Black Stone Minerals Q4 2024 Earnings Report

Black Stone Minerals EPS Results

• Actual EPS: $0.18
• Consensus EPS: $0.39
• Beat/Miss: Missed by -$0.21
• One Year Ago EPS: N/A

Black Stone Minerals Revenue Results

• Actual Revenue: $83.73 million
• Expected Revenue: $115.46 million
• Beat/Miss: Missed by -$31.73 million
• YoY Revenue Growth: N/A

Black Stone Minerals Announcement Details

• Quarter: Q4 2024
• Date: 2/24/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 25, 2025
• Conference Call Time: 10:00AM ET

Black Stone Minerals (NYSE:BSM), together with its subsidiaries, owns and manages oil and natural gas mineral interests. It owns mineral interests in approximately 16.8 million gross acres, nonparticipating royalty interests in 1.8 million gross acres, and overriding royalty interests in 1.6 million gross acres located in 41 states in the United States. The company was founded in 1876 and is based in Houston, Texas.

Black Stone Minerals Q4 2024 Earnings Call Transcript

Key Takeaways

• Blackstone Minerals held its Q4 distribution flat at $0.375 per unit with distributable cash flow coverage of 1.03x despite volatile commodity prices and weak natural gas headwinds.
• In Q4, mineral and royalty production averaged 34,800 BOE/day (36,100 BOE/day total) with net income of $46.3 million and adjusted EBITDA of $90.1 million; full‐year 2024 net income was $271.3 million and adjusted EBITDA $380.9 million.
• The company deployed $43 million on mineral and royalty acquisitions in Q4 (about $130 million since September 2023), focusing on Gulf Coast positions—particularly the Shelby Trough—to capitalize on LNG growth and natural gas fundamentals.
• 2025 guidance calls for higher production driven by high‐interest development in East Texas (Shelby Trough), accelerated drilling agreements in the Louisiana Haynesville (13 gross wells planned), and a 37‐well program in the Permian’s Culberson County.
• With a clean balance sheet, ample liquidity and a constructive natural gas outlook supported by LNG demand, Blackstone is pursuing a conservative, targeted acquisition strategy to sustain long‐term value and shareholder returns.

Presentation

[Operator]

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Blackstone Minerals Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the conference over to Mark Moe, Director of Finance. Please go ahead.

[Mark Meaux, Director of Finance at Black Stone Minerals]

Thank you. Good morning to everyone. Thank you for joining us either by phone or online for Blackstone Minerals' fourth quarter and full year twenty twenty four earnings conference call. Today's call is being recorded and will be available on our website along with the earnings release, which was issued last night. 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, Director of Finance at Black Stone Minerals]

These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward looking statements. For a discussion of these risks, you should refer to the cautionary information about forward looking statements in our press release from yesterday and the Risk Factors section of our twenty twenty four ten ks. We may refer to certain non GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of these measures to the most directly comparable GAAP 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.blackstoneminerals.com. Joining me on the call from the company are Tom Carter, Chairman, CEO and President Taylor DeWalsh, Senior Vice President, Chief Financial Officer and Treasurer Carrie Clark, Senior Vice President, Chief Commercial Officer Steve Putman, Senior Vice President and General Counsel and Fowler Carter, Senior Vice President, Corporate Development. I'll now turn the call over to Tom.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Good morning to everyone on the call and thank you for joining us today to discuss our fourth quarter, and full year twenty four results. Beginning before getting into those details, I want to congratulate Tyler Carter on his recent promotion to SVP of corporate development, where he will continue to lead our acquisition program and work with all of the team on our ongoing long term initiatives. Twenty twenty four can be described in two halves. We started the year with additive oil production and revenue from our strong oil assets, but weak natural gas pricing hindered production in the second half of the year. Despite the natural gas headwinds, our robust portfolio of both oil and gas assets enabled us to remain within our production guidance and hold our distributions at $0.375 for the fourth quarter.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

We're encouraged by the stronger natural gas pricing fundamentals, which coupled with our attractive oil assets puts Blackstone in a solid position for 2025. In addition, we continue to focus on our targeted acquisition strategy, which further builds on our long runway of high interest development opportunities. On the acquisition front, we added another $43,000,000 in minerals and royalty acquisitions during the quarter, bringing our total acquisitions since September of twenty twenty three to around $130,000,000 In 2025, we're confident that we will continue to identify and execute on accretive opportunities, which enhance our existing asset position, increase development opportunities and ultimately look at long term value to the shareholders. Overall, it was a solid quarter and a solid year despite a volatile pricing environment. We're pleased to hold our distribution flat during the year with excess coverage.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Our clean balance sheet and ample liquidity position enable us to continue to execute on our commercial strategy, including targeted grassroots acquisitions and working with operators to achieve full field development across our assets. Constructive natural gas outlook buoyed by growth in LNG demand and robust oil production from multiple basins provides a solid outlook for 2025 and long profitable runway for the company to ultimately drive strong long term shareholder returns. With that, I'll turn it over to Taylor to walk through the financial details of the quarter.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

Thank you, Tom, and good morning, everyone. As Tom pointed out, we had a solid quarter despite continued commodity price volatility. Mineral and royalty production was 34,800 BOE per day in the fourth quarter and total production volumes were 36,100 BOE per day, both of which are down from last quarter. For 2024, mineral and royalty production was 36,600 Boe per day, while total production volumes averaged 38,500 per day. Net income was $46,300,000 for the fourth quarter with adjusted EBITDA being $90,100,000 50 9 percent of oil and gas revenue in the quarter came from oil and condensate production.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

For the full year 2024, net income was $271,300,000 with adjusted EBITDA totaling $380,900,000 We maintained our distribution at $0.375 per unit for the quarter or $1.5 on an annualized basis. Distributable cash flow for the quarter was $81,900,000 which represents 1.03 times coverage for the quarter. In conjunction with the earnings release, we released our 2025 guidance yesterday. As we look forward to the full year 2025, we expect an increase in production from 2024 levels. In addition to activity across our broad acreage position, this production increase is driven by our unique high interest development activity we highlighted in our press release last night.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

In East Texas, we continue to work with multiple operators to promote development on our Shelby Trough acreage. Currently, Exco is operating one rig and Aethon is operating three rigs on the company's acreage. Aethon has already turned to sales 11 gross wells in 2025 with another 17 expected for the remainder of the year. In addition, the accelerated development agreements in Louisiana Haynesville are well underway with first production on two high interest wells during the fourth quarter of twenty twenty four and another 11 gross wells expected to begin producing during 2025. Under these agreements, the operators will provide near term certainty and accelerating development on BSM's high interest areas in exchange for a slightly reduced royalty burden.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

In our Permian position, we are tracking activity across our acreage, including a large development in Culberson County. This development includes 37 gross wells on Blackstone's acreage. Currently, 13 wells have been slowed and we expect eight of the 37 wells to first production in 2025. These developments across different basins represent unique high interest assets within our portfolio and further demonstrate our strong diverse asset base covering growth opportunities in both oil and gas plays. We expect lease bonus operating expense and production costs for 2025 to be in line with 2024.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

G and A is expected to increase slightly in 2025 as a result of hiring and promotions during the last year as well as some additional hiring expected in 'twenty five. Again, we had a solid quarter and year despite volatility in natural gas prices. With a strong start to 2025, we are confident in our long term strategy and our ability to generate long term value for our shareholders. With that, I'd like to open up the call for questions.

[Operator]

We'll take our first question from the line of John Annis with Texas Capital. Please go ahead.

[John Annis, Vice President at Texas Capital]

Hey, good morning guys and thanks for taking my questions. For my first one, I wanted to focus in on the acquisitions you made in Q4. Understanding you guys may prefer not to disclose specific locations at this time, could you help frame whether recent acquisitions continue to be focused on the Gulf Coast region and whether it's oil and gas? And then perhaps more broadly, would you characterize or how would you characterize the current bid ask spread for mineral opportunities for both oil and gas?

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Hi, this is Tom. I'll take a shot at that. Our acquisition program is generally focused in the Gulf Coast region around expanding our relatively large, Shelby Trough footprint where we have had from many prior acquisitions a very solid footprint. And in the natural gas environment, LNG growth opportunity sets that we see in the future. We are conservatively growing this footprint in that area to take advantage of long term add to our long term inventory.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

And I don't remember the second half of your question, if you could repeat that. We're not actively looking at acquisitions in other basins at this time.

[John Annis, Vice President at Texas Capital]

Got it. That makes sense. For my follow-up, shifting over to the accelerated drilling agreements entered into during 2024 in the Louisiana Haynesville, how should we think about the duration of these agreements? Are they multi year type agreements? And then with the constructive outlook for natural gas, especially the call on growth from the Haynesville, how does that backdrop impact your calculus of executing additional ADAs?

[John Annis, Vice President at Texas Capital]

I guess another way of asking it, do you let activity naturally accelerate across your position while retaining a higher royalty? Or does the certainty of activity that ADA is bringing still remain attractive?

[Carrie Clark, SVP & CCO at Black Stone Minerals]

Hi, this is Carrie. So on the ADA, they are not generally, these multiyear new, like the contracts that joint expiration agreement we have with AIGON, these are much more targeted opportunities that we've gone out and identified both based on how much opportunity is there from a first and interest perspective as far as where we might have interest already concentrated in a smaller area. And then, of course, the resource and the location of it. So, in aggregate, these accelerated agreements add up quite a bit, but they are typically much more limited than a contract like a joint a multiyear joint exploration agreement. And then I think I answered question two in that response.

[Carrie Clark, SVP & CCO at Black Stone Minerals]

But just to be clear, we do we are intentional in seeking out those opportunities to try to we call them accelerated it's accelerated development, but it's really goes to the point of our whole strategy. One of the tenants of our strategy to try to maintain some predict more predictability on the production side and consistency on volumes, since we can't do anything about commodity price. And as a mineral owner, since we're not the one out there drilling the wells, that's how this is one of the tools that we have to influence the activity without being in charge of actually drilling the wells.

[Taylor DeWalch, SVP & CFO at Black Stone Minerals]

One follow-up, John, I'd just say is that while the agreements that we've entered into thus far are certainly targeted, as Carrie mentioned, we do still see other opportunities to potentially continue this type of a program into additional years. So there are additional opportunities that we continue to look at.

[John Annis, Vice President at Texas Capital]

Thanks guys.

[Operator]

And our next question will come from the line of Tim Rezvan with KeyBanc Capital Markets. Please go ahead.

[Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Good morning, folks, and thanks for taking my questions. As a start, I just wanted to say that we appreciated the operational detail in the release. It was helpful sort of update. As we think about this increasing line of sight and activity in the Haynesville, do you think that the activity like now as in first half of twenty twenty five is reflecting this increase? Or do you think this will be more of a back half in 2026 impact?

[Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Just trying to understand with the long cycle times because this increase seems to be setting up for a pretty good kind of multiyear period of growth. Just curious if you can have any kind of context on when this would be reflected and should we get a little more constructive on 2026 from this news?

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Tim, this is Tom. I'll take a shot at that and maybe give you a little more information than normal. In our in our Haynesville area, especially in the Shelby Trough, we are hopeful for a very long cycle of, modest to better than modest annual growth in activity in and around our properties. Specifically, the acquisition area that we're working on encompasses in excess of 450,000 acres in various counties in East Texas. And, there's ATHON is the most active in that area, but they only control about 40% of the acreage in that area.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

And we are moving towards owning minerals and or leases in that area totaling almost half of the total acreage in the area. And we see a very long runway with very large amounts of additional activity out there for many years to come with and we are also trying to meaningfully expand our operator subset out there to have multiple operators operating in that area. Of course, all of this is considered it's no surprise to anybody. It's considerably natural gas price sensitive and natural gas prices have been hard to predict forever. We feel like the current environment is as not completely predictable, but certainly relatively predictable.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

And so we're optimistic that there's a fair amount of growth to come out here from expanding the areas that are being developed and expanding the number of operators.

[Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay. That's helpful context. I appreciate that. And then in your prepared comments, you mentioned $43,000,000 of that $110,000,000 was spent in the fourth quarter on acquisitions. I understand you don't want to show your cards too much on the outlook, but can you provide some context on kind of what is still out there in terms of the opportunity set?

[Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

And then just trying to think like how comfortable you would be putting debt on the balance sheet. It looks like you could theoretically make another $300,000,000 acquisitions and be less than one times levered. So what's your kind of inclination to buy more and what's available? Any comments on that would be helpful. Thank you.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Well, there is significant additional identified inventory available to be purchased. There's as much left to go as has been acquired previously, if not more. And we are taking a conservative but studied look at that. We do not want to I doubt that you would see us becoming $300,000,000 or $400,000,000 levered, but there are many different avenues that we could take to further expand our position out there. But we're we're going at it conservatively, trying to watch and monitor what's going on in the natural gas market.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

And that's going to have as much to say about how long and fast we go after this as anything else.

[Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay. Thanks for the context.

[Operator]

And that will conclude our question and answer session. I'll hand the call back over to Tom Carter for any closing comments.

[Thomas Carter, Chairman, President and CEO at Black Stone Minerals]

Okay. Well, thanks very much for your interest and questions today in joining the call. And, we look forward to chatting with you further in the

Participants

Executives

• Mark Meaux, Director of Finance
• Thomas Carter, Chairman, President and CEO
• Taylor DeWalch, SVP & CFO
• Carrie Clark, SVP & CCO

Analysts

• John Annis, Vice President at Texas Capital
• Tim Rezvan, Managing Director & Equity Research Analyst at KeyBanc Capital Markets