Black Stone Minerals LP is an oil and natural gas mineral company. It owns oil and natural gas mineral interests, which make up the majority of its asset base. Its business is actively managing an existing portfolio of mineral and royalty assets to maximize its value and expanding asset base through acquisitions of additional mineral and royalty interests.
Performance Overview
Black Stone Minerals LP (BSM, Financial) reported a net income of $68.3 million for Q2 2024, slightly up from $63.9 million in Q1 2024 but down from $78.4 million in Q2 2023. The company’s Adjusted EBITDA for the quarter was $100.2 million, compared to $104.1 million in Q1 2024 and $109.2 million in Q2 2023. Distributable cash flow was $92.5 million, down from $96.4 million in Q1 2024 and $103.6 million in Q2 2023.
Production and Revenue
Mineral and royalty production for Q2 2024 was 38.2 MBoe/d, with total production, including working-interest volumes, at 40.4 MBoe/d. This is a slight increase from 40.3 MBoe/d in Q1 2024 and 36.2 MBoe/d in Q2 2023. The average realized price per Boe was $30.01, a decrease from $30.87 in Q1 2024 and $31.35 in Q2 2023.
Oil and gas revenue for Q2 2024 was $110.4 million, down 3% from $113.2 million in Q1 2024 but up from $103.2 million in Q2 2023. The company reported a loss on commodity derivative instruments of $5.5 million for Q2 2024, compared to a loss of $11.3 million in Q1 2024 and a gain of $11.3 million in Q2 2023.
Financial Position
As of June 30, 2024, Black Stone Minerals had $26.7 million in cash and no debt. By August 2, 2024, the company had approximately $61 million in cash. The borrowing base under the credit facility was reaffirmed at $375 million, with no amounts drawn.
Distribution and Coverage
Black Stone announced a distribution of $0.375 per unit for Q2 2024, consistent with Q1 2024. The distribution coverage ratio was 1.17x. The distribution will be paid on August 16, 2024, to unitholders of record as of August 9, 2024.
Operational Highlights
Black Stone had 62 rigs operating across its acreage as of June 30, 2024, down from 78 rigs as of March 31, 2024, and 73 rigs as of June 30, 2023. The company continued to work with Aethon on development plans in East Texas and focused on full field development in the Austin Chalk formation.
Acquisition Activity
In Q2 2024, Black Stone acquired additional mineral and royalty interests totaling $26.5 million, primarily in the Gulf Coast region. Since September 2023, the company has acquired $65.1 million in mineral and royalty interests.
Hedge Position
Black Stone has commodity derivative contracts in place for 2024 and 2025. The hedge position as of August 2, 2024, includes oil swaps at an average price of $71.45 per barrel for the remainder of 2024 and $71.22 per barrel for 2025. Natural gas swaps are at an average price of $3.55 per MMBtu for the remainder of 2024 and $3.42 to $3.45 per MMBtu for 2025.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Income | $68.3 million | $63.9 million | $78.4 million |
| Adjusted EBITDA | $100.2 million | $104.1 million | $109.2 million |
| Distributable Cash Flow | $92.5 million | $96.4 million | $103.6 million |
| Oil and Gas Revenue | $110.4 million | $113.2 million | $103.2 million |
Management Commentary
"As previously announced, the second quarter distribution is consistent with first quarter's distribution, with the strong foundation of our comprehensive commercial strategy and capital discipline ensuring our ability to focus on long-term decision making. Throughout the second quarter we continued to add strategic, targeted mineral and royalty interest acquisitions that further enhance our existing assets and provide a long runway for development in combination with our organic growth strategy." - Thomas L. Carter, Jr., Chairman, CEO, and President.
Analysis
Black Stone Minerals LP (BSM, Financial) demonstrated resilience in Q2 2024, with a slight increase in net income and stable production levels. However, the decrease in Adjusted EBITDA and distributable cash flow compared to previous quarters indicates some challenges. The company's strategic acquisitions and strong financial position, with no debt and significant cash reserves, provide a solid foundation for future growth. The consistent distribution and coverage ratio reflect the company's commitment to returning value to unitholders.
Explore the complete 8-K earnings release (here) from Black Stone Minerals LP for further details.
