Black Stone Minerals, L.P. Reports First Quarter Results

May 02, 2022 businesswire.com

THIS IS AN EXCERPT FROM A LONGER ARTICLE

HOUSTON--(BUSINESS WIRE)--Black Stone Minerals, L.P. (NYSE: BSM) ("Black Stone Minerals," "Black Stone," or "the Company") today announces its financial and operating results for the first quarter of 2022.

“We remain very encouraged by the level of activity across our acreage in this strong commodity price environment, and by the initial drilling results on our concentrated mineral positions in the Haynesville and Austin Chalk plays. This optimism is reflected in the significant distribution increase we announced last week.”

Financial and Operational Highlights

• Mineral and royalty production for the first quarter of 2022 equaled 29.6 MBoe/d, a decrease of 16% over the prior quarter, driven in part by the timing of new wells turned to sales in the Shelby Trough Haynesville/Bossier; total production, including working interest volumes, was 32.9 MBoe/d for the quarter.
• Adjusted EBITDA for the quarter totaled $98.8 million, an increase of 27% over the prior quarter. Net loss for the first quarter was $7.0 million.
• Distributable cash flow was $92.6 million for the first quarter, an increase of 30% relative to the fourth quarter of 2021.
• Announced a distribution of $0.40 per unit with respect to the first quarter of 2022, which represents a 48% increase from the distribution paid with respect to the fourth quarter of 2021. Distribution coverage for all units was 1.1x.
• Total debt at the end of the first quarter was $69.0 million; total debt to trailing twelve-month Adjusted EBITDA was 0.2x at quarter-end. As of April 29, 2022, total debt had been reduced to $44.0 million.
• Effective April 28, 2022, Black Stone’s borrowing base under its revolving credit facility was reaffirmed at $400 million.

Management Commentary

Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We remain very encouraged by the level of activity across our acreage in this strong commodity price environment, and by the initial drilling results on our concentrated mineral positions in the Haynesville and Austin Chalk plays. This optimism is reflected in the significant distribution increase we announced last week.”

Quarterly Financial and Operating Results

Production

Black Stone Minerals reported mineral and royalty volume of 29.6 MBoe/d (71% natural gas) for the first quarter of 2022, compared to 35.2 MBoe/d for the fourth quarter of 2021 and 31.1 MBoe/d for the first quarter of 2021. The decrease was most pronounced in the Shelby Trough and was due in part to the timing of new wells brought on line. Aethon Energy ("Aethon"), the Company’s primary operating partner in the area, had four wells turned to sales shortly after the end of the first quarter. In addition, XTO Energy shut in some existing production in the Shelby Trough as it resumed drilling operations on three wells in San Augustine County. Finally, the Company successfully worked with producers in the second half of 2021 to release suspended production volumes across its mineral position, which increased reported volumes in that period.

Working interest production for the first quarter of 2022 was 3.3 MBoe/d, representing a decrease of 15% from the levels generated in the quarter ended December 31, 2021 and a decrease of 43% from the quarter ended March 31, 2021. 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 32.9 MBoe/d (90% mineral and royalty, 72% natural gas) for the first quarter of 2022 compared to 39.1 MBoe/d and 36.8 MBoe/d for the quarters ended December 31, 2021 and March 31, 2021, respectively.

Realized Prices, Revenues, and Net Income

The Company’s average realized price per Boe, excluding the effect of derivative settlements, was $51.25 for the quarter ended March 31, 2022. This is an increase of 16% from $44.12 per Boe from the fourth quarter of 2021 and a 95% increase compared to $26.27 for the first quarter of 2021.

Black Stone reported oil and gas revenue of $151.6 million (50% oil and condensate) for the first quarter of 2022, a decrease of 5% from $158.9 million in the fourth quarter of 2021. Oil and gas revenue in the first quarter of 2021 was $87.1 million.

The Company reported a loss on commodity derivative instruments of $120.0 million for the first quarter of 2022, composed of a $31.2 million loss from realized settlements and a non-cash $88.8 million unrealized loss due to the change in value of Black Stone’s derivative positions during the quarter. Black Stone reported a gain of $18.4 million and a loss of $27.9 million on commodity derivative instruments for the quarters ended December 31, 2021 and March 31, 2021, respectively.

Lease bonus and other income was $4.9 million for the first quarter of 2022, primarily related to leasing activity in the Wolfcamp play. Lease bonus and other income for the quarters ended December 31, 2021 and March 31, 2021 was $2.1 million and $2.4 million, respectively.

The Company reported a net loss of $7.0 million for the quarter ended March 31, 2022, compared to net income of $134.2 million in the preceding quarter. For the quarter ended March 31, 2021, the Company reported net income of $16.2 million.

Adjusted EBITDA and Distributable Cash Flow

Adjusted EBITDA for the first quarter of 2022 was $98.8 million, which compares to $77.6 million in the fourth quarter of 2021 and $60.0 million in the first quarter of 2021. Distributable cash flow for the quarter ended March 31, 2022 was $92.6 million. For the quarters ended December 31, 2021 and March 31, 2021, distributable cash flow was $71.3 million and $53.8 million, respectively.

Shelby Trough Development Update

Aethon has successfully turned six wells to sales (four of which came online in April 2022) and has commenced operations on four additional wells under the development agreement covering Angelina County. Aethon is currently drilling two wells and has another two wells awaiting completion operations under the separate development agreement covering San Augustine County. Additionally, XTO Energy has resumed drilling three wells on Black Stone Shelby Trough acreage in San Augustine County that were originally spud in 2019.

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 our three well test program in the Brookeland Field demonstrates that modern completion technology can greatly improve production rates and increase reserves when compared to the vintage, unstimulated wells in the Austin Chalk formation. Four operators are actively engaged in redevelopment of the field, with two rigs running continuously in the play. To date, seven wells with modern completions are now producing in the area, and an additional five are currently either being drilled or completed.

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 2022 on Tuesday, May 3, 2022 at 10:30 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 5993962. A recording of the conference call will be available on Black Stone's website through June 3, 2022.

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 conflict in conflict in Ukraine and actions taken, and may in the future be taken, against Russia or otherwise as a result;
• the availability of U.S. liquified natural gas ("LNG") export capacity and the level of demand for LNG exports;
• 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.