Black Stone Minerals, L.P. Announces $340 Million Acquisition of Mineral and Royalty Interests and Private Placement of Cumulative Convertible Preferred Units
Mr. Carter continued, “And with this acquisition we have also
established a new relationship with a high-quality capital provider in
Approximately 1.1 million gross (140,000 net) mineral acres, 380,000
gross acres of non-participating royalty interests (“NPRI”), and
600,000 gross acres of overriding royalty interests (“ORRI”)
collectively spread over 20 states with significant concentrations in
Texas, Oklahoma, and North Dakota.
Increases the Partnership’s exposure in the greater
Permian Basinthrough the addition of approximately 8,300 net royalty acres1 in the Midland Basinand approximately 7,200 net royalty acres in the Delaware Basin, as well as increases Black Stone’s exposure to the Bakken/Three Forks play by over 10,000 net royalty acres.
Assets to be acquired also include positions in the
Powder River Basinin Wyoming, the SCOOP play in Oklahoma, and the Granite Wash play in Texas.
Estimated average daily production for
November 2017of 2.6 MBoe/d, excluding NGLs (56% oil/44% natural gas).
Annualized current run-rate cash flows of approximately
$34 millionper year.
The transaction is expected to close on
Including the acquisition of Noble’s assets, Black Stone has closed or
entered into agreements on 135 transactions in 2017 totaling
Series B Cumulative Convertible Preferred Units
- Distributions of 7.0% per annum for six years, and thereafter a distribution equal to the greater of 7.0% or the yield on the 10-year Treasury plus 5.5%.
- The Series B Preferred Units are convertible into common units of BSM on a one-to-one basis at the purchaser’s option after two years. Black Stone can convert the Series B Preferred Units after two years, subject to certain conditions including minimum price and volume thresholds for Black Stone’s common units.
- The Series B Preferred Units may be redeemed by the Partnership after six years at 105% of the issuance price, and at 100% of the issuance price each two-year anniversary thereafter. The purchaser cannot force redemption by Black Stone.
The transaction is expected to close on
Pivotal Farmout Transaction
Mr. Carter remarked, “The Shelby Trough is a part of our portfolio where
we have seen operators become increasingly active over the last year. As
we’ve previously discussed, Black Stone has assembled an
industry-leading mineral position in this part of the
Haynesville/Bossier play. We’ve also been able to attract
well-capitalized, high-quality operators to our acreage and have
provided incentives to allow for its active development. Following our
farmout earlier this year with
Transaction highlights include:
Farmout covers majority of Black Stone Minerals’ Haynesville and
Bossier shale acreage under active development agreements in the
Shelby Trough in
Angelinaand San Augustinecounties, Texas.
Pivotal will receive the Partnership's working interest in the
remaining 20% of Black Stone's working interest in the XTO
Energy-operated wells (10% working interest on an 8/8ths basis) not
covered by the previously announced farmout with
Canaan Resource Partners, as well as 100% of Black Stone's working interest (ranging from approximately 12.5% to 25% on an 8/8ths basis) in wells operated by its other major operator in the area.
- Once Pivotal achieves a preferred return, the majority of the farmed-out working interest and associated net revenue interests revert to Black Stone with minimal future capital obligations.
- Pivotal is obligated to fund Black Stone's working interest in over 80 wells across several development areas, subject to certain conditions. After fulfilling its initial obligation, Pivotal will have the option to continue funding development of the areas, also subject to certain conditions for up to a total term of eight years.
Impact to Multi-Year Outlook
Management expects the announced transactions to have positive impacts on a number of key performance measures in the coming years, including increased production, reduced capital obligations, and higher distributable cash flow per unit. The Partnership expects to provide an updated multi-year outlook in the first quarter of 2018.
Black Stone has purposefully pivoted from direct working interests to carried interests, as well as expanded its mineral and royalty base significantly. Even with the reduction in projected working interest production volumes as a result of the Pivotal farmout, Black Stone expects total production volumes will increase compared to previous guidance as a result of expanded mineral ownership and activity in the Haynesville/Bossier, as well as the announced Noble acquisition and the incorporation of recent industry operating and permitting activity across the asset base. Higher margin royalty production volumes are expected to make up a larger percentage of that improved production forecast.
Net Working Interest Capital Expenditures
Through the Pivotal and the
Cash Flow Available for Distribution and Distribution Coverage
The higher production levels and reduced working interest capital expenditures are expected to benefit cash distributions available for both common and subordinated unitholders. Black Stone anticipates the transactions announced today and the improved outlook for its base business will allow for subordinated units to convert into common units at a conversion ratio greater than previously provided in public disclosure. Even after taking into account the increase in conversion ratio, the Partnership expects to generate higher levels of distributable cash flow per unit, which would allow for increased common unit distributions compared to previous guidance and/or increased levels of distribution coverage.
As discussed below under “Forward-Looking Statements,” there are a number of factors that could cause the Partnership’s actual results to differ materially from this outlook.
BofA Merrill Lynch and
The Partnership will host a conference call to discuss these recent
|Call Type||Phone Number||Conference ID|
Presentation materials, as well as access to the live webcast of the conference call, can be accessed through the Investors section of the Partnership’s website at www.blackstoneminerals.com.
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 Partnership
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 Partnership’s ability to complete the transactions described in this press release;
- the Partnership’s ability to execute its business strategies;
- the volatility of realized oil and natural gas prices;
- the level of production on the Partnership’s properties;
- regional supply and demand factors, delays, or interruptions of production;
- the Partnership’s ability to replace its oil and natural gas reserves; and
- the Partnership’s ability to identify, complete, and integrate acquisitions.
For an important discussion of risks and uncertainties that may impact
our operations, see our annual and quarterly filings with the
1 A net royalty acre (“NRA”) is the economic equivalent of one surface acre leased at a 1/8th royalty
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Black Stone Minerals, L.P.
Brent Collins, 713-445-3200
Vice President, Investor Relations