Black Stone Minerals, L.P. Reports Second Quarter Results
- Mineral and royalty production decreased by 9% in the second quarter compared to the previous quarter.
- Net income for the second quarter was $78.4 million.
- Adjusted EBITDA for the quarter totaled $109.2 million.
- The company announced a distribution of $0.475 per unit, representing a 13% increase from the previous year.
- None.
Financial and Operational Highlights
-
Mineral and royalty production for the second quarter of 2023 equaled 33.6 MBoe/d, a decrease of
9% over the prior quarter; total production, including working-interest volumes, was 36.2 MBoe/d for the quarter. -
Net income for the second quarter was
. Adjusted EBITDA for the quarter totaled$78.4 million .$109.2 million -
Distributable cash flow was
for the second quarter and the fifth consecutive quarter above$103.6 million .$100 million -
Black Stone announced a distribution of
per unit with respect to the second quarter of 2023, representing an increase of$0.47 513% over the common distribution paid for the second quarter of 2022. Distribution coverage for all units was 1.04x. -
Total outstanding debt at the end of the second quarter was zero; as of July 28, 2023, total debt remained at zero with
of cash.$81.4 million
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We continue to execute on our plans for the year and are starting to see increased volumes in the Shelby Trough as Aethon continues to ramp up production consistent with our development agreements. While prices pulled back in the second quarter, we continue working with operators to drive additional drilling activity on our acreage and maintain a strong balance sheet to create long-term value to our unitholders through various commodity cycles.”
Quarterly Financial and Operating Results
Production
Black Stone Minerals reported mineral and royalty volume of 33.6 MBoe/d (
Working-interest production for the second quarter of 2023 was 2.6 MBoe/d, representing an increase of
Total reported production averaged 36.2 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 gain 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 second quarter of 2023 was
Financial Position and Activities
As of June 30, 2023, Black Stone Minerals had
Effective April 27, 2023, Black Stone's borrowing base was reaffirmed at
During the second quarter of 2023, the Company made no repurchases of units under the Board-approved
Second Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of June 30, 2023, Black Stone had 73 rigs operating across its acreage position, a decrease relative to the 78 rigs on the Company's acreage as of March 31, 2023 and the 81 rigs operating on the Company's acreage as of June 30, 2022. The decrease in rigs at the end of the second quarter was driven primarily by a reduction in the Wolfcamp and was consistent with overall
Shelby Trough Development Update
Aethon continues to perform with drilling and completing wells according to our development agreements. Aethon has five rigs currently on Black Stone acreage in the Shelby Trough. Aethon has successfully turned 16 wells to sales and has commenced operations on 18 additional wells under the development agreement covering
Austin Chalk Update
Black Stone has entered into agreements with multiple operators to drill wells in the areas of the Austin Chalk in
Update to 2023 Guidance
The Company expects full year 2023 production volumes to be within the original guidance range of 37 - 39 MBoe/d. Management anticipates that production volumes will ramp up throughout the remainder of the year, driven primarily by the increases in drilling activity in the Shelby Trough and Austin Chalk plays as discussed above.
|
Original Guidance |
|
Revised Guidance |
Mineral and royalty production (MBoe/d) |
35 - 37 |
|
35 - 37 |
Working-interest production (MBoe/d) |
2 - 3 |
|
2 - 3 |
Total production (MBoe/d) |
37 - 39 |
|
37 - 39 |
Percentage natural gas |
|
|
|
Percentage royalty interest |
|
|
|
|
|
|
|
Lease bonus and other income ($MM) |
|
|
|
|
|
|
|
Lease operating expense ($MM) |
|
|
|
Production costs and ad valorem taxes (as % of total pre-derivative O&G revenue) |
|
|
|
|
|
|
|
G&A - cash ($MM) |
|
|
|
G&A - non-cash ($MM) |
|
|
|
G&A - TOTAL ($MM) |
|
|
|
|
|
|
|
DD&A ($/Boe) |
|
|
|
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2023 and 2024. The Company's hedge position as of July 28, 2023 is summarized in the following tables:
Oil Hedge Position |
|
|
|
|
Oil Swap |
Oil Swap Price |
|
|
MBbl |
$/Bbl |
|
3Q23 |
540 |
|
|
4Q23 |
540 |
|
|
1Q24 |
450 |
|
|
2Q24 |
450 |
|
|
3Q24 |
450 |
|
|
4Q24 |
450 |
|
Natural Gas Hedge Position |
|||
|
Gas Swap |
|
Gas Swap Price |
|
BBtu |
|
$/MMbtu |
3Q23 |
8,280 |
|
|
4Q23 |
8,280 |
|
|
1Q24 |
10,010 |
|
|
2Q24 |
10,010 |
|
|
3Q24 |
10,120 |
|
|
4Q24 |
10,120 |
|
|
More detailed information about the Company's existing hedging program can be found in the Quarterly Report on Form 10-Q for the second quarter of 2023, which is expected to be filed on or around August 1, 2023.
Conference Call
Black Stone Minerals will host a conference call and webcast for investors and analysts to discuss its results for the second quarter of 2023 on Tuesday, August 1, 2023 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) 245-3047 for domestic participants and (203) 518-9765 for international participants, the conference ID for the call is BSMQ223. 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, technological advances, 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;
- cybersecurity incidents, including data security breaches or computer viruses;
- competition in the oil and natural gas industry; and
- the availability, high cost, or shortages of rigs, equipment, raw materials, supplies, or personnel to develop and operate our properties; 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 June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
||||||||
REVENUE |
|
|
|
|
|
|
|
||||||||
Oil and condensate sales |
$ |
61,551 |
|
|
$ |
94,296 |
|
|
$ |
122,460 |
|
|
$ |
170,127 |
|
Natural gas and natural gas liquids sales |
|
41,619 |
|
|
|
111,181 |
|
|
|
99,042 |
|
|
|
186,935 |
|
Lease bonus and other income |
|
2,527 |
|
|
|
2,244 |
|
|
|
6,502 |
|
|
|
7,103 |
|
Revenue from contracts with customers |
|
105,697 |
|
|
|
207,721 |
|
|
|
228,004 |
|
|
|
364,165 |
|
Gain (loss) on commodity derivative instruments |
|
11,303 |
|
|
|
(27,349 |
) |
|
|
63,574 |
|
|
|
(147,369 |
) |
TOTAL REVENUE |
|
117,000 |
|
|
|
180,372 |
|
|
|
291,578 |
|
|
|
216,796 |
|
OPERATING (INCOME) EXPENSE |
|
|
|
|
|
|
|
||||||||
Lease operating expense |
|
2,866 |
|
|
|
3,199 |
|
|
|
5,534 |
|
|
|
6,360 |
|
Production costs and ad valorem taxes |
|
12,844 |
|
|
|
19,504 |
|
|
|
25,511 |
|
|
|
33,453 |
|
Exploration expense |
|
4 |
|
|
|
2 |
|
|
|
8 |
|
|
|
182 |
|
Depreciation, depletion, and amortization |
|
10,421 |
|
|
|
11,893 |
|
|
|
21,568 |
|
|
|
22,810 |
|
General and administrative |
|
11,854 |
|
|
|
12,519 |
|
|
|
24,502 |
|
|
|
26,282 |
|
Accretion of asset retirement obligations |
|
250 |
|
|
|
205 |
|
|
|
495 |
|
|
|
407 |
|
(Gain) loss on sale of assets, net |
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
TOTAL OPERATING EXPENSE |
|
38,239 |
|
|
|
47,305 |
|
|
|
77,618 |
|
|
|
89,477 |
|
INCOME (LOSS) FROM OPERATIONS |
|
78,761 |
|
|
|
133,067 |
|
|
|
213,960 |
|
|
|
127,319 |
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
||||||||
Interest and investment income |
|
373 |
|
|
|
2 |
|
|
|
530 |
|
|
|
2 |
|
Interest expense |
|
(645 |
) |
|
|
(1,362 |
) |
|
|
(1,459 |
) |
|
|
(2,571 |
) |
Other income (expense) |
|
(97 |
) |
|
|
81 |
|
|
|
(196 |
) |
|
|
36 |
|
TOTAL OTHER EXPENSE |
|
(369 |
) |
|
|
(1,279 |
) |
|
|
(1,125 |
) |
|
|
(2,533 |
) |
NET INCOME (LOSS) |
|
78,392 |
|
|
|
131,788 |
|
|
|
212,835 |
|
|
|
124,786 |
|
Distributions on Series B cumulative convertible preferred units |
|
(5,250 |
) |
|
|
(5,250 |
) |
|
|
(10,500 |
) |
|
|
(10,500 |
) |
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
73,142 |
|
|
$ |
126,538 |
|
|
$ |
202,335 |
|
|
$ |
114,286 |
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
|
|
|
|
||||||||
General partner interest |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common units |
$ |
73,142 |
|
|
$ |
126,538 |
|
|
$ |
202,335 |
|
|
$ |
114,286 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
|
|
|
|
||||||||
Per common unit (basic) |
$ |
0.35 |
|
|
$ |
0.60 |
|
|
$ |
0.96 |
|
|
$ |
0.55 |
|
Per common unit (diluted) |
$ |
0.35 |
|
|
$ |
0.59 |
|
|
$ |
0.95 |
|
|
$ |
0.55 |
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
|
|
|
|
||||||||
Weighted average common units outstanding (basic) |
|
209,967 |
|
|
|
209,397 |
|
|
|
209,954 |
|
|
|
209,360 |
|
Weighted average common units outstanding (diluted) |
|
209,967 |
|
|
|
224,366 |
|
|
|
224,923 |
|
|
|
209,360 |
|
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
|
|
(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
||||||||||||
Production: |
|
|
|
|
|
|
|
|
||||||
Oil and condensate (MBbls) |
|
|
846 |
|
|
899 |
|
|
|
1,639 |
|
|
1,730 |
|
Natural gas (MMcf)1 |
|
|
14,670 |
|
|
12,895 |
|
|
|
31,121 |
|
|
25,654 |
|
Equivalents (MBoe) |
|
|
3,291 |
|
|
3,048 |
|
|
|
6,826 |
|
|
6,006 |
|
Equivalents/day (MBoe) |
|
|
36.2 |
|
|
33.5 |
|
|
|
37.7 |
|
|
33.2 |
|
Realized prices, without derivatives: |
|
|
|
|
|
|
|
|
||||||
Oil and condensate ($/Bbl) |
|
$ |
72.76 |
|
$ |
104.89 |
|
|
$ |
74.72 |
|
$ |
98.34 |
|
Natural gas ($/Mcf)1 |
|
|
2.84 |
|
|
8.62 |
|
|
|
3.18 |
|
|
7.29 |
|
Equivalents ($/Boe) |
|
$ |
31.35 |
|
$ |
67.41 |
|
|
$ |
32.45 |
|
$ |
59.45 |
|
Revenue: |
|
|
|
|
|
|
|
|
||||||
Oil and condensate sales |
|
$ |
61,551 |
|
$ |
94,296 |
|
|
$ |
122,460 |
|
$ |
170,127 |
|
Natural gas and natural gas liquids sales1 |
|
|
41,619 |
|
|
111,181 |
|
|
|
99,042 |
|
|
186,935 |
|
Lease bonus and other income |
|
|
2,527 |
|
|
2,244 |
|
|
|
6,502 |
|
|
7,103 |
|
Revenue from contracts with customers |
|
|
105,697 |
|
|
207,721 |
|
|
|
228,004 |
|
|
364,165 |
|
Gain (loss) on commodity derivative instruments |
|
|
11,303 |
|
|
(27,349 |
) |
|
|
63,574 |
|
|
(147,369 |
) |
Total revenue |
|
$ |
117,000 |
|
$ |
180,372 |
|
|
$ |
291,578 |
|
$ |
216,796 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||
Lease operating expense |
|
$ |
2,866 |
|
$ |
3,199 |
|
|
$ |
5,534 |
|
$ |
6,360 |
|
Production costs and ad valorem taxes |
|
|
12,844 |
|
|
19,504 |
|
|
|
25,511 |
|
|
33,453 |
|
Exploration expense |
|
|
4 |
|
|
2 |
|
|
|
8 |
|
|
182 |
|
Depreciation, depletion, and amortization |
|
|
10,421 |
|
|
11,893 |
|
|
|
21,568 |
|
|
22,810 |
|
General and administrative |
|
|
11,854 |
|
|
12,519 |
|
|
|
24,502 |
|
|
26,282 |
|
Other expense: |
|
|
|
|
|
|
|
|
||||||
Interest expense |
|
|
645 |
|
|
1,362 |
|
|
|
1,459 |
|
|
2,571 |
|
Per Boe: |
|
|
|
|
|
|
|
|
||||||
Lease operating expense (per working-interest Boe) |
|
$ |
12.46 |
|
$ |
11.03 |
|
|
$ |
12.30 |
|
$ |
10.89 |
|
Production costs and ad valorem taxes |
|
|
3.90 |
|
|
6.40 |
|
|
|
3.74 |
|
|
5.57 |
|
Depreciation, depletion, and amortization |
|
|
3.17 |
|
|
3.90 |
|
|
|
3.16 |
|
|
3.80 |
|
General and administrative |
|
|
3.60 |
|
|
4.11 |
|
|
|
3.59 |
|
|
4.38 |
|
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 June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
(Unaudited) (In thousands, except per unit amounts) |
||||||||||||||
Net income (loss) |
|
$ |
78,392 |
|
|
$ |
131,788 |
|
|
$ |
212,835 |
|
|
$ |
124,786 |
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
Depreciation, depletion, and amortization |
|
|
10,421 |
|
|
|
11,893 |
|
|
|
21,568 |
|
|
|
22,810 |
|
Interest expense |
|
|
645 |
|
|
|
1,362 |
|
|
|
1,459 |
|
|
|
2,571 |
|
Income tax expense (benefit) |
|
|
139 |
|
|
|
(14 |
) |
|
|
286 |
|
|
|
89 |
|
Accretion of asset retirement obligations |
|
|
250 |
|
|
|
205 |
|
|
|
495 |
|
|
|
407 |
|
Equity–based compensation |
|
|
2,517 |
|
|
|
2,724 |
|
|
|
4,635 |
|
|
|
7,275 |
|
Unrealized (gain) loss on commodity derivative instruments |
|
|
16,881 |
|
|
|
(35,103 |
) |
|
|
(22,105 |
) |
|
|
53,673 |
|
(Gain) loss on sale of assets, net |
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
Adjusted EBITDA |
|
|
109,245 |
|
|
|
112,838 |
|
|
|
219,173 |
|
|
|
211,594 |
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
|
|
|
||||||||
Change in deferred revenue |
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
(15 |
) |
Cash interest expense |
|
|
(387 |
) |
|
|
(1,015 |
) |
|
|
(946 |
) |
|
|
(1,877 |
) |
Preferred unit distributions |
|
|
(5,250 |
) |
|
|
(5,250 |
) |
|
|
(10,500 |
) |
|
|
(10,500 |
) |
Distributable cash flow |
|
$ |
103,606 |
|
|
$ |
106,567 |
|
|
$ |
207,720 |
|
|
$ |
199,202 |
|
|
|
|
|
|
|
|
|
|
||||||||
Total units outstanding1 |
|
|
209,979 |
|
|
|
209,402 |
|
|
|
|
|
||||
Distributable cash flow per unit |
|
$ |
0.493 |
|
|
$ |
0.509 |
|
|
|
|
|
1 |
The distribution attributable to the three months ended June 30, 2023 is estimated using 209,979,196 common units as of July 28, 2023; the exact amount of the distribution attributable to the three months ended June 30, 2023 will be determined based on units outstanding as of the record date of August 11, 2023. Distributions attributable to the three months ended June 30, 2022 were calculated using 209,401,737 common units as of the record date of August 12, 2022. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230731912888/en/
Evan Kiefer
Interim Chief Financial Officer and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: Black Stone Minerals, L.P.
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