Group 1 - Black Stone Minerals (NYSE: BSM) reported second quarter earnings that provided sufficient distribution coverage to the adjusted distribution level [1] - The new distribution level enables the company to allocate capital towards increasing inventory levels while managing a decline [1]

PART I – FINANCIAL INFORMATION [Item 1. Condensed Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, statements of equity, and statements of cash flows, along with their accompanying notes, providing a snapshot of the Partnership's financial position, performance, and cash movements [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Partnership's financial position at specific dates, detailing assets, liabilities, and equity Consolidated Balance Sheet Summary | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | TOTAL CURRENT ASSETS | $93,386 | $78,544 | | NET PROPERTY AND EQUIPMENT | $1,165,794 | $1,134,041 | | TOTAL ASSETS | $1,267,889 | $1,218,906 | | LIABILITIES, MEZZANINE EQUITY, AND EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | TOTAL CURRENT LIABILITIES | $28,981 | $30,423 | | Credit facility | $99,000 | $25,000 | | TOTAL LIABILITIES | $165,273 | $89,467 | | MEZZANINE EQUITY (Series B preferred units) | $300,478 | $300,478 | | TOTAL EQUITY | $802,138 | $828,961 | | TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY | $1,267,889 | $1,218,906 | - Total assets increased by **$48.98 million (4.0%)** from December 31, 2024, to June 30, 2025, primarily driven by an increase in oil and natural gas properties, net, and current assets - Total liabilities significantly increased by **$75.81 million (84.7%)** from December 31, 2024, to June 30, 2025, mainly due to a substantial increase in the credit facility balance from **$25.0 million to $99.0 million** [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the Partnership's financial performance over specific periods, including total revenue, income from operations, net income, and earnings per unit Consolidated Statements of Operations Summary | (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 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | TOTAL REVENUE | $159,494 | $109,624 | $218,746 | $215,117 | | INCOME FROM OPERATIONS | $122,281 | $68,490 | $139,442 | $132,464 | | NET INCOME | $120,028 | $68,322 | $135,976 | $132,249 | | NET INCOME ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT (Basic) | $0.53 | $0.29 | $0.57 | $0.56 | - Total revenue for the three months ended June 30, 2025, increased by **$49.87 million (45.5%)** compared to the same period in 2024, primarily driven by a significant gain on commodity derivative instruments[11](index=11&type=chunk)[117](index=117&type=chunk) - Net income for the three months ended June 30, 2025, increased by **$51.71 million (75.7%)** year-over-year, reaching **$120.03 million**[11](index=11&type=chunk) - Basic EPS for the three months ended June 30, 2025, rose to **$0.53** from **$0.29** in the prior year, reflecting improved profitability[11](index=11&type=chunk) [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) This section outlines changes in the Partnership's equity over time, including common units outstanding, partners' equity, and impacts from repurchases, issuances, distributions, and net income Consolidated Statements of Equity Summary | (in thousands) | Common units (count) | Partners' equity (value) | | :------------- | :------------------- | :----------------------- | | BALANCE AT DECEMBER 31, 2024 | 210,695 | $828,961 | | BALANCE AT JUNE 30, 2025 | 211,842 | $802,138 | | **Changes (Dec 31, 2024 to Jun 30, 2025):** | | | | Repurchases of common units | (257) | ($3,755) | | Issuance of common units for property acquisitions | 509 | $7,417 | | Equity–based compensation | — | $7,610 | | Distributions | — | ($158,540) | | Net income | — | $135,976 | - Partners' equity decreased from **$828.96 million** at December 31, 2024, to **$802.14 million** at June 30, 2025, primarily due to distributions exceeding net income and other equity adjustments[13](index=13&type=chunk) - Common units outstanding increased from **210,695 thousand** at December 31, 2024, to **211,842 thousand** at June 30, 2025, mainly due to issuances for property acquisitions and restricted units granted, partially offset by repurchases[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the Partnership's cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Summary | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | CASH FLOWS FROM OPERATING ACTIVITIES | $145,311 | $204,845 | | CASH FLOWS USED IN INVESTING ACTIVITIES | ($42,687) | ($51,681) | | CASH FLOWS USED IN FINANCING ACTIVITIES | ($102,624) | ($196,777) | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $0 | ($43,613) | | CASH AND CASH EQUIVALENTS – end of the period | $2,519 | $26,669 | - Net cash provided by operating activities decreased by **$59.53 million (29.1%)** for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to reduced oil sales and lower cash received from derivative settlements[16](index=16&type=chunk)[145](index=145&type=chunk) - Net cash used in financing activities decreased by **$94.15 million (47.8%)** for the six months ended June 30, 2025, compared to the same period in 2024, driven by lower distributions and net borrowings under the Credit Facility[16](index=16&type=chunk)[147](index=147&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1 - BUSINESS AND BASIS OF PRESENTATION](index=7&type=section&id=NOTE%201%20-%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) This note describes Black Stone Minerals, L.P.'s business, its primary assets, and the basis for presenting its financial statements - Black Stone Minerals, L.P. (BSM) is a publicly traded Delaware limited partnership primarily owning oil and natural gas mineral interests, nonparticipating royalty interests, and overriding royalty interests across **41** U.S. states[18](index=18&type=chunk) - The Partnership operates in a single reportable segment, with the CEO acting as the Chief Operating Decision Maker (CODM), allocating resources and assessing performance based on consolidated net income[24](index=24&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the Partnership's significant accounting policies and any recent accounting pronouncements - No changes in significant accounting policies or their application occurred during the six months ended June 30, 2025[25](index=25&type=chunk) Accrued Revenue and Accounts Receivable (in thousands) | Accrued Revenue and Accounts Receivable (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :------------ | :---------------- | | Accrued revenue | $74,577 | $67,047 | | Accounts receivable | $5,448 | $4,046 | | Total accrued revenue and accounts receivable | $80,025 | $71,093 | - The FASB issued ASU 2024-03 in November 2024, enhancing expense disaggregation disclosures, effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and the Partnership is evaluating its impact[27](index=27&type=chunk) [NOTE 3 - OIL AND NATURAL GAS PROPERTIES](index=9&type=section&id=NOTE%203%20-%20OIL%20AND%20NATURAL%20GAS%20PROPERTIES) This note details the Partnership's activities related to oil and natural gas property acquisitions and asset exchange transactions - During the six months ended June 30, 2025, the Partnership acquired **$45.4 million** in mineral and royalty interests, primarily unproved oil and natural gas properties in the Gulf Coast, funded by **$38.0 million** cash and **$7.4 million** in common units[28](index=28&type=chunk) - The Partnership completed multiple asset exchange transactions in March and February 2025 to consolidate acreage in East Texas, involving the acquisition of net leasehold acres in exchange for undeveloped net mineral and royalty acres in Louisiana and net leasehold acres[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [NOTE 4 - COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS](index=9&type=section&id=NOTE%204%20-%20COMMODITY%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes the Partnership's use of commodity derivative instruments to manage price risk and their fair values - The Partnership uses fixed-price swap contracts to mitigate commodity price risk, not for speculative purposes, and has not designated them as fair value or cash flow hedges[34](index=34&type=chunk)[35](index=35&type=chunk) Fair Values of Derivative Instruments (in thousands) | Fair Values of Derivative Instruments (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Assets | $2,477 | $1,824 | | Total Liabilities | $18,838 | $15,433 | Open Oil Swap Contracts (as of June 30, 2025) | Open Oil Swap Contracts (as of June 30, 2025) | Volume (Bbl) | Weighted Average Price ($/Bbl) | | :------------------------------------ | :----------- | :----------------------------- | | 2025 Third Quarter | 555,000 | $71.22 | | 2026 First Quarter | 480,000 | $64.80 | Open Natural Gas Swap Contracts (as of June 30, 2025) | Open Natural Gas Swap Contracts (as of June 30, 2025) | Volume (MMBtu) | Weighted Average Price ($/MMBtu) | | :------------------------------------------ | :------------- | :------------------------------- | | 2025 Third Quarter | 11,040,000 | $3.45 | | 2026 First Quarter | 11,700,000 | $3.67 | [NOTE 5 - FAIR VALUE MEASUREMENTS](index=12&type=section&id=NOTE%205%20-%20FAIR%20VALUE%20MEASUREMENTS) This note explains the methodology for fair value measurements, categorizing financial instruments into a three-level hierarchy - The Partnership categorizes fair value measurements into a three-level hierarchy based on input observability, with commodity derivative financial instruments measured at Level **2** using market-observable inputs[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[44](index=44&type=chunk) Fair Value Measurements (in thousands) | Fair Value Measurements (in thousands) | Level 2 (June 30, 2025) | Level 2 (December 31, 2024) | | :----------------------------------- | :---------------------- | :-------------------------- | | Financial Assets (Commodity derivative instruments) | $16,481 | $5,634 | | Financial Liabilities (Commodity derivative instruments) | $32,842 | $19,243 | [NOTE 6 - CREDIT FACILITY](index=14&type=section&id=NOTE%206%20-%20CREDIT%20FACILITY) This note provides details on the Partnership's Credit Facility, including its maximum amount, borrowing base, interest rates, and compliance with covenants - The Credit Facility has a maximum credit amount of **$1.0 billion**, terminating on October 31, 2027, with a reaffirmed borrowing base of **$580.0 million** as of April 2025[51](index=51&type=chunk) - The weighted-average interest rate for the Credit Facility was **7.10%** during the six months ended June 30, 2025[54](index=54&type=chunk) - As of June 30, 2025, the aggregate principal balance outstanding was **$99.0 million**, with **$276.0 million** of unused available borrowings, and the Partnership was in compliance with all financial covenants[55](index=55&type=chunk)[56](index=56&type=chunk) [NOTE 7 - COMMITMENTS AND CONTINGENCIES](index=15&type=section&id=NOTE%207%20-%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the Partnership's environmental regulations, legal actions, and potential liabilities - The Partnership's business is subject to U.S. federal, state, and local environmental regulations, but potential remediation costs are not considered material[57](index=57&type=chunk)[58](index=58&type=chunk) - Management believes existing legal actions and claims as of June 30, 2025, will be resolved without material adverse effect on the Partnership's financial condition or operations[59](index=59&type=chunk) [NOTE 8 - INCENTIVE COMPENSATION](index=15&type=section&id=NOTE%208%20-%20INCENTIVE%20COMPENSATION) This note details the Partnership's incentive compensation plans, including cash and equity-based awards, and related expenses Incentive Compensation Expense (in thousands) | Incentive Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Cash—short and long-term incentive plans | $1,235 | $2,521 | | Equity-based compensation—restricted common units | $1,172 | $2,135 | | Equity-based compensation—restricted performance units | $238 | $1,780 | | Board of Directors incentive plan | $550 | $1,100 | | Total incentive compensation expense | $3,195 | $7,536 | - Total incentive compensation expense for the six months ended June 30, 2025, was **$7.54 million**, an increase from **$6.97 million** in the prior year[60](index=60&type=chunk) - The Partnership repurchased **256,771** common units for **$3.75 million** to satisfy tax withholding obligations upon the vesting of equity awards during the six months ended June 30, 2025[60](index=60&type=chunk)[13](index=13&type=chunk) [NOTE 9 - PREFERRED UNITS](index=15&type=section&id=NOTE%209%20-%20PREFERRED%20UNITS) This note describes the Series B cumulative convertible preferred units, their distribution rights, conversion options, and redemption terms - The Series B cumulative convertible preferred units, with a carrying value of **$300.5 million**, are entitled to quarterly distributions, with the rate adjusted to **9.8%** per annum on November 28, 2023, and readjusted every two years thereafter[61](index=61&type=chunk)[62](index=62&type=chunk)[65](index=65&type=chunk) - Holders can convert preferred units to common units on a one-for-one basis, and the Partnership has the option to redeem them during biennial **90-day** windows, with the next window opening on November 28, 2025[63](index=63&type=chunk)[64](index=64&type=chunk) [NOTE 10 - EARNINGS PER UNIT](index=16&type=section&id=NOTE%2010%20-%20EARNINGS%20PER%20UNIT) This note explains the calculation of basic and diluted earnings per unit using the two-class method - The Partnership uses the two-class method for EPU calculation, including restricted common units as participating securities[66](index=66&type=chunk) Earnings Per Unit | EPU (per common unit) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic | $0.53 | $0.29 | $0.57 | $0.56 | | Diluted | $0.53 | $0.29 | $0.57 | $0.56 | - Potentially dilutive Series B cumulative convertible preferred units (**15,072 thousand** units) were excluded from diluted EPU computation for the six months ended June 30, 2025 and 2024, as their inclusion would be anti-dilutive[70](index=70&type=chunk) [NOTE 11 - COMMON UNITS](index=17&type=section&id=NOTE%2011%20-%20COMMON%20UNITS) This note outlines the rights of common unitholders, distribution policies, and details of the unit repurchase program - Common unitholders are entitled to distributions after preferred unitholders receive their **9.8%** per annum distribution[73](index=73&type=chunk) Distributions Declared and Paid Per Common Unit | Distributions Declared and Paid Per Common Unit | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Per common unit | $0.3750 | $0.3750 | $0.7500 | $0.8500 | - The Board authorized a **$150.0 million** unit repurchase program on October 30, 2023, but no repurchases were made under this program for the six months ended June 30, 2025[75](index=75&type=chunk) [NOTE 12 - SUBSEQUENT EVENTS](index=18&type=section&id=NOTE%2012%20-%20SUBSEQUENT%20EVENTS) This note reports significant events that occurred after the balance sheet date but before the financial statements were issued - On July 16, 2025, the Board approved a distribution of **$0.30** per common unit for the three months ended June 30, 2025, payable on August 14, 2025[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Partnership's financial condition and results of operations, highlighting key business developments, the prevailing business environment, and how performance is evaluated [Cautionary Note Regarding Forward-Looking Statements](index=19&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that the report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements based on current expectations, but actual results may differ materially due to significant risks and uncertainties, including commodity price volatility, production levels, and economic conditions[78](index=78&type=chunk) [Overview](index=20&type=section&id=Overview) This section provides an overview of Black Stone Minerals' business as a major owner and manager of oil and natural gas mineral interests in the U.S. - Black Stone Minerals is a major owner and manager of oil and natural gas mineral interests in the U.S., focusing on maximizing value from its existing portfolio through active management, leasing, and structuring terms to encourage drilling[81](index=81&type=chunk) - As of June 30, 2025, the Partnership's non-cost-bearing mineral and royalty interests were located in **41** states, including all major onshore producing basins, with ownership in approximately **71,000** producing wells[82](index=82&type=chunk) [Recent Developments](index=20&type=section&id=Recent%20Developments) This section highlights recent operational activities, including drilling results, accelerated drilling agreements, and new joint exploration agreements - Aethon Energy operated **two** rigs in the Shelby Trough, turning **2** gross (**0.10** net) wells to sales in Q2 2025, with **15** gross (**0.93** net) wells expected to turn to sales in late 2025/early 2026[83](index=83&type=chunk) - In the Louisiana Haynesville, **3** gross (**0.09** net) wells were turned to sales under Accelerated Drilling Agreements (ADAs) in Q2 2025, bringing the total to **seven**, with **two** more expected in Q3 2025[84](index=84&type=chunk)[86](index=86&type=chunk) - The Partnership entered a Joint Exploration Agreement (JEA) with Revenant Energy in May 2025, covering **270,000** gross acres in East Texas, with escalating annual well commitments from **6** in 2026 to **25** in 2030 and beyond[88](index=88&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - An amendment to the Aethon JEAs in May 2025 reduced the contract area by over **50,000** gross acres and lowered the combined annual well commitment to **16** wells[89](index=89&type=chunk) [Business Environment](index=21&type=section&id=Business%20Environment) This section analyzes the prevailing market conditions for oil and natural gas, including price trends, rig counts, and export forecasts - Oil prices decreased in H1 2025 compared to H1 2024 due to weakening global demand, trade policy changes, and an oversupplied market, while natural gas prices increased due to cold weather and higher wholesale power pricing[92](index=92&type=chunk) Benchmark Prices | Benchmark Prices | Second Quarter 2025 | First Quarter 2025 | Second Quarter 2024 | First Quarter 2024 | | :--------------- | :------------------ | :----------------- | :------------------ | :----------------- | | WTI spot oil price ($/Bbl) | $66.30 | $71.87 | $82.83 | $83.96 | | Henry Hub spot natural gas ($/MMBtu) | $3.26 | $4.11 | $2.42 | $1.54 | U.S. Rotary Rig Count | U.S. Rotary Rig Count | Second Quarter 2025 | First Quarter 2025 | Second Quarter 2024 | First Quarter 2024 | | :-------------------- | :------------------ | :----------------- | :------------------ | :----------------- | | Oil | 432 | 484 | 479 | 506 | | Natural gas | 109 | 103 | 97 | 112 | | Total | 547 | 592 | 581 | 621 | - Net natural gas exports averaged **14.2 Bcf** per day in H1 2025, a **19%** increase from 2024, with EIA forecasting further increases to **15.1 Bcf/day** for the remainder of 2025 and **16.0 Bcf/day** for 2026[99](index=99&type=chunk) [How We Evaluate Our Operations](index=23&type=section&id=How%20We%20Evaluate%20Our%20Operations) This section explains the key metrics and non-GAAP financial measures used by the Partnership to assess its operational performance and manage commodity price risk - The Partnership evaluates its operations based on volumes of oil and natural gas produced, commodity prices (including derivative effects), and non-GAAP financial measures like Adjusted EBITDA and Distributable cash flow[100](index=100&type=chunk)[104](index=104&type=chunk) - The Partnership uses fixed-price swap contracts to hedge up to **90%** of expected future volumes for the first **24** months, **70%** for months **25-36**, and **50%** for months **37-48**, without entering into speculative derivative instruments[109](index=109&type=chunk)[110](index=110&type=chunk) Non-GAAP Financial Measures (in thousands) | Non-GAAP Financial Measures (in thousands) | 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 | | Adjusted EBITDA | $84,151 | $100,247 | $166,318 | $204,364 | | Distributable cash flow | $74,789 | $92,522 | $148,466 | $188,910 | - Adjusted EBITDA decreased by **$16.1 million (16.1%)** for the three months ended June 30, 2025, and by **$38.05 million (18.6%)** for the six months ended June 30, 2025, compared to the respective prior periods[115](index=115&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of the Partnership's revenues and operating expenses for the reported periods [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=26&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) This section compares the Partnership's production, revenue, and operating expenses for the three months ended June 30, 2025, against the same period in 2024 Production (Three Months Ended June 30) | Production (Three Months Ended June 30) | 2025 | 2024 | Variance | | :-------------------------------------- | :------ | :------ | :------- | | Oil and condensate (MBbls) | 863 | 953 | (90) (9.4%) | | Natural gas (MMcf) | 13,710 | 16,350 | (2,640) (16.1%) | | Equivalents (MBoe) | 3,148 | 3,678 | (530) (14.4%) | Revenue (Three Months Ended June 30, in thousands) | Revenue (Three Months Ended June 30, in thousands) | 2025 | 2024 | Variance | | :--------------------------------------- | :------- | :------- | :------- | | Oil and condensate sales | $55,807 | $73,889 | ($18,082) (24.5%) | | Natural gas and natural gas liquids sales | $46,189 | $36,493 | $9,696 (26.6%) | | Gain (loss) on commodity derivative instruments | $52,784 | ($5,547) | $58,331 (NM) | | Total revenue | $159,494 | $109,624 | $49,870 (45.5%) | - Oil and condensate sales decreased by **24.5%** due to lower production volumes (down **9.4%**) and realized commodity prices (down **16.6%**)[116](index=116&type=chunk)[118](index=118&type=chunk) - Natural gas and NGL sales increased by **26.6%** due to higher realized commodity prices (up **51.1%**), partially offset by decreased production volumes (down **16.1%**)[116](index=116&type=chunk)[120](index=120&type=chunk) - A significant gain of **$52.78 million** on commodity derivative instruments in Q2 2025, compared to a **$5.55 million** loss in Q2 2024, was primarily driven by changes in forward oil price curves[116](index=116&type=chunk)[121](index=121&type=chunk) Operating Expenses (Three Months Ended June 30, in thousands) | Operating Expenses (Three Months Ended June 30, in thousands) | 2025 | 2024 | Variance | | :-------------------------------------------- | :------ | :------ | :------- | | Lease operating expense | $2,990 | $2,579 | $411 (15.9%) | | Production costs and ad valorem taxes | $9,026 | $13,469 | ($4,443) (33.0%) | | Exploration expense | $1,749 | $14 | $1,735 (NM) | | Depreciation, depletion, and amortization | $9,187 | $11,356 | ($2,169) (19.1%) | | General and administrative | $13,924 | $13,395 | $529 (3.9%) | | Interest expense | $2,270 | $626 | $1,644 (262.6%) | - Production costs and ad valorem taxes decreased by **33.0%** due to lower production taxes from decreased oil prices and reduced production volumes, as well as lower ad valorem tax estimates[124](index=124&type=chunk) - Exploration expense significantly increased to **$1.75 million** from **$14 thousand**, primarily due to costs related to seismic data acquisition projects in the Shelby Trough area[125](index=125&type=chunk) - Interest expense surged by **262.6%** to **$2.27 million** due to higher average outstanding borrowings under the Credit Facility[128](index=128&type=chunk) [Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=28&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) This section compares the Partnership's production, revenue, and operating expenses for the six months ended June 30, 2025, against the same period in 2024 Production (Six Months Ended June 30) | Production (Six Months Ended June 30) | 2025 | 2024 | Variance | | :------------------------------------ | :------ | :------ | :------- | | Oil and condensate (MBbls) | 1,579 | 1,876 | (297) (15.8%) | | Natural gas (MMcf) | 28,563 | 32,820 | (4,257) (13.0%) | | Equivalents (MBoe) | 6,340 | 7,346 | (1,006) (13.7%) | Revenue (Six Months Ended June 30, in thousands) | Revenue (Six Months Ended June 30, in thousands) | 2025 | 2024 | Variance | | :--------------------------------------- | :------- | :------- | :------- | | Oil and condensate sales | $105,900 | $145,113 | ($39,213) (27.0%) | | Natural gas and natural gas liquids sales | $104,424 | $78,504 | $25,920 (33.0%) | | Gain (loss) on commodity derivative instruments | ($3,217) | ($16,837) | $13,620 (80.9%) | | Total revenue | $218,746 | $215,117 | $3,629 (1.7%) | - Total revenue for the six months ended June 30, 2025, increased by **1.7%** to **$218.75 million**, primarily due to higher natural gas and NGL sales and a reduced loss on commodity derivatives, partially offset by decreased oil sales[130](index=130&type=chunk) - Lease bonus and other income increased by **39.6%** to **$11.64 million**, driven by leasing activity in the Permian Basin and proceeds from surface use waivers for solar development[129](index=129&type=chunk)[134](index=134&type=chunk) Operating Expenses (Six Months Ended June 30, in thousands) | Operating Expenses (Six Months Ended June 30, in thousands) | 2025 | 2024 | Variance | | :-------------------------------------------- | :------ | :------ | :------- | | Lease operating expense | $5,152 | $5,011 | $141 (2.8%) | | Production costs and ad valorem taxes | $19,211 | $26,507 | ($7,296) (27.5%) | | Exploration expense | $6,859 | $17 | $6,842 (NM) | | Depreciation, depletion, and amortization | $18,317 | $22,995 | ($4,678) (20.3%) | | General and administrative | $29,096 | $27,485 | $1,611 (5.9%) | | Interest expense | $3,667 | $1,255 | $2,412 (192.2%) | - Exploration expense increased significantly to **$6.86 million**, primarily due to a **$4.0 million** seismic data purchase and additional acquisition project costs[137](index=137&type=chunk) - General and administrative expenses increased by **5.9%** due to higher cash compensation (salaries, one-time personnel costs) and increased equity-based compensation from fewer award forfeitures[138](index=138&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Partnership's sources and uses of cash, capital expenditure plans, and compliance with debt covenants - Primary liquidity sources are cash from operations and Credit Facility borrowings; primary uses are distributions, debt reduction, and business investments[141](index=141&type=chunk) - The Board's distribution policy aims to pay quarterly common unit distributions from operating cash flow after preferred unit distributions and cash reserves, but there is no legal obligation or guarantee[142](index=142&type=chunk) - Cash flows provided by operating activities decreased by **$59.53 million (29.1%)** for the six months ended June 30, 2025, compared to the same period in 2024, mainly due to reduced oil sales and lower cash from derivative settlements[145](index=145&type=chunk) - Net cash used in investing activities decreased by **$8.99 million** for the six months ended June 30, 2025, primarily due to reduced acquisitions of oil and natural gas properties[146](index=146&type=chunk) - The 2025 capital expenditure budget for non-operated working interests is approximately **$2.3 million** (net of farmout reimbursements), with **$0.3 million** invested in H1 2025, mainly for workovers and recompletions[148](index=148&type=chunk) - The Partnership acquired **$45.4 million** in mineral and royalty interests in H1 2025, funded by **$38.0 million** cash and **$7.4 million** in common units, as part of its strategy for targeted acquisitions[149](index=149&type=chunk) - The Credit Facility's borrowing base was reaffirmed at **$580.0 million** in April 2025, with elected cash commitments maintained at **$375.0 million**, and the Partnership was in compliance with all debt covenants as of June 30, 2025[157](index=157&type=chunk)[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Partnership's exposure to various market risks, including commodity price risk, counterparty and customer credit risk, and interest rate risk, explaining how these risks are managed and their potential impact - The Partnership's primary market risk is the volatile pricing of oil, natural gas, and NGLs, which is partially mitigated by commodity derivative financial instruments (fixed-price swap contracts)[161](index=161&type=chunk) - A **10%** discount to SEC commodity pricing for Q2 2025 would result in an approximate **1.3%** reduction of proved reserve volumes[163](index=163&type=chunk) - Credit risk from derivative counterparties is managed by evaluating their credit standing; as of June 30, 2025, all **seven** counterparties were rated Baa2 or better by Moody's and are lenders under the Credit Facility[164](index=164&type=chunk) - Interest rate risk on indebtedness is present, with a **1%** increase in the interest rate on the average outstanding borrowings of **$71.6 million** (H1 2025) potentially increasing interest expense by **$0.4 million**[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the Partnership's disclosure controls and procedures and any changes in internal control over financial reporting - Management concluded that the Partnership's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate financial reporting[167](index=167&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[168](index=168&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the Partnership's involvement in legal actions and claims - Management believes that none of the pending routine litigation, disputes, or claims will have a material adverse effect on the Partnership's financial condition, cash flows, or results of operations[170](index=170&type=chunk) [Item 1A. Risk Factors](index=34&type=page&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive list of risk factors detailed in the Partnership's Annual Report on Form 10-K, noting any material updates - No material changes to the risk factors from those described in the 2024 Annual Report on Form 10-K have occurred, but additional unknown or immaterial risks could still adversely affect the business[171](index=171&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on recent unregistered sales of equity securities and the Partnership's common unit repurchase activities - During Q2 2025, the Partnership issued **253,158** common units valued at **$3.5 million** for property acquisitions, relying on a Section **4(a)(2)** exemption from registration[172](index=172&type=chunk) Purchases of Common Units (June 1 - June 30, 2025) | Purchases of Common Units (June 1 - June 30, 2025) | Total Number of Common Units Purchased | Average Price Paid Per Unit | | :----------------------------------------- | :----------------------------------- | :-------------------------- | | Units withheld for tax withholding | 35,721 | $13.05 | - The **$150.0 million** unit repurchase program authorized on October 30, 2023, remains active, with no repurchases made under this specific program during June 2025[173](index=173&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) This section provides additional information not covered elsewhere in the report - No directors or executive officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[174](index=174&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including partnership agreements, registration rights, incentive plans, and certifications - The exhibits include various amendments to the Certificate of Limited Partnership and the First Amended and Restated Agreement of Limited Partnership, reflecting governance changes[175](index=175&type=chunk) - Key exhibits include the Black Stone Minerals, L.P. 2025 Long-Term Incentive Plan and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act[175](index=175&type=chunk) [Signatures](index=38&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q filing - The report was signed on August 5, 2025, by Thomas L. Carter, Jr., President, CEO, and Chairman (Principal Executive Officer), and H. Taylor DeWalch, Senior Vice President, CFO, and Treasurer (Principal Financial Officer)[180](index=180&type=chunk)

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].