Company: BSM
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001628280-25-007730
Chunk: 165

Company: Black Stone Minerals, L.P.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1A
Chunk 165
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 generated 10% of our royalty revenues and 18% of our working interest revenues from three operators in the Shelby Trough area of the Haynesville play in East Texas, where we own a concentrated, relatively high-interest royalty position. Only one of these operators has an active drilling program on this acreage. Geographic and operator concentration heightens the effect of operational risks, including:

•operators’ diversion of drilling capital to other areas, where our royalty interest is less meaningful or nonexistent;

•adverse changes to the operators’ financial positions;

•unanticipated geographic or environmental constraints in the Shelby Trough; or

•delay or cancellation of construction or operation of LNG export facilities in the Gulf of Mexico.

In December 2023, we received notice that Aethon was exercising the “time-out” provisions under its joint exploration agreements with us in Angelina and San Augustine counties in East Texas. In September 2024, we entered into letter agreements with Aethon to amend the joint exploration agreements to, among other things, withdraw the invocation of the time-out provisions. See "Note 4 - Oil and Natural Gas Properties" to the consolidated financial statements included elsewhere in this Annual Report for additional information.

If any of these risks are realized, production may decrease, reducing cash generated from operations and cash available for distribution.

We may experience delays in the payment of royalties and be unable to replace operators that do not make required royalty payments, and we may not be able to terminate our leases with defaulting lessees if any of the operators on those leases declare bankruptcy.

A failure on the part of the operators to make royalty payments gives us the right to terminate the lease, repossess the property, and enforce payment obligations under the lease. If we repossessed any of our properties, we would seek a replacement operator. However, we might not be able to find a replacement operator and, if we did, we might not be able to enter into a new lease on favorable terms within a reasonable period of time. In addition, the outgoing operator could be subject to bankruptcy proceedings, in which case our right to enforce or terminate the lease for any defaults, including non-payment, may be substantially delayed or otherwise impaired. 

27

Access to Capital and Financing

Our Credit Facility has substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions.

Our Credit Facility limits the amounts we can borrow to a borrowing base amount, as determined by the lenders at their sole discretion based on their valuation of