Black Stone Minerals NYSE: BSM reported first-quarter 2026 results that management described as a “strong” start to the year, driven by higher production across its mineral and royalty portfolio and increased activity in key natural gas and oil regions.
Production growth and basin-level drivers
Taylor DeWalch, co-CEO and president, said the quarter was “highlighted by higher production across our mineral position,” attributing the outperformance to “increased natural gas activity in the Louisiana Haynesville and Shelby Trough, along with strong oil production in the Permian.”
On the company’s outlook, DeWalch said Black Stone continues to view 2026 as “a year of production growth compared to 2025” as development activity ramps in its core areas, and he reiterated that the partnership is maintaining the production guidance it outlined in February.
Haynesville and Shelby Trough activity and agreements
Fowler Carter, co-CEO and president, said the company “executed across our commercial initiatives,” including continued activity under its Haynesville Expansion Acquisition Program. During the quarter, Black Stone acquired an additional $12 million of mineral and royalty acreage, bringing total deployment under the program since inception in 2023 to “more than $250 million,” according to Carter.
Operational activity under development agreements in the Shelby Trough also advanced during the quarter. Carter said Adamas spud four wells and turned seven wells online, including the Congo wells in southern San Augustine County. He said the Congo wells “continued to push the historical extent of the Shelby Trough” and delivered “strong initial results,” reaching 30 MMcf per day.
Management also provided an update on additional operators in the area:
- Caturus is “preparing for their initial activity to begin in June with a pilot hole and several commitment wells,” Carter said.
- Revenant spud two wells during the quarter, but one experienced a loss of well control incident, which the company said it is still evaluating.
Beyond the development agreements, Carter said Black Stone has seen “an increase in activity” across the legacy Shelby Trough and the emerging Haynesville Bossier Expansion Resource Play, which connects the Shelby Trough to the western Haynesville. He said there are currently 13 active rigs across Angelina, Nacogdoches, and San Augustine counties under Adamas, Apex, Exco, and Rockcliff, while Expand is drilling in southern Anderson County and Comstock continues drilling across the western Haynesville.
Carter added that the company saw “strong leasing activity” and remained encouraged by continued interest in the Permian.
New marketing effort for additional acreage
Building on activity in the Shelby Trough expansion area, Carter said Black Stone progressed an opportunity highlighted on the prior quarter’s call that includes “another approximately 300,000 gross mineral acres.” The company is “currently marketing this project to experienced capable operators to secure an additional development agreement,” which Carter said it believes could be “comparable in scale to our other programs” and provide “meaningful incremental production growth over time.”
Financial results, distribution, and commodity price volatility
Chris Bonner, senior vice president, chief financial officer, and treasurer, said the quarter was marked by “significant commodity price volatility.” He said natural gas pricing was affected by “extreme weather-driven swings,” including winter storm-related regional pricing dislocations that temporarily pressured the company’s realizations relative to Henry Hub in February before moderating in March. On oil, Bonner said pricing reflected broader geopolitical developments that intensified later in the quarter and “remain ongoing.”
Bonner said the partnership is “actively managing our hedge position” as part of its risk management approach and is monitoring pricing and operator activity across the portfolio.
On operating results, Bonner reported overall production of 35.9 MBOE per day, up 16% from the prior quarter, and total production of 37 MBOE per day. Net income totaled $13.3 million for the quarter, while adjusted EBITDA was $87 million. Bonner said 54% of oil and gas revenue in the quarter came from natural gas and natural gas liquids.
As previously announced, the company declared a distribution of $0.30 for the quarter, or $1.20 on an annualized basis. Distributable cash flow was $76.5 million, representing 1.2x coverage for the period.
Q&A: well control incident and operator behavior
During the question-and-answer session, management addressed the loss of well control incident on a Revenant well. Asked whether the well could be salvaged or might be abandoned, Fowler Carter said an investigation is ongoing and that “we just don’t know yet,” adding it is “too early to tell.” He said there is “potential for going back into that well, and there may be potential for not going back into that well.”
Asked whether the incident could affect production expectations for 2026, Carter said the company’s “enthusiasm is [not] tempered in any way, shape, or form,” but acknowledged it could be “a bit of a speed bump,” while adding that “over I’m gonna say a two-year period, you won’t see any difference.” DeWalch said the strong start to the year “helps” relative to the company’s original guidance framework and noted the partnership is also watching how operators respond to pricing in a volatile commodity environment.
On the market’s reaction to the incident, Texas Capital analyst Derrick Whitfield asked whether the issue was isolated rather than affecting a broader swath of acreage. Carter responded, “Yes.” DeWalch added the well area is “fully surrounded by development” and said the region is “pretty well delineated from a subsurface standpoint.”
Whitfield also asked about changes in behavior following a change in ownership at Aethon and now Adamas Energy. DeWalch said Black Stone has “at least some expectations on their cadence of operations” based on contractual commitments, but that it is “to be determined on excess growth beyond the commitments.”
On midstream capacity for the broader Shelby Trough-to-western Haynesville expansion, DeWalch said there is “quite a bit of infrastructure out there,” and that as the area potentially grows by “several more gross Bcf a day” over coming years, “a number of other midstream projects” are in the queue, including “existing plus additional infrastructure kind of underway.”
In closing remarks, DeWalch reiterated management’s positive view of the quarter and said the company looks forward to the rest of 2026.
About Black Stone Minerals NYSE: BSM
Black Stone Minerals L.P. NYSE: BSM is a publicly traded limited partnership that acquires and manages oil and natural gas mineral interests and producing royalty interests across the United States. The company's business model centers on holding fractional ownership in subsurface mineral estates, which allows it to earn royalty income from hydrocarbon production without taking on the capital expenditures or operating risks associated with exploration and development.
Founded in 1876 and headquartered in Houston, Texas, Black Stone Minerals has built a diversified portfolio spanning key U.S.
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