Black Stone Minerals LP

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 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. I would now like to turn the conference over to Mark Moe, Director of Finance. Please go ahead.

Thank you, operator. Good morning to everyone. Thank you for joining us either by phone or online for Blackstone Minerals first quarter 2025 earnings conference call. Today's call is being recorded and will be available on our website on 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 discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the risk factor section of our 2025 10-K. 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 gap measure, and other information about these non-gap 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 DeWalsh, Senior Vice President, Chief Financial Officer and Treasurer, Terry 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.

Thanks, Mark. Good morning to everyone on the call, and thank you for joining us today to discuss our first quarter 2025 results. Tom wishes he could join us this morning, but due to a prior family commitment, is not able to be on the call today. We had another solid quarter, and we'll be maintaining our quarterly distribution of 37.5 cents per unit, despite the recent volatility in commodity prices and shifting global market dynamics. 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 34.2 thousand BOE per day in the first quarter, and total production volumes were 35.5 thousand VOE per day, both of which are about in line with the previous quarter. Net income was $15.9 million for the first quarter, with adjusted EBITDA of $82.2 million. As mentioned, we maintained our distribution for the quarter and $1.50 on an annualized basis. Distributable cash flow for the quarter was $73.7 million, 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 climate, 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, Athon 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 Acres 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 Hainesville with two incremental high-interest wells turn to sales in March. This brings the total ADA wells in the Louisiana Hainesville 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 accelerated 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 Culverson County. This development includes more than 35 gross wells on BSM acreage. Notably, 24 of these wells have been spud to date, and we anticipate nine gross wells to turn to sales in the fourth quarter of 2025. 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.