Black Stone Minerals, L.P. Reports Second Quarter 2016 Results and Announces Cash Distribution; Increases Production Guidance Range for 2016
Highlights
- Second quarter of 2016 average production of 31.6 MBoe/d.
-
Oil and gas revenues of
$56.2 million , lease bonus and other income of$15.1 million , and a loss on commodity derivative instruments of$30.7 million for quarter. -
Net loss of
$20.8 million ; Adjusted EBITDA (as defined below) of$74.0 million . -
Increases quarterly distribution for common units by approximately 10%
to
$0.2875 per unit. - Production guidance revised upward to range of 31.0 – 32.0 MBoe/d, an increase of approximately 9% at the midpoint.
Management Commentary
Quarterly Financial and Operating Results
Production
Realized Prices, Revenues, and Net Income
The Partnership’s average realized price per Boe, excluding the effect
of derivative settlements, was
Loss on commodity derivatives instruments was
Lease bonus and other income was
The Partnership reported a net loss of
Financial Position
As of
Unit Repurchase Program
During the second quarter,
Acquisitions
During the quarter, the Partnership closed the previously announced
Distributions
The Board of Directors of the general partner has approved a cash
distribution of
Updated Summary 2016 Guidance
The Partnership has revised its guidance for 2016 as follows:
Initial Guidance |
Revised Guidance |
|||||
Average daily production (MBoe/d) | 28.5 – 29.5 | 31.0 – 32.0 | ||||
Percentage oil | ~30% | ~30% | ||||
Percentage royalty interest | ~63% | ~65% | ||||
Lease bonus and other income ($MM) | $30 | $30 | ||||
Lease operating expense ($/Boe) | $2.00 – $2.25 | $1.65 – $1.85 | ||||
Lease operating expense ($/working interest Boe) | $5.45 – $6.10 | $4.75 – $5.25 | ||||
Production costs and ad valorem taxes (as % of total pre-derivative O&G revenue) | 14% – 16% |
12% – 14% |
||||
Exploration expense ($MM) | $0 – $1 |
$0.5 – $1.5 |
||||
G&A – cash ($MM) | $36.5 – $37.5 |
$37.5 – $38.5 |
||||
G&A – non-cash ($MM) | $29.0 – $30.0 | $30.5 – $31.5 | ||||
G&A – TOTAL ($MM) | $65.5 – $67.5 | $68.0 – $70.0 | ||||
DD&A ($/Boe) | $8.00 – $8.50 | $8.75 – $9.25 | ||||
Working Interest Participation
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 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 June 30, |
Six Months Ended June 30, |
|||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
REVENUE | ||||||||||||||||||||
Oil and condensate sales | $ | 34,553 | $ | 46,293 | $ | 61,801 | $ | 82,456 | ||||||||||||
Natural gas and natural gas liquids sales | 21,607 | 28,968 | 46,719 | 60,608 | ||||||||||||||||
Gain (loss) on commodity derivative instruments | (30,733 | ) | (18,627 | ) | (20,107 | ) | 1,020 | |||||||||||||
Lease bonus and other income | 15,142 | 8,169 | 16,537 | 11,780 | ||||||||||||||||
TOTAL REVENUE | 40,569 | 64,803 | 104,950 | 155,864 | ||||||||||||||||
OPERATING (INCOME) EXPENSE | ||||||||||||||||||||
Lease operating expense | 4,283 | 5,483 | 9,172 | 11,616 | ||||||||||||||||
Production costs and ad valorem taxes | 7,012 | 9,819 | 14,074 | 18,075 | ||||||||||||||||
Exploration expense | 629 | 158 | 637 | 197 | ||||||||||||||||
Depreciation, depletion and amortization | 29,202 | 32,235 | 50,923 | 60,126 | ||||||||||||||||
Impairment of oil and natural gas properties | 679 | 118,362 | 6,775 | 131,829 | ||||||||||||||||
General and administrative | 18,134 | 19,718 | 35,535 | 34,536 | ||||||||||||||||
Accretion of asset retirement obligations | 200 | 269 | 474 | 540 | ||||||||||||||||
Gain on sale of assets, net | (92 | ) | (17 | ) | (4,772 | ) | (24 | ) | ||||||||||||
TOTAL OPERATING EXPENSE | 60,047 | 186,027 | 112,818 | 256,895 | ||||||||||||||||
INCOME FROM OPERATIONS | (19,478 | ) | (121,224 | ) | (7,868 | ) | (101,031 | ) | ||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||
Interest and investment income | 38 | 27 | 191 | 28 | ||||||||||||||||
Interest expense | (1,443 | ) | (1,715 | ) | (2,491 | ) | (4,660 | ) | ||||||||||||
Other income | 73 | 146 | 107 | 196 | ||||||||||||||||
TOTAL OTHER EXPENSE | (1,332 | ) | (1,542 | ) | (2,193 | ) | (4,436 | ) | ||||||||||||
NET LOSS | (20,810 | ) | (122,766 | ) | (10,061 | ) | (105,467 | ) | ||||||||||||
NET (INCOME) LOSS ATTRIBUTABLE TO PREDECESSOR | — | 16,849 | — | (450 | ) | |||||||||||||||
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS SUBSEQUENT TO INITIAL PUBLIC OFFERING | 9 | 140 | 7 | 140 | ||||||||||||||||
DISTRIBUTIONS ON REDEEMABLE PREFERRED UNITS SUBSEQUENT TO INITIAL PUBLIC OFFERING | (1,310 | ) | (1,810 | ) | (3,114 | ) | (1,810 | ) | ||||||||||||
NET LOSS ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON AND SUBORDINATED UNITS SUBSEQUENT TO INITIAL PUBLIC OFFERING | $ | (22,111 | ) | $ | (107,587 | ) | $ | (13,168 | ) | $ | (107,587 | ) | ||||||||
ALLOCATION OF NET INCOME (LOSS) SUBSEQUENT TO INITIAL PUBLIC OFFERING ATTRIBUTABLE TO: | ||||||||||||||||||||
General partner interest | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Common units | (7,445 | ) | (54,109 | ) | 862 | (54,109 | ) | |||||||||||||
Subordinated units | (14,666 | ) | (53,478 | ) | (14,030 | ) | (53,478 | ) | ||||||||||||
$ | (22,111 | ) | $ | (107,587 | ) | $ | (13,168 | ) | $ | (107,587 | ) | |||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON AND SUBORDINATED UNIT: | ||||||||||||||||||||
Per common unit (basic) | $ | (0.08 | ) | $ | (0.56 | ) | $ | 0.01 | $ | (0.56 | ) | |||||||||
Weighted average common units outstanding (basic) | 96,356 | 96,178 | 96,418 | 96,178 | ||||||||||||||||
Per subordinated unit (basic) | $ | (0.15 | ) | $ | (0.56 | ) | $ | (0.15 | ) | $ | (0.56 | ) | ||||||||
Weighted average subordinated units outstanding (basic) | 95,189 | 95,057 | 95,092 | 95,057 | ||||||||||||||||
Per common unit (diluted) | $ | (0.08 | ) | $ | (0.56 | ) | $ | 0.01 | $ | (0.56 | ) | |||||||||
Weighted average common units outstanding (diluted) | 96,418 | 96,178 | 96,481 | 96,178 | ||||||||||||||||
Per subordinated unit (diluted) | $ | (0.15 | ) | $ | (0.56 | ) | $ | (0.15 | ) | $ | (0.56 | ) | ||||||||
Weighted average subordinated units outstanding (diluted) | 95,092 | 95,057 | 95,092 | 95,057 | ||||||||||||||||
DISTRIBUTIONS DECLARED AND PAID SUBSEQUENT TO INITIAL PUBLIC OFFERING: | ||||||||||||||||||||
Per common unit | $ | 0.2625 | $ | — | $ | 0.5250 | $ | — | ||||||||||||
Per subordinated unit | $ | 0.18375 | $ | — | $ | 0.36750 | $ | — | ||||||||||||
The following table shows the Partnership’s production, revenues, realized prices, and expenses for the periods presented.
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
(Dollars in thousands, except | (Dollars in thousands, except | ||||||||||||||||||
for realized prices) | for realized prices) | ||||||||||||||||||
Production: | |||||||||||||||||||
Oil and condensate (MBbls)1 | 947 | 905 | 1,833 | 1,732 | |||||||||||||||
Natural gas (MMcf)1 | 11,558 | 10,621 | 22,807 | 21,406 | |||||||||||||||
Equivalents (MBoe) | 2,873 | 2,675 | 5,634 | 5,300 | |||||||||||||||
Revenue: | |||||||||||||||||||
Oil and condensate sales | $ | 34,553 | $ | 46,293 | $ | 61,801 | $ | 82,456 | |||||||||||
Natural gas and natural gas liquids sales | 21,607 | 28,968 | 46,719 | 60,608 | |||||||||||||||
Loss on commodity derivative instruments | (30,733 | ) | (18,627 | ) | (20,107 | ) | 1,020 | ||||||||||||
Lease bonus and other income | 15,142 | 8,169 | 16,537 | 11,780 | |||||||||||||||
Total revenue | $ | 40,569 | $ | 64,803 | $ | 104,950 | $ | 155,864 | |||||||||||
Realized prices: | |||||||||||||||||||
Oil and condensate ($/Bbl) | $ | 36.49 | $ | 51.15 | $ | 33.72 | $ | 47.61 | |||||||||||
Natural gas ($/Mcf)1 | 1.87 | 2.73 | 2.05 | 2.83 | |||||||||||||||
Equivalents ($/Boe) | $ | 19.55 | $ | 28.13 | $ | 19.26 | $ | 26.99 | |||||||||||
Operating expenses: | |||||||||||||||||||
Lease operating expense | $ | 4,283 | $ | 5,483 | $ | 9,172 | $ | 11,616 | |||||||||||
Production costs and ad valorem taxes | 7,012 | 9,819 | 14,074 | 18,075 | |||||||||||||||
Exploration expense | 629 | 158 | 637 | 197 | |||||||||||||||
Depreciation, depletion, and amortization | 29,202 | 32,235 | 50,923 | 60,126 | |||||||||||||||
Impairment of oil and natural gas properties | 679 | 118,362 | 6,775 | 131,829 | |||||||||||||||
General and administrative | 18,134 | 19,718 | 35,535 | 34,536 | |||||||||||||||
Other expense: | |||||||||||||||||||
Interest expense | $ | 1,443 | $ | 1,715 | $ | 2,491 | $ | 4,660 | |||||||||||
Per Boe: | |||||||||||||||||||
Lease operating expense | $ | 1.49 | $ | 2.05 | $ | 1.63 | $ | 2.19 | |||||||||||
Lease operating expense (per working interest Boe) | 4.66 | 7.18 | 5.02 | 7.07 | |||||||||||||||
Production costs and ad valorem taxes | 2.44 | 3.67 | 2.50 | 3.41 | |||||||||||||||
Depreciation, depletion, and amortization | 10.16 | 12.05 | 9.04 | 11.34 | |||||||||||||||
General and administrative | 6.31 | 7.37 | 6.31 | 6.52 | |||||||||||||||
_______________ |
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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 reported production; however, revenue attributable to NGLs is included in natural gas revenue and the calculation of realized prices for natural gas. |
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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 June 30, | Six Months Ended June 30, | |||||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||
Net loss | $ | (20,810 | ) | $ | (122,766 | ) | $ | (10,061 | ) | $ | (105,467 | ) | ||||||||
Adjustments to reconcile to Adjusted EBITDA: | ||||||||||||||||||||
Add: | ||||||||||||||||||||
Depreciation, depletion and amortization | 29,202 | 32,235 | 50,923 | 60,126 | ||||||||||||||||
Interest expense | 1,443 | 1,715 | 2,491 | 4,660 | ||||||||||||||||
EBITDA | 9,835 | (88,816 | ) | 43,353 | (40,681 | ) | ||||||||||||||
Add: | ||||||||||||||||||||
Impairment of oil and natural gas properties | 679 | 118,362 | 6,775 | 131,829 | ||||||||||||||||
Accretion of asset retirement obligations | 200 | 269 | 474 | 540 | ||||||||||||||||
Equity-based compensation1 | 19,239 | 6,119 | 25,139 | 7,362 | ||||||||||||||||
Unrealized loss on commodity derivative instruments | 44,070 | 35,332 | 54,025 | 33,135 | ||||||||||||||||
Adjusted EBITDA | 74,023 | 71,266 | 129,766 | 132,185 | ||||||||||||||||
Adjustments to reconcile to cash generated from operations: | ||||||||||||||||||||
Add: | ||||||||||||||||||||
Incremental general and administrative related to initial public offering | — | 452 | — | 679 | ||||||||||||||||
Less: | ||||||||||||||||||||
Change in deferred revenue | 424 | (386 | ) | 221 | (490 | ) | ||||||||||||||
Cash interest expense | (1,246 | ) | (1,474 | ) | (2,097 | ) | (4,178 | ) | ||||||||||||
Gain on sales of assets, net | (92 | ) | (17 | ) | (4,772 | ) | (24 | ) | ||||||||||||
Estimated replacement capital expenditures2 | (3,750 | ) | — | (3,750 | ) | — | ||||||||||||||
Cash generated from operations | 69,359 | 69,841 | 119,368 | 128,172 | ||||||||||||||||
Less: | ||||||||||||||||||||
Cash paid to noncontrolling interests | (21 | ) | (70 | ) | (54 | ) | (122 | ) | ||||||||||||
Redeemable preferred unit distributions | (1,310 | ) | (2,941 | ) | (3,114 | ) | (5,850 | ) | ||||||||||||
Cash generated from operations available for distribution on common and subordinated units and reinvestment in our business | $ | 68,028 | $ | 66,830 | $ | 116,200 | $ | 122,200 | ||||||||||||
_______________ |
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1 On April 25, 2016, the Compensation Committee of the Board approved a resolution to change the settlement feature of certain employee long-term incentive compensation plans from cash to equity. As a result of the modification, $10.1 million of cash-settled liabilities were reclassified to equity-settled liabilities during the current quarter. |
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2 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 expenditure prior to this period. |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20160808006135/en/
Source:
Black Stone Minerals, L.P.
Brent Collins, 713-445-3200
Vice
President, Investor Relations
investorrelations@blackstoneminerals.com