Black Stone Minerals Q4 2024: Unpacking Contradictions in Acquisition Strategy, Activity Levels, and Gas Pricing

These are the key contradictions discussed in Black Stone Minerals' latest 2024 Q4 earnings call, specifically including: Acquisition Focus and Strategy, Activity Level and Commitment, and Production and Gas Pricing Assumptions:



Production and Revenue Trends:
- Black Stone Minerals reported mineral and royalty production of 34,800 BOEs per day in Q4 2024, down from the previous quarter, with total production volumes averaging 38,500 BOE per day for the year.
- Oil and gas revenue for the quarter was 59% from oil and condensate production. For the full year, net income was $271.3 million with adjusted EBITDA totaling $380.9 million.
- The decrease in production was due to weak natural gas pricing in the second half of the year, although the company maintained distribution due to its robust portfolio.

Acquisition Strategy:
- The company completed $43 million in minerals and royalty acquisitions during the fourth quarter, adding up to $130 million since September 2023.
- Acquisitions were focused on the Gulf Coast region to expand the Shelby Trough footprint, aiming to seize long-term LNG growth opportunities.
- The strategy is to enhance existing asset positions, increase development opportunities, and add long-term value to shareholders.

Accelerated Development Agreements:
- Black Stone Minerals entered accelerated development agreements in the Louisiana Haynesville, with first production on 2 high interest wells in Q4 2024 and 11 more expected in 2025.
- This strategy provides near-term certainty and accelerated development in high interest areas in exchange for a slightly reduced royalty burden.
- The company seeks to maintain predictability in production and consistency in volumes, as it cannot control commodity prices.

Operational Activity and Outlook:
- The company expects an increase in production from 2024 levels in 2025, driven by activity across its broad acreage position and high interest development activity.
- In the Haynesville, Aethon is operating 3 rigs on the company's acreage, with 11 gross wells already brought to sales in 2025 and another 17 expected for the rest of the year.
- This positive outlook is buoyed by stronger natural gas pricing fundamentals and robust oil production from multiple basins.