Black Stone Minerals LP (BSM) Reports Solid 2023 Earnings and Zero Debt, Despite Natural Gas ...
Net Income: $147.6 million for Q4 2023, contributing to a full-year net income of $422.5 million.
Adjusted EBITDA: $125.5 million for Q4 2023 and $474.7 million for the full year.
Distributable Cash Flow: $119.1 million for Q4 2023, marking the seventh consecutive quarter above $100 million.
Production: Mineral and royalty production averaged 37.4 MBoe/d in 2023, a 9% increase over the previous year.
Debt Position: Total debt stood at zero at the end of Q4 2023, with $102.9 million in cash as of February 16, 2024.
Distributions: Increased cash distributions by 9% from 2022, with a Q4 2023 distribution of $0.475 per unit and a coverage ratio of 1.19x.
2024 Guidance: Expects royalty production to increase by approximately 4% in 2024 with a focus on strategic acquisitions.
On February 20, 2024, Black Stone Minerals LP (NYSE:BSM) released its 8-K filing, detailing its financial and operational performance for the fourth quarter and full year of 2023. The company, a leading owner of oil and natural gas mineral interests in the United States, reported a net income of $147.6 million for the fourth quarter and $422.5 million for the full year. Adjusted EBITDA for the fourth quarter was $125.5 million, contributing to a full-year total of $474.7 million.
Financial and Operational Performance
BSM's mineral and royalty production for the fourth quarter averaged 38.9 MBoe/d, a slight decrease from the previous quarter, with a full-year average of 37.4 MBoe/d, representing a 9% increase over the prior year. The company's total production, including working interest volumes, was 41.1 MBoe/d for the quarter. Despite a challenging natural gas market, BSM maintained a strong distribution of $0.475 per unit for the fourth quarter, with a distribution coverage ratio of 1.19x. Notably, the company eliminated all outstanding debt during 2023, enhancing its financial position.
BSM's realized price per Boe was $35.03 for the fourth quarter, a modest increase from the previous quarter but a significant decrease from the fourth quarter of 2022. Oil and gas revenue for the fourth quarter was $132.6 million, slightly down from the third quarter. The company reported a gain on commodity derivative instruments of $54.5 million for the fourth quarter, reflecting both realized and unrealized gains.
Challenges and Outlook
Thomas L. Carter, Jr., Chairman, CEO, and President of BSM, acknowledged the natural gas market's challenges but expressed optimism for the company's long-term prospects, particularly in light of the growth in liquefied natural gas exports. The company's asset base, with significant inventory life, is expected to benefit unitholders through the next decade.
For 2024, BSM anticipates royalty production to increase by approximately 4%, driven by new well developments and continued activity in the Austin Chalk. The company expects a decline in working interest production due to its strategic decision to farm out participation in working interest opportunities. General and administrative expenses are projected to rise slightly due to inflationary costs and targeted hiring to support the management of undeveloped acreage positions.
Black Stone Minerals' financial strength is further underscored by its zero debt position and substantial cash reserves, positioning the company for strategic acquisitions and organic growth. The company's proactive hedging strategy also provides a measure of stability against commodity price fluctuations.
Value investors and potential GuruFocus.com members may find BSM's strong financial results, commitment to maintaining distributions, and strategic outlook appealing. The company's ability to navigate market challenges while positioning itself for future growth demonstrates a prudent approach to value creation and capital management.
For more detailed information, investors are encouraged to review the full 8-K filing and listen to the conference call hosted by Black Stone Minerals.
Explore the complete 8-K earnings release (here) from Black Stone Minerals LP for further details.
This article first appeared on GuruFocus.
