Black Stone Minerals (BSM) Update - Sept 5

[dan_s]

Today I spend several hours looking at BSM. I have posted my updated forecast/valuation model and updated profile to the EPG website.

Black Stone Minerals, LP (BSM) is one of the four minerals companies in our High Yield Income Portfolio. The other three are KRP, STR and VNOM. They are all rock solid. MInerals/Royalties companies are safe because they have zero drilling risk, and they generate a lot of free cash flow.

Black Stone is a Master Limited Partnership, so it is best to own it in a taxable account. That way you will get the maximum income tax benefit since a percentage of the partnership's distributions are treated as return of capital. You can own it in an IRA account, but there are some federal income tax reporting requirements you need to be aware of.

Black Stone is the most highly leveraged to natural gas of the four minerals companies, with ~45% of this year's revenues coming from natural gas and NGL sales. They have an active hedging program that has partially shielded them from low natural gas prices in 2023 and 2024.

Black Stone has a Super Conservative management team. Strong balance sheet and lots of free cash flow.