Black Stone Minerals(BSM) - 2025 Q2 - Quarterly Results

Executive Summary 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 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] 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 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 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] - Partnered with Revenant Energy for a substantial new development covering approximately 270,000 gross acres in the Shelby Trough[4][19] - 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][5] Quarterly Financial and Operating Results This section details Black Stone Minerals' Q2 2025 production, realized prices, revenues, net income, Adjusted EBITDA, distributable cash flow, and financial position Production Overview 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] Realized Prices, Revenues, and Net Income 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 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 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] Distributions 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 This section details Black Stone Minerals' development activities across key basins and its ongoing strategy of targeted mineral and royalty acquisitions Development Activity 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] - 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] - 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] - 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] Acquisition Activity 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] - Total mineral and royalty acquisitions from September 2023 through July 2025 amounted to $172.3 million, primarily in the expanding Shelby Trough area[23] 2025 Guidance Update This section outlines Black Stone Minerals' revised 2025 production guidance, reflecting lower actual production and anticipated delays in natural gas growth 2025 Guidance Update Black Stone Minerals lowered its total production guidance for 2025 due to lower production in the first half of the year and anticipated delays in natural gas production growth - Total production guidance for 2025 is lowered to 33 MBoe/d to 35 MBoe/d, from the previous range of 38 MBoe/d to 41 MBoe/d[24] - The revision is driven by lower production through Q1 and Q2 2025 and anticipated delays in natural gas production growth through year-end[24] Hedge Position This section details Black Stone Minerals' commodity derivative contracts for anticipated oil and natural gas production in 2025 and 2026 Hedge Position The Partnership has commodity derivative contracts in place covering portions of its anticipated oil and natural gas production for 2025 and 2026 Oil Hedge Position (as of August 1, 2025) | Quarter | Oil Swap (MBbl) | Oil Swap Price ($/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 This section announces Black Stone Minerals' upcoming conference call for Q2 2025 results and an Investor Day in September Conference Call & Investor Day 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] - Black Stone Minerals is planning to host an Investor Day in September, with further details to be released soon[27] About the Partnership 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. 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] - 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] - The business model aims for stable to growing production and reserves over time, distributing the majority of generated cash flow to unitholders[28] Forward-Looking Statements & Risk Factors 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 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] - 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][30] Financial Statements and Non-GAAP Reconciliations 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 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 | $0.56 | Production, Revenue, Pricing, and Expense Details Detailed tables provide a breakdown of production volumes, realized prices, revenues, and operating expenses for the second quarter and first six months of 2025 and 2024, highlighting changes in commodity prices and their impact on revenue Production, Revenues, Pricing, and Expenses (Unaudited, Dollars in thousands, except for realized prices and per Boe data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Production: | | | | | | Oil and condensate (MBbls) | 863 | 953 | 1,579 | 1,876 | | Natural gas (MMcf) | 13,710 | 16,350 | 28,563 | 32,820 | | Equivalents (MBoe) | 3,148 | 3,678 | 6,340 | 7,346 | | Equivalents/day (MBoe) | 34.6 | 40.4 | 35.0 | 40.4 | | Realized prices, without derivatives: | | | | | | Oil and condensate ($/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 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] - 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] - 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][38] Non-GAAP Reconciliations 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 |