Sign in

You're signed outSign in or to get full access.

BS

Black Stone Minerals, L.P. (BSM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered stable operations: mineral & royalty production rose 5% QoQ to 34.7 MBoe/d; total production was 36.3 MBoe/d, with oil & gas revenue $100.2M, net income $91.7M, Adjusted EBITDA $86.3M, and DCF $76.8M .
  • EPS modestly beat S&P Global consensus, while revenue missed: $0.40 actual vs $0.29 consensus EPS (beat), and $100.2M revenue vs $104.0M consensus (miss) (consensus values marked with asterisks) .
  • Distribution held at $0.30/unit (1.21x coverage); leverage improved post-quarter with debt reduced to $73M by Oct 31; maturity of the revolver extended to 2030 and $580M borrowing base reaffirmed .
  • Narrative pivot: near-term volumes aided by Permian oil strength; multi-year gas growth underpinned by Shelby Trough/Western Haynesville development agreements; 2025 production guidance maintained at 33–35 MBoe/d from the call .

What Went Well and What Went Wrong

What Went Well

  • Production mix/volumes: Mineral & royalty volumes rose 5% QoQ to 34.7 MBoe/d; total production 36.3 MBoe/d, supported by strong Permian oil volumes .
  • Cash generation and coverage: Adjusted EBITDA was $86.3M and DCF $76.8M; distribution of $0.30/unit equated to 1.21x coverage—excess cash helped fund acquisitions and preserve balance sheet flexibility .
  • Balance sheet/liquidity: Credit facility maturity extended to 2030; borrowing base reaffirmed at $580M; debt fell from $95M at 9/30 to $73M by 10/31 .

Management quotes:

  • “We had a successful third quarter… mineral and royalty production of 34,700 BOE per day, an increase of 5% over the prior quarter… Distributable cash flow… 1.21x coverage…” .
  • “The partnership's outlook remains strong, anchored by long term contract development in our high interest Shelby Trough acreage…” .

What Went Wrong

  • Revenue softness vs expectations: Oil & gas revenue declined 2% QoQ to $100.2M and missed S&P Global consensus (~$104.0M), despite higher volumes, reflecting lower realized prices QoQ ($30.01/boe vs $32.40 in Q2) .
  • Price headwinds: Average realized price/boe fell 7% QoQ (to $30.01), pressuring oil & gas revenue despite derivative gains .
  • Continued reliance on non-GAAP tailwinds: Commodity derivative gains were $27.3M (incl. $20.4M unrealized), a step down from Q2’s $52.8M gain; non-cash hedge swings complicate earnings comparability .

Financial Results

Headline Financials (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Oil & Gas Revenue ($M)$108.3 $102.0 $100.2
Net Income ($M)$15.9 $120.0 $91.7
Diluted EPS (per unit)$0.04 $0.53 $0.40
Adjusted EBITDA ($M)$82.2 $84.2 $86.3
Distributable Cash Flow ($M)$73.7 $74.8 $76.8
Distribution ($/unit)$0.375 $0.30 $0.30
Distribution Coverage (x)0.93x 1.18x 1.21x
Total Production (MBoe/d)35.5 34.6 36.3
Avg Realized Price ($/Boe)$33.94 $32.40 $30.01
Derivative Gain (Loss) ($M)$(56.0) $52.8 $27.3

Q3 2025 vs S&P Global Consensus

MetricActualConsensusSurprise
EPS (per unit)$0.40 $0.29*+$0.11 (beat)*
Oil & Gas Revenue ($M)$100.2 $104.0*-$3.8 (miss)*

Values marked with asterisks were retrieved from S&P Global.

Product Mix and Realized Prices (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Oil & Condensate Revenue ($M)$50.1 $55.8 $57.1
Nat Gas & NGL Revenue ($M)$58.2 $46.2 $43.1
Oil % of Oil & Gas Revenue46% 55% 57%
Realized Oil Price ($/Bbl)$69.96 $64.67 $62.60
Realized Gas Price ($/Mcf)$3.92 $3.37 $2.96
Avg Realized Price ($/Boe)$33.94 $32.40 $30.01

Volumes and Mix (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Oil (MBbls)716 863 912
Gas (MMcf)14,853 13,710 14,556
Equivalents (MBoe)3,192 3,148 3,338
Total Production (MBoe/d)35.5 34.6 36.3
Mineral & Royalty Volumes (MBoe/d)34.2 33.2 34.7
% Natural Gas (M&R)78% 72% 73%

Balance Sheet and Distributions

MetricQ1 2025Q2 2025Q3 2025
Debt at Quarter-End ($M)$63.0 $99.0 $95.0
Cash at Quarter-End ($M)$2.4 $2.5 $2.9 (+$3.3M restricted)
Post-Quarter Debt Snapshotn/a$71.0 (Aug 1) $73.0 (Oct 31)
Distribution ($/unit)$0.375 $0.30 $0.30 (pay 11/13; rec 11/6)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Production (MBoe/d)FY 202533–35 (lowered on Aug 4) 33–35 (maintained on Q3 call) Maintained
Distribution PolicyQuarterly$0.30/unit in Q2 2025 $0.30/unit in Q3 2025 (1.21x coverage) Maintained
Credit FacilityMaturity/BaseMaturity: 2027; Base: $580M (as of Q2) Maturity extended to 2030; Base reaffirmed $580M Extended maturity

Notes:

  • Management reiterated a multi-year growth path from Shelby Trough/Western Haynesville and Permian developments; 2026 production expected to grow 3–5 MBoe/d over 2025 (from Q2 call context) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025, Q1 2025)Current Period (Q3 2025)Trend
Shelby Trough expansion/Western HaynesvilleIdentified expansion; marketing 180k gross acres; Revenant deal (min 6 wells 2026 → 25/yr) Marketing 220k gross acres with framework for 12 wells/yr by 2030; expectation to more than double drilling within 5 years Accelerating development plans
Multi-operator strategy (Aethon, Revenant, etc.)Restructured Aethon cadence; layering multiple operators to lift total well count Aethon one rig; 3 wells spud in program year; building toward >50 wells/yr across expanded area Building toward multi-operator cadence
Permian large-scale projectMonitoring >34 wells in Culberson; 22 wells to TTS in 2H25 34 wells spud; 5 TTS in Q3; 13 TTS expected in Q4; remainder 1H26 Oil-driven near-term uplift
Pricing/differentialsMaintained hedging; gas-weighted exposure Gas diffs pressured by Waha; BSM notes Henry Hub exposure for Haynesville volumes; hedges provide protection Managing with hedges; diffs remain a watch item
Production guidanceLowered to 33–35 MBoe/d for FY25 Maintained at 33–35 MBoe/d (near high end YTD) Stable
Capital/LeverageLiquidity intact; base reaffirmed Maturity pushed to 2030; debt reduced to $73M by Oct 31 Improved flexibility

Management Commentary

  • Strategic outlook: “We expect these development agreements to ultimately drive over 50 wells drilled in the expanded Shelby Trough per year… providing significant gas growth for the partnership…” .
  • Near-term drivers: “We had a solid quarter bolstered by strong oil volumes from our Permian assets, which ultimately produced robust coverage of the announced distribution.” .
  • Long-term framing: “We put out a multiyear forecast… focus on the next five years… if the natural gas markets are… less volatile and more secure… the time to buy our shares is now, not two years from now.” .
  • Geology/expansion: Discussion of geology bridging Western Haynesville and expanded Shelby Trough (thicker commercial shale packages moving west), supporting longer runway .

Q&A Highlights

  • KLX area marketing status: “We were at the one-yard line, and now we're at the half-yard line… expect to have that wrapped up in the next couple of weeks.” .
  • Production trajectory into 2026: No change to 2025 guide; expect Aethon volumes and Permian wells to drive activity into early next year; watch winter-season gas activity for 2026 setup .
  • Differentials/hedging: Gas diffs pressured (Waha); BSM reiterates consistent hedging and substantial Henry Hub exposure from Haynesville volumes .
  • Tone: Constructive, emphasizing multi-year growth from contracted developments, with confidence in LNG/power demand for gas .

Estimates Context

  • EPS beat and revenue miss vs S&P Global: Q3 2025 EPS $0.40 vs $0.29*; Oil & gas revenue $100.2M vs $104.0M* .
  • Implications: Slight EPS beat despite revenue miss reflects mix (57% oil & condensate), cost discipline, and derivative gains; consensus may adjust mix assumptions and incorporate updated hedge table and Permian timing .
    Values marked with asterisks were retrieved from S&P Global.

Key Takeaways for Investors

  • Operations steady; oil strength and hedge program offset lower realized prices, enabling 1.21x distribution coverage at $0.30/unit .
  • Modest EPS beat vs consensus alongside a top-line miss suggests near-term resilience with mix/hedge support; watch realized prices and diffs into Q4 .
  • 2025 production guidance maintained at 33–35 MBoe/d; near-term catalysts include incremental Permian TTS in Q4 and early 2026 .
  • Structural gas growth story intact: multi-operator Shelby Trough/Western Haynesville program expected to more than double drilling over five years; LNG/power demand supportive .
  • Balance sheet flexibility improved: revolver maturity extended to 2030; borrowing base reaffirmed; debt reduced to $73M by Oct 31 .
  • Monitor Q4: 13 Permian gross wells expected to TTS, additional ADAs in Louisiana Haynesville, and progress on KLX package—potential 2026 volume uplift .
  • Leadership succession effective Jan 1, 2026, with continuity of strategy; potential to be a catalyst for longer-term execution confidence .

Appendix: Q3 2025 Hedge Snapshot (as of Oct 31, 2025)

  • Oil swaps: 4Q25 555 MBbl @$71.22; 2026 615 MBbl/quarter @$64.39; 2027 120 MBbl/quarter @$59.90 .
  • Gas swaps: 4Q25 11,040 BBtu @$3.45; 2026 ~11.7–12.0k BBtu/quarter @$3.67; 2027 ~5.4–5.52k BBtu/quarter @$3.92 .