Black Stone Minerals(US:BSM)2022-02-22 19:45Financial Data and Key Metrics Changes - The company reported realized prices in Q4 2021 of over $73 per barrel of oil and $5.40 per Mcf gas, with prices up 14% from Q3 and doubling from Q4 2020 levels [8][9] - Adjusted EBITDA for Q4 was $77.6 million, slightly up from the previous quarter, while distributable cash flow was $71.3 million, also an increase from the last quarter [26] - For the full year, adjusted EBITDA totaled $292 million from 38,000 Boe per day of total production, with distributions paid amounting to $0.945 per unit [27] Business Line Data and Key Metrics Changes - Royalty volumes in Q4 totaled 35.2 MBoe per day, up 7% from Q3, driven by increases in Bakken, Louisiana, Haynesville, and Midland, Delaware production [9][22] - Working interest volumes continued to trend down in Q4 due to the decline of legacy production from Shelby Trough wells, with royalty volumes now representing 90% of total production [10][11] Market Data and Key Metrics Changes - The company had 95 rigs operating on its acreage at the end of the year, up over 60% from 59 rigs at the end of Q3 and more than doubling from 38 rigs at the end of 2020 [9] - The average spot price for gas in Q4 was $4.75 compared to an average settlement price of $5.83, with realized gas prices at $5.40 being 114% of the daily spot average [24][25] Company Strategy and Development Direction - The company is focusing on organic growth strategies, prioritizing new drilling activity on existing acreage rather than acquisitions, which is seen as providing higher returns to shareholders [16][17] - The company is optimistic about the Haynesville play benefiting from continued growth in LNG export volumes and is actively seeking to enhance drilling activity across its mineral portfolio [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the upcoming years, citing a strong balance sheet and a robust portfolio of growth opportunities [21] - The company expects royalty production in 2022 to be relatively flat compared to 2021 levels, with anticipated production gains in the Permian and Louisiana Haynesville plays offset by declines in legacy wells [28] Other Important Information - The company ended the year with $89 million drawn under its revolver, with a $400 million borrowing base, and reduced its debt balance to $58 million [31] - Management indicated that G&A expenses are expected to increase slightly due to normal cost inflation and selective hires to drive organic growth initiatives [30] Q&A Session Summary Question: Can you quantify the impact of prior period adjustments in Q4? - Management indicated that approximately 4,000 Boe per day was impacted through new well activity in Q4 due to timing of checks received [33] Question: What is the outlook for 2022 guidance regarding production? - Management clarified that while they expect a step down in production initially, they anticipate a slight increase in oil volumes throughout the year, particularly in the second half as new wells come online [46][47] Question: What are the plans regarding undeveloped acreage and payout ratios? - Management stated there are no divestiture plans, focusing instead on maximizing cash flow from existing assets, with expectations for payout ratios to increase as debt levels decrease [49][50]