bsm-20230630

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 June 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 July 28, 2023, there were 209,979,196 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	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other Information	34
Item 6.	Exhibits	35

	Signatures	36

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BLACK STONE MINERALS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)


	June 30, 2023		December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	46,666	$	4,307
Accounts receivable	72,364		135,697
Commodity derivative assets	50,288		31,472

Prepaid expenses and other current assets	2,621		1,905
TOTAL CURRENT ASSETS	171,939		173,381
PROPERTY AND EQUIPMENT
Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $897,836 and $909,344 at June 30, 2023 and December 31, 2022, respectively	3,006,323		3,003,907
Accumulated depreciation, depletion, amortization, and impairment	(1,938,140)		(1,916,919)
Oil and natural gas properties, net	1,068,183		1,086,988
Other property and equipment, net of accumulated depreciation of $13,807 and $13,461 at June 30, 2023 and December 31, 2022, respectively	1,034		1,259
NET PROPERTY AND EQUIPMENT	1,069,217		1,088,247
DEFERRED CHARGES AND OTHER LONG-TERM ASSETS	9,197		9,454
TOTAL ASSETS	$	1,250,353	$	1,271,082
LIABILITIES, MEZZANINE EQUITY, AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	5,601	$	6,773
Accrued liabilities	10,023		19,729
Commodity derivative liabilities	—		3,243
Other current liabilities	1,136		989
TOTAL CURRENT LIABILITIES	16,760		30,734
LONG–TERM LIABILITIES
Credit facility	—		10,000
Accrued incentive compensation	1,086		1,884
Commodity derivative liabilities	469		16
Asset retirement obligations	15,283		15,030
Other long-term liabilities	3,514		3,606
TOTAL LIABILITIES	37,112		61,270
COMMITMENTS AND CONTINGENCIES (Note 7)
MEZZANINE EQUITY
Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at June 30, 2023 and December 31, 2022, respectively	298,361		298,361
EQUITY
Partners' equity – general partner interest	—		—
Partners' equity – common units, 209,968 and 209,407 units outstanding at June 30, 2023 and December 31, 2022, respectively	914,880		911,451
TOTAL EQUITY	914,880		911,451
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY	$	1,250,353	$	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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
REVENUE
Oil and condensate sales	$	61,551	$	94,296	$	122,460	$	170,127
Natural gas and natural gas liquids sales	41,619		111,181		99,042		186,935
Lease bonus and other income	2,527		2,244		6,502		7,103
Revenue from contracts with customers	105,697		207,721		228,004		364,165
Gain (loss) on commodity derivative instruments	11,303		(27,349)		63,574		(147,369)
TOTAL REVENUE	117,000		180,372		291,578		216,796
OPERATING (INCOME) EXPENSE
Lease operating expense	2,866		3,199		5,534		6,360
Production costs and ad valorem taxes	12,844		19,504		25,511		33,453
Exploration expense	4		2		8		182
Depreciation, depletion, and amortization	10,421		11,893		21,568		22,810

General and administrative	11,854		12,519		24,502		26,282
Accretion of asset retirement obligations	250		205		495		407
(Gain) loss on sale of assets, net	—		(17)		—		(17)
TOTAL OPERATING EXPENSE	38,239		47,305		77,618		89,477
INCOME (LOSS) FROM OPERATIONS	78,761		133,067		213,960		127,319
OTHER INCOME (EXPENSE)
Interest and investment income	373		2		530		2
Interest expense	(645)		(1,362)		(1,459)		(2,571)
Other income (expense)	(97)		81		(196)		36
TOTAL OTHER EXPENSE	(369)		(1,279)		(1,125)		(2,533)
NET INCOME (LOSS)	78,392		131,788		212,835		124,786

Distributions on Series B cumulative convertible preferred units	(5,250)		(5,250)		(10,500)		(10,500)
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON UNITS	$	73,142	$	126,538	$	202,335	$	114,286
ALLOCATION OF NET INCOME (LOSS):
General partner interest	$	—	$	—	$	—	$	—
Common units	73,142		126,538		202,335		114,286
	$	73,142	$	126,538	$	202,335	$	114,286
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON UNIT:
Per common unit (basic)	$	0.35	$	0.60	$	0.96	$	0.55
Per common unit (diluted)	$	0.35	$	0.59	$	0.95	$	0.55
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING:
Weighted average common units outstanding (basic)	209,967		209,397		209,954		209,360
Weighted average common units outstanding (diluted)	209,967		224,366		224,923		209,360

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


	Common units	Partners' equity
BALANCE AT DECEMBER 31, 2021	208,666	$	765,268
Repurchases of common units	(262)	(2,991)


Restricted units granted, net of forfeitures	988	—
Equity–based compensation	—	6,659
Distributions	—	(56,462)
Charges to partners' equity for accrued distribution equivalent rights	—	(434)
Distributions on Series B cumulative convertible preferred units	—	(5,250)
Net income (loss)	—	(7,002)
BALANCE AT MARCH 31, 2022	209,392	$	699,788



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

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

BLACK STONE MINERALS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	212,835	$	124,786
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization	21,568		22,810

Accretion of asset retirement obligations	495		407
Amortization of deferred charges	513		694
(Gain) loss on commodity derivative instruments	(63,574)		147,369
Net cash (paid) received on settlement of commodity derivative instruments	41,469		(93,696)
Equity-based compensation	4,635		7,275

(Gain) loss on sale of assets, net	—		(17)
Changes in operating assets and liabilities:
Accounts receivable	63,477		(43,192)
Prepaid expenses and other current assets	(715)		(501)
Accounts payable, accrued liabilities, and other	(10,083)		(5,359)
Settlement of asset retirement obligations	(195)		(437)
NET CASH PROVIDED BY OPERATING ACTIVITIES	270,425		160,139
CASH FLOWS FROM INVESTING ACTIVITIES

Additions to oil and natural gas properties	(2,503)		(10,072)
Additions to oil and natural gas properties leasehold costs	(9)		—
Purchases of other property and equipment	(121)		(41)
Proceeds from the sale of oil and natural gas properties	—		17
Proceeds from farmouts of oil and natural gas properties	—		9,951
NET CASH USED IN INVESTING ACTIVITIES	(2,633)		(145)
CASH FLOWS FROM FINANCING ACTIVITIES

Distributions to common unitholders	(199,334)		(140,221)
Distributions to Series B cumulative convertible preferred unitholders	(10,500)		(10,500)


Repurchases of common units	(5,496)		(2,991)
Borrowings under credit facility	64,000		153,000
Repayments under credit facility	(74,000)		(156,000)
Debt issuance costs and other	(103)		—
NET CASH USED IN FINANCING ACTIVITIES	(225,433)

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