BSM - Earnings call transcript Q4 2021 | Black Stone Minerals, L.P.

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Operator

Good day and thank you for standing by. Welcome to the Black Stone Minerals Fourth Quarter 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]. today's being that advised be conference recorded. is Please Instructions]. [Operator hand over to I would speaker conference to like now your the today, Mr. President Evan Vice of Relations. Kiefer, Investor Mr. Kiefer, floor is the yours.

Evan Kiefer

release, joining everyone Thank and the for will was being night. our conference Minerals which full on thank morning call. Chris. and Stone by Web to be quarter with XXXX you, you or available Good Black the for last site recorded year us fourth online Today's either phone is earnings and issued along earnings call

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

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

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

Tom Carter

Oil posted today another in and joining Thank our Thanks We you, and are entering to 'XX operating to solid full good year financial on momentum gas morning us the to the and Good for our prices results. XXXX Evan. quarter. with and quarter continued business. discuss fourth everyone call. quarter fourth across strengthen

we of as and quarter, and acreage overall of third We environment a prices in just oil our has the XX% trends of Mcf 'XX. the trend, had which end the the gas. the is XX rigs $X.XX of volumes over we up a XX% quarter fourth over saw basis, were levels positive surprisingly, more the we per at commodity per from in $XX benefitted prices were quarter XXXX. the barrel saw XX been and the for On end well. As price more than from the on quarter doubled third at Boe the doubled fourth XXXX. Not operating up the the activity of constructive Realized year, rigs end operating XX has at rigs and from from

Midland, third Delaware by and volumes Our which driven our fourth day, production. up totaled per MBoe royalty by XX.X royalty the volumes Louisiana, Bakken, in X% the over increases quarter in quarter is Haynesville

in fourth our prior participated working where continued our have from interest as in of legacy to Our down interest farmouts volumes wells we've Shelby the the trend that to Trough working rolls off production interest quarter XXXX.

XX% As volumes. royalty our production a result, now represent volumes total of

were XXXX the levels. royalty throughout up trended volumes year. average production relatively XXXX flat royalty to The Our volumes for

in We years two couple Aethon well, producing natural in acreage and Trough. with So growth its to and been in new volume in agreement priority to that with completed. being XXXX; you BP drilling who a under area, programs separate the bring Aethon position the area. their gas as production In made in overall ramp due our development are and are under doing Aethon San been rights slowed in released very And past active know XTO maintaining drilled deals eight After the with another a Energy. of of Texas, programs Texas. over in so, wells have us wells to East Shelby agreement and XXXX, three in or acreage. wells currently activity area. top through a the continues declining our Angelina the we to Shelby the a of covering in plays up Haynesville/Bossier while County, it down concentrated Trough, currently those operator County, In two shut did Augustine has separate for our Aethon Shelby development the that drilling Trough is much

renewed have Black covering Stone and burdens of in. to the added also relieve farmout capital direct agreements area We any existing working new

uniquely Our the increase and to be The to coming positioned XX been to continued an may activity production our over across has levels expected the Haynesville overall volumes. area. our years, LNG a contributor from Shelby Trough with believe add leading over export we total from year East play That quickly in from are will Louisiana Aethon that two years. benefit next the to the volumes what to wells Texas is well and important Haynesville total to always mix, growth XX

well operator significant acreage with we by working attracting existing either and up other drilling in on have and We're the is to repeat the working and mineral to very or So success positions, accelerate acreage. operator. royalty to that activity with running capitalized a that capital where areas program experienced unleash

Clearly, than risk showing focus on drilling adding activity organic to the is through volume higher creates operating downside more to this and enhances partners downside -- packages price more shareholders our have our this paying in view some paid risk commodity acreage organic to current for our high when our return economics We prioritized think now in We acreage acquisitions. effort. appropriate and have added particularly are which acquisitions. time new the existing provide when our we a new in on strategy for creates when from through team environment, potential horsepower view to volumes growth focus hires

our Our is an in footprint efforts. component extensive Austin the important Chalk growth of

on -- working have calls, we marketing previous unleased we the been know, existing have probably area. in packages you and operators As acreage with

commodity Not acreage We wells at those far, results optimistic sizable seeing remain stages Thus continue and completion been to to struck there's deals completions. generation stopping with such other ahead. of have large combination we five encouraging not new of We're ripe Shelby our could efforts last that course, the intensity another of and some various looking of And development the portfolio are that further volume year. drive or wells about across we're are general, where drilling prices agreements. from of under these very do to or for Trough a drilled fairway some technology, And, improved two make a fairways of progress benefit the on and development we've initial and in optimistic variability using and mineral Austin seen the position. years sales Chalk. or latest actively growth. can parts this constructive turned high surprisingly, currently We're

the more I'll these focused With a year. quarter outlook strong all growth call the go team volumes, balance over opportunities sheet, the turn and great have through We shareholders. our robust of details of portfolio and that, into with cash to opportunities for additional the to returning turning goal a on next some of our of Jeff to a

Jeff Wood

morning, good and you everyone. Thank Okay.

in time quarter months most initial we when a several good increasing an another occurred total we production mentioned, that well same several were actually producing, first for note We of good at Those driven Tom happen that of the occurs which high $XXX That, get high Prices million Permian, both began up we from the of of our quarter. activity A and news to what fourth picks up. royalty the Permian times the our historical levels. well and volumes. continued the more up benefit quarter, which Haynesville of to rates specifically quarter. on the from up drove is book in the As oil The primarily last fourth and Royalty by is Bakken times boosting further revenue in well. primarily may we production gains over new quarter activity months and check. the since for a saw ended course, the after in relatively in what increase often Louisiana from lot was we had revenues higher and oil climb acreage. saw and terms we year And production. gas third X% volumes, a was XX% production in production that when quarter our in first receive good things month well check the of and which oil Bakken,

average, from very a divergence fourth of as consistent we've was price gas the big And closely. quarter, of daily contract just was Our the quarter. we XXX. about with those price contract average million settlement two that's $X.XX seen for prior XX% average oil between production was settlement In recorded and quarter. settlement of Portions $XX.X metrics the last price what our average. differentials result, from $XX.X XXX% in average prices the the XXX EBITDA also priced of flow cash Hub where to up these. in We was XX% of fourth last a are was pretty at of it realized compared quarter. of spot quarter the the quarters, of the quarter. the for That the million, gas for our price slightly average saw each off of adjusted gas up WTI spot distributable track spot Normally, Henry price price And steady remained

and cash. was On that mentioned, common of and last million able distribution going Tom to increase from to momentum That's were increase, X.Xx X% about results we an again our per retained Even XXXX our $X.XX $XX into raise positive the the distribution for quarter. quarter the unit. of with coverage back we that those

Boe year, with In unit $X.XXX million we earnings put conjunction release, For million of $XX XX,XXX Distributions generated we adjusted yesterday. totaled the $XXX year full we debt EBITDA per retained guidance paid from of day total the and acquisitions the our about out per production. and for XXXX for full repayment.

the As we forward to we full to XXXX relatively look flat levels. to be of XXXX, royalty forecast year production

XTO and production to natural We Permian in in Haynesville BP and wells discussed. Shelby the that declines continued gains legacy the by plays, offset Trough the Louisiana Tom production see expect

drilling Given this our a by Working year. later the expected up decline growth Aethon, to continue will volumes to return production in interest Shelby to expect we there path ramp Trough a given into Azul Trough XXXX, have program partner. San Shelby who the programs we Augustine in farmout in with as the one Resources has place, including the new existing farmout joined

questions. XXXX we ended cost have was ample inflation prices with about costs operating balance $XXX production advance initiatives And a levels that be Chris, a by tomorrow. organic forward. borrowing $XX expected to in expect open we give our happens up roughly our under paying in to on our growth from XXXX is some and while due we to oil down increased of normally of will with great normal sheet as from gas the The note hires remains balance And which our about prices and Friday, by in prices. liquidity. We up to point, G&A debt for that, bonus, expense cash has We flows don't million XX%. step in slightly our lease year distributions levels. to million line and and XX% final the drive in hedges average base. selective hedge million just increase hedge XX made the we've drawn With fixed call that benefit will revolver, guidance, I move which up as distribution And the will shape XXXX

Operator

[Operator sir. you, Thank Instructions].

KeyBanc. Our first Leo of Mariani from question comes

Your line is open.

Leo Mariani

morning Hi. for A you. quick questions of Good couple guys. here here

quarter checks benefit you fourth book time You when have saw be to appear for guess volumes what lags due to here. I to really production, between clearly adjustments. know sort you of that I get the nice mentioned you these a period in the there's actually prior when the

quarter volumes in here were like anything you just of of the versus X,XXX of day could the of kind the quarter or was in more was you terms barrels kind what run a So for what volumes rate say in fourth actual that quantify period all it prior maybe here? terms could that

Jeff Wood

morning. Jeff. Good to that. Sure, Leo. Hi, is happy This do

before bit new the to just get everyone on remarks. that I for think your I wells across in we all typically, yes, point operator call, check. But months it So added a first that time. the know take few prepared we get And clarify may the the mentioned a system we

that well therefore let's in that hadn't then actually Well, production only say we're new going September. specific we -- December September and but our a not the that a when production we the in September check came comes through on into before for and we on accrual that so booking establish check, saw are that well well. And new seen December got for not we financials, had to accrued as on volumes

overall to mentioned, happens it frequency levels So can lot I that a of volumes activity provide our as And with up. positive picking just as are overall momentum quarter-over-quarter. greater

So new fourth quarter. about well we we a that X,XXX were Boe through saw activity the day in impacted

Leo Mariani

up that's the all but certainly helpful. last which rigs, appear had be to well right the said, momentum it's raised And now to XX% actually your commodity obviously when kind doesn't like just guidance at year, certainly guys you 'XX, probably prices. I And you versus current outperformed kind significantly in Okay, of look slowing of good very as it you on see. earlier quarter, at XX down in

of 'XX? look maybe same it think the make it's when I production high 'XX, with the perhaps little assuming you not see is way you more your wells some on of in in words getting but like extra guidance wells, some benefits rate. which necessarily production about the better. which you're of So kind a maybe some don't similar a at volumes flush to assuming something activity, kind of in seems But could 'XX, to that these the that Is of flush for bigger checks such I'm your a on base mouth, production, want put of could

Tom Carter

Yes, so clarify. let me

that is because have only check So of sizable why first reason the right. we pretty might see, related adjustments we what issues we some accrue to can

added XX,XXX, accruals the make the but don't wells time. don't can't XX,XXX all for system about, those. we wells and have that direct across obviously, we weren't So to We know they visibility

example, don't from production So for estimates, daily get we producers.

accrue So we to best do volumes. our

So When that's GAAP purposes. the what for we different we forecast, actual than in accrue financials. a that's actually little

And to take when so we increasing we try forecast. activity into account

be you if normal in forecast. least we've periods look tended Now, historically, in little our activity, a conservative of at to

great activity. for come accruals say, important, in remember just visibility that XXXX, that all third same being it's that but this But I from I as adjusting will really to does you those think of Trough for quite our said have into Shelby new do a we're company. not we've years new know as not base have the able production I to number well What thing activity. got and production, that of it's we this a into was total about when

wells. for massive stopped, Shelby those you meat spinning BP on wells, start decline that the when in XX big to they're those was so because curve wells, hang pretty and see back And of wheel Trough a then And XTO And stopped and they're spinning. XX the jumped months. or that really

'XX. in the 'XX offset expect that 'XX. that 'XX from Shelby saw is, the Trough on decline in to start be to where news we with legacy out that's volumes. fully our we from activity we is from 'XX But all The good has seeing that decline That's view that what to there, volume in two Shelby just and the wells still going So going plus with to we we do that's as Trough those a the forecast. day Aethon think be we're year

Louisiana coming to a level in activity those out So and Haynesville, areas, resulting that colors of see in we lot higher the a that Perm bit. And wells. volumes forecast that little expect of other obviously Bakken, continued

Leo Mariani

and unleased lot describing that we're And 'XX. environment. that is for there given get last dynamic still like just very, strong helpful in higher to guidance the here just you cautious of more sounds it preference in a very that's little for the try one Maybe being this price there the M&A. a It terms a are just internally portfolio. all in out guys on to acreage seemed like you of bit Okay, maybe

the M&A So maybe give on environment. overall thoughts your just

Jeff Wood

the is thinking anyone around right. think areas frankly, with completion two really had can very summed going really pretty of the sort we the we've starting we Chalk. a see We opportunity think times start really We're But I'll Austin this just We're up can pricing here momentum. basically you just of And I in this portfolio to a table. environment. the -- good across success from there in concentrated of lot well, Yes. lot see some Texas. Leo, technology in benefit chime look, obviously positions current around our in acreage and Jeff. acreage what's excited about economics have and else on Shelby where Trough can where East now is look our that in

our around lot seen cash time acquisition brought time have this can So it. on you we added we focusing that's our have that long we portfolio. start her there's and to said of like that's the in about flow a will I've as tell adding Carrie we're invigorated Tom's focus. for To acreage, again, pay through doing this to And bringing really team efforts existing don't as time I her streams and an a people really why and on just we've extent the opportunities onto and

for how positions to it. So to contiguous enough those and you the generate we're in discussions. you're to to that's our long-term we that when producers shareholders, fortunate talking way a productive relevant IRRs just net do returns large where you're think have you think about very And high

to work where to we're stuff of And work into it. and so has up a to focused. go lot line that's have a of hard that But for lot stars

frankly organic those we chasing time this back better the on to moment. acquisitions spent deals will We someday, is get at the think but

Leo Mariani

Makes Thank lot great. of Okay, you. a sense.

Tom Carter

Thank you, Leo.

Operator

you. Thank

Our comes Stifel. Whitfield next question of from Derrick

open. Your line is

Derrick Whitfield

morning and on congrats Good all quarter end update. your

Tom Carter

Derrick. Hi,

Derrick Whitfield

your the Chalk, completions. the variability that speak to well it's perhaps you wells you're are significantly showing some production performance Can to the relative mix or and remarks Austin the And of improved prepared generation in prior related? nature noted Regarding you if productivity variability seeing?

Tom Carter

portfolio speak result for The several is is play or one little known have the gone it Austin fracture active last is areas a economic we lot last stimulation the very and working different with at very four that our And that of been a it wells, productive generation any darn without least Yes, with five over are Chalk of in this And [ph] wells. through on of bit. Tom. Derrick, pretty and [ph] decades. lot a very in units were operators those cycles I'll the has good wells that to in in past HBP hundreds variability.

new that, there generally that want technology and well successful In operators been addition and in things to quality look that's stimulation. to trying to work put The rock and areas past. with the that around the as areas people as And more like that has other in to new that if before been variability didn't the out so worked not have works. and work far see haven't

other it's the pretty early that it's just building but and well. of area, those fairway, control there's keep areas expect And areas but been wells wells before the the and working massive a were as and fracture inventory up areas the volume stimulated rapidly. the tremendous. of in areas, good were ton In we in where a in look have that innings drilled that on before good However, to is

pretty expand we haven't to before, areas variability were to that areas been it's and exciting. it areas has continue the and look those challenging the good So will worked darn before. they But that do

Derrick Whitfield

County? this up, shifting you point And that you to out, are this and could you follow able the speak guys guys Trough congrats wells drilled being sense. And then perhaps development, at quite the importance your that for are so my timing over makes your in That Angelina agreement? maybe to activity expectation under agreement eight encouraging Haynesville that Azul completed map And or to the to expectations you that. on on speak more it's of your early broadly farmout being with then to Shelby with can for

Jeff Wood

Derrick. bringing The Azul I'll Hi, interest farmed there new is just of has full a which working This in is partner, out. breadth resulted the agreement our in start. Jeff.

farmout have well new in fold. Carnelian, backed the these and business. that make to all So we're Aethon But of the just very, under appropriately and be continues it's are entity, farmouts group and Trough frankly well a of not and capitalized, those a that because there so to in capitalized to program now the three we're by very us, Shelby have active interest guys, capitalized, good happy place, of again, by guys partners, are we sure working out

that partner eight, and Augustine, And seeing supposed they're that in per probably strong just then required then hit the And in going side think the XX ramps next what year. program ramp were up drill Aethon that first that's wells program. to to exceed within the is So and to minimum XX of to on is And XX. the I that's program to terms a five under years, up obviously, incredibly development, Angelina that couple to eight adding and that another eventually to end. we're important of agreement year. an In San of wells they that

couple they're Angelina so within track year those program a got of minimum being -- just and in what's wells program years, of in kind the with But just in those, per little our fact of San a terms that's timing by Augustine Shelby excited expectations and exceeding of keeping And a Trough. the of years specific envisions across XX the us drilled bit.

very this high happy is think so And wherewithal wells. most very, seeing technical and strong. think deep their they're prolific highlights given are is I one that just the we're drillers, So Haynesville these of Aethon, pressured it why we

drilling people You right the want them.

forward. going So yes, important I a it's think going relationship to very be

And with. terrific they've so been work far, to

Derrick Whitfield

very makes helpful. Jeff. and Thanks, it's That sense

Jeff Wood

Thanks, Derrick.

Operator

you. Instructions]. Thank [Operator

of McKay comes Fargo. Wells Joseph from Our next question

Your is line open.

Joseph McKay

a Congrats morning, Good quarter. guys. great Hi. on

XXXX question little guidance. the a had on Just

XX% year, XXXX. of the terms talk I and just XX% compared to cut, and of Is trajectory kind In the to natural the gas that you level in then can? you kind to of steady exit came driving that? a see maybe that in step of a that throughout and we the that XX% color Can or XQ that hold what's of at if year guess of the is down expect something XX%? about closer kind expect to little kind you more around you the Just

Jeff Wood

Yes. This the tend the circle Trough in oil, just, Sure, Thanks know to Shelby let question. I -- is from is question. obviously XX%, we this. answer the are Joseph. the is for lot down Jeff. But XX% And then Evan the of But corresponding I'm step of part gas think your general going up answers second and is dry XXX% step I a to just our of all back gas. in to that to

to be have year is activity a the from Shelby this slightly is completely what surprisingly, And to volumes areas in asset. a last would forecasting the to flat grow. where continue oil declining then, production down think we've whereas seeing, almost [ph] ago, with up that hopefully middle higher of Bakken seen frankly is prices. we're the it to of be so Trough drilling come But step more that And in going we gas. year little course, we we're expected new kind to And like a

think being that trend 'XX and in continuing transition to to driven I'll growth to Trough is oilier the mix again, Shelby a product kind year. address Permian mix relative the down a combination. and is going optimistic just of -- to Bakken. of of bit prior plays, little to let like start really and out bottom continuing So the terms the the what throughout around that trajectory then And be by some we Evan

Evan Kiefer

thanks. Yes,

this just year, QX mix thinking step a down Evan. overall, production feel just first. a starting in little Talking of throughout kind and and we bit of is oil about So the

that middle increase those we second expect assets. more in wells in towards is and decline half got is kind the We volumes year of rig a of do see throughout online currently activity, Shelby that see we and kind oil the Trough the on start we a come it side, then And where the those point really of Given the to in Aethon the early story. discussing additional drilling, inflection slight the kind as we see year And overall growing. of year. gas counts as

is it down then the slight second year, of step increase of throughout and towards year kind So initial growth. driving more an gas really overall of the the volume kind with half

Joseph McKay

is maybe on in thinking you are throughout kind Got on -- of course helpful. thinking wanted for of beyond that about I about just follow up, you. any that, given undeveloped move ratio how That's acreage. around of sheet or of Then then And just Are just guys kind comments great Thank following you. terms touch payout the it's a one XXXX? are shape? proceed marketing larger in to any the the plans G&A kind you of of as How balance you use divestiture XXXX the business is there normal plans? of kind stuff,

Tom Carter

it's Yes. divestiture There's Tom. plan. Joseph, no

of on these the in front, the we're and market because acquisition divest generate we them. want selective amount that mean of to the than we're cash the assets. is maximum have even doesn't more to being take we out historically do absolute assets Just flow What can any just that of we

we've that has good of some the business historically, obviously pay outperformed So the look, debt, at point debt we're just sub pay your a $XX and to used million is maintaining coverage distribution. about to down because been We've one. Again, very today.

balance total step a in will terms But zero that close of we're to up bit. So pretty on sheet. getting debt the

is ratios I you think go time see what just that up. means that should over payout

great do that. something balance a course debt strength we'll through meantime, other thinking about and of it a in the about goes have wonderful Again, We the the security it's but means So think is more think I need Carlyle could what quarter, think of every the see we up. left ratio to with preferred we'll that do and we cash of to talk our higher to just very is outstanding, sheet, flow we'll that the little But shareholders this the But partner. someday with distributions. things. the Board, to with repay, that think has general been which return change I of payout

Joseph McKay

guys. all right. That's for it, it me. Thanks, Got

Tom Carter

Joseph. Thanks, I it. appreciate

Operator

you. closing And for no hand to call I queue. comments. over Carter I in further Thank the back questions the see Tom will

Tom Carter

quarter. good joining for Okay. Well, you Have us to day. you a all And thank today. we'll next talk

Operator

This conference concludes for call. all today's participating. Thank you

now You disconnect. Have a day. may pleasant

Black Stone Minerals (BSM) 22 Feb 222021 Q4 Earnings call transcript