Black Stone Minerals LP

Good day and welcome to the Blackstone Minerals fourth quarter and year-end earnings call. At this time, all participants are in a listen-only mode. Later, there will be a question and answer session. You may queue for a question at any time by pressing the star key followed by the number one on your telephone keypad. Please be advised that today's conference is being recorded. If you require operator assistance, please press star zero. I'd now like to turn the call over to Mark Moe, Director of Finance. Please go ahead.

Thank you. Good morning to everyone. Thank you for joining us either by phone or online for Blackstone Minerals fourth quarter and full year 2023 earnings conference call. Today's call is being recorded and will be available on our website along with the earnings release, which was issued last night. Before we start, I'd like to advise you that we will be making forward-looking statements during this call about our plans, expectations, and assumptions regarding our future performance. These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements. For discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the risk factors section of our 2023 10-K that we expect to file later today. we may refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of those measures to the most directly comparable GAAP measure and other information about these non-GAAP metrics are described in our earnings press release from yesterday, which can be found on our website at www.blackstoneminerals.com. Joining me on the call from the company are Tom Carter, Chairman, CEO and President, Evan Keefer, Senior Vice President, Chief Financial Officer and Treasurer, Terry Clark, Senior Vice President, Land and Commercial, and Steve Putman, Senior Vice President and General Counsel. I'll now turn the call over to Tom.

Good morning to everyone on the call, and thank you for joining us today to discuss our fourth quarter and full year 23 results. We posted strong results with adjusted EBITDA of $125.5 million for the quarter, bringing us to $474.7 million in 2023. We generated total production volumes for the fourth quarter of 41.4 thousand BOE per day, 2% above the upper end of our full-year guidance range. Royalty volumes for the quarter were 38.9 thousand BOE, where we saw oil volumes trend down in the Bakken and Eagle Ford, but were offset by an increase in Midland Dell. We also saw a modest decrease in natural gas volumes, primarily in Louisiana Hainesville, conforming with natural gas trends in our industry. Yet we see the glass is half full. To date, 39 wells have been turned to sales in the Shelby Trough under our development agreements with ATHON. We announced in December that Athon elected to use a timeout provision in our development agreement that specifies that when prices fall below a certain threshold, they may elect to temporarily suspend contractually obligated drilling on our acreage. At this time, we do not expect a timeout. uh will impact the next 12-month cycle for the drilling and completion of aethon operated wells that were spud prior to the timeout and in fact aethon has indicated they may drill additional wells during the timeout period and have actually begun operations on several we are working closely with aethon to determine the effects of the timeout as we focus on longer-term expectations for production in 2025. We had 63 rigs running on our acreage at the end of the quarter, representing approximately 10% of the U.S. rig count and a reduction of 13 rigs compared to the third quarter. Like most in our business, we are seeing general slowdown in drilling in the Haynesville and Gulf Coast, as a response to lower natural gas prices. With oil prices remaining around the $70 per barrel range, we did see a small increase in Midland Delaware and the Bakken play trends. We previously announced that we were maintaining our 47.5 cents per unit for the last quarter, or $1.90 on an annualized basis. which, as reported yesterday, represents 1.19 times coverage for the quarter. Despite the challenges with natural gas prices, we've been able to maintain a strong balance sheet throughout the year and hold distributions at its highest level since going public. Due to the suppressed price environment, we may be in a position where, at current distribution rates, we could fall below one times coverage something we likely would not let stand, implying a possible reduced distribution until pricing recoveries. In 2022, we mentioned that we expected to grow production through 23 with a target exit rate close to 40,000 BOE per day, and were able to execute and exceed those expectations. As we enter 2024, there are headwinds. But due to the quality of our acreage and no debt on our balance sheet, we adjusted our commercial efforts to be proactive in a down cycle and have included targeted mineral and royalty acquisitions that complement our existing acreage position. In 2023, we acquired non-producing minerals and royalties totaling $15 million. Our strategy in 24 includes a continuation of targeted acquisitions that support our commercial initiatives and provide long-term, accretive growth to our unit overall. Overall, it's a strong quarter, and despite challenging commodity price environment, we remain encouraged by the long-term natural gas outlook as we continue to make progress on strategic initiatives in 24 and beyond. With that, I'll turn it over to Evan.