8-K: Black Stone Minerals Announces Fourth Quarter and Full Year 2024 Results; Provides Guidance for 2025

Black Stone Minerals, L.P. reported its Q4 and full year 2024 financial results, with a net income of $46.3 million for the quarter and provides guidance for 2025, anticipating a positive year driven by stronger gas pricing and increased activity on key acreage.

Summary

• Black Stone Minerals, L.P. announced its fourth quarter and full year 2024 financial and operating results on February 24, 2025.
• The company also provided summary guidance for 2025.
• Mineral and royalty production for Q4 2024 was 34.8 MBoe/d, while total production, including working interest volumes, was 36.1 MBoe/d.
• Net income for the quarter was $46.3 million, and adjusted EBITDA totaled $90.1 million.
• Distributable cash flow for the fourth quarter was $81.9 million.
• Black Stone announced a distribution of $0.375 per common unit for Q4 2024, with a distribution coverage of 1.03x.
• Total debt at the end of the quarter was $25.0 million, decreasing to $12.0 million by February 21, 2025, with $6.9 million in cash.
• For the full year 2024, mineral and royalty volumes decreased 2% to average 36.6 MBoe/d, while average full year production was 38.5 MBoe/d.
• Reported 2024 net income and Adjusted EBITDA were $271.3 million and $380.9 million, respectively.
• Cash distributions attributable to the full year 2024 were $1.50 per common unit.
• The company expects full year 2025 production to be between 38 and 41 MBoe/d, representing approximately 2% growth over 2024.
• Estimated proved oil and natural gas reserves at year-end 2024 were 57.4 MMBoe, a decrease of 11% from 64.5 MMBoe at year-end 2023.
• The standardized measure of discounted future net cash flows was $868.1 million at the end of 2024, compared to $1,019.5 million at year-end 2023.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the company's solid financial performance, conservative leverage, and positive outlook for 2025; however, the decrease in proved reserves and the year-over-year decline in mineral and royalty volumes temper the overall sentiment.

Positives

• The company ended 2024 with stronger gas pricing and fundamentals.
• The company maintained its quarterly distribution of $0.375 per unit, or $1.50 for the full year, with excess coverage.
• The company has a conservative leverage position of 0.07x.
• The company added $110 million in grass-roots mineral acquisitions throughout 2024.
• The company expects to benefit from increased activity on high-interest acreage in multiple areas.
• The company expects an overall increase in development on gas-weighted assets driven by strong natural gas prices.
• Total debt decreased from $25.0 million at the end of the quarter to $12.0 million as of February 21, 2025.
• Aethon has already turned-to-sales (TTS) 11 gross (0.9 net) wells with early data showing better performance than the older offsets and strong initial rates primarily between 20 30 MMcf/d.

Negatives

• Mineral and royalty volumes in 2024 decreased 2% over the prior year.
• The company experienced headwinds during the year from lower natural gas pricing and production.
• Estimated proved oil and natural gas reserves at year-end 2024 decreased 11% from the previous year.
• The standardized measure of discounted future net cash flows decreased from the previous year.

Risks

• The company's ability to execute its business strategies is a risk.
• The volatility of realized oil and natural gas prices is a risk.
• The level of production on the company's properties is a risk.
• Overall supply and demand for oil and natural gas, and regional supply and demand factors, delays, or interruptions of production are risks.
• Conservation measures and general concern about the environmental impact of the production and use of fossil fuels are risks.
• The company's ability to replace its oil and natural gas reserves is a risk.
• General economic, business, or industry conditions including slowdowns, domestically and internationally, and volatility in the securities, capital, or credit markets are risks.
• Cybersecurity incidents, including data security breaches or computer viruses are risks.
• Competition in the oil and natural gas industry is a risk.
• The availability or cost of rigs, equipment, raw materials, supplies, oilfield services or personnel is a risk.
• The level of drilling activity by the company's operators, particularly in areas such as the Shelby Trough where the company has concentrated acreage positions is a risk.

Future Outlook

Black Stone Minerals expects a positive 2025, driven by stronger gas pricing and increased activity on high-interest acreage, with production guidance of 38 41 MBoe/d, representing approximately 2% growth over 2024; the company also plans to continue its targeted mineral acquisition program.

Management Comments

• Thomas L. Carter, Jr., Black Stone Minerals Chairman, Chief Executive Officer, and President, commented, 'We ended last year and started this year with stronger gas pricing and fundamentals, which when coupled with our solid oil assets, sets up for what we anticipate to be a positive 2025.'
• He also stated that the company remained within its production guidance at 38.5 MBoe/d for 2024, despite headwinds from lower natural gas pricing and production.
• He noted that the company was able to maintain its quarterly distribution of $0.375 per unit, or $1.50 for the full year, with excess coverage and a conservative leverage position of 0.07x.
• He added that the company executed on its strategic, long-term focus by adding $110 million in grass-roots mineral acquisitions, while also working with partners solidifying development and managing assets across all basins.
• He expects the company to benefit from increased activity on high-interest acreage in multiple areas and an overall increase in development on gas-weighted assets driven by strong natural gas prices in 2025.
• Finally, he stated that the company plans to further advance its targeted mineral acquisition program and is encouraged by the long-term prospects the program provides its shareholders.

Industry Context

Black Stone Minerals' focus on mineral and royalty interests aligns with a broader industry trend of companies seeking stable, long-lived assets that provide consistent cash flow; the company's strategic acquisitions and development plans reflect a proactive approach to capitalizing on favorable gas pricing and increasing activity in key basins.

Comparison to Industry Standards

• It is difficult to compare Black Stone Minerals directly to other companies due to its unique business model focused on mineral and royalty interests.
• However, its production metrics and financial performance can be benchmarked against other oil and gas companies with significant mineral acreage.
• For example, companies like Viper Energy Partners LP (VNOM) and Brigham Minerals, Inc. (MNRL) also focus on mineral and royalty interests and can provide a basis for comparison.
• Black Stone's distribution yield and coverage ratio can be compared to other master limited partnerships (MLPs) in the energy sector to assess its attractiveness to income-seeking investors.
• The company's leverage ratio of 0.07x is significantly lower than many of its peers, indicating a conservative financial approach.

Stakeholder Impact

• Shareholders will benefit from the continued distribution of $0.375 per common unit.
• Employees may see increased opportunities due to the company's expansion and development plans.
• Operators on Black Stone's acreage will benefit from the company's focus on attracting capital and securing drilling commitments.
• The company's long-lived, non-cost-bearing mineral and royalty interests provide for stable production and reserves over time, allowing the majority of generated cash flow to be distributed to unitholders.

Next Steps

• Aethon is expected to continue its development program under the amended JEAs with an estimated 17 gross (1.1 net) additional wells TTS during 2025.
• BSM expects an additional 11 gross (0.6 net) wells to TTS in 2025 in the Louisiana Haynesville.
• A large producer is expected to begin development of 37 gross (1.3 net) wells in Culberson County, TX, which includes 8 gross wells to be TTS in the fourth quarter of 2025.
• The company plans to further advance its targeted mineral acquisition program.
• Black Stone Minerals will host a conference call and webcast for investors and analysts to discuss its results for the fourth quarter and full year of 2024 on Tuesday, February 25, 2025.

Key Dates