Q1 2025 Black Stone Minerals L.P. Earnings Call

Demi: Thank you for standing by, my name is Demi, and I'll be your conference operator today. As this time, I would like to welcome everyone to the Black Stone Minerals' first quarter 2020-25 earnings conference call.

Demi: All lines have been placed on mute to prevent any background noise.

Demi: After you speak as remarks, there will be a question and answer in session.

Speaker Change: If you would like to ask a question during this time, simply press star and follow with the number one on your telephone keypad. I would not like to join the conference over to Mark Meaux, Director of Finance. Please go ahead.

Mark Meaux: Thank you operator. Good morning to everyone. Thank you for joining us either by phone or online for Black Stone Minerals first quarter 2025 earnings conference call. Today's call is being recorded and will be available on our website or earnings release, which was issued last night.

Mark Meaux: Before we start, I'd like to advise you that we will be making forward-looking statements during this call about our plans, expectations and assumptions regarding our future performance.

Mark Meaux: These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements.

Mark Meaux: or discussion of these risks, you should refer to the cautionary information about board looking statements in our press release from yesterday and the risk factor section of our 2025-10K.

Mark Meaux: We may refer to not certain non-GAF financial measures that we believe are useful in evaluating our performance.

Mark Meaux: Reconciliation of those measures to the most directly comparable gap measure and other information about these non-GAAP metrics are described in our earnings press release from yesterday which can be found on our website at www.flashstoneminerals.com

Speaker Change: Joining me on the call from the company are Taylor DeWalch, Senior Vice President, Chief Financial Officer, and Treasurer, Terry Clark, Senior Vice President, Chief Commercial Officer, Chief Putman, Senior Vice President, and General Counsel, and Fowler Carter, Senior Vice President, Orc Development. I'll now turn the call over to Taylor.

Speaker Change: Thanks, Mark. Good morning, everyone on the call and thank you for joining us today to discuss our first quarter of 2025 results. Tom Witches, he could join us this morning but due to a prior family commitment, it's not able to be on the call today. Thank you for joining us today.

Speaker Change: We have another solid quarter, and we'll be maintaining our quarterly distribution of 37.5 cents per unit, despite the recent volatility in commodity prices and shifting global market dynamics.

Speaker Change: We continue to closely monitor activity levels across all of our assets and we are encouraged by the strength and natural gas prices to drive additional near-term gas weighted activity.

Speaker Change: As mentioned in the press release, we also expect to continue to benefit from near term development activity and production on certain high interest acreage in both oil and gas regions.

Speaker Change: Manor on royalty production was 34.2000 BLE per day in the first quarter and total production volumes were 35.5.000 BLE per day, both of which are about in line with the previous quarter.

Speaker Change: Net income was 15.9 million dollars for the first quarter, with adjusted even of 82.2 million.

As mentioned, we maintained our distribution for the quarter.

and $1.50 on an annualized basis.

Speaker Change: Distributable cash flow for the quarter was $73.7 million, which represents 0.93 times coverage for the quarter.

Speaker Change: The slightly lower level of coverage was largely driven by a seismic license purchase that compliments our robust subsurface evaluation of the expanded Shelby Troph area.

Speaker Change: Overall, given our strong financial position, asset outlook and the unique nature of the seismic purchase, the Board of Proof maintaining our quarterly distribution for the quarter.

Speaker Change: However, we are always closely monitoring the commodity environment and activity trends across our portfolio and the near-term implications these trends imply for our business.

Speaker Change: In East Texas, we continue to work with multiple operators to promote development on our Shelby

Speaker Change: Currently, Athon is operating three rigs on the company's acreage, and it's already turned to sales 11 gross wells in 2025 with another 17 expected for the remainder of the year.

Speaker Change: Excode has also been active on the Shelby Trap Acres during the quarter, running one rig and drilling two high interest wells.

Speaker Change: In addition, BSM continues to benefit from the accelerated drilling agreements in the Louisiana Hainesville with two incremental high-interest wells termed as sales in March. This brings the total ADA wells in the Louisiana Hainesville before while we continue to monitor the other wells in progress.

Speaker Change: As a reminder, under these agreements, the operators will provide near-term certainty and accelerated development of the essence high interest areas exchanged for a slightly-reduced royalty burden.

Speaker Change: In our Permian position, we continue tracking activity across our acreage, including the previously mentioned large development in Colverson County.

Speaker Change: This development includes more than 35 gross wells on B.S. and A. Crutch.

Speaker Change: Notably, 24 of these welds have been spudged to date, and we anticipate 9 gross welds to turn to sales in the fourth quarter of 2025.

Speaker Change: We also continue to monitor several incremental large-scale development projects across our Permian portfolio.

Speaker Change: Again, we had a solid quarter of a remain confident in the long-term strategy and outlook across our assets and our ability to generate long-term value for our shareholders.

Speaker Change: With that, I would like to open the call for questions.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press far one on your telephone keypad to reach your hand and join the queue.

Speaker Change: To withdraw your questions, simply press star one again. If you are called upon to ask your question and then listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not unmute when asking your question. Again, press star one to join the queue.

John Innes: And your first question comes from the line of Jan Enis with Texas Capital. Your line is open.

Good morning all and thanks for taking my questions.

John Innes: For my first one, building off your prepared remarks, I wanted to ask if you could share what you are seeing in terms of activity in the Hainesville, just given the re-rate in natural gas prices.

John Innes: And then as it relates to Atheon, could you give a sense of any visibility you have into their cadence of completing the remaining 17 gross wells in 2025?

Thanks, John . This is Taylor. Appreciate the questions.

Speaker Change: Yeah, I think when we look at the hands of the activity, we're certainly encouraged by the continued strength in.

Natural gas prices and...

Speaker Change: Looking forward to continuing increase in activity levels across the basin, and when we specifically look at some of the

Speaker Change: High interest developments that we've called out, we continue to be encouraged that the majority of those are going to continue to happen this year.

Speaker Change: I think speaking specifically to Ethan and your second question, we continue to track on schedule with our completions for those 17 wells throughout the remainder of this year, and just look forward to the ongoing development both from...

Aeson and other operators in that area.

Terrific color. For my fallup, shipping over to Acquisition Activity.

Speaker Change: You have been active in inquiring over 160 million in Minerals in September 2023, as you guys have noted.

Speaker Change: and continue to target the Shelby trough. My question is, how do you view the current opportunity set and does the decrease in oil prices make acquisitions and oilier basins potentially an attractive counter cyclical opportunity, or do you continue to focus on the Shelby trough?

Speaker Change: Thanks, that's a good question. We've been, as you mentioned, very active in our acquisitions and

really see a lot of opportunity for long-term growth.

Speaker Change: that ties into just long-term, natural gas strategy, especially with our beneficial location of those acquisitions.

Speaker Change: and their proximity to the Gulf Coast in that demand center.

Speaker Change: I think as we look at our ongoing acquisition strategy, we continue to look across the market as it makes sense and as it fits our strategy and our portfolio. So there may be opportunities that we will continue to evaluate and look at. But as of right now, you know, and as we have been historically looking over the last couple of years, certainly focused in one area. Thank you.

That's it for me. I appreciate the time.

Thanks, John.

Speaker Change: Again, if you would like to ask a question, please press star one.

Speaker Change: And that includes our question and answer session. I'll hand the call back over to you.

Taylor for any closing remarks.

Speaker Change: Thank you, Albert, and thank you all for calling in to our call this morning, and we look forward to talking to you again next week.

Speaker Change: This concludes today's conference call. Thank you all for joining and you may now disconnect.

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