Black Stone Minerals Stock: Market-Crushing 7.8% Yielder Up 78% in 2022
October 26, 2022
BSM Stock’s Dividend Hiked 68% Year-Over-Year
Thanks to a surge in commodity prices, oil and natural gas stocks have been a no-brainer over the last two years. It would be tough to find someone who actually lost money on oil and gas stocks. With a potential global recession looming, investors might have to be more discerning over the next year or so. That said, Black Stone Minerals LP (NYSE:BSM) should remain on investors’ radar.
With more than 20 million mineral and royalty acres (7.4 million net), Black Stone Minerals is the largest pure-play oil and gas mineral and royalty owner in the U.S. This gives it an acreage position that would be virtually impossible to replicate. (Source: “Piper Sandler – 22nd Annual Energy Conference March 2022,” Black Stone Minerals LP, last accessed October 20, 2022.)
With business interests in more than 40 states, including 60 productive basins, the company’s footprint covers established and emerging plays. This allows it to deliver long-term growth and returns for Black Stone Minerals stockholders.
Some of the partnership’s most heavily concentrated mining positions are in the Permian, Haynesville, and Bakken. Because it’s a mineral play, Black Stone Minerals LP has exposure to oil and gas, but without the hassle of operating costs or capital spending. And thanks to its scale, the company has opportunities to partner with operators to initiate or accelerate drilling.
Despite fears about an upcoming recession, the demand for oil and gas remains high. The war in Ukraine has been shifting the supply/demand imbalance, which is why the prices of West Texas Intermediate crude oil and liquefied natural gas (LNG) are robust. Because of its diverse business footprint, Black Stone Minerals LP is able to moderate long-term energy price swings that affect many of its peers.
And thanks to its continued strong financial results, which are—it seems—expected to continue for years to come, Black Stone Minerals has been able to raise its dividend for the last five quarters.
In July, the company announced a distribution of $0.42 per unit, for a yield of 7.8%. The new dividend amount represents a 68% increase over the common distribution the partnership paid out in the second quarter of 2021 and a five-percent increase over the common distribution it paid out in the first quarter of 2022. (Source: “Black Stone Minerals, L.P. Announces Distribution Increase and Schedules Earnings Call to Discuss Second Quarter 2022 Results,” Black Stone Minerals LP, July 25, 2022.).
Black Stone Minerals LP’s Q2 Distributable Cash Flow Up 15%
For the second quarter ended June 30, Black Stone Minerals announced that its total revenue jumped by 208% to $180.3 million. (Source: “Black Stone Minerals, L.P. Reports Second Quarter Results,” Black Stone Minerals LP, August 1, 2022.)
The partnership’s mineral royalty production in the second quarter equaled 30,300 barrels of oil equivalent per day, a two-percent increase over the prior quarter. Its total production in the second quarter, including working interest volumes, was 33,500 barrels of oil equivalent per day.
Black Stone Minerals LP reported second-quarter 2022 net income of $131.8 million, or $0.59 per share. That’s compared to $15.4 million, or $0.05 per share, in the same period of last year and a net loss of $7.0 million in the first quarter of 2022.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter of 2022 was $112.8 million, compared to $78.4 million in the same period of last year and $98.8 million in the first quarter of 2022.
The partnership’s distributable cash flow in the second quarter of 2022 was $106.6 million, versus $72.1 million in the same period of last year and $92.6 million in the first quarter of 2022.
Thomas L. Carter, Jr., Black Stone Minerals LP’s CEO and chairman, commented, “The efforts to attract capital to our acreage are delivering results. We have a clear line of sight on significant increases in drilling activity from producers on some of our concentrated positions.” (Source: Ibid.)
Black Stone Minerals Stock Up 78% Year-to-Date
High commodity prices and cash flow have been fueling share-price gains. Trading at record levels, BSM stock is up by:
- Eight percent over the last month
- 17% over the last six months
- 78% year-to-date
- 53% year-over-year
Chart courtesy of StockCharts.com
The Lowdown on Black Stone Minerals LP
Black Stone Minerals is the largest pure-play oil and natural gas mineral and royalty owner in the U.S. Because of high commodity prices, Black Stone Minerals stock has been rewarding investors with high share-price gains and growing, high-yield dividends.
Concerns about a recession might cause some investors to question whether BSM stock’s share-price growth is sustainable, and that’s a fair question. Black Stone Minerals’ management answered that question in its second-quarter report, noting that they’re encouraged by recent drilling results in East Texas and a deep inventory of 20 years’ worth of drilling locations, making the company “well-positioned to return to multi-year production growth.”
That’s excellent news for Black Stone Minerals stockholders.
