Black Stone Minerals, L.P.

What they do

Black Stone owns mineral and royalty interests and non-operated working interests, earning revenue when operators produce oil and natural gas from its acreage. As of December 31, 2025, its interests included ownership in approximately 71,000 producing wells across all major onshore producing basins. It also generates revenue from mineral lease bonus and delay rentals under lease agreements. The company does not operate wells; development is driven by third-party operators.

Revenue drivers

• Oil and condensate — Represented 65% of second quarter 2026 oil and gas revenue of $115.4 million, benefiting from improved oil pricing during the quarter.
• Natural gas — Mineral and royalty production was 72% natural gas in the second quarter of 2026; lower Haynesville natural gas volumes drove the sequential production decline.
• Lease bonus and other income — Contributed $6.7 million in the second quarter of 2026, up from $6.4 million in the first quarter and $4.7 million a year earlier.
• Commodity derivative instruments — Produced a $26.8 million gain in the second quarter of 2026, composed of an $8.8 million realized loss and a $35.6 million non-cash unrealized gain.

Recent performance

Second quarter 2026 net income was $106.4 million, with Adjusted EBITDA of $91.3 million and distributable cash flow of $80.4 million. Total production averaged 33.5 MBoe/d, of which mineral and royalty volumes were 32.5 MBoe/d, down 9% from the prior quarter primarily on lower Haynesville natural gas volumes. Average realized price per Boe excluding derivative settlements was $37.82, up 7% sequentially and 17% year over year. Oil and gas revenue of $115.4 million was down 2% from the first quarter but above the $102.0 million reported a year earlier. The company declared a second quarter distribution of $0.32 per unit, or $1.28 annualized, a 7% increase over the prior quarter, with distribution coverage of 1.18x.

Strategy

Black Stone's principal business is maximizing the value of its existing mineral and royalty portfolio through active management, marketing mineral assets for lease, and structuring leases to encourage drilling. Management highlights mineral acquisitions, development agreements, and active asset management as parts of a differentiated organic growth strategy. Under the Aethon agreement in the Shelby Trough, Aethon operated three rigs in the fourth quarter of 2025, with 6 wells spud in the second half of 2025, 8 more expected in the first half of 2026, and 10 expected in the second half of 2026. The Revenant agreement covers 270,000 gross acres with approximately 122,000 undeveloped net acres controlled by Black Stone, and was amended in November 2025 to maintain a 6-well commitment for 2026 and convert future commitments to completed gross lateral-foot targets at one well per 7,000 lateral feet. Management also says it has made significant progress toward an agreement covering a new development area.

Risks

• Commodity price volatility — Realized oil and natural gas prices drive revenue, and derivative instruments have produced large swings, including a $64.6 million loss in the first quarter of 2026 and a $26.8 million gain in the second quarter.
• Operator concentration and activity — The level of drilling by operators, particularly in the Shelby Trough and Haynesville where Black Stone has concentrated acreage, affects production and lease bonus revenue.
• Production declines — Mineral and royalty production fell 9% sequentially in the second quarter of 2026, driven by lower Haynesville natural gas volumes, and the company depends on new development to replace declines.
• Reliance on third-party operators — Black Stone does not operate wells; its results depend on operators obtaining capital, permits, equipment, and services to drill and complete wells on its acreage.

Outlook

Management describes the company as at an important inflection point for production and commercial activity, citing progress under existing development agreements and significant progress toward an agreement covering a new development area. It remains highly encouraged by the long-term outlook for natural gas and increasing activity across core development areas. The company also continues leasing activity and its ongoing mineral acquisition program, which it says are focused on enhancing its development position and supporting long-term production growth.