Black Stone Minerals, L.P. (NYSE: BSM) (“Black Stone Minerals,”
“Black Stone,” or “the Company”) today announces its financial and
operating results for the fourth quarter and full year of 2023 and
provides guidance for 2024.
Fourth Quarter 2023 Highlights
- Mineral and royalty production for the fourth quarter of 2023
equaled 38.9 MBoe/d, a decrease of 3% over the prior quarter; total
production, including working interest volumes, was 41.1 MBoe/d for
the quarter
- Net income for the quarter was $147.6 million. Adjusted EBITDA
for the quarter totaled $125.5 million
- Distributable cash flow was $119.1 million for the fourth
quarter, which represents a 4% decrease relative to the third
quarter of 2023, making the seventh consecutive quarter above $100
million
- Black Stone announced a distribution of $0.475 per unit with
respect to the fourth quarter of 2023. Distribution coverage for
all units was 1.19x
- Total debt at the end of the quarter was zero; as of February
16, 2024, total debt remained at zero with $102.9 million of
cash
Full Year Financial and Operational Highlights
- Mineral and royalty volumes in 2023 increased 9% over the prior
year to average 37.4 MBoe/d; average full year 2023 production was
39.8 MBoe/d
- Reported 2023 net income and Adjusted EBITDA of $422.5 million
and $474.7 million, respectively
- Increased cash distributions by 9% from $1.745 per unit
attributable to the full year 2022 to $1.90 per unit attributable
to the full year 2023
- Eliminated outstanding debt during 2023
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chairman, Chief
Executive Officer, and President, commented, “We finished the year
with a strong quarter. We were able to maintain our highest
distribution without any outstanding debt despite a challenging
natural gas market. We expect headwinds in 2024 as natural gas
prices remain depressed, but we remain encouraged by the long-term
prospects for liquefied natural gas export growth and an asset base
with significant inventory life that will benefit unitholders
through the next decade.”
Quarterly Financial and Operating Results
Production
Black Stone Minerals reported mineral and royalty volumes of
38.9 MBoe/d (95% natural gas) for the fourth quarter of 2023,
compared to 40.3 MBoe/d for the third quarter of 2023. Mineral and
royalty production was 40.0 MBoe/d for the fourth quarter of 2022.
Mineral and royalty production in the fourth quarter of 2023
benefited from new wells coming online in the Permian and Shelby
Trough.
Working interest production for the fourth quarter of 2023 was
2.2 MBoe/d, a decrease of 4% from the 2.3 MBoe/d for the quarter
ended September 30, 2023, and an increase of 5% from the 2.1 MBoe/d
for the quarter ended December 31, 2022. The continued overall
decline in working interest production volumes is consistent with
the Company's decision to farm out its working-interest
participation to third-party capital providers.
Total reported production averaged 41.1 MBoe/d (95% mineral and
royalty, 73% natural gas) for the fourth quarter of 2023. Average
total production was 42.6 MBoe/d and 42.1 MBoe/d for the quarters
ended September 30, 2023 and December 31, 2022, respectively.
Realized Prices, Revenues, and Net Income
The Company’s average realized price per Boe, excluding the
effect of derivative settlements, was $35.03 for the quarter ended
December 31, 2023. This is an increase of 2% from $34.30 per Boe
for the third quarter of 2023 and a 31% decrease compared to $50.67
for the fourth quarter of 2022.
Black Stone reported oil and gas revenue of $132.6 million (60%
oil and condensate) for the fourth quarter of 2023, a decrease of
1% from $134.5 million in the third quarter of 2023. Oil and gas
revenue in the fourth quarter of 2022 was $196.2 million.
The Company reported a gain on commodity derivative instruments
of $54.5 million for the fourth quarter of 2023, composed of a
$17.1 million gain from realized settlements and a non-cash $37.4
million unrealized gain due to the change in value of Black Stone’s
derivative positions during the quarter. Black Stone reported a
loss on commodity derivative instruments of $26.9 million and a
gain of $31.4 million for the quarters ended September 30, 2023 and
December 31, 2022, respectively.
Lease bonus and other income was $3.8 million for the fourth
quarter of 2023, primarily related to leasing activity in the
Granite Wash, Gulf Coast, and Haynesville plays. Lease bonus and
other income for the quarters ended September 30, 2023 and December
31, 2022 was $2.2 million and $2.8 million, respectively.
There was no impairment for the quarters ended December 31,
2023, September 30, 2023, and December 31, 2022.
The Company reported net income of $147.6 million for the
quarter ended December 31, 2023, compared to net income of $62.1
million in the preceding quarter. For the quarter ended December
31, 2022, net income was $183.2 million.
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the fourth quarter of 2023 was $125.5
million, which compares to $130.0 million in the third quarter of
2023 and $131.7 million in the fourth quarter of 2022.
Distributable cash flow for the quarter ended December 31, 2023 was
$119.1 million. For the quarters ended September 30, 2023 and
December 31, 2022, Distributable cash flow was $124.4 million and
$125.3 million, respectively.
2023 Proved Reserves
Estimated proved oil and natural gas reserves at year-end 2023
were 64.5 MMBoe, an increase of 1% from 64.1 MMBoe at year-end
2022, and were approximately 70% natural gas and 89% proved
developed producing. The standardized measure of discounted future
net cash flows was $1,019.5 million at the end of 2023, as compared
to $1,665.0 million at year-end 2022.
Netherland, Sewell and Associates, Inc., an independent,
third-party petroleum engineering firm, evaluated Black Stone
Minerals’ estimate of its proved reserves and PV-10 at December 31,
2023. These estimates were prepared using reference prices of
$78.21 per barrel of oil and $2.64 per MMBTU of natural gas in
accordance with the applicable rules of the Securities and Exchange
Commission (as compared to prompt month prices of $76.81 per barrel
of oil and $1.61 per MMBTU of natural gas as of February 16, 2024).
These prices were adjusted for quality and market differentials,
transportation fees, and, in the case of natural gas, the value of
natural gas liquids. A reconciliation of proved reserves is
presented in the summary financial tables following this press
release.
Financial Position and Activities
As of December 31, 2023, Black Stone Minerals had $70.3 million
in cash, with nothing drawn under its credit facility. The
Company’s borrowing base at December 31, 2023 was $580 million, and
total commitments under the credit facility were $375 million. The
Company's next regularly scheduled borrowing base redetermination
is set for April 2024. Black Stone is in compliance with all
financial covenants associated with its credit facility.
As of February 16, 2024, no debt was outstanding under the
credit facility and the Company had $102.9 million in cash.
During the fourth quarter of 2023, the Company made no
repurchases of units under the Board-approved $150 million unit
repurchase program.
Fourth Quarter 2023 Distributions
As previously announced, the Board approved a cash distribution
of $0.475 for each common unit attributable to the fourth quarter
of 2023. The quarterly distribution coverage ratio attributable to
the fourth quarter of 2023 was approximately 1.19x. These
distributions will be paid on February 23, 2024 to unitholders of
record as of the close of business on February 16, 2024.
Activity Update
Rig Activity
As of December 31, 2023, Black Stone had 63 rigs operating
across its acreage position, a 17% decrease from rig activity on
the Company's acreage as of September 30, 2023 and 42% lower as
compared to the 108 rigs operating on the Company's acreage as of
December 31, 2022. The decrease is primarily driven by reduced rig
activity in the Haynesville and Permian.
Shelby Trough Development Update
A significant portion of Shelby Trough development in recent
years has been performed by Aethon Energy (“Aethon”) under the
Company’s two Joint Exploration Agreements (“JEA” or “JEAs”) with
Aethon, one JEA each covering development in San Augustine County,
Texas, and the other in Angelina County, Texas.
As announced on December 22, 2023, BSM received notice that
Aethon was exercising the “time-out” provisions under its joint
exploration agreements with the Company in Angelina and San
Augustine counties in East Texas. When natural-gas prices fall
below specified thresholds, Aethon may elect to temporarily suspend
its drilling obligations for up to nine consecutive months and a
maximum of 18 total months in any 48-month period. Aethon has not
previously invoked the time-out provisions under the
agreements.
The time-out provisions apply only to drilling obligations and
associated development activity occurring after December 2023.
Based on ongoing discussions with Aethon, we do not expect material
changes for wells on which drilling operations had begun prior to
the invocation of the time-out in December 2023. We continue
working closely with Aethon to finalize development plans going
forward and assess the effect of the temporary suspension of
drilling obligations and any potential longer-term impacts.
Austin Chalk Update
The Company owns a large mineral position in the Brookeland
Austin Chalk play in East Texas.
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 test program in the Brookeland Field demonstrated that modern
completion technology has the potential to improve production rates
and increase reserves when compared to the vintage, unstimulated
wells in the Austin Chalk formation. To date, 29 wells with modern
completions are now producing in the field.
Acquisition Activity
Black Stone’s commercial strategy since 2021 has been focused on
attracting capital and securing drilling commitments on minerals
already owned by the Company. Management made the decision to
expand this growth strategy by adding to the Company’s mineral
portfolio through strategic, targeted efforts primarily in the Gulf
Coast region. To that end, in 2023 Black Stone acquired additional,
non-producing mineral and royalty interests totaling $14.6 million.
Black Stone’s commercial strategy going forward includes the
continuation of meaningful, targeted mineral and royalty
acquisitions to complement our existing positions.
Summary 2024 Guidance
Following are the key assumptions in Black Stone Minerals’ 2024
guidance, as well as comparable results for 2023:
FY 2023
Actual
FY 2024
Est.
Mineral and royalty production
(MBoe/d)
37.4
39 – 40
Working interest production (MBoe/d)
2.4
1 – 2
Total production (MBoe/d)
39.8
40 – 42
Percentage natural gas
74%
76%
Percentage royalty interest
94%
96%
Lease bonus and other income ($MM)
$12.5
$10 - $15
Lease operating expense ($MM)
$11.4
$10 - $12
Production costs and ad valorem taxes (as
% of total pre-derivative O&G revenue)
12%
11% - 13%
G&A - cash ($MM)
$40.6
$44 - $45
G&A - non-cash ($MM)
$10.9
$10 - $12
G&A - TOTAL ($MM)
$51.5
$54 - $57
DD&A ($/Boe)
$3.14
$3.00 - $3.25
Black Stone expects royalty production to increase by
approximately 4% in 2024 relative to full year 2023 levels,
primarily due to Aethon turning on-line the 24 wells in various
stages of development in the Shelby Trough and continued
development in the Austin Chalk. This is partially offset by an
expected moderation of activity in Louisiana Haynesville due to
lower commodity prices.
Working interest production is expected to decline in 2024 as a
result of Black Stone's decision in 2017 to farm out participation
in its working interest opportunities.
The Partnership expects general and administrative expenses to
be slightly higher in 2024 as a result of inflationary costs and
selective hires made to support Black Stone’s ability to evaluate,
market and manage its undeveloped acreage positions to potential
operators.
Hedge Position
Black Stone has commodity derivative contracts in place covering
portions of its anticipated production for 2024 and 2025, including
derivative contracts put in place after the end of the year. The
Company's hedge position as of February 16, 2024, is summarized in
the following tables:
Oil Hedge Position
Oil Swap Volume
Oil Swap Price
MBbl
$/Bbl
1Q24
570
$71.45
2Q24
570
$71.45
3Q24
570
$71.45
4Q24
570
$71.45
1Q25
210
$70.50
2Q25
210
$70.50
3Q25
210
$70.50
4Q25
210
$70.50
Natural Gas Hedge Position
Gas Swap Volume
Gas Swap Price
BBtu
$/MMbtu
1Q24
10,310
$3.56
2Q24
10,465
$3.55
3Q24
10,580
$3.55
4Q24
10,580
$3.55
1Q25
900
$3.65
2Q25
910
$3.65
3Q25
920
$3.65
4Q25
920
$3.65
More detailed information about the Company's existing hedging
program can be found in the Annual Report on Form 10-K, which is
expected to be filed on or around February 20, 2024.
Conference Call
Black Stone Minerals will host a conference call and webcast for
investors and analysts to discuss its results for the fourth
quarter and full year of 2023 on Tuesday, February 20, 2024 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
BSMQ423. 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 and managers
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 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, as wells as the Risk Factors section in our most
recent annual report on Form 10-K:
- 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, and regional
supply and demand factors, delays, or interruptions of
production;
- conservation measures 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 including
slowdowns, domestically and internationally, and volatility in the
securities, capital, or credit markets;
- cybersecurity incidents, including data security breaches or
computer viruses;
- competition in the oil and natural gas industry;
- the availability or cost of rigs, equipment, raw materials,
supplies, oilfield services or personnel; 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.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per unit
amounts)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
REVENUE
Oil and condensate sales
$
80,112
$
85,920
$
288,296
$
336,287
Natural gas and natural gas liquids
sales
52,440
110,254
200,297
434,945
Lease bonus and other income
3,824
2,790
12,506
13,052
Revenue from contracts with customers
136,376
198,964
501,099
784,284
Gain (loss) on commodity derivative
instruments
54,465
31,415
91,117
(120,680
)
TOTAL REVENUE
190,841
230,379
592,216
663,604
OPERATING (INCOME) EXPENSE
Lease operating expense
3,237
3,124
11,386
12,380
Production costs and ad valorem taxes
15,027
14,924
56,979
66,233
Exploration expense
429
1
2,148
193
Depreciation, depletion, and
amortization
11,748
12,786
45,683
47,804
General and administrative
12,505
14,326
51,455
53,652
Accretion of asset retirement
obligations
293
245
1,042
861
(Gain) loss on sale of assets, net
—
—
(73
)
(17
)
TOTAL OPERATING EXPENSE
43,239
45,406
168,620
181,106
INCOME (LOSS) FROM OPERATIONS
147,602
184,973
423,596
482,498
OTHER INCOME (EXPENSE)
Interest and investment income
826
31
1,867
53
Interest expense
(674
)
(2,022
)
(2,754
)
(6,286
)
Other income (expense)
(107
)
237
(160
)
215
TOTAL OTHER EXPENSE
45
(1,754
)
(1,047
)
(6,018
)
NET INCOME (LOSS)
147,647
183,219
422,549
476,480
Distributions on Series B cumulative
convertible preferred units
(6,026
)
(5,250
)
(21,776
)
(21,000
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
GENERAL PARTNER AND COMMON UNITS
$
141,621
$
177,969
$
400,773
$
455,480
ALLOCATION OF NET INCOME (LOSS):
General partner interest
$
—
$
—
$
—
$
—
Common units
141,621
177,969
400,773
455,480
$
141,621
$
177,969
$
400,773
$
455,480
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED
PARTNERS PER COMMON UNIT:
Per common unit (basic)
$
0.67
$
0.85
$
1.91
$
2.18
Per common unit (diluted)
$
0.65
$
0.82
$
1.88
$
2.12
WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING:
Weighted average common units outstanding
(basic)
209,991
209,406
209,970
209,382
Weighted average common units outstanding
(diluted)
225,511
224,756
225,105
224,446
The following table shows the Company’s production, revenues,
realized prices, and expenses for the periods presented.
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(Unaudited)
(Dollars in thousands, except
for realized prices)
Production:
Oil and condensate (MBbls)
1,026
1,017
3,757
3,591
Natural gas (MMcf)1
16,546
17,130
64,647
59,778
Equivalents (MBoe)
3,784
3,872
14,532
13,554
Equivalents/day (MBoe)
41.1
42.1
39.8
37.1
Realized prices, without
derivatives:
Oil and condensate ($/Bbl)
$
78.08
$
84.48
$
76.74
$
93.65
Natural gas ($/Mcf)1
3.17
6.44
3.10
7.28
Equivalents ($/Boe)
$
35.03
$
50.66
$
33.62
$
56.90
Revenue:
Oil and condensate sales
$
80,112
$
85,920
$
288,296
$
336,287
Natural gas and natural gas liquids
sales1
52,440
110,254
200,297
434,945
Lease bonus and other income
3,824
2,790
12,506
13,052
Revenue from contracts with customers
136,376
198,964
501,099
784,284
Gain (loss) on commodity derivative
instruments
54,465
31,415
91,117
(120,680
)
Total revenue
$
190,841
$
230,379
$
592,216
$
663,604
Operating expenses:
Lease operating expense
$
3,237
$
3,124
$
11,386
$
12,380
Production costs and ad valorem taxes
15,027
14,924
56,979
66,233
Exploration expense
429
1
2,148
193
Depreciation, depletion, and
amortization
11,748
12,786
45,683
47,804
General and administrative
12,505
14,326
51,455
53,652
Other expense:
Interest expense
674
2,022
2,754
6,286
Per Boe:
Lease operating expense (per working
interest Boe)
$
16.02
$
16.02
$
13.13
$
12.13
Production costs and ad valorem taxes
3.97
3.85
3.92
4.89
Depreciation, depletion, and
amortization
3.10
3.30
3.14
3.53
General and administrative
3.30
3.70
3.54
3.96
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 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 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 its 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 December
31,
Year Ended December
31,
2023
2022
2023
2022
(Unaudited)
(In thousands, except per unit
amounts)
Net income (loss)
$
147,647
$
183,219
$
422,549
$
476,480
Adjustments to reconcile to Adjusted
EBITDA:
Depreciation, depletion, and
amortization
11,748
12,786
45,683
47,804
Interest expense
674
2,022
2,754
6,286
Income tax expense (benefit)
143
(171
)
320
58
Accretion of asset retirement
obligations
293
245
1,042
861
Equity-based compensation
2,417
5,579
10,829
17,388
Unrealized (gain) loss on commodity
derivative instruments
(37,400
)
(72,014
)
(8,394
)
(82,486
)
(Gain) loss on sale of assets, net
—
—
(73
)
(17
)
Adjusted EBITDA
125,522
131,666
474,710
466,374
Adjustments to reconcile to Distributable
cash flow:
Change in deferred revenue
(1
)
(7
)
(9
)
(30
)
Cash interest expense
(410
)
(1,059
)
(1,715
)
(4,282
)
Preferred unit distributions
(6,026
)
(5,250
)
(21,776
)
(21,000
)
Distributable cash flow
$
119,085
$
125,350
$
451,210
$
441,062
Total units outstanding1
210,313
209,684
Distributable cash flow per unit
0.566
0.598
1 The distribution attributable to the quarter ended December
31, 2023 is calculated using 210,313,477 common units as of the
record date of February 16, 2024. Distributions attributable to the
quarter ended December 31, 2022 were calculated using 209,683,640
common units as of the record date of February 17, 2023.
Proved Oil & Gas Reserve Quantities
A reconciliation of proved reserves is presented in the
following table:
Crude Oil
(MBbl)
Natural Gas
(MMcf)
Total
(MBoe)
Net proved reserves at December 31,
2022
19,184
269,586
64,115
Revisions of previous estimates
675
(20,578
)
(2,754
)
Extensions, discoveries, and other
additions
2,989
87,935
17,645
Production
(3,757
)
(64,647
)
(14,532
)
Net proved reserves at December 31,
2023
19,091
272,296
64,474
Net Proved Developed Reserves
December 31, 2022
19,184
236,529
58,606
December 31, 2023
19,091
228,061
57,101
Net Proved Undeveloped Reserves
December 31, 2022
—
33,057
5,509
December 31, 2023
—
44,235
7,373
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240219650505/en/
Evan Kiefer Senior Vice President, Chief Financial Officer, and
Treasurer Telephone: (713) 445-3200
investorrelations@blackstoneminerals.com
Black Stone Minerals (NYSE:BSM)
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From Oct 2024 to Nov 2024
Black Stone Minerals (NYSE:BSM)
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From Nov 2023 to Nov 2024
