If You Invested in Black Stone Minerals L P (BSM)

Black Stone Minerals, L.P. (NYSE: BSM) is an oil and natural gas mineral company focused on owning and managing mineral and royalty interests. The Partnership states that it is one of the largest owners of oil and natural gas mineral interests in the United States, with a diversified asset base across the continental U.S. Its primary business is actively managing an existing portfolio of mineral and royalty assets and expanding that portfolio through acquisitions of additional mineral and royalty interests.

According to the company, Black Stone owns mineral interests and royalty interests in 41 states in the continental United States. These interests are described as long-lived and non-cost-bearing, meaning the Partnership does not bear drilling and completion capital costs on its mineral and royalty interests but participates in production through royalties. Black Stone believes that this structure, combined with its large and diversified footprint, supports stable to growing production and reserves over time and allows a significant portion of generated cash flow to be distributed to unitholders.

Business model and asset base

Black Stone Minerals’ asset base consists primarily of oil and natural gas mineral and royalty interests. The Partnership highlights that its strategy includes:

• Actively managing its existing mineral and royalty portfolio to maximize value.
• Entering into development agreements with operating partners in key resource plays.
• Expanding its asset base through targeted acquisitions of additional mineral and royalty interests.

The company has emphasized growth in areas such as the Shelby Trough and Haynesville/Bossier plays, as well as activity in the Permian Basin and the Louisiana Haynesville. Black Stone has described its commercial strategy as focused on attracting capital and securing drilling commitments in areas where it already owns significant minerals, and augmenting that position with additional mineral and royalty acquisitions.

Development agreements and key operating areas

Black Stone regularly enters into development agreements with operating companies to advance drilling on its acreage. In its public communications, the Partnership has described several notable arrangements:

• A development agreement with Revenant Energy covering approximately 270,000 gross acres across San Augustine, Nacogdoches, Angelina, Houston, and Trinity counties in Texas, where Black Stone reports it currently controls a substantial amount of undeveloped net acres. Under this agreement, Revenant has escalating annual well commitments beginning in 2026.
• Amended joint exploration agreements with Aethon Energy in Angelina and San Augustine counties, which reduce the contract area and adjust annual well commitments while returning certain highly prospective mineral acreage to Black Stone.
• Accelerated Drilling Agreements in the Louisiana Haynesville, which the Partnership explains are intended to incentivize operators to accelerate development in high-interest areas in exchange for a modest reduction in royalty burden.
• A farmout-related structure in which Ellipsis U.S. Onshore Holdings LLC has the exclusive right to earn non-operated working interests in Black Stone’s Haynesville acreage position under a Farmout Agreement covering approximately 270,000 gross acres associated with BSM’s drilling program with Revenant Energy.
• A development agreement with an affiliate of Caturus Energy, LLC in the Shelby Trough and Haynesville Expansion, covering approximately 220,000 gross acres, with a multi-year drilling program and minimum annual lateral-foot requirements.

In addition to East Texas and the Haynesville/Bossier region, Black Stone has reported ongoing activity on its interests in the Permian Basin, including large-scale development projects on its acreage in Culberson County, Texas.

Production profile and revenue sources

Black Stone’s reported production is primarily derived from mineral and royalty volumes, with a smaller portion from working-interest volumes. The Partnership has disclosed that mineral and royalty volumes represent the vast majority of its total production and that these volumes are significantly weighted toward natural gas. Revenue is generated from oil and condensate sales, natural gas and natural gas liquids sales, lease bonus and other income, and gains or losses on commodity derivative instruments.

The Partnership also uses commodity derivative contracts to hedge portions of its anticipated oil and natural gas production. These hedging activities can result in gains or losses on commodity derivative instruments, which are reported separately from revenue from contracts with customers. Black Stone’s public filings and press releases provide detailed tables summarizing its hedge positions for oil and natural gas over specified future periods.

Growth strategy and acquisitions

Black Stone has described a commercial strategy that combines asset management, development agreements, and acquisitions. Since 2023, the Partnership has reported completing substantial mineral and royalty acquisitions, primarily in the expanding Shelby Trough area. Management commentary indicates that these acquisitions are intended to complement existing positions and support long-term development programs.

The company has also highlighted its focus on “grass-roots” and targeted mineral acquisitions, particularly in areas where it already holds significant mineral interests and has line of sight to additional bolt-on opportunities. These acquisitions are typically described as primarily non-producing mineral and royalty interests, which may contribute to future drilling inventory and production as development progresses.

Capital structure and distributions

As a limited partnership, Black Stone Minerals distributes a portion of its cash flow to common unitholders. The Partnership regularly announces cash distributions per common unit attributable to each quarter, along with distribution coverage ratios and commentary on how distribution levels relate to production trends, commodity prices, and capital allocation decisions.

Black Stone reports maintaining a revolving credit facility with a defined borrowing base and total commitments. The Partnership discloses its cash balances, amounts drawn under the credit facility, and compliance with financial covenants. Management commentary has emphasized disciplined capital management, including the use of excess cash flow for mineral and royalty acquisitions and the maintenance of financial flexibility.

Leadership and governance

Black Stone Minerals has reported leadership succession plans and changes in its Board of Directors and executive team. An amended Form 8-K filing describes a leadership transition effective January 1, 2026, including the appointment of an Executive Chairman and co-Chief Executive Officers, as well as the setting of compensation levels for certain officers. The filing also references anticipated severance arrangements for a senior officer, to be entered into under specified circumstances.

The Partnership has also disclosed Board-level changes, such as director resignations and committee chair appointments, noting that such resignations were not the result of disagreements with the Partnership’s operations, policies, or procedures.

Risk management and hedging

In its quarterly results, Black Stone details its use of commodity derivative contracts to manage exposure to oil and natural gas price fluctuations. These contracts include oil and natural gas swaps with specified volumes and fixed prices over future quarters. The Partnership reports realized and unrealized gains or losses on these instruments, which can materially affect total revenue and net income in a given period.

The company also provides non-GAAP financial measures such as Adjusted EBITDA and distributable cash flow, which it uses to evaluate performance and distribution capacity. Detailed reconciliations and definitions are included in its public financial disclosures.

Frequently asked questions about Black Stone Minerals, L.P.

The following FAQs summarize key aspects of Black Stone Minerals based on its public statements and filings.