Black Stone Minerals(US:BSM)2024-02-20 18:54Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $125.5 million for Q4 2023, totaling $474.7 million for the full year [2] - Total production volumes for Q4 were 41,400 BOE per day, exceeding the upper end of the full year guidance by 2% [2] - Royalty volumes for the quarter were 38,900 BOE, with a noted decline in oil volumes in Bakken and Eagle Ford, offset by increases in Mid/Del [2][3] - The distribution for the last quarter was maintained at $0.475 per unit, representing a 1.19x coverage for the quarter [3] Business Line Data and Key Metrics Changes - The Permian position is expected to remain stable, while a decline is anticipated in the Bakken due to maturation [5] - A modest decrease in natural gas volumes was observed, particularly in Louisiana Haynesville, aligning with industry trends [19] - Lease bonus and other income for Q4 was $3.8 million, with a total of $12.5 million for the full year [41] Market Data and Key Metrics Changes - Henry Hub averaged $2.74 per MMBtu in 2023, with natural gas hedges providing over $80 million in realized gains [6] - The company expects natural gas prices to average $3.55 per MMBtu in 2024, with oil hedges above $71 per barrel [6] Company Strategy and Development Direction - The company plans to continue targeted mineral and royalty acquisitions to support long-term growth, having acquired $15 million in non-producing minerals in 2023 [39] - The strategy includes expanding growth into buying minerals in the Gulf Coast, with expectations to significantly increase acquisition amounts [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a general slowdown in drilling due to lower natural gas prices, but remains optimistic about long-term gas exposure and unit price [7][20] - The company is adjusting its commercial efforts to be proactive in a down cycle, focusing on strategic initiatives for 2024 and beyond [39][25] Other Important Information - The preferred units' rate reset in November 2023 to 9.8%, and a $150 million unit repurchase program was initiated [7] - The company maintains a zero debt balance and has $103 million in cash ahead of the fourth quarter distribution [42] Q&A Session Summary Question: Expansion of growth strategy into Gulf Coast - Management indicated that the $15 million acquisition is small compared to peers, but they expect to expand this significantly [30] Question: Thoughts on repurchase program versus maintaining distribution - Management expressed a preference for repurchasing shares at current prices rather than maintaining a distribution that exceeds cash flow coverage [31][47] Question: 2024 guidance and Aethon DUCs conversion to production - Management expects a lumpy production increase with some wells coming online in the first half of the year and more towards the end [51] Question: Impact of E&P consolidation on business - Management believes operator consolidation could be beneficial, leading to efficiencies that may positively impact mineral owners [57]