Black Stone Minerals, L.P. (NYSE: BSM) ("Black Stone Minerals,"
"Black Stone," or "the Partnership") today announces its financial
and operating results for the first quarter of 2019.
Highlights
- Reported production of 46.8 Mboe/d for
the first quarter of 2019.
- Reported oil and natural gas revenues
of $119.3 million, lease bonus and other income of $5.6 million,
and net income of $9.0 million for the quarter.
- Generated Adjusted EBITDA of $94.9
million.
- Reported distributable cash flow of
$81.7 million, resulting in distribution coverage for all common
and subordinated units of 1.1x at the current distribution
level.
- Previously announced distributions to
common and subordinated units attributable to the first quarter of
2019 of $0.37 per unit or $1.48 annualized. Subordinated units will
convert into common units on a one-for-one basis following the
payment of the distribution on May 23, 2019.
- Acquired $20.9 million in mineral and
royalty assets in the Haynesville formation and the Delaware Basin
for cash and equity during the first quarter.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive
Officer and Chairman, commented, "Over the last several years, new
activity on our legacy asset base combined with our active
acquisition program has resulted in significant growth in
production and cash flows. That growth has allowed us to provide
consistent increases in the cash we return to our unitholders since
our IPO in 2015. With the distribution we will pay later this
month, the subordinated units will convert into common units,
resulting in a simpler capital structure and potentially greater
trading liquidity. The fundamentals of our business remain strong,
and we are well positioned with a strong balance sheet to take
advantage of acquisition opportunities."
Quarterly Financial and Operating Results
Production
Black Stone reported average production of 46.8 MBoe/d (72%
mineral and royalty, 74% natural gas) for the first quarter of
2019. This represents a 10% increase over average production of
42.4 MBoe/d for the corresponding period in 2018 and a decrease of
6% from the fourth quarter of 2018. The majority of the decrease
from the prior quarter is attributable to certain adjustments to
year-end receivable balances, which negatively impacted first
quarter reported production by approximately 2.0 MBoe/d and reduced
reported net income for the first quarter by approximately $5.6
million.
Realized Prices, Revenues, and Net Income
The Partnership’s average realized price per Boe, excluding the
effect of derivative settlements, was $28.34 for the quarter ended
March 31, 2019. This represents a 17% decrease from the
preceding quarter and reflects lower commodity prices as well as
slightly wider differentials in the current quarter. Realized
prices in the first quarter of 2019 were 14% lower than the $33.10
per Boe reported for the quarter ended March 31, 2018.
Black Stone reported oil and gas revenues of $119.3 million (48%
oil and condensate, 52% natural gas) for the first quarter of 2019,
a decrease from $155.4 million in the fourth quarter of 2018. This
decrease in oil and gas revenue was driven primarily by lower
realized pricing during the quarter as well as lower reported
production volumes. Oil and gas revenue in the first quarter of
2018 was $126.2 million.
The Partnership recognized a loss on commodity derivative
instruments of $41.2 million in the first quarter of 2019, composed
of $1.7 million in receipts from counterparties for settlements and
a $42.9 million unrealized loss that reflects the change in value
of the Partnership’s derivative positions during the quarter. Black
Stone reported a net gain of $83.0 million and a net loss of $16.3
million on commodity derivative instruments for the quarters ended
December 31, 2018 and March 31, 2018, respectively.
Black Stone recognized $5.6 million in lease bonus and other
income in the first quarter of 2019, led by leasing activity
focused on the Austin Chalk/Woodbine play. The Partnership reported
$7.6 million and $4.6 million in lease bonus and other income for
the fourth quarter of 2018 and first quarter of 2018,
respectively.
The Partnership reported net income of $9.0 million, which
includes the non-cash derivative loss described above, for the
quarter ended March 31, 2019, compared to net income of $164.1
million in the preceding quarter. Net income for the first quarter
of 2018 was $42.0 million.
Adjusted EBITDA and Distributable Cash Flow
Black Stone reported Adjusted EBITDA of $94.9 million for the
first quarter of 2019, compared to $110.0 million in the fourth
quarter of 2018 and $95.0 million for the corresponding quarter in
2018. Distributable cash flow for the first quarter of 2019 was
$81.7 million, a decrease from $96.7 million and $83.4 million in
the fourth quarter of 2018 and first quarter of 2018,
respectively.
Financial Position and Activities
As of March 31, 2019, the Partnership had $4.2 million in cash
and $435.0 million outstanding under its credit facility.
As of May 3, 2019, the Partnership had $395.0 million
outstanding under the credit facility and $7.8 million in cash,
providing over $285 million in available liquidity. Black Stone
Minerals is in compliance with all financial covenants associated
with its credit facility.
During the first quarter of 2019, there was no activity under
either the Partnership's at-the-market offering program or the
approved common unit repurchase program.
Hedge Position
Black Stone has commodity derivative contracts in place covering
portions of its anticipated production for the remainder of 2019
and 2020. The Partnership's current hedge position is summarized in
the following tables:
Oil Hedge Position
Oil
Costless Oil Swap Oil Swap Price Collars Collar Floor Collar
Ceiling MBbl $/Bbl MBbl $/Bbl $/Bbl 2Q19 855 $58.72 60 $65.00
$74.00 3Q19 855 $58.37 60 $65.00 $74.00 4Q19 855 $58.37 60 $65.00
$74.00 1Q20 270 $57.87 210 $56.43 $67.14 2Q20 270 $57.87 210 $56.43
$67.14 3Q20 270 $57.87 210 $56.43 $67.14 4Q20 270 $57.87 210 $56.43
$67.14
Natural Gas Hedge
Position Gas Swap Gas
Swap MMcf
$/Mcf
2Q19 14,520 $2.96 3Q19 14,640 $2.96 4Q19 14,640 $2.96 1Q20 6,370
$2.72 2Q20 6,370 $2.72 3Q20 6,440 $2.72 4Q20 6,440 $2.72
More detailed information about the Partnership's existing
hedging program can be found in the Quarterly Report on Form 10-Q
for the first quarter of 2019, which is expected to be filed on May
7, 2019.
Acquisitions
Black Stone acquired $20.9 million of properties in the first
quarter of 2019. The vast majority of these acquisitions were
purchased with cash, with the balance acquired by issuing equity
directly to the seller. Approximately 60% of the acquisitions made
during the quarter related to further consolidation of positions
targeting the Haynesville and Bossier program in East Texas, with
additions in the Delaware Basin comprising the remainder of the
acquisition program for the quarter.
Distributions and Conversion of Subordinated Units
As previously reported, the Board of Directors of the general
partner (the "Board") has approved cash distributions attributable
to the first quarter of 2019 of $0.37 per unit for both common and
subordinated units. This represents a quarterly distribution
coverage ratio of approximately 1.1x for all units. Distributions
will be payable on May 23, 2019 to unitholders of record on May 16,
2019. The payment of the distribution attributable to the first
quarter of 2019 will result in the conversion of the subordinated
units into common units on a one-for-one basis on May 24, 2019.
Detail on the conversion process was provided in the Partnership's
April 25, 2019 press release which can be found in the "Investors"
section of Black Stone Minerals' website
(www.blackstoneminerals.com).
Conference Call
Black Stone Minerals will host a conference call and webcast for
investors and analysts to discuss its results for the first quarter
of 2019 on Tuesday, May 7, 2019 at 9:00 a.m. Central Time. To join
the call, participants should dial (877) 447-4732 and use
conference code 8405318. A live broadcast of the call will also be
available at http://investor.blackstoneminerals.com. A
recording of the conference call will be available at that site
through June 6, 2019.
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 41 states in the
continental United States. 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.
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:
- the Partnership’s ability to execute
its business strategies;
- the volatility of realized oil and
natural gas prices;
- the level of production on the
Partnership’s properties;
- regional supply and demand factors,
delays, or interruptions of production;
- the Partnership’s ability to replace
its oil and natural gas reserves; and
- the Partnership’s ability to identify,
complete, and integrate acquisitions.
For an important discussion of risks and uncertainties that may
impact our operations, see our annual and quarterly filings with
the Securities and Exchange Commission, which are available on our
website.
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 37.0% for individuals.
BLACK STONE MINERALS, L.P. CONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) (In thousands, except per
unit amounts) Three Months Ended March 31,
2019 2018 REVENUE Oil and condensate
sales $ 57,704 $ 72,983 Natural gas and natural gas liquids sales
61,640 53,245 Lease bonus and other income 5,645 4,599
Revenue from contracts with customers 124,989 130,827 Gain
(loss) on commodity derivative instruments (41,183 ) (16,333 )
TOTAL REVENUE 83,806 114,494 OPERATING (INCOME)
EXPENSE Lease operating expense 5,292 4,248 Production costs and ad
valorem taxes 14,592 14,925 Exploration expense 4 3 Depreciation,
depletion, and amortization 27,833 28,570 General and
administrative 21,214 18,521 Accretion of asset retirement
obligations 277 269 (Gain) loss on sale of assets, net — (2
) TOTAL OPERATING EXPENSE 69,212 66,534 INCOME (LOSS)
FROM OPERATIONS 14,594 47,960 OTHER INCOME (EXPENSE) Interest and
investment income 46 33 Interest expense (5,525 ) (4,521 ) Other
income (expense) (98 ) (1,515 ) TOTAL OTHER EXPENSE (5,577 ) (6,003
) NET INCOME (LOSS) 9,017 41,957 Net (income) loss attributable to
noncontrolling interests — (27 ) Distributions on Series A
redeemable preferred units — (25 ) Distributions on Series B
cumulative convertible preferred units (5,250 ) (5,250 ) NET INCOME
(LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON AND
SUBORDINATED UNITS $ 3,767 $ 36,655 ALLOCATION OF NET
INCOME (LOSS): General partner interest $ — $ — Common units 1,905
24,329 Subordinated units 1,862 12,326 $ 3,767
$ 36,655 NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS
PER COMMON AND SUBORDINATED UNIT: Per common unit (basic) $ 0.02
$ 0.23 Weighted average common units outstanding
(basic) 109,420 103,774 Per subordinated unit (basic)
$ 0.02 $ 0.13 Weighted average subordinated units
outstanding (basic) 96,329 95,395 Per common unit
(diluted) $ 0.02 $ 0.23 Weighted average common units
outstanding (diluted) 110,035 103,838 Per
subordinated unit (diluted) $ 0.02 $ 0.13 Weighted
average subordinated units outstanding (diluted) 96,329
95,395
The following table shows the Partnership’s production,
revenues, pricing, and expenses for the periods presented:
Three Months Ended March 31, 2019
2018
(Unaudited)
(Dollars in thousands, except
forrealized prices and per Boe data)
Production: Oil and condensate (MBbls) 1,108 1,190 Natural
gas (MMcf)1 18,615 15,742 Equivalents (MBoe) 4,211
3,814 Equivalents/day (MBoe) 46.8 42.4
Revenue: Oil and
condensate sales $ 57,704 $ 72,983 Natural gas and natural gas
liquids sales1 61,640 53,245 Lease bonus and other income 5,645
4,599 Revenue from contracts with customers 124,989
130,827 Gain (loss) on commodity derivative instruments (41,183 )
(16,333 ) Total revenue $ 83,806 $ 114,494
Realized prices,
without derivatives: Oil and condensate ($/Bbl) $ 52.08 $ 61.33
Natural gas ($/Mcf)1 3.31 3.38
Equivalents ($/Boe)
$ 28.34 $ 33.10
Operating expenses: Lease operating expense
$ 5,292 $ 4,248 Production costs and ad valorem taxes 14,592 14,925
Exploration expense 4 3 Depreciation, depletion, and amortization
27,833 28,570 General and administrative 21,214 18,521
Per
Boe: Lease operating expense (per working interest Boe) $ 4.41
$ 3.38 Production costs and ad valorem taxes 3.47 3.91
Depreciation, depletion, and amortization 6.61 7.49 General and
administrative 5.04 4.86
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 Partnership 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 our 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 our management and external
users of our financial statements such as investors, research
analysts, and others, to assess the financial performance of our
assets and our ability to sustain distributions over the long term
without regard to financing methods, capital structure, or
historical cost basis.
We define 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, and non-cash
equity-based compensation. We define distributable cash flow as
Adjusted EBITDA plus or minus amounts for certain non-cash
operating activities, estimated replacement capital expenditures,
cash interest expense, and distributions to noncontrolling
interests and preferred unitholders.
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 our 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 GAAP financial measure. Our computation of Adjusted
EBITDA and distributable cash flow may differ from computations of
similarly titled measures of other companies.
Three Months Ended March 31, 2019
2018
(Unaudited)
(In thousands, except per
unitamounts)
Net income (loss) $ 9,017 $ 41,957 Adjustments to reconcile to
Adjusted EBITDA: Depreciation, depletion, and amortization 27,833
28,570 Interest expense 5,525 4,521 Income tax expense 131 1,507
Accretion of asset retirement obligations 277 269 Equity–based
compensation 9,223 6,226 Unrealized (gain) loss on commodity
derivative instruments 42,926 11,958 Adjusted EBITDA
94,932 95,008 Adjustments to reconcile to distributable cash flow:
Change in deferred revenue (3 ) 1,303 Cash interest expense (5,269
) (4,316 ) (Gain) loss on sale of assets, net — (2 ) Estimated
replacement capital expenditures1 (2,750 ) (3,250 ) Cash paid to
noncontrolling interests — (52 ) Preferred unit distributions
(5,250 ) (5,275 ) Distributable cash flow $ 81,660 $ 83,416
Total units outstanding2 205,712 201,578
Distributable cash flow per unit $ 0.397 $ 0.414 Common unit price
as of May 3, 2019 $ 18.14 Implied distributable cash flow yield 8.8
% 1 On June 8, 2017, the Board approved a replacement
capital expenditure estimate of $13.0 million for the period of
April 1, 2017 to March 31, 2018. On April 27, 2018, the Board
approved a replacement capital expenditure estimate of $11.0
million for the period of April 1, 2018 to March 31, 2019. 2
The distribution attributable to the three
months ended March 31, 2019 is estimated using 109,382,957 common
units and 96,328,836 subordinated units as of April 30, 2019; the
exact amount of the distribution attributable to the three months
ended March 31, 2019 will be determined based on units outstanding
as of the record date of May 16, 2019. Distributions attributable
to the three months ended March 31, 2018 were calculated using
105,249,131 common units and 96,328,836 subordinated units as of
the record date of May 17, 2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20190506005759/en/
Brent CollinsVice President, Investor RelationsTelephone: (713)
445-3200investorrelations@blackstoneminerals.com
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