This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Please stand by. Your conference is about to begin. Should you require operator assistance today, simply press star and zero. Hello, everyone, and thank you for joining us today for this Blackstone Minerals Q3 2024 earnings conference call. As a reminder, all phone participants are in a listen-only mode, but later you will have the opportunity to ask questions during our question-and-answer session. Today's session is also being recorded, and to get us started with opening remarks and introductions, I'm pleased to turn the floor to Director of Finance, Mr. Mark Moe. Please go ahead, sir.
spk03: Thank you, Operator. Good morning to everyone. Thank you for joining us either by phone or online for Blackstone Minerals' third quarter 2024 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 in the risk factors section of our 2023 10-K. 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 of Taylor DeWalch, Senior Vice President, Chief Financial Officer and Treasurer, Kerry Clark, Senior Vice President, Chief Commercial Officer, and Steve Putman, Senior Vice President and General Counsel. I'll now turn the call over to Tom.
spk00: Thanks, Mark. Good morning, and thanks for joining us today. We had a successful third quarter, and as previously announced, maintained our consistent distribution despite a decrease in production from last quarter driven by volatility in the natural gas area. throughout the year. During the quarter, we progressed our Mineral Acquisition Program and we continue working with our partners for long-term development. We remain confident in the outlook across our acreage position and are focused on our targeted acquisition strategy to further enhance our existing long runway of high-interest development opportunities. On the acquisition front, We continue to expand our asset footprint through the targeted grassroots acquisition program we previously discussed throughout the year. During the quarter, we added about $15 million in minerals and royalty assets, along with a substantial lease, all of which further build a contiguous asset for an operator for long-term development. Thus far, we have acquired about $80 million in minerals and royalty interest since the fourth quarter, of 2023 and plan to continue pursuing accretive opportunities which will ultimately drive long-term value for our shareholders. In East Texas and Louisiana, we continue to work with multiple operators to promote development on our acreage while we also monitor the current commodity environment and prepare the anticipated improvements in the natural gas market. And Shelby Trough and other three wells were brought online by ATHON in the third quarter with initial production rates in the 20 to 25 million cubic feet per day range. We recently signed amendments to our existing joint exploration agreement and are currently looking at them operating one rig and fracking multiple wells in Angelina County. on the louisiana side of the play comstock recently turned online multiple wells in the toledo bend area for about 25 million cubic feet per day and we're excited about the ongoing activity in this area as we work with multiple operators to promote near-term development overall was a successful quarter and we will continue to maintain our strategic objectives of working with operators to achieve full development across all of our assets with the goal of accretive production growth through this active asset management and targeted acquisitions. With that, I'll turn it over to Taylor to walk through the financial details of the quarter.
spk04: Thanks, Tom, and good morning, everyone. As Tom pointed out, we had a successful quarter despite continued commodity price volatility. General and royalty production was 35.3 thousand BOE per day in the third quarter, and total production volumes were 37.4 thousand BOE per day, both of which were down a bit from last quarter. We maintained our updated guidance from the first quarter and continued to thoughtfully review current market dynamics. Net income was $92.7 million for the third quarter, with adjusted EBITDA being $86.4 million. 63% of oil and gas revenue in the quarter came from oil and county-state production. We maintained our distribution at 37.5 cents per unit for the quarter, or $1.50 on an annualized basis. Distributable cash flow for the quarter was $78.6 million, which represents approximately one times coverage for the quarter. Our solid ballot sheet and ample liquidity gives us flexibility through these dynamic market cycles and provides the opportunity to focus on commercial opportunities in the short and long term. We appreciate working with our banking partners, and as of November 1st, our credit facility was reaffirmed at $580 million, with total commitments remaining at $375 million, and there are currently no outstanding borrowings on our revolver. As of the end of last week, we had approximately $43 million of cash. We are well hedged for the remainder of the year. Our 2024 natural gas hedges are at approximately $3.55 per MMBTU. In comparing that to an average price entry of $2.16 for the third quarter, we've benefited with a gas settlement of approximately $15 million. We have over 60% of our expected gas and oil volumes hedged for the remainder of 2024 that will help insulate our cash flows for near-term price volatility. We also have attractive hedges in place for 2025, and we'll maintain our strategy of adding on additional hedges for 2026. Again, we had a successful quarter, and we'll continue to focus on generating long-term value for our shareholders. With that, I'd like to open the call for questions.
spk01: Gentlemen, thank you. And to our audience joining today on the phones, if you would like to ask a question, simply press star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing star and 2. Once again, that is star and 1 to ask a question, and we'll pause for just a moment to assemble our queue. We'll hear from Tim Resvin at KeyBank Capital Markets.
spk02: Good morning, folks, and thank you for taking my question. I'd like to start first with the ASON update that you provided. I know you kind of put some factual sort of terms around there. Can you step back and give us kind of an idea on how you see activity levels sort of trending going forward? I think the market consternation was on how 2025 volumes would look. If you could kind of just sort of step in picture and say, what is this amendment? Kind of what sort of visibility do you have over the next couple of years on activity? Thank you.
spk04: Thank you, Tim. This is Taylor. I'll just start off. And first off, I just want to say I appreciate your report. last night this morning so just generally speaking i think taking a step back and looking at the entire macro picture we're certainly being thoughtful and thinking about natural gas activity across the entire basin and we continue to work with our operators across all of louisiana and east texas as mentioned in tom's remarks a little bit earlier as it relates to athon we continue to work with them as well and you know certainly appreciate the activity and the current rig that they're running in the area, and we'll continue to work with all of our partners.
spk02: So I hope that answers your question. So is that a way of saying you think there's going to be one dedicated rig on the area of interest?
spk04: I'd say as far as exact rig activity, what I would say about AFON activity just in the whole is that we continue to see them being active in the area, and as we've seen historically, they're going to maintain a level of commitment that they've been working, and we're going to continue to work with them in developing the Shelby Trough.
spk02: Okay. Okay. Appreciate that. If I could pivot to the Gulf Coast area, you know, another kind of measured quarter of acquisitions, about $15 million, and you talked about the progression. Is this cadence of acquisition, is that reflective of your ability to get deals done, or are you trying to be measured about the spending? Like, theoretically, could you spend $50 or $100 million if something came up next quarter? Just trying to understand kind of – it sounds like there's a big opportunity set, but – just trying to understand the measured spending to date and maybe where you think you could take that. Thanks.
spk04: Yeah, thanks, and that's a good question. And what I'd say is we're continuing to be thoughtful in the current market in our ability to acquire additional minerals in this area in the Gulf Coast that we're looking at. I'd say that we've reached a cadence that – we feel pretty comfortable about, but we continue to look on a, you know, quarterly, monthly basis at what opportunities there are and assess those on an individual basis.
spk02: Thank you.
spk01: And again, to our phone audience, that is star and one if you would like to ask a question. Gentlemen, we have no signals from our phone audience. I'll turn it back to you for any additional or closing remarks.
spk00: Okay. Well, thank you all. We don't have any additional questions. And, again, we thank you for joining us today, and we look forward to talking with you next quarter.
spk01: Ladies and gentlemen, this does conclude today's Blackstone Minerals conference call, and we thank you all for your participation. You may now disconnect your lines.
Disclaimer