BSM - Earnings call transcript Q2 2022 | Black Stone Minerals, L.P.

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Operator

Good morning and welcome to the Black Stone Minerals Second Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. hand Mr. to like would over to I Evan President, Finance Relations. and Investor Kiefer, Vice

Evan Kiefer

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

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

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

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

Tom Carter

about second over averaging the last the commodity of quarter we EBITDA financial lot from averaging flow call. and $XXX X% over last for crude higher and distribution a the per resulted Overall, the to tailwinds had second year. and XX% quarter which in in cash That's able realized in quarter, with than morning of the a out joining $X. Last natural $X.XX $XXX quarter's for which is of for quarter prices respect operating to production the quarter We talk about announced distributable paid gas an quarter the quarter, the distribution adjusted $XXX a increase quarter financial you quarter XX% And We million. results Good were and for is our with what in prior cash prices unit production million second was thanks core second our of increase continue the around of XX% let's over that what production and to over on Evan. we second volumes, Thanks, all performance our see to That beyond. We compared generated distribution pretty XXXX trends were of the back record With a as outlook. flow we the for Stone week, that, for and company. Black inventory. helpful unitholders. especially the to low in a quarter. with that highest to relatively level coming public plays, we feel XXXX up our good

a day. decline is production many Boe That peaked result day. at number in XX,XXX XXXX total per factors. interest Today royalty Boe just As working and of XX,XXX over volumes, our know, around per a at of we're

only spend averaged volumes We we the in all XX,XXX out. on $XX play we our farm on made end mineral the in investing interest the development strategically of Shelby position to volumes we million-plus to own. Boe a our significant of prior to capital play. hold that running XX,XXX per focus and play spent in Trough was At were from up Haynesville/Bossier interest was proven the annual royalty Shelby East in there XXXX, of that its the in working day to That Boe out farmed strategic a once working First, fast XXXX, Trough decisions Texas. capital

program levels. royalty we area no have shifted our done today that since from otherwise, drilling to full you result, stride X,XXX working a and to acreage Shelby in in Shelby when the familiar are costs. at wells the our biggest day over a And we interest our Boe at is access over available that for our This working acreage the acreage. using in the with Aethon. peak to conclude San continues XXXX, Angelina reduce can calls fit-for-purpose working XX,XXX of per rates. five rigs efforts day wells the be important for two the times wells. year, and in Augustine decline cumulative said Many year interest a BP to these agreement area volumes back well incurred and Shelby of to feet they stay annually several increases year. year those drilled and Aethon and volumes the million across per second our rates XX entirely Aethon have our for Lower are covering lower other These year September in to place with a XTO will finally, to XXXX deep day. over and this fell is past resulted in following with to rate and prices Once counts year XXXX, preferred around 'XX starting year. development program very it The of program about cycle The year. in for volumes program our Boe That exclusive contributor high-pressured which years. covering County are in XX again, capital in that's and Trough naturally Trough. the the As have current typically we relationship remarket program And year, Energy hitting and gas the wells in goes It in level major in our of County area successful and us. current for acreage first interest requirement come years XX operators were cubic production exited priorities. both royalty Trough was year, Even to per development the a covering year. natural for declined Trough area both Shelby the for the XX choked the acreage agreements, just increasing

on activity forward. lo So, in wells XTO growth out more is Shelby a Trough in this well and year from acreage for lot going there and we Aethon three see as possibly the San our and Augustine, behold back of

depths are driven producers and the of LNG Boe Coast in our rate. a day favorable strike we generating day side accelerated we Permian, Boe ever our XXXX. in in around X,XXX on per development in production Permian, $XX seen Remember end our volumes of $XXX properties, the area to responding Boe the of XXXX, per market the royalty-driven to the lands of trend, in highest approximately approximately and addition trend sold the Shelby like anticipate play, of that deals recently royalty million as over seen peaked Haynesville the you debt the the operators our general Louisiana some the beginning back dynamics new by Today, by activity today. averaging to and up interest is increase that with also we're day and Permian. acreage the quickly. growth Trough, to production well. from volumes X,XXX the down area from there day County know, good Reeves pandemic, X,XXX our the run exports. drilling while gas reduce X,XXX as will the in XXXX, Boe at spool around deals, in we of in per Gulf peak is million per it's been the growth activity And In in by rest increasing by of follow about which up of there efforts to We've as So, run rate up to Pecos and We've the tends Comstock, the as expect

is contractual same before months. fun a XX of play is XX. was many day monster up well about Chalk last chalk XXXX the pandemic outstanding covers have this the are of there environment on of acreage We commitments are Enverus this strong area well include drilled sight didn't solid the -- delivering flowing curve this been the This hold, to cubic on as wells our old and Since XX million of of new kid and report on we're Austin by Texas report the X,XXX per exciting is restarted the Yet economics. the very there, real multiple prospects in reason commodity the to block has per in quickly counties. we in downturn learning that, And -- of June working part the a by almost next the at of our Austin XX have just East oil environment, in drill operators Austin to new and year Our spud via and towards barrels is per wells in certainly gas Chalk the the subareas play wells. variability and This took part have this Chalk. summarized the out line the getting this believe on a we that was excited of the to where how day. our XX generation play play positive standard part over That of out any and that's there. feet we one, well middle and and XX

inventory interest We have territory. of a lot in high

private areas, come of more we and this And excited the be hundreds position. we're areas still core now continuing with in areas new with acreage solid thousands we're discussions especially Certainly, into, what and to turn that previously companies the what more large this E&P in tested. may acres untested to much quarters. significant play coming to So have be might and about in on public with towards expand where of

from promising. the and XX,XXX prices of see of we very how sheet a pandemic, revival sheet our non-op around to as the and voluntary XXXX environment. peak the existing in to looking of focus and rearview spooling rising of sale story delivered. to per but rallied We've back take with mirror current on curtailment It's to new growth our made The that strength old has mid-XXXXXs. our advantage mandate we during Permian of the points and balance over to and strongly centered maintain some this a around activity organic decision up Boe acreage to in strategic Foregoing a plays balance operators strengthen team reduction went acute the day period

there, are the as feel forward. are we cycle we our production. we The great there, last about and plays economics this grow operators So from there, are will volumes move the

constructive and to plans, Shelby macro production in per to our the Austin operators their on environment we Assuming and Chalk mostly exit grow stays Boe through stated XXXX expect key deliver the contractual Trough year XX,XXX next at close day. and and

increasing sound macro other and the growing macro the run Finally, years general short, ways were to in gas oil let's good early focus the realities. context ago do view fill world believe XXX-year view be many demand looks pop let's void. economy. going meet Two in the transition less And headlines a and is the environmentally as to on and three of global years would oil up in have we global evolving inventory. to think and Today, crisis gas to of just mid-XXs, said reactionary a ahead, to to and that I renewables on gas oil over consumption. two energy more and In

major all knowable about see So various That's production number Black be Stone's statement years cost inventory. that with risk a over our importantly, undeveloped not it. the are of of We inventory don't no make matter slice Haynesville/Bossier go XX you We Stone because been included known yet. inventory at it acreage. last through you to quarter. that what some even numbers. Jeff of other With in to turn acreage was for surprises categories well XX in how in rates years. Shelby our But might to remember play today the these in ago, Black XX know And remaining zero, are said, Stone's put and in details healthy millions inventory very out there the excess hadn't very inventory of Trough that, I'll efficiencies that a that now I'll months has play Black with

Jeff Wood

the second quarter stuff All and the right. I of for important my and on growth morning Realizations XXX% price word Well, for for consistent morning, WTI of around do for year. to want hedges end going our increased the I'm covered hedges XX% note for XXXX. next for as hedge really average by a that. is commodity over quarter, brief prices our with mentioned, EBITDA our crude, XXX% be prices gas expectations That those outlook at you, of before XX% the around thank good constrained adjusted quarter, as highs prices for hedges. from Tom everyone. both year, Tom and no And Hub oil keep were those of quick those course at I'll production, up average swap the impact this make record last that, future of is our the The gas. surprise. realizations, prices to and reported this almost that Henry to comments though just volumes. even that in and of DCF our quarter by our hedges roll And positive news should swap XXXX we almost going amounts are and were for this

So would curves. by increase at for the XX% and despite next hedges both place backwardation in prices, the existing current realized in XXXX XXXX, our current and prices year, strip

if is next of million imply production XXXX, would flat stayed $XX distributable flow to year. levels our cash that course even, expectation of from XXXX So which over incremental not

have entire you as of our of IPO during volatility, big as the practices. might XXXX, and environment, since generally so commodity in designed as prices a this we questions looking our And I'll limited hedging philosophy far out so hedging And company, out our we prices to program has it been that reduce risen one including percentage as for dramatically, in that's XX% turned public around even that years down year hedging a the year upside this certain and dramatically. two history XXXX, production less, our forecasted get benefit of Typically, has volumes. In or a hedging of Now lot a XX% our and XXXX, in just near-term cash some around that our hedged hedging when at say, positive program, expect do out. us. in have and history distributions. We strategy just

systematic when over So hedging hedging a worst have again through prices a long that outcome relatively term. good, hedge program the the that with you hedge watch cycle, And take we to at like and serves its and believe purpose are the be bad then this down continue to the a frankly, just attractive, stop time prices fall don't when protection. we would

increase. The hedging a to, as And locks distributions distribution locking I XXXX, incremental about can of when good investor points it in to is extent that this a that the that that we to year, like that we over and DCF some other use feel for thing management which to greater mentioned. certainty about particularly we just team, hedges in provide

a around and last years As is we'll just been it's all a some IPO, I won't. in since this, corporate that one recognizing quarter question consistent in we've that years said, in we of philosophy response from benefit around it, our some to

Okay.

by we And So the earnings some are interruptions areas, headwinds, in well we've of in guidance global drilling. we expectation of some our the facing that plays slip, would interest see active release across around some some ramp-up our range. full come multi-pad more guidance operators timing the happening from the year, high original industry. the our optimize our low We supply our as had chain also updated with in in end that for yesterday,

as volumes. going us, tamp can be these down to view absolutely Over it near-term but issues. said, we And good temporary some as the that's Tom for long-term,

positioned facilitate $XXX revolving our Our was credit activity, focus existing The to beyond great April. And we well believe leads to we're is growth in to facility acreage, remains do balance the at and for our on finally, base, XXXX and sheet shape. that. reaffirmed that production in borrowing million in very

million, of quarter second on advance And in and to balance course, today. will of debt end our of $XX is paying the August down was million distribution, total which XX. at quarter further this occur that Our is $XX

So that prepared remarks. our concludes

this Paulie, So open will up we questions. for

Operator

question speakers. private first Instructions] Thank from Your the [Operator you [ph] investor. Brian line Fitzgerald comes all of

now is line open. Your

Unidentified Analyst

to quarter. you the Hi. on in add commentary that Thank more Great, good you royalty East results. very and program for induce you a set the a favorable operators area up now Could program Chalk, -- royalty drilling? the

Jeff Wood

this by of lot honestly is of and is very and on the work I'll others hard Sure, start This years chalk. can -- that the excited a -- two chime Jeff Look, in. about Brian, team. we're

in prior really in of group three of core main As said had we existing an the field. we calls, operators that

of just And we've number a things. so done

We new leases. brought on existing have players, it. those worked in with to development to try their around activity, And accelerate we operators, new have existing start to activity

the think spud, wells So time. we're strong had area very with XX is see completion all that I a XX fair nice excited year seeing we acreage, we're is producing delineated seeing around We as better that and technology, this about, getting And mentioned, and now. new where results. area past and over way plus we're absolutely the wells consistent of what we've better

and absolute out at day. most recent million gas came the almost feet XXXX-plus an of XX just well here in mentioned, a barn Tom As cubic burner a day barrels

as It's going us. of yes, a into for it's we that we been we're look and look beyond, of ton and hard excited So work be this. to area a about growth XXXX think real

Unidentified Analyst

you. Thank

Jeff Wood

Thank Brian. you,

Operator

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

open. line is Your

Trafford Lamar

around the then quarter this revolves closer know Hey, the are about distribution was guys. first question Thanks My X.X. quarter you for first and call. to coverage. taking in of X.Xx kind I my

modeling back the the could expect second to want – Thanks. what thoughts on of or that. at a basis revert X.X? year an get that to your of like to Just I or closer just on could average half we X.X looking

Jeff Wood

Sure as on Trafford. well. This is Jeff. that start Yes. I'll

So payout the distribution to is ratios to our we some past prioritizing expect look we we come sheet are excess over on of calls that have clean investors. of and so balance time these down, that sort to returning the fact cash come given up said just

in curves a hedges was quarter in the there's Second some XXXX. backwardation for price and unusual. QX kick uptick QX little before Obviously, in through

a we going little So of the ran to it X.XX rest would really coverage at of really through year. just sort times balance this anticipate quarter we forward higher than out the

but – So there's no been here. in philosophy change

I will returning continue to the we like think cash over prioritize moment. buybacks to investors for things

down And so come ratio we should coverage year. go you the see forward through as that

Trafford Lamar

Okay. Thank and my Perfect. hedges. if thoughts for get you second around all – all and strictly you Great. about onwards that. revolves thoughts talked maybe I possibility been then then on versus to in want you've Have for that. your right collars. know just question XXXX to swaps? I And just XXXX. on I of swaps now that wanted your XXXX the get

Jeff Wood

Yes.

look we time for go trades. We've every seen to levels put on So at as attractive. we and swaps collars swap those

will So that at. look collars to continue be we something

and the with them I maybe pretty simple time we then. used some collars XXXX last that was we've think in had since swaps the we been had

still that we make likely what hedge more through be most maybe in simple found anything to collar see upside stay think to protection continue we preserve swaps, provide I that. may this. stability is nice We're sense get do downside pretty that dominated again, we and do swaps a a but than effectively. not program if see to we really areas most by will trying the like is you'll So some what that do other and the distribution to But tend to with little

Trafford Lamar

Okay. Perfect. all. Thank you

Jeff Wood

Thank you.

Operator

you. Thank

line Marlin from comes question William next of Sams the Fund. Sams Your from the

Your line is open.

Unidentified Analyst

gas for much. you Hi. you. do your year dreamed Congratulations would on never the dividend oil up percent production? a quite hedge that great and I on go What

Jeff Wood

like the really hedge then, we two coverage XX% that that It us is time we've -- some for systematically year in something our will we on William. volumes historically Thank put a level look expected mean done from you forward give layer for hedge. we question, to typically yeah. And depends. one William years forward. will what the I of hedges current

just sort So forward of again, one-year hedges we XX%. periodically on. up to to those two-year range in layer range. forward in call the XX% And it And that XX% then, would

Unidentified Analyst

my Okay. That's question. answers

Tom Carter

comment hedging. a on the add that I'd on

are about If -- months of think you the systematically XX around just we in that you the comment if of inventory context XX-plus covering years, out.

total of terms in substantially a base, unhedged. we're So resource

Unidentified Analyst

Okay.

Tom Carter

you, Thank William.

Unidentified Analyst

Thanks.

Operator

further over Carter. would turn no time. are and to questions Mr. Chairman to Tom There call CEO the like at back I this

Tom Carter

Well we you thank about excited all our you look with for on on, today. And to talking assets. going quarter. joining We're forward what's next

Operator

This now the concludes presentation.

You may now disconnect.

Black Stone Minerals (BSM) 2 Aug 222022 Q2 Earnings call transcript