Black Stone Minerals, L.P. Reports First Quarter Results
Financial and Operational Highlights
- Mineral and royalty production for the first quarter of 2023 equaled 36.8 MBoe/d, a decrease of 8% over the prior quarter; total production, including working interest volumes, was 39.3 MBoe/d for the quarter.
-
Net income for the first quarter was
$134.4 million . Adjusted EBITDA for the quarter totaled$109.9 million , a decrease of 17% over the prior quarter. -
Distributable cash flow was
$104.1 million for the first quarter, a decrease of 17% relative to the fourth quarter of 2022. -
Announced a distribution of
$0.475 per unit with respect to the first quarter of 2023 and represents an increase of 19% over the common distribution paid to the first quarter of 2022. Distribution coverage for all units was 1.04x. -
Total outstanding debt at the end of the first quarter was zero; as of
April 28, 2023 , total debt remained at zero with$66 million of cash. -
Effective
April 27, 2023 , Black Stone’s borrowing base under its revolving credit facility was reaffirmed at$550 million , with$375 million of commitments.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We had a strong start to the year despite headwinds from weaker natural gas prices. We remain constructive on our long-term outlook and are encouraged by our development agreements with Aethon in the Shelby Trough and various operators in the Austin Chalk. As we continue to focus on growth in our existing assets, Black Stone is able to maintain the highest distribution level since going public.”
Quarterly Financial and Operating Results
Production
Working interest production for the first quarter of 2023 was 2.4 MBoe/d, representing an increase of 14% from the levels generated in the quarter ended
Total reported production averaged 39.3 MBoe/d (94% mineral and royalty, 78% natural gas) for the first quarter of 2023 compared to 42.1 MBoe/d and 32.9 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 gain on commodity derivative instruments of
Lease bonus and other income was
The Company reported net income of
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the first quarter of 2023 was
Financial Position and Activities
As of
Subsequent to quarter-end, Black Stone's borrowing base was reaffirmed at
During the first quarter of 2023, the Company made no repurchases of units under the Board-approved
First Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of
Shelby Trough Development Update
Aethon has successfully turned 16 wells to sales and has commenced operations on 10 additional wells under the development agreement covering
Austin Chalk Update
Black Stone has entered into agreements with multiple operators to drill wells in the areas of the Austin Chalk in
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering portions of its anticipated production for 2023 and 2024. The Company's hedge position as of
|
Oil Hedge Position |
|
|
|
|
|
Oil Swap |
Oil Swap Price |
|
|
|
MBbl |
$/Bbl |
|
|
1Q23 |
210 |
|
|
|
2Q23 |
540 |
|
|
|
3Q23 |
540 |
|
|
|
4Q23 |
540 |
|
|
|
1Q24 |
270 |
|
|
|
2Q24 |
270 |
|
|
|
3Q24 |
270 |
|
|
|
4Q24 |
270 |
|
|
|
Natural Gas Hedge Position |
||
|
|
Gas Swap |
Gas Swap Price |
|
|
BBtu |
$/MMbtu |
|
2Q23 |
8,190 |
|
|
3Q23 |
8,280 |
|
|
4Q23 |
8,280 |
|
|
1Q24 |
5,460 |
|
|
2Q24 |
5,460 |
|
|
3Q24 |
5,520 |
|
|
4Q24 |
5,520 |
|
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 2023, 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 conflict in conflict in
Ukraine and actions taken, and may in the future be taken, againstRussia or otherwise as a result; -
the availability of
U.S. liquefied natural gas ("LNG") export capacity and the level of demand for LNG exports; - 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;
- cybersecurity incidents, including data security breaches or computer viruses;
- competition in the oil and natural gas industry; and
- the availability, high cost, or shortages of rigs, equipment, raw materials, supplies, or personnel to develop and operate out properties; 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.
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited) |
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(In thousands, except per unit amounts) |
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Three Months Ended |
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2023 |
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|
2022 |
|
|
|
|
|
|
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REVENUE |
|
|
|
||||
|
Oil and condensate sales |
$ |
60,909 |
|
|
$ |
75,831 |
|
|
Natural gas and natural gas liquids sales |
|
57,423 |
|
|
|
75,754 |
|
|
Lease bonus and other income |
|
3,975 |
|
|
|
4,859 |
|
|
Revenue from contracts with customers |
|
122,307 |
|
|
|
156,444 |
|
|
Gain (loss) on commodity derivative instruments |
|
52,271 |
|
|
|
(120,020 |
) |
|
TOTAL REVENUE |
|
174,578 |
|
|
|
36,424 |
|
|
OPERATING (INCOME) EXPENSE |
|
|
|
||||
|
Lease operating expense |
|
2,668 |
|
|
|
3,161 |
|
|
Production costs and ad valorem taxes |
|
12,667 |
|
|
|
13,949 |
|
|
Exploration expense |
|
4 |
|
|
|
180 |
|
|
Depreciation, depletion, and amortization |
|
11,147 |
|
|
|
10,917 |
|
|
General and administrative |
|
12,648 |
|
|
|
13,763 |
|
|
Accretion of asset retirement obligations |
|
245 |
|
|
|
202 |
|
|
TOTAL OPERATING EXPENSE |
|
39,379 |
|
|
|
42,172 |
|
|
INCOME (LOSS) FROM OPERATIONS |
|
135,199 |
|
|
|
(5,748 |
) |
|
OTHER INCOME (EXPENSE) |
|
|
|
||||
|
Interest and investment income |
|
157 |
|
|
|
— |
|
|
Interest expense |
|
(814 |
) |
|
|
(1,209 |
) |
|
Other income (expense) |
|
(99 |
) |
|
|
(45 |
) |
|
TOTAL OTHER EXPENSE |
|
(756 |
) |
|
|
(1,254 |
) |
|
NET INCOME (LOSS) |
|
134,443 |
|
|
|
(7,002 |
) |
|
Distributions on Series B cumulative convertible preferred units |
|
(5,250 |
) |
|
|
(5,250 |
) |
|
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
129,193 |
|
|
$ |
(12,252 |
) |
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
||||
|
General partner interest |
$ |
— |
|
|
$ |
— |
|
|
Common units |
$ |
129,193 |
|
|
$ |
(12,252 |
) |
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
||||
|
Per common unit (basic) |
$ |
0.62 |
|
|
$ |
(0.06 |
) |
|
Per common unit (diluted) |
$ |
0.60 |
|
|
$ |
(0.06 |
) |
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
||||
|
Weighted average common units outstanding (basic) |
|
209,941 |
|
|
|
209,323 |
|
|
Weighted average common units outstanding (diluted) |
|
224,910 |
|
|
|
209,323 |
|
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
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|
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Three Months Ended |
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|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|||
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|
|
(Unaudited)
(Dollars in thousands, except
|
|||||
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Production: |
|
|
|
|
|||
|
Oil and condensate (MBbls) |
|
|
793 |
|
|
831 |
|
|
Natural gas (MMcf)1 |
|
|
16,452 |
|
|
12,759 |
|
|
Equivalents (MBoe) |
|
|
3,535 |
|
|
2,958 |
|
|
Equivalents/day (MBoe) |
|
|
39.3 |
|
|
32.9 |
|
|
Realized prices, without derivatives: |
|
|
|
|
|||
|
Oil and condensate ($/Bbl) |
|
$ |
76.81 |
|
$ |
91.25 |
|
|
Natural gas ($/Mcf)1 |
|
|
3.49 |
|
|
5.94 |
|
|
Equivalents ($/Boe) |
|
$ |
33.47 |
|
$ |
51.25 |
|
|
Revenue: |
|
|
|
|
|||
|
Oil and condensate sales |
|
$ |
60,909 |
|
$ |
75,831 |
|
|
Natural gas and natural gas liquids sales1 |
|
|
57,423 |
|
|
75,754 |
|
|
Lease bonus and other income |
|
|
3,975 |
|
|
4,859 |
|
|
Revenue from contracts with customers |
|
|
122,307 |
|
|
156,444 |
|
|
Gain (loss) on commodity derivative instruments |
|
|
52,271 |
|
|
(120,020 |
) |
|
Total revenue |
|
$ |
174,578 |
|
$ |
36,424 |
|
|
Operating expenses: |
|
|
|
|
|||
|
Lease operating expense |
|
$ |
2,668 |
|
$ |
3,161 |
|
|
Production costs and ad valorem taxes |
|
|
12,667 |
|
|
13,949 |
|
|
Exploration expense |
|
|
4 |
|
|
180 |
|
|
Depreciation, depletion, and amortization |
|
|
11,147 |
|
|
10,917 |
|
|
General and administrative |
|
|
12,648 |
|
|
13,763 |
|
|
Other expense: |
|
|
|
|
|||
|
Interest expense |
|
|
814 |
|
|
1,209 |
|
|
Per Boe: |
|
|
|
|
|||
|
Lease operating expense (per working interest Boe) |
|
$ |
12.13 |
|
$ |
10.75 |
|
|
Production costs and ad valorem taxes |
|
|
3.58 |
|
|
4.72 |
|
|
Depreciation, depletion, and amortization |
|
|
3.15 |
|
|
3.69 |
|
|
General and administrative |
|
|
3.58 |
|
|
4.65 |
|
|
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 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
|
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|
Three Months Ended |
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|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
||||
|
|
|
(Unaudited)
(In thousands, except per unit
|
||||||
|
Net income (loss) |
|
$ |
134,443 |
|
|
$ |
(7,002 |
) |
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
||||
|
Depreciation, depletion, and amortization |
|
|
11,147 |
|
|
|
10,917 |
|
|
Interest expense |
|
|
814 |
|
|
|
1,209 |
|
|
Income tax expense (benefit) |
|
|
147 |
|
|
|
103 |
|
|
Accretion of asset retirement obligations |
|
|
245 |
|
|
|
202 |
|
|
Equity–based compensation |
|
|
2,118 |
|
|
|
4,551 |
|
|
Unrealized (gain) loss on commodity derivative instruments |
|
|
(38,986 |
) |
|
|
88,776 |
|
|
Adjusted EBITDA |
|
|
109,928 |
|
|
|
98,756 |
|
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
||||
|
Change in deferred revenue |
|
|
(5 |
) |
|
|
(9 |
) |
|
Cash interest expense |
|
|
(559 |
) |
|
|
(862 |
) |
|
Preferred unit distributions |
|
|
(5,250 |
) |
|
|
(5,250 |
) |
|
Distributable cash flow |
|
$ |
104,114 |
|
|
$ |
92,635 |
|
|
|
|
|
|
|
||||
|
Total units outstanding1 |
|
|
209,967 |
|
|
|
209,398 |
|
|
Distributable cash flow per unit |
|
$ |
0.496 |
|
|
$ |
0.442 |
|
|
1 |
The distribution attributable to the three months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005703/en/
Interim Chief Financial Officer and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: