BSM — Black Stone Minerals, L.P.

Summary of Black Stone Minerals Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Production: Mineral and royalty production reached 35.9 MBoe per day, a 16% increase from the previous quarter; total production was 37.0 MBoe per day.
• Net Income: Reported net income was $13.3 million.
• Adjusted EBITDA: $87 million for the quarter.
• Revenue Composition: 54% of oil and gas revenue derived from natural gas and natural gas liquids.
• Distributions: Declared a distribution of $0.30 per unit, equating to an annualized rate of $1.20.
• Distributable Cash Flow: $76.5 million, representing a coverage ratio of 1.2x.

2. Strategic Updates and Business Highlights

• Increased production driven by heightened natural gas activity in the Louisiana Haynesville and Shelby Trough, alongside strong oil production in the Permian.
• Continued progress in multiple development agreements in the Haynesville and Bossier expansion areas.
• Acquired an additional $12 million in mineral and royalty acreage, bringing total investment under the expansion program to over $250 million since 2023.
• Active drilling and development by operators in the Shelby Trough, with notable results from Adamas and ongoing preparations by Caturus and Revenant.

3. Forward Guidance and Outlook

• The company maintains its production growth guidance for 2026, expecting continued development across core areas.
• Positive long-term outlook for natural gas demand, driven by LNG exports, industrial activity, and power demand.
• Confidence in the structural demand for natural gas, particularly in the Gulf Coast region, where the company has significant acreage.

4. Bad News, Challenges, or Points of Concern

• A well control incident involving Revenant's operations raises uncertainty regarding its impact on the development program, with ongoing assessments needed.
• The company acknowledged significant commodity price volatility during the quarter, influenced by weather events and geopolitical developments.
• While the incident is considered isolated, it may pose a temporary speed bump in production growth expectations.

5. Notable Q&A Insights

• Management is still assessing the implications of the well control incident, with potential for salvaging the well but no definitive conclusions yet.
• Despite the incident, management remains optimistic about overall production growth for 2026, emphasizing that the incident may only cause minor delays.
• There are ongoing discussions regarding the growth potential of operators following changes in ownership at Aethon and Adamas Energy, with expectations for continued development under existing commitments.
• Questions regarding midstream infrastructure adequacy for future growth were addressed, indicating that while current infrastructure is sufficient, additional projects are anticipated to support increased production.

Overall, Black Stone Minerals reported a strong first quarter with positive production metrics and strategic initiatives, while also navigating challenges related to commodity price volatility and operational incidents. The company remains confident in its growth trajectory for the year.