What changed in this filing

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Item 1. Financial Statements

2024-11-05 compared with 2024-08-06 · 138 added, 98 removed, 466 unchanged (34% of the section changed)

4 unchanged sentences

(In thousands)

June 30, 2024 December 31, 2023

September 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 $ 929,291 and $ 890,338 at June 30, 2024 and December 31, 2023, respectively

Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $ 943,916 and $ 890,338 at September 30, 2024 and December 31, 2023, respectively

3,057,879 3,026,394

1 unchanged sentence

Oil and natural gas properties, net 1,095,265 1,064,495

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

Other property and equipment, net of accumulated depreciation of $ 14,453 and $ 14,163 at September 30, 2024 and December 31, 2023, respectively

NET PROPERTY AND EQUIPMENT 1,096,296 1,065,502

16 unchanged sentences

MEZZANINE EQUITY

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

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

300,478 299,137

Partners' equity – general partner interest — —

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

Partners' equity – common units, 210,688 and 209,991 units outstanding at September 30, 2024 and December 31, 2023, respectively

867,823 918,208

6 unchanged sentences

(In thousands, except per unit amounts)

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

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

2024 2023 2024 2023

12 unchanged sentences

Accretion of asset retirement obligations 324 254 962 749

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

TOTAL OPERATING EXPENSE 41,736 47,763 124,389 125,381

4 unchanged sentences

Other income (expense) ( 9 ) 143 ( 101 ) ( 53 )

TOTAL OTHER EXPENSE ( 168 ) ( 369 ) ( 215 ) ( 1,125 )

TOTAL OTHER INCOME (EXPENSE) ( 389 ) 33 ( 604 ) ( 1,092 )

NET INCOME (LOSS) 92,731 62,067 224,980 274,902

35 unchanged sentences

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

Restricted units granted, net of forfeitures 6 —

Equity–based compensation — 1,726

Distributions — ( 79,008 )

Charges to partners' equity for accrued distribution equivalent rights — ( 247 )

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

Net income (loss) — 92,731

BALANCE AT SEPTEMBER 30, 2024 210,688 $ 867,823

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

15 unchanged sentences

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.

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

7 unchanged sentences

Equity-based compensation 6,765 8,412

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

Changes in operating assets and liabilities:

42 unchanged sentences

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

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.

The results of operations for the nine months ended September 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 six months ended June 30, 2024.

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

Accounts Receivable

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in thousands)

8 unchanged sentences

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.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - OIL AND NATURAL GAS PROPERTIES

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.

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.

During the nine months ended September 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 $ 65.2 million, including capitalized direct transaction costs, and were considered asset acquisitions.

The consideration paid consisted of $ 64.2 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.

1 unchanged sentence

The consideration paid was 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

Asset Exchange

In the third quarter of 2024, the Partnership closed on a transaction with a third-party operator whereby the Partnership received an oil and natural gas lease on approximately 8,000 net leasehold acres in East Texas in exchange for the assignment of approximately 51,000 undeveloped net mineral and royalty acres in Mississippi.

The acreage surrendered in Mississippi constituted a partial disposition of unproved property and no gain or loss was recognized on the transaction.

Shelby Trough Development Agreements

In 2020 and 2021, BSM entered into Joint Exploration Agreements ("JEAs") with Aethon Energy ("Aethon") to develop certain portions of the Partnership's undeveloped acreage in San Augustine County and Angelina County in East Texas.

The agreements provide for minimum annual well commitments by Aethon in exchange for reduced royalty rates and exclusive access to BSM's mineral and leasehold acreage in the contract areas.

If Aethon drills more than the minimum commitment wells in a given program year, Aethon may reduce its minimum well commitment in future program years by the number of excess wells, which we refer to as "banked" wells.

Aethon's ability to apply banked wells to reduce its drilling commitments is capped at three or four wells each year, depending on the JEA.

The Partnership's development agreement and related drilling commitments covering its San Augustine County acreage are independent of the development agreement and associated commitments covering Angelina County.

Under the JEAs, 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.

In December 2023, the Partnership received notice that Aethon was exercising the time-out provisions under the JEAs in San Augustine and Angelina counties.

BLACK STONE MINERALS, L.P.

1 unchanged sentence

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.

In September 2024, the Partnership entered into letter agreements with Aethon to amend the JEAs in San Augustine and Angelina counties.

In those agreements, the parties agreed to revise the current program year drill schedules under each JEA, to extend the respective program years by nine months, and to withdraw the invocation of the time-out provisions.

Aethon also released its rights under 25,000 acres from the parties' area of mutual interest defined in the original JEAs.

Upon the satisfaction of the current program year performance deadlines as described in the letter agreements, Aethon will have an inventory of ten banked wells in Angelina and one banked well in San Augustine.

San Augustine County JEA

The original San Augustine JEA called for a minimum of five wells to be drilled in the initial program year, which began in September 2021, 10 wells to be drilled in the second and third program years, and, thereafter, a minimum of 12 wells per year beginning with the fourth program year.

As amended, the San Augustine JEA now provides for a minimum of nine wells to be drilled in the current (third) program year ending in May 2025, with a minimum of 12 wells to be drilled in the fourth program year scheduled to commence in June 2025 and each program year thereafter.

As of September 30, 2024, Aethon had drilled three wells in the third program year under the San Augustine JEA.

Angelina County JEA

The original Angelina JEA called for a minimum of four wells to be drilled in the initial program year, which began in October 2020, 10 wells to be drilled in the second program year, and, thereafter, a minimum of 15 wells per year beginning with the third program year.

As amended, the Angelina JEA now provides for a minimum 15 wells to be drilled in the current (fourth) program year ending in June 2025 and, each program year thereafter.

As of September 30, 2024, Aethon had drilled four wells in the fourth program year under the Angelina JEA, two of which have been temporarily abandoned and scheduled for plugging as a result of mechanical issues.

Farmout Agreements

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.

BSM's current farmout arrangements cover the Partnership's share of working interests under active development by Aethon in San Augustine County and Angelina County in East Texas.

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.

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 began in the third quarter of 2021, 10 wells to be drilled in the second and third program years, and, thereafter, 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.

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").

In April 2022, the Partnership amended the Canaan Farmout and entered into a farmout agreement (the "JWM Farmout") with JWM Oil & Gas LLC ("JWM").

These agreements cover all of the Partnership's share of working interests under active development by Aethon in San Augustine County, Texas and continue for a 10 year period, unless earlier terminated in accordance with the terms of the agreements.

Canaan, Azul, and JWM will each earn a percentage of the Partnership's working interest in wells drilled and operated by Aethon within the contract area subject to the agreements.

Canaan, Azul, and JWM are obligated to fund the development of wells drilled by Aethon in the initial program year, and thereafter, have certain rights and options to continue funding the Partnership's working interest for the duration of each farmout agreement.

These agreements continue for a 10 -year period, unless earlier terminated in accordance with the terms of the agreements.

The JWM Farmout terminated in September 2024, and the Partnership expects to enter into a new farmout arrangement with respect to the interests covered by the JWM Farmout in the fourth quarter of 2024.

The Partnership’s farmout counterparties were obligated to fund the development of wells drilled by Aethon in the initial program year, and thereafter, have certain rights and options to continue funding the Partnership's working interest for the duration of each farmout agreement.

The farmout counterparties each earn a percentage of the Partnership's working interest in wells drilled and operated by Aethon within the contract area subject to the agreements.

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 June 30, 2024, 20 wells have been spud by Aethon in the contract area subject to the Canaan, Azul, and JWM Farmouts.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

Azul 20.0 % 10.0 %

JWM 16.0 % 8.0 %

Former JWM Interest 16.0 % 8.0 %

Total 100.0 % 50.0 %

2 unchanged sentences

Azul 50.0 % 12.5 %

JWM 10.0 % 2.5 %

Former JWM Interest 10.0 % 2.5 %

Total 100.0 % 25.0 %

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

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, 10 wells to be drilled in the second program year, and, beginning with the third program year, 15 wells per year beginning thereafter.

In November 2020, the Partnership entered into a farmout agreement (the "Pivotal Farmout") with Pivotal.

The Pivotal Farmout covers the Partnership's share of working interest under active development by Aethon in Angelina County, Texas and continues until April 2028, unless earlier terminated in accordance to the terms of the agreement.

The Pivotal Farmout continues until April 2028, unless earlier terminated in accordance to the terms of the agreement.

Pivotal will earn 100 % of the Partnership's working interest (ranging from approximately 12.5 % to 25 % on an 8/8ths basis) in wells drilled and operated by Aethon within the contract area subject to the agreement.

1 unchanged sentence

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 June 30, 2024, 45 wells have been spud by Aethon in the contract area subject to the Pivotal Farmout.

Aethon Time-Out

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 six months ended June 30, 2024 and 2023.

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

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

10 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2024, the Partnership’s open derivative contracts consisted of fixed-price swap contracts.

As of September 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 June 30, 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 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.

As of September 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:

June 30, 2024

September 30, 2024

Classification Balance Sheet Location Gross

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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 June 30, Six Months Ended June 30,

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

Derivatives not designated as hedging instruments 2024 2023 2024 2023

7 unchanged sentences

Ending fair value of commodity derivative instruments $ 15,693 $ ( 65 ) $ 15,693 $ ( 65 )

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

The Partnership had the following open derivative contracts for oil as of September 30, 2024:

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

1 unchanged sentence

Oil Swap Contracts:

Third Quarter 190,000 $ 71.45 $ 67.00 $ 81.00

Fourth Quarter 570,000 71.45 67.00 81.00

First Quarter 555,000 $ 71.22 $ 70.02 $ 73.15

Second Quarter 555,000 71.22 70.02 73.15

5 unchanged sentences

Fourth Quarter 120,000 65.85 65.52 66.23

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

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, 2024:

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

1 unchanged sentence

Natural Gas Swap Contracts:

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

First Quarter 10,800,000 $ 3.36 $ 3.02 $ 3.65

Second Quarter 10,920,000 3.36 3.02 3.65

Third Quarter 11,040,000 3.45 3.34 3.65

4 unchanged sentences

Fourth Quarter 7,360,000 3.52 3.50 3.57

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership entered into the following derivative contracts for oil subsequent to September 30, 2024:

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

Period and Type of Contract Volume (Bbl) Low High

Oil Swap Contracts:

First Quarter 60,000 $ 67.18 $ 67.00 $ 67.35

Second Quarter 60,000 67.18 67.00 67.35

Third Quarter 60,000 67.18 67.00 67.35

Fourth Quarter 60,000 67.18 67.00 67.35

NOTE 5 - FAIR VALUE MEASUREMENTS

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Level 3 —Inputs that are unobservable and significant to the fair value measurement (including the Partnership’s own assumptions in determining fair value).

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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 six months ended June 30, 2024 and 2023.

There were no transfers into, or out of, the three levels of fair value hierarchy for the nine months ended September 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 June 30, 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 September 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.

3 unchanged sentences

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 June 30, 2024

As of September 30, 2024

Financial Assets

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The Partnership has designated these measurements as Level 3.

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

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

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

2 unchanged sentences

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 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 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.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 September 30, 2024 or December 31, 2023.

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

NOTE 6 - CREDIT FACILITY

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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.

The subsequent redeterminations increased the borrowing base to $ 580.0 million in October 2023 and reaffirmed the borrowing base in April 2024 and November 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 next semi-annual redetermination is scheduled for April 2025.

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:

2 unchanged sentences

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 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 reference rate for base rate loans is the highest of (a) Wells Fargo’s prime commercial lending rate for that day, (b) 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 September 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 7.96 % during the six months ended June 30, 2024 and 7.36 % for the twelve months ended December 31, 2023.

The weighted-average interest rate of the Credit Facility was 8.04 % during the nine months ended September 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 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 .

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

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

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

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

federal, state, and local environmental regulations with regard to air, land, and water quality and other environmental matters.

BLACK STONE MINERALS, L.P.

AND SUBSIDIARIES

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 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 June 30, 2024 will be resolved without material adverse effect on the Partnership’s financial condition or operations.

The Partnership believes existing claims as of September 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

6 unchanged sentences

$ 3,675 $ 5,080 $ 10,648 $ 11,648

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.

For the nine months ended September 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.

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").

The Aspirational Awards include performance cash awards and performance equity awards in the form of restricted performance units.

To the extent earned, each performance unit represents the right to receive one common unit.

The performance cash awards and performance units are eligible to become earned at the end of the requisite service period on December 31, 2025 if the minimum performance metrics are achieved.

The minimum performance metrics are at least 42 Mboe per day of average daily royalty production in either the fourth quarter or the month of December of 2025 while maintaining a net debt to EBITDA ratio less than or equal to 1.0 on December 31, 2025.

Average daily royalty production does not include production attributable to acquisitions consummated during the performance period.

Compensation expense related to the Aspirational Awards will be recorded over the service period when achievement of the performance condition is probable.

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

NOTE 9 - PREFERRED UNITS

3 unchanged sentences

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

The rate set on each 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.

BLACK STONE MINERALS, L.P.

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 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.

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 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 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 had a carrying value of $ 300.5 million, including accrued distributions of $ 7.4 million, as of September 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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

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 June 30, Six Months Ended June 30,

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

2024 2023 2024 2023

10 unchanged sentences

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, L.P.

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.

prior to the IPO, their transferees, persons who acquired such units with the prior approval of the board of directors of the Partnership's general partner (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 beginning on November 28, 2023 any distributions are paid each quarter in the following manner:

2 unchanged sentences

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

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

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

2024 2023 2024 2023

3 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 six months ended June 30, 2024.

The Partnership made no repurchases under this program for the nine months ended September 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 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.

On October 16, 2024, the Board approved a distribution for the three months ended September 30, 2024 of $ 0.375 per common unit.

Distributions will be payable on November 15, 2024 to unitholders of record at the close of business on November 8, 2024.

Subsequent to September 30, 2024, the Partnership acquired mineral and royalty interests from various sellers for cash consideration of $ 12.6 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