HOUSTON--(BUSINESS WIRE)--Feb. 21, 2017--
Black Stone Minerals, L.P. (NYSE: BSM) (“Black Stone Minerals,” “Black
Stone,” or “the Partnership”) announced today that it has entered into a
farmout agreement with Canaan Resource Partners (“Canaan”), which will
reduce Black Stone’s future capital requirements and will generate
additional royalty income. The farmout covers the Partnership’s working
interests within an approximate 34,000 gross acre block in San Augustine
County, Texas. Black Stone expects the farmout agreement to reduce its
capital obligations by approximately $35 million in 2017 and by an
average of $40-$50 million annually thereafter during the three program
phases discussed below.
“This is a great example of the creative deal structures that Black
Stone Minerals pursues to generate value for its unitholders,” said
Thomas L. Carter, Jr., Black Stone Minerals’ President, Chief Executive
Officer and Chairman. “This transaction, involving our most concentrated
area of working interest investment, accomplishes several important
things for Black Stone Minerals. It meaningfully reduces our near-term
capital exposure while facilitating the continued development of a play
where we have significant royalty interests. We will also benefit from
the anticipated growth in volumes from this asset through the overriding
royalty interests we are retaining. Lastly, it delivers on our
commitment to our unitholders to remain focused on managing and growing
our core minerals and royalty business.”
Agreement covers certain Haynesville and Bossier shale acreage in the
Shelby Trough in San Augustine County, Texas operated by XTO Energy.
Black Stone has an average 50% working interest in the acreage and is
the largest mineral owner.
A total of 58 wells are anticipated to be drilled over an initial
phase and two additional phases that Canaan may participate in at its
option, with each phase estimated to last approximately two years,
beginning with wells spud after January 1, 2017.
During the first three phases of the agreement, Canaan will commit on
a phase-by-phase basis and fund 80% of Black Stone’s drilling and
completion costs and will be assigned 80% of Black Stone’s working
interests in such wells (40% working interest on an 8/8ths basis).
After the third phase, Canaan can earn 40% of the Partnership’s
working interest (20% working interest on an 8/8ths basis) in
additional wells drilled in the area by continuing to fund 40% of
Black Stone’s costs for those wells on a well-by-well basis.
Black Stone Minerals receives a base overriding royalty interest
(“ORRI”) before payout and an additional ORRI after payout on all
wells drilled under the agreement.
Canaan Resource Partners (www.crpok.com)
has directed and managed energy investments through a number of current
and predecessor investment vehicles since 1990.
Tudor, Pickering, Holt & Co. served as the sole financial advisor for
Black Stone Minerals. Legal advice was provided by Vinson & Elkins LLP.
About Black Stone Minerals, L.P.
Black Stone Minerals is one of the largest owners of oil and natural gas
mineral interests in the United States. The Partnership owns mineral
interests and royalty interests in over 40 states and 60 onshore basins
in the continental United States. The Partnership also owns and
selectively participates as a non-operating working partner in
established development programs, primarily on its mineral and royalty
holdings. The Partnership expects that its large, diversified asset base
and long-lived, non-cost-bearing mineral and royalty interests will
result in production and reserve growth, as well as increasing quarterly
distributions to its unitholders.
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, Black Stone Minerals undertakes
no obligation and does not intend to update these forward-looking
statements to reflect events or circumstances occurring after this news
release. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this news
release. All forward-looking statements are qualified in their entirety
by these cautionary statements. These forward-looking statements involve
risks and uncertainties, many of which are beyond the control of Black
Stone Minerals, which may cause the Partnership’s actual results to
differ materially from those implied or expressed by the forward-looking
statements. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are
not limited to, those summarized below:
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
the Partnership’s ability to replace its oil and natural gas reserves;
the Partnership’s ability to identify, complete, and integrate
View source version on businesswire.com: http://www.businesswire.com/news/home/20170221005553/en/
Source: Black Stone Minerals, L.P.
Black Stone Minerals, L.P.
Brent Collins, 713-445-3200
President, Investor Relations