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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
  
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period _______________ to _______________
Commission File Number: 001-37362
Black Stone Minerals, L.P.
(Exact name of registrant as specified in its charter)
 
Delaware 47-1846692
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
   
1001 Fannin Street, Suite 2020 77002
Houston,Texas
(Address of principal executive offices) (Zip code)

(713) 445-3200
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Units Representing Limited Partner InterestsBSMNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filer Accelerated filer
Non-accelerated filer(Do not check if a smaller reporting company)Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 
As of April 29, 2020, there were 206,709,448 common units and 14,711,219 Series B cumulative convertible preferred units of the registrant outstanding.




TABLE OF CONTENTS
 
  Page
 
 
 
 
 
 




ii


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements 


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 March 31, 2020December 31, 2019
ASSETS  
CURRENT ASSETS  
Cash and cash equivalents$3,040  $8,119  
Accounts receivable58,464  78,214  
Commodity derivative assets96,278  14,790  
Prepaid expenses and other current assets1,995  1,168  
TOTAL CURRENT ASSETS159,777  102,291  
PROPERTY AND EQUIPMENT  
Oil and natural gas properties, at cost, using the successful efforts method of accounting, includes unproved properties of $1,073,475 and $1,073,447 at March 31, 2020 and December 31, 2019, respectively
3,291,755  3,302,340  
Accumulated depreciation, depletion, amortization, and impairment(1,938,773) (1,870,412) 
Oil and natural gas properties, net1,352,982  1,431,928  
Other property and equipment, net of accumulated depreciation of $11,792 and $11,622 at March 31, 2020 and December 31, 2019, respectively
2,132  2,300  
NET PROPERTY AND EQUIPMENT1,355,114  1,434,228  
DEFERRED CHARGES AND OTHER LONG-TERM ASSETS7,676  8,689  
TOTAL ASSETS$1,522,567  $1,545,208  
LIABILITIES, MEZZANINE EQUITY, AND EQUITY 
CURRENT LIABILITIES 
Accounts payable$563  $5,309  
Accrued liabilities8,823  22,702  
Commodity derivative liabilities  159  
Other current liabilities1,412  1,633  
TOTAL CURRENT LIABILITIES10,798  29,803  
LONG–TERM LIABILITIES 
Credit facility388,000  394,000  
Accrued incentive compensation543  2,110  
Commodity derivative liabilities  18  
Asset retirement obligations16,225  15,653  
Other long-term liabilities4,914  6,820  
TOTAL LIABILITIES420,480  448,404  
COMMITMENTS AND CONTINGENCIES (Note 7)
MEZZANINE EQUITY  
Partners' equity – Series B cumulative convertible preferred units, 14,711 units outstanding at March 31, 2020 and December 31, 2019
298,361  298,361  
EQUITY 
Partners' equity – general partner interest    
Partners' equity – common units, 206,695 and 205,960 units outstanding at March 31, 2020 and December 31, 2019, respectively
803,726  798,443  
TOTAL EQUITY803,726  798,443  
TOTAL LIABILITIES, MEZZANINE EQUITY, AND EQUITY$1,522,567  $1,545,208  
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1



BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per unit amounts)

Three Months Ended
March 31,
 20202019
REVENUE  
Oil and condensate sales$52,093  $57,704  
Natural gas and natural gas liquids sales36,642  61,640  
Lease bonus and other income4,308  5,645  
Revenue from contracts with customers93,043  124,989  
Gain (loss) on commodity derivative instruments90,011  (41,183) 
TOTAL REVENUE183,054  83,806  
OPERATING (INCOME) EXPENSE  
Lease operating expense3,827  5,292  
Production costs and ad valorem taxes12,376  14,592  
Exploration expense1  4  
Depreciation, depletion, and amortization23,182  27,833  
Impairment of oil and natural gas properties51,031    
General and administrative11,856  21,214  
Accretion of asset retirement obligations272  277  
TOTAL OPERATING EXPENSE102,545  69,212  
INCOME (LOSS) FROM OPERATIONS80,509  14,594  
OTHER INCOME (EXPENSE) 
Interest and investment income31  46  
Interest expense(4,427) (5,525) 
Other income (expense)(1) (98) 
TOTAL OTHER EXPENSE(4,397) (5,577) 
NET INCOME (LOSS)76,112  9,017  
Distributions on Series B cumulative convertible preferred units(5,250) (5,250) 
NET INCOME (LOSS) ATTRIBUTABLE TO THE GENERAL PARTNER AND COMMON AND SUBORDINATED UNITS$70,862  $3,767  
ALLOCATION OF NET INCOME (LOSS):   
General partner interest$  $  
Common units70,862  1,905  
Subordinated units  1,862  
 $70,862  $3,767  
NET INCOME (LOSS) ATTRIBUTABLE TO LIMITED PARTNERS PER COMMON AND SUBORDINATED UNIT:  
Per common unit (basic)$0.34  $0.02  
Weighted average common units outstanding (basic)206,631  109,420  
Per subordinated unit (basic)$  $0.02  
Weighted average subordinated units outstanding (basic)  96,329  
Per common unit (diluted)$0.34  $0.02  
Weighted average common units outstanding (diluted)206,631  110,035  
Per subordinated unit (diluted)$  $0.02  
Weighted average subordinated units outstanding (diluted)  96,329  
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
2



BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
Common unitsPartners' equity — common unitsTotal equity
BALANCE AT DECEMBER 31, 2019205,960  $798,443  $798,443  
Repurchases of common units(503) (5,029) (5,029) 
Restricted units granted, net of forfeitures1,238  —  —  
Equity–based compensation—  1,159  1,159  
Distributions—  (61,641) (61,641) 
Charges to partners' equity for accrued distribution equivalent rights—  (68) (68) 
Distributions on Series B cumulative convertible preferred units—  (5,250) (5,250) 
Net income (loss)—  76,112  76,112  
BALANCE AT MARCH 31, 2020206,695  $803,726  $803,726  
 
Common unitsSubordinated unitsPartners' equity — common unitsPartners' equity — subordinated unitsTotal equity
BALANCE AT DECEMBER 31, 2018108,363  96,329  $714,823  $189,440  $904,263  
Repurchases of common units(588) —  (10,110) —  (10,110) 
Issuance of common units, net of offering costs—  —  (43) —  (43) 
Issuance of common units for property acquisitions57  —  943  —  943  
Restricted units granted, net of forfeitures1,545  —  —  —  —  
Equity–based compensation—  —  13,669  —  13,669  
Distributions—  —  (40,275) (35,642) (75,917) 
Charges to partners' equity for accrued distribution equivalent rights—  —  (1,044) —  (1,044) 
Distributions on Series B cumulative convertible preferred units—  —  (5,250) —  (5,250) 
Net income (loss)—  —  7,155  1,862  9,017  
BALANCE AT MARCH 31, 2019109,377  96,329  $679,868  $155,660  $835,528  
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3



BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Three Months Ended March 31,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income (loss)$76,112  $9,017  
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
Depreciation, depletion, and amortization23,182  27,833  
Impairment of oil and natural gas properties51,031    
Accretion of asset retirement obligations272  277  
Amortization of deferred charges260  257  
(Gain) loss on commodity derivative instruments(90,011) 41,183  
Net cash (paid) received on settlement of commodity derivative instruments8,954  1,743  
Equity-based compensation(2,894) 9,223  
Exploratory dry hole expense  4  
Changes in operating assets and liabilities:
Accounts receivable19,693  9,740  
Prepaid expenses and other current assets(827) (541) 
Accounts payable, accrued liabilities, and other(14,269) (8,522) 
Settlement of asset retirement obligations(53) (40) 
NET CASH PROVIDED BY OPERATING ACTIVITIES71,450  90,174  
CASH FLOWS FROM INVESTING ACTIVITIES  
Acquisitions of oil and natural gas properties(28) (19,946) 
Additions to oil and natural gas properties(3,548) (31,633) 
Additions to oil and natural gas properties leasehold costs  (234) 
Purchases of other property and equipment(2) (2,036) 
Proceeds from the sale of oil and natural gas properties1,266  2  
Proceeds from farmouts of oil and natural gas properties3,703  29,468  
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES1,391  (24,379) 
CASH FLOWS FROM FINANCING ACTIVITIES  
Proceeds from issuance of common units, net of offering costs  (43) 
Distributions to common and subordinated unitholders(61,641) (75,917) 
Distributions to Series B cumulative convertible preferred unitholders(5,250) (5,250) 
Repurchases of common units(5,029) (10,752) 
Borrowings under credit facility67,000  98,000  
Repayments under credit facility(73,000) (73,000) 
NET CASH USED IN FINANCING ACTIVITIES(77,920) (66,962) 
NET CHANGE IN CASH AND CASH EQUIVALENTS(5,079) (1,167) 
CASH AND CASH EQUIVALENTS – beginning of the period8,119  5,414  
CASH AND CASH EQUIVALENTS – end of the period$3,040  $4,247  
SUPPLEMENTAL DISCLOSURE  
Interest paid$4,173  $5,197  
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
4


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS AND BASIS OF PRESENTATION
Description of the Business
Black Stone Minerals, L.P. (“BSM” or the “Partnership”) is a publicly traded Delaware limited partnership that owns oil and natural gas mineral interests, which make up the vast majority of the asset base. The Partnership's assets also include nonparticipating royalty interests and overriding royalty interests. These interests, which are substantially non-cost-bearing, are collectively referred to as “mineral and royalty interests.” The Partnership’s mineral and royalty interests are located in 41 states in the continental United States, including all of the major onshore producing basins. The Partnership also owns non-operated working interests in certain oil and natural gas properties. The Partnership's common units trade on the New York Stock Exchange under the symbol "BSM."
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of the Partnership have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with GAAP. Accordingly, the accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the Partnership’s consolidated financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Annual Report on Form 10-K").
The unaudited interim consolidated financial statements include the consolidated results of the Partnership. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.
In the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for the fair presentation of the financial results for all periods presented have been reflected. All intercompany balances and transactions have been eliminated.
The Partnership evaluates the significant terms of its investments to determine the method of accounting to be applied to each respective investment. Investments in which the Partnership has less than a 20% ownership interest and does not have control or exercise significant influence are accounted for using fair value or cost minus impairment if fair value is not readily determinable. Investments in which the Partnership exercises control are consolidated, and the noncontrolling interests of such investments, which are not attributable directly or indirectly to the Partnership, are presented as a separate component of net income (loss) and equity.
The unaudited interim consolidated financial statements include undivided interests in oil and natural gas property rights. The Partnership accounts for its share of oil and natural gas property rights by reporting its proportionate share of assets, liabilities, revenues, costs, and cash flows within the relevant lines on the accompanying unaudited interim consolidated balance sheets, statements of operations, and statements of cash flows.
Segment Reporting
The Partnership operates in a single operating and reportable segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. The Partnership’s chief executive officer has been determined to be the chief operating decision maker and allocates resources and assesses performance based upon financial information at the consolidated level.
5


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant Accounting Policies
Significant accounting policies are disclosed in the Partnership’s 2019 Annual Report on Form 10-K. There have been no changes in such policies or the application of such policies during the three months ended March 31, 2020.
Accounts Receivable

The following table presents information about the Partnership's accounts receivable:
March 31, 2020December 31, 2019
(in thousands)
Accounts receivable:
Revenues from contracts with customers$53,652  $71,022  
Other4,812  7,192  
Total accounts receivable$58,464  $78,214  
Recent Accounting Pronouncements
On January 1, 2020, the Partnership adopted Accounting Standards Update ("ASU") 2018-13, Fair Value Measurements (Topic 820), which removed, modified, and added certain required disclosures on fair value measurements. The adoption of this update had no impact on the Partnership's financial position, results of operations, or liquidity.
NOTE 3 - OIL AND NATURAL GAS PROPERTIES 
Acquisitions of proved oil and natural gas properties and working interests are generally considered business combinations and are recorded at their estimated fair value as of the acquisition date. Acquisitions that consist of all or substantially all unproved oil and natural gas properties are generally considered asset acquisitions and are recorded at cost.
2020 Acquisitions
The Partnership had no acquisition activity during the three months ended March 31, 2020.
2019 Acquisitions
During the year ended December 31, 2019, the Partnership closed on multiple acquisitions of mineral and royalty interests for total consideration of $44.0 million.
Acquisitions that were considered business combinations were primarily located in the Permian Basin. These acquisitions were funded with borrowings under the Credit Facility (as defined in Note 6 - Credit Facility) and funds from operating activities. Acquisition related costs of less than $0.1 million were expensed and included in the General and administrative line item of the consolidated statement of operations for the year ended December 31, 2019. The following table summarizes these acquisitions:
Assets AcquiredConsideration Paid
ProvedUnprovedNet Working CapitalTotal Fair ValueCash
(in thousands)
February$173  $8,437  $1  $8,611  $8,611  
March24      24  24  
June527  3,268    3,795  3,795  
Total fair value$724  $11,705  $1  $12,430  $12,430  
6


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In addition, during 2019, the Partnership acquired mineral and royalty interests that were considered asset acquisitions from various sellers for an aggregate of $31.6 million. These acquisitions were primarily located in East Texas and the Permian Basin. The cash portion of the consideration paid for these acquisitions of $30.7 million was funded with borrowings under the Credit Facility and funds from operating activities, and $0.9 million was funded through the issuance of common units of the Partnership based on the fair values of the common units issued on the acquisition dates.
Farmout Agreements
In 2017, the Partnership entered into two farmout arrangements designed to reduce its working interest capital expenditures and thereby significantly lower its capital spending other than for royalty and mineral 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.
Canaan Farmout
On February 21, 2017, the Partnership announced that it had entered into a farmout agreement with Canaan Resource Partners ("Canaan") which covers certain Haynesville and Bossier shale acreage in San Augustine County, Texas operated by XTO Energy Inc., a subsidiary of Exxon Mobil Corporation. The Partnership has an approximate 50% working interest in the acreage and is the largest mineral owner. A total of 20 wells were drilled over an initial phase, beginning with wells spud after January 1, 2017. Canaan elected to participate in an additional phase that began in September 2018 and continues for the lesser of 2 years or until 20 wells have been drilled. As of March 31, 2020, a total of 17 wells have been drilled during the second phase. After the completion of the second phase, Canaan will have the option to elect to participate in a similar third phase. During the first three phases of the agreement, Canaan commits on a phase-by-phase basis and funds 80% of the Partnership's drilling and completion costs and is assigned 80% of the Partnership's working interests in such wells (40% working interest on an 8/8ths basis) as the wells are drilled. After the third phase, Canaan can earn 40% of the Partnership’s working interest (20% working interest on an 8/8ths basis) in additional wells drilled in the area by continuing to fund 40% of the Partnership's costs for those wells on a well-by-well basis. The Partnership receives an overriding royalty interest (“ORRI”) before payout and an increased ORRI after payout on all wells drilled under the agreement.
Pivotal Farmout
On November 21, 2017, the Partnership entered into a farmout agreement with Pivotal Petroleum Partners (“Pivotal”), a portfolio company of Tailwater Capital, LLC. The farmout agreement covers substantially all of the Partnership's remaining working interests under active development in the Shelby Trough area of East Texas, targeting the Haynesville and Bossier shale acreage (after giving effect to the Canaan Farmout), until November 2025. Pivotal will earn the Partnership's remaining working interest in wells operated by XTO Energy Inc. in San Augustine County, Texas not covered by the Canaan Farmout (10% working interest on an 8/8th basis), as well as 100% of the Partnership's working interests (ranging from approximately 12.5% to 25% on an 8/8ths basis) in wells operated by BPX Energy in San Augustine and Angelina counties, Texas. Initially, Pivotal is obligated to fund the development of up to 80 wells, in designated well groups, across several development areas and then has options to continue funding the Partnership's working interest across those areas for the duration of the farmout agreement. Once Pivotal achieves a specified payout for a designated well group, the Partnership will obtain a majority of the original working interest in such well group. As of March 31, 2020, a total of 68 wells have been drilled in the contract area. The Partnership's development agreement with BPX Energy terminated in 2019 with respect to the majority of the Partnership's acreage covered by the farmout agreement with Pivotal. As such, Pivotal retains minimal rights or obligations related to the farmout for that area. The Partnership remains engaged with Pivotal around farmout opportunities with potential new operators in the area forfeited by BPX Energy.
From the inception of the farmout agreements through March 31, 2020, the Partnership has received $90.3 million and $118.6 million from Canaan and Pivotal, respectively, under the agreements. When such reimbursements are received prior to assigning the wells to Canaan and Pivotal, the Partnership records the amounts as increases to Oil and natural gas properties and Other long-term liabilities. When working interests in farmout wells are assigned to Canaan and Pivotal, the Partnership's Oil and natural gas properties and Other long-term liabilities are reduced by the reimbursed capital costs. As of March 31, 2020 and December 31, 2019, $0.1 million and $1.7 million, respectively, was included in the Other long-term liabilities line item of the consolidated balance sheets for reimbursements received associated with farmed-out working interests not yet assigned to Canaan and Pivotal.
7


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Oil and Natural Gas Properties
Proved and unproved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of those properties. When assessing producing properties for impairment, the Partnership compares the expected undiscounted projected future cash flows of the producing properties to the carrying amount of the producing properties to determine recoverability. When the carrying amount exceeds its estimated undiscounted future cash flows, the carrying amount is written down to its fair value, which is measured as the present value of the projected future cash flows of such properties.
There was a collapse in oil prices during the first quarter of 2020 due to geopolitical events that increased supply at the same time demand weakened due to the impact of the COVID-19 pandemic. The Partnership determined these events and circumstances indicated a possible decline in the recoverability of the carrying value of certain proved properties and recoverability testing determined that certain depletable units consisting of mature oil producing properties were impaired. The Partnership recognized impairment of oil and natural gas properties of $51.0 million for three months ended March 31, 2020. No impairment of oil and natural gas properties was recognized during 2019. See Note 5 - Fair Value Measurements for further discussion
NOTE 4 - COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS
The Partnership’s ongoing operations expose it to changes in the market price for oil and natural gas. To mitigate the inherent commodity price risk associated with its operations, the Partnership uses oil and natural gas commodity derivative financial instruments. From time to time, such instruments may include variable-to-fixed-price swaps, costless collars, fixed-price contracts and other contractual arrangements. The Partnership enters into oil and natural gas derivative contracts that contain netting arrangements with each counterparty. The Partnership does not enter into derivative instruments for speculative purposes.
As of March 31, 2020, the Partnership’s open derivative contracts consisted of fixed-price swap contracts and costless collar contracts. A fixed-price swap contract between the Partnership and the counterparty specifies a fixed commodity price and a future settlement date. A costless collar contract between the Partnership and the counterparty specifies a floor and a ceiling commodity price and a future settlement date. The Partnership has not designated any of its contracts as fair value or cash flow hedges. Accordingly, the changes in the fair value of the contracts are included in the consolidated statement of operations in the period of the change. All derivative gains and losses from the Partnership’s derivative contracts have been recognized in revenue in the Partnership's accompanying consolidated statements of operations. Derivative instruments that have not yet been settled in cash are reflected as either derivative assets or liabilities in the Partnership’s accompanying consolidated balance sheets as of March 31, 2020 and December 31, 2019. See Note 5 - Fair Value Measurements for further discussion. 
The Partnership's derivative contracts expose it to credit risk in the event of nonperformance by counterparties that may adversely impact the fair value of the Partnership's commodity derivative assets. While the Partnership does not require its derivative contract counterparties to post collateral, the Partnership does evaluate the credit standing of such counterparties as deemed appropriate. This evaluation includes reviewing a counterparty’s credit rating and latest financial information. As of March 31, 2020, the Partnership had eight counterparties, all of which are rated Baa1 or better by Moody’s and are lenders under the Credit Facility.
8


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The tables below summarize the fair values and classifications of the Partnership’s derivative instruments, as well as the gross recognized derivative assets, liabilities, and amounts offset in the consolidated balance sheets as of each date:
March 31, 2020
ClassificationBalance Sheet LocationGross
Fair Value
Effect of Counterparty NettingNet Carrying Value on Balance Sheet
  (in thousands)
Assets:
    
Current asset
Commodity derivative assets$96,294  $(16) $96,278  
Long-term asset
Deferred charges and other long-term assets      
 Total assets
 $96,294  $(16) $96,278  
Liabilities:
    
Current liability
Commodity derivative liabilities$16  $(16) $  
Long-term liability
Commodity derivative liabilities      
Total liabilities
 $16  $(16) $  

December 31, 2019
ClassificationBalance Sheet LocationGross
Fair Value
Effect of Counterparty NettingNet Carrying Value on Balance Sheet
  (in thousands)
Assets:
    
Current asset
Commodity derivative assets$19,028  $(4,238) $14,790  
Long-term asset
Deferred charges and other long-term assets713  (105) 608  
 Total assets
 $19,741  $(4,343) $15,398  
Liabilities:
    
Current liability
Commodity derivative liabilities$4,397  $(4,238) $159  
Long-term liability
Commodity derivative liabilities123  (105) 18  
Total liabilities
 $4,520  $(4,343) $177  
Changes in the fair values of the Partnership’s derivative instruments (both assets and liabilities) are presented on a net basis in the accompanying consolidated statements of operations and consolidated statements of cash flows and consist of the following for the periods presented:
 Three Months Ended
March 31,
Derivatives not designated as hedging instruments20202019
(in thousands)
Beginning fair value of commodity derivative instruments$15,221  $48,038  
Gain (loss) on oil derivative instruments77,811  (39,261) 
Gain (loss) on natural gas derivative instruments12,200  (1,922) 
Net cash paid (received) on settlements of oil derivative instruments(1,541) (4,555) 
Net cash paid (received) on settlements of natural gas derivative instruments(7,413) 2,812  
Net change in fair value of commodity derivative instruments81,057  (42,926) 
Ending fair value of commodity derivative instruments$96,278  $5,112  
9


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership had the following open derivative contracts for oil as of March 31, 2020:
 Weighted Average Price (Per Bbl)Range (Per Bbl)
Period and Type of ContractVolume (Bbl)LowHigh
Oil Swap Contracts:    
2020    
First Quarter210,000  $57.32  $54.92  $58.65  
Second Quarter630,000  57.32  54.92  58.65  
Third Quarter630,000  57.32  54.92  58.65  
Fourth Quarter630,000  57.32  54.92  58.65  

Weighted Average
Floor Price (Per Bbl)
Weighted Average
Ceiling Price (Per Bbl)
Period and Type of ContractVolume (Bbl)
Oil Collar Contracts:
2020
First Quarter70,000  $56.43  $67.14  
Second Quarter210,000  56.43  67.14  
Third Quarter210,000  56.43  67.14  
Fourth Quarter210,000  56.43  67.14  
The Partnership had the following open derivative contracts for natural gas as of March 31, 2020:
 Weighted Average Price (Per MMBtu)Range (Per MMBtu)
Period and Type of ContractVolume (MMBtu)LowHigh
Natural Gas Swap Contracts:    
2020    
Second Quarter10,010,000  $2.69  $2.55  $2.74  
Third Quarter10,120,000  2.69  2.55  2.74  
Fourth Quarter10,120,000  2.69  2.55  2.74  
The Partnership entered into the following derivative contracts for oil subsequent to March 31, 2020:
Weighted Average Price (Per Bbl)Range (Per Bbl)
Period and Type of ContractVolume (Bbl)LowHigh
Oil Swap Contracts:
2021
First Quarter480,000  $36.18  $32.64  $37.92  
Second Quarter480,000  36.18  32.64  37.92  
Third Quarter480,000  36.18  32.64  37.92  
Fourth Quarter480,000  36.18  32.64  37.92  
10


BLACK STONE MINERALS, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Partnership entered into the following derivative contracts for natural gas subsequent to March 31, 2020:
Weighted Average Price (Per MMBtu)Range (Per MMBtu)
Period and Type of ContractVolume (MMBtu)LowHigh
Natural Gas Swap Contracts:
2021
First Quarter7,200,000  $2.60  $2.52  $2.72  
Second Quarter7,280,000  2.60  2.52  2.72  
Third Quarter7,360,000