Black Stone Minerals (NYSE: BSM) reported Q2 EPS of ($0.07), $0.24 worse than the analyst estimate of $0.17. Revenue for the quarter came in at $38.53 million versus the consensus estimate of $84.64 million.

Highlights

• Total mineral and royalty production for the second quarter of 2020 equaled 34.0 MBoe/d, a decrease of 7.3% over the prior quarter; total production, including working interest volumes, was 42.6 MBoe/d for the quarter.
• Net income (loss) and Adjusted EBITDA for the quarter totaled $(8.4) million and $72.4 million, respectively.
• Distributable cash flow was $64.4 million for the second quarter, resulting in distribution coverage for all units of 2.1x based on the announced cash distribution of $0.15 per unit.
• Closed two previously announced mineral and royalty divestitures in July 2020, resulting in total proceeds, after closing adjustments, of $150.1 million.
• Total debt at the end of the second quarter was $323 million; total debt to trailing twelve-month Adjusted EBITDA was 1.0x at quarter-end. As of July 31, 2020, total debt had been reduced to $153 million.
• Entered into a development agreement with Aethon Energy with respect to Black Stone's undeveloped mineral and leasehold acreage in the Shelby Trough in Angelina County, Texas
• Entered into a new incentive agreement with XTO Energy, Inc ("XTO") whereby XTO is expected to complete and turn to sales the 13 existing drilled but uncompleted wells on Black Stone's San Augustine Shelby Trough acreage.
• Increased distribution to $0.15 per common unit with respect to the second quarter of 2020.
• Continued to conduct business in a remote work environment as part of the Company’s response to the COVID-19 pandemic.

Management Commentary

Thomas L. Carter, Jr., Black Stone Minerals’ Chief Executive Officer and Chairman commented, “We have taken decisive action to strengthen our balance sheet even further in light of the depressed commodity price environment and dramatic reduction in drilling activity. After closing the two asset sales in July, we have reduced our total debt balance by 58% since the start of the year. We also remain focused on maximizing the value of our existing asset base, as evidenced by our recent development agreements with Aethon and XTO. With the debt reduction, lower cost structure following the G&A reductions last quarter, and development opportunities across the portfolio, Black Stone is well positioned to weather the current industry downturn.”

Update to 2020 Guidance

Given the dramatic impact on the energy industry caused by the COVID-19 pandemic, Black Stone is lowering its production and lease bonus guidance for 2020 relative to the expectations announced earlier this year, as well as updating certain other items of its original guidance as shown in the table below. This guidance is subject to further revision given the ongoing uncertainty around the recovery in energy demand and the timing and extent of upstream operators resuming development activity.

For earnings history and earnings-related data on Black Stone Minerals (BSM) click here.