What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 130 added, 87 removed, 445 unchanged (33% of the section changed)

4 unchanged sentences

(In thousands)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

CURRENT ASSETS

5 unchanged sentences

PROPERTY AND EQUIPMENT

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 937,464 at March 31, 2021 and December 31, 2020

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 947,509 and $ 937,464 at June 30, 2021 and December 31, 2020, respectively

3,187,176 3,157,818

1 unchanged sentence

Oil and natural gas properties, net 1,161,673 1,170,486

Other property and equipment, net of accumulated depreciation of $ 12,453 and $ 12,292 at March 31, 2021 and December 31, 2020, respectively

Other property and equipment, net of accumulated depreciation of $ 12,613 and $ 12,292 at June 30, 2021 and December 31, 2020, respectively

NET PROPERTY AND EQUIPMENT 1,163,066 1,172,136

17 unchanged sentences

MEZZANINE EQUITY

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at March 31, 2021 and December 31, 2020

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at June 30, 2021 and December 31, 2020

298,361 298,361

Partners' equity – general partner interest — —

Partners' equity – common units, 207,542 and 206,749 units outstanding at March 31, 2021 and December 31, 2020, respectively

Partners' equity – common units, 208,637 and 206,749 units outstanding at June 30, 2021 and December 31, 2020, respectively

725,693 760,606

6 unchanged sentences

(In thousands, except per unit amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Oil and condensate sales $ 53,936 $ 25,417 $ 98,112 $ 77,510

47 unchanged sentences

BALANCE AT MARCH 31, 2021 207,542 $ 738,429 $ 738,429

Issuance of common units for property acquisitions 1,088 10,766 10,766

Restricted units granted, net of forfeitures 7 — —

Equity–based compensation — 2,820 2,820

Distributions — ( 36,321 ) ( 36,321 )

Charges to partners' equity for accrued distribution equivalent rights — ( 180 ) ( 180 )

Distributions on Series B cumulative convertible preferred units — ( 5,250 ) ( 5,250 )

Net income (loss) — 15,429 15,429

BALANCE AT JUNE 30, 2021 208,637 $ 725,693 $ 725,693

The accompanying notes are an integral part of these unaudited consolidated financial statements.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

Common units Partners' equity — common units Total equity

8 unchanged sentences

BALANCE AT MARCH 31, 2020 206,695 $ 803,726 $ 803,726

Repurchases of common units — ( 6 ) ( 6 )

Restricted units granted, net of forfeitures 14 — —

Equity–based compensation — 2,292 2,292

Distributions — ( 16,679 ) ( 16,679 )

Charges to partners' equity for accrued distribution equivalent rights — ( 31 ) ( 31 )

Distributions on Series B cumulative convertible preferred units — ( 5,250 ) ( 5,250 )

Net income (loss) — ( 8,371 ) ( 8,371 )

BALANCE AT JUNE 30, 2020 206,709 $ 775,681 $ 775,681

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

29 unchanged sentences

Repayments under credit facility ( 109,000 ) ( 160,000 )

Debt issuance costs and other ( 3,528 ) —

NET CASH USED IN FINANCING ACTIVITIES ( 113,578 ) ( 164,855 )

22 unchanged sentences

The unaudited interim consolidated financial statements include the consolidated results of the Partnership.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year.

In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for the fair presentation of the financial results for all periods presented have been reflected.

15 unchanged sentences

Significant accounting policies are disclosed in the Partnership’s 2020 Annual Report on Form 10-K.

There have been no changes in such policies or the application of such policies during the three months ended March 31, 2021.

There have been no changes in such policies or the application of such policies during the six months ended June 30, 2021.

Accounts Receivable

The following table presents information about the Partnership's accounts receivable:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in thousands)

4 unchanged sentences

NOTE 3 - OIL AND NATURAL GAS PROPERTIES

Acquisitions of proved oil and natural gas properties and working interests are generally considered business combinations and are recorded at their estimated fair value as of the acquisition date.

Acquisitions that consist of all or substantially all unproved oil and natural gas properties are generally considered asset acquisitions and are recorded at cost.

In the second quarter of 2021, the Partnership closed an acquisition of mineral and royalty acreage in the northern Midland Basin for total consideration of $ 20.8 million.

The purchase price consisted of $ 10.0 million in cash and $ 10.8 million in common units of the Partnership.

The cash consideration was funded with borrowings under the Credit Facility (as defined in Note 6 - Credit Facility) and funds from operating activities.

The transaction was accounted for as a business combination with the assets acquired recorded at their estimated fair values as of the acquisition date.

The assets acquired consisted of $ 4.9 million of proved oil and natural gas properties, $ 15.6 million of unproved oil and natural gas properties, and $ 0.3 million of net working capital.

Acquisition related costs of $ 0.3 million were expensed and included in the General and administrative line of the consolidated statement of operations for the three and six months ended June 30, 2021.

In the third quarter of 2020, the Partnership closed two separate divestitures of certain mineral and royalty properties in the Permian Basin for total proceeds, after closing adjustments, of $ 150.6 million.

6 unchanged sentences

Under these agreements, the Partnership conveyed its rights to participate in certain non-operated working interest opportunities to external capital providers while retaining value from these interests in the form of additional royalty income or retained economic interests.

Canaan Farmout

In February 2017, the Partnership entered into a farmout agreement with Canaan Resource Partners ("Canaan") which covers certain Haynesville and Bossier shale acreage in San Augustine County, Texas operated by XTO Energy Inc.

("XTO"), a subsidiary of Exxon Mobil Corporation.

The Partnership has an approximate 50 % working interest in the acreage and is the largest mineral owner.

During the first three phases of the farmout agreement, Canaan commits on a phase-by-phase basis and funds 80 % of the Partnership's drilling and completion costs and is assigned 80 % of the Partnership's working interests in such wells ( 40 % working interest on an 8/8ths basis) as the wells are drilled.

After the third phase, Canaan can earn 40 % of the Partnership’s working interest ( 20 % working interest on an 8/8ths basis) in additional wells drilled in the area by continuing to fund 40 % of the Partnership's costs for those wells on a well-by-well basis.

The Partnership receives an ORRI before payout and an increased ORRI after payout on all wells drilled under the agreement .

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Canaan has participated in a total of 37 wells under the farmout agreement through March 31, 2021, covering two election phases.

Canaan Farmout

In February 2017, the Partnership entered into a farmout agreement (the "First Canaan Farmout") with Canaan Resource Partners ("Canaan") covering certain Haynesville and Bossier shale acreage in San Augustine County, Texas jointly owned with and operated by XTO Energy Inc.

("XTO"), a subsidiary of Exxon Mobil Corporation.

The Partnership had an approximate 50 % working interest in the acreage.

Under the terms of the First Canaan Farmout, Canaan funded 80 % of the Partnership's drilling and completion costs and was assigned 80 % of the Partnership's working interests in covered wells ( 40 % working interest on an 8/8ths basis) as the wells were drilled.

The Partnership received an ORRI before payout and an increased ORRI after payout on all wells drilled under the First Canaan Farmout .

Canaan's rights and obligations to participate in future wells in the contract area were terminated in the second quarter of 2021 in conjunction with Canaan and the Partnership entering into a new farmout agreement as discussed below.

Canaan participated in a total of 37 wells under the First Canaan Farmout.

In 2019, XTO Energy Inc.

suspended its development activities in the area due to low natural gas prices.

Canaan has the right to elect to continue its participation in a third phase covering up to 20 future wells drilled under the farmout agreement should XTO resume drilling activity.

In March 2021, BSM and XTO reached an agreement to partition the jointly owned working interests in the San Augustine County development area.

Under the partition agreement, BSM and XTO exchanged working interests in certain existing and proposed drilling units, resulting in each company holding 100 % of the working interests in their respective partitioned units.

In May 2021, BSM and Aethon Energy ("Aethon") entered into an agreement to develop certain of the Partnership's undeveloped acreage in San Augustine County, including the working interests resulting from the partition agreement discussed above.

The agreement provides for minimum well commitments by Aethon in exchange for reduced royalty rates and exclusive access to BSM's mineral and leasehold acreage in the contract area.

The agreement calls for a minimum of five wells to be drilled in the initial program year, which begins in the third quarter of 2021, increasing to a minimum of 12 wells per year beginning with the fourth program year.

The Partnership's development agreement with Aethon and related drilling commitments covering its San Augustine County acreage is independent of the development agreement and associated commitments covering Angelina County discussed below.

On May 25, 2021, the Partnership and Canaan entered into a new farmout agreement (the "Second Canaan Farmout").

The Second Canaan Farmout supersedes and replaces the First Canaan Farmout with respect to the area in San Augustine County covered by the Aethon development agreement.

The Second Canaan Farmout covers part of the Partnership's share of working interests under active development by Aethon in San Augustine County, Texas and continues until May 2031, unless earlier terminated in accordance to the terms of the agreement.

Canaan will earn 80 % of the Partnership's working interest in the partitioned acreage from XTO (up to a maximum of 40 % on an 8/8ths basis) and 50 % of the Partnership's working interest in other areas (up to a maximum of 12.5 % on an 8/8ths basis) in wells drilled and operated by Aethon in accordance with the development agreement.

Canaan is obligated to fund the development of all wells drilled by Aethon in the initial program year and thereafter, Canaan has certain rights and options to continue funding the Partnership's working interest for the duration of the Second Canaan Farmout.

As of June 30, 2021, no wells had been drilled under the Second Canaan Farmout.

The Partnership will receive an ORRI before payout and an increased ORRI after payout on all wells drilled under the Second Canaan Farmout.

Pivotal Farmout

3 unchanged sentences

Once Pivotal achieves a specified payout for a designated well group, the Partnership will obtain a majority of the original working interest in such well group.

As of March 31, 2021, a total of 68 wells have been spud in the contract area subject to the First Pivotal Farmout.

As of June 30, 2021, a total of 68 wells have been spud in the contract area subject to the First Pivotal Farmout.

The Partnership's development agreement with BPX Energy terminated in 2019 with respect to the majority of the Partnership's acreage covered by the agreement.

As such, Pivotal retains minimal rights or obligations related to the farmout for that area that remains subject to the First Pivotal Farmout.

In the second quarter of 2020, the Partnership entered into a development agreement with Aethon Energy ("Aethon") to develop certain portions of the area forfeited by BPX Energy in Angelina County, Texas.

The agreement provides for minimum well commitments by Aethon in exchange for reduced royalty rates and exclusive access to our mineral and leasehold acreage in the contract area.

In the second quarter of 2020, the Partnership entered into a development agreement with Aethon to develop certain portions of the area forfeited by BPX Energy in Angelina County, Texas.

The agreement provides for minimum well

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

commitments by Aethon in exchange for reduced royalty rates and exclusive access to our mineral and leasehold acreage in the contract area.

The agreement calls for a minimum of four wells to be drilled in the initial program year, which began in the third quarter of 2020, increasing to a minimum of 15 wells per year beginning with the third program year.

5 unchanged sentences

Once Pivotal achieves a specified payout for a designated well group, the Partnership will obtain a majority of the original working interest in such well group.

As of March 31, 2021, a total of two wells have been spud in the contract area subject to the Second Pivotal Farmout.

From the inception of the farmout agreements through March 31, 2021, the Partnership has received $ 90.2 million and $ 119.2 million from Canaan and Pivotal, respectively, under the agreements.

As of June 30, 2021, a total of five wells have been spud in the contract area subject to the Second Pivotal Farmout.

From the inception of the farmout agreements through June 30, 2021, the Partnership has received $ 90.2 million and $ 119.2 million from Canaan and Pivotal, respectively, under the agreements.

When such reimbursements are received prior to assigning the wells to Canaan and Pivotal, the Partnership records the amounts as increases to Oil and natural gas properties and Other long-term liabilities.

When working interests in farmout wells are assigned to Canaan and Pivotal, the Partnership's Oil and natural gas properties and Other long-term liabilities are reduced by the reimbursed capital costs.

As of March 31, 2021 and December 31, 2020, $ 0.1 million was included in the Other long-term liabilities line item of the consolidated balance sheets for reimbursements received associated with farmed-out working interests not yet assigned to Canaan and Pivotal.

XTO Completions Agreement

In June 2020, the Partnership entered into a new incentive agreement with XTO with respect to certain drilled but uncompleted wells ("DUCs") in the Shelby Trough.

The agreement allowed for royalty relief on 13 existing DUCs if XTO completed and turned the wells to sales by March 31, 2021.

As of January 18, 2021, XTO had turned all 13 DUCs to sales.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2021 and December 31, 2020, $ 0.1 million was included in the Other long-term liabilities line item of the consolidated balance sheets for reimbursements received associated with farmed-out working interests not yet assigned to Canaan and Pivotal.

Impairment of Oil and Natural Gas Properties

4 unchanged sentences

The Partnership determined these events and circumstances indicated a possible decline in the recoverability of the carrying value of certain proved properties and recoverability testing determined that certain depletable units consisting of mature oil producing properties were impaired.

The Partnership recognized no impairment of oil and natural gas properties for the three months ended March 31, 2021 and $ 51.0 million of impairment of oil and natural gas properties for the three months ended March 31, 2020.

The Partnership recognized no impairment of oil and natural gas properties for the three and six months ended June 30, 2021 and the three months ended June 30, 2020.

The Partnership recognized $ 51.0 million of impairment of oil and natural gas properties for the six months ended June 30, 2020.

See Note 5 - Fair Value Measurements for further discussion.

5 unchanged sentences

The Partnership does not enter into derivative instruments for speculative purposes.

As of March 31, 2021, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

As of June 30, 2021, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

A fixed-price swap contract between the Partnership and the counterparty specifies a fixed commodity price and a future settlement date.

2 unchanged sentences

All derivative gains and losses from the Partnership’s derivative contracts have been recognized in revenue in the Partnership's accompanying consolidated statements of operations.

Derivative instruments that have not yet been settled in cash are reflected as either derivative assets or liabilities in the Partnership’s accompanying consolidated balance sheets as of March 31, 2021 and December 31, 2020.

See Note 5 - Fair Value Measurements for further discussion.

The Partnership's derivative contracts expose it to credit risk in the event of nonperformance by counterparties that may adversely impact the fair value of the Partnership's commodity derivative assets.

While the Partnership does not require its derivative contract counterparties to post collateral, the Partnership does evaluate the credit standing of such counterparties as deemed appropriate.

This evaluation includes reviewing a counterparty’s credit rating and latest financial information.

As of March 31, 2021, the Partnership had seven counterparties, all of which are rated Baa1 or better by Moody’s and are lenders under the Credit Facility.

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

While the Partnership does not require its derivative contract counterparties to post collateral, the Partnership does evaluate the credit standing of such counterparties as deemed appropriate.

This evaluation includes reviewing a counterparty’s credit rating and latest financial information.

As of June 30, 2021, the Partnership had seven counterparties, all of which are rated Baa1 or better by Moody’s and six are lenders under the Credit Facility.

The tables below summarize the fair values and classifications of the Partnership’s derivative instruments, as well as the gross recognized derivative assets, liabilities, and amounts offset in the consolidated balance sheets as of each date:

March 31, 2021

June 30, 2021

Classification Balance Sheet Location Gross

27 unchanged sentences

$ 26,379 $ ( 5,213 ) $ 21,166

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Changes in the fair values of the Partnership’s derivative instruments (both assets and liabilities) are presented on a net basis in the accompanying consolidated statements of operations and consolidated statements of cash flows and consist of the following for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Derivatives not designated as hedging instruments 2021 2020 2021 2020

7 unchanged sentences

Ending fair value of commodity derivative instruments $ ( 85,511 ) $ 40,552 $ ( 85,511 ) $ 40,552

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership had the following open derivative contracts for oil as of March 31, 2021:

The Partnership had the following open derivative contracts for oil as of June 30, 2021:

Weighted Average Price (Per Bbl) Range (Per Bbl)

1 unchanged sentence

Oil Swap Contracts:

First Quarter 220,000 $ 38.97 $ 32.64 $ 46.50

Second Quarter 220,000 $ 38.97 $ 32.64 $ 46.50

5 unchanged sentences

Fourth Quarter 480,000 60.14 55.29 65.50

The Partnership had the following open derivative contracts for natural gas as of March 31, 2021:

The Partnership had the following open derivative contracts for natural gas as of June 30, 2021:

Weighted Average Price (Per MMBtu) Range (Per MMBtu)

1 unchanged sentence

Natural Gas Swap Contracts:

Third Quarter 10,120,000 $ 2.69 $ 2.52 $ 3.08

Fourth Quarter 10,120,000 2.69 2.52 3.08

First Quarter 7,920,000 $ 2.98 $ 2.80 $ 3.15

Second Quarter 8,000,000 2.99 2.80 3.15

1 unchanged sentence

Fourth Quarter 8,080,000 2.99 2.80 3.15

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - FAIR VALUE MEASUREMENTS

10 unchanged sentences

The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The carrying value of the Partnership's cash and cash equivalents, receivables, and payables approximate fair value due to the short-term nature of the instruments.

The estimated carrying value of all debt as of March 31, 2021 and December 31, 2020 approximated the fair value due to variable market rates of interest.

The estimated carrying value of all debt as of June 30, 2021 and December 31, 2020 approximated the fair value due to variable market rates of interest.

These debt fair values, which are Level 3 measurements, were estimated based on the Partnership’s incremental borrowing rates for similar types of borrowing arrangements, when quoted market prices were not available.

3 unchanged sentences

See Note 4 - Commodity Derivative Financial Instruments for further discussion.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information about the Partnership’s assets and liabilities measured at fair value on a recurring basis:

2 unchanged sentences

(in thousands)

As of March 31, 2021

As of June 30, 2021

Financial Assets

23 unchanged sentences

(in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Impaired oil and natural gas properties $ — $ — $ — $ —

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Impaired oil and natural gas properties $ — $ — $ — $ —

Six Months Ended June 30, 2021

Impaired oil and natural gas properties $ — $ — $ — $ —

Six Months Ended June 30, 2020

Impaired oil and natural gas properties $ — $ — $ 2,044 $ 51,031

The Partnership’s estimates of fair value have been determined at discrete points in time based on relevant market data.

1 unchanged sentence

Changes to these estimates, particularly related to economic reserves, future commodity prices, and timing of future production could result in additional impairment charges in the future.

There were no significant changes in valuation techniques or related inputs as of March 31, 2021 or December 31, 2020.

There were no significant changes in valuation techniques or related inputs as of June 30, 2021 or December 31, 2020.

NOTE 6 - CREDIT FACILITY

The Partnership maintains a senior secured revolving credit agreement, as amended (the “Credit Facility”).

The Credit Facility has an aggregate maximum credit amount of $ 1.0 billion.

The Credit Facility has an aggregate maximum credit amount of $ 1.0 billion and terminates on November 1, 2024.

The commitment of the lenders equals the lesser of the aggregate maximum credit amount and the borrowing base.

2 unchanged sentences

The Partnership also has the right to request a redetermination following the acquisition of oil and natural gas properties in excess of 10 % of the value of the borrowing base immediately prior to such acquisition.

Effective November 3, 2020, the borrowing base redetermination reduced the borrowing base from $ 430.0 million to $ 400.0 million, and effective April 30, 2021, the borrowing base was reaffirmed at $ 400.0 million and the term of the Credit Facility was extended through November 1, 2024.

Please see Item 5 of Part II of this quarterly report for a more detailed description of the amendment to the Credit Facility effective April 30, 2021.

The next semi-annual redetermination is scheduled for October 2021.

Outstanding borrowings under the Credit Facility bear interest at a floating rate elected by the Partnership equal to an alternative base rate (which is equal to the greatest of the Prime Rate, the Federal Funds effective rate plus 0.50 %, or 1-month LIBOR plus 1.00 %) or LIBOR, in each case, plus the applicable margin.

As of March 31, 2021 and December 31, 2020, the applicable margin for the alternative base rate ranged from 1.00 % to 2.00 % and the applicable margin for LIBOR ranged from 2.00 % to 3.00 %, depending on the borrowings outstanding in relation to the borrowing base.

Effective April 30, 2021, the LIBOR margin was increased to between 2.50 % and 3.50 % and the alternative base rate margin was increased to between 1.50 % and 2.50 %.

The weighted-average interest rate of the Credit Facility was 2.37 % and 2.40 % as of March 31, 2021 and December 31, 2020, respectively.

As of December 31, 2020, the applicable margin for the alternative base rate ranged from 1.00 % to 2.00 % and the applicable margin for LIBOR ranged from 2.00 % to 3.00 %, depending on the borrowings outstanding in relation to the borrowing base.

As of June 30, 2021, the alternative base rate margin ranged from 1.50 % to 2.50 % and the LIBOR margin ranged from 2.50 % to 3.50 %.

The weighted-average interest rate of the Credit Facility was 2.60 % and 2.40 % as of June 30, 2021 and December 31, 2020, respectively.

Accrued interest is payable at the end of each calendar quarter or at the end of each interest period, unless the interest period is longer than 90 days, in which case interest is payable at the end of every 90-day period.

3 unchanged sentences

Additionally, the Credit Facility requires the Partnership to maintain a current ratio of not less than 1.0 :1.0 and a ratio of total debt to EBITDAX (Earnings before Interest, Taxes, Depreciation, Amortization, and Exploration) of not more than 3.5 :1.0.

As of March 31, 2021, the Partnership was in compliance with all financial covenants in the Credit Facility.

Distributions are not permitted if there is a default under the Credit Facility (including the failure to satisfy one of the financial covenants), if the availability under the Credit Facility is less than 10 % of the lenders' commitments, or if total debt to EBITDAX is greater than 3.0 .

As of June 30, 2021, the Partnership was in compliance with all financial covenants in the Credit Facility.

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The aggregate principal balance outstanding was $ 111.0 million and $ 121.0 million at March 31, 2021 and December 31, 2020, respectively.

The unused portion of the available borrowings under the Credit Facility were $ 289.0 million and $ 279.0 million at March 31, 2021 and December 31, 2020, respectively.

The aggregate principal balance outstanding was $ 96.0 million and $ 121.0 million at June 30, 2021 and December 31, 2020, respectively.

The unused portion of the available borrowings under the Credit Facility were $ 304.0 million and $ 279.0 million at June 30, 2021 and December 31, 2020, respectively.

On March 5, 2021, the U.K.

10 unchanged sentences

From time to time, the Partnership is involved in legal actions and claims arising in the ordinary course of business.

The Partnership believes existing claims as of March 31, 2021 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

The Partnership believes existing claims as of June 30, 2021 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

NOTE 8 - INCENTIVE COMPENSATION

The table below summarizes incentive compensation expense recorded in the General and administrative line item of the consolidated statements of operations for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(in thousands)

7 unchanged sentences

1 Compensation expense related to the restricted performance awards is determined using the measurement-date (i.e., the last day of each reporting period date) fair value of the Partnership's common units.

Downward cost revisions recognized in the three months ended March 31, 2020 are due to the decrease in the Partnership's common unit price period over period.

Downward cost revisions recognized in the six months ended June 30, 2020 are due to the decrease in the Partnership's common unit price period over period.

NOTE 9 - PREFERRED UNITS

8 unchanged sentences

However, the Partnership shall not be obligated to honor any request for such conversion if such request does not involve an underlying value of common units of at least $ 10.0 million based on the closing trading price of common units on the trading day immediately preceding the conversion notice date, or such lesser amount to the extent such exercise covers all of a holder's Series B cumulative convertible preferred units.

The Series B cumulative convertible preferred units had a carrying value of $ 298.4 million, including accrued distributions of $ 5.3 million, as of March 31, 2021 and December 31, 2020.

The Series B cumulative convertible preferred units had a carrying value of $ 298.4 million, including accrued distributions of $ 5.3 million, as of June 30, 2021 and December 31, 2020.

The Series B cumulative convertible preferred units are classified as mezzanine equity on the consolidated balance sheets since certain provisions of redemption are outside the control of the Partnership.

9 unchanged sentences

The following table sets forth the computation of basic and diluted earnings per common unit:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(in thousands, except per unit amounts)

17 unchanged sentences

The following units of potentially dilutive securities were excluded from the computation of diluted weighted average units outstanding because their inclusion would be anti-dilutive:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(in thousands)

11 unchanged sentences

The following table provides information about the Partnership's per unit distributions to common unitholders:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Distributions declared and paid per common unit $ 0.1750 $ 0.0800 $ 0.3500 $ 0.3800

2 unchanged sentences

The repurchase program authorizes the Partnership to make repurchases on a discretionary basis as determined by management, subject to market conditions, applicable legal requirements, available liquidity, and other appropriate factors.

The Partnership made no repurchases under this program for the three months ended March 31, 2021.

As of March 31, 2021, the Partnership has repurchased $ 4.2 million in common units under the repurchase program since inception.

The Partnership made no repurchases under this program for the six months ended June 30, 2021.

As of June 30, 2021, the Partnership has repurchased $ 4.2 million in common units under the repurchase program since inception.

The repurchase program is funded from the Partnership's cash on hand or availability on the Credit Facility.

1 unchanged sentence

NOTE 12 - SUBSEQUENT EVENTS

On April 21, 2021, the Board approved a distribution for the three months ended March 31, 2021 of $ 0.175 per common unit.

Distributions will be payable on May 21, 2021 to unitholders of record at the close of business on May 14, 2021.

On April 30, 2021, the Partnership amended its Credit Facility.

Please see Item 5 of Part II of this quarterly report for a description of the amendment.

In April 2021, the Partnership entered into an agreement with several operators to test and develop areas of the Austin Chalk in East Texas where the Partnership has significant acreage positions.

Under the terms of the agreement, the operators will participate in three test wells targeting the Austin Chalk formation.

In April 2021, the Partnership entered into an agreement with a large, private independent operator ("Operator") to drill and complete multiple Austin Chalk wells on the Partnership's acreage within East Texas in 2021.

If the initial wells are successful, the Operator has the option to expand the Austin Chalk development program on additional acreage owned by the Partnership.

In May 2021, the Partnership entered into an agreement with Aethon to develop certain of the Partnership's undeveloped acreage in San Augustine County.

The agreement provides for minimum well commitments by Aethon in exchange for reduced royalty rates and exclusive access to the Partnership's mineral and leasehold acreage in the contract area.

In May 2021, the Partnership entered into an agreement to acquire mineral and royalty acreage in the northern Midland Basin for total consideration of $ 20.7 million.

The purchase price will consist of $ 10.0 million in cash and $ 10.7 million in common units of the Partnership.

On July 26, 2021, the Board approved a distribution for the three months ended June 30, 2021 of $ 0.25 per common unit.

In determining the distribution level with respect to the second quarter, the Board considered a base distribution of $ 0.20 per unit, which it expects will be sustainable through the end of 2021, plus a special distribution of $ 0.05 per unit which reflects certain positive, non-recurring items in the quarter.

Distributions will be payable on August 20, 2021 to unitholders of record at the close of business on August 13, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements