Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to today's Black Stone Minerals’ 2Q Earnings Conference Call. [Operator Instructions] Please note, this call may be recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Mark Meaux, Director of Finance. Please go ahead.

Mark Meaux

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

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

a should the information press cautionary For XXXX Factors these of in from release discussion our risks, Risk refer to our statements forward-looking you section the and yesterday of about XX-K.

financial in yesterday, release are non-GAAP metrics those these our website we We are GAAP at Reconciliation directly of about in to measures evaluating press be to performance. and our may useful from the most found measure non-GAAP www.blackstoneminerals.com. on which described measures can comparable certain believe our information that other refer earnings

President and Geology; Chairman Garrett the President, Clark, Joining Carter, are Senior Tom Treasurer; Interim CEO; President, Officer Evan the and Kiefer, Vice Thad Land company Montgomery, on call Chief Vice Carrie and from Gremillion, Financial me of Land. and Engineering and Commercial; Vice

now to call Tom. over turn the I’ll

Tom Carter

today Thank you, us second thank discuss to Mark. joining Good morning for our to of everyone and on the you call, quarter XXXX.

over is of fifth a adjusted generated adjusted million the quarter, with posted the Black EBITDA quarter line $XXX first of where million Stone consecutive a the quarter solid EBITDA. This We with in $XXX for quarter has results. second

and quarter from from hedge cash the XX,XXX gas as BOE day, from X% prices the to was decrease price the but decreased high total we day, the rate for driver We per wells decline production performed a per the in came Despite portfolio in saw we volumes of XX,XXX generated XX% flow of quarter Haynesville, Royalty movements. interest, help at quarter the last natural several XXXX. Primary XXXX. volumes X% gas volumes half as it insulate above production natural second online quarter in and high initial reduced Louisiana was of second production, BOE first of of intended volumes. the decline that natural saw our our significant in pullback

quarter to Oil of in quarter as production XX meet market. held first rigs new by wells in of up well Counties. the location activity San Angelina to and five Trough year the the development Augustine on into volumes the in quarter in continues is due expected moved the minimum to ramp Shelby Aethon the and per pace end the the year and up

been have are Aethon agreement various or our in turned of wells the production second XX XX that drilling completing our the stages Trough and to Shelby of under with development sales expect the date, year. To in we in benefit half to

operator existing been it’s Austin an in put position next In accelerate working new keep deals on to place wells the new And we in development reached wells East and addition, two further Texas completion acreage to sales generation concentrated the over acreage. exciting play, will continued our ten the see in to years. long-term momentum to production our field drill We’ve agreement in an have turned in Chalk. XX to multistage the with

in with the rigs U.S. the second an the Permian, XX% saw we activity quarter, on running as primarily in our rig only rigs decrease in decrease in of in XX acreage that an quarter, As currently experienced June X% operating XX.

Permian for seen Aethon importance the seen operators acreage. maintain normal driven like movements that help that consistent our highlights second rig drilling flow ebb will acreage and mainly high-interest on offset the from of back agreements rig activity decreases count the of on XX, and quarter. working to our increase As long-term was the of yesterday, in the development our an to This with

per to flat first distribution. Last week, quarter our distribution announced the we our second quarter of unit, for $X.XXX

$XX the high distribution of cash over in a prior Black to million for since the have watermark public. We payment new going Stone and

investors. continue We cash flow to that returning prioritize to our

With that, I to over will Evan. turn it

Evan Kiefer

Thank And good you, Tom. morning everyone. to

quarter was per first Tom per to as So which quarter. day. royalty for totaled down And was the quarter for our X% total volumes the XX,XXX mentioned, day, BOE BOE relative second production XX,XXX the

was the $X.XX prices hedges were WTI for for where at prices quarter the our And hedges the gas $XX driven increased averaged new primarily fourth Gas Hub with at barrel the realizations second Henry The averaged prices quarter of XXXX, realized prices. quarter XXX% production MMBtu. of on revenues before in averaged for quarter at over from by the that $X per a wells and Oil MMBtu. amount. in XX% Henry prices per before realized came Hub our

of year. the the average per a to place in to have volatility emphasize was decrease for short-term we quarter a hedge continues comparison, prices in program gas importance This the represents the XXXX, commodity short-term ago, $X.XX over prices the which last year natural For in mitigate gas XX% prices. MMBtu, these – second in of

and a On compared prior after realized oil the for hedges brought $X.XX process and our of year. were barrel XXXX quarter, this second an continued MMBtu $XX.X over the hedges $XX hedge basis, per with And realized in hedges, gas. adding systematic have BOE to our quarter. per for gains In messaging, prices of consistent we throughout of increase the represents X% first over million

per is gas per natural at $XX for MMBtu and price strike over barrel. crude approximately $X.XX current Our

our continue that of end by to year. XXXX of expect volumes the the hedge approximately XX% will we So, be

and cash million EBITDA second both quarter the generated first of results. $XXX.X We These the of distributable adjusted for with consistent $XXX.X million flow are quarter.

cash this $XX to strong We continue and where have balance prior of debt very distribution currently the is consecutive million quarter $X later to we’ve this sheet, and second maintain a the had outstanding over month.

of in Board maintaining existing generated our coverage revolver which of supported the quarter. the the translates times and Directors per X.XX given So, distribution to for $X.XXX has unit, undrawn the quarter, cash

consolidated We as year. a do year back agreement. a original to full the as in In ramps slowdown that’s due prices we production in and of the the for slightly our guidance original natural earnings production continue production volumes with the XX,XXX growing up to gassier our BOE per gas. maintained the Haynesville day guidance for Louisiana we development our saw guidance XX,XXX pull consistent yesterday, expect to Aethon original mix release compared Shelby Trough for seeing Our year

last helped of to remained mentioned, prices rebound this seen of the lower that all offset Tom over has natural July year. Permits the consistent. headwinds rig count acreage some on three quarters our And in gas the

expect We range. on the to a continue in our to production acreage. in And as see our activity half be we modest improvement by of guidance the second encouraged by indicated year

with it questions. to open so I will up And that,

Operator

first Our ahead. from with question Instructions] Please Markets. [Operator comes KeyBanc go Capital Rezvan Tim

Tim Rezvan

the the of you year. was? a little thought? Is you want Haynesville, of it look Great. Can you guess two trajectories Austin little on about Good comments, what to SKU. morning gassier folks, in little those as talked the thank of more but kind walk assets guided than Chalk Evan, Or guess you place, less it’s guidance for to little a taking what end I a gassier. follow-up of to I a you my you sort just through your that I the question. getting

Evan Kiefer

Yes, morning And the Tim. for good thank question. you

Evan So this stab first that. I’ll is and a at take

wells little have several And so, a the mix. in the towards we’ve year we initial this did some shifted seen yes, One, on Chalk. just pushback that the a things bit gassier going in focus on Austin that estimates of

also the half some little a the estimates Haynesville benefit than come year, a shift but little the also for year. from We increased bit of from in we coming the of little lower forecasted that above Permian the originally saw beginning at a of side first bit has the in a

combination those kind slightly really at beginning. to year we things were mix increased what’s gassier several looking a what the the is driving compared the So, for of of

Tom Carter

little I just chime that in can Evan, on a bit.

are thousand XX higher liquids million. of coming a liquids of more with we core done are drilled, even some really areas that per of of been been get that's cubic volume of XXX been see in that next out it gassy the per year. anywhere that per variable liquid With and the hard deeper working to to play volumes pretty the areas more the of is highest to And so being in the gas, Austin developed million lot in in has from respect – that's some really may which Chalk, hadn't – see we drilling from ranges barrels the BOE and yet, that area feet

Tim Rezvan

where the that payout. number been a you it you keep three quarters. wanted I the then And want with context. that afford appreciate sort the that $X.XXX sheet to distribution, for Is on obviously I baseline of straight intact balance can some high ask sense there to has Okay. is,

been a for straight need number XX% to deliver the a there's is thinking Or you Obviously, three what better. quarters. for kind quarters? about of gas quarterly at straight looks a same consistent market little You've two payout feel Board like with Do distribution? that

Evan Kiefer

this answering that. start is I'll Tim, Evan. Yes,

being DCF I each with one and in basis. first $X.X a other and did the million And within quarter close on fairly second so almost think come

the quarter. mentioned, where the that on today coverage up ratio. higher what comfortable under strip was year, we the And as with today, you where first just kind the call increase payout really maintain remainder the a third which to just even going of it, through of XX% looking saw quarter in one, from at so, And saw natural and felt balance to sheet were we is gas $X.XX,

maintaining So that we're – we can. best like as distribution we do

does quarter at closer above the right the to that $X. gas through pricing into and least with even some help on there's think now, fourth that I that third prices quarter momentum being

the maintain like think, year to sheet we And yes, forecast we're second the ability the that with looking currently strength for balance of the so the allows and I at that. half that,

Tim Rezvan

curious the thanks you of was any to for is could Circling thinking any months So And from Board a there's is color rate? going away. or rate preferreds now Okay. repeat a XQ sneak to I then back what the quarter. on going question if variable in. than I for kind that. Thanks provide. management preferreds, on more those can update I'm two one less if and the last with

Tom Carter

you want Evan, on that ahead to do one? go

Evan Kiefer

Yes, question, definitely internally. looking Yes. something it's we've great a and it's at been Thanks, Tim.

a yes, of to this basis And in does XXX November year rate that so, going XX-year treasury plus reset points.

bit And X%. so a of little relative north it at looking X% that's at rates where today, to we're the

quarter. our changed from so hasn't last much too view And the really

so and looking when years something last and in it's that the material Noble at that the over fantastic we're yes, not with were quarter. where there, so can And there's the that is And maybe preferred it do really from the maintaining but been from put partner acquisition, we at. a something they've we place looking any change we

Tim Rezvan

Fair Thanks. Okay. enough.

Operator

Derrick Whitfield next comes with The Stifel. ahead. question Please from go

Derrick Whitfield

Good your morning, agreement. on all, new Austin and Chalk congrats

Tom Carter

Good morning, Thanks. Derrick.

Derrick Whitfield

XXXX For focus my to I first on guidance. question, wanted your

the the for XXXX up midpoint trajectory balance on and X,XXX guidance, up about the gas about X down barrels cubic sorry, implied of on, oil well. Assuming feet of is on as million

what primary see oil oil do seeing in on driver trends of specifically, growth on Focusing activity lower that shore? light the as we're of you

Evan Kiefer

Thanks fantastic Derrick. a yes, And question.

high relative will produce to of in come helped come that quarters. into wells where has first, online wells we're line have soon in that the next that looking this the sight a quarter have we some or activity really to online acreage continue at; had of do And expect on have things out second of see will We which those our some with of we couple Bakken, Permian. so to the one, the couple interest off

kind a on the So in some gas through a of the the focused going little from benefit bit up Permian as really we second do Bakken of the of the side half move and well. then see year,

Derrick Whitfield

of the as stand for are better if my to realizations speak as we price And your could QX, considerably than ask here the realizations, follow-up, today? drivers with industry QX for to there respect Terrific. expectations and you guys you wanted gas to some your

Evan Kiefer

Sure, Derrick.

in And volumes quarter the of the particular benchmark last so booked. a came of at them second yes, from recognized revenues fourth came quarter. any for in well. was production the that that actually And we we came really, handful we drove quarter that year, of was in and in wasn't There XXX% that what that

mineral as so company, we And a delay as initial production checks you're on from there an is aware to that that. inherent see when

the higher those of a really drove some of side some especially on And so quarter. it's gas prices, just filling this wells in natural of that the

Derrick Whitfield

your for Thanks Terrific. time.

Tom Carter

Thank you, Derrick.

Operator

Instructions] [Operator

Tom Carter

don't Okay. If we have any?

Operator

interruption. the Pardon

James. one Please Trafford Lamar from Raymond more with ahead. go We question have

Trafford Lamar

my Hi. Guys. Thanks taking questions. for

all or just details tell could if was you the any you'll additional agreement, wondering color I Longroad any willing date development to First, lease anything provide be start us? possibly on or

Carrie Clark

this Hey, Carrie Sure. is Clark.

the Assuming a look try you another excited It's extracting are press provide own more to right on doing just I that always the to for any and it. manage was don't than We're way other us for to of we now what we release, release. details the think saw assets option about value as we're we Longroad and out have the about it. at in excited arrangement press

view concept it seen I currently it's as stands than a different think solar this in development today. we've before

much to point. sense gas royalty quite especially owner being what very the good technology that solar unique we're using emerging this transition. just into and create we a really core game that what position something competency together Oil active and is can there's help again, again in not for It's be and it of hydrocarbons possible best sort energy and but able we're So really scale. hoping certainly projects what good still scalable do has, bit for really we're at, at future, our our optimistic to case scenario Longroad of and looking the always successful about is the an that it we're makes this something – and might do on to

we'll add this to things definitely time, the develop. more to speak in it but at as much future not So

Trafford Lamar

discretion? year? drill purely of Thanks for well that second, the kind wells on year a Yes. at have to then is on XX here know Okay. and I BSM agreement, look And the under Angelina a to that. they're on any But requirements County on do Aethon completions agreement their acreage. they Or obligated

Evan Kiefer

Evan. Yes. This is

with so timely great given gas really a it's and Louisiana And prices. question where prices just are in

a provision so where so have them they to there And wells to complete get is yes, and drill in there, the online.

Trafford Lamar

Okay. Perfect. guys. Thanks

Tom Carter

Thank you.

Operator

no are additional presenters questions time. there further over now remarks. this the appears for turn our back It any at I program to will

Tom Carter

all look next today, much forward All you we the for speaking right. Well, thank you joining and to call quarter. very with

Operator

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

may time. at You disconnect any

Black Stone Minerals (BSM) 1 Aug 232023 Q2 Earnings call transcript