BSM - Earnings call transcript Q3 2019 | Black Stone Minerals, L.P.

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Operator

Good morning, ladies and gentlemen, and welcome to the Third Quarter 2019 Black Stone Minerals L.P. Earnings Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Brent Collins, Vice President of Investor Relations. sir. ahead, go Please

Brent Collins

is Good release, by and Black phone XXXX along Today's Third Bella. available will joining our was on Stone you issued us Quarter website call Call. Conference either or the Earnings recorded morning, you, and thank be earnings everyone, with for Minerals' being which Thank online afternoon. for yesterday

assumptions forward-looking advise regarding statements statements that I'd the start, differ in we that statements. implied we plans, These you expectations future our materially or like our our to and this performance. involve during may be actual Before call cause from about making results forward-looking expressed will risks results our to

cautionary from discussion our risks, For of today. information will and to yesterday you forward-looking these the later filed statements which Risk our press XX-Q, refer of in Factors to be section release a should about the the forward-looking --

refer evaluating metrics GAAP yesterday, website believe other be financial in to directly can comparable about measures measures We Reconciliation non-GAAP earnings press blackstoneminerals.com. to our our most described which found we measures non-GAAP these performance. at those our information on that certain the may in are and useful release are of

Vice President Chairman Vice call of morning the Brock President Engineering and Vice to on the Tom. CFO; Geology; Counsel. officials President Company call Holbrook Senior General I'll Senior turn Jeff are and and Steve Tom this Wood, Carter, CEO; Dorn, and With Development; Senior over Putman, President of Morris, that, and Business

Thomas Carter

the day. year-over-year, Permian volumes conference call. and BOE our reported production. that for quarter production to to thanks third in by calling solid third driven quarter Royalty Good per for Total Blackstone morning growth XX,XXX the you. Thank Trough XX% feel quarter. Shelby averaged in increased mostly everyone, results for and We the

versus Our was and on working by volumes that year, declined purpose. interest last XX% done

facilitate order last value continued mineral acreage. during Trough and partner current lot We That two key development development interest the in Shelby program for participated as our with downturn a of operators kickstarted to create the a working shareholders. round of our original of

to volumes We even of override potential. investment from after and additional our that farming all back-end obligations capital interest through continue out benefit working

line is in revised expectations. our Overall, with production our trending

recall but maintain was our which NGL cash million year Distributable and our we're gas $XX including to wider guidance quarter, natural our You'll were able that bit last for the excess and in the production per the that unit the right down distribution quarter. for increased the prices common lower realizations. distribution financial year. to pay us flow to middle at for we debt generating allowed commodity we full for in $X.XX coverage, Weaker quarter, down range tracking be of results a while of impacted differentials quarter,

the balance the end we Over the acreage. the the a basins. quarter, count more XX% spread Both Midland XX of and of in our Bakken operating or At with total Haynesville the rig and are portfolio. of the Delaware our had of on third drilling had running share entire those across XX% rigs

of permitting additions to drilling in see activity levels slowdown We activity. well continue general the good despite and

which our top record. over net In the net remaining further net Year-to-date, XX wells wells, we've was we a The the across contributed net basins last Eagle our added from wells Haynesville, acreage, XXXX, X.X added a the we year, with on we've Ford added company quarter, the a wells over X.X plays. seen XX largest with acreage. net Delaware and Consistent little net outside with coming X Midland and what wells. During X.X Bakken were the contributors the wells.

chance record in I XXXX. great beat or meet So a to think have that we

recently have net if we XX approximately alone meaningfully in move being that are in up completed completed, number been so year. see In of fact, come potentially wells process we're that those aware in could or them wells of the Permian this the

the In from terms the permits quarter. of decrease permitting saw in XXX activity, is in during both our flat Haynesville, third acreage Eagle in and Midland Bakken. added related Delaware last permits. an we slightly the down activity which quarter, XXX saw we The Ford horizontal to the on fewer increase was actually area permitting Permitting and

We response this environment in being more horns, acquisition tough on during -- we've quarter. pulled selective. macro is, any The in right now. meaningful our some to and acquisition didn't acquisitions on frankly, have are that, the front And

can't we the anything bit position defensive we'll a will that the which prioritize us revolver, repurchases. for mode, that more being or while acquisitions We down we're haven't live in without. at share future We're seen And moment. paying

Last in quarter, the activity in Shelby on particularly formerly we the BP, the Trough, slowdown BPX, of part lower XX. discussed

we interest is those a call, The about a earnings number of various of level with genuine received now discussions we're and few our encouraging, from Following in that project. parties inbound of groups. calls inquiring

focus getting important on are there Trough well think that is to us implications asset been and out on activity of the company. Our moving proceeding as and Obviously, as profile front. quickly has I things cash an flow possible, has on Shelby long-term again the

who us active to doing our know the follow are can beneficial commodity our are acreage you acreage others is as so something in efforts to regularly Trough, with generally. restricted such space that for these, we In in access management Those in everything to they and particularly where of additional times our Shelby promote our that us capital on believe E&Ps. we addition prices and is of from differentiates activity we

distribution -- usual, of and coming our in the call distribution in excuse unit around over -- with coverage me, at price We very end fourth XXXX with guidance give January attractive yield, current current to XX% quarter to connection as the strong initial XXXX a February. are We plan price. our

turn With the Jeff. to that, I'll call over

Jeffrey Wood

morning, everyone. Okay. Tom, you, Thank and good

earnings afternoon. release yesterday XXXX quarter third our released we So

that midpoint guidance range XX,XXX revised Tom issued day at original reported that As our production the last in issued the that February range we we course, upwards from total And XXXX. of of guidance of mentioned, was quarter. of revised our BOE was per

the Royalty guidance. production and to generally upper was were costs range, of end guidance that favorable near compared

G&A bit both That's a DD&A taxes are came that on information earnings in the a result release. a expectations. percentage lower as higher available guided. and little costs valorem revenues. below and from ad we is down our through Production trending oil bringing and Specifically, basis All of gas prices what

focus of our impacted items financial here, a the for going So I'm to the on few quarter. that results

hedge prices and gas is items here by including actually where we we on the price realizations differentials not perfect from improved gas of year, mitigate those almost million points this but touch sales oil the volumes differentials moved want but is the quarter. impacted market The pricing. hedges prices. and therefore, aware Henry it $XX We're through don't most don't portfolio those ultimately although have as third see, seen down a We're impact. recently. visibility recorded this to that Because Hub have we quarter, Those differentials hedged positive oil historically hub first that to sold, own have nice for cash and frankly, is you between on has, in and, our all worsened. we have XXXX, of that, designed And that I WTI can by our bounce

just down quarter, levels 'XX. were bad In addition, seen we since third that to historically haven't prices in trading NGL early the

$X.XX quarter for gas occurrence So and Henry down year. our us. prices NGL natural unusual the is for Hub in fall Overall, worsening caused price, of the to last last combination realized That's and XX% which from differentials third price an XX% quarter from down quarter Mcf. over lower for our gas the was of realized quarter prices the the below

environment. to came and September now cover by our that XX-month current I We We debt third decrease in ratio where million are conjunction trailing liquidity to want sheet a as is other price a to deck-related that the focused because million balance base said, the we borrowing our more we've reduced fall related topic of total debt in small little just X.Xx. price under $XXX as the our had with on redetermination been the $XX quarter The down Tom occurred. -- even in and current XX, EBITDAX to

had we at available quarter that, $XXX million to us almost of Despite end. liquidity

liquidity of balance last to lower too $XXX for excited on front. that does model, in the levels acquisitions. also Friday, about so positions this we're Not progress good was funding make frankly, revolver [indiscernible] minerals it down as a greater our These to As liquidity difficult environment. but time million, not using at acquire only and extra especially when we debt important continue our energy us to a are equity levels assets source what further derisk is business

if a set financial in up hope us environment tough this remain continues. energy very succeed to we So overall, we which even position, will strong

the those has does the shares. to at some out their ago. of million but does may right X an the no to statement shares, this common shares underlying intend position common covers not to of we $XXX last sell direct It that and common, underlying they so not Friday. into have XX.X that shares units Finally, filed to Carlyle indication registration have certainly time. you needed impact to Carlyle indicate additional from have common we we S-X plan statement financials, to That and Carlyle we we convert seen preferred the that on million a that issued of this register now its years preferred convert preferred

I will over Bella, that, questions. call With to turn the

Operator

Instructions]. [Operator

from Energy. Our with comes line Hammond Simmons first Pearce question of the

Pearce Hammond

now, of So that reductions. some thoughts versus I my sort up But priority quarter, right unit the on your that the buybacks Obviously, unit are first So where this does buybacks? allocation, $XX kind your just to on question on get down distributions paid you worth. given million wanted units to bump just thoughts subject. debt, capital pertains of versus debt

Jeffrey Wood

Sure, Peter. balance the really great depends on is the mean the question. to a sheet. a That's just at first opportunities This It always strong maintain really Jeff. priority us for I time. is

all mentioned were we us comments, cash down acquisitions. not when, and cited, as reduce too about a debt position equity take finance better directly opportunities to to flow we're using more in be in were balances, advantage on focused that line, the to I So our my of -- using to excited positions excess just you we with think we as quarter this that virtually of especially

think good it's that that I opportunity. best just we us today. Based and gives about the point from what pretty position our feel liquidity from point, --

the there. you is I potential think for certainly mentioned, share as repurchases

We are the environment. seeing some interesting acquisition things in

of So it's IRR, us on just use best of the that ROI provides capital. long-term kind what the

we really depend to it's going what focused there about liquidity our debt see just kind again, And pretty forward. in on feel market good out but So of the reduction, acquisition primarily going on today. we

Pearce Hammond

to that thought previously, pertains DUCs we more I area. completion it know you get But of hard Shelby it some Jeff, might follow-up, of on might think profile some quarter done I the impact of 'XX. I the to those for than my XTO in you postponing Because there the thought an is 'XX the Trough. thought producers then are does And given reported, company? working Great. other production the that XXXX you how in guys And get on impact when last be rather had drilling it

Jeffrey Wood

Yes.

may maybe comment Pearce, then and that more take on generally. see progress Shelby just So Trough want Tom if to I'll

I right. that's think

and that XTO frame, quarter, that DUCs to push do rapid out complete in going expectation impact. a move to more little going was those and last was the on -- time those So the was

plans look, originally one our XTO's not point flows. total there, percentage it's current understanding of out of DUCs, I a production. of I more thought cash what our areas again Shelby gas, will they going But is which to are than with big we dry little of were I is that it's think delayed think those bigger be. as out a so our now, Trough

we of flat online, I for pretty months. think of rates half get see given impact, way come at XX the just and as the those to XX XXXX, wells stay the generally more volume into back we'll that

of more half think into as I will play. into we back get that XXXX, come the So

across are As his to certainly mentioned our out trying there portfolio. volumes, accelerate remarks, every Tom only we that but we in not pull lever Trough the in can to Shelby

some -- of see have yes, just lot a the forward think you a know I balls to we'll play say how it's in completions, delays But some things don't safe there's wanted with if effect bit, said. air the those on little right as you And that and of So there's to Tom, to? out. I now, of the moves those

Thomas Carter

comments additional on make some Trough. just the would I Shelby Well,

in year. somewhere years at that's probably we're in XX-plus a of XXX wells a out Shelby the wells And near inventory. have We And XX locations the there. to Trough not anywhere XXX year, viable XX

We full constrained very to are where project, around capital to But low come. provide long-term to natural position wells partners i.e., to years produce and around but plays for are going other on for cost a to is rates success our And going that gas long efficiently market. can unitholders those a be a working to the our to can royalty them to with and we low, distributions basis, manage commitments strong compete flow, drilling to cash we try they economic economics everything entry in for working have pricing do very, this time. it's property, on a to allow with to

Operator

Instructions]. [Operator

Markets. of from the question Capital next Our RBC TJ Schultz from comes line

Torrey Schultz

reverse? Is there. know just you any caused forward? on last what limited line you said have of on the differentials. kind gas expect something that hedge sight kind of you you that more quarter? going Just of to Do this that impact I insight Or

Jeffrey Wood

this I others think may -- is Well, and want in. Jeff, chime to TJ,

of little saw underway There that, meant a are that now Gulf large East a I of impacted differentials down perfect that of ones and West Coast. some Marcellus couple coming lot from a gas to coming gas the around bring are a the gas bit that East that's are the negatively Permian think you from -- just Texas. to will pipelines all that storm of alleviate of that

just how think it on come you'll the kind into I see complete, area. gas those are is and just much pipelines until of depending flowing go So

So it it's it for very $X.XX was completed. -- are probably as pipelines I but how idea until low, have was quarter. see Again, to goes something that price bad have if no on be that we'll that would this realized us as those gas

tough said, ones actually I marketing for As gas. it's not to the hedge differentials the us really since we're

us. great for that specific do exactly producers on to the where Our visibility are. have It's sales points tough

so get to. historically have we're that reason we in not we that So hedged actually not something we're that hedging exposed that for differences a position don't

So know. other will comments? I there yes, think I -- change, practice don't but Is Yes. don't that

doubt I on and should think I it, term in hedge those near that's coming the TJ. position, we be solving the help differentials.

Torrey Schultz

of how coverage. Is just a should on about of makes on the distribution thinking distribution, Just Okay. coverage kind sense. the certain No, then we that level And reevaluate there the about that think kind next where you level? over XX months?

Jeffrey Wood

Yes.

very What So be It is coverage what sheet balance Not that little shape. to in more only in in I'd this is say opportunities. number choppy, are Jeff. we've found debt of acquire. for or a frankly, share does One, but the greater flexibility it or gives help repayment gives valuable right? markets when reasons, keeps to acquisitions repurchases us a fund we it can times it

to a stuff portfolio sort we For PV-heavy acquisitions allows us so example, but come that often flows it's doesn't on right? to know weighted, more cash you feather going is of of production it soon. have So focus off that just we get back-end immediately, acquired in

acquisition you a immediate an And construct so that number having been much And allows to so it acquisition helpful. coverage across flow cash and years. to extends of the not very on accretion a focus has having profile impact again, of nice

have levels. that's we're our that, we will is going go level on that say board we with deciding coverage look distribution to I'd will I go think the what some us And continue thoughts to with forward, So distribution as as and to into -- and continue. of

Operator

of with Scotiabank. Your from line comes Stuart next Phil question the

Philip Stuart

working on bring kind solutions on creative I some the understand that partners. information in Trough. I you potentially of to the are Shelby appreciate

gave curious, that what XTO the that that for of cost us of don't can time area. kind terms cost remember you But you Just last I all well BPX remind averaging in in are a number well area? and maybe

Brock Morris

in The range, are Yes. $XX about $XX the the wells wells XTO XTO Brock sorry, Morris. BP is are million to this $XX and -- million. million

Philip Stuart

would are a a is table in recently? then kind pivoted order off the interest I you operators? there of guess more potential to attract participate all fashion of all that And working you understood. since Okay, that kind is from evaluating Or as all away that you options, in

Thomas Carter

of of over would the that management growth of This sake. in you sometimes, of out company doesn't as distributions, allow I our distributions. is distributions, our balance growth's is owners proper the legacy Tom. next tell table because we on like our to or going not everything and proper certainly looking this X as years in of terms X But industry chase long-term our to management to owners of well terms and we're just the that, maintain the grow for sheet

focused that preferred the that, can at much distributions. are that later. very more We're you very in But It's is Shelby are around certain And on of working way balance you next reconstruct interest I also go. focused we going sheet. work on question for the times. our the in you tell would how over We couple our We'll not that to our program minds asked on very have years Trough. to

Operator

Energy. comes the question next Hammond of Pearce from Simmons from Your line

Pearce Hammond

is what going you specifically, as moment. it what's Just right know the a But or you're mineral at kind Permian? a buyer's in quick seeing. the in I'm this market? not guys just I active are far on follow-up. of seller's curious as market And acquisitions,

Holbrook Dorn

market's somewhat Holbrook. -- is This slow. gotten the actually It's more of

more just buy come opinion. I the expectations side, gap, still don't just have the looking SAR's accordingly. than are I sellers. from And That's our kind the the to are little pretty just got 'XX when in prices bit opinion, think in a And my in and of think in feeling things back broadening third that. buyers quarter. is between rocky Permian there Sellers, good market, especially a

front So right our out some But the we've on we're of more peers there now. have seeing been of late. that's what than active acquisition been

Pearce Hammond

with same other you areas. companies year, earlier do does necessarily it more the market? public in all this not And like it make that competitive one Or a IPO-ed play

Holbrook Dorn

gets mean, with I the comes toolbox. think information plays, probably more I market efficient Yes. is competitive these as now. it's everyone and people all working right more pricing similar out -- on a a mean and I more

everyone -- more I yes, gets because plays think more knows plays. the these competitive it's So longer go about it the these on,

Jeffrey Wood

But the Pearce, in public, like has It's I changed environment coming private years the 'XX space competitive And know. number -- someone much was a I lot. we to been the I capital. so I went more mean, don't few they may this before years. not just equity there into a money felt of may is or now Jeff. that, know access them mean competitive get for because that

That I guys there think before lot were was went was company a being of well. these reupped, getting lot I'm active a availability. sure they'll be and as they of public, active and PE-backed public

Operator

Instructions]. [Operator

Thomas Carter

Okay. Well, seem questions. we further to any don't have

you quarter future. third speaking look participating with in in thank earnings the for and you all XXXX our call, we we to forward So

Operator

conference today's you Thank call. concludes This for your participation.

You now may disconnect.

Black Stone Minerals (BSM) 5 Nov 192019 Q3 Earnings call transcript