What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-10-31 · 116 added, 147 removed, 430 unchanged (38% of the section changed)

4 unchanged sentences

(In thousands)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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 $ 898,768 and $ 909,344 at September 30, 2023 and December 31, 2022, respectively

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 913,031 and $ 890,338 at March 31, 2024 and December 31, 2023, respectively

3,049,455 3,026,394

1 unchanged sentence

Oil and natural gas properties, net 1,076,931 1,064,495

Other property and equipment, net of accumulated depreciation of $ 13,988 and $ 13,461 at September 30, 2023 and December 31, 2022, respectively

Other property and equipment, net of accumulated depreciation of $ 14,270 and $ 14,163 at March 31, 2024 and December 31, 2023, respectively

NET PROPERTY AND EQUIPMENT 1,077,869 1,065,502

9 unchanged sentences

LONG–TERM LIABILITIES

Credit facility — 10,000

Accrued incentive compensation 802 1,699

5 unchanged sentences

MEZZANINE EQUITY

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at September 30, 2023 and December 31, 2022

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at March 31, 2024 and December 31, 2023

300,478 299,137

Partners' equity – general partner interest — —

Partners' equity – common units, 209,986 and 209,407 units outstanding at September 30, 2023 and December 31, 2022, respectively

Partners' equity – common units, 210,656 and 209,991 units outstanding at March 31, 2024 and December 31, 2023, respectively

875,324 918,208

6 unchanged sentences

(In thousands, except per unit amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Oil and condensate sales $ 71,224 $ 60,909

11 unchanged sentences

Accretion of asset retirement obligations 317 245

(Gain) loss on sale of assets, net ( 73 ) — ( 73 ) ( 17 )

TOTAL OPERATING EXPENSE 41,519 39,379

33 unchanged sentences

BALANCE AT MARCH 31, 2024 210,656 $ 875,324

Restricted units granted, net of forfeitures 5 —

Equity–based compensation — 2,076

Distributions — ( 99,734 )

Charges to partners' equity for accrued distribution equivalent rights — ( 471 )

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

Net income (loss) — 78,392

BALANCE AT JUNE 30, 2023 209,968 $ 914,880

Restricted units granted, net of forfeitures 18 —

Equity–based compensation — 3,530

Distributions — ( 99,744 )

Charges to partners' equity for accrued distribution equivalent rights — ( 461 )

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

Net income (loss) — 62,067

BALANCE AT SEPTEMBER 30, 2023 209,986 $ 875,022

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

8 unchanged sentences

BALANCE AT MARCH 31, 2023 209,963 $ 939,867

Restricted units granted, net of forfeitures 7 —

Equity–based compensation — 2,273

Distributions — ( 83,759 )

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

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

Net income (loss) — 131,788

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

Restricted units granted, net of forfeitures 3 —

Equity–based compensation — 4,084

Distributions — ( 87,949 )

Charges to partners' equity for accrued distribution equivalent rights — ( 460 )

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

Net income (loss) — 168,475

BALANCE AT SEPTEMBER 30, 2022 209,402 $ 823,227

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

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Equity-based compensation 2,383 2,118

(Gain) loss on sale of assets, net ( 73 ) ( 17 )

Changes in operating assets and liabilities:

10 unchanged sentences

Proceeds from the sale of oil and natural gas properties 79 —

Proceeds from farmouts of oil and natural gas properties — 11,331

NET CASH USED IN INVESTING ACTIVITIES ( 23,964 ) ( 1,954 )

30 unchanged sentences

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

The results of operations for the nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three months ended March 31, 2024 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.

2 unchanged sentences

Investments in which the Partnership has less than a 20 % ownership interest and does not have control or exercise significant influence are accounted for using fair value or cost minus impairment if fair value is not readily determinable.

Investments in which the Partnership exercises control are consolidated, and the noncontrolling interests of such investments, which are not attributable directly or indirectly to the Partnership, are presented as a separate component of net income (loss) and equity.

The unaudited interim consolidated financial statements include undivided interests in oil and natural gas property rights.

10 unchanged sentences

Significant accounting policies are disclosed in the Partnership’s 2023 Annual Report on Form 10-K.

There have been no changes in such policies or the application of such policies during the nine months ended September 30, 2023.

There have been no changes in such policies or the application of such policies during the three months ended March 31, 2024.

Accounts Receivable

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands)

3 unchanged sentences

Total accounts receivable $ 72,428 $ 82,253

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segments Disclosures (Topic 280), which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments provide new segment disclosure requirements for entities with a single reportable segment.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Partnership does not plan to early adopt and expects the new guidance will not have a material impact on the Partnership's consolidated financial statements and related disclosures.

NOTE 3 - OIL AND NATURAL GAS PROPERTIES

The Partnership had no material divestiture activity during 2022 or the nine months ended September 30, 2023.

The Partnership had no material divestiture activity during 2023 or the three months ended March 31, 2024.

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 third quarter of 2023, the Partnership acquired mineral and royalty acreage in East Texas from various sellers for aggregate cash consideration of $ 0.9 million.

These acquisitions were considered asset acquisitions and were funded with cash from operating activities.

The Partnership had no material acquisition activity during the nine months ended September 30, 2022.

In the first quarter of 2024, the Partnership acquired mineral and royalty interests that consisted of substantially all unproved oil and natural gas properties from various sellers for cash consideration of $ 23.0 million, including capitalized direct transaction costs.

These acquisitions were considered asset acquisitions, were primarily located in the Gulf Coast land region, and were funded with cash from operating activities.

During the year ended December 31, 2023, the Partnership acquired mineral and royalty interests that consisted of unproved oil and natural gas properties from various sellers for cash consideration of $ 14.6 million, including capitalized direct transaction costs.

These acquisitions were considered asset acquisitions, were primarily located in the Gulf Coast land region, and were funded with cash from operating activities.

Farmout Agreements

The Partnership has entered into farmout arrangements designed to reduce its working interest capital expenditures and thereby significantly lowering its capital spending other than for mineral and royalty interest acquisitions.

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.

Under these agreements, the Partnership conveyed its rights to participate in certain non-operated working interest opportunities to external

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

capital providers while retaining value from these interests in the form of additional royalty income or retained economic interests.

San Augustine Farmout

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.

In May 2021, BSM and Aethon Energy ("Aethon") entered into an agreement to develop certain portions of the Partnership's undeveloped acreage in San Augustine County, Texas.

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.

1 unchanged sentence

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.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In May 2021, the Partnership entered into a farmout agreement (the "Canaan Farmout") with Canaan and in December 2021, the Partnership entered into a farmout agreement (the "Azul Farmout") with Azul-SA, LLC ("Azul").

4 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 September 30, 2023, 17 wells have been spud by Aethon in the contract area subject to the Canaan, Azul, and JWM Farmouts.

As of March 31, 2024, 20 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:

10 unchanged sentences

Total 100.0 % 25.0 %

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Angelina Farmout

In May 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.

In May 2020, BSM and Aethon entered into an agreement to develop certain portions of the Partnership's undeveloped acreage in Angelina County, Texas.

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.

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 September 30, 2023, 45 wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, 45 wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

Aethon Time-Out

In December 2023, the Partnership received notice that Aethon was exercising the "time-out" provisions under its joint exploration agreements with BSM in Angelina and San Augustine counties in East Texas.

When natural gas prices fall below specified thresholds, Aethon may elect to temporarily suspend its drilling obligations for up to nine consecutive months and a maximum of 18 total months in any 48-month period.

The current program year under each agreement is paused during the suspension period such that the program year may extend beyond 12 calendar months.

Aethon has not previously invoked the time-out provisions under the agreements.

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 did not recognize any impairment of oil and natural gas properties for the three and nine months ended September 30, 2023 and 2022.

See Note 5 - Fair Value Measurements for further discussion.

The Partnership did not recognize any impairment of oil and natural gas properties for the three months ended March 31, 2024 and 2023.

See "Note 5 - Fair Value Measurements" for additional information.

NOTE 4 - COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

6 unchanged sentences

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

As of September 30, 2023, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, 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 September 30, 2023 and December 31, 2022.

See Note 5 - Fair Value Measurements for further discussion.

See "Note 5 - Fair Value Measurements" for additional information.

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.

1 unchanged sentence

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

As of September 30, 2023, 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.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, the Partnership had seven counterparties, all of which are rated Baa2 or better by Moody’s and 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:

September 30, 2023

March 31, 2024

Classification Balance Sheet Location Gross

31 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Derivatives not designated as hedging instruments 2024 2023

7 unchanged sentences

Ending fair value of commodity derivative instruments $ 12,248 $ 67,927

The Partnership had the following open derivative contracts for oil as of September 30, 2023:

The Partnership had the following open derivative contracts for oil as of March 31, 2024:

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

1 unchanged sentence

Oil Swap Contracts:

First Quarter 190,000 $ 71.45 $ 67.00 $ 81.00

Second Quarter 570,000 71.45 67.00 81.00

Third Quarter 570,000 71.45 67.00 81.00

4 unchanged sentences

Fourth Quarter 555,000 71.22 70.02 73.15

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership had the following open derivative contracts for natural gas as of September 30, 2023:

The Partnership had the following open derivative contracts for natural gas as of March 31, 2024:

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

1 unchanged sentence

Natural Gas Swap Contracts:

Fourth Quarter 8,280,000 5.15 3.28 6.59

First Quarter 10,010,000 $ 3.57 $ 3.48 $ 3.76

Second Quarter 10,465,000 $ 3.55 $ 3.00 $ 3.76

1 unchanged sentence

Fourth Quarter 10,580,000 3.55 3.00 3.76

The Partnership entered into the following derivative contracts for oil subsequent to September 30, 2023:

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

Period and Type of Contract Volume (Bbl) Low High

Oil Swap Contracts:

First Quarter 7,200,000 $ 3.39 $ 3.34 $ 3.65

2 unchanged sentences

Fourth Quarter 11,040,000 3.45 3.34 3.65

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.

There were no transfers into, or out of, the three levels of fair value hierarchy for the three months ended March 31, 2024 and 2023.

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 September 30, 2023 and December 31, 2022 approximated the fair value due to variable market rates of interest.

These debt fair values, which are Level 3

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

measurements, were estimated based on the Partnership’s incremental borrowing rates for similar types of borrowing arrangements, when quoted market prices were not available.

The estimated carrying value of all debt as of March 31, 2024 and December 31, 2023 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.

The estimated fair values of the Partnership’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

1 unchanged sentence

The Partnership estimated the fair value of commodity derivative financial instruments using the market approach via a model that uses inputs that are observable in the market or can be derived from, or corroborated by, observable data.

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

See "Note 4 - Commodity Derivative Financial Instruments" for additional information.

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 September 30, 2023

As of March 31, 2024

Financial Assets

12 unchanged sentences

The Partnership has designated these measurements as Level 3.

The Partnership had no business combinations for the nine months ended September 30, 2023 or the year ended December 31, 2022.

The Partnership had no business combinations for the three months ended March 31, 2024 or the year ended December 31, 2023.

See "Note 3 - Oil and Natural Gas Properties".

Oil and natural gas properties are measured at fair value on a non-recurring basis using the income approach when assessing for impairment.

Proved and unproved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of those properties.

The factors used to determine fair value include estimates of proved reserves, future commodity prices, timing of future production, operating costs, future capital expenditures, and a risk-adjusted discount rate.

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

These estimates involve uncertainty, particularly in the current volatile market, and cannot be determined with precision.

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 September 30, 2023 or December 31, 2022.

There were no assets measured at fair value on a non-recurring basis for the nine months ended September 30, 2023 or the year ended December 31, 2022.

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

These estimates involve uncertainty, and cannot be determined with precision.

There were no significant changes in valuation techniques or related inputs as of March 31, 2024 or December 31, 2023.

There were no assets measured at fair value on a non-recurring basis for the three months ended March 31, 2024 or the year ended December 31, 2023.

BLACK STONE MINERALS, L.P.

3 unchanged sentences

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 October 31, 2027.

The commitment of the lenders equals the least of the aggregate maximum credit amount, the then-effective borrowing base, and the aggregate elected commitment, as it may be adjusted from time to time.

4 unchanged sentences

In these circumstances, the borrowing base will be adjusted by the value attributed to the terminated hedge positions or the oil and natural gas property interests sold in the most recent borrowing base.

In October 2022, the Partnership revised and amended the Credit Facility to extend the maturity date from November 1, 2024 to October 31, 2027.

Concurrent with the Credit Facility amendment, the borrowing base under the Credit Facility was increased to $ 550.0 million and the Partnership elected to lower commitments under the Credit Facility from $ 400.0 million to $ 375.0 million.

The April 2023 borrowing base redetermination reaffirmed the borrowing base at $ 550.0 million with cash commitments at $ 375.0 million.

The October 2023 borrowing base redetermination increased the borrowing base to $ 580.0 million with no change to the cash commitments.

The next semi-annual redetermination is scheduled for April 2024.

In October 2022, the Credit Facility was amended to replace the LIBOR rate with the secured overnight financing rate published by the Federal Reserve Bank of New York ("SOFR").

Outstanding borrowings under the Credit Facility bear interest at a floating rate elected by the Partnership equal to a base rate (which is a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Rate in effect on such day plus 0.50 %, and (c) Adjusted Term SOFR for a one month tenor in effect on such day plus 1.00 %) or Adjusted Term SOFR, in each case, plus the applicable margin.

As of December 31, 2022 and September 30, 2023, the applicable margin for the alternative base rate ranged from 1.50 % to 2.50 % and the Adjusted Term SOFR margin 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 7.33 % during the nine months ended September 30, 2023 and 6.92 % as of December 31, 2022.

The April 2023 borrowing base redetermination reaffirmed the borrowing base at $ 550.0 million.

The subsequent redeterminations increased the borrowing base to $ 580.0 million in October 2023 and reaffirmed the borrowing base in April 2024.

After each redetermination we elected to maintain cash commitments at $ 375.0 million.

The next semi-annual redetermination is scheduled for October 2024.

The Partnership’s borrowings under the Credit Facility bear interest at a floating rate determined by the type of loan the Partnership has elected to take:

a secured overnight financing rate ("SOFR") loan or a base-rate loan.

Both types of loans bear interest at a reference rate plus a margin that varies with the amount of borrowings outstanding under the Credit Facility.

The reference rate for SOFR loans is equal to SOFR as published by the Federal Reserve Bank of New York, adjusted for the borrowing term, plus 0.10 %, which is referred to as Adjusted Term SOFR.

The reference rate for base rate loans is the highest of (a) Wells Fargo’s prime commercial lending rate for that day, (2) the Federal Funds Rate in effect on that day plus 0.50 %, and (c) the Adjusted Term SOFR for a one-month tenor, plus 1.00 %.

As of December 31, 2023 and March 31, 2024, the applicable margin for the base rate loans ranged from 1.50 % to 2.50 %, and the margin for SOFR loans ranged from 2.50 % to 3.50 %.

The Partnership is obligated to pay a quarterly commitment fee ranging from a 0.375 % to 0.500 % annualized rate on the unused portion of the borrowing base, depending on the amount of the borrowings outstanding in relation to the borrowing base.

Principal may be optionally repaid from time to time without premium or penalty, other than customary SOFR breakage, and is required to be paid (a) if the amount outstanding exceeds the borrowing base, whether due to a borrowing base redetermination or otherwise, in some cases subject to a cure period, or (b) at the maturity date.

The weighted-average interest rate of the Credit Facility was 7.92 % during the three months ended March 31, 2024 and 7.36 % for the twelve months ended December 31, 2023.

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.

In addition, a commitment fee is payable at the end of each calendar quarter based on either a rate of 0.375 % if the borrowing base utilization percentage is less than 50 %, or 0.500 % per annum if the borrowing base utilization percentage is equal to or greater than 50 %.

The Credit Facility is secured by substantially all of the Partnership’s oil and natural gas production and assets.

2 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 September 30, 2023, the Partnership was in compliance with all financial covenants in the Credit Facility.

The aggregate principal balance outstanding was zero and $ 10.0 million at September 30, 2023 and December 31, 2022, respectively.

The unused portion of the available borrowings under the Credit Facility were $ 375.0 million and $ 365.0 million at September 30, 2023 and December 31, 2022, respectively.

As of March 31, 2024, the Partnership was in compliance with all financial covenants in the Credit Facility.

There was no aggregate principal balance outstanding at March 31, 2024 and December 31, 2023, respectively.

The unused portion of the available borrowings under the Credit Facility was $ 375.0 million at March 31, 2024 and December 31, 2023 .

NOTE 7 - COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership does not consider the potential remediation costs that could result from issues identified in any environmental site assessments to be significant to the consolidated financial statements, and no provision for potential remediation costs has been recorded.

The Partnership does not consider the potential remediation costs that could result from issues identified in any environmental site assessments to be significant to the unaudited interim consolidated financial statements, and no provision for potential remediation costs has been recorded.

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 September 30, 2023 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

The Partnership believes existing claims as of March 31, 2024 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(in thousands)

5 unchanged sentences

$ 3,643 $ 3,197

For the nine months ended September 30, 2023, the Partnership repurchased 357,761 common units at an average price of $ 15.36 per unit for the purpose of satisfying tax withholding obligations upon the vesting of certain long-term incentive equity awards held by our executive officers and certain other employees.

Specifically, when an employee's equity award vests, the Partnership withholds a portion of the shares to cover the employee's tax liability.

For the three months ended March 31, 2024, the Partnership repurchased 286,761 common units at a weighted average price of $ 15.28 per unit for the purpose of satisfying tax withholding obligations upon the vesting of certain long-term incentive equity awards held by our executive officers and certain other employees.

Specifically, when an employee's equity award vests, the Partnership withholds a portion of the units to cover the employee's tax liability.

In the first quarter of 2022, the board of directors of the Partnership's general partner (the "Board") approved a grant of awards to all employees dependent on the achievement of an aspirational production target to be measured in the fourth quarter of 2025 (the "Aspirational Awards").

6 unchanged sentences

Total compensation expense to be recognized over the life of the Aspirational Awards consists of $ 5.6 million for the performance cash awards and $ 14.7 million for the performance equity awards ( 1,220,201 performance units with a weighted-average grant date fair value of $ 12.03 per unit).

As of September 30, 2023, the Partnership determined achievement of the performance condition was not yet probable and no expense was recognized.

As of March 31, 2024, the Partnership determined achievement of the performance condition was not yet probable and no expense was recognized.

NOTE 9 - PREFERRED UNITS

1 unchanged sentence

On November 28, 2017, the Partnership issued and sold in a private placement 14,711,219 Series B cumulative convertible preferred units representing limited partner interests in the Partnership for a cash purchase price of $ 20.39 per Series B cumulative convertible preferred unit, resulting in total proceeds of approximately $ 300.0 million.

The Series B cumulative convertible preferred units are entitled to an annual distribution of 7.0 %, payable on a quarterly basis in arrears;

provided that the distribution rate will be adjusted as follows:

commencing on November 28, 2023 and readjusting every two years thereafter (each, a "Readjustment Date"), the rate will equal the greater of (i) the distribution rate in

The Series B cumulative convertible preferred units were initially entitled to quarterly distributions in an amount equal to 7.0 % of the face amount of the preferred units per annum (the "Distribution Rate").

On November 28, 2023, the Distribution Rate was adjusted to 9.8 % and will be readjusted every two years thereafter (each, a "Readjustment Date").

The rate set on each

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

effect immediately prior to the relevant Readjustment Date and (ii) the 10-year Treasury Rate as of such Readjustment Date plus 5.5 % per annum;

Readjustment Date is equal to the greater of (i) the distribution rate in effect immediately prior to the relevant Readjustment Date and (ii) the 10-year Treasury Rate as of such Readjustment Date plus 5.5 % per annum;

provided, however, that for any quarter in which quarterly distributions are accrued but unpaid, the then-distribution rate shall be increased by 2.0 % per annum for such quarter.

The Partnership cannot pay any distributions on any junior securities, including common units, prior to paying the quarterly distribution payable to the preferred units, including any previously accrued and unpaid distributions.

The Series B cumulative convertible preferred units may be converted by each holder at its option, in whole or in part, into common units on a one -for-one basis at the purchase price of $ 20.39 , adjusted to give effect to any accrued but unpaid accumulated distributions on the applicable Series B cumulative convertible preferred units through the most recent declaration date.

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 Partnership has the option to redeem all or a portion (equal to or greater than $ 100 million) of the Series B cumulative convertible preferred units for a 90 day period beginning on November 28, 2023 at a redemption price of $ 21.41 per Series B cumulative convertible preferred unit, which is equal to 105 % of par value.

Thereafter, the Partnership may redeem the Series B cumulative convertible preferred units at par within a 90 day period on each second anniversary following November 28, 2023.

The Series B cumulative convertible preferred units had a carrying value of $ 298.4 million, including accrued distributions of $ 5.3 million, as of September 30, 2023 and December 31, 2022.

The Partnership has the option to redeem all or a portion (equal to or greater than $ 100 million) of the Series B cumulative convertible preferred units for a 90 day period beginning on each Readjustment Date at a redemption price of $ 20.39 per Series B cumulative convertible preferred unit, which is equal to par value.

The Series B cumulative convertible preferred units had a carrying value of $ 300.5 million, including accrued distributions of $ 7.4 million, as of March 31, 2024 and a carrying value of $ 299.1 million, including accrued distributions of $ 6.0 million, as of December 31, 2023.

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.

12 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(in thousands, except per unit amounts)

11 unchanged sentences

Effect of dilutive securities

— 14,969 14,969 14,969

Denominator for diluted EPU - weighted average number of common units outstanding after the effect of dilutive securities 210,654 224,910

3 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

(in thousands)

4 unchanged sentences

The holders of common units are entitled to participate in distributions and exercise the rights and privileges provided to limited partners holding common units under the partnership agreement.

The partnership agreement restricts unitholders’ voting rights by providing that any units held by a person or group that owns 15 % or more of any class of units then outstanding, other than the limited partners in Black Stone Minerals Company,

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

prior to the IPO, their transferees, persons who acquired such units with the prior approval of the Board, holders of Series B cumulative convertible preferred units in connection with any vote, consent or approval of the Series B cumulative convertible preferred units as a separate class, and persons who own 15 % or more of any class as a result of any redemption or purchase of any other person's units or similar action by the Partnership or any conversion of the Series B cumulative convertible preferred units at the Partnership's option or in connection with a change of control, may not vote on any matter.

The partnership agreement generally provides that any distributions are paid each quarter in the following manner:

• first , to the holders of the Series B cumulative convertible preferred units in an amount equal to 7 % per annum, subject to certain adjustments;

The partnership agreement generally provides that beginning on November 28, 2023 any distributions are paid each quarter in the following manner:

• first , to the holders of the Series B cumulative convertible preferred units in an amount equal to 9.8 % of the face amount of the preferred units per annum, subject to readjustment on each Readjustment Date;

• second , to the holders of common units.

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Distributions declared and paid per common unit $ 0.4750 $ 0.4750

NOTE 12 - SUBSEQUENT EVENTS

On October 18, 2023, the Board approved a distribution for the three months ended September 30, 2023 of $ 0.475 per common unit.

Distributions will be payable on November 16, 2023 to unitholders of record at the close of business on November 9, 2023.

Common Unit Repurchase Program

On October 30, 2023, the Board authorized a $ 150.0 million unit repurchase program, terminating its existing $ 75.0 million program authorized in 2018.

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

All or a portion of any repurchases may be made under a Rule 10b5-1 plan, which would permit common units to be repurchased when the Partnership might otherwise be precluded from doing so under applicable laws.

The repurchase program does not obligate the Partnership to acquire any particular number of common units and may be modified or suspended at any time and could be terminated prior to completion.

The Partnership will periodically report the number of common units repurchased.

The program will be funded from the Partnership’s cash on hand or through borrowings under the credit facility.

Any repurchased units will be canceled.

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

The Partnership made no repurchases under this program for the three months ended March 31, 2024.

The program is funded from the Partnership’s cash on hand or through borrowings under the credit facility.

Any repurchased units are canceled.

NOTE 12 - SUBSEQUENT EVENTS

On April 17, 2024, the Board approved a distribution for the three months ended March 31, 2024 of $ 0.375 per common unit.

Distributions will be payable on May 17, 2024 to unitholders of record at the close of business on May 10, 2024.

Subsequent to March 31, 2024, the Partnership acquired mineral and royalty interests from various sellers for cash consideration of $ 12.3 million.

These acquisitions were funded with cash from operating activities.

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