Black Stone Minerals' Strategic Expansion in the Shelby Trough: A High-Conviction Energy Play

Black Stone Minerals (BSM) has emerged as a standout player in the energy sector, leveraging its unique business model and strategic positioning in the Shelby Trough to create a compelling long-term investment opportunity. By combining mineral ownership with operator partnerships, BSM is unlocking significant compounding potential, making it a must-own MLP for investors seeking exposure to the next phase of U.S. natural gas production.

Strategic Partnerships Drive Acreage and Drilling Momentum

BSM's expansion in the Shelby Trough is anchored by a series of transformative development agreements that amplify its control over high-quality acreage while minimizing operational risk. In November 2025, the company announced a landmark partnership with Caturus Energy, securing a 220,000-gross-acre development program in the region. This agreement, spanning six years, begins with two gross wells in 2026 and scales to 12 gross wells annually by the program's end, directly aligning with BSM's goal to increase net well development.

Complementing this, BSM's collaboration with Revenant Energy targets an additional 270,000 gross acres, with well commitments rising from six to 25 per year over five years. These partnerships not only expand BSM's footprint but also ensure a steady escalation in drilling activity, which is critical for sustaining production growth. Notably, the amended agreements with Aethon Energy-returning 50,000 gross acres to BSM-further optimize the company's acreage portfolio, reducing well commitments while preserving long-term value.

Production Growth and Financial Discipline Fuel Confidence

Third-quarter 2025 results underscore BSM's operational strength, with mineral and royalty production reaching 34.7 MBoe/d-a 5% increase from the prior quarter. Total production, including working-interest volumes, hit 36.3 MBoe/d, with natural gas accounting for 73% of output. While the Permian Basin remains a key contributor, the Shelby Trough's strategic importance is growing, with management targeting over 50 wells annually in the area.

Looking ahead, BSM's full-year 2025 production guidance of 38-41 MBoe/d reflects a projected 2% growth over 2024 levels. This trajectory is underpinned by the Shelby Trough's vast drilling inventory, which management estimates can support 20 years of activity in the Haynesville and Bossier shale plays. The company's disciplined approach to capital allocation is also evident in its recent $20 million in mineral and royalty acquisitions during Q3 2025, bringing total investments since September 2023 to $193 million.

Long-Term Compounding Through Mineral Control

BSM's model-owning mineral rights while outsourcing operations-creates a powerful flywheel effect. By retaining ownership of approximately 40,000 undeveloped net acres in the Shelby Trough's Caturus agreement, BSM ensures future cash flow from production without bearing operational costs. This structure allows the company to benefit from rising natural gas demand in the Gulf Coast region while maintaining flexibility to pursue additional acquisitions and optimize net interests.

The Shelby Trough expansion is not merely a short-term play. With development agreements designed to more than double drilling activity over five years, BSM is positioning itself to capitalize on the region's long-lived reserves. For investors, this translates to a durable cash flow stream with minimal capital intensity, a hallmark of high-conviction MLPs.

Conclusion: A Must-Own MLP for the Energy Transition Era

Black Stone Minerals' strategic expansion in the Shelby Trough exemplifies the power of mineral ownership and operator partnerships in driving sustainable growth. With a 20-year inventory, rising drilling commitments, and a track record of disciplined capital deployment, BSM offers a rare combination of scalability and predictability. As natural gas remains a critical pillar of the global energy transition, BSM's focus on high-margin, long-lived assets positions it as a must-own MLP for investors seeking compounding returns over the next decade.