Black Stone Minerals, L.P. (NYSE: BSM) ("Black Stone Minerals,"
"Black Stone," or "the Company") today announces its financial and
operating results for the second quarter of 2023.
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
Black Stone Minerals reported mineral and royalty volume of 33.6
MBoe/d (74% natural gas) for the second quarter of 2023, compared
to 36.8 MBoe/d for the first quarter of 2023 and 30.3 MBoe/d for
the second quarter of 2022. The decrease was primarily driven by
lower volumes in the Louisiana Haynesville where rig count and
activity have pulled back in response to lower natural gas prices.
This was partially offset by increased oil volumes compared to the
first quarter which was led by several high interest properties
coming online in the Bakken.
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 March 31, 2023, and a decrease of
19% from the quarter ended June 30, 2022. The continued decline
year over year in working-interest volumes is consistent with the
Company's decision to farm out its working-interest participation
to third-party capital providers.
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 March 31,
2023 and June 30, 2022, respectively.
Realized Prices, Revenues, and Net Income
The Company’s average realized price per Boe, excluding the
effect of derivative settlements, was $31.35 for the quarter ended
June 30, 2023. This is a decrease of 6% from $33.47 per Boe in the
first quarter of 2023 and a 53% decrease from $67.41 in the second
quarter of 2022. Natural gas realizations benefited from new
production that came online in the second half of 2022.
Black Stone reported oil and gas revenue of $103.2 million (60%
oil and condensate) for the second quarter of 2023, a decrease of
13% from $118.3 million in the first quarter of 2023. Oil and gas
revenue in the second quarter of 2022 was $205.5 million.
The Company reported a gain on commodity derivative instruments
of $11.3 million for the second quarter of 2023, composed of a
$28.2 million gain from realized settlements and a non-cash $16.9
million unrealized loss due to the change in value of Black Stone’s
derivative positions during the quarter. Black Stone reported a
gain of $52.3 million and a loss of $27.3 million on commodity
derivative instruments for the quarters ended March 31, 2023 and
June 30, 2022, respectively.
Lease bonus and other income was $2.5 million for the second
quarter of 2023, primarily related to leasing activity in the
Bakken and Haynesville/Bossier. Lease bonus and other income for
the quarters ended March 31, 2023 and June 30, 2022 was $4.0
million and $2.2 million, respectively.
The Company reported net income of $78.4 million for the quarter
ended June 30, 2023, compared to net income of $134.4 million in
the preceding quarter. For the quarter ended June 30, 2022, the
Company reported net income of $131.8 million.
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the second quarter of 2023 was $109.2
million, which compares to $109.9 million in the first quarter of
2023 and $112.8 million in the second quarter of 2022.
Distributable cash flow for the quarter ended June 30, 2023 was
$103.6 million. For the quarters ended March 31, 2023 and June 30,
2022, distributable cash flow was $104.1 million and $106.6
million, respectively.
Financial Position and Activities
As of June 30, 2023, Black Stone Minerals had $46.7 million in
cash and no amount was drawn under its credit facility. At the end
of July, the Company had approximately $81.4 million in cash, and
no debt was outstanding under the credit facility. Interest expense
for the second quarter of 2023 was $0.6 million, a decrease from
$0.8 million in the first quarter. The decrease was attributable to
lower borrowings under the credit facility during the period, which
was partially offset by higher interest rates.
Effective April 27, 2023, Black Stone's borrowing base was
reaffirmed at $550 million and total commitments were $375 million.
Black Stone is in compliance with all financial covenants
associated with its credit facility.
During the second quarter of 2023, the Company made no
repurchases of units under the Board-approved $75 million unit
repurchase program.
Second Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution
of $0.475 for each common unit attributable to the second quarter
of 2023. The quarterly distribution coverage ratio attributable to
the second quarter of 2023 was approximately 1.04x. These
distributions will be paid on August 18, 2023 to unitholders of
record as of the close of business on August 11, 2023.
Activity Update
Rig Activity
As of June 30, 2023, Black Stone had 73 rigs operating across
its acreage position, a decrease relative to the 78 rigs on the
Company's acreage as of March 31, 2023 and the 81 rigs operating on
the Company's acreage as of June 30, 2022. The decrease in rigs at
the end of the second quarter was driven primarily by a reduction
in the Wolfcamp and was consistent with overall U.S. rig count
trends as a response to pricing pressures.
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
Angelina County. Aethon has successfully turned six wells to sales
and has another nine wells awaiting completion operations under the
separate development agreement covering San Augustine County.
Additionally, XTO Energy has turned four wells to sales in the
second quarter and has two wells currently awaiting completion
operations.
Austin Chalk Update
Black Stone has entered into agreements with multiple operators
to drill wells in the areas of the Austin Chalk in East Texas,
where the Company has significant acreage positions. The results of
the 2021 three well test program in the Brookeland Field
demonstrated that modern completion technology has the potential to
greatly improve production rates and increase reserves when
compared to the vintage, unstimulated wells in the Austin Chalk
formation. Eight operators are actively engaged in redevelopment of
the field. Black Stone has also reached an agreement with one of
these operators to drill 10 wells in the field over the next two
years. To date, 26 wells with modern completions are now producing
in the field, and an additional three wells are currently either
being drilled or completed.
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 Austin Chalk plays as
discussed above.
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)
$10 - $12
$10 - $12
Lease operating expense ($MM)
$12 - $13
$11 - $12
Production costs and ad valorem taxes (as
% of total pre-derivative O&G revenue)
9% - 11%
10% - 12%
G&A - cash ($MM)
$42 - $44
$42 - $44
G&A - non-cash ($MM)
$12 - $14
$11 - $13
G&A - TOTAL ($MM)
$54 - $58
$53 - $57
DD&A ($/Boe)
$3.50 - $3.75
$3.25 - $3.50
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 July 28, 2023 is summarized in the
following tables:
Oil Hedge Position
Oil Swap
Oil Swap Price
MBbl
$/Bbl
3Q23
540
$80.80
4Q23
540
$80.80
1Q24
450
$68.98
2Q24
450
$68.98
3Q24
450
$68.98
4Q24
450
$68.98
Natural Gas Hedge Position
Gas Swap
Gas Swap Price
BBtu
$/MMbtu
3Q23
8,280
$5.15
4Q23
8,280
$5.15
1Q24
10,010
$3.57
2Q24
10,010
$3.57
3Q24
10,120
$3.57
4Q24
10,120
$3.57
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
August 1, 2023.
Conference Call
Black Stone Minerals will host a conference call and webcast for
investors and analysts to discuss its results for the second
quarter of 2023 on Tuesday, August 1, 2023 at 9:00 a.m. Central
Time. Black Stone recommends participants who do not anticipate
asking questions to listen to the call via the live broadcast
available at http://investor.blackstoneminerals.com. Analysts and
investors who wish to ask questions should dial (800) 245-3047 for
domestic participants and (203) 518-9765 for international
participants, the conference ID for the call is BSMQ223. A
recording of the conference call will be available on Black Stone's
website.
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 Company
owns mineral interests and royalty interests in 41 states in the
continental United States. Black Stone believes its large,
diversified asset base and long-lived, non-cost-bearing mineral and
royalty interests provide for stable to growing production and
reserves over time, allowing the majority of generated cash flow to
be distributed to unitholders.
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,
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 Company’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:
- 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.
BLACK STONE MINERALS, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per unit
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
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 June
30,
Six Months Ended June
30,
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,
Black Stone Minerals is often provided insufficient and
inconsistent data on natural gas liquid ("NGL") volumes by its
operators. As a result, the Company is unable to reliably determine
the total volumes of NGLs associated with the production of natural
gas on its acreage. Accordingly, no NGL volumes are included in
reported production; however, revenue attributable to NGLs is
included in natural gas revenue and the calculation of realized
prices for natural gas.
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 the United States as measures of the Company's
financial performance.
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 U.S. GAAP financial measure. The Company's computation
of Adjusted EBITDA and Distributable cash flow may differ from
computations of similarly titled measures of other companies.
Three Months Ended June
30,
Six Months Ended June
30,
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 June 30, 2023 is estimated using 209,979,196 common
units as of July 28, 2023; the exact amount of the distribution
attributable to the three months ended June 30, 2023 will be
determined based on units outstanding as of the record date of
August 11, 2023. Distributions attributable to the three months
ended June 30, 2022 were calculated using 209,401,737 common units
as of the record date of August 12, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230731912888/en/
Evan Kiefer Interim Chief Financial Officer and Treasurer
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
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