Company: BSM
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0001628280-25-007730
Chunk: 29

Company: Black Stone Minerals, L.P.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 9B
Chunk 29
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 acquisition activity during 2022. Asset ExchangeIn the third quarter of 2024, the Partnership closed on a transaction with a third-party operator whereby the Partnership received an oil and natural gas lease on approximately 8,000 net leasehold acres in East Texas in exchange for the assignment of approximately 51,000 undeveloped net mineral and royalty acres in Mississippi. The acreage surrendered in Mississippi constituted a partial disposition of unproved property and no gain or loss was recognized on the transaction.Shelby Trough Development AgreementsIn 2020 and 2021, BSM entered into Joint Exploration Agreements ("JEAs") with Aethon Energy ("Aethon") to develop certain portions of the Partnership's undeveloped acreage in San Augustine County and Angelina County in East Texas. The agreements provide for minimum annual well commitments by Aethon in exchange for reduced royalty rates and exclusive access to BSM's mineral and leasehold acreage in the contract areas. The Partnership's development agreement and related drilling commitments covering its San Augustine County acreage are independent of the development agreement and associated commitments covering Angelina County.Under the JEAs, Aethon may elect to temporarily suspend its drilling obligations for up to nine consecutive months and a maximum of 18 total months in any 48-month period when natural gas prices fall below certain thresholds. In December 2023, the Partnership received notice that Aethon was exercising the time-out provisions under the JEAs in San Augustine and Angelina counties.In September 2024, the Partnership entered into letter agreements with Aethon to amend the JEAs in San Augustine and Angelina counties. In those agreements, the parties agreed to revise the current program year drill schedules under each JEA, to extend the respective program years by nine months, and to withdraw the invocation of the time-out provisions. Aethon also released its rights under 25,000 acres from the parties' area of mutual interest defined in the original JEAs.Farmout AgreementsThe Partnership has entered into farmout arrangements designed to reduce its working interest capital expenditures and thereby significantly lowering its capital spending other than for mineral and royalty interest acquisitions. Under these agreements, the Partnership conveyed its rights to participate in certain non-operated working interest opportunities to external capital providers while retaining value from these interests in the form of additional royalty income or retained economic interests. The Partnership's farmout arrangements cover its share of working interests under active development by Aethon in San Augustine County and Angelina County in East Texas.

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