Black Stone Minerals, L.p. · NYSE:BSM
Black Stone Minerals, L.p — Shareholder Meeting (June 2017)
22 slides from Black Stone Minerals, L.p's shareholder meeting presentation, Jun 8, 2017
Slide 1: 2017 Annual Meeting
2017 Annual Meeting June 8, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the securities laws. All statements, other than statements of historical fact, included in this presentation that address activities, events, or developments that Black Stone Minerals, L.P. (“Bla
Slide 3: Black Stone Minerals at a Glance
Black Stone Minerals at a Glance Black Stone Minerals, L.P. is the largest publicly traded yield vehicle focused on oil and gas mineral and royalty interests in the U.S. Over 18 million mineral and royalty acres with interests in over 40 states and 60 producing basins Ideal asset profile for MLP inv
Slide 4: Investment Highlights
Investment Highlights Growth potential from world class asset base Size and scale through over 18 million mineral and royalty acres Diverse footprint exposes us to both established and emerging plays Haynesville/Bossier play and Permian Basin expected to drive near-term growth Durable competitive ad
Slide 5: Large, Diversified Portfolio of Assets
Large, Diversified Portfolio of Assets Over the last four decades, BSM has built a high-quality, diverse footprint that is exposed to most major plays Permian Basin (Wolfcamp Spraberry Bone Spring) Haynesville / Bossier Shales Eagle Ford Shale Bakken / Three Forks Marcellus / Utica SCOOP / STACK - C
Slide 6: Managing the Mineral and Royalty Assets
Managing the Mineral and Royalty Assets Demonstrated ability to attract activity to BSM mineral and royalty (M&R) interests Recent M&R Volumes vs. Rig Count Derive working interest value from Black Stone’s core M&R assets Black Stone Minerals leverages its mineral position to create optionality with
Slide 7: Long History of Acquisitions
Long History of Acquisitions Acquisitions by Year 1 Scalable Infrastructure for Future Acquisitions Business Development: Reviewed hundreds of third-party acquisitions since the beginning of 2012, with more than $500 million of transactions completed/entered into; nearly $2 billion of acquisitions s
Slide 8: Shelby Trough Case Study: Creating Additional Value
Shelby Trough Case Study: Creating Additional Value In 2014, BSM owned ~75,000 net mineral acres in southern Shelby Trough of Haynesville/Bossier play Very high quality rock Prospective for both Haynesville and Bossier Significantly overpressured (.85 - .90 psi/ft) Relatively undeveloped compared to
Slide 9: Shelby Trough Case Study: Expanding the Core
Shelby Trough Case Study: Expanding the Core In late 2015, BSM was able to attract a major oil and gas company to its leasehold and minerals acreage in northern Angelina County and entered into a development agreement on a ~10,000 acre block Upon the success achieved there, the Partnership began act
Slide 10: Strong Start to 2017
Strong Start to 2017 Solid performance across all metrics in the first quarter of 2017 Costs are trending in-line or better than guidance Well additions are averaging levels seen back in 2015 Monthly Gross Well Additions Production expected to grow 14% at mid-point of 2017 production guidance Workin
Slide 11: Solid Financial Position
Solid Financial Position Black Stone Minerals has consistently adhered to maintaining a conservative capital structure Senior credit facility is BSM’s only debt Borrowing base increased by 10% to $550 million following most recent redetermination Pro forma liquidity in excess of $170 million availab
Slide 12: Long-Term Outlook
Long-Term Outlook BLACK STONE MINERALS, LP.
Slide 13: Long-Term Production Outlook Assumptions
Long-Term Production Outlook Assumptions The following production and distribution growth scenarios are based on management’s current views of current and expected future operator activity across Black Stone’s mineral and working interest properties. Such views are subject to change due to myriad fa
Slide 14: Long-Term Production Outlook
Long-Term Production Outlook Total production is expected to increase over time while the production mix shifts dramatically away from working interest volumes Higher value royalty volumes are expected to substantially replace decline in working interest volumes Growth in production is expected in t
Slide 15: Production Mix Outlook
Production Mix Outlook Production Type1 Commodity Type1 The combination of the 2017 working interest farm-out and strong growth in royalty volumes shifts the production mix over time, while the commodity mix is expected to increase its weighting to natural gas 1) Base Case forecast
Slide 16: Company Performance Since IPO
Company Performance Since IPO Relative to expectations at the time of the IPO: Production is up, though more weighted to gas and to working interest volumes Dramatically lower commodity prices more than offset the production gains and led to a cut in subordinated distributions in early 2016 Historic
Slide 17: Subordinated Conversion Mechanics
Subordinated Conversion Mechanics Automatic Conversion Optional Conversion 1:1 Conversion if BSM earns and pays $1.35 per unit on all common and subordinated units for the four-quarter period ending March 31, 2019, or any four-quarter period thereafter Board may elect to “force” conversion on or aft
Slide 18: Post-Conversion Distribution Growth
Post-Conversion Distribution Growth Management's current outlook (before acquisitions) supports a distribution growth rate of approximately 4% per year after conversion while converting almost 70% of the sub units Any shortfall in Management’s current projections could be absorbed by the subordinate
Slide 19: Discussion Materials: Subordinated Unit Conversion
Discussion Materials: Subordinated Unit Conversion
Slide 20: Subordination Background / Rationale
Subordination Background / Rationale The subordinated units (“subs”) were put in place as the primary mechanism to minimize dilution to the legacy holders at the time of the IPO The underwriters would have priced the IPO at an estimated 7.5% yield (equivalent to a $14.00 offer price) without the com
Slide 21: Current Situation
Current Situation Reduced cash flows relative to IPO expectations have brought the subs’ protective mechanisms into play Subordinated distribution reduced to $0.735/unit annually (64% of the $1.15/unit MQD to common unitholders as of 1Q’17); level of sub distributions revisited every quarter with Bo
Slide 22: Impact of Conversion on Legacy Holders
Impact of Conversion on Legacy Holders Because of the relatively small percentage of the company sold to third party investors, most of the value loss to Legacy Holders from converting at less than 1:1 is recaptured through the Legacy common position Assumes Black Stone issues 8.1 million common uni
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