volumes of NGLs associated with the production of natural gas on its acreage. Accordingly, no NGL volumes are included in reported production; however, revenue attributable to NGLs is included in natural gas revenue and the calculation of realized prices for natural gas. |
|||||||
Non-GAAP Financial Measures
Adjusted EBITDA and Distributable cash flow are supplemental non-GAAP financial measures used by Black Stone's management and external users of the Company's financial statements such as investors, research analysts, and others, to assess the financial performance of its assets and ability to sustain distributions over the long term without regard to financing methods, capital structure, or historical cost basis.
The Company defines Adjusted EBITDA as net income (loss) before interest expense, income taxes, and depreciation, depletion, and amortization adjusted for impairment of oil and natural gas properties, if any, accretion of asset retirement obligations, unrealized gains and losses on commodity derivative instruments, non-cash equity-based compensation, and gains and losses on sales of assets, if any. Black Stone defines Distributable cash flow as Adjusted EBITDA plus or minus amounts for certain non-cash operating activities, cash interest expense, distributions to preferred unitholders, and restructuring charges, if any.
Adjusted EBITDA and Distributable cash flow should not be considered an alternative to, or more meaningful than, net income (loss), income (loss) from operations, cash flows from operating activities, or any other measure of financial performance presented in accordance with generally accepted accounting principles ("GAAP") in
Adjusted EBITDA and Distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income (loss), the most directly comparable
|
|
|
Three Months Ended March 31, |
||||||
|
|
|
2024 |
|
2023 |
||||
|
|
|
|
|
|
||||
|
|
(Unaudited) (In thousands, except per unit amounts) |
|||||||
Net income (loss) |
|
|
$ |
63,927 |
|
|
$ |
134,443 |
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
||||
Depreciation, depletion, and amortization |
|
|
|
11,639 |
|
|
|
11,147 |
|
Interest expense |
|
|
|
629 |
|
|
|
814 |
|
Income tax expense (benefit) |
|
|
|
135 |
|
|
|
147 |
|
Accretion of asset retirement obligations |
|
|
|
317 |
|
|
|
245 |
|
Equity–based compensation |
|
|
|
2,383 |
|
|
|
2,118 |
|
Unrealized (gain) loss on commodity derivative instruments |
|
|
|
25,087 |
|
|
|
(38,986 |
) |
Adjusted EBITDA |
|
|
|
104,117 |
|
|
|
109,928 |
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
||||
Change in deferred revenue |
|
|
|
(1 |
) |
|
|
(5 |
) |
Cash interest expense |
|
|
|
(361 |
) |
|
|
(559 |
) |
Preferred unit distributions |
|
|
|
(7,367 |
) |
|
|
(5,250 |
) |
Distributable cash flow |
|
|
$ |
96,388 |
|
|
$ |
104,114 |
|
|
|
|
|
|
|
||||
Total units outstanding1 |
|
|
|
210,703 |
|
|
|
209,967 |
|
Distributable cash flow per unit |
|
|
|
0.457 |
|
|
|
0.496 |
|
1 The distribution attributable to the three months ended March 31, 2024 is estimated using 210,702,620 common units as of May 3, 2024; the exact amount of the distribution attributable to the three months ended March 31, 2024 will be determined based on units outstanding as of the record date of May 10, 2024. Distributions attributable to the three months ended March 31, 2023 were calculated using 209,967,353 common units as of the record date of May 13, 2023. |
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Black Stone Minerals, L.P. Contact
Evan Kiefer
Senior Vice President, Chief Financial Officer, and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: Black Stone Minerals, L.P.
FAQ
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