BSM — Black Stone Minerals, L.P.

Black Stone Minerals (BSM) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Income: $72.2 million for Q4 2025.
• Adjusted EBITDA: $76.7 million, with an updated presentation excluding seismic acquisition costs.
• Production:
  • Mineral and royalty production was 30,900 BOE per day, down 11% from the previous quarter.
  • Total production for Q4 was 32,100 BOE per day.
• Distribution: Declared a distribution of $0.30 per unit for the quarter ($1.20 annualized).
• Distributable Cash Flow: $66.8 million, representing a coverage ratio of 1.05x.

2. Strategic Updates and Business Highlights:

• Development Agreements: Signed agreements with Revenant Energy and Caturus Energy, committing to develop approximately 500,000 gross acres with a total of 50 gross wells expected by 2031.
• New Wells: Aethon brought several new wells online in the Shelby Trough, with more expected in 2026.
• Seismic Surveys: Initiating two significant 3D seismic surveys covering 360,000 gross acres to enhance subsurface evaluation and support development.
• Acquisition Program: Invested approximately $240 million since 2023 to acquire mineral and royalty acreage, focusing on the Shelby Trough and Haynesville expansion areas.

3. Forward Guidance and Outlook:

• Production Growth: While production guidance is flat year-over-year, significant growth is anticipated throughout 2026, particularly in the Shelby Trough and Haynesville expansion areas.
• Market Positioning: The company is well-positioned to benefit from increasing natural gas demand, especially given its proximity to Gulf Coast LNG facilities.
• Increased G&A: Strategic increase in general and administrative expenses in 2026 to support anticipated growth in activity.

4. Bad News, Challenges, or Points of Concern:

• Production Decline: Notable decrease in production from Q3 to Q4 2025, attributed to lower natural gas-directed drilling activity.
• Commodity Price Risks: Concerns about the impact of lower Henry Hub prices on future cash flows and the ability to sustain distributions without leaning on liquidity.
• Operational Risks: The company is navigating a challenging environment with fluctuating commodity prices and production levels, which could affect future performance.

5. Notable Q&A Insights:

• Production Cadence: Management indicated that production levels are expected to step up progressively throughout 2026, starting at Q4 2025 levels.
• Development Pipeline: The company is open to both new operators and existing partners for future development agreements, indicating a diverse approach to expanding its asset base.
• Permian Activity: Management expressed optimism about ongoing developments in the Permian Basin, though they remain cautious about forecasting broader volumes due to market conditions.
• Funding Distributions: Confidence was expressed regarding the ability to fund distributions through cash flow, supported by strong hedges in place for natural gas.

Overall, Black Stone Minerals reported a solid year despite production challenges, with a strategic focus on growth through new development agreements and acquisitions, while keeping an eye on market conditions and operational risks.