Black Stone Minerals(BSM) - 2024 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2024, was $271,326, a decrease of 35.8$422,549 in 2023[315]. - Total revenue for 2024 decreased by 26.8% to $433,699 from$592,216 in 2023, primarily due to lower oil and condensate sales and a loss on commodity derivative instruments[316][317]. - Adjusted EBITDA for 2024 was $380,946, down 19.7$474,710 in 2023[315]. - Distributable cash flow for 2024 was $349,446, a decrease of 22.6$451,210 in 2023[315]. - Cash flows provided by operating activities decreased by 25.4% to $389,043 in 2024 from$521,251 in 2023[332]. Production and Sales - Oil and condensate production decreased by 4.0% to 3,606 MBbls in 2024 from 3,757 MBbls in 2023[316]. - Natural gas production decreased by 2.6% to 62,984 MMcf in 2024 from 64,647 MMcf in 2023[316]. - The average net natural gas exports in 2024 were 12.0 Bcf per day, a 1% increase from 2023, with forecasts of 14.1 Bcf per day for early 2025, an 18% increase[299]. Commodity Prices and Market Conditions - The average WTI spot crude oil price in Q4 2024 was $72.44 per barrel, while the Henry Hub spot natural gas price was$3.40 per MMBtu[293]. - The company operates in a volatile commodity price environment, with oil prices rising early in 2024 but declining later due to market oversupply concerns[292]. - A 10% discount applied to commodity prices resulted in an approximate 1.5% reduction in estimated proved reserve volumes as of December 31, 2024[355]. Hedging and Risk Management - The company hedged 77% of its available oil and condensate hedge volumes and 82% of its available natural gas hedge volumes for 2025 as of December 31, 2024[309]. - The company utilizes various derivative instruments to manage cash flow variability, including fixed-price swap contracts and costless collar contracts[291]. - The company utilizes commodity derivative financial instruments to mitigate exposure to price volatility in oil and natural gas, with contracts settling monthly in cash[362]. - The company does not currently have any interest rate hedges in place[366]. - The company may consider using derivative instruments to hedge exposure to variable interest rates in the future[366]. Capital Expenditures and Investments - The 2025 capital expenditure budget for non-operated working interests is expected to be approximately $2.3 million, primarily for workovers and recompletions on existing wells[335]. - Expenditures for drilling, completion, and recompletion costs were$0.8 million in 2024 and $4.2 million in 2023, with lease acquisitions costing$3.4 million in 2024 and $0.6 million in 2023[336]. - In 2024, the company acquired mineral and royalty interests for an aggregate of$110.4 million, funded by $109.4 million in borrowings and$1.0 million through common units issuance[337]. Debt and Financing - The senior secured revolving credit facility has a maximum credit amount of $1.0 billion, with a borrowing base reaffirmed at$550.0 million in April 2023 and increased to $580.0 million in October 2023[340]. - The company had weighted average outstanding borrowings of$7.7 million under its Credit Facility[366]. - The weighted-average interest rate on the borrowings was 7.5%[366]. - A 1% increase in the interest rate would result in an increase in interest expense of less than $0.1 million for the year ended December 31, 2024[366]. - Interest expense increased by 12.9$3,109 in 2024 from $2,754 in 2023[327]. Future Outlook and Plans - In 2024, the company entered into Accelerated Drilling Agreements with large operators, resulting in 2 gross (0.4 net) wells turned-to-sales (TTS) and an expectation of 11 gross (0.6 net) additional wells TTS in 2025[286]. - The company expects Aethon to turn-to-sales 17 gross (1.1 net) additional wells during 2025, with initial rates between 20 – 30 MMcf/d[285]. - The company plans to continue targeted mineral and royalty acquisitions to complement existing positions[337]. - The next semi-annual borrowing base redetermination is scheduled for April 2025[340].