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 2021.
Financial and Operational Highlights
- Mineral and royalty production for the first quarter of 2021
equaled 31.1 MBoe/d, a decrease of 3% over the prior quarter; total
production, including working interest volumes, was 36.8 MBoe/d for
the quarter.
- Net income and Adjusted EBITDA for the quarter totaled $16.2
million and $60.0 million, respectively.
- Distributable cash flow was $53.8 million for the first
quarter, resulting in distribution coverage for all units of 1.5x
based on the announced cash distribution of $0.175 per unit.
- Total debt at the end of the first quarter was $111.0 million;
total debt to trailing twelve-month Adjusted EBITDA was 0.4x at
quarter-end. As of April 30, 2021, total debt had been reduced to
$96.0 million.
- Effective April 30, 2021, Black Stone’s borrowing base under
its revolving credit facility was reaffirmed at $400 million. As
part of the redetermination process, Black Stone and its lenders
agreed to extend the maturity date of the facility to November 1,
2024.
Strategic Highlights
Subsequent to the end of the first quarter of 2021, Black
Stone:
- Entered into an agreement with affiliates of Aethon Energy
(“Aethon”) to develop certain of the Company’s undeveloped Shelby
Trough Haynesville and Bossier acreage in San Augustine County,
Texas.
- Entered into an agreement with a consortium of operators
through which the operators will drill up to three test wells for
the Austin Chalk formation on Black Stone acreage in East Texas
using high-intensity, multi-stage completions; the initial test
well under the agreement was spud in April 2021.
- Entered into an agreement with a large, private independent
operator to develop additional Black Stone acreage within the
Austin Chalk formation in East Texas.
- Agreed to acquire mineral and royalty properties in the
northern Midland Basin for total consideration of $20.7 million in
cash and BSM common units.
Management Commentary
Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive
Officer and Chairman commented, “We are encouraged by the rebound
in commodity prices and increases in producer activity across our
acreage, and by our successful efforts to attract operator capital
to our large, contiguous, high-net positions in East Texas. The
agreements signed over the past few months will help delineate over
200,000 gross Black Stone acres in the Austin Chalk formation
alone, while retaining significant additional acreage in the area
for further development deals. These organic projects, if
successful, provide for years of high-quality drilling locations
and, combined with our acquisition efforts, give us multiple
avenues to drive accretive growth for our unitholders.”
Quarterly Financial and Operating Results
Production
Black Stone Minerals reported mineral and royalty volume was
31.1 MBoe/d (73% natural gas) for the first quarter of 2021,
compared to 32.0 MBoe/d for the fourth quarter of 2020. Mineral and
royalty production for the first quarter of 2020 was 36.7
MBoe/d.
Working interest production for the first quarter of 2021 was
5.8 MBoe/d, and represents a decrease of 17% from the levels
generated in the quarter ended December 31, 2020 and a decrease of
44% from the quarter ended March 31, 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 36.8 MBoe/d (84% mineral and
royalty, 75% natural gas) for the first quarter of 2021. Total
production was 39.0 MBoe/d and 46.9 MBoe/d for the quarters ended
December 31, 2020 and March 31, 2020, respectively.
Realized Prices, Revenues, and Net Income
The Company’s average realized price per Boe, excluding the
effect of derivative settlements, was $26.27 for the quarter ended
March 31, 2021. This is an increase of 18% from $22.21 per Boe from
the fourth quarter of 2020 and a 26% increase compared to $20.81
for the first quarter of 2020.
Black Stone reported oil and gas revenue of $87.1 million (51%
oil and condensate) for the first quarter of 2021, an increase of
9% from $79.7 million in the fourth quarter of 2020. Oil and gas
revenue in the first quarter of 2020 was $88.7 million.
The Company reported a loss on commodity derivative instruments
of $27.9 million for the first quarter of 2021, composed of a $4.5
million loss from realized settlements and a non-cash $23.4 million
unrealized loss due to the change in value of Black Stone’s
derivative positions during the quarter. Black Stone reported a
loss of $3.6 million and a gain of $90.0 million on commodity
derivative instruments for the quarters ended December 31, 2020 and
March 31, 2020, respectively.
Lease bonus and other income was $2.4 million for the first
quarter of 2021, primarily related to leasing activity in the
Austin Chalk. Lease bonus and other income for the quarters ended
December 31, 2020 and March 31, 2020 was $1.4 million and $4.3
million, respectively.
There was no impairment for the quarters ended March 31, 2021
and December 31, 2020 and a $51.0 impairment for the quarter ended
March 31, 2020.
The Company reported net income of $16.2 million for the quarter
ended March 31, 2021, compared to net income of $30.3 million in
the preceding quarter. For the quarter ended March 31, 2020, net
income was $76.1 million.
Adjusted EBITDA and Distributable Cash Flow
Adjusted EBITDA for the first quarter of 2021 was $60.0 million,
which compares to $72.3 million in the fourth quarter of 2020 and
$71.1 million in the first quarter of 2020. Distributable cash flow
for the quarter ended March 31, 2021 was $53.8 million. For the
quarters ended December 31, 2020 and March 31, 2020, distributable
cash flow was $65.9 million and $66.2 million, respectively. The
decreases in Adjusted EBITDA and distributable cash flow for the
first quarter of 2021 relative to the fourth quarter of 2020 and
first quarter of 2020 are primarily attributable to lower realized
settlements on the Company's commodity derivatives.
Financial Position and Activities
As of March 31, 2021, Black Stone Minerals had $3.8 million in
cash and $111.0 million outstanding under its credit facility. The
ratio of total debt at March 31, 2021 to trailing twelve-month
Adjusted EBITDA was 0.4x. As of April 30, 2021, $96.0 million was
outstanding under the credit facility and the Company had $10.3
million in cash.
Subsequent to quarter-end, Black Stone's borrowing base was
reaffirmed at $400 million. As part of the redetermination process,
the term of the credit facility was extended until November 1,
2024. Black Stone is in compliance with all financial covenants
associated with its credit facility.
During the first quarter of 2021, the Company made no
repurchases of units under the Board-approved $75 million unit
repurchase program and issued no units under its at-the-market
offering program.
First Quarter 2021 Distributions
As previously announced, the Board approved a cash distribution
of $0.175 for each common unit attributable to the first quarter of
2021. The quarterly distribution coverage ratio attributable to the
first quarter of 2021 was approximately 1.5x. Distributions will be
payable on May 21, 2021 to unitholders of record as of the close of
business on May 14, 2021.
Activity Update
Rig Activity
As of March 31, 2021, Black Stone had 59 rigs operating across
its acreage position, an increase relative to the 38 rigs on the
Company's acreage as of December 31, 2020 and the 54 rigs operating
on the Company's acreage as of March 31, 2020.
Shelby Trough Development Update
Angelina County
Aethon has successfully drilled the initial two wells under the
development agreement covering Angelina County and expects to turn
those wells to sales in the second quarter of 2021. Under the terms
of that agreement, Aethon will drill a minimum of four wells on
Black Stone acreage in the first program year ending in September
2021, escalating to a minimum of 15 wells per program year starting
with the third program year.
San Augustine County
In March 2021, Black Stone and XTO Energy, Inc. (“XTO”) reached
an agreement to partition jointly owned working interests in the
Brent Miller development area in San Augustine County. Under the
partition agreement, Black Stone and XTO exchanged working
interests in certain existing and proposed drilling units,
resulting in each company holding 100% of the working interests in
their respective partitioned units.
In May 2021, Black Stone and Aethon entered into an agreement to
develop certain of the Company’s undeveloped acreage in San
Augustine County, including the working interests resulting from
the partition agreement discussed above. The agreement provides for
minimum well commitments by Aethon in exchange for reduced royalty
rates and exclusive access to Black Stone’s mineral and leasehold
acreage in the contract area. The agreement calls for a minimum of
five wells to be drilled in the initial program year, which begins
in the third quarter of 2021, increasing to a minimum of 12 wells
per year beginning with the fourth program year. The Company’s
development agreement with Aethon and related drilling commitments
covering its San Augustine County acreage is independent of the
development agreement and associated commitments covering Angelina
County.
Austin Chalk Update
In April 2021, Black Stone entered into an agreement with
several operators to test and develop 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. Under the terms of the
agreement, the operators will participate in three test wells
targeting the Austin Chalk formation. Assuming the test well
program is successful, Black Stone anticipates entering into
separate agreements with each operator to further develop the
acreage.
In April 2021, Black Stone also entered into an agreement with a
large, private independent operator to drill and complete multiple
Austin Chalk wells on Company acreage within East Texas in 2021. If
the initial wells are successful, the operator has the option to
expand the Austin Chalk development program on additional Black
Stone acreage.
In February of 2021, Black Stone entered into an agreement with
a large, publicly traded independent operator by which the operator
will undertake a program to drill, test, and complete wells in the
Austin Chalk formation on certain of the Company’s acreage in East
Texas. If the initial wells are successful, the operator has the
option to expand the Austin Chalk drilling program over a
significant acreage position, the majority of which is owned and
controlled by the Company.
Acquisition Update
In May 2021, Black Stone entered into an agreement to acquire
mineral and royalty acreage in the northern Midland Basin for total
consideration of $20.7 million. The purchase price will consist of
$10 million in cash and $10.7 million in BSM common units. The
acquisition is expected to close in the second quarter of 2021.
Update to Hedge Position
Black Stone has commodity derivative contracts in place covering
portions of its anticipated production for 2021 and 2022. The
Company's hedge position as of April 30, 2021 is summarized in the
following tables:
Oil Hedge Position
Oil Swap
Oil Swap Price
MBbl
$/Bbl
1Q21
220
$38.97
2Q21
660
$38.97
3Q21
660
$38.97
4Q21
660
$38.97
1Q22
150
$55.47
2Q22
150
$55.47
3Q22
150
$55.47
4Q22
150
$55.47
Natural Gas Hedge Position
Gas Swap
Gas Swap Price
BBtu
$/MMbtu
2Q21
10,010
$2.69
3Q21
10,120
$2.69
4Q21
10,120
$2.69
More detailed information about the Company's existing hedging
program can be found in the Quarterly Report on Form 10-Q for the
first quarter of 2021, which is expected to be filed on or around
May 4, 2021.
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 2021 on Tuesday, May 4, 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 3175119. A recording of the conference call will be available
on Black Stone's website through June 3, 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;
- 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 March
31,
2021
2020
REVENUE
Oil and condensate sales
$
44,176
$
52,093
Natural gas and natural gas liquids
sales
42,889
36,642
Lease bonus and other income
2,385
4,308
Revenue from contracts with customers
89,450
93,043
Gain (loss) on commodity derivative
instruments
(27,882
)
90,011
TOTAL REVENUE
61,568
183,054
OPERATING (INCOME) EXPENSE
Lease operating expense
2,664
3,827
Production costs and ad valorem taxes
11,842
12,376
Exploration expense
1,073
1
Depreciation, depletion, and
amortization
15,632
23,182
Impairment of oil and natural gas
properties
—
51,031
General and administrative
12,852
11,856
Accretion of asset retirement
obligations
292
272
TOTAL OPERATING EXPENSE
44,355
102,545
INCOME (LOSS) FROM OPERATIONS
17,213
80,509
OTHER INCOME (EXPENSE)
Interest and investment income
—
31
Interest expense
(1,210
)
(4,427
)
Other income (expense)
183
(1
)
TOTAL OTHER EXPENSE
(1,027
)
(4,397
)
NET INCOME (LOSS)
16,186
76,112
Distributions on Series B cumulative
convertible preferred units
(5,250
)
(5,250
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
GENERAL PARTNER AND COMMON UNITS
$
10,936
$
70,862
ALLOCATION OF NET INCOME (LOSS):
General partner interest
$
—
$
—
Common units
10,936
70,862
$
10,936
$
70,862
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED
PARTNERS PER COMMON UNIT:
Per common unit (basic)
$
0.05
$
0.34
Per common unit (diluted)
$
0.05
$
0.34
WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING:
Weighted average common units outstanding
(basic)
207,442
206,631
Weighted average common units outstanding
(diluted)
207,442
206,631
The following table shows the Company’s production, revenues,
pricing, and expenses for the periods presented:
Three Months Ended March
31,
2021
2020
(Unaudited)
(Dollars in thousands, except
for realized prices and per Boe data)
Production:
Oil and condensate (MBbls)
829
1,163
Natural gas (MMcf)1
14,911
18,612
Equivalents (MBoe)
3,314
4,265
Equivalents/day (MBoe)
36.8
46.9
Realized prices, without
derivatives:
Oil and condensate ($/Bbl)
$
53.29
$
44.79
Natural gas ($/Mcf)1
2.88
1.97
Equivalents ($/Boe)
$
26.27
$
20.81
Revenue:
Oil and condensate sales
$
44,176
$
52,093
Natural gas and natural gas liquids
sales1
42,889
36,642
Lease bonus and other income
2,385
4,308
Revenue from contracts with customers
89,450
93,043
Gain (loss) on commodity derivative
instruments
(27,882
)
90,011
Total revenue
$
61,568
$
183,054
Operating expenses:
Lease operating expense
$
2,664
$
3,827
Production costs and ad valorem taxes
11,842
12,376
Exploration expense
1,073
1
Depreciation, depletion, and
amortization
15,632
23,182
Impairment of oil and natural gas
properties
—
51,031
General and administrative
12,852
11,856
Other expense:
Interest expense
1,210
4,427
Per Boe:
Lease operating expense (per working
interest Boe)
$
5.14
$
4.12
Production costs and ad valorem taxes
3.57
2.90
Depreciation, depletion, and
amortization
4.72
5.44
General and administrative
3.88
2.78
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, distributions to noncontrolling interests and
preferred unitholders, 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 March
31,
2021
2020
(Unaudited)
(In thousands, except per unit
amounts)
Net income (loss)
$
16,186
$
76,112
Adjustments to reconcile to Adjusted
EBITDA:
Depreciation, depletion, and
amortization
15,632
23,182
Impairment of oil and natural gas
properties
—
51,031
Interest expense
1,210
4,427
Income tax expense (benefit)
(157
)
36
Accretion of asset retirement
obligations
292
272
Equity–based compensation
3,462
(2,894
)
Unrealized (gain) loss on commodity
derivative instruments
23,359
(81,057
)
Adjusted EBITDA
59,984
71,109
Adjustments to reconcile to Distributable
cash flow:
Change in deferred revenue
(9
)
(302
)
Cash interest expense
(953
)
(4,168
)
Preferred unit distributions
(5,250
)
(5,250
)
Restructuring charges1
—
4,815
Distributable cash flow
$
53,772
$
66,204
Total units outstanding2
207,552
206,709
Distributable cash flow per unit
$
0.259
$
0.320
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 March 31, 2021 is estimated using 207,552,011 common
units as of April 30, 2021; the exact amount of the distribution
attributable to the three months ended March 31, 2021 will be
determined based on units outstanding as of the record date of May
14, 2021. Distributions attributable to the three months ended
March 31, 2020 were calculated using 206,709,448 common units as of
the record date of May 14, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210504005540/en/
Black Stone Minerals, L.P.
Jeffrey P. 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)
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