Earnings call transcript: Black Stone Minerals misses Q1 2025 forecasts

Black Stone Minerals LP (BSM) reported its first-quarter 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company posted an EPS of $0.04, sharply below the expected $0.32, and actual revenue of $59.25 million, falling short of the anticipated $118.35 million. Despite the earnings miss, the company maintains an attractive dividend yield of 10.53% and shows strong financial fundamentals, according to InvestingPro analysis, which rates the company’s overall financial health as "GOOD." Following the announcement, BSM’s stock experienced a decline of 2.49% in after-hours trading, closing at $14.25.

Key Takeaways

• Black Stone Minerals reported a substantial miss in both EPS and revenue for Q1 2025.
• The company’s stock fell by 2.49% in after-hours trading following the earnings release.
• Despite the earnings miss, BSM maintained its quarterly distribution of $0.375 per unit.
• The company remains optimistic about natural gas prices and continues to focus on strategic developments.

Company Performance

Black Stone Minerals’ performance in the first quarter of 2025 was below expectations, with significant shortfalls in both earnings and revenue compared to analyst forecasts. Despite these challenges, the company reported a net income of $15.9 million and an adjusted EBITDA of $82.2 million. InvestingPro data reveals impressive gross profit margins of 86.12% and a notably low debt-to-equity ratio of 0.03, indicating strong operational efficiency. The firm’s mineral and royalty production stood at 34,200 barrels of oil equivalent (BOE) per day, with total production volumes reaching 35,500 BOE per day.

Financial Highlights

• Revenue: $59.25 million, below the forecast of $118.35 million.
• Earnings per share: $0.04, missing the expected $0.32.
• Net income: $15.9 million.
• Adjusted EBITDA: $82.2 million.
• Distributable cash flow: $73.7 million (0.93x coverage).

Earnings vs. Forecast

Black Stone Minerals reported an EPS of $0.04, significantly missing the forecasted $0.32, representing an 87.5% shortfall. Revenue was also below expectations, with actuals at $59.25 million against a forecast of $118.35 million, a 50% miss.

Market Reaction

Following the earnings announcement, Black Stone Minerals’ stock declined by 2.49% in after-hours trading. The stock closed at $14.25, moving closer to its 52-week low of $12.80. According to InvestingPro analysis, BSM typically trades with low volatility (Beta: 0.31) and appears slightly undervalued based on their proprietary Fair Value model. This reaction reflects investor disappointment with the company’s financial performance, despite broader market trends that have been relatively stable. InvestingPro subscribers have access to detailed valuation metrics and 10+ additional ProTips about BSM’s financial position.

Outlook & Guidance

Looking ahead, Black Stone Minerals is focused on ongoing development in East Texas and the Permian Basin, with plans to turn nine gross wells to sales in Q4 2025. The company remains optimistic about natural gas prices and is strategically positioned in key regions such as the Shelby Trough and Haynesville. With an 11-year track record of consistent dividend payments and a current yield of 10.53%, BSM continues to demonstrate strong shareholder returns. For deeper insights into BSM’s financial outlook and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro.

Executive Commentary

Taylor DeWaltz, CFO of Black Stone Minerals, stated, "We had another solid quarter and we’ll be maintaining our quarterly distribution." DeWaltz also expressed confidence in the company’s strategic direction, noting, "We continue to look across the market, as it makes sense and as it fits our strategy."

Risks and Challenges

• Volatility in natural gas prices could impact future revenue.
• The company faces operational risks associated with drilling and production activities.
• Geopolitical and macroeconomic factors could influence commodity markets and investor sentiment.

Q&A

During the earnings call, analysts inquired about the company’s activity in the Haynesville region and natural gas price trends. John Innis from Texas Capital specifically questioned Aethon’s well completion schedule and Black Stone Minerals’ acquisition strategy.

Full transcript - Black Stone Minerals (BSM) Q1 2025:

Demi, Conference Operator: Thank you for standing by. My name is Demi, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Blackstone Minerals First Quarter twenty twenty five 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.

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

Mark Moe, Director of Finance, Blackstone Minerals: Thank you, operator. Good morning to everyone. Thank you for joining us either by phone or online for Blackstone Minerals’ first quarter twenty twenty five 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.

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 five ten ks. We may refer to certain non GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of those 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 Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer Gary 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 Taylor.

Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer, Blackstone Minerals: Thanks, Mark. Good morning to everyone on the call, and thank you for joining us today to discuss our first quarter twenty twenty five results. Tom wishes he could join us this morning, but due to a prior family commitment, he’s not able to be on the call today. We had another solid quarter and we’ll be maintaining our quarterly distribution of $0.03 $75 per unit We continue to closely monitor activity levels across all of our assets, and we are encouraged by the strength in natural gas prices to drive additional near term gas weighted activity.

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. Mineral and royalty production was 34,200 BOE per day in the first quarter and total production volumes were 35,500 BOE per day, both of which are about in line with the previous quarter. Net income was $15,900,000 for the first quarter with adjusted EBITDA of 82,200,000.0 As mentioned, we maintained our distribution for the quarter and 1.5 on an annualized basis. Distributable cash flow for the quarter was $73,700,000 which represents 0.93 times coverage for the quarter. The slightly lower level of coverage was largely driven by a seismic license purchase that complements our robust subsurface evaluation of the expanded Shelby Trough area.

Overall, given our strong financial position, asset outlook and the unique nature of the seismic purchase, the Board approved maintaining our quarterly distribution for the quarter. 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. In East Texas, we continue to work with multiple operators to promote development on our Shelby Trough acreage. Currently, Aethon is operating three rigs on the company’s acreage and has already turned to sales 11 gross wells in 2025, with another 17 expected for the remainder of the year. Exco has also been active on the Shelby Trough acreage during the quarter running one rig and drilling two high interest wells.

In addition, BSM continues to benefit from the accelerated drilling agreements in the Louisiana Haynesville with two incremental high interest wells turned to sales in March. This brings the total ADA wells in the Louisiana Haynesville to four, while we continue to monitor the other wells in progress. As a reminder, under these agreements, the operators will provide near term certainty and accelerate development on BSM’s high interest areas in exchange for a slightly reduced royalty burden. In our Permian position, we continue tracking activity across our acreage, including the previously mentioned large development in Culberson County. This development includes more than 35 gross wells on BSM acreage.

Notably, 24 of these wells have been spud to date, we anticipate nine gross wells to turn to sales in the fourth quarter of twenty twenty five. We also continue to monitor several incremental large scale development projects across our Permian portfolio. Again, we had a solid quarter and remain confident in the long term strategy and outlook across our assets and our ability to generate long term value for our shareholders. With that, I would like to open the call for questions.

Demi, Conference Operator: Thank you. We will now begin the question and answer session. Press star one on your telephone keypad to raise your hand and join the queue. To withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, And your first question comes from the line of John Innis with Texas Capital.

Your line is open.

John Innis, Analyst, Texas Capital: Good morning all and thanks for taking my questions. 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 Haynesville just given the rerate in natural gas prices? And then as it relates to Aethon, could you give a sense of any visibility you have into their cadence of completing the remaining 17 gross wells in 2025?

Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer, Blackstone Minerals: Thanks, John. This is Taylor. Appreciate the questions. Yeah, I think when we look at the Haynesville activity, we’re certainly encouraged by, the continued strength in natural gas prices and looking forward to continued increase in activity levels across the basin. When we specifically look at some of the 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.

I think speaking specifically to Aethon in 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 Aison and other operators in that area.

John Innis, Analyst, Texas Capital: Terrific color. For my follow-up, shifting over to acquisition activity. You have been active in acquiring over $160,000,000 in minerals since September 2023, as you guys have noted, 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 in oilier basins potentially an attractive countercyclical opportunity?

Or do you continue to focus on the Shelby Trough?

Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer, Blackstone Minerals: 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 that ties into just long term natural gas strategy, especially with our beneficial location of those acquisitions and their proximity to the Gulf Coast in that demand center. 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’ll continue to evaluate and look at.

But as of right now and as we have been historically looking over the last couple of years, certainly focused, in one area.

John Innis, Analyst, Texas Capital: That’s it for me. I appreciate the time.

Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer, Blackstone Minerals: Thanks, Sean.

Demi, Conference Operator: And that concludes our question and answer session. I’ll hand the call back over to Taylor for any closing remarks.

Taylor DeWaltz, Senior Vice President, Chief Financial Officer and Treasurer, Blackstone Minerals: Thank you, Albert, and thank you all for calling in to our call this morning. And we look forward to talking to again next quarter.

Demi, Conference Operator: This concludes today’s conference call. Thank you all for joining, and you may now disconnect.

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