Black Stone Minerals, L.P. Reports First Quarter 2017 Results and Declares Cash Distribution; East Texas Acquisitions and Development Agreements Enhance Growth Outlook
Highlights
- Production for the first quarter averaged 35.6 MBoe/d, a 19% increase over the prior quarter.
-
Reported oil and gas revenues of
$88.2 million and lease bonus and other income of$13.7 million for the quarter. -
Generated record net income of
$61.6 million , record Adjusted EBITDA (as defined below) of$77.9 million , and record cash available for distribution of$68.5 million for the quarter. -
Realized a
$50.0 million increase in the revolving credit facility borrowing base to$550.0 million , resulting in liquidity in excess of$175 million based on outstanding borrowings at the end of the quarter. -
Achieved a 1.5x coverage ratio on all classes of units on the declared
distribution attributable to the first quarter; common unit
distribution scheduled to grow 9% to
$0.3125 for the second quarter of 2017. -
Subsequent to quarter-end, entered into an agreement to acquire
approximately 138,000 gross mineral acres (approximately 49,000 net)
in
East Texas for 2.0 million common units issued directly to the sellers and$2.2 million of cash; concurrently entered into agreements with a major oil and gas company that provide incentives to accelerate development of the acquired and legacyBlack Stone minerals position in the Shelby Trough.
Management Commentary
Mr. Carter continued, "We have also taken a number of positive steps
this year to enhance our liquidity and balance sheet strength. We have
funded a substantial portion of our acquisitions year-to-date with
equity, dramatically lowered our future capital requirements through the
Quarterly Financial and Operating Results
Production
Realized Prices, Revenues, and Net Income
The Partnership’s average realized price per Boe, excluding the effect
of derivative settlements, was
Gain on commodity derivative instruments was
Lease bonus and other income was
The Partnership reported net income of
Financial Position
As of
Acquisitions
During the quarter, the Partnership's acquisition activity was focused
in the
Working Interest Participation
Distributions
The Board of Directors of the general partner has approved cash
distributions attributable to the first quarter of 2017 of
East Texas Acquisitions and Development Update
At the beginning of 2017, Black Stone began an active effort to acquire
acreage in the Shelby Trough area of
The Partnership has also entered into agreements to acquire various
mineral and royalty interests throughout
Concurrent with the acquisition activity above,
On the recent
Mr. Carter added, "The acquisitions we've made combined with the attendant development agreements are another important step to delivering on our commitment to increase royalty volumes as a percentage of our overall production profile. Together, they have the potential to drive growth in production and cash flow from our mineral and royalty assets for years to come. Importantly, we believe that at full development pace our Shelby Trough assets will be able to equal the net working interest cash flows that were farmed out earlier in the year. We are committed to right-sizing the working interest portion of our business in a way that maximizes the value of our world-class mineral and royalty portfolio."
Conference Call
Upcoming Investor Relations Event
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 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 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.
Information for Non-U.S. Investors
This press release is intended to be a qualified notice under Treasury
Regulation Section 1.1446-4(b). Although a portion of Black Stone
Minerals’ income may not be effectively connected income and may be
subject to alternative withholding procedures, brokers and nominees
should treat 100% of Black Stone Minerals’ distributions to non-U.S.
investors as being attributable to income that is effectively connected
with a
BLACK STONE MINERALS, L.P. | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||
(Unaudited) | ||||||||||
(In thousands, except per unit amounts) | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2017 | 2016 | |||||||||
REVENUE | ||||||||||
Oil and condensate sales | $ | 40,474 | $ | 27,248 | ||||||
Natural gas and natural gas liquids sales | 47,701 | 25,112 | ||||||||
Gain (loss) on commodity derivative instruments | 22,725 | 10,626 | ||||||||
Lease bonus and other income | 13,682 | 1,395 | ||||||||
TOTAL REVENUE | 124,582 | 64,381 | ||||||||
OPERATING (INCOME) EXPENSE | ||||||||||
Lease operating expense | 4,189 | 4,889 | ||||||||
Production costs and ad valorem taxes | 11,902 | 7,062 | ||||||||
Exploration expense | 562 | 8 | ||||||||
Depreciation, depletion, and amortization | 26,379 | 21,721 | ||||||||
Impairment of oil and natural gas properties | — | 6,096 | ||||||||
General and administrative | 17,212 | 17,401 | ||||||||
Accretion of asset retirement obligations | 247 | 274 | ||||||||
(Gain) loss on sale of assets, net | (924 | ) | (4,680 | ) | ||||||
TOTAL OPERATING EXPENSE | 59,567 | 52,771 | ||||||||
INCOME (LOSS) FROM OPERATIONS | 65,015 | 11,610 | ||||||||
OTHER INCOME (EXPENSE) | ||||||||||
Interest and investment income | 6 | 153 | ||||||||
Interest expense | (3,507 | ) | (1,048 | ) | ||||||
Other income (expense) | 69 | 34 | ||||||||
TOTAL OTHER EXPENSE | (3,432 | ) | (861 | ) | ||||||
NET INCOME (LOSS) | 61,583 | 10,749 | ||||||||
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (9 | ) | (2 | ) | ||||||
DISTRIBUTIONS ON REDEEMABLE PREFERRED UNITS | (1,114 | ) | (1,804 | ) | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON AND SUBORDINATED UNITS | $ | 60,460 | $ | 8,943 | ||||||
ALLOCATION OF NET INCOME (LOSS): | ||||||||||
General partner interest | $ | — | $ | — | ||||||
Common units |
35,517 |
8,320 | ||||||||
Subordinated units |
24,943 |
623 | ||||||||
$ | 60,460 | $ | 8,943 | |||||||
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON AND SUBORDINATED UNIT: | ||||||||||
Per common unit (basic) | $ |
0.37 |
$ | 0.09 | ||||||
Weighted average common units outstanding (basic) | 96,901 | 96,484 | ||||||||
Per subordinated unit (basic) | $ | 0.26 | $ | 0.01 | ||||||
Weighted average subordinated units outstanding (basic) | 95,149 | 94,995 | ||||||||
Per common unit (diluted) | $ |
0.37 |
$ | 0.09 | ||||||
Weighted average common units outstanding (diluted) |
97,590 |
96,752 | ||||||||
Per subordinated unit (diluted) | $ | 0.26 | $ | 0.01 | ||||||
Weighted average subordinated units outstanding (diluted) |
95,149 |
94,995 | ||||||||
DISTRIBUTIONS DECLARED AND PAID: | ||||||||||
Per common unit | $ | 0.2875 | $ | 0.2625 | ||||||
Per subordinated unit | $ | 0.1838 | $ | 0.1838 | ||||||
The following table shows the Partnership’s production, revenues, realized prices, and expenses for the periods presented.
Three Months Ended March 31, | |||||||||
2017 | 2016 | ||||||||
(Unaudited)
(Dollars in thousands, except for realized prices and per Boe data) |
|||||||||
Production: | |||||||||
Oil and condensate (MBbls) |
861 | 886 | |||||||
Natural gas (MMcf)1 | 14,060 | 11,250 | |||||||
Equivalents (MBoe) | 3,204 | 2,761 | |||||||
Revenue: | |||||||||
Oil and condensate sales | $ | 40,474 | $ | 27,248 | |||||
Natural gas and natural gas liquids sales | 47,701 | 25,112 | |||||||
Gain on commodity derivative instruments | 22,725 | 10,626 | |||||||
Lease bonus and other income | 13,682 | 1,395 | |||||||
Total revenue | $ | 124,582 | $ | 64,381 | |||||
Realized prices: | |||||||||
Oil and condensate ($/Bbl) | $ | 47.01 | $ | 30.75 | |||||
Natural gas ($/Mcf)1 | 3.39 | 2.23 | |||||||
Equivalents ($/Boe) | $ | 27.52 | $ | 18.96 | |||||
Operating expenses: | |||||||||
Lease operating expense | $ | 4,189 | $ | 4,889 | |||||
Production costs and ad valorem taxes | 11,902 | 7,062 | |||||||
Exploration expense | 562 | 8 | |||||||
Depreciation, depletion, and amortization | 26,379 | 21,721 | |||||||
Impairment of oil and natural gas properties | — | 6,096 | |||||||
General and administrative | 17,212 | 17,401 | |||||||
Per Boe: | |||||||||
Lease operating expense (per working interest Boe) | $ |
3.19 |
$ | 5.37 | |||||
Production costs and ad valorem taxes | 3.71 | 2.56 | |||||||
Depreciation, depletion, and amortization | 8.23 | 7.87 | |||||||
General and administrative | 5.37 | 6.30 | |||||||
______________________ |
||||
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 Partnership 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 our 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
EBITDA, Adjusted EBITDA, and cash available for distribution are non-GAAP supplemental financial measures used by Black Stone Minerals’ management and external users of the Partnership’s financial statements such as investors, research analysts, and others, to assess the financial performance of its assets and its ability to sustain distributions over the long term without regard to financing methods, capital structure, or historical cost basis.
EBITDA, Adjusted EBITDA, and cash available for distribution 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 GAAP as measures of the Partnership’s financial performance. EBITDA, Adjusted EBITDA, and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income (loss), the most directly comparable GAAP financial measure. The Partnership’s computation of EBITDA, Adjusted EBITDA, and cash available for distribution may differ from computations of similarly titled measures of other companies.
The following table presents a reconciliation of EBITDA, Adjusted EBITDA, and cash available for distribution to net income, the most directly comparable GAAP financial measure, for the periods indicated.
Three Months Ended March 31, | ||||||||||
2017 | 2016 | |||||||||
(Unaudited) | ||||||||||
(In thousands) | ||||||||||
Net income (loss) | $ | 61,583 | $ | 10,749 | ||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||
Add: | ||||||||||
Depreciation, depletion and amortization | 26,379 | 21,721 | ||||||||
Interest expense | 3,507 | 1,048 | ||||||||
EBITDA | 91,469 | 33,518 | ||||||||
Add: | ||||||||||
Impairment of oil and natural gas properties | — | 6,096 | ||||||||
Accretion of asset retirement obligations | 247 | 274 | ||||||||
Equity-based compensation | 4,661 | 5,900 | ||||||||
Unrealized loss on commodity derivative instruments | — | 9,955 | ||||||||
Less: | ||||||||||
Unrealized gain on commodity derivative instruments | (18,447 | ) | — | |||||||
Adjusted EBITDA | 77,930 | 55,743 | ||||||||
Adjustments to reconcile to cash generated from operations: | ||||||||||
Less: | ||||||||||
Change in deferred revenue | (325 | ) | (203 | ) | ||||||
Cash interest expense | (3,292 | ) | (851 | ) | ||||||
(Gain) loss on sales of assets, net |
(924 | ) | (4,680 | ) | ||||||
Estimated replacement capital expenditures1 | (3,750 | ) | — | |||||||
Cash generated from operations | 69,639 | 50,009 | ||||||||
Less: | ||||||||||
Cash paid to noncontrolling interests | (25 | ) | (33 | ) | ||||||
Redeemable preferred unit distributions | (1,114 | ) | (1,804 | ) | ||||||
Cash generated from operations available for distribution on common and subordinated units and reinvestment in our business | $ | 68,500 | $ | 48,172 | ||||||
____________________ |
1 On August 3, 2016, the Board established a replacement capital expenditure estimate of $15.0 million for the period of April 1, 2016 to March 31, 2017. There was no established estimate of replacement capital expenditures prior to this period. |
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Source:
Black Stone Minerals, L.P.
Brent Collins, 713-445-3200
Vice
President, Investor Relations
investorrelations@blackstoneminerals.com