Company: BSM
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001628280-25-007730
Chunk: 200

Company: Black Stone Minerals, L.P.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 7
Chunk 200
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TS during 2025.  

In the Louisiana Haynesville during 2024, we entered into several Accelerated Drilling Agreements (“ADAs”) with large, well-capitalized operators. Under these agreements, the operators will provide near term certainty and accelerated development on our high-interest areas in exchange for a reduced royalty burden. During 2024, 2 gross (0.4 net) wells were TTS and we expect an additional 11 gross (0.6) net wells to TTS in 2025.

In the Permian Basin, a large producer is expected to begin development of over 37 gross (1.3 net) wells in Culberson County, Texas, which includes 8 gross wells to be TTS in the fourth quarter of 2025. 

Farmout Agreements 

In September and December 2024, two of our farmout agreements covering non-operated working interests in San Augustine County terminated. Consistent with our policy to minimize participation in working interests, we do not intend to step into the working interests associated with the terminated agreements. Unless we agree otherwise with Aethon, we believe that Aethon, as operator and the party who has proposed the existing wells, has absorbed and will continue to absorb any non-consented interests.

47

Business Environment

The information below is designed to give a broad overview of the oil and natural gas business environment as it affects us.

Commodity Prices and Demand  

Oil and natural gas prices have been historically volatile based upon the dynamics of supply and demand. To manage the variability in cash flows associated with the projected sale of our oil and natural gas production, we use various derivative instruments, which have recently consisted of fixed-price swap contracts and costless collar contracts.

Oil prices rose in early 2024 due to heightened geopolitical risks, including attacks on vessels in the Red Sea and elevated tensions in the region, but declined later in the year due to market oversupply concerns. Natural gas prices decreased sharply in late 2023 and early 2024 due to surplus storage but increased in the second quarter of 2024 due to reduced drilling and production curtailments. This upward trend continued into the third and fourth quarters, driven by high energy demand from extreme temperatures and increased LNG exports. Given the dynamic nature of these events, along with the geopolitical conflicts in Ukraine and the Middle East, we cannot reasonably estimate how long these market conditions will persist. While we use derivative instruments to partially mitigate the impact of commodity price volatility, our revenues and operating results