Black Stone Minerals L P
We are one of the largest owners of oil and natural gas mineral interests in
the United States. Our principal business is maximizing the value of our existing
portfolio of mineral and royalty assets through active management and expanding
our asset base through acquisitions of additional mineral and royalty interests.
We maximize value through marketing our mineral assets for lease, creatively
structuring terms on those leases to encourage and accelerate drilling activity,
and selectively participating alongside our lessees on a working-interest basis
in low-risk development-drilling opportunities on our interests. Our primary
business objective is to grow our reserves, production, and cash generated from
operations over the long term, while paying, to the extent practicable, a growing
quarterly distribution to our unitholders.
We own mineral interests in approximately 15.5 million acres, with an average
45.7% ownership interest in that acreage. We also own nonparticipating royalty
interests in 1.5 million acres and overriding royalty interests in 1.5 million
acres. These non-cost-bearing interests, which we refer to collectively as our
“mineral and royalty interests,” include ownership in approximately
50,000 producing wells. Our mineral and royalty interests are located in 41
states and in 64 onshore basins in the continental United States. Many of these
interests are in active resource plays, including the Bakken/Three Forks in
the Williston Basin, the Eagle Ford Shale in South Texas, the Wolfcamp/Spraberry/Bone
Spring in the Permian Basin, the Niobrara/Codell Shales in the DJ basin, the
Haynesville/Bossier Shales in East Texas/Western Louisiana, and the Fayetteville
Shale in the Arkoma Basin, as well as emerging plays such as the Lower Wilcox
play in East Texas and the Canyon Lime play in the Texas Panhandle. The combination
of the breadth of our asset base and the long-lived, non-cost-bearing nature
of our mineral and royalty interests exposes us to potential additional production
and reserves from new and existing plays without investing additional capital.
Mineral interests are real-property interests that are typically perpetual
and grant ownership of the oil and natural gas under a tract of land and the
rights to explore for, drill for, and produce oil and natural gas on that land
or to lease those exploration and development rights to a third party. When
those rights are leased, usually for a three-year term, we typically receive
an upfront cash payment, known as lease bonus, and we retain a mineral royalty,
which entitles us to a cost-free percentage (usually ranging from 20% to 25%)
of production or revenue from production. A lessee can extend the lease beyond
the initial lease term with continuous drilling, production, or other operating
activities. When production or drilling ceases, the lease terminates, allowing
us to lease the exploration and development rights to another party. Mineral
interests generate the substantial majority of our revenue and are also the
assets that we have the most influence over.
In addition to mineral interests, we also own other types of non-cost-bearing
royalty interests, which include:
nonparticipating royalty interests (“NPRIs”), which are royalty
interests that are carved out of the mineral estate and represent the right,
which is typically perpetual, to receive a fixed, cost-free percentage of production
or revenue from production, without an associated right to lease or receive
lease bonus; and
overriding royalty interests (“ORRIs”), which are royalty interests
that burden working interests and represent the right to receive a fixed, cost-free
percentage of production or revenue from production from a lease. ORRIs remain
in effect until the associated leases expire.