BSM Filings — Black Stone Minerals, L.p. - FilingSpy
BSM
Black Stone Minerals, L.p.
A Houston-based partnership that owns oil and gas mineral and royalty interests, mostly across Texas and Louisiana, collecting payments from energy producers who drill on land it controls rather than operating wells itself. Black Stone Minerals traces its roots to the Liedtke family's oil dealings in Texas, and its name nods to the black stone that marks mineral boundaries in the Lone Star State's surveying tradition. It offers investors a way to own a slice of America's oil and gas royalties without ever touching a drill bit.
Derivative gains fell $25.9M year over year, cutting Q2 revenue 6.6% despite a 34.7% rise in realized oil prices.
A drop in derivative gains overshadowed higher oil prices. fell 6.6% to $149.0 million as a $25.9 million decline in gains on commodity derivatives and lower natural gas prices offset a 34.7% rise in realized oil prices to $87.08 per barrel. The partnership's cash generation improved, but the story remains tied to commodity forward curves it does not control.
Key takeaways
A $25.9 million decline in gains on commodity derivatives was the primary driver of the 6.6% decrease, as none of the contracts are designated as hedges and fair value changes flow directly into .
Oil and condensate sales rose 34.7% to $75.2 million, driven by a 34.7% increase in realized prices to $87.08 per barrel, which more than offset a 3.0% decline in total equivalent production.
Natural gas and NGL sales fell 12.8% to $40.3 million, as an 8.9% drop in realized prices to $3.07 per Mcf compounded a volume decline from the Haynesville/Bossier and other plays.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue fell 6.6% YoY to $149M as lower derivative gains and gas sales offset higher oil prices and lease bonuses.
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Total decreased 6.6% to $149.0M, driven by a $25.9M drop in derivative gains and a 12.8% decline in natural gas/NGL sales, partially offset by a 34.7% rise in oil/condensate sales.
Production costs and fell 32.3%, helped by $4.2 million in operator refunds from deduction-free lease settlements, which flowed through to a 5.6% increase in to $80.4 million.
The partnership amended the Revenant joint exploration agreement in the Shelby Trough, reducing Program Year 1 drilling commitments to four wells after a well-control incident, and deployed $37.2 million in mineral and royalty acquisitions during the quarter.
What changed
The $52.3 million in unrealized derivative losses flagged in Q1 2026 partially reversed: Q2 recorded a $52.8 million derivative gain, though this was still $25.9 million below the prior-year quarter's gain.
The 9.6% oil production increase from Q1 2026 did not hold; total equivalent production fell 3.0% in Q2, with oil and condensate volumes declining from the prior quarter's Permian and Eagle Ford-driven gains.
The Revenant well-control incident flagged in Q1 2026 resulted in a formal amendment to the joint exploration agreement, cutting Program Year 1 drilling commitments to four wells, down from an unspecified prior plan.
rose to $93.0 million from $62.6 million in Q1 2026, while weighted-average borrowings increased to $190.3 million with a 6.56% interest rate, intensifying the burden noted in prior periods.
What to watch
Whether the $52.8 million in derivative gains recorded in Q2 reverses in Q3 if commodity forward curves move against the partnership's positions, given that none of the contracts are designated as hedges.
Whether the four-well Revenant drilling program in the Shelby Trough proceeds on schedule after the well-control incident and amended agreement, and whether it can begin to offset the 3.0% decline in total equivalent production.
Whether of $93.0 million can sustain the current distribution level alongside rising on $190.3 million in weighted-average borrowings.
The trajectory of realized natural gas prices, which fell 8.9% to $3.07 per Mcf, and whether the $37.2 million in new Gulf Coast mineral and royalty acquisitions can generate enough incremental production to stabilize volumes.
Oil and condensate realized prices surged 34.7% to $87.08/Bbl, while natural gas realized prices fell 8.9% to $3.07/Mcf, with total equivalent production down 3.0%.
Production costs and dropped 32.3%, largely due to $4.2M in operator refunds from deduction-free lease settlements.
Exploration expense rose 175.9% to $4.8M, driven by higher seismic data costs tied to Shelby Trough development programs.
increased 6.8% to $91.3M, and rose 5.6% to $80.4M, supported by higher oil and lower operating costs.
The company acquired $37.2M in mineral and royalty interests in Q2 and amended the Revenant JEA, reducing Program Year 1 drilling commitments to 4 wells after a well control incident.
Quantitative and Qualitative Disclosures About Market Risk
Commodity price risk from oil, gas, and NGLs is the primary exposure, partially hedged with derivatives; interest rate risk is unhedged.
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The company’s major market risk is volatile pricing for oil, natural gas, and NGLs produced by its operators, driven by global and U.S. market conditions.
It uses commodity derivative financial instruments (not designated as hedges) to mitigate oil and natural gas price volatility, with changes recorded in .
A hypothetical $1/barrel move in NYMEX WTI would change the of oil derivatives by approximately $3.2 million; a $0.10/MMBtu move in Henry Hub natural gas would change natural gas derivatives by approximately $5.5 million.
A 10% discount to SEC commodity pricing applied to reserves suggests an approximate 1.2% reduction in proved reserve volumes versus the undiscounted scenario.
Derivative counterparty credit risk is managed by evaluating credit standing; all eight counterparties at June 30, 2026 were rated BBB or better and are lenders under the .
Interest rate risk arises from variable-rate debt: a hypothetical 1% rate increase on the $190.3 million borrowings would have raised by $1.0 million over six months, with no interest rate hedges currently in place.
Although we may, from time to time, be involved in various legal claims arising out of our operations in the normal course of business, we do not believe that the resolution of these matters will have a material adverse impact on our financial condition or results of operations.
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Although we may, from time to time, be involved in various legal claims arising out of our operations in the normal course of business, we do not believe that the resolution of these matters will have a material adverse impact on our financial condition or results of operations.
In addition to the other information set forth in this report, readers should carefully consider the risks under the heading “Risk Factors” in our 2025 Annual Report on Form 10-K. Except to the extent updated below, there has been no material change in our risk factors from thos…
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In addition to the other information set forth in this report, readers should carefully consider the risks under the heading “Risk Factors” in our 2025 Annual Report on Form 10-K. Except to the extent updated below, there has been no material change in our risk factors from those described in our 2025 Annual Report on Form 10-K. These risks are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially adversely affect our business, financial condition or results of operations.