Black Stone Minerals, L.P. Reports Third Quarter Results and Updates Full-Year 2021 Guidance
Black Stone Minerals, L.P. (NYSE: BSM) reported strong financial performance for Q3 2021, with mineral and royalty production of 33.0 MBoe/d, up 2% from Q2 2021. The company achieved net income of $16.2 million and Adjusted EBITDA of $76.5 million. Distributable cash flow decreased 3% to $70.2 million. A cash distribution of $0.25 per unit was announced, representing a 25% increase over prior expectations. Notably, total debt was reduced to $86.0 million as of October 29, 2021, showcasing a solid balance sheet and a debt to EBITDA ratio of just 0.3x.
- Production increased to 33.0 MBoe/d, a 2% rise quarter-over-quarter.
- Net income improved to $16.2 million from $15.4 million in the prior quarter.
- Adjusted EBITDA stood at $76.5 million, outperforming Q3 2020's $65.5 million.
- Cash distribution raised to $0.25 per unit, up 25% from previous expectations.
- Total debt reduced to $86.0 million, maintaining a low debt to EBITDA ratio of 0.3x.
- Distributable cash flow decreased by 3% from Q2 2021.
- Working interest production dropped by 11% compared to the previous quarter.
Financial and Operational Highlights
-
Mineral and royalty production for the third quarter of 2021 equaled 33.0 MBoe/d, an increase of
2% over the prior quarter; total production, including working interest volumes, was 38.0 MBoe/d for the quarter. -
Net income and Adjusted EBITDA for the quarter totaled
$16.2 million $76.5 million -
Distributable cash flow was
$70.2 million 3% relative to the second quarter of 2021. -
Announced a distribution of
$0.25 -
Total debt at the end of the third quarter was
$99.0 million October 29, 2021 , total debt had been reduced to$86.0 million
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “Black Stone continues to benefit from the strong recovery in commodity prices and from incremental producer activity across the acreage position. We are seeing positive early results from operators in the East Texas Haynesville/Bossier and
Quarterly Financial and Operating Results
Production
Working interest production for the third quarter of 2021 was 5.1 MBoe/d, representing a decrease of
Total reported production averaged 38.0 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
There was no impairment for the quarters ended
The Company reported net income of
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the third quarter of 2021 was
Financial Position and Activities
As of
Subsequent to quarter-end, Black Stone's borrowing base was reaffirmed at
During the third quarter of 2021, the Company made no repurchases of units under the Board-approved
Third Quarter 2021 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of
Shelby Trough Development Update
Aethon has successfully turned to sales the initial two program wells and has commenced operations on four 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 2021 Guidance
The Company now expects total production for 2021 to be at or near the high end of its previously revised guidance range of 34.5 to 37.0 MBoe/d. The Company expects lease operating expenses and production costs as a percentage of oil and gas revenues to be at the low end of the revised guidance ranges of
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2021, 2022, and 2023. The Company's hedge position as of
Oil Hedge Position |
|
|
||||
|
Oil Swap |
Oil Swap Price |
||||
|
MBbl |
$/Bbl |
||||
3Q21 |
220 |
|
||||
4Q21 |
660 |
|
||||
1Q22 |
480 |
|
||||
2Q22 |
480 |
|
||||
3Q22 |
480 |
|
||||
4Q22 |
480 |
|
||||
Natural Gas Hedge Position |
||||||
|
Gas Swap |
Gas Swap Price |
||||
|
BBtu |
$/MMbtu |
||||
4Q21 |
10,120 |
|
||||
1Q22 |
7,920 |
|
||||
2Q22 |
8,000 |
|
||||
3Q22 |
8,080 |
|
||||
4Q22 |
8,080 |
|
||||
1Q23 |
1,800 |
|
||||
2Q23 |
1,820 |
|
||||
3Q23 |
1,840 |
|
||||
4Q23 |
1,840 |
|
||||
More detailed information about the Company's existing hedging program can be found in the Quarterly Report on Form 10-Q for the third quarter of 2021, which is expected to be filed on or around
Conference Call
About
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,
- the Company’s ability to execute its business strategies;
- the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other parties in response to the pandemic;
- 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;
- the Company’s ability to identify, complete, and integrate acquisitions;
- 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 level of drilling activity by the Company's operators, particularly in areas such as the Shelby Trough where the Company has concentrated acreage positions.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per unit amounts) |
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||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||||||
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|
|
|
|
|
|
|
||||||||||||
REVENUE |
|
|
|
|
|
|
|
||||||||||||
Oil and condensate sales |
$ |
61,916 |
|
|
|
$ |
34,335 |
|
|
|
$ |
160,028 |
|
|
|
$ |
111,845 |
|
|
Natural gas and natural gas liquids sales |
73,167 |
|
|
|
29,107 |
|
|
|
172,537 |
|
|
|
96,060 |
|
|
||||
Lease bonus and other income |
2,305 |
|
|
|
1,386 |
|
|
|
12,195 |
|
|
|
7,669 |
|
|
||||
Revenue from contracts with customers |
137,388 |
|
|
|
64,828 |
|
|
|
344,760 |
|
|
|
215,574 |
|
|
||||
Gain (loss) on commodity derivative instruments |
(77,561 |
) |
|
|
(21,086 |
) |
|
|
(164,923 |
) |
|
|
49,751 |
|
|
||||
TOTAL REVENUE |
59,827 |
|
|
|
43,742 |
|
|
|
179,837 |
|
|
|
265,325 |
|
|
||||
OPERATING (INCOME) EXPENSE |
|
|
|
|
|
|
|
||||||||||||
Lease operating expense |
3,303 |
|
|
|
3,160 |
|
|
|
9,804 |
|
|
|
10,280 |
|
|
||||
Production costs and ad valorem taxes |
14,331 |
|
|
|
9,905 |
|
|
|
35,469 |
|
|
|
31,836 |
|
|
||||
Exploration expense |
5 |
|
|
|
4 |
|
|
|
1,080 |
|
|
|
28 |
|
|
||||
Depreciation, depletion, and amortization |
14,925 |
|
|
|
19,823 |
|
|
|
46,353 |
|
|
|
62,198 |
|
|
||||
Impairment of oil and natural gas properties |
— |
|
|
|
— |
|
|
|
— |
|
|
|
51,031 |
|
|
||||
General and administrative |
12,320 |
|
|
|
9,381 |
|
|
|
37,359 |
|
|
|
32,738 |
|
|
||||
Accretion of asset retirement obligations |
273 |
|
|
|
286 |
|
|
|
863 |
|
|
|
836 |
|
|
||||
(Gain) loss on sale of assets, net |
(2,850 |
) |
|
|
(24,045 |
) |
|
|
(2,850 |
) |
|
|
(24,045 |
) |
|
||||
TOTAL OPERATING EXPENSE |
42,307 |
|
|
|
18,514 |
|
|
|
128,078 |
|
|
|
164,902 |
|
|
||||
INCOME (LOSS) FROM OPERATIONS |
17,520 |
|
|
|
25,228 |
|
|
|
51,759 |
|
|
|
100,423 |
|
|
||||
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
||||||||||||
Interest and investment income |
— |
|
|
|
1 |
|
|
|
— |
|
|
|
35 |
|
|
||||
Interest expense |
(1,359 |
) |
|
|
(1,664 |
) |
|
|
(4,197 |
) |
|
|
(9,055 |
) |
|
||||
Other income (expense) |
17 |
|
|
|
168 |
|
|
|
231 |
|
|
|
71 |
|
|
||||
TOTAL OTHER EXPENSE |
(1,342 |
) |
|
|
(1,495 |
) |
|
|
(3,966 |
) |
|
|
(8,949 |
) |
|
||||
NET INCOME (LOSS) |
16,178 |
|
|
|
23,733 |
|
|
|
47,793 |
|
|
|
91,474 |
|
|
||||
Distributions on Series B cumulative convertible preferred units |
(5,250 |
) |
|
|
(5,250 |
) |
|
|
(15,750 |
) |
|
|
(15,750 |
) |
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
10,928 |
|
|
|
$ |
18,483 |
|
|
|
$ |
32,043 |
|
|
|
$ |
75,724 |
|
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
|
|
|
|
||||||||||||
General partner interest |
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
Common units |
10,928 |
|
|
|
18,483 |
|
|
|
32,043 |
|
|
|
75,724 |
|
|
||||
|
$ |
10,928 |
|
|
|
$ |
18,483 |
|
|
|
$ |
32,043 |
|
|
|
$ |
75,724 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
|
|
|
|
||||||||||||
Per common unit (basic) |
$ |
0.05 |
|
|
|
$ |
0.09 |
|
|
|
$ |
0.15 |
|
|
|
$ |
0.37 |
|
|
Per common unit (diluted) |
$ |
0.05 |
|
|
|
$ |
0.09 |
|
|
|
$ |
0.15 |
|
|
|
$ |
0.37 |
|
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
|
|
|
|
||||||||||||
Weighted average common units outstanding (basic) |
208,653 |
|
|
|
206,732 |
|
|
|
208,018 |
|
|
|
206,690 |
|
|
||||
Weighted average common units outstanding (diluted) |
208,653 |
|
|
|
206,732 |
|
|
|
208,018 |
|
|
|
206,690 |
|
|
||||
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
||||||||
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|
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(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
|||||||||||||||||
Production: |
|
|
|
|
|
|
|
|
|||||||||||
Oil and condensate (MBbls) |
|
922 |
|
|
|
953 |
|
|
|
2,610 |
|
|
|
2,980 |
|
||||
Natural gas (MMcf)1 |
|
15,467 |
|
|
|
15,220 |
|
|
|
46,053 |
|
|
|
51,922 |
|
||||
Equivalents (MBoe) |
|
3,500 |
|
|
|
3,490 |
|
|
|
10,286 |
|
|
|
11,634 |
|
||||
Equivalents/day (MBoe) |
|
38.0 |
|
|
|
37.9 |
|
|
|
37.7 |
|
|
|
42.5 |
|
||||
Realized prices, without derivatives: |
|
|
|
|
|
|
|
|
|||||||||||
Oil and condensate ($/Bbl) |
|
$ |
67.15 |
|
|
|
$ |
36.03 |
|
|
|
$ |
61.31 |
|
|
|
$ |
37.53 |
|
Natural gas ($/Mcf)1 |
|
4.73 |
|
|
|
1.91 |
|
|
|
3.75 |
|
|
|
1.85 |
|
||||
Equivalents ($/Boe) |
|
$ |
38.60 |
|
|
|
$ |
18.18 |
|
|
|
$ |
32.33 |
|
|
|
$ |
17.87 |
|
Revenue: |
|
|
|
|
|
|
|
|
|||||||||||
Oil and condensate sales |
|
$ |
61,916 |
|
|
|
$ |
34,335 |
|
|
|
$ |
160,028 |
|
|
|
$ |
111,845 |
|
Natural gas and natural gas liquids sales1 |
|
73,167 |
|
|
|
29,107 |
|
|
|
172,537 |
|
|
|
96,060 |
|
||||
Lease bonus and other income |
|
2,305 |
|
|
|
1,386 |
|
|
|
12,195 |
|
|
|
7,669 |
|
||||
Revenue from contracts with customers |
|
137,388 |
|
|
|
64,828 |
|
|
|
344,760 |
|
|
|
215,574 |
|
||||
Gain (loss) on commodity derivative instruments |
|
(77,561 |
) |
|
|
(21,086 |
) |
|
|
(164,923 |
) |
|
|
49,751 |
|
||||
Total revenue |
|
$ |
59,827 |
|
|
|
$ |
43,742 |
|
|
|
$ |
179,837 |
|
|
|
$ |
265,325 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|||||||||||
Lease operating expense |
|
$ |
3,303 |
|
|
|
$ |
3,160 |
|
|
|
$ |
9,804 |
|
|
|
$ |
10,280 |
|
Production costs and ad valorem taxes |
|
14,331 |
|
|
|
9,905 |
|
|
|
35,469 |
|
|
|
31,836 |
|
||||
Exploration expense |
|
5 |
|
|
|
4 |
|
|
|
1,080 |
|
|
|
28 |
|
||||
Depreciation, depletion, and amortization |
|
14,925 |
|
|
|
19,823 |
|
|
|
46,353 |
|
|
|
62,198 |
|
||||
Impairment of oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
51,031 |
|
||||
General and administrative |
|
12,320 |
|
|
|
9,381 |
|
|
|
37,359 |
|
|
|
32,738 |
|
||||
Other expense: |
|
|
|
|
|
|
|
|
|||||||||||
Interest expense |
|
1,359 |
|
|
|
1,664 |
|
|
|
4,197 |
|
|
|
9,055 |
|
||||
Per Boe: |
|
|
|
|
|
|
|
|
|||||||||||
Lease operating expense (per working interest Boe) |
|
$ |
7.10 |
|
|
|
$ |
4.99 |
|
|
|
$ |
6.53 |
|
|
|
$ |
4.38 |
|
Production costs and ad valorem taxes |
|
4.09 |
|
|
|
2.84 |
|
|
|
3.45 |
|
|
|
2.74 |
|
||||
Depreciation, depletion, and amortization |
|
4.26 |
|
|
|
5.68 |
|
|
|
4.51 |
|
|
|
5.35 |
|
||||
General and administrative |
|
3.52 |
|
|
|
2.69 |
|
|
|
3.63 |
|
|
|
2.81 |
|
||||
1 |
As a mineral-and-royalty-interest owner, |
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 our 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, 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. Black Stone defines Distributable cash flow as Adjusted EBITDA plus or minus amounts for certain non-cash operating activities, cash interest expense, and restructuring charges.
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 |
|
Nine Months Ended |
||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(Unaudited) (In thousands, except per unit amounts) |
||||||||||||||||||
Net income (loss) |
|
$ |
16,178 |
|
|
|
$ |
23,733 |
|
|
|
$ |
47,793 |
|
|
|
$ |
91,474 |
|
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||||||
Depreciation, depletion, and amortization |
|
14,925 |
|
|
|
19,823 |
|
|
|
46,353 |
|
|
|
62,198 |
|
|
||||
Impairment of oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
51,031 |
|
|
||||
Interest expense |
|
1,359 |
|
|
|
1,664 |
|
|
|
4,197 |
|
|
|
9,055 |
|
|
||||
Income tax expense (benefit) |
|
20 |
|
|
|
(155 |
) |
|
|
(131 |
) |
|
|
7 |
|
|
||||
Accretion of asset retirement obligations |
|
273 |
|
|
|
286 |
|
|
|
863 |
|
|
|
836 |
|
|
||||
Equity–based compensation |
|
3,172 |
|
|
|
1,825 |
|
|
|
9,705 |
|
|
|
1,405 |
|
|
||||
Unrealized (gain) loss on commodity derivative instruments |
|
43,421 |
|
|
|
42,374 |
|
|
|
108,915 |
|
|
|
17,043 |
|
|
||||
(Gain) loss on sale of assets, net |
|
(2,850 |
) |
|
|
(24,045 |
) |
|
|
(2,850 |
) |
|
|
(24,045 |
) |
|
||||
Adjusted EBITDA |
|
76,498 |
|
|
|
65,505 |
|
|
|
214,845 |
|
|
|
209,004 |
|
|
||||
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
|
|
|
||||||||||||
Change in deferred revenue |
|
(2 |
) |
|
|
(6 |
) |
|
|
(16 |
) |
|
|
(315 |
) |
|
||||
Cash interest expense |
|
(1,011 |
) |
|
|
(1,401 |
) |
|
|
(2,965 |
) |
|
|
(8,273 |
) |
|
||||
Preferred unit distributions |
|
(5,250 |
) |
|
|
(5,250 |
) |
|
|
(15,750 |
) |
|
|
(15,750 |
) |
|
||||
Restructuring charges1 |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,815 |
|
|
||||
Distributable cash flow |
|
$ |
70,235 |
|
|
|
$ |
58,848 |
|
|
|
$ |
196,114 |
|
|
|
$ |
189,481 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total units outstanding2 |
|
208,666 |
|
|
|
206,749 |
|
|
|
|
|
|
||||||||
Distributable cash flow per unit |
|
$ |
0.337 |
|
|
|
$ |
0.285 |
|
|
|
|
|
|
||||||
1 |
Restructuring charges include non-recurring costs associated with broad workforce reduction in the first quarter of 2020. |
2 |
The distribution attributable to the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211101005872/en/
President and Chief Financial Officer
Vice President, Finance and Investor Relations
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source:
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