Core Viewpoint - Black Stone Minerals, L.P. held its Q2 2025 earnings conference call, discussing financial performance and future expectations [1][2]. Group 1: Company Overview - The conference call featured key participants including H. Taylor DeWalch (CFO), Mark Meaux (Director of Finance), and Thomas L. Carter (CEO) [1]. - The call was recorded and will be available on the company's website along with the earnings release [3]. Group 2: Financial Performance - The company indicated that forward-looking statements regarding future performance would be made during the call, highlighting the potential risks involved [4]. - Non-GAAP financial measures may be referenced, which the company believes are useful for evaluating performance [5].

Financial Data and Key Metrics Changes - Mineral royalty production was 33,200 BOE per day in Q2 2025, with total production volumes at 34,600 BOE per day [9] - Net income for Q2 was $120 million, with adjusted EBITDA at $84.2 million [9] - Distributable cash flow for the quarter was $74.8 million, representing 1.18 times coverage [10] - A distribution of $0.30 per unit was declared for the quarter, equating to $1.20 on an annualized basis [9][10] Business Line Data and Key Metrics Changes - 55% of oil and gas revenue in the quarter came from oil and condensate production [9] - The company added 31 million in royalty acquisitions during the quarter, bringing total acquisitions since September 2023 to approximately $172 million [6] Market Data and Key Metrics Changes - The company expects production growth in 2026 of an incremental 3,000 to 5,000 BOE per day over the revised guidance for 2025 [10][11] - The outlook for natural gas remains robust, supported by growing global demand for LNG [7] Company Strategy and Development Direction - The company is focused on expanding its drilling obligations in the Shelby Trough, which is expected to more than double over the next five years [6] - The grassroots acquisition program is progressing well, with ongoing marketing efforts in the Shelby Trough [5][6] - The company aims to maintain a clean balance sheet and ample liquidity to support its commercial strategy, including targeted grassroots acquisitions [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in production growth in 2026 and beyond, despite slower natural gas production growth in 2025 [10][11] - The company is optimistic about the outlook for the partnership, citing strong demand and ongoing development agreements [7][11] Other Important Information - The company has restructured its agreement with Aethon, reducing the number of wells from mid-20s to high teens per year, which is expected to impact production volumes [27] - The company is actively working to place strategically important acreage with other operators [27] Q&A Session Summary Question: Activity response to higher natural gas prices and production trajectory - Management noted subdued activity in the first half of the year but is excited about upcoming development agreements and ongoing activity in the Shelby Trough [14][15][17] Question: Comparison of geology in Shelby Trough and Western Haynesville - Management highlighted analogous subsurface characteristics and increasing productivity in the Western Haynesville, which could benefit the Shelby Trough [18][19] Question: Updated production guidance and activity in Haynesville - Management explained that the restructuring of agreements and strategic decisions have led to a slower production ramp-up, but they anticipate significant well activity in the coming years [27][29] Question: Production outlook and oil volumes - Management indicated that oil volumes are expected to be around 25% to 26% as they look towards 2026, with contributions from various projects [35]

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $120 million, with adjusted EBITDA at $84.2 million, reflecting a strong financial performance despite slower natural gas production growth [10] - Distributable cash flow for the quarter was $74.8 million, representing a coverage ratio of 1.18 times [10] - The company declared a distribution of $0.30 per unit for the quarter, which translates to an annualized distribution of $1.20 [10] Business Line Data and Key Metrics Changes - Mineral royalty production averaged 33,200 BOE per day, while total production volumes were 34,600 BOE per day in Q2 2025 [10] - The company expects production for the full year 2025 to average between 33,035 BOE per day, reflecting a revision due to slower natural gas production growth [11] Market Data and Key Metrics Changes - The company has identified a substantial expansion in the Shelby Trough and is actively marketing an additional 180,000 gross acres to well-capitalized operators [6] - The outlook for natural gas remains robust, supported by growing global demand for LNG, which is expected to drive future production growth [8] Company Strategy and Development Direction - The company is focused on maintaining a clean balance sheet and ample liquidity to support its commercial strategy, including targeted grassroots acquisitions [8] - The partnership anticipates more than doubling its drilling obligations over the next five years, which is expected to provide significant natural gas growth [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in production growth in 2026, projecting an incremental increase of 3,000 to 5,000 BOE per day over the revised guidance for 2025 [11] - The management remains optimistic about the outlook for the partnership, citing strong demand and ongoing development agreements as key drivers for future growth [8] Other Important Information - The company has added $172 million in royalty acquisitions since September 2023, indicating a proactive approach to expanding its asset base [7] - The company is monitoring a large project in the Permian Basin, which is expected to add meaningful oil volumes to its production base [12] Q&A Session Summary Question: Insights on activity increase in acreage and production trajectory - Management acknowledged subdued activity but highlighted upcoming development agreements and ongoing operator activity as positive indicators for future production [16][17] Question: Comparison of geology in Shelby Trough and Western Haynesville - Management noted analogous subsurface characteristics and expressed excitement about the potential for increased productivity and EURs in the Shelby Trough [19][20] Question: Understanding production guidance amidst increased rig count - Management explained that a restructuring of agreements and strategic decisions led to a slower production growth, emphasizing the long-term development strategy [28][30] Question: Future development obligations and production cadence - Management confirmed plans to significantly ramp up development obligations, aiming for a cadence of 40 to 50 wells per year [33] Question: Production outlook for 2026 and SKU assumptions - Management indicated that oil volumes are expected to be closer to 25% to 26% as they look towards 2026, influenced by ongoing projects [36]

Financial Performance - Black Stone Minerals (BSM) reported revenue of $159.49 million for the quarter ended June 2025, marking a year-over-year increase of 45.5% [1] - The earnings per share (EPS) for the same period was $0.53, compared to $0.29 a year ago, indicating significant growth [1] - The reported revenue exceeded the Zacks Consensus Estimate of $106 million by 50.47%, while the EPS surpassed the consensus estimate of $0.30 by 76.67% [1] Production Metrics - The company produced 34.6 million barrels of oil equivalent per day, which was below the average estimate of 38.21 million barrels by three analysts [4] - Oil and condensate production reached 863,000 barrels, exceeding the average estimate of 774,440 barrels based on two analysts [4] - Natural gas production was reported at 13,710 million cubic feet, which fell short of the average estimate of 15,919.15 million cubic feet [4] - Total production equivalents were 3,148,000 barrels of oil equivalent, compared to the average estimate of 3,428,050 barrels [4] Revenue Breakdown - Revenue from lease bonuses and other income was $4.71 million, surpassing the average estimate of $3.49 million, but reflecting a year-over-year decrease of 1.6% [4] - Revenue from oil and condensate sales was $55.81 million, exceeding the average estimate of $50.66 million, but showing a year-over-year decline of 24.5% [4] - Revenue from natural gas and natural gas liquids sales was $46.19 million, which was below the average estimate of $55.94 million, yet represented a year-over-year increase of 26.6% [4] Stock Performance - Over the past month, shares of Black Stone Minerals have returned -4.6%, contrasting with the Zacks S&P 500 composite's increase of +0.6% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

[Executive Summary](index=1&type=section&id=Executive%20Summary) Black Stone Minerals, L.P. reported Q2 2025 financial and operating results, highlighting strong net income despite production decreases, and updated 2025 guidance [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Black Stone Minerals, L.P. announced its Q2 2025 financial and operating results and updated 2025 guidance. Key highlights include a decrease in production and distribution, but strong net income and Adjusted EBITDA, alongside significant new development agreements for long-term growth - Black Stone Minerals, L.P. (BSM) announced Q2 2025 financial and operating results and updated 2025 guidance[2](index=2&type=chunk) Q2 2025 Key Financial & Operational Highlights | Metric | Q2 2025 Value | Change from Prior Quarter | Change from Q2 2024 | | :-------------------------------- | :---------------- | :------------------------ | :-------------------- | | Mineral & Royalty Production | 33.2 MBoe/d | -3% | -13% (38.2 MBoe/d in Q2 2024) | | Total Production | 34.6 MBoe/d | -2.5% (35.5 MBoe/d in Q1 2025) | -14.3% (40.4 MBoe/d in Q2 2024) | | Net Income | $120.0 million | +655% (from $15.9M in Q1 2025) | +75.7% (from $68.3M in Q2 2024) | | Adjusted EBITDA | $84.2 million | +2.4% (from $82.2M in Q1 2025) | -16% (from $100.2M in Q2 2024) | | Distributable Cash Flow | $74.8 million | +1.5% (from $73.7M in Q1 2025) | -19.1% (from $92.5M in Q2 2024) | | Distribution per Unit | $0.30 | -20% (from prior quarter) | N/A | | Distribution Coverage | 1.18x | N/A | N/A | | Total Debt (end of Q2) | $99.0 million | N/A | N/A | | Total Debt (as of Aug 1, 2025) | $71.0 million | N/A | N/A | [Management Commentary & Strategic Outlook](index=1&type=section&id=Management%20Commentary) Management outlined new development opportunities in the Shelby Trough, projecting significant growth in contractual obligations and future distributions despite near-term production trends [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted significant new development opportunities in the Shelby Trough, including a partnership with Revenant Energy and another 180,000 gross acre opportunity being marketed. These initiatives are expected to more than double contractual development obligations over the next five years, driving long-term growth and anticipated production increases in 2026, with distributions surpassing previous highs within six years, despite near-term subdued production - In-depth subsurface evaluation delineated significant new areas of prospectivity in the Shelby Trough and westward towards the Western Haynesville[4](index=4&type=chunk) - Partnered with Revenant Energy for a substantial new development covering approximately **270,000 gross acres** in the Shelby Trough[4](index=4&type=chunk)[19](index=19&type=chunk) - Contractual development obligations are expected to **more than double** over the next five years, with production growing in 2026 and distributions surpassing previous highs within six years, driven by Gulf Coast market proximity and projected natural gas pricing[4](index=4&type=chunk)[5](index=5&type=chunk) [Quarterly Financial and Operating Results](index=1&type=section&id=Quarterly%20Financial%20and%20Operating%20Results) This section details Black Stone Minerals' Q2 2025 production, realized prices, revenues, net income, Adjusted EBITDA, distributable cash flow, and financial position [Production Overview](index=1&type=section&id=Production) Black Stone Minerals experienced a decrease in total production volumes quarter-over-quarter and year-over-year, consistent with its strategy to farm out working-interest participation Production Volumes (MBoe/d) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :-------- | :-------- | :-------- | | Mineral & Royalty Volumes | 33.2 | 34.2 | 38.2 | | Working-Interest Production | 1.4 | 1.3 | 2.2 | | Total Production | 34.6 | 35.5 | 40.4 | - The year-over-year decline in working-interest volumes aligns with the Partnership's strategy to farm out participation to third-party capital providers[7](index=7&type=chunk) [Realized Prices, Revenues, and Net Income](index=2&type=section&id=Realized%20Prices%2C%20Revenues%2C%20and%20Net%20Income) Despite lower oil and gas revenue, a significant gain on commodity derivative instruments led to a substantial increase in net income for the second quarter of 2025 Realized Prices, Revenues, and Net Income | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Change QoQ | Change YoY | | :-------------------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Average Realized Price per Boe (excl. derivatives) | $32.40 | $33.94 | $30.01 | -5% | +8% | | Oil and Gas Revenue | $102.0 million | $108.3 million | $110.4 million | -6% | -7.6% | | Gain (Loss) on Commodity Derivatives | $52.8 million (+$49.6M unrealized) | -$56.0 million | -$5.5 million | Significant increase | Significant increase | | Lease Bonus and Other Income | $4.7 million | $6.9 million | $4.8 million | -31.8% | -2.1% | | Net Income | $120.0 million | $15.9 million | $68.3 million | +655% | +75.7% | [Adjusted EBITDA and Distributable Cash Flow](index=2&type=section&id=Adjusted%20EBITDA%20and%20Distributable%20Cash%20Flow) Adjusted EBITDA and distributable cash flow saw slight increases quarter-over-quarter but decreases year-over-year Adjusted EBITDA and Distributable Cash Flow | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Change QoQ | Change YoY | | :-------------------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Adjusted EBITDA | $84.2 million | $82.2 million | $100.2 million | +2.4% | -16% | | Distributable Cash Flow | $74.8 million | $73.7 million | $92.5 million | +1.5% | -19.1% | [Financial Position and Liquidity](index=2&type=section&id=Financial%20Position%20and%20Activities) Black Stone Minerals maintained a strong financial position with reaffirmed borrowing capacity and reduced debt post-quarter end Financial Position | Metric | As of June 30, 2025 | As of August 1, 2025 | | :-------------------------------- | :------------------- | :------------------- | | Cash | $2.5 million | $7.9 million | | Drawn under Credit Facility | $99.0 million | $71.0 million | | Borrowing Base (reaffirmed April 30, 2025) | $580 million | $580 million | | Total Commitments (maintained) | $375 million | $375 million | - Black Stone is in compliance with all financial covenants associated with its credit facility[16](index=16&type=chunk) [Distributions](index=2&type=section&id=Second%20Quarter%202025%20Distributions) The Partnership announced a cash distribution of $0.30 per common unit for Q2 2025, representing a 20% decrease from the prior quarter, with a distribution coverage ratio of 1.18x Q2 2025 Distributions | Metric | Value | | :-------------------------------- | :---- | | Cash Distribution per Common Unit | $0.30 | | Change from Prior Quarter | -20% | | Quarterly Distribution Coverage Ratio | 1.18x | [Operational Activities and Development](index=2&type=section&id=Activity%20Update) This section details Black Stone Minerals' development activities across key basins and its ongoing strategy of targeted mineral and royalty acquisitions [Development Activity](index=3&type=section&id=Development%20Activity) Black Stone Minerals saw continued development activity across its key acreage, including the Shelby Trough, Louisiana Haynesville, and Permian Basin, with new wells turned to sales and significant future drilling obligations secured through new agreements like the one with Revenant Energy - In the Shelby Trough, Aethon Energy turned **2 gross (0.10 net) wells** to sales in Q2 2025, with **15 gross (0.93 net) wells** expected in late 2025/early 2026; EXCO Resources Inc. completed and spud **2 gross (0.08 net) wells** each[18](index=18&type=chunk) - A new development agreement with Revenant Energy covers approximately **270,000 gross acres**, obligating a minimum of **6 wells in 2026**, increasing to **25 wells per year** over the next five years[19](index=19&type=chunk) - In the Louisiana Haynesville, **3 gross (0.09 net) wells** were turned to sales under ADAs in Q2 2025, totaling seven wells, with **2 gross (0.13 net) wells** anticipated in Q3 2025[21](index=21&type=chunk) - In the Permian Basin, **30 of over 34 gross (1.20 net) wells** in Culberson County have been spud, with **22 gross wells** expected to turn to sales in H2 2025[22](index=22&type=chunk) [Acquisition Activity](index=3&type=section&id=Acquisition%20Activity) Black Stone Minerals continued its strategy of targeted mineral and royalty acquisitions, primarily in the expanding Shelby Trough area - Acquired **$31.2 million** of additional mineral and royalty interests, primarily non-producing, in Q2 2025[23](index=23&type=chunk) - Total mineral and royalty acquisitions from September 2023 through July 2025 amounted to **$172.3 million**, primarily in the expanding Shelby Trough area[23](index=23&type=chunk) [2025 Guidance Update](index=3&type=section&id=2025%20Guidance%20Update) This section outlines Black Stone Minerals' revised 2025 production guidance, reflecting lower actual production and anticipated delays in natural gas growth [2025 Guidance Update](index=3&type=section&id=2025%20Guidance%20Update) Black Stone Minerals lowered its total production guidance for 2025 due to lower production in the first half of the year and anticipated delays in natural gas production growth - Total production guidance for 2025 is lowered to **33 MBoe/d to 35 MBoe/d**, from the previous range of 38 MBoe/d to 41 MBoe/d[24](index=24&type=chunk) - The revision is driven by lower production through Q1 and Q2 2025 and anticipated delays in natural gas production growth through year-end[24](index=24&type=chunk) [Hedge Position](index=3&type=section&id=Update%20to%20Hedge%20Position) This section details Black Stone Minerals' commodity derivative contracts for anticipated oil and natural gas production in 2025 and 2026 [Hedge Position](index=3&type=section&id=Update%20to%20Hedge%20Position) The Partnership has commodity derivative contracts in place covering portions of its anticipated oil and natural gas production for 2025 and 2026 Oil Hedge Position (as of August 1, 2025) | Quarter | Oil Swap (MBbl) | Oil Swap Price ($/Bbl) | | :------ | :-------------- | :--------------------- | | 3Q25 | 555 | $71.22 | | 4Q25 | 555 | $71.22 | | 1Q26 | 480 | $64.80 | | 2Q26 | 480 | $64.80 | | 3Q26 | 480 | $64.80 | | 4Q26 | 480 | $64.80 | Natural Gas Hedge Position (as of August 1, 2025) | Quarter | Gas Swap (BBtu) | Gas Swap Price ($/MMbtu) | | :------ | :-------------- | :----------------------- | | 3Q25 | 11,040 | $3.45 | | 4Q25 | 11,040 | $3.45 | | 1Q26 | 11,700 | $3.67 | | 2Q26 | 11,830 | $3.67 | | 3Q26 | 11,960 | $3.67 | | 4Q26 | 11,960 | $3.67 | [Investor Relations](index=4&type=section&id=Conference%20Call) This section announces Black Stone Minerals' upcoming conference call for Q2 2025 results and an Investor Day in September [Conference Call & Investor Day](index=4&type=section&id=Conference%20Call) Black Stone Minerals will host a conference call to discuss Q2 2025 results and updated guidance, and is planning an Investor Day in September to provide further updates - A conference call and webcast for investors and analysts to discuss Q2 2025 results and updated 2025 guidance is scheduled for **Tuesday, August 5, 2025, at 9:00 a.m. Central Time**[27](index=27&type=chunk) - Black Stone Minerals is planning to host an Investor Day in September, with further details to be released soon[27](index=27&type=chunk) [About the Partnership](index=4&type=section&id=About%20Black%20Stone%20Minerals%2C%20L.P.) This section describes Black Stone Minerals, L.P. as a major owner of diversified, non-cost-bearing oil and natural gas mineral interests across the U.S., focused on stable production and unitholder distributions [About Black Stone Minerals, L.P.](index=4&type=section&id=About%20Black%20Stone%20Minerals%2C%20L.P.) Black Stone Minerals is one of the largest owners of oil and natural gas mineral interests in the U.S., holding diversified, long-lived, non-cost-bearing assets across 41 states, designed to provide stable to growing production and reserves, with the majority of cash flow distributed to unitholders - Black Stone Minerals is one of the **largest owners of oil and natural gas mineral interests** in the United States[28](index=28&type=chunk) - The Partnership owns mineral and royalty interests in **41 states**, characterized by a large, diversified asset base and long-lived, non-cost-bearing interests[28](index=28&type=chunk) - The business model aims for stable to growing production and reserves over time, distributing the majority of generated cash flow to unitholders[28](index=28&type=chunk) [Forward-Looking Statements & Risk Factors](index=4&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking information, highlighting various risks and uncertainties that could cause actual results to differ materially [Forward-Looking Statements & Risk Factors](index=4&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements in the news release, emphasizing that actual results may differ materially due to various risks and uncertainties, including market volatility, production levels, supply/demand dynamics, and operational factors - The news release contains forward-looking statements, and readers are cautioned that actual results may differ materially[29](index=29&type=chunk) - Key factors influencing actual results include the Partnership's strategy execution, oil and natural gas price volatility, production levels, supply/demand dynamics, trade policies, environmental concerns, reserve replacement, economic conditions, cybersecurity, competition, resource availability/cost, and operator drilling activity[29](index=29&type=chunk)[30](index=30&type=chunk) [Financial Statements and Non-GAAP Reconciliations](index=5&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Reconciliations) This section presents Black Stone Minerals' consolidated statements of operations, detailed production and revenue data, and reconciliations for non-GAAP financial measures [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The unaudited consolidated statements of operations show a significant increase in net income for Q2 2025 compared to both the prior quarter and the same quarter last year, primarily driven by a gain on commodity derivative instruments Consolidated Statements of Operations (Unaudited, In thousands, except per unit amounts) | (In thousands, except per unit amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Oil and condensate sales | $55,807 | $73,889 | $105,900 | $145,113 | | Natural gas and natural gas liquids sales | $46,189 | $36,493 | $104,424 | $78,504 | | Lease bonus and other income | $4,714 | $4,789 | $11,639 | $8,337 | | Revenue from contracts with customers | $106,710 | $115,171 | $221,963 | $231,954 | | Gain (loss) on commodity derivative instruments | $52,784 | $(5,547) | $(3,217) | $(16,837) | | TOTAL REVENUE | $159,494 | $109,624 | $218,746 | $215,117 | | INCOME (LOSS) FROM OPERATIONS | $122,281 | $68,490 | $139,442 | $132,464 | | NET INCOME (LOSS) | $120,028 | $68,322 | $135,976 | $132,249 | | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITS | $112,661 | $60,956 | $121,243 | $117,516 | | Per common unit (basic) | $0.53 | $0.29 | $0.57 | $0.56 | [Production, Revenue, Pricing, and Expense Details](index=6&type=section&id=Production%2C%20Revenue%2C%20Pricing%2C%20and%20Expense%20Details) Detailed tables provide a breakdown of production volumes, realized prices, revenues, and operating expenses for the second quarter and first six months of 2025 and 2024, highlighting changes in commodity prices and their impact on revenue Production, Revenues, Pricing, and Expenses (Unaudited, Dollars in thousands, except for realized prices and per Boe data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Production: | | | | | | Oil and condensate (MBbls) | 863 | 953 | 1,579 | 1,876 | | Natural gas (MMcf) | 13,710 | 16,350 | 28,563 | 32,820 | | Equivalents (MBoe) | 3,148 | 3,678 | 6,340 | 7,346 | | Equivalents/day (MBoe) | 34.6 | 40.4 | 35.0 | 40.4 | | Realized prices, without derivatives: | | | | | | Oil and condensate ($/Bbl) | $64.67 | $77.53 | $67.07 | $77.35 | | Natural gas ($/Mcf) | $3.37 | $2.23 | $3.66 | $2.39 | | Equivalents ($/Boe) | $32.40 | $30.01 | $33.17 | $30.44 | | Revenue: | | | | | | Total revenue | $159,494 | $109,624 | $218,746 | $215,117 | | Operating expenses: | | | | | | Lease operating expense | $2,990 | $2,579 | $5,152 | $5,011 | | Production costs and ad valorem taxes | $9,026 | $13,469 | $19,211 | $26,507 | | Depreciation, depletion, and amortization | $9,187 | $11,356 | $18,317 | $22,995 | | General and administrative | $13,924 | $13,395 | $29,096 | $27,485 | [Non-GAAP Financial Measures Explanation](index=7&type=section&id=Non-GAAP%20Financial%20Measures) This section defines Adjusted EBITDA and Distributable cash flow as supplemental non-GAAP financial measures used by management and external users to assess financial performance and ability to sustain distributions, while also noting their limitations compared to GAAP measures - Adjusted EBITDA and Distributable cash flow are supplemental non-GAAP financial measures used to assess asset financial performance and distribution sustainability, independent of financing methods, capital structure, or historical cost basis[35](index=35&type=chunk) - Adjusted EBITDA is net income (loss) before interest, taxes, and DDA, adjusted for non-cash items; Distributable cash flow further adjusts Adjusted EBITDA for non-cash operating activities, cash interest, preferred unitholder distributions, and restructuring charges[36](index=36&type=chunk) - These non-GAAP measures should not be considered alternatives or superior to GAAP financial measures like net income (loss) or cash flows from operating activities, and their computation may vary across companies[37](index=37&type=chunk)[38](index=38&type=chunk) [Non-GAAP Reconciliations](index=7&type=section&id=Non-GAAP%20Reconciliations) The reconciliation table provides a detailed breakdown of adjustments from net income (loss) to Adjusted EBITDA and Distributable cash flow for the second quarter and first six months of 2025 and 2024 Non-GAAP Reconciliations (Unaudited, In thousands, except per unit amounts) | (In thousands, except per unit amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $120,028 | $68,322 | $135,976 | $132,249 | | Adjustments to reconcile to Adjusted EBITDA: | | | | | | Depreciation, depletion, and amortization | 9,187 | 11,356 | 18,317 | 22,995 | | Interest expense | 2,270 | 626 | 3,667 | 1,255 | | Income tax expense (benefit) | 8 | 51 | (77) | 186 | | Accretion of asset retirement obligations | 337 | 321 | 669 | 638 | | Equity–based compensation | 1,960 | 2,205 | 5,015 | 4,588 | | Unrealized (gain) loss on commodity derivative instruments | (49,639) | 17,366 | 2,751 | 42,453 | | Adjusted EBITDA | $84,151 | $100,247 | $166,318 | $204,364 | | Adjustments to reconcile to Distributable cash flow: | | | | | | Change in deferred revenue | (1) | (1) | (2) | (2) | | Cash interest expense | (1,994) | (358) | (3,117) | (719) | | Preferred unit distributions | (7,367) | (7,366) | (14,733) | (14,733) | | Distributable cash flow | $74,789 | $92,522 | $148,466 | $188,910 | | Total units outstanding | 211,853 | 210,687 | N/A | N/A | | Distributable cash flow per unit | $0.353 | $0.439 | N/A | N/A |

Core Insights - The energy sector has several oversold stocks that present potential buying opportunities for undervalued companies [1] - The Relative Strength Index (RSI) is a key indicator for identifying oversold conditions, typically below 30 [1] Company Summaries - Clean Energy Technologies Inc (CETY) has an RSI of 29.9, with a recent stock price of $0.25, reflecting a 20% decline over the past month [7] - Black Stone Minerals LP (BSM) has an RSI of 28, with a recent stock price of $12.95, showing a 7% decline over the past five days [7]

Financial Data and Key Metrics Changes - The preliminary voting results indicated a majority of votes in favor of the election of directors and the ratification of Deloitte as the independent registered public accounting firm for the fiscal year ending December 31, 2025 [15] Business Line Data and Key Metrics Changes - No specific business line data or key metrics were discussed during the meeting [16] Market Data and Key Metrics Changes - No specific market data or key metrics were provided during the meeting [16] Company Strategy and Development Direction and Industry Competition - The meeting focused on the election of directors and the ratification of the independent accounting firm, indicating a stable governance structure and continuity in management [10][12] Management's Comments on Operating Environment and Future Outlook - Management did not provide specific comments on the operating environment or future outlook during the meeting [16] Other Important Information - The meeting included formalities such as the appointment of the inspector of the election and the announcement of the record date for unitholders [8][4] - The agenda included the election of directors, ratification of Deloitte, and approval of the 2025 long-term incentive plan [10][11] Q&A Session Summary - There were no questions submitted during the Q&A session, and the meeting concluded without further discussion [17][18]

Production and Sales - As of March 31, 2025, the company holds mineral and royalty interests in 41 states, including ownership in approximately 71,000 producing wells[83]. - During Q1 2025, Aethon successfully turned to sales 11 gross (0.7 net) wells, with an estimated 17 gross (1.0 net) additional wells expected to turn to sales in the remainder of 2025[84]. - In the Louisiana Haynesville, two gross (0.2 net) wells were turned to sales under Accelerated Drilling Agreements (ADAs) during Q1 2025[85]. - The company anticipates nine gross wells to turn to sales in Q4 2025 in the Permian Basin, with the remainder expected in the first half of 2026[87]. - Oil and condensate sales dropped by 29.7% to $50,093,000, primarily due to lower production volumes and realized commodity prices[113]. - Natural gas and NGL sales increased by 38.6% to $58,235,000, driven by higher realized commodity prices despite reduced production volumes[116]. - Production of oil and condensate decreased by 22.4% to 716 MBbls, while natural gas production fell by 9.8% to 14,853 MMcf[113]. Financial Performance - For the three months ended March 31, 2025, total revenue decreased by 43.8% to $59,252,000 compared to $105,493,000 for the same period in 2024[113]. - Adjusted EBITDA for the quarter was $82,167,000, down from $104,117,000 in the prior year, reflecting a decrease of 21.1%[111]. - Distributable cash flow decreased to $73,677,000 from $96,388,000, representing a decline of 23.6%[111]. - The company recognized $52.4 million in unrealized losses from commodity derivative instruments during the first quarter of 2025, compared to $25.1 million in the same period in 2024[117]. - General and administrative expenses rose by 7.7% to $15,172,000, primarily due to increased cash and equity-based compensation[123]. - Interest expense increased by 122.1% to $1,397,000, driven by higher borrowings under the Credit Facility[124]. Cash Flow and Investments - Cash flows provided by operating activities decreased to $64.8 million for the three months ended March 31, 2025, down from $104.5 million in the same period of 2024, representing a decline of approximately 38.0%[130]. - Cash flows used in investing activities improved to $(13.1) million for the three months ended March 31, 2025, compared to $(24.0) million in the same period of 2024, a decrease of approximately 45.5%[131]. - Cash flows used in financing activities decreased to $(51.9) million for the three months ended March 31, 2025, down from $(110.3) million in the same period of 2024, a reduction of approximately 53.0%[132]. - The company spent $2.3 million on capital expenditures for non-operated working interests in 2025, with $0.1 million invested in the first quarter of 2025[133]. - The company acquired mineral and royalty interests for $14.2 million during the three months ended March 31, 2025, funded by $10.3 million in cash and $3.9 million in equity[134]. Market Conditions - The average WTI spot oil price decreased to $71.87 per barrel in Q1 2025 from $83.96 in Q1 2024, while Henry Hub spot natural gas rose to $4.11 per MMBtu from $1.54[91]. - Net natural gas exports averaged 14.4 Bcf per day in Q1 2025, a 21% increase from the 2024 average, with forecasts of 15.5 Bcf per day for the remainder of 2025[95]. - Natural gas storage levels are projected to rise to 3.7 Tcf by the end of October 2025, which would be 3% lower than the five-year average[94]. - The U.S. rotary rig count decreased to 592 in Q1 2025 from 621 in Q1 2024, with oil rigs at 484 and natural gas rigs at 103[92]. Risk Management - The company utilizes fixed-price swap contracts to mitigate the impact of commodity price volatility on cash generated from operations[101]. - The company has hedged a portion of expected future volumes for the remainder of 2025 and 2026, in accordance with its Credit Facility terms[105]. Debt and Financing - The company maintains a Credit Facility with a maximum credit amount of $1.0 billion, with a reaffirmed borrowing base of $580.0 million as of April 2025[144]. - The company had $47.1 million in weighted average outstanding borrowings under the Credit Facility, with a weighted average interest rate of 6.92% for the three months ended March 31, 2025[152]. - The company authorized a $150.0 million unit repurchase program, which will be funded from cash on hand or borrowings under the Credit Facility[128]. - Aethon Energy has commitments to drill a minimum of nine wells in the current program year ending May 2025 under the San Augustine Joint Exploration Agreement[141]. - As of March 31, 2025, the company was in compliance with all debt covenants associated with its Credit Facility[145].

Financial Data and Key Metrics Changes - Net income for the first quarter was $15.9 million with adjusted EBITDA of $82.2 million, maintaining a quarterly distribution of $0.0375 per unit [7][6] - Distributable cash flow for the quarter was $73.7 million, representing a coverage ratio of 0.93 times, slightly lower due to a seismic license purchase [7][8] Business Line Data and Key Metrics Changes - Mineral and royalty production was 34,200 BOE per day, while total production volumes were 35,500 BOE per day, both in line with the previous quarter [7] - In East Texas, Aethon operated three rigs and turned to sales 11 gross wells in 2025, with another 17 expected for the remainder of the year [9] - In Louisiana Haynesville, two incremental high-interest wells were turned to sales in March, bringing the total to four under accelerated drilling agreements [10] Market Data and Key Metrics Changes - The company is encouraged by the strength in natural gas prices, which is expected to drive additional near-term gas-weighted activity [6][13] - The ongoing development in the Permian position includes more than 35 gross wells, with 24 already spud and nine anticipated to turn to sales in Q4 2025 [11] Company Strategy and Development Direction - The company continues to focus on high-interest acreage in both oil and gas regions, with a long-term strategy tied to natural gas [6][17] - The Board approved maintaining the quarterly distribution due to a strong financial position and asset outlook, while closely monitoring commodity environments [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy and outlook across assets, indicating a solid quarter and ongoing development [11] - The company is actively evaluating acquisition opportunities, particularly in the Shelby Trough, while remaining open to other potential acquisitions [15][17] Other Important Information - The company has been active in acquiring over $160 million in minerals since September 2023, focusing on long-term growth tied to natural gas strategy [15][16] Q&A Session Summary Question: Activity in Haynesville and Aethon's well completions - Management is encouraged by the strength in natural gas prices and anticipates continued activity levels, with Aethon on schedule for the completion of the remaining 17 gross wells [13][14] Question: Current acquisition opportunities and oil price impact - Management views ongoing acquisitions as beneficial for long-term growth, particularly in natural gas, while remaining focused on the Shelby Trough [15][16]

Financial Data and Key Metrics Changes - Net income for the first quarter was $15.9 million with adjusted EBITDA of $82.2 million, maintaining a quarterly distribution of $0.0375 per unit [6][5] - Distributable cash flow for the quarter was $73.7 million, representing a coverage ratio of 0.93 times [6] Business Line Data and Key Metrics Changes - Mineral and royalty production was 34,200 BOE per day, while total production volumes were 35,500 BOE per day, both in line with the previous quarter [6] - In East Texas, Aethon operated three rigs and turned to sales 11 gross wells in 2025, with another 17 expected for the remainder of the year [7][8] Market Data and Key Metrics Changes - The company is encouraged by the strength in natural gas prices, which is expected to drive additional near-term gas-weighted activity [5][11] - The Louisiana Haynesville area saw two incremental high-interest wells turned to sales in March, bringing the total to four under accelerated drilling agreements [8] Company Strategy and Development Direction - The company continues to focus on high-interest acreage in both oil and gas regions, with ongoing development activity expected to benefit from recent acquisitions [6][14] - The acquisition strategy remains focused on the Shelby Trough area, with over $160 million in minerals acquired since September 2023 [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy and outlook across assets, emphasizing the ability to generate long-term value for shareholders [9] - The company is closely monitoring commodity environments and activity trends, indicating a proactive approach to potential market changes [7] Other Important Information - The company has made a seismic license purchase to enhance subsurface evaluation in the expanded Shelby Trough area [6] Q&A Session Summary Question: Activity in the Haynesville given the rerate in natural gas prices - Management is encouraged by the strength in natural gas prices and anticipates increased activity levels across the basin, with ongoing developments expected this year [11][12] Question: Current opportunity set for acquisitions and impact of oil price decrease - The company sees long-term growth opportunities in its acquisition strategy, particularly in natural gas, while remaining open to evaluating other opportunities as they arise [13][14]