• Mineral and Royalty Production: 35,300 BOE per day in Q3.
• Total Production Volumes: 37,400 BOE per day in Q3.
• Net Income: $92.7 million for Q3.
• Adjusted EBITDA: $86.4 million for Q3.
• Distribution: 37.5 per unit for the quarter, $1.50 annualized.
• Distributable Cash Flow: $78.6 million for Q3.
• Credit Facility: Reaffirmed at $580 million, with total commitments at $375 million.
• Cash on Hand: Approximately $43 million as of the end of last week.
• Natural Gas Hedges: 2024 hedges at approximately $3.55 per MMBtu.
• Gas Settlement Benefit: Approximately $15 million for Q3.

• Warning! GuruFocus has detected 3 Warning Signs with HPK.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Black Stone Minerals LP maintained its consistent distribution despite a decrease in production, showcasing financial stability.
• The company progressed its minimal acquisition program, adding about $15 million in minerals and royalty assets, enhancing its asset footprint.
• Black Stone Minerals LP has acquired approximately $80 million in minerals and royalty interests since Q4 2023, indicating a strong acquisition strategy.
• The company is well-hedged for the remainder of 2024, with over 60% of expected gas and oil volumes hedged, providing insulation against price volatility.
• Black Stone Minerals LP reported a net income of $92.7 million for Q3 2024, reflecting strong financial performance.

Negative Points

• Production volumes decreased in the third quarter, with mineral and royalty production at 35.3 thousand BOE per day, down from the previous quarter.
• The company faces continued commodity price volatility, impacting its financial performance.
• Despite a successful quarter, the company only achieved approximately one times coverage for its distributable cash flow.
• There is uncertainty regarding future activity levels and rig commitments, particularly in the Shelby Trough area.
• The company's acquisition strategy appears measured, potentially limiting rapid expansion opportunities if larger deals arise.

Q & A Highlights

Q: Can you provide an update on AON's activity levels and how you see them trending going forward, particularly concerning 2025 volumes? A: Taylor DeWalch, Senior Vice President, CFO, and Treasurer, responded that they are being thoughtful about natural gas activity across the basin and continue to work with operators in Louisiana and East Texas. AON is maintaining a level of commitment in the Shelby Trough, and they expect continued activity in the area.

Q: Is there going to be one dedicated rig in the area of interest? A: Taylor DeWalch indicated that while exact rig activity specifics weren't provided, AON is expected to maintain a level of commitment and activity in the Shelby Trough, consistent with historical operations.

Q: Regarding the Gulf Coast acquisitions, is the current pace reflective of your ability to get deals done, or are you being measured in your spending? Could you potentially spend more if opportunities arise? A: Taylor DeWalch explained that they are being thoughtful in the current market and have reached a comfortable acquisition cadence. They continue to assess opportunities on a quarterly and monthly basis, indicating flexibility to increase spending if suitable opportunities arise.

Q: What is the current status of your hedging strategy, particularly for natural gas? A: Taylor DeWalch noted that they are well-hedged for the remainder of the year, with 2024 natural gas hedges at approximately $3.55 per MMBtu, compared to an average price of $2.16 for the third quarter. They have over 60% of expected gas and oil volumes hedged for the remainder of 2024, providing insulation against price volatility.

Q: Can you elaborate on the financial performance and distribution for the third quarter? A: Taylor DeWalch reported a net income of $92.7 million and adjusted EBITDA of $86.4 million for the third quarter. The distribution was maintained at 37.5 cents per unit, with distributable cash flow at $78.6 million, representing approximately one times coverage for the quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.