Company: BSM
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001628280-25-022559
Chunk: 81

Company: Black Stone Minerals, L.P.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 8
Chunk 81
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 These seismic initiatives aim to further bolster our subsurface evaluation of the expanded Shelby Trough area. Exploration expenses were minimal in the first quarter of 2024.

25

Depreciation, depletion, and amortization. Depletion is the amount of cost basis of oil and natural gas properties attributable to the volume of hydrocarbons extracted during a period, calculated on a units-of-production basis. Estimates of proved developed producing reserves are a major component of the calculation of depletion. We adjust our depletion rates semi-annually based upon mid-year and year-end reserve reports, except when circumstances indicate that there has been a significant change in reserves or costs. Depreciation, depletion, and amortization decreased for the quarter ended March 31, 2025 as compared to the same period in 2024 due to lower production volumes.

General and administrative. General and administrative expenses are costs not directly associated with the production of oil and natural gas and include expenses such as the cost of employee salaries and related benefits, office expenses, and fees for professional services. For the quarter ended March 31, 2025, general and administrative expenses increased as compared to the same period in 2024, primarily due to increased cash and equity-based compensation. The increase in equity-based compensation was due to higher costs recognized for performance-based incentive awards resulting from upward movements in our common unit price during the quarter ended March 31, 2025 compared to minimal price changes in the corresponding period in 2024.

Interest expense. Interest expense in the first quarter of 2025 increased as compared to the corresponding period in 2024, due to increased borrowings under our Credit Facility. Average outstanding borrowings during the first quarter of 2025 were higher than the first quarter of 2024 due to funding acquisitions in 2025 and 2024.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash generated from operations and borrowings under our Credit Facility. Our primary uses of cash are for distributions to our unitholders, reducing outstanding borrowings under our Credit Facility, and for investing in our business. On November 28, 2023 the distribution rate for the Series B cumulative convertible preferred units was adjusted to 9.8% and will be readjusted every two years thereafter (each, a "Readjustment Date"). 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