Black Stone Minerals, L.P. (NYSE: BSM) (“Black Stone Minerals”)
today announced its financial and operating results for the third
quarter of 2015.
Key Third Quarter 2015 Highlights:
- Average production of 29.0 MBoe per
day, representing year-over-year growth of 2.5%.
- Revenues of $137.0 million for the
quarter, including unrealized derivative gain of $44.1
million.
- Net income of $53.9 million; Adjusted
EBITDA (as defined below) of $64.8 million.
- Quarterly distribution coverage ratio
of 1.2 times with cash generated from operations available for
distribution of $61.1 million.
- Debt to trailing twelve month EBITDAX
of 0.2 times at end of the quarter.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ President, Chief
Executive Officer, and Chairman commented, “In tumultuous times
like these for the oil and gas industry, the advantages of Black
Stone Minerals’ low capital intensity business model become even
more apparent. Without investing any capital, royalty volumes have
grown throughout 2015 even as the drilling rig count across the
industry has declined during that period. We’re actively working
with our lessees to incent them to maintain or accelerate activity
on BSM acreage, while also taking steps to enhance the revenues and
costs that we can directly control. Management is reviewing a plan
that could meaningfully reduce G&A in 2016. Deal flow for
acquisitions is picking up and the balance sheet is in great shape.
We remain optimistic that we are on a path that will enable us to
grow distributions for unitholders.”
Financial and Operating Results
Production
Black Stone Minerals reported average production of 29.0 MBoe
per day for the third quarter of 2015, 72.5% of which is
attributable to mineral and royalty interests. This represents an
increase of 2.5% over average production of 28.3 MBoe per day for
the corresponding period in 2014 and is a decrease of 1.2% from the
second quarter of 2015.
Realized Prices, Revenues, and Net Income
The partnership’s average realized price per Boe, excluding the
effect of derivative settlements, was $28.57 for the quarter ended
September 30, 2015, a decline of 36.3% from $44.88 per Boe for the
quarter ended September 30, 2014.
Black Stone Minerals reported revenues of $137.0 million in the
third quarter of 2015, an increase of 3.2% from $132.8 million in
the third quarter of 2014. The increase reflects lower commodity
prices compared to the corresponding period in 2014 offset by an
unrealized gain of $44.1 million in the current quarter that
reflects the increase in value of unsettled derivative contracts
during the quarter.
Lease bonus for the quarter was $4.3 million for the third
quarter of 2015, compared to $7.1 million for the same period last
year. The timing and amount of lease bonus is variable. Several
lease transactions have been completed subsequent to quarter-end
and a number of transactions are currently being negotiated.
Subsequent to quarter-end, Black Stone Minerals also received a
cash payment of $18.7 million from an operator related to the
termination of an exploration and development agreement associated
with the partnership’s minerals and leasehold interests. Black
Stone Minerals retained its ownership of these interests, which are
currently being marketed to potential partners.
Reported net income was $53.9 million for the quarter ended
September 30, 2015, compared to net income of $57.9 million in the
corresponding period in 2014. The current period reflects a
non-cash impairment of oil and natural gas properties of $24.9
million resulting from declines in future expected net cash flows
and other factors at September 30, 2015.
Financial Position
As of September 30, 2015, Black Stone Minerals had $43.0 million
outstanding under its credit facility. Subsequent to quarter end,
the partnership’s borrowing base was re-determined at $550.0
million as part of its regularly scheduled re-determination.
Additionally, the bank group and the partnership agreed to extend
the termination date of the credit agreement from February 3, 2017
to February 4, 2019. Black Stone Minerals is in compliance with all
financial covenants associated with its credit facility. As of
November 9, 2015, there were no outstanding borrowings under the
credit facility.
Acquisitions and Investing Activities
Year to date, net cash used in investing activities for the
partnership was $104.2 million. The largest component of this
amount is $62.2 million of acquisitions, the majority of which were
located in the Midland Basin and in the Eagle Ford shale. The
remaining balance relates almost entirely to additions to oil and
natural gas properties associated with the partnership’s working
interest participation option, which allows it to participate in
the development of de-risked resource plays on its mineral
interests.
Distributions
The Board of Directors of the general partner has approved a
cash distribution of $0.2625 per unit attributable to the third
quarter of 2015. The quarterly distribution coverage ratio was over
1.2 times the approved distribution attributable to the third
quarter of 2015. Distributions will be payable on November 27, 2015
to unitholders of record at the close of business on
November 19, 2015.
Conference Call
Black Stone Minerals will host a conference call and webcast for
investors and analysts to discuss its results of operations for the
third quarter of 2015 on Tuesday, November 10, 2015 at 9:00 a.m.
Central Time. To join the call, participants should dial (855)
546-9558 and use conference code 52525494. A live broadcast of the
call will also be available on our website at
http://investor.blackstoneminerals.com. A recording of the
conference call will be available at that site through November 27,
2015.
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 over 40 states and
60 onshore basins in the continental United States. The partnership
also owns and selectively participates in non-operating working
interests in established development programs, primarily on its
mineral and royalty holdings. 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.
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 39.6% for individuals.
BLACK STONE MINERALS, L.P.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per unit
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2015 2014 2015 2014 REVENUE Oil and
condensate sales $ 44,128 $ 71,089 $ 126,584 $ 195,665 Natural gas
and natural gas liquids sales 32,191 45,914 92,799 156,554 Gain on
commodity derivative instruments 56,430 8,682 57,450 339 Lease
bonus and other income 4,271 7,110
16,051 26,586 TOTAL REVENUE
137,020 132,795 292,884
379,144 OPERATING (INCOME) EXPENSE Lease operating expense
4,924 6,037 16,540 15,707 Production costs and ad valorem taxes
8,175 12,181 26,250 33,589 Exploration expense 1,817 440 2,014 444
Depreciation, depletion and amortization 23,288 37,065 83,414
84,058 Impairment of oil and natural gas properties 24,854
-
156,683
-
General and administrative 18,994 15,644 53,530 45,607 Accretion of
asset retirement obligations 265 148 805 443 (Gain) loss on sale of
assets, net
4
-
(20 )
-
TOTAL OPERATING EXPENSE 82,321 71,515
339,216 179,848 INCOME (LOSS)
FROM OPERATIONS 54,699 61,280 (46,332 ) 199,296 OTHER INCOME
(EXPENSE) Interest and investment income 18 3 46 27 Interest
expense (870 ) (3,440 ) (5,530 ) (10,292 ) Other income 45
62 241 869 TOTAL
OTHER EXPENSE (807 ) (3,375 ) (5,243 )
(9,396 ) NET INCOME (LOSS) 53,892 57,905 (51,575 ) 189,900 NET
INCOME ATTRIBUTABLE TO PREDECESSOR
-
(57,905 ) (450 ) (189,900 ) NET (INCOME) LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS SUBSEQUENT TO INITIAL PUBLIC OFFERING (3 )
-
137
-
DISTRIBUTIONS ON PREFERRED UNITS SUBSEQUENT TO INITIAL PUBLIC
OFFERING (2,973 )
-
(4,783 )
-
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND
LIMITED PARTNERS SUBSEQUENT TO INITIAL PUBLIC OFFERING $ 50,916
$
-
$ (56,671 )
$
-
ALLOCATION OF NET INCOME (LOSS) SUBSEQUENT TO INITIAL PUBLIC
OFFERING ATTRIBUTABLE TO: General partner interest
$
-
$
-
Common limited partner interests 25,608 (28,502 ) Subordinated
limited partner interests 25,308 (28,169 ) $
50,916 $ (56,671 ) NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED
PARTNERS PER UNIT: Per common limited partner unit (basic and
diluted) $ 0.27 $ (0.30 ) Weighted average common limited
partner units outstanding (basic and diluted) 96,186
96,183 Per subordinated limited partner unit (basic
and diluted) $ 0.27 $ (0.30 ) Weighted average subordinated
limited partner units outstanding (basic and diluted) 95,057
95,057 DISTRIBUTIONS DECLARED AND PAID
SUBSEQUENT TO INITIAL PUBLIC OFFERING: Per common limited partner
unit $ 0.1615 $ 0.1615 Per subordinated limited
partner unit $ 0.1615 $ 0.1615
The following table shows the partnership’s production, realized
prices, and revenues for the periods presented.
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015
2014 (Unaudited) (Dollars in thousands, except for
realized prices) Production: Oil and condensate (MBbls)
936 783 2,668 2,106 Natural gas (MMcf)1 10,411 10,945
31,817 31,173 Equivalents (MBoe)2 2,671 2,607 7,971
7,302
Realized prices: Oil and condensate ($/Bbl) $ 47.15 $
90.79 $ 47.45 $ 92.91 Natural gas ($/Mcf)1 $ 3.09 $ 4.19 $ 2.92 $
5.02 Equivalents ($/Boe)2 $ 28.57 $ 44.88 $ 27.52 $ 48.24
Revenue: Oil and condensate sales $ 44,128 $ 71,089 $
126,584 $ 195,665 Natural gas and natural gas liquids sales 32,191
45,914 92,799 156,554 Gain on commodity derivative instruments
56,430 8,682 57,450 339 Lease bonus and other income 4,271
7,110 16,051 26,586 Total revenue $ 137,020 $
132,795 $ 292,884 $ 379,144
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 reported production; however, revenue attributable to
NGLs is included in natural gas revenue and the calculation of
realized prices for natural gas.
2
“Btu-equivalent” production volumes are
presented on an oil-equivalent basis using a conversion factor of
six Mcf of natural gas per barrel of “oil equivalent,” which is
based on approximate energy equivalency and does not reflect the
price or value relationship between oil and natural gas.
Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, and cash available for distribution are
non-GAAP supplemental financial measures used by Black Stone
Minerals’ management and external users of the partnership’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.
Black Stone Minerals defines EBITDA as net income (loss) before
interest expense, income taxes and depreciation, depletion, and
amortization. Black Stone Minerals defines Adjusted EBITDA as
EBITDA adjusted for impairment of oil and natural gas properties,
accretion of asset retirement obligations, unrealized gains/losses
on commodity derivative instruments, and non-cash equity-based
compensation. Black Stone Minerals defines cash available for
distribution as Adjusted EBITDA plus or minus amounts for certain
non-cash operating activities, borrowings for capital expenditures,
capital expenditures, cash interest expense, and distributions to
noncontrolling interests and preferred unitholders.
EBITDA, Adjusted EBITDA, and cash available for distribution
should not be considered an alternative to, or more meaningful
than, net income, income from operations, cash flows from operating
activities, or any other measure of financial performance presented
in accordance with GAAP as measures of the partnership’s financial
performance. EBITDA, Adjusted EBITDA, and cash available for
distribution have important limitations as analytical tools because
they exclude some but not all items that affect net income, the
most directly comparable GAAP financial measure. The partnership’s
computation of EBITDA, Adjusted EBITDA, and cash available for
distribution may differ from computations of similarly titled
measures of other companies.
The following table presents a reconciliation of EBITDA,
Adjusted EBITDA, and cash available for distribution to net income,
the most directly comparable GAAP financial measure, for the
periods indicated.
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 2015 2014
(Unaudited) (In thousands) Net income (loss) $ 53,892
$ 57,905 $ (51,575 ) $ 189,900 Adjustments to reconcile to Adjusted
EBITDA: Add: Depreciation, depletion and amortization 23,288 37,065
83,414 84,058 Interest expense 870 3,440 5,530
10,292 EBITDA 78,050 98,410 37,369 284,250 Add: Impairment
of oil and natural gas properties 24,854
-
156,683
-
Accretion of asset retirement obligations 265 148 805 443
Equity-based compensation 5,690 1,798 13,052 7,452 Less: Unrealized
gain on commodity derivative instruments (44,053 )
(9,108 ) (10,918 ) (3,708 ) Adjusted EBITDA 64,806
91,248 196,991 288,437 Adjustments to reconcile to cash generated
from operations: Add: Borrowings/cash used to fund capital
expenditures 62,165 32,973 104,558 102,858 Loss on sales of assets,
net 4
-
-
-
Less: Deferred revenue (94 )
-
(584 ) (2,516 ) Cash interest expense (628 ) (3,197 ) (4,806 )
(9,566 ) Gain on sales of assets, net
-
-
(20 )
-
Additions to and acquisitions of oil and natural gas properties
(62,165 ) (32,973 ) (104,558 ) (102,858
) Cash generated from operations 64,088 88,051 191,581 276,355
Less: Cash paid to noncontrolling interests (45 ) (84 ) (167 ) (252
) Preferred unit distributions (2,973 ) (3,962 )
(8,823 ) (11,763 ) Cash generated from operations
available for distribution on common and subordinated units and
reinvestment in our business $ 61,070 $ 84,005 $ 182,591 $ 264,340
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151109006718/en/
Black Stone Minerals, L.P.Brent Collins, (713)
445-3200Vice President, Investor
Relationsinvestorrelations@blackstoneminerals.com
Black Stone Minerals (NYSE:BSM)
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