Black Stone Minerals, L.P. (NYSE: BSM) ("Black Stone Minerals,"
"Black Stone," or "the Company") today announces its financial and
operating results for the third quarter of 2021.
Financial and Operational Highlights
- Mineral and royalty production for the third quarter of 2021
equaled 33.0 MBoe/d, an increase of 2% over the prior quarter;
total production, including working interest volumes, was 38.0
MBoe/d for the quarter.
- Net income and Adjusted EBITDA for the quarter totaled $16.2
million and $76.5 million, respectively.
- Distributable cash flow was $70.2 million for the third
quarter, a decrease of 3% relative to the second quarter of
2021.
- Announced a distribution of $0.25 per unit with respect to the
third quarter of 2021. Distribution coverage for all units was
1.35x.
- Total debt at the end of the third quarter was $99.0 million;
total debt to trailing twelve-month Adjusted EBITDA was 0.3x at
quarter-end. As of October 29, 2021, total debt had been reduced to
$86.0 million.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive
Officer and Chairman commented, “Black Stone continues to benefit
from the strong recovery in commodity prices and from incremental
producer activity across the acreage position. We are seeing
positive early results from operators in the East Texas
Haynesville/Bossier and Austin Chalk, and we continue to focus on
attracting capital to other high-net acreage in our portfolio. We
posted another solid quarter with production levels well above our
revised guidance, which contributed to our ability to raise our
distribution for the third quarter by 25% over our previous
expectations. With our very strong balance sheet position, we
intend to continue to prioritize returning cash flow to our
unitholders."
Quarterly Financial and Operating Results
Production
Black Stone Minerals reported mineral and royalty volume of 33.0
MBoe/d (72% natural gas) for the third quarter of 2021, compared to
32.5 MBoe/d for the second quarter of 2021. Mineral and royalty
production for the third quarter of 2020 was 31.1 MBoe/d.
Working interest production for the third quarter of 2021 was
5.1 MBoe/d, representing a decrease of 11% from the levels
generated in the quarter ended June 30, 2021 and a decrease of 26%
from the quarter ended September 30, 2020. The continued decline 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 38.0 MBoe/d (87% mineral and
royalty, 74% natural gas) for the third quarter of 2021. Total
production was 38.2 MBoe/d and 37.9 MBoe/d for the quarters ended
June 30, 2021 and September 30, 2020, respectively.
Realized Prices, Revenues, and Net Income
The Company’s average realized price per Boe, excluding the
effect of derivative settlements, was $38.60 for the quarter ended
September 30, 2021. This is an increase of 21% from $31.79 per Boe
from the second quarter of 2021 and a 112% increase compared to
$18.18 for the third quarter of 2020.
Black Stone reported oil and gas revenue of $135.1 million (46%
oil and condensate) for the third quarter of 2021, an increase of
22% from $110.4 million in the second quarter of 2021. Oil and gas
revenue in the third quarter of 2020 was $63.4 million.
The Company reported a loss on commodity derivative instruments
of $77.6 million for the third quarter of 2021, composed of a $34.1
million loss from realized settlements and a non-cash $43.5 million
unrealized loss due to the change in value of Black Stone’s
derivative positions during the quarter. Black Stone reported
losses of $59.5 million and $21.1 million on commodity derivative
instruments for the quarters ended June 30, 2021 and September 30,
2020, respectively.
Lease bonus and other income was $2.3 million for the third
quarter of 2021, primarily related to leasing activity in the
Haynesville Shale play and proceeds from surface use waivers on
Black Stone's mineral acreage supporting solar development. Lease
bonus and other income for the quarters ended June 30, 2021 and
September 30, 2020 was $7.5 million and $1.4 million,
respectively.
There was no impairment for the quarters ended September 30,
2021, June 30, 2021, and September 30, 2020.
The Company reported net income of $16.2 million for the quarter
ended September 30, 2021, compared to net income of $15.4 million
in the preceding quarter. For the quarter ended September 30, 2020,
the Company reported net income of $23.7 million.
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the third quarter of 2021 was $76.5 million,
which compares to $78.4 million in the second quarter of 2021 and
$65.5 million in the third quarter of 2020. Distributable cash flow
for the quarter ended September 30, 2021 was $70.2 million. For the
quarters ended June 30, 2021 and September 30, 2020, distributable
cash flow was $72.1 million and $58.8 million, respectively.
Financial Position and Activities
As of September 30, 2021, Black Stone Minerals had $3.3 million
in cash and $99.0 million outstanding under its credit facility. At
September 30, 2021, the ratio of total debt to trailing
twelve-month Adjusted EBITDA was 0.3x. As of October 29, 2021,
$86.0 million was outstanding under the credit facility and the
Company had $8.6 million in cash.
Subsequent to quarter-end, Black Stone's borrowing base was
reaffirmed at $400 million. Black Stone is in compliance with all
financial covenants associated with its credit facility.
During the third quarter of 2021, the Company made no
repurchases of units under the Board-approved $75 million unit
repurchase program.
Third Quarter 2021 Distributions
As previously announced, the Board approved a cash distribution
of $0.25 for each common unit attributable to the third quarter of
2021. The quarterly distribution coverage ratio attributable to the
third quarter of 2021 was approximately 1.35x. The distribution
attributable to the third quarter was equal to the distribution
paid with respect to the second quarter of 2021, and was 67% higher
than the distribution attributable to the third quarter of 2020.
Distributions will be payable on November 19, 2021 to unitholders
of record as of the close of business on November 12, 2021.
Activity Update
Rig Activity
As of September 30, 2021, Black Stone had 59 rigs operating
across its acreage position, a slight decrease relative to the 64
rigs on the Company's acreage as of June 30, 2021 and an increase
compared to the 29 rigs operating on the Company's acreage as of
September 30, 2020.
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 Angelina County. In October
2021, Aethon spud the first three wells under the separate
development agreement covering San Augustine County.
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. Recent drilling
results have shown that advances in fracturing and other completion
techniques can dramatically improve well performance in existing
Austin Chalk fields. One well has been drilled and turned to sales
and five additional wells are currently being drilled under these
agreements.
Update to 2021 Guidance
The Company now expects total production for 2021 to be at or
near the high end of its previously revised guidance range of 34.5
to 37.0 MBoe/d. The Company expects lease operating expenses and
production costs as a percentage of oil and gas revenues to be at
the low end of the revised guidance ranges of $10-$12 million and
10%-12%, respectively. Black Stone expects cash and non-cash
G&A to be slightly above the revised guidance ranges of $33-$34
million and $10-$12 million, respectively, due primarily to the
outperformance of 2021 financial and operating results to date
relative to targets.
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering
portions of its anticipated production for 2021, 2022, and 2023.
The Company's hedge position as of October 29, 2021 is summarized
in the following tables:
Oil Hedge Position
Oil Swap
Oil Swap Price
MBbl
$/Bbl
3Q21
220
$38.97
4Q21
660
$38.97
1Q22
480
$60.14
2Q22
480
$60.14
3Q22
480
$60.14
4Q22
480
$60.14
Natural Gas Hedge Position
Gas Swap
Gas Swap Price
BBtu
$/MMbtu
4Q21
10,120
$2.69
1Q22
7,920
$2.98
2Q22
8,000
$2.99
3Q22
8,080
$2.99
4Q22
8,080
$2.99
1Q23
1,800
$3.28
2Q23
1,820
$3.28
3Q23
1,840
$3.28
4Q23
1,840
$3.28
More detailed information about the Company's existing hedging
program can be found in the Quarterly Report on Form 10-Q for the
third quarter of 2021, which is expected to be filed on or around
November 2, 2021.
Conference Call
Black Stone Minerals will host a conference call and webcast for
investors and analysts to discuss its results for the third quarter
of 2021 on Tuesday, November 2, 2021 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 (877) 447-4732
and use conference code 4659348. A recording of the conference call
will be available on Black Stone's website through December 2,
2021.
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 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.
BLACK STONE MINERALS, L.P. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per unit
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
REVENUE
Oil and condensate sales
$
61,916
$
34,335
$
160,028
$
111,845
Natural gas and natural gas liquids
sales
73,167
29,107
172,537
96,060
Lease bonus and other income
2,305
1,386
12,195
7,669
Revenue from contracts with customers
137,388
64,828
344,760
215,574
Gain (loss) on commodity derivative
instruments
(77,561
)
(21,086
)
(164,923
)
49,751
TOTAL REVENUE
59,827
43,742
179,837
265,325
OPERATING (INCOME) EXPENSE
Lease operating expense
3,303
3,160
9,804
10,280
Production costs and ad valorem taxes
14,331
9,905
35,469
31,836
Exploration expense
5
4
1,080
28
Depreciation, depletion, and
amortization
14,925
19,823
46,353
62,198
Impairment of oil and natural gas
properties
—
—
—
51,031
General and administrative
12,320
9,381
37,359
32,738
Accretion of asset retirement
obligations
273
286
863
836
(Gain) loss on sale of assets, net
(2,850
)
(24,045
)
(2,850
)
(24,045
)
TOTAL OPERATING EXPENSE
42,307
18,514
128,078
164,902
INCOME (LOSS) FROM OPERATIONS
17,520
25,228
51,759
100,423
OTHER INCOME (EXPENSE)
Interest and investment income
—
1
—
35
Interest expense
(1,359
)
(1,664
)
(4,197
)
(9,055
)
Other income (expense)
17
168
231
71
TOTAL OTHER EXPENSE
(1,342
)
(1,495
)
(3,966
)
(8,949
)
NET INCOME (LOSS)
16,178
23,733
47,793
91,474
Distributions on Series B cumulative
convertible preferred units
(5,250
)
(5,250
)
(15,750
)
(15,750
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
GENERAL PARTNER AND COMMON UNITS
$
10,928
$
18,483
$
32,043
$
75,724
ALLOCATION OF NET INCOME (LOSS):
General partner interest
$
—
$
—
$
—
$
—
Common units
10,928
18,483
32,043
75,724
$
10,928
$
18,483
$
32,043
$
75,724
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED
PARTNERS PER COMMON UNIT:
Per common unit (basic)
$
0.05
$
0.09
$
0.15
$
0.37
Per common unit (diluted)
$
0.05
$
0.09
$
0.15
$
0.37
WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING:
Weighted average common units outstanding
(basic)
208,653
206,732
208,018
206,690
Weighted average common units outstanding
(diluted)
208,653
206,732
208,018
206,690
The following table shows the Company’s production, revenues,
pricing, and expenses for the periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(Unaudited)
(Dollars in thousands, except
for realized prices and per Boe data)
Production:
Oil and condensate (MBbls)
922
953
2,610
2,980
Natural gas (MMcf)1
15,467
15,220
46,053
51,922
Equivalents (MBoe)
3,500
3,490
10,286
11,634
Equivalents/day (MBoe)
38.0
37.9
37.7
42.5
Realized prices, without derivatives:
Oil and condensate ($/Bbl)
$
67.15
$
36.03
$
61.31
$
37.53
Natural gas ($/Mcf)1
4.73
1.91
3.75
1.85
Equivalents ($/Boe)
$
38.60
$
18.18
$
32.33
$
17.87
Revenue:
Oil and condensate sales
$
61,916
$
34,335
$
160,028
$
111,845
Natural gas and natural gas liquids
sales1
73,167
29,107
172,537
96,060
Lease bonus and other income
2,305
1,386
12,195
7,669
Revenue from contracts with customers
137,388
64,828
344,760
215,574
Gain (loss) on commodity derivative
instruments
(77,561
)
(21,086
)
(164,923
)
49,751
Total revenue
$
59,827
$
43,742
$
179,837
$
265,325
Operating expenses:
Lease operating expense
$
3,303
$
3,160
$
9,804
$
10,280
Production costs and ad valorem taxes
14,331
9,905
35,469
31,836
Exploration expense
5
4
1,080
28
Depreciation, depletion, and
amortization
14,925
19,823
46,353
62,198
Impairment of oil and natural gas
properties
—
—
—
51,031
General and administrative
12,320
9,381
37,359
32,738
Other expense:
Interest expense
1,359
1,664
4,197
9,055
Per Boe:
Lease operating expense (per working
interest Boe)
$
7.10
$
4.99
$
6.53
$
4.38
Production costs and ad valorem taxes
4.09
2.84
3.45
2.74
Depreciation, depletion, and
amortization
4.26
5.68
4.51
5.35
General and administrative
3.52
2.69
3.63
2.81
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 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 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 September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(Unaudited)
(In thousands, except per unit
amounts)
Net income (loss)
$
16,178
$
23,733
$
47,793
$
91,474
Adjustments to reconcile to Adjusted
EBITDA:
Depreciation, depletion, and
amortization
14,925
19,823
46,353
62,198
Impairment of oil and natural gas
properties
—
—
—
51,031
Interest expense
1,359
1,664
4,197
9,055
Income tax expense (benefit)
20
(155
)
(131
)
7
Accretion of asset retirement
obligations
273
286
863
836
Equity–based compensation
3,172
1,825
9,705
1,405
Unrealized (gain) loss on commodity
derivative instruments
43,421
42,374
108,915
17,043
(Gain) loss on sale of assets, net
(2,850
)
(24,045
)
(2,850
)
(24,045
)
Adjusted EBITDA
76,498
65,505
214,845
209,004
Adjustments to reconcile to Distributable
cash flow:
Change in deferred revenue
(2
)
(6
)
(16
)
(315
)
Cash interest expense
(1,011
)
(1,401
)
(2,965
)
(8,273
)
Preferred unit distributions
(5,250
)
(5,250
)
(15,750
)
(15,750
)
Restructuring charges1
—
—
—
4,815
Distributable cash flow
$
70,235
$
58,848
$
196,114
$
189,481
Total units outstanding2
208,666
206,749
Distributable cash flow per unit
$
0.337
$
0.285
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 September 30, 2021 is estimated using 208,665,648
common units as of October 29, 2021; the exact amount of the
distribution attributable to the three months ended September 30,
2021 will be determined based on units outstanding as of the record
date of November 12, 2021. Distributions attributable to the three
months ended September 30, 2020 were calculated using 206,748,889
common units as of the record date of November 13, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211101005872/en/
Black Stone Minerals, L.P. Contacts Jeff Wood President
and Chief Financial Officer
Evan Kiefer Vice President, Finance and Investor Relations
Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Black Stone Minerals (NYSE:BSM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Black Stone Minerals (NYSE:BSM)
Historical Stock Chart
From Jul 2023 to Jul 2024