What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 75 added, 57 removed, 489 unchanged (21% of the section changed)

4 unchanged sentences

(In thousands)

March 31, 2024 December 31, 2023

June 30, 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 $ 913,031 and $ 890,338 at March 31, 2024 and December 31, 2023, respectively

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 929,291 and $ 890,338 at June 30, 2024 and December 31, 2023, respectively

3,078,212 3,026,394

1 unchanged sentence

Oil and natural gas properties, net 1,094,411 1,064,495

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

Other property and equipment, net of accumulated depreciation of $ 14,349 and $ 14,163 at June 30, 2024 and December 31, 2023, respectively

NET PROPERTY AND EQUIPMENT 1,095,287 1,065,502

16 unchanged sentences

MEZZANINE EQUITY

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

Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at June 30, 2024 and December 31, 2023

300,478 299,137

Partners' equity – general partner interest — —

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

Partners' equity – common units, 210,682 and 209,991 units outstanding at June 30, 2024 and December 31, 2023, respectively

859,987 918,208

6 unchanged sentences

(In thousands, except per unit amounts)

Three Months Ended March 31,

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

2024 2023 2024 2023

Oil and condensate sales $ 73,889 $ 61,551 $ 145,113 $ 122,460

46 unchanged sentences

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

Repurchases of common units ( 4 ) ( 68 )

Issuance of common units for property acquisitions 64 1,039

Restricted units granted, net of forfeitures ( 34 ) —

Equity–based compensation — 1,935

Distributions — ( 79,014 )

Charges to partners' equity for accrued distribution equivalent rights — ( 185 )

Distributions on Series B cumulative convertible preferred units — ( 7,366 )

Net income (loss) — 68,322

BALANCE AT JUNE 30, 2024 210,682 $ 859,987

Common units Partners' equity

8 unchanged sentences

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

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

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

51 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, 2024 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, 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.

15 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 three months ended March 31, 2024.

There have been no changes in such policies or the application of such policies during the six months ended June 30, 2024.

Accounts Receivable

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands)

9 unchanged sentences

NOTE 3 - OIL AND NATURAL GAS PROPERTIES

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

The Partnership had no material divestiture activity during 2023 or the six months ended June 30, 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 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.

During the six months ended June 30, 2024, the Partnership acquired mineral and royalty interests that consisted of primarily unproved oil and natural gas properties in the Gulf Coast land region from various sellers for an aggregate of $ 50.5 million, including capitalized direct transaction costs, and were considered asset acquisitions.

The consideration paid consisted of $ 49.5 million in cash that was funded from operating activities and $ 1.0 million in equity that was funded through the issuance of common units of the Partnership based on the fair values of the common units issued on the acquisition dates.

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

The consideration paid was funded with cash from operating activities.

Farmout Agreements

5 unchanged sentences

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

San Augustine Farmout

San Augustine County Farmout

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.

8 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, 2024, 20 wells have been spud by Aethon in the contract area subject to the Canaan, Azul, and JWM Farmouts.

As of June 30, 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:

13 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Angelina Farmout

Angelina County Farmout

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

6 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, 2024, 45 wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

As of June 30, 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.

Under our Joint Exploration Agreements ("JEAs") with Aethon in San Augustine and Angelina counties in East Texas, 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 when natural gas prices fall below certain thresholds.

When the "time-out" provision is invoked, the current program year under each agreement is paused during the suspension period such that the program year may extend beyond 12 calendar months.

In December 2023, the Partnership received notice that Aethon was exercising the time-out provisions under the JEAs in San Augustine and Angelina counties, implying a maximum resumption date in September 2024.

Aethon drilled three wells in the first quarter of 2024 in San Augustine county despite the invocation of the time-out and has brought 16 total wells online in the first half of 2024.

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 months ended March 31, 2024 and 2023.

The Partnership did not recognize any impairment of oil and natural gas properties for the six months ended June 30, 2024 and 2023.

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

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

As of June 30, 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 March 31, 2024 and December 31, 2023.

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

2 unchanged sentences

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

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.

As of June 30, 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:

March 31, 2024

June 30, 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 March 31,

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

Derivatives not designated as hedging instruments 2024 2023 2024 2023

7 unchanged sentences

Ending fair value of commodity derivative instruments $ ( 5,118 ) $ 51,046 $ ( 5,118 ) $ 51,046

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

The Partnership had the following open derivative contracts for oil as of June 30, 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 190,000 $ 71.45 67.00 81.00

5 unchanged sentences

Fourth Quarter 555,000 71.22 70.02 73.15

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

The Partnership had the following open derivative contracts for natural gas as of June 30, 2024:

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

1 unchanged sentence

Natural Gas Swap Contracts:

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

Third Quarter 10,580,000 $ 3.55 $ 3.00 $ 3.76

19 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.

There were no transfers into, or out of, the three levels of fair value hierarchy for the six months ended June 30, 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 March 31, 2024 and December 31, 2023 approximated the fair value due to variable market rates of interest.

The estimated carrying value of all debt as of June 30, 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.

10 unchanged sentences

(in thousands)

As of March 31, 2024

As of June 30, 2024

Financial Assets

12 unchanged sentences

The Partnership has designated these measurements as Level 3.

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

The Partnership had no business combinations for the six months ended June 30, 2024 or the year ended December 31, 2023.

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

4 unchanged sentences

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.

There were no significant changes in valuation techniques or related inputs as of June 30, 2024 or December 31, 2023.

There were no assets measured at fair value on a non-recurring basis for the six months ended June 30, 2024 or the year ended December 31, 2023.

BLACK STONE MINERALS, L.P.

19 unchanged sentences

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 %.

As of December 31, 2023 and June 30, 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.

The weighted-average interest rate of the Credit Facility was 7.96 % during the six months ended June 30, 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.

3 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, 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 .

As of June 30, 2024, the Partnership was in compliance with all financial covenants in the Credit Facility.

There was no aggregate principal balance outstanding at June 30, 2024 and December 31, 2023.

The unused portion of the available borrowings under the Credit Facility was $ 375.0 million at June 30, 2024 and December 31, 2023 .

NOTE 7 - COMMITMENTS AND CONTINGENCIES

7 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, 2024 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

The Partnership believes existing claims as of June 30, 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 March 31,

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

2024 2023 2024 2023

(in thousands)

5 unchanged sentences

$ 3,330 $ 3,371 $ 6,973 $ 6,568

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.

For the six months ended June 30, 2024, the Partnership repurchased 291,163 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.

7 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 $ 13.5 million for the performance equity awards ( 1,110,496 performance units with a weighted-average grant date fair value of $ 12.13 per unit).

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

As of June 30, 2024, the Partnership determined achievement of the performance condition was not yet probable and no expense was recognized.

NOTE 9 - PREFERRED UNITS

13 unchanged sentences

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 had a carrying value of $ 300.5 million, including accrued distributions of $ 7.4 million, as of June 30, 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 March 31,

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

2024 2023 2024 2023

(in thousands, except per unit amounts)

16 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,

2024 2023 2024 2023

(in thousands)

1 unchanged sentence

Series B cumulative convertible preferred units on an as-converted basis

15,072 14,969 15,072 —

NOTE 11 - COMMON UNITS

10 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,

2024 2023 2024 2023

Distributions declared and paid per common unit $ 0.3750 $ 0.4750 $ 0.8500 $ 0.9500

2 unchanged sentences

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 Partnership made no repurchases under this program for the six months ended June 30, 2024.

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

1 unchanged sentence

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.

On July 24, 2024, the Board approved a distribution for the three months ended June 30, 2024 of $ 0.375 per common unit.

Distributions will be payable on August 16, 2024 to unitholders of record at the close of business on August 9, 2024.

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