What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 85 added, 46 removed, 482 unchanged (21% of the section changed)

4 unchanged sentences

(In thousands)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

CURRENT ASSETS

1 unchanged sentence

Accounts receivable 140,569 97,142

Commodity derivative assets 316 —

Prepaid expenses and other current assets 2,457 1,956

1 unchanged sentence

PROPERTY AND EQUIPMENT

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 937,395 and $ 937,395 at March 31, 2022 and December 31, 2021, respectively

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 925,707 and $ 937,395 at June 30, 2022 and December 31, 2021, respectively

3,000,991 3,001,627

1 unchanged sentence

Oil and natural gas properties, net 1,108,756 1,131,896

Other property and equipment, net of accumulated depreciation of $ 13,000 and $ 12,931 at March 31, 2022 and December 31, 2021, respectively

Other property and equipment, net of accumulated depreciation of $ 13,150 and $ 12,931 at June 30, 2022 and December 31, 2021, respectively

NET PROPERTY AND EQUIPMENT 1,109,878 1,133,336

17 unchanged sentences

MEZZANINE EQUITY

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at March 31, 2022 and December 31, 2021, respectively

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at June 30, 2022 and December 31, 2021, respectively

298,361 298,361

Partners' equity – general partner interest — —

Partners' equity – common units, 209,392 and 208,666 units outstanding at March 31, 2022 and December 31, 2021, respectively

Partners' equity – common units, 209,399 and 208,666 units outstanding at June 30, 2022 and December 31, 2021, respectively

744,327 765,268

6 unchanged sentences

(In thousands, except per unit amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Oil and condensate sales $ 94,296 $ 53,936 $ 170,127 $ 98,112

11 unchanged sentences

Accretion of asset retirement obligations 205 298 407 590

(Gain) loss on sale of assets, net ( 17 ) — ( 17 ) —

TOTAL OPERATING EXPENSE 47,305 41,416 89,477 85,771

1 unchanged sentence

OTHER INCOME (EXPENSE)

Interest and investment income 2 — 2 —

Interest expense ( 1,362 ) ( 1,628 ) ( 2,571 ) ( 2,838 )

29 unchanged sentences

BALANCE AT MARCH 31, 2022 209,392 $ 699,788 $ 699,788

Restricted units granted, net of forfeitures 7 — —

Equity–based compensation — 2,273 2,273

Distributions — ( 83,759 ) ( 83,759 )

Charges to partners' equity for accrued distribution equivalent rights — ( 513 ) ( 513 )

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

Net income (loss) — 131,788 131,788

BALANCE AT JUNE 30, 2022 209,399 $ 744,327 $ 744,327

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, 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.

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

8 unchanged sentences

Exploratory dry hole expense — 1,049

(Gain) loss on sale of assets, net ( 17 ) —

Changes in operating assets and liabilities:

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisitions of oil and natural gas properties — ( 10,064 )

Additions to oil and natural gas properties ( 10,072 ) ( 2,606 )

1 unchanged sentence

Purchases of other property and equipment ( 41 ) ( 63 )

Proceeds from the sale of oil and natural gas properties 17 —

Proceeds from farmouts of oil and natural gas properties 9,951 —

6 unchanged sentences

Repayments under credit facility ( 156,000 ) ( 109,000 )

Debt issuance costs and other — ( 3,528 )

NET CASH USED IN FINANCING ACTIVITIES ( 156,712 ) ( 113,578 )

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, 2022 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, 2022 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 2021 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, 2022.

There have been no changes in such policies or the application of such policies during the six months ended June 30, 2022.

Accounts Receivable

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands)

11 unchanged sentences

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.

The Partnership had no acquisition activity during the six months ended June 30, 2022.

In the third quarter of 2021, the Partnership closed on the divestiture of its wholly owned subsidiary, TLW Investments, L.L.C.

2 unchanged sentences

TLW's assets and liabilities consisted of oil and natural gas properties with a net book value of $ 3.0 million and asset retirement obligations with a book value of $ 5.7 million at the time of sale.

The Partnership had no material divestiture activity during the six months ended June 30, 2022.

Farmout Agreements

21 unchanged sentences

The Partnership will receive an overriding royalty interest ("ORRI") before payout and an increased ORRI after payout on all wells drilled under the farmout agreements.

As of March 31, 2022, four wells have been spud by Aethon in the contract area subject to the Canaan, Azul, and JWM Farmouts.

As of June 30, 2022, six wells have been spud by Aethon in the contract area subject to the Canaan, Azul, and JWM Farmouts.

The following tables present the working interests each farmout partner will earn within the contract area under the San Augustine farmout agreements:

22 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, 2022, ten wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

As of June 30, 2022, fourteen wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

Impairment of Oil and Natural Gas Properties

2 unchanged sentences

When the carrying amount exceeds its estimated undiscounted future cash flows, the carrying amount is written down to its fair value, which is measured as the present value of the projected future cash flows of such properties.

The Partnership recognized no impairment of oil and natural gas properties for the three months ended March 31, 2022 and 2021, respectively.

The Partnership recognized no impairment of oil and natural gas properties for the three and six months ended June 30, 2022 and 2021, respectively.

See Note 5 - Fair Value Measurements for further discussion.

7 unchanged sentences

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

As of March 31, 2022, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

As of June 30, 2022, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

The Partnership has not designated any of its contracts as fair value or cash flow hedges.

1 unchanged sentence

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, 2022 and December 31, 2021.

See Note 5 - Fair Value Measurements for further discussion.

2 unchanged sentences

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

As of March 31, 2022, the Partnership had six counterparties, all of which are rated Baa1 or better by Moody’s and are lenders under the Credit Facility.

As of June 30, 2022, 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.

2 unchanged sentences

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, 2022

June 30, 2022

Classification Balance Sheet Location Gross

5 unchanged sentences

Deferred charges and other long-term assets 2,886 ( 918 ) 1,968

$ 3,588 $ ( 1,304 ) $ 2,284

Current liability

22 unchanged sentences

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 2022 2021 2022 2021

7 unchanged sentences

Ending fair value of commodity derivative instruments $ ( 107,218 ) $ ( 85,511 ) $ ( 107,218 ) $ ( 85,511 )

The Partnership had the following open derivative contracts for oil as of March 31, 2022:

The Partnership had the following open derivative contracts for oil as of June 30, 2022:

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

1 unchanged sentence

Oil Swap Contracts:

First Quarter 220,000 $ 66.47 $ 55.29 $ 83.91

Second Quarter 220,000 66.47 55.29 83.91

2 unchanged sentences

First Quarter 180,000 $ 80.40 $ 78.00 $ 82.80

Second Quarter 90,000 $ 89.50 $ 89.50 89.50

Third Quarter 90,000 $ 89.50 $ 89.50 89.50

Fourth Quarter 90,000 $ 89.50 $ 89.50 89.50

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership had the following open derivative contracts for natural gas as of March 31, 2022:

The Partnership had the following open derivative contracts for natural gas as of June 30, 2022:

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

8 unchanged sentences

Fourth Quarter 3,680,000 4.16 3.28 5.05

The Partnership entered into the following derivative contracts for natural gas subsequent to March 31, 2022:

The Partnership entered into the following derivative contracts for natural gas subsequent to June 30, 2022:

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

21 unchanged sentences

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, 2022 and December 31, 2021 approximated the fair value due to variable market rates of interest.

The estimated carrying value of all debt as of June 30, 2022 and December 31, 2021 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.

7 unchanged sentences

(in thousands)

As of March 31, 2022

As of June 30, 2022

Financial Assets

18 unchanged sentences

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, 2022 or December 31, 2021.

There were no significant changes in valuation techniques or related inputs as of June 30, 2022 or December 31, 2021.

BLACK STONE MINERALS, L.P.

11 unchanged sentences

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 December 31, 2021 and March 31, 2022, the applicable margin for the alternative base rate ranged from 1.50 % to 2.50 % and the applicable margin for LIBOR ranged from 2.50 % to 3.50 %, depending on the borrowings outstanding in relation to the borrowing base.

The weighted-average interest rate of the Credit Facility was 2.94 % and 2.61 % as of March 31, 2022 and December 31, 2021, respectively.

As of December 31, 2021 and June 30, 2022, the applicable margin for the alternative base rate ranged from 1.50 % to 2.50 % and the applicable margin for LIBOR ranged from 2.50 % to 3.50 %, depending on the borrowings outstanding in relation to the borrowing base.

The weighted-average interest rate of the Credit Facility was 4.12 % and 2.61 % as of June 30, 2022 and December 31, 2021, 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.

4 unchanged sentences

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 March 31, 2022, the Partnership was in compliance with all financial covenants in the Credit Facility.

The aggregate principal balance outstanding was $ 69.0 million and $ 89.0 million at March 31, 2022 and December 31, 2021, respectively.

The unused portion of the available borrowings under the Credit Facility were $ 331.0 million and $ 311.0 million at March 31, 2022 and December 31, 2021, respectively.

As of June 30, 2022, the Partnership was in compliance with all financial covenants in the Credit Facility.

The aggregate principal balance outstanding was $ 86.0 million and $ 89.0 million at June 30, 2022 and December 31, 2021, respectively.

The unused portion of the available borrowings under the Credit Facility were $ 314.0 million and $ 311.0 million at June 30, 2022 and December 31, 2021, respectively.

The 1-week and 2-month U.S.

13 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, 2022 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

The Partnership believes existing claims as of June 30, 2022 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,

2022 2021 2022 2021

(in thousands)

13 unchanged sentences

Total compensation expense to be recognized over the life of the Aspirational Awards consists of $ 5.0 million for the performance cash awards and $ 17.1 million for the performance equity awards ( 1,476,943 performance units with a weighted-average grant date fair value of $ 11.58 per unit).

As of March 31, 2022, the Partnership determined achievement of the performance condition was not yet probable and no expense was recognized.

As of June 30, 2022, the Partnership determined achievement of the performance condition was not yet probable and no expense was recognized.

NOTE 9 - PREFERRED UNITS

4 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, 2022 and December 31, 2021.

The Series B cumulative convertible preferred units are

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, 2022 and December 31, 2021.

The Series B cumulative convertible preferred units are classified

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

classified as mezzanine equity on the consolidated balance sheets since certain provisions of redemption are outside the control of the Partnership.

as mezzanine equity on the consolidated balance sheets since certain provisions of redemption are outside the control of the Partnership.

NOTE 10 - EARNINGS PER UNIT

8 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,

2022 2021 2022 2021

(in thousands, except per unit amounts)

9 unchanged sentences

Per common unit (diluted) 1

$ 0.59 $ 0.05 $ 0.55 $ 0.10

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING:

2 unchanged sentences

Weighted average common units outstanding (diluted) 224,366 207,945 209,360 207,695

1 For the Three Months Ended June 30, 2022, diluted net income (loss) attributable to common units included distributions on Series B cumulative convertible preferred units of $ 5.3 million.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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,

2022 2021 2022 2021

(in thousands)

2 unchanged sentences

— 14,969 14,969 14,969

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - COMMON UNITS

7 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,

2022 2021 2022 2021

Distributions declared and paid per common unit $ 0.4000 $ 0.1750 $ 0.6700 $ 0.3500

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, 2022.

As of March 31, 2022, 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, 2022.

As of June 30, 2022, 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 25, 2022, the Board approved a distribution for the three months ended March 31, 2022 of $ 0.40 per common unit.

Distributions will be payable on May 20, 2022 to unitholders of record at the close of business on May 13, 2022.

On July 25, 2022, the Board approved a distribution for the three months ended June 30, 2022 of $ 0.42 per common unit.

Distributions will be payable on August 19, 2022 to unitholders of record at the close of business on August 12, 2022.

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