Black Stone Minerals, L.P. Q3 FY2024 earnings call

• Had a successful third quarter, maintaining consistent distribution despite production decrease from last quarter due to natural gas volatility.
• Progressed mineral acquisition program, adding about $15 million in minerals and royalty assets along with a substantial lease during the quarter, with $80 million acquired since Q4 2023.
• Continues working with partners for long-term development, focusing on targeted acquisition strategy to enhance development opportunities.
• In East Texas and Louisiana, worked with multiple operators; Aethon brought wells online in Shelby Trough with initial production rates 20-25 million cubic feet per day; signed amendments to joint exploration agreement and looking at operating a rig in Angelina County; Comstock turned wells online in Toledo Bend area.

Mineral and royalty production was 35,300 BOE per day in the third quarter, and total production volumes were 37,400 BOE per day, both down from last quarter. Net income was $92.7 million for the third quarter, with adjusted EBITDA being $86.4 million. 63% of oil and gas revenue in the quarter came from oil and condensate production.

• Maintained updated guidance for the first quarter.
• Well hedged for the remainder of 2024 with 2024 natural gas hedges at approximately $3.55 per MMBtu, benefiting from gas settlement, and over 60% of expected gas and oil volumes hedged for 2024.
• Has attractive hedges in place for 2025 and plans to add additional hedges for 2026.

• Forward-looking statements involve risks that may cause actual results to differ materially from those expressed.
• Refer to cautionary information about forward-looking statements in the press release from yesterday and the Risk Factors section of the 2023 10-K.

Q: Good morning, folks, and thank you for taking my question. I'd like to start first with the Aethon update that you provided. I know you kind of put some factual sort of terms around there. Can you step back and give us kind of an idea on how you see activity level sort of trending going forward? I think the market consternation was on how 2025 volumes would book. If you could kind of just sort of step picture and say what is this amendment kind of what sort of visibility you have over the next couple of years on activity?

A: Thanks, Tim. This is Taylor. I'll just say just start off and first off, I just want to say I appreciate your report last night this morning. So just generally speaking, I think taking a step back and looking at the entire macro picture, we're certainly being thoughtful in thinking about natural gas activity across the entire basin. And we continue to work with our operators across all of Louisiana, Andes Texas, as mentioned in Tom's remarks a little bit earlier. As it relates to Aethon, we continue to work with them as well. And certainly, appreciate the activity in the current rate that they're running in the area, and we'll continue to work with all of our partners. So I hope that answers your question.

Q: So is that a way of saying you think there's going to be one dedicated rig on the area of interest?

A: I'd say as far as exact rig activity, what I would say about Aethon activity just in the whole is that we continue to see them being active in the area and – as we've seen historically, they're going to maintain a level of commitment that they've been working, and we're going to continue to work with them in developing the Shelby Trough.

Q: Okay. Appreciate that. And then like you pivot to the Gulf Coast area, another kind of measured quarter of acquisitions, about $15 million, and you've talked about the progression. – Is this cadence of acquisitions, is that reflective of your ability to get deals done? Or are you trying to be measured back the spending? Like theoretically, could you spend $50 million or $100 million if something came up next quarter? Just trying to understand kind of – it sounds like there's a big opportunity set, but just trying to understand the measured spending to date and maybe where you think you could take that.

A: Yes. Thanks, Tim. That's a good question. And what I'd say is we're continuing to be thoughtful in the current market and our ability to acquire additional minerals in this area in the Gulf Coast that we're looking at. I'd say that we've reached a cadence that we feel pretty comfortable about. But we continue to look on a quarterly, monthly basis at what opportunities there are and assess those on an individual basis.