Black Stone Minerals(BSM) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported total production volumes of 39.3 MBoe/d for the first quarter, an 8% decrease from the fourth quarter [16] - Adjusted EBITDA was $109 million and distributable cash flow was$104 million, both up 11% to 12% from the first quarter of 2022 [19] - Realized prices per Boe for the first quarter were approximately $33 per barrel, a decrease of 35$51 per barrel in the fourth quarter [10] - The borrowing base for the revolving credit facility was reaffirmed at $550 million, with$375 million in commitments [11] Business Line Data and Key Metrics Changes - Royalty volumes for the first quarter were 36.8 MBoe/d, which is 24% above the first quarter of 2022 [17] - The company turned to sales 20 wells in the Shelby Trough under development agreements, with six new wells since the beginning of the year [6] - The company has 21 new generation multistage completion wells turned to sales in the East Texas Austin Chalk, with potential for an additional 14 wells this year [6][21] Market Data and Key Metrics Changes - The company experienced a decrease in rig activity on its acreage, down from 108 rigs at the end of the previous year to 78 rigs as of March 31 [18][35] - Permitted activity in the first quarter remained consistent with the fourth quarter, with over 400 horizontal permits added on the company's acreage [7] Company Strategy and Development Direction - The company aims to continue developing through commodity cycles, expecting to add long-term value to its unit holders [19] - The company is focused on organic initiatives and long-term development deals to accelerate production with minimal capital requirements [32] Management's Comments on Operating Environment and Future Outlook - Management noted challenges with natural gas prices but expressed confidence in maintaining the highest distribution level as a public company at $0.475 per unit [19] - The company expects to see growing volumes from Aethon and the Austin Chalk, which may mitigate risks from other areas [28] Other Important Information - The company’s hedging strategy brought in over$13 million for the quarter, with hedge natural gas prices over $5 per MMBtu [33][36] - The total debt balance was$0 at the end of the quarter, with $66 million in cash on the balance sheet [22] Q&A Session All Questions and Answers Question: Update on 2023 guidance - Management indicated that they typically update guidance mid-year and are currently assessing the gas price environment and rig counts before making any updates [23] Question: Payout ratio and distribution policy - Management stated they are comfortable maintaining a lower coverage in the near term and aim for a stable to slightly growing distribution [27] Question: Oil cuts and production impact from the Austin Chalk - Management expects to see significant volume ramp-up in Q3 and Q4 from the Austin Chalk area [29] Question: Buybacks and capital structure - Management is considering buybacks but does not have aggressive plans currently, focusing on maintaining a clean balance sheet [46][50]