bsm-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM						10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period _______________ to _______________

Commission File Number: 001-37362


Black Stone Minerals, L.P.
(Exact name of registrant as specified in its charter)


Delaware		47-1846692
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1001 Fannin Street, Suite 2020
Houston,	Texas	77002
(Address of principal executive offices)		(Zip code)


(713)			445-3200
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Units Representing Limited Partner Interests

BSM

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of October 27, 2023, there were 209,990,924 common units and 14,711,219 Series B cumulative convertible preferred units of the registrant outstanding.

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Equity	3
	Consolidated Statements of Cash Flows	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

	Signatures	35

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BLACK STONE MINERALS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)


	September 30, 2023		December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	56,030	$	4,307
Accounts receivable	87,725		135,697
Commodity derivative assets	21,218		31,472

Prepaid expenses and other current assets	1,979		1,905
TOTAL CURRENT ASSETS	166,952		173,381
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	3,008,650		3,003,907
Accumulated depreciation, depletion, amortization, and impairment	(1,950,326)		(1,916,919)
Oil and natural gas properties, net	1,058,324		1,086,988
Other property and equipment, net of accumulated depreciation of $13,988 and $13,461 at September 30, 2023 and December 31, 2022, respectively	1,090		1,259
NET PROPERTY AND EQUIPMENT	1,059,414		1,088,247
DEFERRED CHARGES AND OTHER LONG-TERM ASSETS	7,615		9,454
TOTAL ASSETS	$	1,233,981	$	1,271,082
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	4,502	$	6,773
Accrued liabilities	13,597		19,729
Commodity derivative liabilities	14,513		3,243
Other current liabilities	1,173		989
TOTAL CURRENT LIABILITIES	33,785		30,734
LONG–TERM LIABILITIES
Credit facility	—		10,000
Accrued incentive compensation	1,368		1,884
Commodity derivative liabilities	6,770		16
Asset retirement obligations	15,497		15,030
Other long-term liabilities	3,178		3,606
TOTAL LIABILITIES	60,598		61,270
COMMITMENTS AND CONTINGENCIES (Note 7)
MEZZANINE EQUITY
Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at September 30, 2023 and December 31, 2022	298,361		298,361
EQUITY
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	875,022		911,451
TOTAL EQUITY	875,022		911,451
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,233,981	$	1,271,082

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

BLACK STONE MINERALS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per unit amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
REVENUE
Oil and condensate sales	$	85,724	$	80,240	$	208,184	$	250,367
Natural gas and natural gas liquids sales	48,815		137,756		147,857		324,691
Lease bonus and other income	2,180		3,159		8,682		10,262
Revenue from contracts with customers	136,719		221,155		364,723		585,320
Gain (loss) on commodity derivative instruments	(26,922)		(4,726)		36,652		(152,095)
TOTAL REVENUE	109,797		216,429		401,375		433,225
OPERATING (INCOME) EXPENSE
Lease operating expense	2,615		2,896		8,149		9,256
Production costs and ad valorem taxes	16,441		17,856		41,952		51,309
Exploration expense	1,711		10		1,719		192
Depreciation, depletion, and amortization	12,367		12,208		33,935		35,018

General and administrative	14,448		13,044		38,950		39,326
Accretion of asset retirement obligations	254		209		749		616
(Gain) loss on sale of assets, net	(73)		—		(73)		(17)
TOTAL OPERATING EXPENSE	47,763		46,223		125,381		135,700
INCOME (LOSS) FROM OPERATIONS	62,034		170,206		275,994		297,525
OTHER INCOME (EXPENSE)
Interest and investment income	511		20		1,041		22
Interest expense	(621)		(1,693)		(2,080)		(4,264)
Other income (expense)	143		(58)		(53)		(22)
TOTAL OTHER EXPENSE	33		(1,731)		(1,092)		(4,264)
NET INCOME (LOSS)	62,067		168,475		274,902		293,261

Distributions on Series B cumulative convertible preferred units	(5,250)		(5,250)		(15,750)		(15,750)
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS	$	56,817	$	163,225	$	259,152	$	277,511
ALLOCATION OF NET INCOME (LOSS):
General partner interest	$	—	$	—	$	—	$	—
Common units	56,817		163,225		259,152		277,511
	$	56,817	$	163,225	$	259,152	$	277,511
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT:
Per common unit (basic)	$	0.27	$	0.78	$	1.23	$	1.33
Per common unit (diluted)	$	0.27	$	0.75	$	1.22	$	1.31
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING:
Weighted average common units outstanding (basic)	209,982		209,402		209,963		209,374
Weighted average common units outstanding (diluted)	209,982		224,371		224,932		224,343

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

BLACK STONE MINERALS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)


	Common units	Partners' equity
BALANCE AT DECEMBER 31, 2022	209,407	$	911,451
Repurchases of common units	(358)	(5,496)


Restricted units granted, net of forfeitures	914	—
Equity–based compensation	—	5,052
Distributions	—	(99,600)
Charges to partners' equity for accrued distribution equivalent rights	—	(733)
Distributions on Series B cumulative convertible preferred units	—	(5,250)
Net income (loss)	—	134,443
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


Restricted units granted, net of forfeitures	18	—
Equity–based compensation	—	3,530
Distributions	—

SEC Form 10-Q filed by Black Stone Minerals L.P.