BSM — Black Stone Minerals, L.P.

Summary of Black Stone Minerals Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Production: Mineral and royalty production increased by 5% quarter-over-quarter to 34,700 BOE per day; total production was 36,300 BOE per day.
• Net Income: Reported at $91.7 million.
• Adjusted EBITDA: $86.3 million.
• Revenue Composition: 57% of oil and gas revenue came from oil and condensate production.
• Distribution: Declared a distribution of $0.30 per unit for the quarter, equating to an annualized rate of $1.20.
• Distributable Cash Flow: $76.8 million, representing a coverage ratio of 1.21x, with excess used for acquisitions.

2. Strategic Updates and Business Highlights

• Acquisitions: Added $20 million in mineral and royalty acquisitions during the quarter, totaling approximately $193 million since September 2023.
• Development Initiatives: Ongoing development in the Haynesville expansion, particularly around Shelby Trough, with expectations of over 50 wells drilled annually.
• Partnerships: Collaborating with Revenant Energy for development starting in early 2026 and pursuing additional agreements covering 220,000 gross acres.
• Permian Basin: Monitoring large projects expected to add significant oil volumes, with additional projects anticipated in the next 12 to 18 months.

3. Forward Guidance and Outlook

• Production Guidance: Unchanged for 2025 at 33,000 to 35,000 BOE per day.
• Long-Term Outlook: Positive sentiment regarding natural gas demand, particularly from LNG and power sectors, positioning Black Stone favorably for future growth.
• Multi-Year Forecast: Emphasis on long-term growth potential over the next five years rather than short-term fluctuations.

4. Bad News, Challenges, or Points of Concern

• Market Dynamics: Noted weakening natural gas differentials, particularly related to exposure to Waha pricing, which may persist until 2027.
• Development Activity: General slowdown in U.S. development activity in 2025, though optimism remains for 2026.
• Hedging Strategy: While maintaining a consistent hedging approach, there are concerns about the impact of Waha pricing on future revenues.

5. Notable Q&A Insights

• Acreage Marketing Update: Progress on a deal in the KLX area has slowed, now at the "half yard line" but expected to conclude soon.
• Increased Interest: Robust interest in commitments following recent developments in the Western Haynesville.
• Volume Trends: Anticipated growth in volumes from Aethon and Permian developments, with a cautious approach to updating guidance based on market conditions.
• Natural Gas Pricing: Acknowledgment of the challenges posed by Waha pricing, with expectations that this may affect pricing dynamics in the near term.

Overall, Black Stone Minerals reported a solid quarter with strong production growth and a positive outlook, despite facing challenges related to market pricing and development activity.