- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Black Stone Minerals Q3 2022 Earnings Release. At this time, all lines are currently in a listen-only mode. There will be a question-and-answer session at the end of the presentation. [Operator Instructions] As a reminder, this call is being recorded. to of conference Finance like Kiefer, to now President Vice and would turn over the Evan I Investor Relations. ahead. go Please

Evan Kiefer

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

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

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

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

Tom Carter

joining you and morning, good Thanks, thank all Evan, for and us.

second quarter to up good have our per news We XX,XXX the of volumes. day. total was from which lot per a of were All XX% production volumes, XX,XXX royalty XX% increase Boe day, volumes over increase quarter that for to of an generated We report. Boe

base certain our robust continue development up is Haynesville in activity and acreage growing and quarter Louisiana taking natural as line moving to development initial production Chalk higher new flow in target with due bringing Haynesville, at Texas, to Trough, while forward. trending shape, from operators take on remains Our particularly advantage wells more Austin East exceeded Shelby as programs and operators, across our expectations gas the the aggressive Production rates prices. of

our the wells of The revenue in the drilled this We well. often and see can first production, prices revenues future significant quarter as peaks continue impacts hit at receive on expect months to and early payment we on have third so quarters as similar saw newly multiple production meaningful the that impact covers time. in a same

same price big commodity time volumes quarter increase XX XX last is acreage and basin Black cash Stone flow distribution which the on the favorable our our running a quarter, adjusted EBITDA of environment reported the quarter. year. up million, cash good record for completion. third in They're year, our total now our of Boe level unit, the into With rigs acreage. production announced and the in we Austin in our at the thus that our The on of per the Minerals higher the turned on the year of implies had projects above the per has last another quarter. flow the count, Last XX progress acreage expect or both drilling have we requirement above rigs been of garnering organic We and second That Shelby sales for fourth wells second a Chalk. XX the has public $XXX third increase there. in combined quarter wells rig industry will come also ‘XX great way XX% particular. for above levels from as very quarter far. and end midpoint X% quarter growth for up to evidenced day guidance contractual the across the generate third XX,XXX which day. these second are we $XXX of or activity, At the Blackstone. the better potential of from for potential was around the week, is are company. full quarter, further in X% we now $X.XX to working from That's of Shelby XX detail and upside Distributable overall or above Trough Last by we've the on high establishes as wells ramping per about Boe per interest Activity and XX,XXX with waiting gaining well on the of the at levels production original their of quarter, XX made and programs at went increasing quarter Both watermark to our pace a results for Aethon new end million new Trough entrants.

focused efforts Austin the volumes East Texas, heavily commercial production and also Chalk continue grow. also development activity to on Our acreage, remain where

acreage. us provides unparalleled Our an in with knowledge the long history this area of

long-term and to Chalk, to from develop development be will which execute We strategy on continue focused of long-term Austin have allows the our responsible entire interests, strong working basin. holders perspective a commercial opportunity full industry other more net royalty mineral perspective team been us owners combined some influence interests outcomes have. high the with to and than often across and remaining give relationships That

the four We another had in new drilled XXXX. do. success a five strategy have been but new part lot in well acreage still intensity test accelerate have Over and We've long XX wells the even further area took the expand position. with the to step placing completions high with completed our existing in working a in now the on that operators major of producers, and and lessees employs up there's program to more are advantages and operators in original activity three pace to game good across focused in remain development activity that this and development. acreage in with the to currently development unique supplement development open brought We

As continue areas mode, into to explore these core acreage development further development. two our we to other new areas expansive within move portfolio drive

enabled the many attracting said, few we years, of commercial to times the dollars increase are our value ability our to past to positioned generate of As over volumes focusing existing strategy well acres. on by This development maximize we really strong capital sets acquisitions its what employed the additional without years. growth returns to equity what production is flagstone the peers us from over generate investments on occurrence of is largely debt has apart through or and

excited XQ going the about are into We year. next into momentum and

environment as price that, over development, turn us shareholders, to more into well. and and has I'll Our allowed the continue our success we're it optimistic to that With cash will strong ‘XX to return that commodity Jeff. trend

Jeff Wood

and right. thank morning Well, All everyone. you good

As royalty mentioned, Tom day XX,XXX production per the was quarter. to XX% Boe for third up

was All higher in the producers by primarily of increase gas from and volumes Louisiana on driven that Haynesville. our acreage

the price environment In remained robust. addition,

more gas. but -- down per over very per at second for and from Oil realized gas Our natural differentials for while as we gas in realized over the while rerecorded barrel quarter, up prices down the and healthy were last quarter, than from from and downturn quarter. offset widened $X improved last oil revenues our oil realized and fell. gains, that’s $XX MCF NGL prices prices gas were remained million $XXX however, differentials in production X% prices and The

line range in us. We XXXX quarter the Expenses with operating midpoint full end XX,XXX expect year be so quarter revenues nice Prior high for we XX%. in for range at With to of this now a and at the of our production quarter, guidance this is the to production expect of of the our a at XX,XXX we or to to above million level total trends costs now recovery guidance. level be for volumes and the below the original third guidance guidance to to per of for original with and last range, our strong BOE million, of the $XX were in in at to our expenses day. lease come are production gas XX% to $XX as year come that end percentage generally oil low of the this, expecting guidance

impacts cash million our and which G&A $XX in million portfolio line primarily non-cash increase during year, range million. compensation. to We of for $XX to also be of long-term our to year We component expect with our at XXXX to $XX of the hedge original to added the to the That's prices. $XX due attractive at be during range mark-to-market of G&A unit the guidance million end high in the our price the incentive

MMBtu about XXXX, increase next strike year. into swaps as average on this hedges hedge XX% over The prices natural from per strike a on oil. increases by increased for an $X over Our per over price our it's any prices. year increased in MMBtu volumes, our to give to in $XX benefits normally gas production for average we move flow our from similar before deliver And to story increased XX%. substantially, barrel The oil we prices of hedge We'll year barrel 'XX do, production per well in from XXXX cash in big of even XXXX. the this approximately per just very set our $XX over up step-up but are guidance February for we higher like $X

In an million. was date for reduction. was total as conjunction facility our our us that October our of to borrowing from allowed the balance million increase commitments the five million debt base voluntarily month of flexibility limit facility quarter debt we that and million. under the just further of $XXX the on ended That last tremendous part flexibility drawn for credit million, years semiannual gives facility and facility results financial to credit amendment facility, out distribution of added in quarter elected base that, extending to borrowing of We the maturity $XX although with redetermination to by financial $XXX strong for the that to and of we the $XXX with as under $XX to increased XXXX. Our Friday down and last credit

is, this a should that said, efforts some news environment major we into full Tom really our the both, of year by commercial As trends continue think have years. beyond. driven the robust focused shareholders the quarter results, over next was of we to The on by few these been results good past and early positive benefit the of and

open we that, will the with call questions. Jesse, to So,

Operator

from [Operator Thank question We'll Derrick take Instructions] Whitfield first you. Stifel. with our

Derrick Whitfield

reviewing Louisiana the to congrats strength Good production due Is majority activity which in a prepared In turning quarter wanted to lateral, located candidly and and My the the first lines was morning encouraged how the profile volumes, QX comments, non-incremental question, not impact given we these release I about on of into your several focus are subtlety we the commentary were of all, that QX high QX? longer on by modern update. for wells, drive noted Trough completions. updates, Shelby were most rate and of QX, in thinking if read in Haynesville. QX. In terms production arguably fair which a in strength a area, your strong you new should

Jeff Wood

Yes.

Jeff. Derrick. of drilling think, ramp from prepared look, They encouraged and is up activity. there I This out great all to very in continuing the there about the mentioned as we are there, absolutely remarks, we is wells two are things activity Aethon. One,

for going that's decade to chosen is work the we've we program area. things there, I right benefit the mean, years. And that that's in the a out plus partner if out a way. right So, think volumes right production program

are we yes, -- was coming. that So by very we but encouraged that, we remain knew

report moves these What was of us the don't bit, I in around the fully for move that quarter, a wells just of that you massive came if Louisiana the the from some side was were kind a in huge surprised think we And original these are timing guidance. come these we And out of forecast. will, So, while the on frankly, our that little just and saw fully guys Haynesville. permits on were we try we much expecting. just wells on some rates. but else, at bringing out everything for example, that higher just a And wells were Southwestern, yesterday production -- as, not and look, these research to track

XX Southwestern peak day example, on above is up a rates, well XX% For day. their going MMCF XX

hard, get we when for several will wells wells and really production, of create those that being it typically have difference. combination payments are of the when that months pulled can initial So, and those a

of a some think, there's surprise Louisiana. the trough. just the size was into of on So of have the in that underlying the of fully growth I from forecast the baked we bit And coming little kind these then Shelby wells

Derrick Whitfield

my the X current the That's for what's for the Based the to great. operators in relative XX activity And maybe permits that and trend to are shifting over noted over on engaged expectation your the Chalk you release, that seven from activity? follow-up. current to months Austin next

Tom Carter

I delineate trend going for next that play. the activity the XX -- we're think fairway that's more up. more and the definitely activity the we operators, and think that There's of on of will -- of play over results there operators it been XX months. see would There's the turn we restructuring bit say very existing hoping importantly, fair exactly areas play, low-XXs in the months, that little extremes a call unknown. And of some variables lot the core XX we been over continuing in new the But a be where into is we next some the to have with we the high-XXs, see comes of the out, play. the good. But limits of will where amount of to what There's trying a main that.

Derrick Whitfield

Thanks guys. terrific. Very That's helpful.

Jeff Wood

Derrick. Thanks

Operator

ahead. no to the appears back the go further presenters for any will It have we remarks. now Instructions] I turn [Operator closing over questions. call Please

Tom Carter

hope we us we're Well, thank speaking quarter with to next the today. all we to And on. forward and you you. for Thank trend you joining continue look

Operator

conclude participation. for program. today's This you does Thank your

may disconnect. You now

Black Stone Minerals (BSM) 1 Nov 222022 Q3 Earnings call transcript