Q3 2024 Black Stone Minerals LP Earnings Call
Hello, everyone and thank you for joining us today for this black Stone minerals Q3, 2024 earnings conference call. As a reminder, all phone participants are in a listen only mode. But later you will have the opportunity to ask questions. During our question and answer session. Today's session is also being recorded and to get US started with opening remarks and introductions I am pleased to.
Turn the floor to director of Finance, Mr. Mark <unk>. Please go ahead Sir.
Mark <unk>: Thank you operator, good morning to everyone and thank you for joining us either by phone or online for Black Stone Minerals' third quarter 2000, Q4 earnings Conference call. Today's call is being recorded and will be available on our website along with the earnings release, which was issued last night before we start I'd like to advise you that we will be making forward looking statements. During this call.
Mark <unk>: And our plans expectations and assumptions regarding our future performance.
Mark <unk>: Even small risks that may cause our actual results to differ materially from the results expressed or implied in our forward looking statements for a discussion of these risks you should refer to.
Mark <unk>: Cautionary information about forward looking statements in our press release from yesterday and the risk factors section of our 2023 10-Q10-K, we may refer to certain non-GAAP financial measures that we believe are useful.
Evaluating our performance reconciliation of those measures to the most directly comparable GAAP measure and other information about these non-GAAP metrics are described in our earnings press release from yesterday, which can be found on our website at www Dot Blackstone minerals Dot com joining me on the call from the company are Tom Carter Chairman.
Mark <unk>: <unk> CEO and President tailored Walsh, senior Vice President and Chief Financial Officer, and Treasurer, Terry Hart Senior Vice President and Chief Commercial Officer, and Steve Putman, Senior Vice President and General Counsel I'll now turn the call over to Tom Thanks, Mark.
Tom Carter: Morning, and thanks for joining US today, we had a successful third quarter and as previously announced maintained our consistent distributions.
Despite a decrease in production from last quarter, driven by volatility in the natural gas.
Tom Carter: Area throughout the year during the quarter, we progressed, our mineral acquisition program and we continue working with our partners for a long term development.
We remain confident in the outlook across our acreage position and are focused on our targeted acquisition strategy cheaper to further enhance our existing long runway of high interest development opportunities.
Mark <unk>: On the acquisition front, we continue to expand our asset footprint through the targeted grass roots acquisition program. We've previously discussed throughout the year during the quarter, we added about $15 million in minerals and royalty assets, along with a substantial lease all of which further build a can.
Mark <unk>: <unk> asset for an operator for long term development.
Thus far we have acquired about $80 million in minerals and royalty interest since the fourth quarter.
Mark <unk>: 2023, and plan to continue pursuing accretive opportunities, which will ultimately drive long term value for our shareholders.
Mark <unk>: In East, Texas and Louisiana.
Mark <unk>: We continue to work with multiple operators to promote development on our acreage. While we also monitor the current commodity environment and prepare for the anticipated improvements.
Mark <unk>: And the natural gas market.
Mark <unk>: In the Shelby trough. Another three wells were brought online by <unk> in the third quarter with initial production rates in the 20% to 25 million cubic feet per day range. We recently signed amendments to our existing joint.
Mark <unk>: Joining exploration agreement.
Mark <unk>: And are currently.
Mark <unk>: Looking at them operating one rig in fracking multiple wells in Angelina County on the Louisiana side of the play Comstock recently.
Mark <unk>: <unk> online multiple wells in the Toledo Bend area for about 25 million cubic feet per day and were excited about the ongoing activity in this area as we work with multiple operators promote near term development.
Mark <unk>: Overall was a successful quarter and we will continue to maintain our strategic objective of working with operators to achieve full development across all of our assets with the goal of accretive production growth through this active asset management and targeted acquisitions.
Speaker Change: With that I'll turn it over to Taylor to walk through the financial details of the quarter.
Taylor: Thanks, Tom and good morning, everyone as Tom pointed out we had a successful quarter. Despite continued commodity price volatility.
Taylor: And royalty production was $35 3000 Boe per day in the third quarter and total production volumes were 37, 4000 Boe per day, both of which were down a bit from last quarter. We maintained our updated guidance for the first quarter and continuing to thoughtfully reviewed current market dynamics.
Taylor: Net income was $90 $7 million for the third quarter with adjusted EBITDA being $86 $4 million.
Taylor: 63% of oil and gas revenue in the quarter came from oil and condensate production.
Taylor: We maintained our distribution at 37 five cents per unit for the quarter were $1 50 on an annualized basis distributable cash flow for the quarter was $78 $6 million, which.
Taylor: <unk> approximately one times coverage for the quarter.
Taylor: Our solid balance sheet and ample liquidity gives us flexibility through these dynamic market cycles. It provides the opportunity to focus on commercial opportunities in the short and long term. We appreciate working with our banking partners and as of November 1st our credit facility was reaffirmed at $580 million with total commitments remaining at $375 million.
Taylor: And there are currently no outstanding borrowings on our revolver.
Mark <unk>: As of the end of last week, we had approximately $43 million of cash.
Mark <unk>: We are well hedged for the remainder of the year, our 2024 natural gas hedges are at approximately $3 55 per M. Btu.
Mark <unk>: And comparing that to an average price at Henry hub of $2.16 for the third quarter, we benefited with the gas settlement of approximately $15 million, we have over 60% of our expected gas and oil volumes hedged for the remainder of 2024. It will help insulate our cash flows for near term price volatility. We also have attractive hedges.
Mark <unk>: Place for 2025, and we will maintain our strategy of adding on additional hedges for 2026.
Mark <unk>: Again, we had a successful quarter and will continue to focus on generating long term value for our shareholders with that I'd like to open the call for questions.
Speaker Change: Gentlemen, thank you and to our audience joining today on the phones. If you would like to ask a question simply press star and one on your Touchtone phone you may remove yourself from the queue at any time by pressing star into once again that is star and one to ask a question, we'll pause for just a moment to assemble our queue.
Speaker Change: We will hear from Tim resident at Keybanc capital markets.
Tim: Hey, good morning folks and thank you for taking my question I'd like to start first with the the Athos <unk> update that you provided.
Tim: I know you kind of put some factual terms around there.
Speaker Change: Can you step back and give us kind of an idea on how you see activity level sort of it's sort of trending going forward I think the market consternation was on how 2025 volumes with box.
Speaker Change: You could kind of just sort of step a picture and say what is this amendment kind of what sort of visibility do you have over the next couple of years on activity.
Speaker Change: Okay.
Speaker Change: Thanks, Tim This is Taylor.
Speaker Change: Maybe just start off in first off just want to say I. Appreciate your report.
Speaker Change: Unless I have this morning.
Speaker Change: So just generally speaking I think taking a step back and looking at the entire macro picture, we're certainly being thoughtful and thinking about natural gas activity across the entire basin and we continue to work with our operators across all of Louisiana and East, Texas as mentioned in.
Mark <unk>: Tom's remarks, a little bit earlier.
Mark <unk>: As it relates to Athens, we continue to work with them as well.
Mark <unk>: And.
Mark <unk>: Certainly.
Mark <unk>: Appreciate the activity in the.
Mark <unk>: Current rig that theyre running in the area and we will continue to work with all of our partners.
Mark <unk>: So I hope that answers your question.
Speaker Change: So is that a way of saying you think theres going be one dedicated rig.
Mark <unk>: On the area of interest.
Mark <unk>: Okay.
Mark <unk>: Yeah.
Speaker Change: I would say as far as exact rig activity, what I would say about asos activity just in the whole is that we continue to see them being active in the area and.
Speaker Change: As we've seen historically, they're going that route.
Mark <unk>: Maintain a level of commitment.
Mark <unk>: That.
Mark <unk>: They've been working and we're going to continue to work with them in developing the Shelby trough.
Speaker Change: Okay. Okay, I appreciate that and then.
Speaker Change: If I could pivot to the Gulf Coast area.
Speaker Change: Another kind of magic quarter of acquisitions about $15 million and you've talked about the progression.
Speaker Change: Is this cadence of acquisitions is that reflective.
Speaker Change: The ability to get deals done or are you trying to be measured about that the spending like theoretically could you spend 50 or $100 million. If something came up next quarter just trying to understand.
Speaker Change: It sounds like there's a big opportunity set but I'm just trying to understand that the measured spending to date.
Speaker Change: And maybe where you think you could take that thanks.
Speaker Change: Yes, Thanks, Tim that's a good question.
Speaker Change: What I'd say is we're continue to be thoughtful in the current market and our ability to add.
Speaker Change: Acquire additional minerals in this area in the Gulf Coast that we're looking at it.
Speaker Change: I would say that we've reached a cadence that we.
Speaker Change: We feel pretty comfortable about.
Mark <unk>: But we continue to look on a quarterly monthly basis at what opportunities there are NSS those on an individual basis.
Mark <unk>: Okay.
Speaker Change: Thank you.
Speaker Change: And again to our phone audience that is star one if you would like to ask a question.
Mark <unk>: Okay.
Speaker Change: Gentlemen, we have no signals from our phone audience I'll turn it back to you for any additional or closing remarks.
Mark <unk>: Okay well. Thank you all we don't have any additional questions and.
Mark <unk>: Again.
Mark <unk>: We thank you for joining us today, and we look forward to talking with you next quarter.
Speaker Change: Ladies and gentlemen, this does conclude today's Blackstone minerals conference call and we thank you all for your participation you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: Okay.
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