Black Stone Minerals, L.P. Announces Fourth Quarter and Full Year 2023 Results; Provides Guidance for 2024
Fourth Quarter 2023 Highlights
- Mineral and royalty production for the fourth quarter of 2023 equaled 38.9 MBoe/d, a decrease of 3% over the prior quarter; total production, including working interest volumes, was 41.1 MBoe/d for the quarter
- Net income for the quarter was
$147.6 million . Adjusted EBITDA for the quarter totaled$125.5 million - Distributable cash flow was
$119.1 million for the fourth quarter, which represents a 4% decrease relative to the third quarter of 2023, making the seventh consecutive quarter above$100 million - Black Stone announced a distribution of
$0.475 per unit with respect to the fourth quarter of 2023. Distribution coverage for all units was 1.19x - Total debt at the end of the quarter was zero; as of
February 16, 2024 , total debt remained at zero with$102.9 million of cash
Full Year Financial and Operational Highlights
- Mineral and royalty volumes in 2023 increased 9% over the prior year to average 37.4 MBoe/d; average full year 2023 production was 39.8 MBoe/d
- Reported 2023 net income and Adjusted EBITDA of
$422.5 million and$474.7 million , respectively - Increased cash distributions by 9% from
$1.745 per unit attributable to the full year 2022 to$1.90 per unit attributable to the full year 2023 - Eliminated outstanding debt during 2023
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chairman, Chief Executive Officer, and President, commented, “We finished the year with a strong quarter. We were able to maintain our highest distribution without any outstanding debt despite a challenging natural gas market. We expect headwinds in 2024 as natural gas prices remain depressed, but we remain encouraged by the long-term prospects for liquefied natural gas export growth and an asset base with significant inventory life that will benefit unitholders through the next decade.”
Quarterly Financial and Operating Results
Production
Working interest production for the fourth quarter of 2023 was 2.2 MBoe/d, a decrease of 4% from the 2.3 MBoe/d for the quarter ended
Total reported production averaged 41.1 MBoe/d (95% mineral and royalty, 73% natural gas) for the fourth quarter of 2023. Average total production was 42.6 MBoe/d and 42.1 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 gain 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 fourth quarter of 2023 was
2023 Proved Reserves
Estimated proved oil and natural gas reserves at year-end 2023 were 64.5 MMBoe, an increase of 1% from 64.1 MMBoe at year-end 2022, and were approximately 70% natural gas and 89% proved developed producing. The standardized measure of discounted future net cash flows was
Financial Position and Activities
As of
As of
During the fourth quarter of 2023, the Company made no repurchases of units under the Board-approved
Fourth Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of
Shelby Trough Development Update
A significant portion of Shelby Trough development in recent years has been performed by Aethon Energy (“Aethon”) under the Company’s two Joint Exploration Agreements (“JEA” or “JEAs”) with Aethon, one JEA each covering development in
As announced on
The time-out provisions apply only to drilling obligations and associated development activity occurring after
Austin Chalk Update
The Company owns a large mineral position in the Brookeland Austin Chalk play in
Black Stone has entered into agreements with multiple operators to drill wells in the areas of the Austin Chalk in
Acquisition Activity
Black Stone’s commercial strategy since 2021 has been focused on attracting capital and securing drilling commitments on minerals already owned by the Company. Management made the decision to expand this growth strategy by adding to the Company’s mineral portfolio through strategic, targeted efforts primarily in the
Summary 2024 Guidance
Following are the key assumptions in Black Stone Minerals’ 2024 guidance, as well as comparable results for 2023:
|
|
FY 2023 Actual |
|
FY |
|
Mineral and royalty production (MBoe/d) |
37.4 |
|
39 – 40 |
|
Working interest production (MBoe/d) |
2.4 |
|
1 – 2 |
|
Total production (MBoe/d) |
39.8 |
|
40 – 42 |
|
Percentage natural gas |
74% |
|
76% |
|
Percentage royalty interest |
94% |
|
96% |
|
|
|
|
|
|
Lease bonus and other income ($MM) |
|
|
|
|
|
|
|
|
|
Lease operating expense ($MM) |
|
|
|
|
Production costs and ad valorem taxes (as % of total pre-derivative O&G revenue) |
12% |
|
11% - 13% |
|
|
|
|
|
|
G&A - cash ($MM) |
|
|
|
|
G&A - non-cash ($MM) |
|
|
|
|
G&A - TOTAL ($MM) |
|
|
|
|
|
|
|
|
|
DD&A ($/Boe) |
|
|
|
Black Stone expects royalty production to increase by approximately 4% in 2024 relative to full year 2023 levels, primarily due to Aethon turning on-line the 24 wells in various stages of development in the Shelby Trough and continued development in the Austin Chalk. This is partially offset by an expected moderation of activity in Louisiana Haynesville due to lower commodity prices.
Working interest production is expected to decline in 2024 as a result of Black Stone's decision in 2017 to farm out participation in its working interest opportunities.
The Partnership expects general and administrative expenses to be slightly higher in 2024 as a result of inflationary costs and selective hires made to support Black Stone’s ability to evaluate, market and manage its undeveloped acreage positions to potential operators.
Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2024 and 2025, including derivative contracts put in place after the end of the year. The Company's hedge position as of
|
Oil Hedge Position |
|
|
|
|
Oil Swap Volume |
Oil Swap Price |
|
|
MBbl |
$/Bbl |
|
1Q24 |
570 |
|
|
2Q24 |
570 |
|
|
3Q24 |
570 |
|
|
4Q24 |
570 |
|
|
1Q25 |
210 |
|
|
2Q25 |
210 |
|
|
3Q25 |
210 |
|
|
4Q25 |
210 |
|
|
Natural Gas Hedge Position |
|
|
|
|
Gas Swap Volume |
Gas Swap Price |
|
|
BBtu |
$/MMbtu |
|
1Q24 |
10,310 |
|
|
2Q24 |
10,465 |
|
|
3Q24 |
10,580 |
|
|
4Q24 |
10,580 |
|
|
1Q25 |
900 |
|
|
2Q25 |
910 |
|
|
3Q25 |
920 |
|
|
4Q25 |
920 |
|
More detailed information about the Company's existing hedging program can be found in the Annual Report on Form 10-K, 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 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, and regional supply and demand factors, delays, or interruptions of production;
- conservation measures 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;
- general economic, business, or industry conditions including slowdowns, domestically and internationally, and volatility in the securities, capital, or credit markets;
- cybersecurity incidents, including data security breaches or computer viruses;
- competition in the oil and natural gas industry;
- the availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel; 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 |
|
Year Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
REVENUE |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate sales |
|
$ |
80,112 |
|
|
$ |
85,920 |
|
|
$ |
288,296 |
|
|
$ |
336,287 |
|
|
Natural gas and natural gas liquids sales |
|
|
52,440 |
|
|
|
110,254 |
|
|
|
200,297 |
|
|
|
434,945 |
|
|
Lease bonus and other income |
|
|
3,824 |
|
|
|
2,790 |
|
|
|
12,506 |
|
|
|
13,052 |
|
|
Revenue from contracts with customers |
|
|
136,376 |
|
|
|
198,964 |
|
|
|
501,099 |
|
|
|
784,284 |
|
|
Gain (loss) on commodity derivative instruments |
|
|
54,465 |
|
|
|
31,415 |
|
|
|
91,117 |
|
|
|
(120,680 |
) |
|
TOTAL REVENUE |
|
|
190,841 |
|
|
|
230,379 |
|
|
|
592,216 |
|
|
|
663,604 |
|
|
OPERATING (INCOME) EXPENSE |
|
|
|
|
|
|
|
|
||||||||
|
Lease operating expense |
|
|
3,237 |
|
|
|
3,124 |
|
|
|
11,386 |
|
|
|
12,380 |
|
|
Production costs and ad valorem taxes |
|
|
15,027 |
|
|
|
14,924 |
|
|
|
56,979 |
|
|
|
66,233 |
|
|
Exploration expense |
|
|
429 |
|
|
|
1 |
|
|
|
2,148 |
|
|
|
193 |
|
|
Depreciation, depletion, and amortization |
|
|
11,748 |
|
|
|
12,786 |
|
|
|
45,683 |
|
|
|
47,804 |
|
|
General and administrative |
|
|
12,505 |
|
|
|
14,326 |
|
|
|
51,455 |
|
|
|
53,652 |
|
|
Accretion of asset retirement obligations |
|
|
293 |
|
|
|
245 |
|
|
|
1,042 |
|
|
|
861 |
|
|
(Gain) loss on sale of assets, net |
|
|
— |
|
|
|
— |
|
|
|
(73 |
) |
|
|
(17 |
) |
|
TOTAL OPERATING EXPENSE |
|
|
43,239 |
|
|
|
45,406 |
|
|
|
168,620 |
|
|
|
181,106 |
|
|
INCOME (LOSS) FROM OPERATIONS |
|
|
147,602 |
|
|
|
184,973 |
|
|
|
423,596 |
|
|
|
482,498 |
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
||||||||
|
Interest and investment income |
|
|
826 |
|
|
|
31 |
|
|
|
1,867 |
|
|
|
53 |
|
|
Interest expense |
|
|
(674 |
) |
|
|
(2,022 |
) |
|
|
(2,754 |
) |
|
|
(6,286 |
) |
|
Other income (expense) |
|
|
(107 |
) |
|
|
237 |
|
|
|
(160 |
) |
|
|
215 |
|
|
TOTAL OTHER EXPENSE |
|
|
45 |
|
|
|
(1,754 |
) |
|
|
(1,047 |
) |
|
|
(6,018 |
) |
|
NET INCOME (LOSS) |
|
|
147,647 |
|
|
|
183,219 |
|
|
|
422,549 |
|
|
|
476,480 |
|
|
Distributions on Series B cumulative convertible preferred units |
|
|
(6,026 |
) |
|
|
(5,250 |
) |
|
|
(21,776 |
) |
|
|
(21,000 |
) |
|
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
|
$ |
141,621 |
|
|
$ |
177,969 |
|
|
$ |
400,773 |
|
|
$ |
455,480 |
|
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
|
|
|
|
|
||||||||
|
General partner interest |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Common units |
|
|
141,621 |
|
|
|
177,969 |
|
|
|
400,773 |
|
|
|
455,480 |
|
|
|
|
$ |
141,621 |
|
|
$ |
177,969 |
|
|
$ |
400,773 |
|
|
$ |
455,480 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
|
|
|
|
|
||||||||
|
Per common unit (basic) |
|
$ |
0.67 |
|
|
$ |
0.85 |
|
|
$ |
1.91 |
|
|
$ |
2.18 |
|
|
Per common unit (diluted) |
|
$ |
0.65 |
|
|
$ |
0.82 |
|
|
$ |
1.88 |
|
|
$ |
2.12 |
|
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
|
|
|
|
|
||||||||
|
Weighted average common units outstanding (basic) |
|
|
209,991 |
|
|
|
209,406 |
|
|
|
209,970 |
|
|
|
209,382 |
|
|
Weighted average common units outstanding (diluted) |
|
|
225,511 |
|
|
|
224,756 |
|
|
|
225,105 |
|
|
|
224,446 |
|
The following table shows the Company’s production, revenues, realized prices, and expenses for the periods presented.
|
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
(Unaudited) (Dollars in thousands, except for realized prices) |
||||||||||||||
|
Production: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate (MBbls) |
|
|
1,026 |
|
|
|
1,017 |
|
|
|
3,757 |
|
|
|
3,591 |
|
|
Natural gas (MMcf)1 |
|
|
16,546 |
|
|
|
17,130 |
|
|
|
64,647 |
|
|
|
59,778 |
|
|
Equivalents (MBoe) |
|
|
3,784 |
|
|
|
3,872 |
|
|
|
14,532 |
|
|
|
13,554 |
|
|
Equivalents/day (MBoe) |
|
|
41.1 |
|
|
|
42.1 |
|
|
|
39.8 |
|
|
|
37.1 |
|
|
Realized prices, without derivatives: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate ($/Bbl) |
|
$ |
78.08 |
|
|
$ |
84.48 |
|
|
$ |
76.74 |
|
|
$ |
93.65 |
|
|
Natural gas ($/Mcf)1 |
|
|
3.17 |
|
|
|
6.44 |
|
|
|
3.10 |
|
|
|
7.28 |
|
|
Equivalents ($/Boe) |
|
$ |
35.03 |
|
|
$ |
50.66 |
|
|
$ |
33.62 |
|
|
$ |
56.90 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate sales |
|
$ |
80,112 |
|
|
$ |
85,920 |
|
|
$ |
288,296 |
|
|
$ |
336,287 |
|
|
Natural gas and natural gas liquids sales1 |
|
|
52,440 |
|
|
|
110,254 |
|
|
|
200,297 |
|
|
|
434,945 |
|
|
Lease bonus and other income |
|
|
3,824 |
|
|
|
2,790 |
|
|
|
12,506 |
|
|
|
13,052 |
|
|
Revenue from contracts with customers |
|
|
136,376 |
|
|
|
198,964 |
|
|
|
501,099 |
|
|
|
784,284 |
|
|
Gain (loss) on commodity derivative instruments |
|
|
54,465 |
|
|
|
31,415 |
|
|
|
91,117 |
|
|
|
(120,680 |
) |
|
Total revenue |
|
$ |
190,841 |
|
|
$ |
230,379 |
|
|
$ |
592,216 |
|
|
$ |
663,604 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Lease operating expense |
|
$ |
3,237 |
|
|
$ |
3,124 |
|
|
$ |
11,386 |
|
|
$ |
12,380 |
|
|
Production costs and ad valorem taxes |
|
|
15,027 |
|
|
|
14,924 |
|
|
|
56,979 |
|
|
|
66,233 |
|
|
Exploration expense |
|
|
429 |
|
|
|
1 |
|
|
|
2,148 |
|
|
|
193 |
|
|
Depreciation, depletion, and amortization |
|
|
11,748 |
|
|
|
12,786 |
|
|
|
45,683 |
|
|
|
47,804 |
|
|
General and administrative |
|
|
12,505 |
|
|
|
14,326 |
|
|
|
51,455 |
|
|
|
53,652 |
|
|
Other expense: |
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
|
674 |
|
|
|
2,022 |
|
|
|
2,754 |
|
|
|
6,286 |
|
|
Per Boe: |
|
|
|
|
|
|
|
|
||||||||
|
Lease operating expense (per working interest Boe) |
|
$ |
16.02 |
|
|
$ |
16.02 |
|
|
$ |
13.13 |
|
|
$ |
12.13 |
|
|
Production costs and ad valorem taxes |
|
|
3.97 |
|
|
|
3.85 |
|
|
|
3.92 |
|
|
|
4.89 |
|
|
Depreciation, depletion, and amortization |
|
|
3.10 |
|
|
|
3.30 |
|
|
|
3.14 |
|
|
|
3.53 |
|
|
General and administrative |
|
|
3.30 |
|
|
|
3.70 |
|
|
|
3.54 |
|
|
|
3.96 |
|
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 its 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, if any, 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, if any. Black Stone defines Distributable cash flow as Adjusted EBITDA plus or minus amounts for certain non-cash operating activities, cash interest expense, distributions to preferred unitholders, and restructuring charges, if any.
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 |
|
Year Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
(Unaudited) (In thousands, except per unit amounts) |
||||||||||||||
|
Net income (loss) |
|
$ |
147,647 |
|
|
$ |
183,219 |
|
|
$ |
422,549 |
|
|
$ |
476,480 |
|
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
|
Depreciation, depletion, and amortization |
|
|
11,748 |
|
|
|
12,786 |
|
|
|
45,683 |
|
|
|
47,804 |
|
|
Interest expense |
|
|
674 |
|
|
|
2,022 |
|
|
|
2,754 |
|
|
|
6,286 |
|
|
Income tax expense (benefit) |
|
|
143 |
|
|
|
(171 |
) |
|
|
320 |
|
|
|
58 |
|
|
Accretion of asset retirement obligations |
|
|
293 |
|
|
|
245 |
|
|
|
1,042 |
|
|
|
861 |
|
|
Equity-based compensation |
|
|
2,417 |
|
|
|
5,579 |
|
|
|
10,829 |
|
|
|
17,388 |
|
|
Unrealized (gain) loss on commodity derivative instruments |
|
|
(37,400 |
) |
|
|
(72,014 |
) |
|
|
(8,394 |
) |
|
|
(82,486 |
) |
|
(Gain) loss on sale of assets, net |
|
|
— |
|
|
|
— |
|
|
|
(73 |
) |
|
|
(17 |
) |
|
Adjusted EBITDA |
|
|
125,522 |
|
|
|
131,666 |
|
|
|
474,710 |
|
|
|
466,374 |
|
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
|
|
|
||||||||
|
Change in deferred revenue |
|
|
(1 |
) |
|
|
(7 |
) |
|
|
(9 |
) |
|
|
(30 |
) |
|
Cash interest expense |
|
|
(410 |
) |
|
|
(1,059 |
) |
|
|
(1,715 |
) |
|
|
(4,282 |
) |
|
Preferred unit distributions |
|
|
(6,026 |
) |
|
|
(5,250 |
) |
|
|
(21,776 |
) |
|
|
(21,000 |
) |
|
Distributable cash flow |
|
$ |
119,085 |
|
|
$ |
125,350 |
|
|
$ |
451,210 |
|
|
$ |
441,062 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total units outstanding1 |
|
|
210,313 |
|
|
|
209,684 |
|
|
|
|
|
||||
|
Distributable cash flow per unit |
|
|
0.566 |
|
|
|
0.598 |
|
|
|
|
|
||||
1 The distribution attributable to the quarter ended
Proved Oil & Gas Reserve Quantities
A reconciliation of proved reserves is presented in the following table:
|
|
Crude Oil (MBbl) |
|
Natural Gas (MMcf) |
|
Total (MBoe) |
|||
|
Net proved reserves at |
19,184 |
|
|
269,586 |
|
|
64,115 |
|
|
Revisions of previous estimates |
675 |
|
|
(20,578 |
) |
|
(2,754 |
) |
|
Extensions, discoveries, and other additions |
2,989 |
|
|
87,935 |
|
|
17,645 |
|
|
Production |
(3,757 |
) |
|
(64,647 |
) |
|
(14,532 |
) |
|
Net proved reserves at |
19,091 |
|
|
272,296 |
|
|
64,474 |
|
|
Net Proved Developed Reserves |
|
|
|
|
|
|||
|
|
19,184 |
|
|
236,529 |
|
|
58,606 |
|
|
|
19,091 |
|
|
228,061 |
|
|
57,101 |
|
|
Net Proved Undeveloped Reserves |
|
|
|
|
|
|||
|
|
— |
|
|
33,057 |
|
|
5,509 |
|
|
|
— |
|
|
44,235 |
|
|
7,373 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240219650505/en/
Senior Vice President, Chief Financial Officer, and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: