Black Stone Minerals, L.P. Reports Second Quarter Results
Financial and Operational Highlights
- Mineral and royalty production for the second quarter of 2023 equaled 33.6 MBoe/d, a decrease of 9% over the prior quarter; total production, including working-interest volumes, was 36.2 MBoe/d for the quarter.
-
Net income for the second quarter was
$78.4 million . Adjusted EBITDA for the quarter totaled$109.2 million . -
Distributable cash flow was
$103.6 million for the second quarter and the fifth consecutive quarter above$100 million . -
Black Stone announced a distribution of
$0.475 per unit with respect to the second quarter of 2023, representing an increase of 13% over the common distribution paid for the second quarter of 2022. Distribution coverage for all units was 1.04x. -
Total outstanding debt at the end of the second quarter was zero; as of
July 28, 2023 , total debt remained at zero with$81.4 million of cash.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We continue to execute on our plans for the year and are starting to see increased volumes in the Shelby Trough as Aethon continues to ramp up production consistent with our development agreements. While prices pulled back in the second quarter, we continue working with operators to drive additional drilling activity on our acreage and maintain a strong balance sheet to create long-term value to our unitholders through various commodity cycles.”
Quarterly Financial and Operating Results
Production
Working-interest production for the second quarter of 2023 was 2.6 MBoe/d, representing an increase of 8% from the levels generated in the quarter ended
Total reported production averaged 36.2 MBoe/d (93% mineral and royalty, 74% natural gas) for the second quarter of 2023 compared to 39.3 MBoe/d and 33.5 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 second quarter of 2023 was
Financial Position and Activities
As of
Effective
During the second quarter of 2023, the Company made no repurchases of units under the Board-approved
Second Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution of
Activity Update
Rig Activity
As of
Shelby Trough Development Update
Aethon continues to perform with drilling and completing wells according to our development agreements. Aethon has five rigs currently on Black Stone acreage in the Shelby Trough. Aethon has successfully turned 16 wells to sales and has commenced operations on 18 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 2023 Guidance
The Company expects full year 2023 production volumes to be within the original guidance range of 37 - 39 MBoe/d. Management anticipates that production volumes will ramp up throughout the remainder of the year, driven primarily by the increases in drilling activity in the Shelby Trough and
|
|
Original Guidance |
|
Revised Guidance |
|
Mineral and royalty production (MBoe/d) |
35 - 37 |
|
35 - 37 |
|
Working-interest production (MBoe/d) |
2 - 3 |
|
2 - 3 |
|
Total production (MBoe/d) |
37 - 39 |
|
37 - 39 |
|
Percentage natural gas |
72% |
|
74% |
|
Percentage royalty interest |
94% |
|
93% |
|
|
|
|
|
|
Lease bonus and other income ($MM) |
|
|
|
|
|
|
|
|
|
Lease operating expense ($MM) |
|
|
|
|
Production costs and ad valorem taxes (as % of total pre-derivative O&G revenue) |
9% - 11% |
|
10% - 12% |
|
|
|
|
|
|
G&A - cash ($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 2023 and 2024. The Company's hedge position as of
|
Oil Hedge Position |
|
|
|
|
|
Oil Swap |
Oil Swap Price |
|
|
|
MBbl |
$/Bbl |
|
|
3Q23 |
540 |
|
|
|
4Q23 |
540 |
|
|
|
1Q24 |
450 |
|
|
|
2Q24 |
450 |
|
|
|
3Q24 |
450 |
|
|
|
4Q24 |
450 |
|
|
Natural Gas Hedge Position |
|||
|
|
Gas Swap |
|
Gas Swap Price |
|
|
BBtu |
|
$/MMbtu |
|
3Q23 |
8,280 |
|
|
|
4Q23 |
8,280 |
|
|
|
1Q24 |
10,010 |
|
|
|
2Q24 |
10,010 |
|
|
|
3Q24 |
10,120 |
|
|
|
4Q24 |
10,120 |
|
|
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 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 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;
- 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 our 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.
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per unit amounts) |
|||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
REVENUE |
|
|
|
|
|
|
|
||||||||
|
Oil and condensate sales |
$ |
61,551 |
|
|
$ |
94,296 |
|
|
$ |
122,460 |
|
|
$ |
170,127 |
|
|
Natural gas and natural gas liquids sales |
|
41,619 |
|
|
|
111,181 |
|
|
|
99,042 |
|
|
|
186,935 |
|
|
Lease bonus and other income |
|
2,527 |
|
|
|
2,244 |
|
|
|
6,502 |
|
|
|
7,103 |
|
|
Revenue from contracts with customers |
|
105,697 |
|
|
|
207,721 |
|
|
|
228,004 |
|
|
|
364,165 |
|
|
Gain (loss) on commodity derivative instruments |
|
11,303 |
|
|
|
(27,349 |
) |
|
|
63,574 |
|
|
|
(147,369 |
) |
|
TOTAL REVENUE |
|
117,000 |
|
|
|
180,372 |
|
|
|
291,578 |
|
|
|
216,796 |
|
|
OPERATING (INCOME) EXPENSE |
|
|
|
|
|
|
|
||||||||
|
Lease operating expense |
|
2,866 |
|
|
|
3,199 |
|
|
|
5,534 |
|
|
|
6,360 |
|
|
Production costs and ad valorem taxes |
|
12,844 |
|
|
|
19,504 |
|
|
|
25,511 |
|
|
|
33,453 |
|
|
Exploration expense |
|
4 |
|
|
|
2 |
|
|
|
8 |
|
|
|
182 |
|
|
Depreciation, depletion, and amortization |
|
10,421 |
|
|
|
11,893 |
|
|
|
21,568 |
|
|
|
22,810 |
|
|
General and administrative |
|
11,854 |
|
|
|
12,519 |
|
|
|
24,502 |
|
|
|
26,282 |
|
|
Accretion of asset retirement obligations |
|
250 |
|
|
|
205 |
|
|
|
495 |
|
|
|
407 |
|
|
(Gain) loss on sale of assets, net |
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
|
TOTAL OPERATING EXPENSE |
|
38,239 |
|
|
|
47,305 |
|
|
|
77,618 |
|
|
|
89,477 |
|
|
INCOME (LOSS) FROM OPERATIONS |
|
78,761 |
|
|
|
133,067 |
|
|
|
213,960 |
|
|
|
127,319 |
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
||||||||
|
Interest and investment income |
|
373 |
|
|
|
2 |
|
|
|
530 |
|
|
|
2 |
|
|
Interest expense |
|
(645 |
) |
|
|
(1,362 |
) |
|
|
(1,459 |
) |
|
|
(2,571 |
) |
|
Other income (expense) |
|
(97 |
) |
|
|
81 |
|
|
|
(196 |
) |
|
|
36 |
|
|
TOTAL OTHER EXPENSE |
|
(369 |
) |
|
|
(1,279 |
) |
|
|
(1,125 |
) |
|
|
(2,533 |
) |
|
NET INCOME (LOSS) |
|
78,392 |
|
|
|
131,788 |
|
|
|
212,835 |
|
|
|
124,786 |
|
|
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 |
$ |
73,142 |
|
|
$ |
126,538 |
|
|
$ |
202,335 |
|
|
$ |
114,286 |
|
|
ALLOCATION OF NET INCOME (LOSS): |
|
|
|
|
|
|
|
||||||||
|
General partner interest |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Common units |
$ |
73,142 |
|
|
$ |
126,538 |
|
|
$ |
202,335 |
|
|
$ |
114,286 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT: |
|
|
|
|
|
|
|
||||||||
|
Per common unit (basic) |
$ |
0.35 |
|
|
$ |
0.60 |
|
|
$ |
0.96 |
|
|
$ |
0.55 |
|
|
Per common unit (diluted) |
$ |
0.35 |
|
|
$ |
0.59 |
|
|
$ |
0.95 |
|
|
$ |
0.55 |
|
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING: |
|
|
|
|
|
|
|
||||||||
|
Weighted average common units outstanding (basic) |
|
209,967 |
|
|
|
209,397 |
|
|
|
209,954 |
|
|
|
209,360 |
|
|
Weighted average common units outstanding (diluted) |
|
209,967 |
|
|
|
224,366 |
|
|
|
224,923 |
|
|
|
209,360 |
|
The following table shows the Company’s production, revenues, pricing, and expenses for the periods presented:
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
|
|
|
(Unaudited) (Dollars in thousands, except for realized prices and per Boe data) |
||||||||||||
|
Production: |
|
|
|
|
|
|
|
|
||||||
|
Oil and condensate (MBbls) |
|
|
846 |
|
|
899 |
|
|
|
1,639 |
|
|
1,730 |
|
|
Natural gas (MMcf)1 |
|
|
14,670 |
|
|
12,895 |
|
|
|
31,121 |
|
|
25,654 |
|
|
Equivalents (MBoe) |
|
|
3,291 |
|
|
3,048 |
|
|
|
6,826 |
|
|
6,006 |
|
|
Equivalents/day (MBoe) |
|
|
36.2 |
|
|
33.5 |
|
|
|
37.7 |
|
|
33.2 |
|
|
Realized prices, without derivatives: |
|
|
|
|
|
|
|
|
||||||
|
Oil and condensate ($/Bbl) |
|
$ |
72.76 |
|
$ |
104.89 |
|
|
$ |
74.72 |
|
$ |
98.34 |
|
|
Natural gas ($/Mcf)1 |
|
|
2.84 |
|
|
8.62 |
|
|
|
3.18 |
|
|
7.29 |
|
|
Equivalents ($/Boe) |
|
$ |
31.35 |
|
$ |
67.41 |
|
|
$ |
32.45 |
|
$ |
59.45 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
||||||
|
Oil and condensate sales |
|
$ |
61,551 |
|
$ |
94,296 |
|
|
$ |
122,460 |
|
$ |
170,127 |
|
|
Natural gas and natural gas liquids sales1 |
|
|
41,619 |
|
|
111,181 |
|
|
|
99,042 |
|
|
186,935 |
|
|
Lease bonus and other income |
|
|
2,527 |
|
|
2,244 |
|
|
|
6,502 |
|
|
7,103 |
|
|
Revenue from contracts with customers |
|
|
105,697 |
|
|
207,721 |
|
|
|
228,004 |
|
|
364,165 |
|
|
Gain (loss) on commodity derivative instruments |
|
|
11,303 |
|
|
(27,349 |
) |
|
|
63,574 |
|
|
(147,369 |
) |
|
Total revenue |
|
$ |
117,000 |
|
$ |
180,372 |
|
|
$ |
291,578 |
|
$ |
216,796 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||
|
Lease operating expense |
|
$ |
2,866 |
|
$ |
3,199 |
|
|
$ |
5,534 |
|
$ |
6,360 |
|
|
Production costs and ad valorem taxes |
|
|
12,844 |
|
|
19,504 |
|
|
|
25,511 |
|
|
33,453 |
|
|
Exploration expense |
|
|
4 |
|
|
2 |
|
|
|
8 |
|
|
182 |
|
|
Depreciation, depletion, and amortization |
|
|
10,421 |
|
|
11,893 |
|
|
|
21,568 |
|
|
22,810 |
|
|
General and administrative |
|
|
11,854 |
|
|
12,519 |
|
|
|
24,502 |
|
|
26,282 |
|
|
Other expense: |
|
|
|
|
|
|
|
|
||||||
|
Interest expense |
|
|
645 |
|
|
1,362 |
|
|
|
1,459 |
|
|
2,571 |
|
|
Per Boe: |
|
|
|
|
|
|
|
|
||||||
|
Lease operating expense (per working-interest Boe) |
|
$ |
12.46 |
|
$ |
11.03 |
|
|
$ |
12.30 |
|
$ |
10.89 |
|
|
Production costs and ad valorem taxes |
|
|
3.90 |
|
|
6.40 |
|
|
|
3.74 |
|
|
5.57 |
|
|
Depreciation, depletion, and amortization |
|
|
3.17 |
|
|
3.90 |
|
|
|
3.16 |
|
|
3.80 |
|
|
General and administrative |
|
|
3.60 |
|
|
4.11 |
|
|
|
3.59 |
|
|
4.38 |
|
|
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
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
|
|
|
(Unaudited) (In thousands, except per unit amounts) |
||||||||||||||
|
Net income (loss) |
|
$ |
78,392 |
|
|
$ |
131,788 |
|
|
$ |
212,835 |
|
|
$ |
124,786 |
|
|
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
||||||||
|
Depreciation, depletion, and amortization |
|
|
10,421 |
|
|
|
11,893 |
|
|
|
21,568 |
|
|
|
22,810 |
|
|
Interest expense |
|
|
645 |
|
|
|
1,362 |
|
|
|
1,459 |
|
|
|
2,571 |
|
|
Income tax expense (benefit) |
|
|
139 |
|
|
|
(14 |
) |
|
|
286 |
|
|
|
89 |
|
|
Accretion of asset retirement obligations |
|
|
250 |
|
|
|
205 |
|
|
|
495 |
|
|
|
407 |
|
|
Equity–based compensation |
|
|
2,517 |
|
|
|
2,724 |
|
|
|
4,635 |
|
|
|
7,275 |
|
|
Unrealized (gain) loss on commodity derivative instruments |
|
|
16,881 |
|
|
|
(35,103 |
) |
|
|
(22,105 |
) |
|
|
53,673 |
|
|
(Gain) loss on sale of assets, net |
|
|
— |
|
|
|
(17 |
) |
|
|
— |
|
|
|
(17 |
) |
|
Adjusted EBITDA |
|
|
109,245 |
|
|
|
112,838 |
|
|
|
219,173 |
|
|
|
211,594 |
|
|
Adjustments to reconcile to Distributable cash flow: |
|
|
|
|
|
|
|
|
||||||||
|
Change in deferred revenue |
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
(15 |
) |
|
Cash interest expense |
|
|
(387 |
) |
|
|
(1,015 |
) |
|
|
(946 |
) |
|
|
(1,877 |
) |
|
Preferred unit distributions |
|
|
(5,250 |
) |
|
|
(5,250 |
) |
|
|
(10,500 |
) |
|
|
(10,500 |
) |
|
Distributable cash flow |
|
$ |
103,606 |
|
|
$ |
106,567 |
|
|
$ |
207,720 |
|
|
$ |
199,202 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total units outstanding1 |
|
|
209,979 |
|
|
|
209,402 |
|
|
|
|
|
||||
|
Distributable cash flow per unit |
|
$ |
0.493 |
|
|
$ |
0.509 |
|
|
|
|
|
||||
|
1 |
The distribution attributable to the three months ended |
|||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230731912888/en/
Interim Chief Financial Officer and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Source: