BSM - Earnings call transcript Q1 2022 | Black Stone Minerals, L.P.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Black Stone Minerals First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Evan Kiefer, Vice President of Investor Relations. sir. ahead, go Please

Evan Kiefer

Today’s and the either to for by first last our conference Stone Ren, will recorded for available night. release, be the Thank which joining Minerals on call. earnings XXXX us phone along quarter is good you, being everyone. and with morning website you Black call earnings Thank or issued online was

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

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

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

Tom Carter

with first over on quarter financial $XXX quarter thanks today results. and These generated gas XX. fourth the of up and million. the the adjusted call for quarter, robust of quarter a our in first on morning Good for that in especially covering line the in brought March result wells. relative was wells all cash increase feet from to XX you came flow other as the million results from XX% of volumes, in down Angelina oil interest of have in and quarter agreement, prices cubic and $XX an royalty higher or decrease San rig gas The royalty this Aethon rigs well these XX timing than wells the are can its Much and variability of production generate a minimum Trough turn to on typically And since last the them we the decrease of Shelby came our the continued That’s XXXX. at almost for over steady development requirements compared quarter. over We in the the of levels. last during at were EBITDA drilling we production under year. XX operating in had in relatively Distributable first is million joining remained the high of We XX% fourth to last year these sales. saw the rise acreage time in our realized some properties operating rigs quarter’s Augustine in of slightly quarter, typically the benefited exceeding when counties. at first some from meeting Despite first quarter, Trough. XX activity activity, when over end us Shelby

difference the drilling big excited very in timing Overall, wise. Shelby the about So they Trough. we activity make are a

in We Aethon operating the partner remain to in thus been expected happy four very to turned and levels the commenced in drill Aethon experience well alone. XX important drilling results capitalized two has From and activity operations there, years covering such across We area. of to Trough year an wells a counties. chosen over wells Shelby weighting to encouraging successfully In far Trough for have development drilling in area next by this quickly our we completion very two Trough agreements Aethon’s six San and resumed have have for San came County, spud Augustine our increase wells to is in beneficial County this the XXXX. partnership drilling and sales are that and Augustine Energy Aethon with Black Angelina has were another area three the for separate which mutually wells volume additional Shelby XXXX to picture benefitting wells expect wells April be XTO have XX overall Angelina, minerals San acreage on of online acreage Aethon years many in operations. Augustine come. the in in leading currently on the two has to development originally Shelby Further Stone

discussed quarter, well. we all we have As in fully of as Black out working interest Trough the Stone’s last farmed Shelby

program. strategic operators global while results. Last time. the Recent to of we highlighted unstimulated capital We best deals an believe agreements have Aethon’s with in world from area those discussed These events in continued wells to volumes burdens reserves, growth will the no very the outcome past benefit capital the from operators completions to use was drill several export that Haynesville U.S. prior importance calls, operator encouraging. bring East that Chalk over gas our provisions and high I’ve The in efforts of solid ensuring we test play associated with onto position in entered carry our minerals benefit the ongoing Texas. several we extensive year, intensity Texas. development wells is yielded ongoing where in over East additional program aggressive Austin of into generations shale have LNG

are the five additional currently the flow. modern operators four contracts for Currently, in continuously completed. to in development And running area producing the of or of redevelopment field. key have rig in wells either ongoing our are engaged completions area field are seven now the rigs so actively in two To-date, several operators drilled the being with with now committed of and

acreage. to create drilling to surrounding move a the on additional we the We year acreage direction to in per scenario hard engage working area. where for And commence Things this Stone. development operators potential multiple in multiple are right Black are in continue important operators also wells remained with

we the very of positioned projects, growth announced growth volume key increase increasing XXXX. our sight X.X able given level leverage highest ratio contributed line low very prices, and That of High to in since week. but distribution our organic an also The payout that, pricing a to ramping on per our ratio, certainly, last balances are debt sizeable nicely or and going forward. of a IPO factors up times. with increases combination constructive environment unit is We’re for distribution $X.XX $X.XX annualized allowed

more are to the down turn We even our I’ll enabled us some the over With that, of cycle hard Jeff to shareholders. work that the of details excited quarter. back and to to through through return come stronger it the go cash has

Jeff Wood

you volumes. XX% Tom, XX,XXX good a down Well, the After several thank and royalty consecutive growth, right. was that first quarter volumes production royalty Boe lower All quarter. to came first and little to everyone. The in in quarters relative fourth per of oil bit volumes morning, totaled quarter day, the gas our in

to Trough, the fall decrease as three Augustine that returned end in a mentioned, operations XTO in some addition, there it volumes. existing gas factors of resumed on San in County. quarter. was those in lower Both quarter. shut primarily production Trough result oil to wells the off sales in to our And last as of contributed volumes drilling compared quarter revenue of received volumes Shelby were The suspended Tom after some just the in net this As wells high Shelby the in

Our Permian day which of production Boe almost the across we reported and quarter. and to particularly gas the Bakken, X,XXX producers fourth successfully as volumes last mentioned with our worked the on the second position volumes call, by the in mineral staff in and half in last per release increased year oil suspended

temporary these and nature our environment and in Haynesville shock items expect combined to of with positive and the programs. see up activity, the industry growth Austin the ramp organic generally we in the through Given

realized day. year. sticking gas prices revenues and improved That’s the And our last our we’re to in We expect full original improvement with to growth XX% a per what first production throughout XX% Combined we differentials over year total XX,XXX both over by our that for of Boe quarter. guidance in Boe Spot saw the barrel. oil trajectory for resulting resume last prices, quarter, rose $XX the fourth year. per higher prices of XX,XXX over hedge settlement of quarter to and the

that benefited higher million. distributable operating Cash financial were bonus expectations adjusted almost as from generally line with cash translated very and a $X higher at flow lease of well. also revenues results quarter in solid expenses into EBITDA so Our

by $X.XX. rose Our for Bcf unit quarter the per

efforts, first the As increase The for low Directors to balance on fourth organic quarter Tom with of our our our said, of quarter XXXX. this – a Bcf higher – the per with this of solid to quarter. our much supported out our a XX% $X.XX per paying over respect and Board unit the represents quarter shareholders percentage debt progress quarter of distribution growth distribution

the Turning With to maintain is to the such was little that we Ren, balance that, it our borrowing credit number base down frankly, will million please. elected $XX the quarter could over million just facility million month. level. with pushed last we debt reaffirmed have further the end $XXX call that $XX We on for higher, at and at The million was but revolving today. sheet, to outstanding, of questions, our total at turn $XXX debt

Operator

Mariani Your first Leo All [Operator Instructions] comes right. KeyBanc. from line from the of question

open. is line Your

Leo Mariani

guys. Hey

to I saw. of quantify could First quarter the contributor those hoping sounds that big you like It off, a little shut-ins lower was was the first volumes bit definitely maybe you impact quarter. a this that

Evan Kiefer

for Hey, thank you the And question. Leo.

on Evan So that. this start and is I’ll

impact So bit Boe mentioned, shut-in to that QX that the for going three with be in XXX the range just about XTO day QX maybe those above little of is that, impact. a that we of alone drilling a wells think kind Jeff but in

Leo Mariani

of the Jeff, I the just to year. sort bottom Haynesville comments. And I activity to and a of kind comments as then see be follow-up you And of for expected kind here think shock. you of to volumes kind the kicks first ramp bit one of the expected production on that of generally start the wanted Is for I said in to the kind little right? prepared you of correctly, year in XQ rest that Okay. your quarter the heard guess, on If

Tom Carter

would the the bit little trajectory Yes, of year you mid-XXs just and that for if range that we I the growth what think production to right. would imply, that up expect a of would with that’s climb that. a generally guidance Leo, hopefully look onto at

Leo Mariani

M&A there current of the deals then also, on guess a the still you the as down look here, high it. Got price paying I of you’re debt of And right environment, currently you pricey in all out environment kind could kind are just now? comment sort at just landscape, rapidly

Tom Carter

Yes. a you that up it. to good surprise were think, on XXX, of Look, a there’s I you it’s and popped of If and trends coming time over and assets the downturn sudden lot us, a gas all right? the to doesn’t really sell had sitting through that deals, oil probably

So new to we The have on the these I much would existing environment, we highly that cash just to That’s levels. deals, to prices this right? own. just at don’t see bring can around already in projects, downside we more activity. pay flow more doing very are a risk acreage really our is stream. do what that cautious in To for, team remaining, price almost we And higher there’s producers think return because acquisition definitionally we focused we extent are M&A on right, frankly, an say,

more think us stay quiet acreage. you’re very, tend normalize to existing M&A And we’ll maybe front going driving focused activity a remain on M&A I get see to things to back on the then bit. pretty once very to So and

Leo Mariani

there, successful Yes. I operators guys, know can chalk. results but and want a I all over given in were prices, to big drill. got these new maybe I think mean, it sounded there would probably the get you the some fairly you’ve that get confident out like we you and position

Tom Carter

iron’s yes, hot, help producers activity strike it’s to very in I news to the – the existing spur in who those time Yes. rig to all But only new to already I is, we’re contracts to that’s good unleashed ramp mean, at that’s right. mean, program had mean, to then And to test hard, area, surrounding but already additional of well from we bring moment. right, operators the from seen this to what up also acreage working translation seeing. existing you’ve This now the positions development. course operators not the is that. committing start a are on I

Leo Mariani

Okay. Thanks guys.

Tom Carter

Leo. you, Thank

Operator

Whitfield question Your Stifel. next from from the of Derrick comes line

Your open. line is

Derrick Whitfield

all. morning Good

Tom Carter

Derrick. Hey,

Derrick Whitfield

With greatly in improved you the noted offer remarks, the my first these in performance prepared results? degree three question, on in the you Austin I program wanted field demonstrated results test to to well focus Chalk, past seeing production color on some comparison rates. you’re Could the in Brooklyn your of

Garrett Gremillion

Sure.

Garrett is this in So Gremillion Engineering.

with well So gas, the the main was program XXX,XXX DLR, been months [indiscernible] well very some field. well five which encouraging made X.XX Bcf three test second at test a It’s Intel good rates. months by a included producing well for that barrels, two of over the for has

sure. and better for is third been the The offsets demand well months for three unstimulated also than has producing

that The producing has months a for well XXX,XXX tuned with couple newer vintage wells has in gas, online. oldest coming barrels. been that the XX X.X there’s Bcf the of completion more field So well are

So in X,XXX hanging condensate and day. barrels producers at of producing day a older a healthy X with the over million there still rates, really

very We’re we’re seeing. what by encouraged

Derrick Whitfield

activity could the the shifting to three additional the of on expected and from then wells XTO? beyond timing Great. if you’re Haynesville, XTO wells you with completions three over those And comment expecting

Garrett Gremillion

Haynesville is – three their I drilling wells. they’re that at on the that third actually as before for in XTO place on when that available they’d then they can of use And expect we am area is be would moment, to kind to the their of my finishing unsure rigs we end. of a and it’s place drill kind completion But So year understanding well schedule. schedule those going the

Derrick Whitfield

ahead. go Yes, Great.

Jeff Wood

to I No, we just – have got is say, going this Jeff. was

We and the move They into there’s for this exactly here area. drill and haven’t from drill them. in that schedule may specific no a gotten around right. We see swing Garrett’s for XTO, schedule time but think be timing so back from kind of any specific play this rigs County could at Shelby new XTO forth,

Derrick Whitfield

the versus and QX? I And and think flat light how benefit about Jeff, QX the think on when think down, events Could could QX, about in we offer you the guidance et in of if impacts oil about some really oil just Bakken. modeling, clarification i.e., up to noted one QX question recent for production directional of on during cetera,

Jeff Wood

Permian hope volumes in suspense that, prepared I that QX here the oil saw Yes. Bakken I the the from mean, propped that bit would that, remarks I would that quantum QX. recover oil through I oil year, of point last the up work volumes would a say we again end QX we from that would out of as team specifically. my and mentioned in did

QX a we again. that certainly So level volumes I oil see we it that better we’re wouldn’t expect quarter. in to But expecting see would yes, this than bit little recognize what

Derrick Whitfield

Thanks. guys. Very helpful,

Operator

Reese Sagepoint. line question from next from Your of Ken the Instructions] [Operator comes

line Your is open.

Ken Reese

like kind away and some I’d look for the just point, macro have of and in? from senior what’s the Good if appreciate on that. affect the analysis going morning, management put been I’m backwardation step constrain hedges your things in at wondering right to thought a on. And it’s now, while, companies about that to micro earnings, these – and why like could that your gas. is hedging gentlemen. of energy to keep current I oil you you talk if across high. prices And would how increased to production I’d

unhitched continental reports up blow As had and a you they’re as well. court tomorrow, know, [indiscernible] yesterday,

you. I So Thank like thoughts. your

Jeff Wood

we this that. have anyone this followed a long who’s time consistent Ken, been for is hedgers. I’ll Jeff. as company on Look, Yes. knows, start

almost I and for going some XXXX our benefited entirely it’s more and consistency us fully example, otherwise production created it and in swing appreciate sorry, our and is lower we’re just done is – what that Board hampered in that for proxy results but greatly Black a so that large Board And to mean, XXXX, result stability to of and has XXXX hampered be saying, as flow be stream they opposed cash with shareholders in XX to that would indicated our comprised volatile what just Stone is of prices. hey,

So corporate it’s just it’s – a philosophy.

higher. yes, been undoubtedly would’ve results So

self benefited keep other in in hedges had – You know. release, know the I that. capital in opening don’t prices There’s that not of can constraints producers categories see as the agree high. in, put constraining to with And we the us I that industry. don’t but mean that it’s well. terms I fully are in statement I just your

that There’s demand. to selling a curve those and pickups seeing are presume smart better factors of be don’t into day. activity. every that lot be people the the rig than obviously are buying across enough at We to supply and we go And predicting in

a So we’ve It shouldn’t and years. us anyway, what we for philosophy we it’s issue for corporate sometimes surprise get just sometimes and it’s hurt. and benefit investors done consistently

Ken Reese

your percentage hedged? What is production of

Jeff Wood

XX% We’re XXXX XX% about stand and probably XX% today. the XXXX for here – hedged in we probably XX% we’re hedged to to as for

Ken Reese

Thanks right. your time. All for Okay.

Jeff Wood

Thanks, Ken.

Operator

Your the Schultz next comes line from question RBC of Instructions] [Operator TJ Capital. from

open. line Your is

TJ Schultz

Hey, good morning.

the me Just question for one a on distribution.

current as to that do this Given plan you cash? prices moving approve, level or we to assuming forward maintain expect a payout increase stay ratio quarter build elevated the more volumes as have higher and Thanks. maintain the just the

Tom Carter

our already to Tom. we’re can moving coverage speaking, excess have creating as continue low ratio those growing and ratio we I we the in we and flat have as distributions volatility. continuity think lower then confidence as growing say production balances, them of not payout a to as sustaining long higher long to higher have would we will future, continue is debt generally that to I if This keeping in we

TJ Schultz

and is have smooth of rather overarching goal distribution growing the purely a to Okay. variable? than kind But

Tom Carter

Absolutely.

TJ Schultz

Okay. Thank you.

Tom Carter

TJ. Thanks,

Operator

next Instructions] line from comes Lamar James. the Raymond [Operator Your question Trafford from of

Your open. line is

Trafford Lamar

Hey guys, thanks call. for taking my

from the it that leased? on than I than question quick unleashed based payments a it majority factor saw bonus or was lands release that more of and coming one land XQ is Just leases up existing in unleashed Wolfcamp. being XQ. lease doubled Was or

Thad Montgomery

them Hey, of them The again of expired downturn two came is own me, majority of and XXXX, private a County. from that another lease this quickly, was not in expired and a small under their diamond were company that lot excuse equity terms able to They because leases was release Thad. lease activity. back in bonus just One quickly. we the Midland

Trafford Lamar

Perfect. Thank you.

Tom Carter

Yes.

Operator

[Operator Instructions]

Tom Carter

questions, Okay. there further joining in you look we for forward the with future. you aren’t any If today we us thank again all to and talking

Operator

conference Ladies Thank today’s call. for and participating. this concludes you gentlemen,

You disconnect. now may

Black Stone Minerals (BSM) 3 May 222022 Q1 Earnings call transcript