Black Stone Minerals, L.P. Reports First Quarter Results and Announces Multiple New Development Agreements
Financial and Operational Highlights
- Mineral and royalty production for the first quarter of 2021 equaled 31.1 MBoe/d, a decrease of 3% over the prior quarter; total production, including working interest volumes, was 36.8 MBoe/d for the quarter.
-
Net income and Adjusted EBITDA for the quarter totaled
$16.2 million and$60.0 million , respectively. -
Distributable cash flow was
$53.8 million for the first quarter, resulting in distribution coverage for all units of 1.5x based on the announced cash distribution of$0.175 per unit. -
Total debt at the end of the first quarter was
$111.0 million ; total debt to trailing twelve-month Adjusted EBITDA was 0.4x at quarter-end. As ofApril 30, 2021 , total debt had been reduced to$96.0 million . -
Effective
April 30, 2021 , Black Stone’s borrowing base under its revolving credit facility was reaffirmed at$400 million . As part of the redetermination process, Black Stone and its lenders agreed to extend the maturity date of the facility toNovember 1, 2024 .
Strategic Highlights
Subsequent to the end of the first quarter of 2021, Black Stone:
-
Entered into an agreement with affiliates of Aethon Energy (“Aethon”) to develop certain of the Company’s undeveloped Shelby Trough Haynesville and Bossier acreage in
San Augustine County, Texas . -
Entered into an agreement with a consortium of operators through which the operators will drill up to three test wells for the Austin Chalk formation on Black Stone acreage in
East Texas using high-intensity, multi-stage completions; the initial test well under the agreement was spud inApril 2021 . -
Entered into an agreement with a large, private independent operator to develop additional Black Stone acreage within the Austin Chalk formation in
East Texas . -
Agreed to acquire mineral and royalty properties in the northern
Midland Basin for total consideration of$20.7 million in cash and BSM common units.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We are encouraged by the rebound in commodity prices and increases in producer activity across our acreage, and by our successful efforts to attract operator capital to our large, contiguous, high-net positions in
Quarterly Financial and Operating Results
Production
Working interest production for the first quarter of 2021 was 5.8 MBoe/d, and represents a decrease of 17% from the levels generated in the quarter ended
Total reported production averaged 36.8 MBoe/d (84% mineral and royalty, 75% natural gas) for the first quarter of 2021. Total production was 39.0 MBoe/d and 46.9 MBoe/d for the quarters ended
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 first quarter of 2021 was
Financial Position and Activities
As of
Subsequent to quarter-end, Black Stone's borrowing base was reaffirmed at
During the first quarter of 2021, the Company made no repurchases of units under the Board-approved
First 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 drilled the initial two wells under the development agreement covering
In
In
Austin Chalk Update
In
In
In February of 2021, Black Stone entered into an agreement with a large, publicly traded independent operator by which the operator will undertake a program to drill, test, and complete wells in the Austin Chalk formation on certain of the Company’s acreage in
Acquisition Update
In
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2021 and 2022. The Company's hedge position as of
Oil Hedge Position |
||||
|
Oil Swap |
Oil Swap Price |
||
|
MBbl |
$/Bbl |
||
1Q21 |
220 |
|
||
2Q21 |
660 |
|
||
3Q21 |
660 |
|
||
4Q21 |
660 |
|
||
1Q22 |
150 |
|
||
2Q22 |
150 |
|
||
3Q22 |
150 |
|
||
4Q22 |
150 |
|
Natural Gas Hedge Position |
||||
|
Gas Swap |
Gas Swap Price |
||
|
BBtu |
$/MMbtu |
||
2Q21 |
10,010 |
|
||
3Q21 |
10,120 |
|
||
4Q21 |
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 first 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;
- 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) |
||||||||
|
Three Months Ended |
|||||||
|
2021 |
2020 |
||||||
|
|
|
||||||
REVENUE |
|
|
||||||
Oil and condensate sales |
$ |
44,176 |
|
$ |
52,093 |
|
||
Natural gas and natural gas liquids sales |
42,889 |
|
36,642 |
|
||||
Lease bonus and other income |
2,385 |
|
4,308 |
|
||||
Revenue from contracts with customers |
89,450 |
|
93,043 |
|
||||
Gain (loss) on commodity derivative instruments |
(27,882 |
) |
90,011 |
|
||||
TOTAL REVENUE |
61,568 |
|
183,054 |
|
||||
OPERATING (INCOME) EXPENSE |
|
|
||||||
Lease operating expense |
2,664 |
|
3,827 |
|
||||
Production costs and ad valorem taxes |
11,842 |
|
12,376 |
|
||||
Exploration expense |
1,073 |
|
1 |
|
||||
Depreciation, depletion, and amortization |
15,632 |
|
23,182 |
|
||||
Impairment of oil and natural gas properties |
— |
|
51,031 |
|
||||
General and administrative |
12,852 |
|
11,856 |
|
||||
Accretion of asset retirement obligations |
292 |
|
272 |
|
||||
TOTAL OPERATING EXPENSE |
44,355 |
|
102,545 |
|
||||
INCOME (LOSS) FROM OPERATIONS |
17,213 |
|
80,509 |
|
||||
OTHER INCOME (EXPENSE) |
|
|
||||||
Interest and investment income |
— |
|
31 |
|
||||
Interest expense |
(1,210 |
) |
(4,427 |
) |
||||
Other income (expense) |
183 |
|
(1 |
) |
||||
TOTAL OTHER EXPENSE |
(1,027 |
) |
(4,397 |
) |
||||
NET INCOME (LOSS) |
16,186 |
|
76,112 |
|
||||
Distributions on Series B cumulative convertible preferred units |
(5,250 |
) |
(5,250 |
) |
||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
10,936 |
|
$ |
70,862 |
|
||
ALLOCATION OF NET INCOME (LOSS): |
|
|
||||||
General partner interest |
$ |
— |
|
$ |
— |
|
||
Common units |
10,936 |
|
70,862 |
|
||||
|
$ |
10,936 |
|
$ |
70,862 |
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
||||||
Per common unit (basic) |
$ |
0.05 |
|
$ |
0.34 |
|
||
Per common unit (diluted) |
$ |
0.05 |
|
$ |
0.34 |
|
||
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
||||||
Weighted average common units outstanding (basic) |
207,442 |
|
206,631 |
|
||||
Weighted average common units outstanding (diluted) |
207,442 |
|
206,631 |
|
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
Three Months Ended |
|||||||
|
2021 |
2020 |
||||||
|
(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
|||||||
Production: |
|
|
||||||
Oil and condensate (MBbls) |
|
829 |
|
1,163 |
||||
Natural gas (MMcf)1 |
|
14,911 |
|
18,612 |
||||
Equivalents (MBoe) |
|
3,314 |
|
4,265 |
||||
Equivalents/day (MBoe) |
|
36.8 |
|
46.9 |
||||
Realized prices, without derivatives: |
|
|
||||||
Oil and condensate ($/Bbl) |
$ |
53.29 |
|
$ |
44.79 |
|||
Natural gas ($/Mcf)1 |
|
2.88 |
|
1.97 |
||||
Equivalents ($/Boe) |
$ |
26.27 |
|
$ |
20.81 |
|||
Revenue: |
|
|
||||||
Oil and condensate sales |
$ |
44,176 |
|
$ |
52,093 |
|||
Natural gas and natural gas liquids sales1 |
|
42,889 |
|
36,642 |
||||
Lease bonus and other income |
|
2,385 |
|
4,308 |
||||
Revenue from contracts with customers |
|
89,450 |
|
93,043 |
||||
Gain (loss) on commodity derivative instruments |
|
(27,882 |
) |
90,011 |
||||
Total revenue |
$ |
61,568 |
|
$ |
183,054 |
|||
Operating expenses: |
|
|
||||||
Lease operating expense |
$ |
2,664 |
|
$ |
3,827 |
|||
Production costs and ad valorem taxes |
|
11,842 |
|
12,376 |
||||
Exploration expense |
|
1,073 |
|
1 |
||||
Depreciation, depletion, and amortization |
|
15,632 |
|
23,182 |
||||
Impairment of oil and natural gas properties |
|
— |
|
51,031 |
||||
General and administrative |
|
12,852 |
|
11,856 |
||||
Other expense: |
|
|
||||||
Interest expense |
|
1,210 |
|
4,427 |
||||
Per Boe: |
|
|
||||||
Lease operating expense (per working interest Boe) |
$ |
5.14 |
|
$ |
4.12 |
|||
Production costs and ad valorem taxes |
|
3.57 |
|
2.90 |
||||
Depreciation, depletion, and amortization |
|
4.72 |
|
5.44 |
||||
General and administrative |
|
3.88 |
|
2.78 |
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, distributions to noncontrolling interests and preferred unitholders, 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 |
|||||||
|
2021 |
2020 |
||||||
|
(Unaudited) (In thousands, except per unit amounts) |
|||||||
Net income (loss) |
$ |
16,186 |
|
$ |
76,112 |
|
||
Adjustments to reconcile to Adjusted EBITDA: |
|
|
||||||
Depreciation, depletion, and amortization |
15,632 |
|
23,182 |
|
||||
Impairment of oil and natural gas properties |
— |
|
51,031 |
|
||||
Interest expense |
1,210 |
|
4,427 |
|
||||
Income tax expense (benefit) |
(157 |
) |
36 |
|
||||
Accretion of asset retirement obligations |
292 |
|
272 |
|
||||
Equity–based compensation |
3,462 |
|
(2,894 |
) |
||||
Unrealized (gain) loss on commodity derivative instruments |
23,359 |
|
(81,057 |
) |
||||
Adjusted EBITDA |
59,984 |
|
71,109 |
|
||||
Adjustments to reconcile to Distributable cash flow: |
|
|
||||||
Change in deferred revenue |
(9 |
) |
(302 |
) |
||||
Cash interest expense |
(953 |
) |
(4,168 |
) |
||||
Preferred unit distributions |
(5,250 |
) |
(5,250 |
) |
||||
Restructuring charges1 |
— |
|
4,815 |
|
||||
Distributable cash flow |
$ |
53,772 |
|
$ |
66,204 |
|
||
|
|
|
||||||
Total units outstanding2 |
207,552 |
|
206,709 |
|
||||
Distributable cash flow per unit |
$ |
0.259 |
|
$ |
0.320 |
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/20210504005540/en/
President and Chief Financial Officer
Vice President, Finance and Investor Relations
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: