BSM - Earnings call transcript Q3 2020 | Black Stone Minerals, L.P.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2020 Black Stone Minerals, L.P. Earnings Conference Call. At this time all participants are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Investor Evan would to conference Relations. I speaker your Kiefer, Instructions] like the to over [Operator Director of Sir, please begin.

Evan Kiefer

for yesterday is Stone website release Minerals Good and quarter on XXXX phone Norma. our to call. third afternoon. and online joining Today's which will conference you available call or Black you, earnings by recorded us, was with the Thank for the earnings issued either being morning thank everyone be

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

are you from of yesterday will useful in the release XX-Q, described press reconciliation at to our are measures should GAAP to discussion non-GAAP in forward-looking release measures financial section believe the from be directly about to later a We these that press Factors cautionary our statements yesterday, Risk which these refer found may performance. from be information For on refer today. our earnings our comparable about these and most of measure in A metrics can certain blackstoneminerals.com. our non-GAAP other filed evaluating which and the information we risks, website

Engineering and I'll Vice Tom Gremillion, company turn General Chairman and of Financial and Wood, the Joining CEO; the to call Steve and over now are, Carter, Officer; President from me Geology. Garrett Tom. the Senior call on Counsel; Director Chief President and Putman, Jeff

Tom Carter

reduction focusing going the Day. debt on everybody of call off to coming results in third morning Good positive some the Election our to off I'm efforts. on kick quarter, Evan. Thanks, by

outstanding to the million, quarter. you cash we of used of July, we revolver. brought $XXX proceeds in under sales which second our in balances Those most announced asset reduce closed know, we two during total As

redevelopment. be with also we've Even off the of into EBITDA. to third pay debt industry; with borrowings represents borrowing its moving under our total, properties down debt, adjusted distribution with flow, the reduced quarter. coverage through total retained County kick ended drilling leverage also on focused Haynesville the or maintained gas-weighted of year. $XXX million a just our which ended ratio continued commonplace We've million the X.X around months in We we will In will cash with base, strong quarter Trough, million of during $XXX expect lowered this our we Aethon our $XXX our program over liquidity. Angelina We on month. quarter remained -- development which this by trailing given across acreage times the Shelby we've XX

in experienced As a one be Aethon we're Haynesville, will the hope begin very in of most long-term with area. the excited we this to operators what partnership

with engaged additional portion Moving by DUC of remain We're east to more Shelby acreage on dialogue the through we development have their Energy. Trough, constructive operators bringing to of the County, in this in with or XTO broadly restart XTO in area. them And continue San currently part the either a that inventory into with Augustine or working both. we

completion play. acreage Chalk of to modern including test techniques to this development, in We the to efficacy additional on new advance also wells Austin continue facilitate efforts our

thousands, in of thousands actually tens Chalk. of have We of acres hundreds the

levels demand continue COVID long accomplished to like from has a remains kept supplies the limit in This struggle, step-up concerns run. move for challenging. performance and down could backdrop. against in areas activity things Oil Libya. come needle a as across very difficult us environment these our acreage. We've The well additional So online the macro prices

on active that rigs ago. XX what were there saw sharply we XX activity saw down This a quarter, our is acreage. from it's we levels but with consistent September year last of As

of addition, This closed redetermination most our In focus equity instead impacts drilling operators strained Bank growth, sheet plus across go markets through balance fall season. companies. the for of the production which are and a E&P cash has don't we have It's and limited many and remain living and overall. renewed long simply for capital unclear on on extent borrowing production will returns industry base obviously as new of to We're levels. and impact COVID. in sure uncertain in gas constrained will oil regulatory environment what gas long-term happen what the potential demand oil in the tonight administration what We how can to know due for be and times. change Lower-XX,

actions Given distribution are Stone I'm to with we add long-term pleased regrowing areas. is lower positioned With this important the that taken of we our on year. number through of I downturn. we're opportunities, strong lower have pay glad call in we progress base Jeff. debt of With minute development and a would we extensive Black uncertainties, this continue we far all remain day. made very structure, that inventory have to cost to balances to the every turn be also and believe Overall, very gas-focused continue a production much every focused healthy thus the to working and on over that, that I'll have

Jeff Wood

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

That's all Tom As generated for day. and and last driven from declines production revised discussed. the last factors just our quarter our line you release by the in BOE And were that for production total year, The quarter. night volumes per MBOE for macro with third were were the of XX.X quarter. they production we royalty XX,XXX per day down in the X% the mineral saw guidance

oil on dry existing in were is over the Shelby Trough those per XTO Despite average that, its a shut-ins prices quarter. of the last environment by differentials to Expenses hedge while checks generally take we Permian estimate were wells impact cash did that's continuing primarily G&A in adjusted addition, Once some on again, million EBITDA of during under and of wider million. through we distributable robust the to quarter cushion BOE processed G&A prices third We in the $XX.X be this of our third of total was we million that negatively million lows $XX provided our hit on our were WTI with a low-price for shut-in our inventory. because $XX.X In volumes. expectations, oil we with DUC Realized quarter that line in temporarily quarter reported day volumes. quarter. impacted $XX.X the revenues, all to lot X,XXX that a portfolio completing and from flow bit trend and cash works recognized the in of to favor. third hedge were saw the our in the and of Cash to settlements up and we was quarter G&A which million down. third $X.X for for the to gas gas down We quarter quarter

While relative both times distribution based to quarter, reported metrics these of last announced per healthy still we coverage unit. on distribution $X.XX down were of our of X.X

use coverage great asset repayments. continuing excess of the debt the balance our Tom mentioned, quarter sales is after two As in for to with outstanding, closing debt our million shape. ended July $XXX We in sheet and

debt. Just million for we the started with context, year almost of $XXX

part of to quarter. as to that this process, of $XXX we gives energy That bank credit XX% our and much interest group made and of credit for given reflects points difficult utilization. the very lending as stronger we profile. lower there the the were where $XXX agreed reduction us the year before XXX are under plus million. thank a base revised the Borrowing continue million on constructive some basis basis to Overall, points actually across were bank by to amount rate our security we've Once the the facility over no this the our third as points the navigate terms the base we And spread was the while Yesterday, appreciative This of same And want banks originally grid on situations basis increase other fall of again, I all XX employees agreed changes borrowing end That bank through LIBOR change of just in flexibility staying moves course part XX very lowered the market we facing tremendous of by pricing finalized of strengthen base they're the that's to borrowing downturn. we mid-XXXX group our market. to it remotely. facility redetermination. to remains depending XXX a upstream focused work of So as through to much just redetermination. tighter in today, a to facility a our universe. is the from

value both efforts, prices to recent influence go in oil everyone an this push As recovers. to domestically The comfortable forward in once make recover. Stone. very market unitholders and here that projects, is downturn make over of And And With Norma you're rally course $X it questions. the and hard when working we that are that to forward of feel setting challenging combined with going optimism long-term with going XX environment around do to sure the already with believe still that, is Black ahead lessening the the and is open underinvestment during we hope once will abroad, for this create we very for There's it we're Tom happens, the for call recovers. in trick natural mentioned, projects stage our in oil demand this and we've gas at MMbtu. OPEC done the some expectation

Operator

Pearce Energy. first Instructions] [Operator you. Our Simmons Thank from of Hammond comes question

Your open. line is

Pearce Hammond

taking Yes. my thanks questions. and morning, morning Good for

Chalk. release or earnings curious the prices talking is The it is you're reason asking Haynesville improvement some in you the sell looking I'm about much mentioned divest there? natural with gas just that and to sizable? in I'm good assets sheet shape. balance You -- Austin are Is the assets how the the in in

what need is just driving for divestitures. the So to trying understand

Jeff Wood

this Pearce, Yes. is Jeff. Hey,

way to this in and Chalk that. play in press our assets in that convey The gas I we're with natural just release into think I press the the the the prices in -- and existing the didn't apologize meant more I getting is Haynesville. uptick traction release convey seeing right

have would We existing assets. meant really So discussions and balance feel in where you great it's are shape. need the to a good is potential productive continuing we divest additional with say, that and completely was to is we in and new agree that I spot really those just plays. just sheet don't operators with -- hey to this

growth So divestiture meant comment. more it's be than comment a a was to -- of that

Pearce Hammond

should then you how Thanks can And think Perfect. about any around there my Okay. QX guardrails we for clarification. production? follow-up, XXXX provide the And are production?

Jeff Wood

period interest to through not to continue gas still volumes continuing And see play. in that I both in kind with things Thought so part the the get start those with and coming kind fund DUC facing of say wedge out is large and just as a is a say XXXX we MBOE call. XTO, we'll a mid-year, going overall of be are we us we're are some XXXX I portfolio. headwinds that in of going accelerate I'd which be off expect working guidance Shelby the think to that we're -- as put Aethon's that, we're will going of then see normal Trough what XQ. We're our just factors out day starting a program -- of will a XXXX. probably to some next hoping guidance to and that a mid-XXs have impact we puts resetting its production still in the decline. of recovery Pearce the up a well. XXXX would Well in market we're come lot to per But the then bit But And to the when conference level it comfortable volumes going we while February, very to I'd it's from end for replace updated think of to into course, other implies balance as things of Aethon what volumes, that for

Tom Carter

and and that's Yes. in is XXXX, you add is industry that And ran really focused on the Tom. the everything talking takes you're it XXXX queues. back what look company. it about contraction I'll spool. core probably our it and at probably time. progress I when up. into the And eye where subject most we and to will spool XXXX, But this just And the pleased back just on XXXX late is acutely in that went saying. we're something that anything into on the spooling a XXXX, in in getting and properties take focused we've support now And and Jeff I'm activities, very while got drilling you, we for But moving right with on those our making teams are promise volumes up are what

Pearce Hammond

Thank very Perfect. you much.

Jeff Wood

Thank you.

Operator

[Operator Harry James. Instructions] from Halbach Our comes with question next Raymond

open. line Your is

Harry Halbach

XX%. flat a Good I of order leverage looking at guess morning, When little you that are is turn guys. are wondering, to that now is you distribution what kind kept rate and half that like increasing do guys was just around metrics utilization that? about your ratio potentially kind bit And your I like thinking for more? you payout all of have a $X.XX in

Jeff Wood

our we always investors the decent of amount question. for of Harry, -- value a really is the and stability this distribution. lot Thanks I'll foresight core Jeff. Look, a start. have into

to I do the debt is a to $X.XX cash a very acquisition some small year right, across of that's Board paying you, was that wide as quarter, benefit. nice either a a look, it's of other really And whether this think, or a down flow have debt, that something we outlook opportunities every or retaining $X.XX markets. something while My what be repurchases, we as further So job repayment and we by for that set done a share lot wanted determined range continued we'd quarter. pretty to thought sustainable going level, frankly, see things have

that, with medium comfortable whole of but a a to got the Tom meantime, ratio, the go. value those comfortable in on to transition. the we'll mentioned a at sustaining. way we again, in quarter-by-quarter right I going to that term, see term, back more stability some it want stuff play And near be volumes the are we think we And spool after is that the in probably payout increasing we world's we're that. we to up. we're it with very to going evaluate visibility think level at just longer that of need think, over just going in bunch -- now point But were right, I and a we've and And that little distribution as just set

Tom Carter

for that debt where we I And the would just reason to of extraordinarily pretty paying add we obvious been that feel coverage high now. comfortable down. in arena has are

too. So production volumes -- but down come have

be can interested we'll so XXXX increasing with looking Board the So, soon. here pretty into and do And in we're distributions, we logically. if conservatively

Harry Halbach

then And where it update Great. Thanks. now second expect question decline next kind is, any year? to be where of and you base on your my right sits

Jeff Wood

neighborhood. That XXs, in tad across as that coming decline I percent. already, don't roll-offs mean, the update. in I long still there's XX-ish but low the any we've base asset we've some it's think the of base the high said, a that just seen may is down be with

Tom Carter

a things And -- where we stability won't we're XXXX, they comment the shale And just was I When growing our the shale off, volumes in when explosion, close some volumes in. much real which of range. And a to XXXX we like boom, XX,XXX, day in plug it period the CapEx some you went we're you we're XX,XXX. statistic obviously beginning in can in interesting too if and per But respects turn An feeling public the that down. peaked start were XX,XXX again. the interesting curves. decline come in BOE on but one hitting volumes those production can have

Harry Halbach

Appreciate Great. guys/ all color, the

Operator

with Notre question Dame. next from our Andrew And of you. University Carreon comes Thank

is line open. Your

Andrew Carreon

the you you equity that private listed players packages buy curious, and has the from lot the of price on I'm could businesses I'm crazy or mineral Jeff. and Thanks of acquisition where you environment accretive pricing paint for your larger either really, a how could on smaller today kind with where acquire of kind could being look time shares? of are or this you publicly back Tom some attractive actually some are think just environment if front, a making seeing private for to other you would side, be share that are packages that at the really extremely cheap. of I just the been, my Hi questions. assets even this curious own minerals opportunities, scenarios

Jeff Wood

environment. And NAV we long-term long-term unit, what still of you a of smaller even a about between private it value overall or least the were those the price guys I it wide production -- of positions goal get few sellers disconnect package they larger Good morning, just on assets for I'll that equity kind and accretive including to together that the of put the mentioned small the anchored a would out look good course we've I'll probably really pay the expect you at it's we is so us seeing kind today the the different think is to accretive. paid our need these to Andrew is whether and balance have to thanks of tell as Jeff. over past start. think to with tell still just to with work the and being We're or Yes, in real year share call. public we've a And right? sizes. a some to-date both a having market aggregators, them everything But I'll taken per This in if commodity lot price I done what there's it come by price pretty to all for hit just what shape would you and sheet there's that seen guys more you that of there. in the at make

out course the in as in in very not frankly, and we're an our a up currency way equity we're right And not meaningful of in we're -- really not re-levering So, this environment. rushing using interested interested now. acquisition

in you Tom our massive second sure try this much acreage efforts will to do we I'm so just today like series of that some existing To development. acreage in-house don't those that we that is I'll tell what to to So, positions and a cash these are we extent acquisitions streams we can put of have have been that really flow to for. that in create and development unleased of that's get doing can pay from the things have actually not

really if Look things has of some this focus might using that like the be But that going side continue that's whether or been. happens. there's I be where coverage just the So, opportunities. on that some I think think excess company to more religion seller some to the there that it's whatever need before yes

Andrew Carreon

been And was really that's Chalk -- the then wet know play. on PepperJack Austin But it's been helpful. time conventional-type or update acreage the been I of kind maybe since that play. I question one gas a more an of kind No, some kind more maybe possible of recall up. brought that's on you've just that

more something only few are are really active curious you're wells place is to putting for kind E&Ps, development? those a -- operators. conversations kind speculative there the But pricing into closed like have with on of I hard going Texas and in guys expecting of these for be to Just bank little less you maybe get in a those be environment or mentioned that play able to being how maybe that a actually know that kind working out markets to are Tyler little completions? this modern Are you a something of that

Tom Carter

is this Tom. Well,

completed that would XXXXs part have not had the mature on old that X,XXX last about pretty take were me the what Brooklyn production old we're units that hundreds the call was core to technology. we what acres a that going the is and decade. since hundreds operators extremely And the Chalk. through the show markets with good them And and old virgin And very the seeing at modern just area -- of Austin that's if the industry of Let by We're literally rather some there drilled have in they reservoir those good with now, the X,XXX of good I size of don't a which few right and with problem okay? the way and right very are wells wells that the field EURs. the stab spots and excited have people what the old would been way pressures to now. industry production a something into way wait, units do is bright The are is few drilling capital rates

acreage. what's mean I it's And I thought bring about large that's play. and I could enough our core in problem And West play of tell and too for part of because XD we see play where We But be move that lot there. will going acreage the them to wait imminently. to getting the not ways gross we've active find a very plays I'm if PepperJack is optimistic scope are long-term there's help half operators there. Giddings a With that have on. is to substantial The forward to that some position traction us. list down keep working the PepperJack, ways positions getting a were on the Field that XXXX, don't capital going a very growth us banging there all the with -- the net redevelopment into conventional just it areas area we we're some specific, of first out see our Without of with that we like really in try on, in our to respect going long out activity with development where of to off. don't to think, the additional seismic of got in I've and

Andrew Carreon

time. color, Thank the and Jeff. appreciate the Really Tom for you

Tom Carter

Thanks, Andrew.

Operator

comes Derrick question Stifel. our Whitfield And you. from with Thank next

is open. line Your

Derrick Whitfield

morning, Good all.

Tom Carter

morning. Good

Derrick Whitfield

the areas really regarding taking Maybe staying relative Perhaps and natural Tom. just your you your to to market regard are extensive NRI in effectively acreage Q&A in you comments Trough for down Shelby first on ended have there of aggressively enough positions. question advantage where strength the or drilling of on outside drive the Haynesville, market With where activities? specifically, to prices gas

Tom Carter

fact revenue of area have we of rank concentration. matter in be as some -- leaner there bit in but next a areas would Our we points a And And our Louisiana. some we we to Louisiana incent net some are terms key queue drill weren't of to in soon trades of operators four have five some made the recently wells or be pretty in to drilled. just that

so meaningful And yes that play And as for a well. opportunity the of it's working we're part us.

Derrick Whitfield

That's volumes great. into And then offset as my Or X,XXX did really in QX? XTO does equivalent carry up follow-up does with barrels regard with completions, to in of that shut QX? were the that over clean it

Jeff Wood

-- Derrick, so the of next over They're will the of through No, in the way into XX they'll be or wells year. quarter they'll those QX. -- be that to first kind Jeff. this end and carry a going completing there's -- through is of

wells. in So fracking they're those those offset to shut we'll some see locations continue as of

the quarter in we'll I fourth think impact XXXX. that impact first some So in see quarter would of the some and

Tom Carter

when But they come on.

Jeff Wood

Yes. a for Yes. I it's good reason. mean obviously

Tom Carter

Those wells XX there'll be to them. and be are wells of strong going

it'll shut being fun, while in So back and pick up.

Jeff Wood

Yes.

Derrick Whitfield

very That’s for Thanks. an right. All helpful update.

Jeff Wood

Derrick. you, Thank

Operator

And to like turn the this at queue back I'm over time. Carter Mr. to remarks. Tom no in callers call any for showing further I'd other the currently

Tom Carter

volumes, us today. here It's today. it yet. we're all got looking we working not And done to XX front for Well, of and been into forward add add a moving strength will we Black with look add We're distributions year. next financial to the We long Stone. to us XXXX. years. we revenues, long day a joining you to forward to in And thank And for keep

Operator

for thank This gentlemen, and conference concludes call. the you participation. Ladies your

disconnect. now have a day. may Everyone wonderful You

Black Stone Minerals (BSM) 3 Nov 202020 Q3 Earnings call transcript