8-K: Black Stone Minerals, L.P. Announces First Quarter 2025 Results

Black Stone Minerals, L.P. reports its Q1 2025 financial results, highlighting a net income of $15.9 million and a distribution of $0.375 per unit.

Summary

• Black Stone Minerals, L.P. (BSM) reported its financial and operating results for the first quarter of 2025.
• Mineral and royalty production averaged 34.2 MBoe/d, while total production, including working-interest volumes, was 35.5 MBoe/d.
• Net income for the quarter was $15.9 million, and Adjusted EBITDA totaled $82.2 million.
• Distributable cash flow was $73.7 million for the first quarter.
• BSM announced a distribution of $0.375 per unit for the first quarter of 2025, with a distribution coverage of approximately 0.93x.
• Total debt remained at $63.0 million as of both March 31, 2025, and May 2, 2025, with approximately $4.3 million of cash on hand as of May 2, 2025.
• The average realized price per Boe, excluding derivative settlements, was $33.94, a 10% increase from both Q4 2024 and Q1 2024.
• Oil and gas revenue was $108.3 million, up 6% from the previous quarter but down from $113.2 million in Q1 2024.
• The company reported a loss on commodity derivative instruments of $56.0 million for the quarter.
• Black Stone acquired $14.2 million of additional mineral and royalty interests during the quarter, bringing total acquisitions since September 2023 to $160.6 million.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company highlights its strong financial position and strategic acquisitions, there are concerns about declining income and cash flow, as well as lower distribution coverage. The management's commentary is cautiously optimistic.

Positives

• The average realized price per Boe increased by 10% year-over-year and quarter-over-quarter, reaching $33.94.
• Oil and gas revenue increased by 6% compared to the previous quarter, totaling $108.3 million.
• The company reaffirmed its borrowing base under the credit facility at $375.0 million and is in compliance with all financial covenants.
• Black Stone continues to make strategic mineral and royalty acquisitions, investing $14.2 million in Q1 2025.
• Development activity in key areas like the Shelby Trough and Louisiana Haynesville is progressing, with new wells being turned to sales.

Negatives

• Net income decreased to $15.9 million compared to $46.3 million in the previous quarter and $63.9 million in Q1 2024.
• Adjusted EBITDA decreased to $82.2 million from $90.1 million in Q4 2024 and $104.1 million in Q1 2024.
• Distributable cash flow decreased to $73.7 million from $81.9 million in Q4 2024 and $96.4 million in Q1 2024.
• The distribution coverage ratio was approximately 0.93x, below 1.0x, indicating that the distribution exceeded distributable cash flow.
• The company reported a significant loss of $56.0 million on commodity derivative instruments.
• Total reported production averaged 35.5 MBoe/d, down from 36.1 MBoe/d in Q4 2024 and 40.3 MBoe/d in Q1 2024.

Risks

• Market volatility could impact the company's financial performance.
• Lower distribution coverage ratio (0.93x) raises concerns about the sustainability of the current distribution level.
• Significant losses on commodity derivative instruments can negatively affect net income.
• Decline in total production compared to previous periods could impact future revenue.
• Reliance on development activity by third-party operators exposes the company to potential delays or underperformance.

Future Outlook

Black Stone expects to benefit from near-term development activity and production on certain high-interest acreage in both oiland gas-focused regions. The company anticipates 17 gross (1.0 net) additional wells to turn to sales during the remainder of 2025 in the Shelby Trough. Nine gross wells are expected to turn to sales in the Permian Basin in Q4 2025, with the remainder expected in the first half of 2026.

Management Comments

• Thomas L. Carter, Jr., Black Stone's Chairman, Chief Executive Officer and President, stated that despite recent market volatility, the company's financial position and asset outlook remain strong.
• He also mentioned that the lower distribution coverage was partially driven by an expenditure related to a seismic license.
• Management remains confident in the long-term growth opportunities provided by their targeted mineral acquisitions program.
• The company is staying keenly aware of the current price environment and activity across all of its assets.

Industry Context

Black Stone's focus on mineral and royalty interests aligns with a broader industry trend of seeking stable, long-lived assets. The company's strategic acquisitions in areas like the Shelby Trough reflect a targeted approach to growth, contrasting with more general acquisition strategies. The decision to farm out working-interest participation to third-party capital providers is a common strategy to reduce capital expenditures and risk.

Comparison to Industry Standards

• Black Stone's royalty-focused model is comparable to companies like Viper Energy Partners (VNOM) and Kimbell Royalty Partners (KRP), which also focus on acquiring and managing mineral and royalty interests.
• The distribution coverage ratio of 0.93x is lower than some peers, where coverage typically aims to be above 1.0x to ensure distribution sustainability.
• The company's debt level of $63.0 million appears manageable given its reaffirmed credit facility and compliance with financial covenants.
• The realized price per Boe of $33.94 is within the range of other mineral and royalty companies, but can vary based on regional pricing and commodity mix.

Stakeholder Impact

• Shareholders will receive a distribution of $0.375 per unit, although the lower distribution coverage may raise concerns about future payouts.
• Employees are likely to be impacted by the company's strategic focus on mineral acquisitions and development activity.
• Operators in the Shelby Trough, Louisiana Haynesville, and Permian Basin will continue to work with Black Stone on development projects.
• The company's financial performance and debt levels could impact its relationships with creditors.

Next Steps

• The company will continue development activity in the Shelby Trough, Louisiana Haynesville, and Permian Basin.
• Black Stone plans to continue evaluating and pursuing targeted mineral and royalty acquisitions.
• The company will file its Quarterly Report on Form 10-Q for the first quarter of 2025 on or around May 6, 2025.
• The distribution of $0.375 per unit will be paid on May 15, 2025, to unitholders of record as of May 8, 2025.

Key Dates

Keywords

Black Stone Minerals, Mineral Interests, Royalty Interests, Production, Financial Results, Adjusted EBITDA, Distributable Cash Flow, Distribution, Commodity Derivatives, Acquisition, Shelby Trough, Haynesville, Permian Basin