Black Stone Minerals, L.P. Reports Second Quarter Results
Financial and Operational Highlights
- Mineral and royalty production for the second quarter of 2021 equaled 32.5 MBoe/d, an increase of 5% over the prior quarter; total production, including working interest volumes, was 38.2 MBoe/d for the quarter.
-
Net income and Adjusted EBITDA for the quarter totaled
$15.4 million and$78.4 million , respectively. -
Distributable cash flow was
$72.1 million for the second quarter, an increase of 34% over the first quarter of 2021. -
Announced a distribution of
$0.25 per unit with respect to the second quarter of 2021, composed of a base distribution of$0.20 per unit and a special distribution of$0.05 per unit reflecting the benefit of certain positive, one-time items during the second quarter. Distribution coverage for all units on the base distribution of$0.20 per unit is 1.7x and distribution coverage on the combined base and special distribution of$0.25 per unit is 1.4x. -
Total debt at the end of the second quarter was
$96.0 million ; total debt to trailing twelve-month Adjusted EBITDA was 0.4x at quarter-end. As ofJuly 30, 2021 , total debt had been reduced to$81 million . -
As previously disclosed, entered into agreements promoting Haynesville and Bossier development of certain of the Company’s acreage in
San Augustine County, Texas , andAustin Chalk development inEast Texas . - Subsequent to the end of the quarter, announced a new sustainability initiative in which Black Stone will use proceeds from surface use waivers on its mineral acreage supporting solar development to purchase carbon credits in an effort to offset part of the CO2 emissions associated with its mineral production.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We posted robust operational and financial performance for the second quarter, with increases in production and realized prices. In addition to better fundamentals, our results for the quarter were bolstered by strong lease bonus payments and higher gas price realizations stemming from the February Texas storms. Most importantly, the positive results combined with our low debt levels allowed us to prioritize returning cash flow to our unitholders in the form of increased distributions. We look forward to building on this positive momentum into 2022.”
Quarterly Financial and Operating Results
Production
Working interest production for the second quarter of 2021 was 5.7 MBoe/d, and represents a decrease of 1% from the levels generated in the quarter ended
Total reported production averaged 38.2 MBoe/d (85% mineral and royalty, 75% natural gas) for the second quarter of 2021. Total production was 36.8 MBoe/d and 42.6 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 second quarter of 2021 was
Financial Position and Activities
As of
During the second quarter, Black Stone's borrowing base was reaffirmed at
During the second quarter of 2021, the Company made no repurchases of units under the Board-approved
Second 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 turned to sales the initial two program wells and has commenced operations on four additional wells under the development agreement covering
In
In
Austin Chalk Update
In
In
Earlier in the year, 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 2021 Guidance
The following table provides the assumptions for Black Stone’s original and current 2021 guidance. Production through the first half of 2021 exceeded the Company’s original guidance expectations. Production is anticipated to trend lower in the second half of 2021, driven in part by declines in mature plays such as the Bakken and
|
|
Original Guidance |
Revised Guidance |
|
Mineral and royalty production (MBoe/d) |
28 - 30 |
29 - 31 |
|
Working interest production (MBoe/d) |
5.5 - 6.5 |
5.5 - 6.0 |
|
Total production (MBoe/d) |
33.5 - 36.5 |
34.5 - 37.0 |
|
Percentage natural gas |
~76% |
~75% |
|
Percentage royalty interest |
~83% |
~84% |
|
|
|
|
|
Lease bonus and other income ($MM) |
|
|
|
|
|
|
|
Lease operating expense ($MM) |
|
|
|
Production costs and ad valorem taxes (as % of total pre-derivative O&G revenue) |
13% - 15% |
10% - 12% |
|
|
|
|
|
G&A - cash ($MM) |
|
|
|
G&A - non-cash ($MM) |
|
|
|
G&A - TOTAL ($MM) |
|
|
|
|
|
|
|
DD&A ($/Boe) |
|
|
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 |
|
2Q21 |
220 |
|
|
3Q21 |
660 |
|
|
4Q21 |
660 |
|
|
1Q22 |
480 |
|
|
2Q22 |
480 |
|
|
3Q22 |
480 |
|
|
4Q22 |
480 |
|
|
Natural Gas Hedge Position |
|
|
|
|
Gas Swap |
Gas Swap Price |
|
|
BBtu |
$/MMbtu |
|
3Q21 |
10,120 |
|
|
4Q21 |
10,120 |
|
|
1Q22 |
7,920 |
|
|
2Q22 |
8,000 |
|
|
3Q22 |
8,080 |
|
|
4Q22 |
8,080 |
|
More detailed information about the Company's existing hedging program can be found in the Quarterly Report on Form 10-Q for the second 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;
- cybersecurity incidents, including data security breaches or computer viruses;
- 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 |
|
Six Months Ended |
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
REVENUE |
|
|
|
|
|
|
|
||||||||
|
Oil and condensate sales |
$ |
53,936 |
|
|
$ |
25,417 |
|
|
$ |
98,112 |
|
|
$ |
77,510 |
|
|
Natural gas and natural gas liquids sales |
56,481 |
|
|
30,311 |
|
|
99,370 |
|
|
66,953 |
|
||||
|
Lease bonus and other income |
7,505 |
|
|
1,975 |
|
|
9,890 |
|
|
6,283 |
|
||||
|
Revenue from contracts with customers |
117,922 |
|
|
57,703 |
|
|
207,372 |
|
|
150,746 |
|
||||
|
Gain (loss) on commodity derivative instruments |
(59,479 |
) |
|
(19,174 |
) |
|
(87,361 |
) |
|
70,837 |
|
||||
|
TOTAL REVENUE |
58,443 |
|
|
38,529 |
|
|
120,011 |
|
|
221,583 |
|
||||
|
OPERATING (INCOME) EXPENSE |
|
|
|
|
|
|
|
||||||||
|
Lease operating expense |
3,837 |
|
|
3,293 |
|
|
6,501 |
|
|
7,120 |
|
||||
|
Production costs and ad valorem taxes |
9,296 |
|
|
9,555 |
|
|
21,138 |
|
|
21,931 |
|
||||
|
Exploration expense |
3 |
|
|
23 |
|
|
1,076 |
|
|
24 |
|
||||
|
Depreciation, depletion, and amortization |
15,796 |
|
|
19,193 |
|
|
31,428 |
|
|
42,375 |
|
||||
|
Impairment of oil and natural gas properties |
— |
|
|
— |
|
|
— |
|
|
51,031 |
|
||||
|
General and administrative |
12,187 |
|
|
11,501 |
|
|
25,039 |
|
|
23,357 |
|
||||
|
Accretion of asset retirement obligations |
298 |
|
|
278 |
|
|
590 |
|
|
550 |
|
||||
|
TOTAL OPERATING EXPENSE |
41,417 |
|
|
43,843 |
|
|
85,772 |
|
|
146,388 |
|
||||
|
INCOME (LOSS) FROM OPERATIONS |
17,026 |
|
|
(5,314 |
) |
|
34,239 |
|
|
75,195 |
|
||||
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
||||||||
|
Interest and investment income |
— |
|
|
3 |
|
|
— |
|
|
34 |
|
||||
|
Interest expense |
(1,628 |
) |
|
(2,964 |
) |
|
(2,838 |
) |
|
(7,391 |
) |
||||
|
Other income (expense) |
31 |
|
|
(96 |
) |
|
214 |
|
|
(97 |
) |
||||
|
TOTAL OTHER EXPENSE |
(1,597 |
) |
|
(3,057 |
) |
|
(2,624 |
) |
|
(7,454 |
) |
||||
|
NET INCOME (LOSS) |
15,429 |
|
|
(8,371 |
) |
|
31,615 |
|
|
67,741 |
|
||||
|
Distributions on Series B cumulative convertible preferred units |
(5,250 |
) |
|
(5,250 |
) |
|
(10,500 |
) |
|
(10,500 |
) |
||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS |
$ |
10,179 |
|
|
$ |
(13,621 |
) |
|
$ |
21,115 |
|
|
$ |
57,241 |
|
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
|
|
|
|
||||||||
|
General partner interest |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Common units |
10,179 |
|
|
(13,621 |
) |
|
21,115 |
|
|
57,241 |
|
||||
|
|
$ |
10,179 |
|
|
$ |
(13,621 |
) |
|
$ |
21,115 |
|
|
$ |
57,241 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
|
|
|
|
||||||||
|
Per common unit (basic) |
$ |
0.05 |
|
|
$ |
(0.07 |
) |
|
$ |
0.10 |
|
|
$ |
0.28 |
|
|
Per common unit (diluted) |
$ |
0.05 |
|
|
$ |
(0.07 |
) |
|
$ |
0.10 |
|
|
$ |
0.28 |
|
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
|
|
|
|
||||||||
|
Weighted average common units outstanding (basic) |
207,945 |
|
|
206,707 |
|
|
207,695 |
|
|
206,669 |
|
||||
|
Weighted average common units outstanding (diluted) |
207,945 |
|
|
206,707 |
|
|
207,695 |
|
|
206,669 |
|
||||
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
||||||||||||||
|
Production: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate (MBbls) |
|
860 |
|
|
864 |
|
|
1,689 |
|
|
2,027 |
|
||||
|
Natural gas (MMcf)1 |
|
15,676 |
|
|
18,090 |
|
|
30,586 |
|
|
36,702 |
|
||||
|
Equivalents (MBoe) |
|
3,473 |
|
|
3,879 |
|
|
6,787 |
|
|
8,144 |
|
||||
|
Equivalents/day (MBoe) |
|
38.2 |
|
|
42.6 |
|
|
37.5 |
|
|
44.7 |
|
||||
|
Realized prices, without derivatives: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate ($/Bbl) |
|
$ |
62.72 |
|
|
$ |
29.42 |
|
|
$ |
58.09 |
|
|
$ |
38.24 |
|
|
Natural gas ($/Mcf)1 |
|
3.60 |
|
|
1.68 |
|
|
3.25 |
|
|
1.82 |
|
||||
|
Equivalents ($/Boe) |
|
$ |
31.79 |
|
|
$ |
14.37 |
|
|
$ |
29.10 |
|
|
$ |
17.74 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
||||||||
|
Oil and condensate sales |
|
$ |
53,936 |
|
|
$ |
25,417 |
|
|
$ |
98,112 |
|
|
$ |
77,510 |
|
|
Natural gas and natural gas liquids sales1 |
|
56,481 |
|
|
30,311 |
|
|
99,370 |
|
|
66,953 |
|
||||
|
Lease bonus and other income |
|
7,505 |
|
|
1,975 |
|
|
9,890 |
|
|
6,283 |
|
||||
|
Revenue from contracts with customers |
|
117,922 |
|
|
57,703 |
|
|
207,372 |
|
|
150,746 |
|
||||
|
Gain (loss) on commodity derivative instruments |
|
(59,479 |
) |
|
(19,174 |
) |
|
(87,361 |
) |
|
70,837 |
|
||||
|
Total revenue |
|
$ |
58,443 |
|
|
$ |
38,529 |
|
|
$ |
120,011 |
|
|
$ |
221,583 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Lease operating expense |
|
$ |
3,837 |
|
|
$ |
3,293 |
|
|
$ |
6,501 |
|
|
$ |
7,120 |
|
|
Production costs and ad valorem taxes |
|
9,296 |
|
|
9,555 |
|
|
21,138 |
|
|
21,931 |
|
||||
|
Exploration expense |
|
3 |
|
|
23 |
|
|
1,076 |
|
|
24 |
|
||||
|
Depreciation, depletion, and amortization |
|
15,796 |
|
|
19,193 |
|
|
31,428 |
|
|
42,375 |
|
||||
|
Impairment of oil and natural gas properties |
|
— |
|
|
— |
|
|
— |
|
|
51,031 |
|
||||
|
General and administrative |
|
12,187 |
|
|
11,501 |
|
|
25,039 |
|
|
23,357 |
|
||||
|
Other expense: |
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
1,628 |
|
|
2,964 |
|
|
2,838 |
|
|
7,391 |
|
||||
|
Per Boe: |
|
|
|
|
|
|
|
|
||||||||
|
Lease operating expense (per working interest Boe) |
|
$ |
7.41 |
|
|
$ |
4.18 |
|
|
$ |
6.27 |
|
|
$ |
4.15 |
|
|
Production costs and ad valorem taxes |
|
2.68 |
|
|
2.46 |
|
|
3.11 |
|
|
2.69 |
|
||||
|
Depreciation, depletion, and amortization |
|
4.55 |
|
|
4.95 |
|
|
4.63 |
|
|
5.20 |
|
||||
|
General and administrative |
|
3.51 |
|
|
2.96 |
|
|
3.69 |
|
|
2.87 |
|
||||
|
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, 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 |
|
Six Months Ended |
||||||||||||
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
(Unaudited) (In thousands, except per unit amounts) |
||||||||||||||
|
Net income (loss) |
|
$ |
15,429 |
|
|
$ |
(8,371 |
) |
|
$ |
31,615 |
|
|
$ |
67,741 |
|
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
|
Depreciation, depletion, and amortization |
|
15,796 |
|
|
19,193 |
|
|
31,428 |
|
|
42,375 |
|
||||
|
Impairment of oil and natural gas properties |
|
— |
|
|
— |
|
|
— |
|
|
51,031 |
|
||||
|
Interest expense |
|
1,628 |
|
|
2,964 |
|
|
2,838 |
|
|
7,391 |
|
||||
|
Income tax expense (benefit) |
|
7 |
|
|
126 |
|
|
(150 |
) |
|
162 |
|
||||
|
Accretion of asset retirement obligations |
|
298 |
|
|
278 |
|
|
590 |
|
|
550 |
|
||||
|
Equity–based compensation |
|
3,071 |
|
|
2,474 |
|
|
6,534 |
|
|
(420 |
) |
||||
|
Unrealized (gain) loss on commodity derivative instruments |
|
42,134 |
|
|
55,726 |
|
|
65,493 |
|
|
(25,331 |
) |
||||
|
Adjusted EBITDA |
|
78,363 |
|
|
72,390 |
|
|
138,348 |
|
|
143,499 |
|
||||
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
|
|
|
||||||||
|
Change in deferred revenue |
|
(5 |
) |
|
(7 |
) |
|
(15 |
) |
|
(309 |
) |
||||
|
Cash interest expense |
|
(1,001 |
) |
|
(2,704 |
) |
|
(1,954 |
) |
|
(6,872 |
) |
||||
|
Preferred unit distributions |
|
(5,250 |
) |
|
(5,250 |
) |
|
(10,500 |
) |
|
(10,500 |
) |
||||
|
Restructuring charges1 |
|
— |
|
|
— |
|
|
— |
|
|
4,815 |
|
||||
|
Distributable cash flow |
|
$ |
72,107 |
|
|
$ |
64,429 |
|
|
$ |
125,879 |
|
|
$ |
130,633 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total units outstanding2 |
|
208,643 |
|
|
206,738 |
|
|
|
|
|
||||||
|
Distributable cash flow per unit |
|
$ |
0.346 |
|
|
$ |
0.312 |
|
|
|
|
|
||||
|
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 |
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President and Chief Financial Officer
Vice President, Finance and Investor Relations
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
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