Black Stone Minerals LP Aktie

Hello, everyone. Thank you for joining us, and welcome to Blackstone Minerals First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Natalie Liddell, Vice President, Corporate Planning. Natalie, please go ahead.

Thank you. Good morning to everyone. Thank you for joining us for Blackstone Minerals first quarter 2026 earnings conference call. Today's call is being recorded and will be available on our website along with 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 a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the Risk Factors 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 these measures to the most directly comparable GAAP measure and other information about these non-GAAP 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 Tom Carter, Executive Chairman; Taylor DeWalch, Co-CEO and President; Fowler Carter, Co-CEO and President; Steve Putman, Senior Vice President and General Counsel; and Chris Bonner, Senior Vice President, Chief Financial Officer and Treasurer. I'll now turn the call over to Taylor.

Thanks, Natalie. Good morning, everybody, and thank you for joining us. As detailed in our earnings release last night, we delivered a strong first quarter, highlighted by higher production across our mineral position. Outperformance was driven by increased natural gas activity in the Louisiana Haynesville and Shelby Trough, along with strong oil production in the Permian. Looking ahead, we view 2026 as a year of production growth compared to 2025 as development across our core areas continues to ramp, and we maintain our production guidance outlined in February. Our multiple development agreements in the Haynesville and Bossier expansion play are progressing well, and we remain positioned for meaningful production growth over time.

We are seeing continued delineation and also increased activity across the broader Shelby Trough, which reinforces confidence in our long-term inventory profile and growth outlook. This outlook is bolstered by our constructive view on the long-term natural gas backdrop. We are witnessing the industry react to the structural demand growth, which is supported by accelerating LNG export growth, increasing power demand, including data center-driven load growth and continued strength in U.S. industrial activity. These demand drivers continue to highlight the Gulf Coast as a key market for natural gas, where we maintain a significant acreage position and development agreements with direct proximity to premium demand centers. Additionally, we continue to closely monitor the potential long-term implications of supply disruptions in the Middle East and how that could add incremental demand for secure U.S. molecules.

We believe each of these drivers, coupled with premier natural gas assets in close proximity to the Gulf Coast and infrastructure projects to transport those molecules positions us well to benefit from the structural demand over time and provide significant value to our unitholders. With that, I'll turn it over to Power to walk through additional details on the commercial front.

Thanks, Taylor. Well, it was a great quarter, and we executed across our commercial initiatives, building on the momentum established last year, including continued activity under our Haynesville expansion acquisition program. During the quarter, we acquired an additional $12 million of mineral and royalty acreage. This brings total development -- excuse me, total deployment under the program since its inception in '23 to more than $250 million, further strengthening our positioning across the Haynesville and expanding Shelby Trough area. Operators under our development agreements in the Shelby Trough continued to advance multiple programs during the period. Adamas spud 4 wells during the quarter and turned online 7 wells. This included the Congo wells in Southern San Augustin County, which continued to push the historical extent of the Shelby Trough and delivered strong initial results, reaching 30 MMcf per day.

Additionally, [ Catalyze ] is preparing for their initial activity to begin in June with a pilot hole and several commitment wells. Revenant also spud 2 wells during the quarter. And as mentioned in the press release last night, one of those wells experienced a loss of well control incident. We are assessing the potential impact on their first year development program. More broadly, we have continued to see an increase inactivity within the legacy Shelby Trough area and the emerging Haynesville/Bossier expansion resource play, connecting the Shelby Trough to the Western Haynesville.

Currently, there are 13 active rigs across Angelina, Nacogdoches and San Augustine counties under Adamas, Apex, ExCo and Rockliff. Expand is also actively drilling in the Southern Anderson County area, while Comstock continues drilling throughout the Western Haynesville. Across the broader portfolio, we also saw strong leasing activity and remain encouraged by continued interest in the Permian. Building on that activity, we progressed the opportunity highlighted last quarter in our Shelby Trough expansion area, which includes another approximately 300,000 gross mineral acres. We are currently marketing this project to experienced Haynesville operators to secure an additional development agreement, which we believe would be comparable in scale to our other programs and provide meaningful incremental production growth over time. With that, I will turn the call over to Chris to cover the financial results.

Thanks, Fowler, and good morning. As highlighted earlier, we saw strong production in the first quarter with mineral and royalty production of 35.9 MBoe per day, which is up 16% from the prior quarter. Total production was 37.0 MBoe per day. The period was also marked by significant commodity price volatility. Natural gas pricing was impacted by extreme weather-driven swings, including Winter Storm Fern, which created regional pricing dislocations and temporarily pressured our realizations relative to Henry Hub in February before conditions moderated in March. Oil pricing meanwhile reflected broader geopolitical developments that intensified later in the quarter to remain ongoing. As we navigate this environment, we are actively managing our hedge position as part of our broader risk management approach and monitoring pricing and operator activity across the portfolio.

Turning to the quarter's financial results. Net income was $13.3 million for the quarter with adjusted EBITDA of $87 million. 54% of our oil and gas revenue in the quarter came from natural gas and natural gas liquids. As previously announced, we declared a distribution of $0.30 for the quarter or $1.20 on an annualized basis. Distributable cash flow for the quarter was $76.5 million, which represents 1.2x coverage for the period. In the first quarter, we continued to execute across the business, positioning the partnership well for the balance of 2026 and remain confident that our diversified portfolio across multiple basins, together with our commercial strategy and the extended Shelby Trough supports our ability to deliver sustainable long-term value for unitholders. With that, we'll open it up for questions.

[Operator Instructions] Your first question comes from the line of Tim Rezvan with KeyBanc Capital Markets.

For my first question, I was hoping you could provide maybe a little more context on what exactly the outcome is with the loss of well control incident from one of a resident's wells. Does that well, you get like abandoned? Or is there still a hope of salvaging it? And then when you talked about assessing the potential impact, can you talk about what that means? Does that mean some sort of like deferral or delay? Just any more context would be helpful.

Tim, this is Fowler. I'll tackle that. Right now, it just happened. So the truth is we don't know. There is an investigation currently ongoing. Right now, I'd say there is potential for going back into that well and there may be potential for not going back into that well. We just don't know yet. It is too early to tell. And that's really it, man. I'm really sorry, I can't give you more color. But as we get information back, we will be updating folks.

Okay. Okay. I guess we'll stay tuned on that. And then as a follow-up, you had a very strong start to the year on the production front, and you laid out a pretty granular kind of cadence for your partnerships and their activity. So I know you're not a company that adjust guidance on a quarterly basis and you sort of reiterated it. But can you give us a little more color on maybe what the shape of 2026 production will look like? This is revenue potentially temper your enthusiasm on the outlook? I'm just trying to get a little more color on that.

Sorry. I wouldn't say our enthusiasm is tempered in any way, shape or form. But again, since this just happened, we are actively discussing these things and what that profile will look like this year. And as you said, Tim, we don't adjust guidance quarter-to-quarter, but we will get back to you once we have something firmly in place and can understand the situation more clearly. Without putting anything of real substance out there, it might be a bit of a speed bump. But over, I'm going to say, a 2-year period, you won't see any difference.

Yes. Tim, this is Taylor. I'll just add to that a little bit. I think when we look back at our original guidance, which contemplated quite a bit of production growth kind of throughout the year, even if it was flat compared to 2025, certainly, starting out the year with a pretty nice production number helps. And as we think about the rest of the year, I would go back to kind of what we thought from just a production growth standpoint, given we're getting these development programs off the ground and excited about what that means for production, especially as it looks to the end of 2026 and going into 2027. I think the other piece of the equation that we're really trying to understand right now is kind of operators' reaction to pricing right now with kind of geopolitical events going on in the commodity strip. So I think more to come on that. Certainly, trying to guide within a pretty volatile environment can be difficult, but we're excited about where we think we're headed for the rest of the year.

[Operator Instructions] Our next question comes from the line of Derrick Whitfield with Texas Capital.

With the change in ownership at Aethon and now Adamas Energy, could you speak to what changes, if any, you're seeing in behavior around the desire to grow?

Derrick, this is Taylor. I'll jump in first and just say, I think that given our contractual commitments there, we certainly have at least some expectations on their cadence of operations and excited about them continue to move forward in developing the area. I think to be determined on excess growth beyond the commitments, that's a conversation we're having, and we'll continue to kind of update as that becomes available. But overall, excited about the transaction and the team and continuing to move forward with our contract.

Great. And then with respect to the well control incident, and it feels like the market today is treating this as an issue that impacts a swap of your acreage. As I understand this is more isolated in nature, is that a fair characterization?

Yes. Yes. Thanks, Derek. What I would say is when you look at that area and where the well is, it's fully surrounded by development by the likes of Adamas, ExCo and historically others. So I think that the area is pretty well delineated from a subsurface standpoint. And we certainly look forward to kind of further development in that overall area.

Great. And maybe just one last, if I could. So as you guys think about the broader expansion from Shelby Trough to Western Haynesville, could you speak to midstream egress for this region and if it's adequate to meet the needs of where you think growth is headed?

Good question. There's certainly plenty of -- there's quite a bit of infrastructure out there. But as you think about the area growing by potentially several more gross Bcf a day over the coming years, there's a number of other midstream projects that I think are in the queue and probably more to come on exactly what those projects look like. But I'd say there's existing plus additional infrastructure kind of underway.

There are no further questions at this time. I will now turn the call back to Taylor for closing remarks.

Thanks so much. Once again, thanks, everybody, for joining us this morning. It was a great quarter and look forward to the rest of 2026. Talk to you all again soon. Thanks.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by, and welcome to the Black Stone Minerals Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the call over to Natalie Liddell, Vice President, Corporate Planning.

You may begin.

Thank you. Good morning, everyone. Thank you for joining us for the Black Stone Minerals Fourth Quarter and Full Year 2025 Earnings Conference Call. Today's call is being recorded and will be available on our website along with 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 forward-looking -- our actual results to differ materially from the results expressed or implied in our forward-looking statements. For a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the Risk Factors section in 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 GAAP measure and other information about these non-GAAP 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 Tom Carter, Executive Chairman; Taylor DeWalch, Co-CEO and President; Fowler Carter, Co-CEO and President; Steve Putman, Senior Vice President and General Counsel; Chris Bonner, Senior Vice President, Chief Financial Officer and Treasurer.

I'll now turn the call over to Fowler.

Thank you, Natalie. Good morning, everyone, and thank you for joining us on our fourth quarter earnings call. If you look at our earnings release from last night, you'll see that we had a great 2025 despite headwinds from production and oil prices. During the year, we achieved significant commercial milestones that will benefit our future production for years to come. We successfully signed development agreements with Revenant Energy and Caturus Energy. These deals place approximately 500,000 gross acres into development with minimum drilling commitments ramping up to 37 gross wells per year by 2031 from those programs and including Aethon, a total of 50 gross wells over the same period. Aethon also recently brought several new wells online in the Shelby Trough at about 25 to 30 MMcf a day with another 5 wells expected to come online in the first quarter.

An additional 18 wells are expected to be drilled throughout 2026. Also in 2026, we expect that Revenant will spud more than its minimum 6-well commitment and Caturus plans to drill its initial wells, including a pilot well. We are also seeing increased activity from others in the Shelby Trough as the industry moves towards available inventory to meet the growing natural gas demand. In addition to these developments, we are building another new opportunity in our Haynesville expansion area that we believe will add significant inventory and scale to the current development. Based on existing subsurface analysis, we believe we can continue to expand the Shelby Trough and Haynesville Basin towards the Western Haynesville.

With our continued focus of increasing production from existing assets and driving long-term value for our unitholders, we have also entered into an LOI with a reputable operator with experience in the Haynesville on a meaningful amount of acreage in the Gulf Coast region outside of our recent focus areas. Our acquisition program remains on track as well. Since launching the program in '23, we've invested about $240 million to add accretive mineral and royalty acreage across the Shelby Trough and Haynesville expansion area. We remain confident that the combination of these commercial initiatives will lead to significant growth and value for our unitholders.

With that, I will hand the call over to Taylor.

Thanks, Fowler. Good morning, everyone. Adding on to Fowler's commentary, we're excited about the increased activity and the ramp in production that we expect throughout 2026. We ended 2025 and begin 2026 at about [ 32,000 BOE ] per day, but we see that materially growing throughout 2026. So while production guidance is roughly flat year-over-year, we see solid growth from fourth quarter 2025 to fourth quarter 2026. Our fall investor presentation showed that 2026 is anticipated to be just the beginning of new activity in the Shelby Trough. We expect significant increases in natural gas production and distributions for BSM unitholders over the coming years. Because we have one substantial industry-leading inventory on our acreage in the Shelby Trough and Haynesville expansion and two, advantageous proximity to the Gulf Coast and key demand centers, we are optimistic about the long-term growth for our unitholders.

The team has done a phenomenal job the last several years delineating and marketing the Haynesville expansion area and securing the development agreements. We are now preparing to manage the growth in activity through these development agreements with our operating partners. As noted in our release last night, we are strategically increasing G&A in 2026 to support this increase in activity. We remain focused on disciplined capital management and our comprehensive commercial strategy, including grassroots acquisitions, high interest development agreements, new development opportunities and proactive asset management across all basins. Those efforts support our goal of delivering near-term and long-term value for Black Stone's unitholders.

With that, I'll handle the call over to Chris to walk through the financial details for the quarter and full year.

Thanks, Taylor, and good morning, everyone. In the fourth quarter, mineral and royalty production was [ 30,900 ] BOE per day, a decrease of 11% from the prior quarter. Total production for the quarter was [ 32,100 ] BOE per day, and we completed the year at the high end of the updated guidance. As discussed in the release last night, our updated guidance last year reflected lower natural gas directed drilling activity and volume levels in the Shelby Trough over the last couple of years. We expect 2026 to be a turning point with new and increased development in the Shelby Trough and Haynesville expansion areas, along with high interest projects in the Permian Basin and ongoing development across our broader assets. We continue to monitor increasing activity levels in the Haynesville and commodity price dynamics as we look towards 2026 production and distribution.

The partnership is also in the process of shooting two substantial 3D seismic surveys in the Shelby Trough and Haynesville expansion area, covering about 360,000 gross acres. While initiating and funding these surveys is not typical for Black Stone, we believe it allows us to control the timing, pace and focus of the data, highlighting our minerals and supporting their development under our contracted agreements. Most of the remaining costs for these surveys are expected to be incurred in 2026 with completion targeted for early 2027. They are subject to partial reimbursement with reported costs reflecting Black Stone's share while the partnership retains full ownership of the data. Over time, the proprietary nature of these surveys may provide opportunities to license the data to industry, potentially generating additional revenue.

Together with these supplemental seismic purchases, these assets are expected to enhance subsurface evaluation, further unlock the value of our mineral and royalty acreage and accelerate development of that acreage. To better reflect how we view these investments, we've updated the presentation of adjusted EBITDA and distributable cash flow to exclude seismic acquisition costs. Turning to the quarter's financial results. Net income was $72.2 million for the fourth quarter with adjusted EBITDA of $76.7 million. 51% of oil and gas revenue in the quarter came from oil and condensate production. As previously announced, we declared a distribution of $0.30 per unit for the quarter or $1.20 on an annualized basis.

Distributable cash flow for the quarter was $66.8 million, which represents 1.05x coverage for the period. As Fowler and Taylor mentioned earlier, the partnership's outlook remains strong, anchored by long-term contracted development in our high-interest Shelby Trough acreage as well as our core legacy assets across the U.S. With growing demand from LNG and electric power generation, the outlook for natural gas is increasingly constructive over the next decade. Our significant assets near Gulf Coast LNG facilities position Black Stone to benefit from the substantial call on gas supply, which we expect to increase over the coming years.

In conclusion, we had a successful 2025 on many fronts, setting the partnership up for a great 2026 and beyond. We remain confident that our existing acreage positions across numerous basins, coupled with our commercial strategy and the expanded Shelby Trough will provide a strong foundation to deliver sustainable long-term value for unitholders.

With that, I'd like to open up the call for questions.

[Operator Instructions] Your first question today comes from the line of Derrick Whitfield from Texas Capital.

Regarding guidance for the year, while I realize some of this is beyond your control, how should we think about the cadence of production from 4Q levels throughout 2026 based on the known developments?

Yes, Derrick, this is Taylor, and I'll start out with that. I mean I think when we look back to 2025 kind of midyear and then along with kind of our investor presentation, we really pointed to where we thought production was headed based on the last couple of years kind of activity in the Shelby Trough and the decreased activity there. And so where we end 2025 is where we think we're going to start 2026, which is what we've kind of alluded to in the release last night and mentioned in our script this morning. And then I think that where that puts us for the full year is reflected kind of in the guidance. So again, we think we're going to be increasing materially throughout the course of 2026. And most of that is attributable to kind of new development agreements as well as Permian production and those high interest developments out West.

And Taylor, would you expect it to kind of stall out at the kind of Q1 -- maybe Q4 level for Q1 and then kind of step up each quarter progressively? Or would there be more lumpiness than what I just suggested?

No, I think that's right. You'll see it start to step up. We've -- as we've mentioned, we've got some wells coming on here in the beginning of the year, specifically related to Aethon and then we see activity increasing throughout the year.

Great. And for my follow-up, in your commentary, you referenced efforts to build new opportunities to further expand your asset base and add new development agreements in both the Shelby Trough and Haynesville expansion area. I guess looking ahead, how would you characterize the pipeline of potential new development agreements? Are these conversations primarily with new operators in the basin or extensions with existing operators? And how should we think about the cadence and acreage scope of incremental agreements over the next 12 to 18 months?

Derrick, I would tell you that we certainly don't discriminate against existing partners or newcomers. We welcome all parties. And while we enjoy the partnerships that are established, we are happy to continue to diversify our new developments with new partners or strengthen existing contracts with established partners.

Your next question comes from the line of Tim Rezvan from KeyBanc Capital Markets.

Changing gears to the Permian. We saw comments in the release about leasing outside of the Coterra development area. We also saw guidance for liquids down a bit in 2026 versus our expectations. So can you talk about kind of what you're pursuing in the Permian and kind of how -- just kind of the scale and the priority of that given everything that's going on in the Haynesville?

Sure, Tim. This is Taylor, and I'll start there. I think we're excited to see activity in the Permian kind of in two different folds, if you will. We've got high interest activity from Coterra, and then we mentioned another large-scale kind of high interest development that's happening in the Southern Delaware. So that's a bit more proactive asset management, if you will, along with quite a bit of leasing throughout 2025 that we think points to increased activity across '26 and '27. I think if you look at the timing of some of this and when we see those volumes coming on, certainly, we'll see some of the Coterra wells continue to come on over the course of '26.

Some of the other activity, I think, really is probably later on in '26 and more materially in 2027. So I think you'll start to see those volumes a little bit later on. But no, we're excited about what's going on. Certainly excited about some of the other folks in the industry and their excitement around the Barnett, which we've also seen leasing pick up. So I think there's a lot to be excited about in the Permian right now.

Yes. The only thing I'd add there is -- so we know about these high interest developments that we can model. When we're looking at where pricing is right now in the Permian, we're being thoughtful on just the broader development there and not wanting to get ahead of ourselves when it comes to forecasting the broader Permian volumes.

Okay. Okay. I appreciate the context. My next question, if we look at the Henry Hub strip this year, it's below $3.50 for a lot of the year into kind of the winter. And you've talked about sort of maybe a flattish start to the year growing. Do you feel comfortable you can fund your $0.30 distribution through distributable cash flow without sort of leaning on liquidity for the next -- I mean, 1Q will be a big aberration we know with $5 Henry Hub. But as we look to the summer, how confident are you that you can sort of fund that without leaning on liquidity?

Yes. Good question. And maybe I'll start off and Chris, if you want to jump in. But I think it really just sort of following up on what Chris just said, we've taken a stance on being really thoughtful about where we see commodity prices and activity levels and where we think that we've got some pretty solid development that's going to happen, and we're confident in that development based on our agreements and our minimum commitments there. So along with the sort of ongoing activity and wells coming online. So I would say that we're confident that we can continue to fund the distribution and grow throughout the year based on those minimums.

Yes. I would just concur with that assessment and then also note that we do have strong hedges in place for natural gas throughout the year.

Okay. Okay. I just wanted to push on that. And if I could sneak one more in. I appreciate the prepared comments on the seismic, we saw that adjustment with your adjusted EBITDA in the fourth quarter. Should we assume that, that $30 million of exploration expense is all seismic? Is there a cadence to that? Is that a onetime expense? And do you expect to continue to kind of adjust that out for adjusted EBITDA?

Yes, I can answer that. So it is expense throughout the year. We do expect more of it to hit when the shoot is actually taking place in the middle of the year. And it is the majority of the seismic that we forecasted. It's about 90-plus percent of the total. And we do expect the majority of the costs related to these two specific shoots to be completed in early '27, but primarily expensed in '26. And we don't anticipate additional significant seismic costs within this development area.

Yes. I might just add on too and just take that question a little bit further, Tim. The seismic shoot is certainly something, I think, pretty unique for a company like us to do. But I think when you look back at the last couple of years, we have taken a stance of putting subsurface analysis and geology first, and we're pretty convicted in the Rock in the Shelby Trough and the Haynesville expansion. And I think these seismic shoots are just another data point for us to further that story and really build the foundation for our operators to come in and start to develop.

And I think as Chris also mentioned in his prepared remarks, these are proprietary shoots. So we own them and look forward to, at some point, also potentially turning those licenses to industry and generating revenue off of them. So a couple of different ways we're thinking about the seismic. But excited to get those shot later this year and just keep on developing the Shelby Trough and the Haynesville expansion.

And there being no further questions, I will now turn the call back over to Taylor DeWalch for some final closing comments.

Thank you all for joining us this morning and look forward to speaking with you all again next quarter.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Thank you for standing by. My name is Van and I will be your conference operator today. At this time, I would like to welcome everyone to Black Stone Minerals Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Mark Meaux, Director of Finance. You may now begin, sir.

Thank you. Good morning to everyone. Thank you for joining us either by phone or online for Black Stone Minerals Third Quarter 2025 Earnings Conference Call. Today's call is being recorded and will be available on our website along with 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 a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the Risk Factors section of our 2024 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 GAAP measure and other information about these non-GAAP 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 Tom Carter, Chairman, CEO and President; Taylor DeWalch, Senior Vice President, Chief Financial Officer and Treasurer; Steve Putman, Senior Vice President and General Counsel; Fowler Carter, Senior Vice President, Corporate Development; and Chris Bonner, Vice President and Chief Accounting Officer. I'll now turn the call over to Tom.

Thank you very much, Mark. Good morning, and thank you all for joining us on the third quarter earnings call. Before we discuss our financial and operating results, I'd like to congratulate Fowler Carter, Taylor DeWalch; and Chris Bonner on their announced upcoming promotions. I'm excited for and confident in their leadership as we look to the continued growth and success of Black Stone for many years to come.

Looking forward to my new role as Executive Chair as well and will continue to provide strategic guidance to the management and lead the board. Thank you to all of our employees who continue to work very hard day in and day out to drive Black Stone's success and position us for an exciting future.

We continue to pursue acquisitions through the Haynesville expansion around Shelby Trough, and we're looking forward to Revenant's development getting underway in early 2026. We also continue to work towards solidifying another development agreement covering 220,000 gross acres in between Aethon's development in the Shelby Trough and expand's development in the Western Haynesville.

Unscripted, I also add, we are working on yet another package that we hope to assemble and market in the not-too-distant future. The recently announced expand energy horizontal well and successful pilot well in addition to the ongoing development throughout the Western Haynesville provide even further confidence in the Haynesville expansion play and long runway of inventory.

As mentioned previously, we expect these development agreements to ultimately drive over 50 wells drilled in the expanded Shelby trial per year providing significant gas growth for the partnership and a constructive outlook for demand in the region. And this is in conjunction with ongoing great opportunities coming up in other areas in our properties. We remain focused on the significant growth opportunity that result in the increasing production and distribution outlook for years ahead.

With that, I'll hand it over to Fowler to walk through the operational updates.

Thank you, Tom, [indiscernible], and good morning to everyone. During the quarter, we progressed our commercial initiatives across the expanded Shelby Trough, including working with Revenant Energy on their inaugural development program beginning early next year. Our marketing efforts on an additional 220,000 gross acres is progressing well with a framework agreement that would add the equivalent of 12 additional wells annually to our acreage by 2030.

We expect these new developments, coupled with our existing agreements to more than double the current annual drilling rate in the expanded Shelby Trough in the next 5 years. There is also the opportunity for our operating partners to exceed their annual well commitments, and we are excited about the multiple decades of development inventory in this play.

Our grass-roots acquisition program also continues to progress well. We added $20 million in mineral and royalty acquisitions during the quarter bringing our total acquisitions since September 2023 to roughly $193 million. We have line of sight to an additional accretive acquisition opportunities in the near term which we expect to enhance our existing asset position in the Shelby Trough and to add long-term value for our unitholders. While 2025 development activity has slowed across the U.S., we are optimistic looking ahead to 2026 given our existing and pending development agreements across our high-interest acreage in the Shelby Trough.

Turning to the Permian. The large project we were monitoring remains on track to add meaningful oil volumes to our production base. We are also tracking several new projects on our high-interest acreage there that are expected to add additional liquids volumes in the next 12 to 18 months. We believe that these projects, in addition to our agreements in the Shelby Trough, provide Black Stone a path to increase production and, in turn, higher distributions.

With all of that, I'll turn it over to Taylor to walk through the financial details of the quarter.

Thanks, Fowler, and good morning, everyone. We had a successful third quarter with mineral and royalty production of 34,700 BOE per, an increase of 5% over the prior quarter. The increase in production quarter-over-quarter was driven by strong volumes in the Permian Basin. Total production volumes were 36, 300 BOE per day. While we currently sit here at the high end of the range, production guidance for 2025 is unchanged at 33,000 to 35,000 BOE per day. We continue to monitor activity levels and commodity price dynamics as we look towards the fourth quarter of 2025 and full year 2026 production and distributions.

Net income was $91.7 million for the third quarter with adjusted EBITDA at $86.3 million. 57% oil and gas revenue in the quarter came from oil and condensate production. As previously announced, we declared a distribution of $0.30 per unit for the quarter, or $1.20 on an annualized basis. Distributable cash flow for the quarter was $76.8 million, which represents 1.21x coverage for the period. The excess coverage was used to partially fund acquisitions and maintain a solid financial and leverage position.

As Tom mentioned earlier, the partnership's outlook remains strong, anchored by long-term contract development in our high-interest Shelby Trough acreage as well as our core legacy assets across the U.S. In addition, with increasing demand from LNG and power, the outlook for natural gas is increasingly constructive over the next decade. With significant assets in close proximity to LNG facilities, Black Stone is in a prime position to benefit from the looming call on gas supply.

In conclusion, we had a solid quarter, bolstered by strong oil volumes from our Permian assets which ultimately produced robust coverage of the announced distribution. Going forward, we remain confident that our existing acreage positions, coupled with our commercial strategy and the expanded Shelby Trough will provide a strong foundation to deliver sustainable long-term value for unitholders.

With that, we'd like to open the call for questions.

[Operator Instructions] Our first question comes from the line of John Annis from Texas Capital.

Congratulations to everyone on their new roles. For my first question, on the acreage currently being marketed in the KLX area, I think on the September update call, you mentioned that you were on the 1 yard line with getting a deal across. I was hoping if you could provide a quick update on where those discussions currently sit?

And secondly, if you've seen any increased interest in potential commitment to the development following expand's entry into the Western Haynesville. And then maybe just building off of Tom's remarks that you're also working on assembling another package. Is there any additional color that you could share at this time?

Well, I'll start with the 1 yard line comment. We were at the 1 yard line and now we're at the half yard line. So it's progressed, and we expect to hopefully have that wrapped up here in the next couple of weeks. But we'll let you all know how that goes, and we'll announce that information accordingly.

Remind me your second part of your question before we go on to the expanded area that [indiscernible] mentioned.

Yes. Just if you've been seeing any increased interest in potential commitments just following expands announcement and their entry into the Western Haynesville?

We say interest remains robust across this whole area and increased commitments. What I'm comfortable saying about that is that our operating partners have the ability to flex up above and beyond their minimum annual commitments. And so you can certainly see some relative outperformance there.

Terrific. Is there any color that you could offer on the package that you're working on assembling that you mentioned in the prepared remarks?

I'm going to let [indiscernible] take that one because he's really excited about it.

If you look at the Shelby Trough in the Western Haynesville and now the expand well, the Yancey well, which is about 20% to 30% further to the east than any of the wells that have been drilled so far moving back into almost North Central Houston County. And then you go into Trinity County, Cherokee County, Angelina County, Polk County, Tyler County, San Augustine County, Sabine County. There is so much inventory potential out there that really hasn't even been scratched yet, and folks keep putting blocks together. And we've done a lot of homework on the subsurface all the way across to the Western Haynesville and everything that keeps happening thus far has been positive to more positive than what one could expect.

We see some very, very interesting geologic things happening as you move further west from the traditional Shelby Trough, where there is significant expansion between the base of the Knowles Lime and the top of the Cotton Valley if I'm saying that -- Smackover -- excuse me, Cotton Valley also. Smackover and that phenomenon is what's been driving moving Eastward into the Western Haynesville.

So I think I said this last time, these packages of shale that are commercial are thicker in that expanded area. And we have existing acreage that we think is deeper than the traditional work that's been done in the Shelby Trough, but that is not inconsistent with what's been going on in the Western Haynesville. And it's in our inventory, and we're working it hard and looking forward to taking it out to capital development in the future.

I appreciate all the color. For my follow-up, with the strong volume growth this quarter, how should we think about volumes trending in the fourth quarter and into 2026 with the wells that are expected to be turned in line from Aethon and the Permian development project? And then maybe more broadly, just how would you compare what you're seeing in terms of gas-directed activity across your acreage relative to earlier in the year.

Yes. Thanks, John. So like I said in my prepared remarks, I mean, we didn't update full year guidance at this point. So we're still being pretty thoughtful about the activity that's going on across our assets, whether it's Aethon or larger developments out in the Permian, I'd say where we start to get excited is to see Aethon volumes coming online and then kind of throughout the fourth quarter into the beginning of next year, along with the large development in the Permian, which is Coterra and seeing their wells start to come online recently, but more completely as we think about kind of the beginning of next year.

So overall, I think it's going to be an interesting several months kind of winter season to watch activity levels, especially in the natural gas-focused basins and to see how that plays into full year '26 volumes.

I would add also, recently, we put out a multiyear forecast, which is somewhat unusual for a publicly-traded company. And I would just encourage the marketplace to not focus so much on the next 6 to 12 months, but to focus on the next 5 years because as I said earlier, this is a massive reservoir, and it takes time to spool it up -- and evaluate it and spool it up. And we really are excited about the slow, methodic, thoughtful, early stages of some of these new transactions that we've done.

But every one of those with success will grow in well counts by two to threefold as well as layering new projects in there. I just -- when you talk about share value and share activity, that's a real good question because I don't know how much the average person wants to get out in front of the market. But if what we're seeing is valid and as I said before, if the natural gas markets are as everybody seems to think they're going to be, i.e., less volatile and more secure in the future. The time to buy our shares is now not 2 years from now.

Our next question comes from the line of Tim Rezvan from KeyBanc Capital Markets.

Congrats everybody on the new roles and Tom, on your transition. Some of my questions were addressed by the prior analysts. But I wanted to ask, you mentioned more Permian production coming. As a 2-stream reporter, we've noticed that your natural gas differentials have weakened. I'm guessing that's due to exposure to Waha.

And as you think about -- I know the Haynesville is sort of the longer-term story, but a lot of producers are getting beaten up by the challenges at Waha that may not resolve until 2027. So can you talk about anything you're doing? I know you've been plain vanilla hedges in the past. Do you intend to just sort of ride this out? Or is there anything you can do because gas is still over 70% of your production. Just curious on that.

Yes. Thanks, Tim. This is Taylor. I'd say, like you said, I mean, our hedging strategy remains consistent the way that we've been thinking about it. And I think when you think about our natural gas volumes so much of that is coming from the Haynesville and from the Shelby Trough, where we've got good exposure to Henry Hub, I think relative to -- as you mentioned, kind of some of the dynamics that are going on with Waha and the Permian.

I think when we think about Waha and we think about just general Permian production, really what gets us excited is to see the ongoing development on high-interest acreage and then ongoing development across the full suite of assets. I guess we touched on in the investor presentation in September, we're really well aligned with the top operators in the Permian. And so we continue to see robust activity from those folks.

And then also just going back to some of these a little bit more bespoke high interest development that we have in the Permian. So excited to see those volumes come online. So overall, continuing to maintain our consistent strategy as we're thinking about pricing and activity levels.

Okay. So from a modeling perspective, do you think that on a 2-stream basis being at a discount to the benchmark Henry Hub is that going to be the reality over the next year if Waha sort of stays where it is? That's what I'm trying to get at.

Yes. I mean that's -- like I said, that's what we're thinking about it, and that's what we've got a robust hedge strategy.

[Operator Instructions]

All right. If there are no more questions, we sure thank you all for joining us today, and we look forward to speaking with you soon.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Hello, and welcome to the Black Stone Minerals September 2025 Investor Presentation. [Operator Instructions] I would now like to turn the conference over to Mark Meaux, Director of Finance. You may begin.

Thank you. Good morning to everyone. Thank you for joining us either by phone or online for the Black Stone Minerals September 2025 Investor Presentation. Today's call is being recorded and will be available on our website along with the presentation that was posted 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 a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our presentation and to the Risk Factors section of our 2024 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 GAAP measure and other information about these non-GAAP metrics are described in the appendix of our presentation distributed yesterday, which can be found on our website at www.blackstoneminerals.com.

Joining me on the call from the company are Tom Carter, Chairman, CEO and President; Taylor DeWalch, Senior Vice President, Chief Financial Officer and Treasurer; Steve Putman, Senior Vice President and General Counsel; Fowler Carter, Senior Vice President, Corporate Development; Chris Bonner, Vice President, Chief Accounting Officer; Travis Frazier, Director, Corporate Development; and Natalie Liddell, Director, Corporate Planning. I'll now turn the call over to Tom.

Thanks, Mark. Good morning to you all, and thank you for joining us on this investor presentation, which is a somewhat new or revitalized effort by us. And we are excited to share with you some of our excitement about the future of our company.

We seem to have -- we're going to go a little bit beyond the relatively short-term focus that generally public -- which public companies generally focus on and look at a bit of a more long-term nature because we think we're pretty comfortable that we find ourselves in a relatively unique position of having some really stable core assets in key areas as well as a very substantial inventory of growth assets that we own at this time without a whole lot of necessity for additional capital expenditures that very well could see our production and distributions substantially increase over the next 5 to 10 years. And I know that's a long time in public company land, but we wanted to share some of this with you. And with that, I will turn it over to Taylor.

Thanks, Tom. Just to reiterate, echo what Tom said, really appreciate everyone joining us this morning. We're excited to walk through our detailed strategic growth initiatives and really excited about where that takes us on a great trajectory for our unitholders.

Turning to Slide 4. This really starts with the pillars of our strategy being embedded organic growth and extensive asset development and inventory across the major basins, which we're going to go into in quite a bit of detail throughout these slides. We've talked about it quite a bit recently and more so in the recent quarters. But the Black Stone team has spent considerable time in the last couple of years really delineating and acquiring acreage in the expanding Shelby Trough and putting it into play with operators via these contractual development agreements, as well as staying focused on activity across all of the assets and really across all of our vast leased and unleased mineral footprint to see where there's opportunities across the Lower 48.

And I just want to take a minute to really commend the Black Stone team on all these efforts that lead to production doubling over the next 5 to 10 years, resulting in just tremendous growth that we see for the Black Stone unitholders and notably while maintaining very conservative and peer-leading leverage. I think those are some of the key tenets that we want to hit on today.

So as outlined, like I said, on Slide 4, it starts with a firm technical understanding of the subsurface, which our team has spent quite a bit of time on, moving to targeted acquisitions of undeveloped minerals at very competitive prices, and then partnering with these operators on development agreement to provide that certainty on long-term development on high interest acreage and then providing that line of sight to annual well commitments as a baseline as we're thinking about our forecast and excited to really spell that out later in the slides as we've done.

And so in addition to those organic growth efforts and primarily focused in the expanding Shelby Trough as well as some opportunities that we're looking at, not quite ready to go into as much detail today, but we've also got substantial embedded inventory that Tom was speaking to across the major basins. And really want to touch on where that inventory exists and how we're aligned with some of the top operators and their plans in those major basins.

I think that really provides a diverse foundation for the company as we're thinking about this long-term trajectory for our unitholders, balanced with both gas growth and oil growth, ultimately leading to growing distributions to greater than $2 a unit over the next 5 to 10 years and just continuing to prioritize that long-term value for all of our unitholders.

So with that, if we flip to Slide 5. We really remain focused on our assets across the Lower 48, which is colored in red and blue on the map here. And today, we're going to focus on some of the core basins being the Haynesville and the expanding Shelby Trough, the Permian, both in the Midland and the Delaware and then also the Williston, all of which we continue to monitor all of our inventory there and see how that's going to inform our long-term strategy.

Again, because of our expansion efforts, along with that substantial inventory, we look at about 20-plus years of inventory life, which we think just continues to provide that foundation for a lot of growth for decades to come. So next, we'll walk through this strategy a bit more numerically. So like we said, today, we sit at about 33,000 to 35,000 Boe a day with sub 0.3x leverage. We talked about that at second quarter earnings. I want to expand on that. And as we mentioned, the team has delineated a focus area of approximately 700,000 gross acres in existing and to-be-contracted areas that along with some of the incremental bolt-ons leads to production doubling to 60-plus MBoe per day out in 2035, while maintaining very conservative leverage because of the acquisition strategy.

So in addition to, like we've said, the expanding Shelby Trough, looking at just all of our inventory across the basins really built the foundation for this. Within the Shelby Trough, specifically speaking of that inventory, we see greater than 2,000 gross wells that have been unlocked and strategically positioned really with the current and coming sources of natural gas demand.

So we're pairing both the inventory with the gas demand that is both here and growing. That boost in production leads a significant uplift in revenue and distributions over the next 5 to 10 years, as mentioned, leading to $2-plus per unit from about $1.20 per unit LQA right now.

I want to speak to the acquisition strategy for just a minute. Notably, this strategy is much different than the historical BSM acquisition strategy or other marketed acquisitions. In the past, Black Stone spent upwards of $800 million to produce about a 5% CAGR pre-COVID while also participating in working interest investments, which led to over a 1x leverage.

The philosophy now is to bolt on to existing assets with the subsurface technical analysis and maintain a conservative leverage ratio because we're only utilizing about half the capital needed previously while substantially increasing production volumes to the tune of about a 10% CAGR.

So taking existing assets that Black Stone has held for a while now, bolting on some incremental assets and then placing those with an operator to provide substantial production growth.

So ultimately, Black Stone has line of sight to double production, maintain low leverage, partner with operators on high interest development agreements that provide more certainty on activity levels and maintain a diverse substantial set of inventory across all the major basins. With that, I'll hand it over to Fowler.

Thanks, Taylor. So here, you can see that our assets are well positioned to take full advantage of the LNG and growing power demand story. Our significant footprint in the Haynesville/Bossier with close proximity to export terminals as well as data and industrial centers that coupled with vintage and newly minted development agreements that Taylor just mentioned with folks like Aethon, Revenant and others supports the 10% CAGR on production that you can see there at the bottom, while keeping debt and EBITDA metrics attractively low.

Next slide, please. So active management and organic growth. So we own approximately 40% blended across 20 million gross acres of which 2 million of that is currently under leasehold or contracted otherwise. These acres account for our current cash flow and substantial inventory, as you can see in the pie chart right there.

The remaining balance or roughly 5.4 million net acres is where our organic growth opportunities like HEX, KLX and some other ones that are in the pipeline will come from. They are the end result of a lot of hard work by our land, technical, legal, commercial teams, and that combined work is what is going to get us to identify market and ultimately partner with operators and non-ops to delineate and further develop all these new areas.

Next slide, please. So this slide highlights the visibility of our inventory pipeline. We average about 10% exposure to the Lower 48 rig count or 1 out of every 10 rigs at any given time being on BSM assets. This ultimately leads to a total of about 1,244 WIPs on our acreage over the last 5 quarters. A breakdown of that is 744 DUCs and 500 permits, all with -- a lot of those with marquee operators. And those are kind of just the highlights on that, and we can take more deep dive questions at the end of the presentation, if anybody wants to dive deep on that later.

And now I'm going to hand it off to Natalie and Travis to talk more about the Haynesville and other plays.

Thanks, Fowler. Page 10 highlights the importance of the Haynesville and Middle Bossier as the cornerstone of our portfolio. From an activity perspective, there have been 2 trends that have materially shaped the direction of development over the past 5 years in the basin.

First, while the core of the play has historically been in DeSoto, Red River and Bossier Parishes, full-scale development has expanded into Shelby Trough and Western Haynesville, unlocking hundreds of locations with attractive breakevens.

And then second, heavy M&A has consolidated the basin into a few gas-focused independents, namely Comstock, Aethon, Expand, TGNR and Apex. Each is pushing the limits of technical design with long laterals, refracs, specialty wellbores, steadily expanding the economic footprint in both the NFC and Shelby Trough.

While the legacy core inventory is largely exhausted, the Shelby Trough now represents the engine of future growth in the basin, accounting for over 50% of remaining locations in the play and positioning the Haynesville as a durable long-term driver of Black Stone's portfolio. And importantly, the Haynesville is now directly tied to LNG export growth, linking its long-term economics to global gas demand. And as the Haynesville is shifting from a regional gas play into a global supply source, Black Stone's material position in the Haynesville extension area will be a contributing force behind that shift.

So Travis, I'll turn it over to you to get more into the specifics of the HEX play.

That's perfect. Thank you, Natalie. As we go to Slide 11, you can see a little bit more of a zoom in on the acreage position and really the substantial progress that we've done expanding upon our previously substantial legacy position.

And really, as you look into this map on the southern side of the Shelby Trough and into the HEX position, you can see a substantial inventory of what Taylor pointed out, about 2,000-plus Haynesville and Bossier locations located within that Southern Shelby and HEX area. And really, this is all a product of a lot of the hard work from the technical team and really delineating using our geologists, engineers and so forth of really honing in on what we perceive to be a large asset for operators going forward.

As you look into this, as Taylor also mentioned, the contracts and the relationships that we have with operators, the high-density nature of this position really points to our ability to bring in operators that have -- that we can provide a good element of control for them and be able to provide them good line of sight to an expanding inventory count that everybody in the industry is looking for.

And as everybody has mentioned, obviously, clearly, the growing LNG story is something that everybody is looking forward to expanding their positions within, and we feel like we're a premier mineral company here to provide that feedstock for LNG providers.

As we move over to Slide 12, you can see a lot of the offset wells that we continue to focus on and helping delineate the acreage position that we currently have, you'll see on the right -- on the bottom right side, really good well results that are holding in quite well with strong EURs. Those well results have helped solidify our position here and continue to expand upon the growing density of our acreage position. And one thing that you'll point out -- that I'll point out is as you see the Shelby Trough going into HEX and then over into the Western Haynesville, we firmly believe that there is a connection and, call it, a river or so that goes into the Western Haynesville, and so that pilot well that we point out here is another marker for us in helping to substantiate that belief through our science and geology work going forward.

So everybody continues to push the extent of the plays, and that's another point that you see within the Western Haynesville also with this pilot and other activities from operators.

Go to the next slide, please. And really, so on Slide 13, a key core element of how we think about the Haynesville and a lot of our assets is this element of control in high-density acres. As we look through the existing agreements that we have, as we call out, with both Aethon and Revenant and KLX over here.

The idea is to really hone in on large swaths of acreage that we have delineated internally through all of our technical teams and so forth to provide an operator a significant amount of running room as everybody is continuing to clamor for locations. We identify the acreage that is of interest and prospective.

We go in using our grassroots acquisition team to go and acquire as much as we can through a substantial amount of landman. And through that, by getting these large swaths of acreage, we're able to provide an operator like I said, a significant amount of running room and which is highly attractive to them at a low cost for them. And so that provides efficiencies on the front end and allows them to plan accordingly.

And so with those agreements, providing some flexibility for them to ramp up, and you'll see in this chart on the bottom, the idea is for them to build into this position and grow into a good line of sight for us to be able to see well commitments on a growing scale out into the future, which provides us a lot of visibility into our own production growth and the operators the ability to efficiently and effectively build into their position, which is a good core tenet of our relationships with both parties.

With that, I'm going to turn it right back to Natalie to dive into some of our other core assets.

Yes. So shifting gears a little bit to the remainder of our portfolio on Page 14. The Permian Basin is not just a premier oil basin, it's Black Stone's strategic hedge. It diversifies us away from gas concentration, stabilizes cash flows across cycles and ensures we remain positioned to capture upside across both oil and gas markets.

This is the busiest U.S. basin by rig count with consistent development through cycles due to core Permian breakevens that are among the lowest onshore at $35 to $45 a barrel. Wells are primarily oil weighted, but they deliver meaningful associated gas, and this dual commodity exposure gives us balance.

Oil drives durable returns and associated gas creates upside as U.S. LNG export demand grows over the next decade. Our runway in the Midland Basin clusters along the core from Martin through Midland County and up into Upton Reagan County with 75% of our remaining inventory concentrated in the Central North and Southwest subplays.

Meaningful development in areas with the basin's highest location, NPV and deepest stacked pay underpins the reliability of our oil-weighted forecast in this area. The post-M&A consolidation wave, namely Exxon Pioneer and Diamondback Endeavor has created highly capital disciplined operators capable of drilling increasingly long laterals, efficient multi-zone co-development and the appetite to consistently keep pads turning and tills flowing through cycles.

Rigs on Black Stone acreage started the year elevated and drifted modestly lower into the midyear, but the mix stays stable. Exxon and Diamondback carry the bulk of the rigs and other operators still in the remainder. Black Stone saw an average of 17 rigs a month on our acreage between these 2 operators in the first half of 2025.

So what we're seeing is that the scale operators are still setting the operational cadence even as the basin trims rigs for efficiency. And for us, that means multiyear visibility where we overlapped with Exxon and Diamondback because operator scale plus runway equals reliability for us.

And then moving to Page 15, the Delaware Basin. Our position clusters around the core Loving County fairway, the Central West and the South extensional areas with smaller pockets in the North, Western margin and Eastern margin. Our estimated inventory depth of close to 4,000 in gross locations translates to well over 10 years of inventory at current rig rates.

The core of our inventory is held by a handful of scaled publics, ConocoPhillips across much of the Northern Central fairway. We have sizable contiguous blocks of Coterra and Devon around the Western Stateline, Occidental through the Central Southern trend and slightly scattered exposure to Chevron and a handful of others throughout the basin.

Operationally, we've seen a modest step down in rigs since January, but the mix is stable, and we expect development to continue around current rates for the remainder of the year because even with lower headline rig total than we see in the Exxon and Diamondback pairing in the Midland Basin, the scale operators are similarly steady in cadence for the Delaware.

Again, operator scale plus continuity and inventory equals reliability for us. So overlap with these operators means multiyear visibility into pad turns until. On Page 16, moving over to the Williston is a late life relative to the Permian or Haynesville. So this is our steady low decline oil play, limited runway but reliable cash flows. And this is where we think concentrating our focus on sections under top-quality operators is the best way to protect pace and realize value for our shareholders.

Because inventory depth is thinner and most core acreage has already been drilled, forward growth is structurally more limited and more dependent on efficiencies for excess. So Chord, Continental, Chevron and Conoco are scaling to 3- to 4-mile laterals, optimizing cube development to lower dollar per foot cost and beginning refracs and brownfield work in Middle Bakken and Three Forks to extend runway and add barrels without large step-outs.

For Black Stone, this means runway is selective, but not gone. A significant portion of our remaining units are in the best neighborhoods, but development cadence will be operator and program driven rather than basin net wide growth. Cash flows are durable but price sensitive in the Williston.

As the mix shifts outside the Tier 1 areas, breakevens rise and the Bakken becomes slightly less reliable for us in a lower price environment. Although 60% of our estimated remaining inventory is held by Continental, Chord, Chevron and Conoco, and those 4 operators largely controlling the cadence of development in the basin make us hopeful that our expected returns are somewhat protected against the downturn. In a mature basin like this, we believe that reliability matters more than the headline rig count. And now I'm going to hand it back over to Taylor.

Great. Thanks, Natalie, and thanks, Travis, for walking through the different basins and different assets. So all of that really culminates again, in just a substantial growth through inventory development and the growth initiatives in the expanding Shelby Trough as outlined on Slide 17.

On the left, we have the production growth going again from 33,000 to 35,000 a day to over 60,000. And as we see outlined in 2035, a substantial amount of that is from the efforts in Shelby Trough, HEX and the just general Haynesville expansion area through those contracts.

As Natalie was pointing out, though, it really comes back to the diversity of our assets and we're thinking about our revenue and our forecasted revenue, both on a gas and oil basis. I think that, that's what really differentiates Black Stone and the diversity of the assets and just that foundation of oil and gas mix as we think about growing into the future.

So going from about $425 million in revenue in 2025 to $650 million plus with both oil and gas playing a critical role in that growth. So important to our unitholders, as we outlined on Slide 18, is the consistency of capital return via distributions, and we've maintained that philosophy for a long time through various cycles.

Of course, right in the middle of the chart, COVID was exceptionally difficult. But otherwise, we've prioritized transparency and consistency in our mindset of capital return. This is no different on a go-forward basis where limited debt and production growth leads to beneficial distribution growth for the long term for our unitholders.

Of course, where we are right now, we think is just a springboard for where we're headed in the future for distributions. On Slide 19, speaking again to debt, this limited debt has been a theme for a while for us. Earlier, I spoke to the changing philosophy in our acquisition program and the implications on our debt. Currently, our elected commitment amount on the borrowing base is $375 million. And in second quarter, we had just $99 million borrowed.

We prioritize limited debt to give BSM the maximum flexibility and prioritize capital returns to our unitholders. And as we said, we continue to think about that for the long term throughout this forecast and our strategy.

Finally, on Slide 20, another consistent theme for us has been our hedging philosophy. We think that this kind of maintaining a strategy of 6% to 7% of volumes 1.5 years to 2 years out, really ensures that steady cash flow and limits the volatility in the commodities to provide that consistency of returns to our unitholders that they certainly appreciate. So here, we've outlined both our current oil and gas position through '26 and into 2027. So with that, I will hand it over to Fowler.

Thanks, Taylor. All right. Well, to reiterate and just drive home all the points here that the team has made. Black Stone remains dedicated to growing our long-term unitholder value and distributions and doing that through active asset management and organic growth initiatives, all of which are underpinned by substantial inventory and growing natural gas demand. All that culminating to ultimately a doubling of production and $2 or better per unit distribution over the next 10 years. And that's it. Any questions?

[Operator Instructions]

Your first question comes from Tim Rezvan with KeyBanc Capital Markets.

Thank you for the presentation out there. It's really insightful. I guess I have a few here. But as my first one, maybe for Tom, this presentation is a little bit change in tone. You've generally been pretty tight lipped about details and your strategy. So I was just curious kind of why put this out now? Is this a signal that sort of this acquisition program, about $160 million is sort of wrapping up? Just trying to kind of get some context on why the push for doing this now as opposed to with earnings or at a later date.

Well, that's a good question. And I will answer that by saying our acquisition program continues. I don't want to be too specific about where. But if you look at the maps on the HEX area, the areas that have a little bit less yellow in them, we hope to increase our density there, but we're still going to stay well below 1x debt to EBITDA in doing this, and we think we have a competitive advantage out there, and we will keep growing to a certain extent.

But at the same time, we have enough critical mass in these areas to be able to have inked and are in the process of inking additional exploration agreements with folks that are capable, well-capitalized operators to drill a lot of wells on a regular basis in order -- in a drill-to-earn capacity, okay, which is different than giving somebody a 100,000-acre lease with a 5-year primary term and maybe they drill some wells and maybe they don't.

We are -- we've seen -- all of us that have been in the industry over time have seen great expectations come and fall down and not be realized, and that could certainly still happen in the world we live in today, but I would tell you that I think that the reliability and the stability of the gas market as we see it going forward for the next 10-plus years is as -- seems to have as little volatility potential in it as I've seen in the past, and so we see ourselves having a very strong liquids base in the Permian and in the Williston and other areas.

And we see ourselves being fortunate enough to have quite a position in a rapidly expanding, at least currently Haynesville/Bossier play in the Shelby Trough going over into the Western Haynesville. And once again, I want to capture this at about, call it, 200,000 acres in that area that we have under control, that we have science on and we know where wells are being drilled and are going to be drilled, that is -- that's -- you can drill 50 wells a year for 20 years to fully delineate that area, and I'm not talking about going out in the middle of nowhere.

These are development wells and the industry is filling in. And so we find ourselves -- I mean, obviously, the Marcellus has quite a bit of inventory, but they've got other headwinds up there. And going into a global AI natural gas-fired electrical plants, I saw where Entergy got approved for 2 plants, one in Cleveland, Texas and one in Port Arthur, Texas recently, those are right next to our Shelby Trough acreage, and if there is a time when natural gas is going to be reliable, this is it.

And we've got -- I don't know that there's an inventory for a mineral company that matches what we've got out there. And we now have three or more defined development agreements. So we just felt like what this looks like long term, we wanted to let the industry know about it.

We get questions from existing investors and new investors all the time, and we think we have found ourselves in a unique spot. Clearly, the Achilles heel on this program is natural gas prices, but if natural gas prices are $1.40 between now and 2040, we're going to have bigger problems as a global economy than just getting these wells drilled. I don't -- what would cause that? It would be massive contraction in a global economy. And so we're putting the chips all on the table.

I appreciate that.

I hope that answered your question.

That did. It's good to know you're still blocking up, but you have the core. On a related topic, you talked about the KLX being the third agreement, but you also say in the presentation that you're currently marketing that package. You have one well, looks like scheduled for 2026. Can you talk about -- are you on the one yard line of getting a deal announced? You seem highly confident that, that program will be going to 2026. So can you just talk about where you are with KLX?

I think you said it right. We're on the one yard line, but University of Texas was on the one yard line against Ohio State and didn't get in the end zone, so we -- that doesn't mean we're going to get in the end zone, but we sure think we are, and right after this call, there's going to be quite a lot of discussion about placing that ball in the end zone in a very discrete short period of time.

And I told the team a little bit jokingly that when we get that one closed, we've only got to do five more before Christmas, for any of you out there that are investors, that is not a statement that you should put a lot of stock in. It was more of a -- everybody has been running hard and working hard here, and I was pulling their chain. But we're not done yet.

If you look at that map, at Trinity County, we have hundreds of thousands of acres already owned in Trinity County, which is underlined by the same play that is going on in HEX and the Kirk Lake, KLX. It's just deeper, and we've got -- we'll take a short breather when we get KLX closed, but then we'll start our manic acquisition program over again.

Okay. If I could just sneak a third one in, and then I'll turn it back. Pretty intriguing this Bobby Yancey pilot that was drilled in Houston County. It looks like a vertical well, and there's some scuttle but if it's a true operator name or if that's an alias being used by a larger operator. Can you talk about why you're optimistic? Was that well fracked? Is your optimism just based on logs that you pulled? And can you give any color on who maybe drilled that vertical pilot?

I'll tell you what we see in that deal. We think Expand is the actual capital behind that. I mean that's industry knowledge. It's not anything we know, and we have talked to people who have specific knowledge about that well, and we've tried to get them to tell us about it, and they've said, they're under confidentiality and they're not going to do that, but they are -- they speak pretty -- in my experience, I've never seen a tight hole that's a dry hole be tight very long, and in addition to that, Expand and others have bought 70,000 to 80,000 acres of oil and gas leases around that well going back to the East, approaching the western end of our KLX project.

And so -- and we've reviewed a tremendous amount of 3D data out there as well as 2D data, and we see the same technical footprint going from Angelina County through Houston County, through Cherokee County, all the way over into the Western Haynesville. We also see expansion in the section between the Knowles Lime and the -- you're probably getting more than you wanted to hear here and the Smackover, which is the interval that is of interest with the Haynesville and Bossier in it.

And it expands as you go west by as much as 2 to 2.5 fold. And if you look at some of the subsurface control points that are available in the Western Haynesville, the Bossier section is up to 800-plus feet thick as opposed to 150 feet thick in the core Shelby Trough. And that's reserves. And you can drain probably 100-plus vertical feet with 1 wellbore. So every one of those wells may be the equivalent of 4 or 5 wells. So there's a lot of upside and there's a lot of known knowns as we move from the East to the West.

I would also add that it's long been a technical thesis that this depositional environment that created the Haynesville expanded all the way over to Freestone County, but it took quite a long time for operational efficiencies to be able to drill laterals at that depth, and so now that the inventory in the Haynesville is being exhausted, operators have the capability to drill longer, deeper wells in these temperatures, at a more cost-efficient rate, and we're seeing that delineation at this point in time.

Our exploration agreements that are in place work kind of like this. As you ramp up from, say, 10 wells a year to 25 wells a year, there's plenty of drilling for multiple years to come that is development drilling off of existing production in the Shelby Trough, like next door to stuff in Angelina County that's already under in production and moving slightly west, there's tons of inventory there, and in order to be able to harvest that inventory, we are embedding in our agreements requirements for large step-out wells to test the unknown area or the less known areas and backfill.

And so -- and if these guys quit drilling these wells, what happens? They just give us all the inventory back, and we'll try to place it with somebody else. So once again, we're optimistic that we've got a lot of economic inventory at $3.50 to $4 gas, and we're also subscribing to the theory that the LNG and AI and electric -- gas-powered electrical generation will cause the next 10 to 15 years of the gas market to not be perfect, but more reliable than it's been over the past 15 years.

[Operator Instructions]

Your next question comes from Derrick Whitfield of Texas Capital.

With respect to your 2030 outlook, could you speak to what broad assumptions underpin this 50% growth through 2030?

Absolutely. This is Taylor. I think the most significant assumption that I would point you to is the Shelby Trough gross spuds ramp in activity. We really look to those contractual agreements to ramp through the next 5 years or so, which provides a significant amount of that gas production growth that leads to the 2030 and 2035 outcomes.

Terrific. And maybe just leaning in on the Haynesville extensional areas, what degree of productivity and spacing are you guys assuming in the HEX area?

We're looking at it. I mean, if you look at the well results that we outlined on the Shelby Trough and as we're thinking about the Haynesville expansion, we certainly think that, that's indicative of what the rock can do, along with some of the spacing that we're seeing out there right now going a little bit wider than has been recently tested and something in the neighborhood of maybe 4 to 6 wells per 1,000 acre unit.

And I think those EURs that are in the 2 to 2.5 Bcf per 1,000 foot range, I think those are a solid assumption. I think that there's absolute room for upside above that as we think about the general productivity trend continues to follow the dip downwards, and with pressure and increasing depth, we have seen productivity increase.

So we're certainly interested to see, as we -- as Tom was alluding to, kind of further delineate some of the pieces of Haynesville expansion. We could certainly see additional both productivity and wells per unit as we're thinking about the thickness of the rock, but those are how it's kind of laid out today.

Great. And probably more from a technical perspective and subsurface perspective, could you guys speak to how the geology changes from Shelby Trough through to Western Haynesville? And then as an add-on to that, is Trinity -- the acreage you have in Trinity perceived to be part of this fairway?

Depends on who you ask on the Trinity stuff.

If you ask me, I say yes. This is Fowler Carter. It absolutely is part of this, but we still have to prove that up, and we're working on that piece right now.

The section, as I said, between the upper Knowles Lime or the equivalent of that in the Western Haynesville, it's a different geologic feature and the Smackover thickens dramatically as you go from west to east across Robertson and Leon County, and we are seeing the same thing as you go west into Western -- Eastern Angelina, Houston, Trinity, Cherokee counties.

And we have pilot wells that are going to be drilled out there that are required, multiple of those. We also have pilot wells that are required to be drilled deeper in the more traditional HEX area to 17,000 and 18,000 feet in Angelina County. There's something that you've probably heard us talk about a lot.

There's a well that was drilled deep in Angelina County back in the '80s or '90s by Mobil, and it's called the Mobil Julian Johnson well, and it was long before the Haynesville/Bossier shale play was around, but that well penetrated both the Haynesville and the Bossier, and it has some of the best-looking rocks in it, that have been seen.

There's some really good engineers around town that know the Haynesville play very well and have said that's the best looking rocks in the play, and it's at 17,000 to 18,000 feet, which is the same depth as the Bobby Yancey well. So we know it can be drilled in those pressures, and porosities that are on that well, meaningfully higher than they are in the core Shelby Trough is a great combination of attributes for potentially very strong productivity.

And at the same time, we've been able to acquire acreage in Nacogdoches County that heretofore had not been developed because it was very difficult to -- for industry to put it together. We put it together, and it's going to get drilled very soon, and it's right smack dab in the middle of the core stuff that's been drilled in San Augustine County and Angelina County and to the north by Exco in Nacogdoches County, and there's just quite a number of wells to be drilled in there as well as other areas that are more traditional. So there's a lot of inventory.

I think from a geologic perspective, too, the reason we included that Smackover Shelf and Sabine Island on the map are that the Shelby Trough is really the most restricted geological environment during deposition, and so that's why you have kind of the thinnest Haynesville and Bossier in that area.

But areas closer to the core DeSoto and Harrison and Caddo, you get thicker section because you had more sediment coming in. And then as you move over to Freestone County, Leon County off of the high on that side, you also had just a lot more sediment coming into that area of the basin. It was more -- less restricted. And so you'll see similarly a lot more just growth thickness across Leon and Houston than the Shelby Trough proper.

This concludes the question-and-answer session. I'll turn the call to Tom Carter for closing remarks.

Well, again, thank you all for joining us today, and we were excited and are excited to share our view on what's going on at Black Stone in a little bit more fulsome and long-term way. We feel like we've reached a point in critical mass of the attributes of what we've been talking about to where we could share it with you, and we're glad to do that. And we thank you for joining us today.

This concludes today's conference call. Thank you for joining. You may now disconnect.

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Blackstone Minerals Second Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Mark Meaux, Director of Finance. You may begin.

Thank you. Good morning to everyone. Thank you for joining us either by phone or online for Black Stone Minerals Second Quarter 2025 Earnings Conference Call. Today's call is being recorded and will be available on our website along with 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 a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the Risk Factors section of our 2024 10-K.

We may refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of these measures to the most directly comparable GAAP measure and other information about these non-GAAP metrics are described in our earnings press release from yesterday, which can be found on our website at www.blackstoneminerals.com.

Joining me from the call -- on the call from the company are Tom Carter, Chairman, CEO and President; Taylor DeWalch, Senior Vice President and Chief Financial Officer; Steve Putman, Senior Vice President and General Counsel; Fowler Carter, Senior Vice President, Corporate Development; and Chris Bonner, Vice President and Chief Accounting Officer.

I'll now turn the call over to Tom.

Thank you, Mark. Good morning, and thanks to all for joining our quarterly earnings call. Before we discuss results for the second quarter, I'd like to highlight the excellent work done by the team over the last 2 years, which ultimately has led to the recent announcement -- announced development agreement with Revenant as well as ongoing marketing efforts in the Shelby Trough. Through our subsurface evaluation, we determined that the substantial expansion of the Shelby Trough and extension towards the Western Haynesville. We're excited for Revenant to begin development and we're actively marketing an additional 180,000 gross acre area to well-known and well-capitalized operators.

These new developments, coupled with our existing agreements are expected to more than double our drilling obligations in the area over the next 5 years, providing significant natural gas growth for the partnership, amid a strong demand outlook in the region.

Our grassroots acquisition program supporting these expansion areas also continues to progress well. We've added $31 million in minerals and royalty acquisitions during the quarter, bringing our total acquisitions since September of '23 to about $172 million. During the second half of 2025, we're confident that we will continue to identify and execute on accretive opportunities, which enhance our existing asset position and add long-term value for our shareholders.

We previously announced a distribution of $0.30 per unit for the quarter. The reduction was driven by slower natural gas production growth in 2025, primarily in the Haynesville/Bossier. However, we have line of sight to production growth in 2026 and beyond through our various development agreements and high interest activity growth as outlined in our earnings release. Ultimately, our expectation for increased activity, combined with strong demand outlook, provide a clear path to future distribution increases.

We remain encouraged about the outlook for the partnership, maintaining a clean balance sheet and ample liquidity enables us to continue our commercial strategy, including targeted grassroots acquisitions and working with operators to achieve full field development across our out. The outlook for natural gas is constructive, reinforced by growing global demand for LNG. In addition, our robust oil portfolio across multiple basins provides a solid foundation for long term as well.

With that, I'll turn it over to Taylor to walk through the financial details of the quarter.

Thanks, Tom. Good morning, everyone. Mineral royalty production was 33.2 MBOE per day in the second quarter, and total production volumes were 34.6 MBOE per day. Net income was $120 million for the second quarter with adjusted EBITDA coming in at $84.2 million. 55% of oil and gas revenue in the quarter came from oil and condensate production.

As mentioned previously, we declared a distribution of $0.30 per unit for the quarter or $1.20 on an annualized basis. Distributable cash flow for the quarter was $74.8 million, which represents 1.18x coverage for the period.

In conjunction with the earnings release, we provided a revised 2025 production guidance yesterday. As we look at realized production for the first half of 2025, combined with our forecast for the second half of the year, we expect production for the full year to average between 33 and 35 MBOE per day. Our new guidance reflects lower-than-expected natural gas production growth, particularly in the Shelby Trough and Haynesville/Bossier play. However, as Tom mentioned earlier, the outlook for natural gas remains robust and we remain confident that our diversified asset base, highlighted by our high-interest acreage and development agreements in the expanding Shelby Trough provides a path to increased production and distributions.

Therefore, we forecast production growth in 2026 of an incremental 3 to 5 MBOE per day over 2025 revised guidance.

During the quarter, operators continue to actively develop our acreage through existing agreements and the accelerated drilling agreements. Additionally, the large project we're monitoring in the Permian Basin by Caterra remains on track to add meaningful oil volumes to our production base. These projects, in addition to our agreement with Revenant and the expanded Shelby Trough provide BSM a pathway to increase production, ultimately enabling us to increase the distribution to its previous high watermark.

Although slower gas production growth post challenges in the first half of the year, we remain confident that our commercial strategy positions us well to deliver sustainable long-term value for our shareholders.

With that, I'd like to open the call for questions.

[Operator Instructions] Your first question comes from the line of John Annis with Texas Capital.

For my first one, we have been surprised as well by the subdued activity response in the first half to higher natural gas prices. But with the recent pickup in gas-directed rigs, I wanted to ask if you could provide any color on any green shoots you're seeing in terms of activity increasing on your acreage and how you see this in the Revenant agreement starting in 2016 in the Permian development coming online, setting up the production trajectory next year?

Sure, John. Thanks for the question. I think the -- overall, we are seeing the same thing a lot of folks are seeing with some subdued activity. I think some of that's probably borne from the response we saw in '24 versus 2025. Of course, across the Haynesville and Bossier, we've seen some wells coming online kind of spread out throughout the basin. I think for us, we're most focused on the activity and the development agreements that we called out in our earnings release and talked about on the call a little bit earlier.

So we're excited to see revenue get to work with their first wells being spud likely at the beginning of 2026. And those 6 wells that they're obligated to drill throughout 2026 as well as the ongoing activity from some of the other operators that we mentioned throughout the Shelby Trough and then also our agreements on some of the other acreage that we have line of sight to throughout the Haynesville and Bossier. So excited about the activity that we see here in kind of the coming quarters and more to come from that.

Terrific. My follow-up I wanted to dig into your comments in the release on the subsurface work you've done to delineate new areas in the Shelby Trough. How does the geology compare to your understanding of what the Western Haynesville is today just in terms of depth, temperatures and EURs?

Yes. Thanks, John. That's a great question. So as Tom mentioned, the team has spent the last couple of years really digging into how the Shelby Trough expands outside of some of our existing development areas. And we're getting excited about the really potential of that play to further expand kind of all around the Shelby Trough as well as Westford towards the Western Haynesville. We do see some analogous subservice characteristics as we think about kind of the western part of the Shelby Trough and how that connects to some of the things that we're seeing going on in the Western Haynesville. The formations are getting thicker. They are getting a bit deeper.

But in the Shelby Trough, we have quite a few different places for development at different depths and different temperatures. So I think what we're most excited about is to see both the increasing productivity in EURs in the Western Haynesville as well as the operational efficiencies and results that are being gained in the Western Haynesville and how that can tie to further development of the Shelby Trough as we think about developing this expanded region within the area.

I'd like to add to that just a little industry color and some of the work that we're doing, talking with capital providers and operators in this area of the what I would call the Western Shelby Trough going towards the eastern part of the Western Haynesville -- sorry for all the geographic directions there. But people are moving the Western Haynesville to the East, and there's been activity out there and a lot of buying of acreage and ours is -- our efforts have been moving the Shelby Trough to the West. And we're seeing a lot of commonality in subsurface. And it's really hard to get people on the frontier edges of these things to talk much about what they're seeing in their step-out drilling.

But one of the larger operators out there, the other day, we were in a conversation with them, and we made some comments about what we're seeing moving West in the Shelby Trough relative to what they may have been seeing moving East in the Western Haynesville. And we were pleased to get a response that was something like this that they see the comparison of those 2 areas, the same way we do. In other words, if they may bridge across that area. And ultimately, being one in the same.

Your next question comes from the line of Timothy Rezvan with KeyBanc Capital Markets.

I wanted to take a little different tact on 1 of the first questions. Tom, you and the team have a pretty unique lens into broader Haynesville activity. We've seen the rig count increase steadily throughout the year and production is up about over Bcf a day from the recent trough. So we're trying to understand how to square that with the kind of updated production guide, which suggests even potentially another leg down in the back half of the year. So did something change further in your agreement with Avon or -- I was wondering if you could help kind of understand why your acreage is not really participating in this uplift we're seeing.

Well, I'll be glad to answer that. Let's start with late '23. That is -- was a low stand, a recent low stand in gas prices and Aethon call for a time out, which allowed them to slow down their drilling activity. That event takes about 18 to 24 months to show up in production volume declines, and that's what we saw in late '24 and '25. We have restructured our agreement with Aethon from mid-20s wells per year to high teens per year. But in addition to that, we also carved back some strategically important and close-in development acreage that we have packaged with other acreage and our working to place with another operator.

And when you add all these things up from having Aethon as really a primary operator with drilling expectations of around mid-20s per year going to high teens, and then you layer Revenant on top of that with a buildup to 20-plus per year. And then you add on top of that another operator coming in with maybe 20 wells per year it takes time to spool that activity up because you've got infrastructure issues, you've got all sorts of things, and these are projects that take 20-plus years to fully develop. And so we're very excited about -- yes, there is a little bit less coming from Aethon. But that's been by design. We are trying to have 4 or 5 active operators out there and a cumulative set of contractually required wells that are well north of the mid-20s that Aethon had 1.5 years ago.

So we are constantly reshuffling and restructuring to add operators and capital and well count out there. And we see some really potentially staggering number of wells in '28, '29 and '30. And it's just going to take a while for it to build up.

I might just add on when you're looking at the rest of the Haynesville and some of the activity I might just mention, we've seen some activity pick up some rigs pick up from some of the private operators in the Haynesville and then also certainly have seen a number of deferred TILs or docs that have come online from expand. And so really, when you just look at where that activity is relative to some of our higher interest acreage, we're going to see some of that activity that comes through from production. Of course, there's always a little bit of a time delay right between first production and royalty company receiving that production. But really it comes back to our high-interest acreage and our line of sight to that development to all the things Tom was just speaking to.

Okay. That's very helpful insight. I appreciate that. And my follow-up is sort of related to that. With the second acreage position being marketed, you did mention in the release more than doubling the development obligation. So you threw out some numbers here. Can you help us sort of understand in marketing? Are you trying to get to kind of a 40 to 50 per year cadence? I'm just trying to get some numbers around kind of how you're thinking about this ramp into the end of the decade.

I'll answer that. And the answer is yes, and then some.

Okay. Okay. And then if I could just sneak a final one, a housekeeping one. I did see you mentioned potential 2026 production outlook. Should we assume a similar skew to the -- natural gas skew to that production? I know you've talked a lot about this Cortera ad coming online. Just trying to understand how we can think about the SKU? And that's all I had.

Yes. Thanks, Tim. That's a great question. And the CoCare volumes are certainly going to help from an oil standpoint, along with just the rest of our kind of oil-weighted activity. I really think that when you look at the rest of '25 going into '26, we're probably closer to kind of where we were in '24 as opposed to where we were in Q1 '25. So probably more like 25%, 26% oil volumes as we're looking out.

And there are no further questions at this time. Tom Carter, I will turn the call back over to you.

All right. Thank you very much, and we really appreciate everyone joining us today for the call. And we look forward to speaking with you in the future as we move into these, what we think are pretty exciting forward-looking times. Thank you.

This does conclude today's conference call. You may now disconnect.

Hello, and welcome to the Blackstone Minerals 2025 Annual Meeting of Limited Partners. Please note that this meeting is being recorded. [Operator Instructions] The meeting is about to begin.

Good afternoon, ladies and gentlemen. It's now 12:00 p.m. And in accordance with the notice of the Annual Meeting, I call the Blackstone Minerals LP 2025 Annual Meeting of Limited Partners to order.

I'm Tom Carter, Chief Executive Officer, President and Chairman of the Board of Directors and a candidate for election as director. I'll preside at today's meeting, and Steve Putman will act as Secretary of the meeting. On behalf of the Board of Directors, I welcome you to the annual meeting.

I'd like to take a moment to introduce the members of our current Board of Directors and executive officers. The non-management directors in attendance today are Carin Barth, Mark DeWalch, Jerry Kyle, A.J. Longmaid, Will Mathis, Will Randall and James Whitehead. The executive officers in attendance today are Fowler Carter, Carrie Clark, Taylor DeWalch, Chris Bonner and Steve Putman.

In addition, I would like to recognize Matt Burley, who is also in attendance as a representative of Deloitte, our current independent registered public accountant. I've appointed Steve to act as inspector of the election for the meeting. The inspector of the election has taken the oath of office, which I directed to be filed with the partnership's records.

You can access the agenda via the web portal, which we will follow in carrying out the business of this meeting. As you'll see on the agenda, time has been allotted later in the meeting for any questions or comments you may have concerning the matters to be voted upon this afternoon. Please keep in mind that as the meeting is a virtual-only format, you will be able to submit questions that we will answer at the appropriate time later in the meeting as long as questions are relevant to the meeting.

If any unitholder has any matter of individual concern, please raise it after the meeting. So that all the items on the agenda may be presented before that time, the voting matters contained in the agenda will be presented in succession without comment.

After these matters have been presented, the polls will be opened, and questions to remainder to these matters may be asked up to a maximum of 30 minutes, after which the time the polls will be closed. After presentation of the matters to be voted on, you may vote via the web portal. Of course, if you have already voted, you need not vote again at this meeting. If you have not voted or if you would like to change your vote, you may do so by following the directions on the web portal.

There are a few formalities to cover before we get into the business of the meeting. Will the Secretary please report on the record date, listing of unitholders, notice, quorum and matters to be considered at today's annual meeting.

April 14, 2025, was set by a resolution of the Board of Directors as the record date for today's annual meeting. All unitholders of record or their proxy holders at the close of business on April 14, are entitled to vote at the annual meeting. If you would like to view the listing of unitholders as of the record date, please ask a question saying so, and we will provide the list.

Notice of the meeting was duly given in accordance with the partnership agreement. We received an affidavit from the partnership's transfer agent, Equiniti, certifying that the notice of Internet availability of proxy materials was sent to all unitholders on or about April 30, 2025. The affidavit will be filed with the partnership's records.

As set forth in the agenda and notice of the annual meeting, the matters to be considered at today's annual meeting are: the election of directors to the Board of Directors of the general partner, each to serve until the 2026 Annual Meeting of Limited Partners and thereafter until such director's successor shall have been duly elected and qualified or until such directors' earlier death, resignation or removal. The ratification of the appointment of Deloitte as the partnership's independent registered public accounting firm for the fiscal year ending December 31, 2025. The approval on a nonbinding advisory basis of the compensation of the general partners named executive officers for the fiscal year ended December 31, 2024, and the approval of the 2025 LTIP.

Each of the matters to be considered today is described in the proxy statement, which accompanies the notice of the annual meeting.

The Secretary has advised us that a quorum is present. Legal notice has been given. This meeting is now convened and open for the transaction of business. As previously mentioned, the items of business being submitted to the unitholders for action today's meeting are the election of directors, the ratification of the appointment of Deloitte, the say-on-pay vote and the approval of our LTIP.

We will now have the presentation for the proposals. The first item of business is the election of directors. The Board nominees for election to serve until 2026 Annual Meeting are Carin Barth, Tom Carter, Mark DeWalch, Jerry Kyle, Michael Linn, A.J. Longmaid, Will Mathis, Will Randall, Sandy Stuart and James Whitehead.

The second item of business is the ratification of the appointment of Deloitte as the partnership's independent registered public accounting firm for the fiscal year ending December 31, 2025.

The third item of business is the approval of a nonbinding advisory basis -- on a nonbinding advisory basis of the compensation of the general partners named executive officers for the fiscal year ended December 31, 2024.

The final item of business is the approval of the 2025 long-term incentive plan.

There are no other proposals to come before this meeting since management has not made any other proposals, and no other proposals were submitted by the unitholders in the manner prescribed in the partnership agreement, which requires that certain information concerning unitholder proposals be provided to the partnership before the date of the meeting.

It is now 12:05 p.m., and I now declare the polls open for voting. It's important that each unitholder be given an opportunity to cast his or her vote. Accordingly, the polls will remain open until such time as it does not appear any votes are being cast through the web portal up to a maximum of 30 minutes. If you have already voted, you need not vote again at this meeting. If you have not voted or if you would like to change your vote, you may do so by following the directions on the web portal and submitting a question to the portal so that we can wait for you to finish voting.

You may vote at this time.

[Voting]

This concludes the matters to be considered and voted upon at today's meeting. It's now 12:07 p.m., and I now declare the polls closed. The inspector of election will count the votes. Will the Secretary please announce preliminary voting results?

Based on a preliminary tabulation of the votes, a plurality of the votes cast were in favor of each of the partnerships nominees for Directors of the General Partner, each to serve until the 2026 Annual Meeting of Limited Partners and thereafter until such directors' successor shall have been duly elected and qualified or until such directors' earlier death, resignation or removal.

A majority of the votes cast were in favor of the ratification of the appointment of Deloitte as the partnership's independent registered public accounting firm for the fiscal year ending December 31, 2025. A majority of the votes cast were in favor of the approval on a nonbinding advisory basis of the compensation of the general partners named executive officers for the fiscal year ended December 31, 2024.

A majority of the votes cast were in favor of the approval of the 2025 long-term incentive plan. The final voting results will be tallied and subsequently announced in accordance with the requirements of the Securities and Exchange Commission.

Following the conclusion of the business portion of the meeting, we will continue with a question-and-answer session. I'm aware of no other business that should be brought before this meeting. Accordingly, I declare the meeting adjourned.

We'll now be pleased to answer any questions or address any comments asked during the meeting about the partnership to the extent that they do not require us to disclose material nonpublic information.

All right. We're hearing no questions. So therefore, thank you for all your comments and questions. This concludes the Black Stone Minerals LP 2025 Annual Meeting of Limited Partners. On behalf of Blackstone Minerals LP and the Board of Directors and the employees of Blackstone, I want to thank you for attending today's meeting.