UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):   November 9, 2015

 

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Black Stone Minerals, L.P.

(Exact name of registrant as specified in its charter)

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Registrant’s telephone number, including area code: (713) 445-3200

 

Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

 

 

 

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Item 2.02  Results of Operations and Financial Condition

 

On November 9, 2015, Black Stone Minerals, L.P. issued a press release that announced its third quarter financial results. A copy of the press release is furnished herewith as Exhibit 99.1.

 

The information in Item 2.02 of this Current Report, including the exhibit attached hereto as Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

 

 

Item 9.01  Financial Statements and Exhibits

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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Exhibit Index

 

 

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Black Stone Minerals, L.P. Announces Third Quarter 2015 Results

And Announces Cash Distribution

 

HOUSTON, November 9, 2015 (BUSINESS WIRE) – Black Stone Minerals, L.P. (NYSE: BSM) (“Black Stone Minerals”) today announced its financial and operating results for the third quarter of 2015.  

 

Key Third Quarter 2015 Highlights:

 

 

Management Commentary

 

Thomas L. Carter, Jr., Black Stone Minerals’ President, Chief Executive Officer, and Chairman commented, “In tumultuous times like these for the oil and gas industry, the advantages of Black Stone Minerals’ low capital intensity business model become even more apparent. Without investing any capital, royalty volumes have grown throughout 2015 even as the drilling rig count across the industry has declined during that period. We’re actively working with our lessees to incent them to maintain or accelerate activity on BSM acreage, while also taking steps to enhance the revenues and costs that we can directly control. Management is reviewing a plan that could meaningfully reduce G&A in 2016. Deal flow for acquisitions is picking up and the balance sheet is in great shape. We remain optimistic that we are on a path that will enable us to grow distributions for unitholders.”

 

Financial and Operating Results

 

Production

 

Black Stone Minerals reported average production of 29.0 MBoe per day for the third quarter of 2015, 72.5% of which is attributable to mineral and royalty interests. This represents an increase of 2.5% over average production of 28.3 MBoe per day for the corresponding period in 2014 and is a decrease of 1.2% from the second quarter of 2015.

 

Realized Prices, Revenues, and Net Income

 

The partnership’s average realized price per Boe, excluding the effect of derivative settlements, was $28.57 for the quarter ended September 30, 2015, a decline of 36.3% from $44.88 per Boe for the quarter ended September 30, 2014.

 

Black Stone Minerals reported revenues of $137.0 million in the third quarter of 2015, an increase of 3.2% from $132.8 million in the third quarter of 2014. The increase reflects lower commodity prices compared to the corresponding period in 2014 offset by an unrealized gain of $44.1 million in the current quarter that reflects the increase in value of unsettled derivative contracts during the quarter.

 

Lease bonus for the quarter was $4.3 million for the third quarter of 2015, compared to $7.1 million for the same period last year. The timing and amount of lease bonus is variable. Several lease transactions have been completed subsequent to quarter-end and a number of transactions are currently being negotiated. Subsequent to quarter-end, Black Stone Minerals also received a cash payment of $18.7 million from an operator related to the termination of an exploration and development agreement associated with the partnership’s minerals and leasehold interests. Black Stone Minerals retained its ownership of these interests, which are currently being marketed to potential partners.

 

Reported net income was $53.9 million for the quarter ended September 30, 2015, compared to net income of $57.9 million in the corresponding period in 2014. The current period reflects a non-cash impairment of oil and natural gas properties of $24.9 million resulting from declines in future expected net cash flows and other factors at September 30, 2015.

 

 

 

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Financial Position

 

As of September 30, 2015, Black Stone Minerals had $43.0 million outstanding under its credit facility. Subsequent to quarter end, the partnership’s borrowing base was re-determined at $550.0 million as part of its regularly scheduled re-determination. Additionally, the bank group and the partnership agreed to extend the termination date of the credit agreement from February 3, 2017 to February 4, 2019. Black Stone Minerals is in compliance with all financial covenants associated with its credit facility. As of November 9, 2015, there were no outstanding borrowings under the credit facility.

 

 

Acquisitions and Investing Activities

 

Year to date, net cash used in investing activities for the partnership was $104.2 million. The largest component of this amount is $62.2 million of acquisitions, the majority of which were located in the Midland Basin and in the Eagle Ford shale. The remaining balance relates almost entirely to additions to oil and natural gas properties associated with the partnership’s working interest participation option, which allows it to participate in the development of de-risked resource plays on its mineral interests.

 

 

Distributions

 

The Board of Directors of the general partner has approved a cash distribution of $0.2625 per unit attributable to the third quarter of 2015. The quarterly distribution coverage ratio was over 1.2 times the approved distribution attributable to the third quarter of 2015. Distributions will be payable on November 27, 2015 to unitholders of record at the close of business on November 19, 2015.

 

 

Conference Call

 

Black Stone Minerals will host a conference call and webcast for investors and analysts to discuss its results of operations for the third quarter of 2015 on Tuesday, November 10, 2015 at 9:00 a.m. Central Time. To join the call, participants should dial (855) 546-9558 and use conference code 52525494. A live broadcast of the call will also be available on our website at http://investor.blackstoneminerals.com. A recording of the conference call will be available at that site through November 27, 2015.

 

 

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 in non-operating working interests 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.

 

 

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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 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:

 

 

Information for Non-U.S. Investors

 

This press release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Although a portion of Black Stone Minerals’ income may not be effectively connected income and may be subject to alternative withholding procedures, brokers and nominees should treat 100% of Black Stone Minerals’ distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business.  Accordingly, Black Stone Minerals’ distributions to non-U.S. investors are subject to federal income tax withholding at the highest marginal rate, currently 39.6% for individuals.

 

 

Black Stone Minerals, L.P. Contact

 

Brent Collins

Vice President, Investor Relations

Telephone: (713) 445-3200

investorrelations@blackstoneminerals.com   

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BLACK STONE MINERALS, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per unit amounts)

 

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The following table shows the partnership’s production, realized prices, and revenues for the periods presented.

 

 

 

 

 

 

Non-GAAP Financial Measures

 

EBITDA, Adjusted EBITDA, and cash available for distribution are non-GAAP supplemental financial measures used by Black Stone Minerals’ management and external users of the partnership’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.

 

Black Stone Minerals defines EBITDA as net income (loss) before interest expense, income taxes and depreciation, depletion, and amortization. Black Stone Minerals defines Adjusted EBITDA as EBITDA adjusted for impairment of oil and natural gas properties, accretion of asset retirement obligations, unrealized gains/losses on commodity derivative instruments, and non-cash equity-based compensation. Black Stone Minerals defines cash available for distribution as Adjusted EBITDA plus or minus amounts for certain non-cash operating activities, borrowings for capital expenditures, capital expenditures, cash interest expense, and distributions to noncontrolling interests and preferred unitholders.

 

EBITDA, Adjusted EBITDA, and cash available for distribution should not be considered an alternative to, or more meaningful than, net income, income from operations, cash flows from operating activities, or any other measure of financial performance presented in accordance with GAAP as measures of the partnership’s financial performance. EBITDA, Adjusted EBITDA, and cash available for distribution have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. The partnership’s computation of EBITDA, Adjusted EBITDA, and cash available for distribution may differ from computations of similarly titled measures of other companies.

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The following table presents a reconciliation of EBITDA, Adjusted EBITDA, and cash available for distribution to net income, the most directly comparable GAAP financial measure, for the periods indicated.

 

 

 

 

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