Company: BSM
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001621434-25-000108
Chunk: 113

Company: Black Stone Minerals, L.P.
Filing Date: 2025-08-05
Form: 10-Q
Item: Part I, Item 2
Chunk 113
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 repairs. Lease operating expense increased for the quarter ended June 30, 2025 as compared to the same period in 2024, primarily due to increased nonrecurring service-related expenses, including workovers.

Production costs and ad valorem taxes. Production taxes include statutory amounts deducted from our production revenues by various state taxing entities. Depending on the regulations of the states where the production originates, these taxes may be based on a percentage of the realized value or a fixed amount per production unit. This category also includes the costs to process and transport our production to applicable sales points. Ad valorem taxes are jurisdictional taxes levied on the value of oil and natural gas minerals and reserves. Rates, methods of calculating property values, and timing of payments vary between taxing authorities. For the quarter ended June 30, 2025, production costs and ad valorem taxes decreased as compared to the quarter ended June 30, 2024, primarily due to lower production taxes from decreased oil commodity prices and reduced oil and natural gas production volumes, as well as lower ad valorem tax estimates.

Exploration expense. Exploration expense typically consists of dry-hole expenses, payments for delay rentals where the Partnership is the lessee, and geological and geophysical costs, including seismic costs, and is expensed as incurred under the successful efforts method of accounting. For the quarter ended June 30, 2025, exploration expenses increased compared to the same period in 2024, primarily due to additional costs related to seismic data acquisition projects associated with existing and future development programs in the expanded Shelby Trough area. Exploration expenses were minimal in the second quarter of 2024.

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 June 30, 2025 as compared to the same period in 2024 due to lower production volumes.

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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.