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 -- or 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 announcements -- 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 grass-roots 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 grass-roots acquisitions and working with operators to achieve full field development across our assets. 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 33,200 BOE per day in the second quarter, and total production volumes were 34,600 BOE 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 33,000 and 35,000 BOE per day. Our new guidance reflects slower-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 increase production and distributions. Therefore, we forecast production growth in 2026 of an incremental 3,000 to 5,000 BOE 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 Coterra 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 '26 and 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 Revenant 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 the Bossier. So excited about the activity that we see here in kind of the coming quarters and more to come from that.

Terrific. For 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 westward towards the Western Haynesville. We do see some analogous subsurface 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 and 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 in 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, that they may bridge across that area and ultimately, be one and 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 one 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 Aethon? 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 called 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 are 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.

If I might just add on to, 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 DUCs 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 Coterra pad 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 Coterra 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.