Black Stone Minerals, L.P. (NYSE:BSM) Q2 2022 Earnings Conference Call August 2, 2022 10:00 AM ET Company Participants Evan Kiefer - Vice President, Finance & Investor Relations. Tom Carter - Chairman & Chief Executive Officer Jeff Wood - President & Chief Financial Officer Conference Call Participants Trafford Lamar - Raymond James Operator Good morning and welcome to the Black Stone Minerals Second Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. A ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Black Stone Minerals, L.P.'s unaudited consolidated financial statements as of June 30, 2022, reflecting significant revenue and net income growth driven by higher commodity prices and a slight increase in total assets to **$1.27 billion** [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (thousands of dollars) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $155,500 | $107,974 | | **Net Property and Equipment** | $1,109,878 | $1,133,336 | | **Total Assets** | **$1,272,693** | **$1,247,921** | | **Total Current Liabilities** | $124,817 | $77,140 | | **Total Liabilities** | $230,005 | $184,292 | | **Total Equity** | $744,327 | $765,268 | | **Total Liabilities, Mezzanine Equity, and Equity** | **$1,272,693** | **$1,247,921** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (thousands of dollars, except per unit) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $180,372 | $58,442 | $216,796 | $120,010 | | **Income from Operations** | $133,067 | $17,026 | $127,319 | $34,239 | | **Net Income** | $131,788 | $15,429 | $124,786 | $31,615 | | **Net Income Attributable to Common Units** | $126,538 | $10,179 | $114,286 | $21,115 | | **Net Income Per Common Unit (basic)** | $0.60 | $0.05 | $0.55 | $0.10 | | **Net Income Per Common Unit (diluted)** | $0.59 | $0.05 | $0.55 | $0.10 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Highlights (thousands of dollars) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $160,139 | $125,579 | | **Net Cash Used in Investing Activities** | ($145) | ($12,754) | | **Net Cash Used in Financing Activities** | ($156,712) | ($113,578) | | **Net Change in Cash and Cash Equivalents** | $3,282 | ($753) | | **Cash and Cash Equivalents - End of Period** | $12,158 | $1,043 | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) - The Partnership's primary business is owning and managing oil and natural gas mineral and royalty interests across **41 states** in the continental U.S.[25](index=25&type=chunk) - The Partnership entered into farmout agreements with Canaan, Azul, and JWM to fund development of its working interests in San Augustine County, Texas, retaining overriding royalty interests[46](index=46&type=chunk) - As of June 30, 2022, the Partnership held open fixed-price swap contracts for oil and natural gas, with a net fair value liability of **$107.2 million**, to mitigate commodity price risk[55](index=55&type=chunk)[56](index=56&type=chunk)[63](index=63&type=chunk) - The Partnership's credit facility has a borrowing base of **$400.0 million**, with **$86.0 million** outstanding as of June 30, 2022, maturing in November 2024[82](index=82&type=chunk)[86](index=86&type=chunk) - On July 25, 2022, the Board approved a distribution of **$0.42 per common unit** for the second quarter of 2022[111](index=111&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant increase in revenue and profitability for the second quarter and first half of 2022, driven by strong commodity prices, while highlighting development activities and strong liquidity with **$314.0 million** unused borrowing capacity [Overview and Recent Developments](index=21&type=section&id=Overview%20and%20Recent%20Developments) - The company's principal business is maximizing the value of its mineral and royalty assets through active management and acquisitions[119](index=119&type=chunk) - Development activity is progressing in the Shelby Trough, with Aethon turning eight wells to sales in Angelina County and commencing operations on six additional wells; Aethon is also actively drilling and completing wells in San Augustine County[122](index=122&type=chunk) - In the Austin Chalk play, seven operators are actively engaged in redevelopment, with four rigs running; twelve wells with modern completions are producing, and an additional six are being drilled or completed[123](index=123&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 2022 vs Q2 2021 Performance | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | **Total Production (MBoe/d)** | 33.5 | 38.2 | (12.3)% | | Natural Gas Production (MMcf) | 12,895 | 15,676 | (17.7)% | | **Realized Oil Price ($/Bbl)** | $104.89 | $62.72 | 67.2% | | **Realized Natural Gas Price ($/Mcf)** | $8.62 | $3.60 | 139.4% | | **Total Revenue ($ thousands)** | $180,372 | $58,442 | 208.6% | - The increase in Q2 2022 revenue was primarily due to significantly higher realized commodity prices for both oil and natural gas, which more than offset a **17.7% decrease** in natural gas production volumes[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - For the six months ended June 30, 2022, total revenue increased **80.6%** to **$216.8 million** compared to the prior year, driven by higher commodity prices, partially offset by a **$60.0 million** increase in losses on commodity derivative instruments[175](index=175&type=chunk)[176](index=176&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of liquidity are cash from operations and borrowings under the Credit Facility; as of June 30, 2022, the company had **$86.0 million** in borrowings outstanding[188](index=188&type=chunk) - Cash from operating activities increased to **$160.1 million** for the first six months of 2022, up from **$125.6 million** in the same period of 2021, mainly due to higher commodity prices[192](index=192&type=chunk)[196](index=196&type=chunk) - The 2022 capital expenditure budget for non-operated working interests is approximately **$4.5 million**, net of farmout reimbursements[195](index=195&type=chunk) - The Credit Facility has a borrowing base of **$400.0 million**, providing **$314.0 million** of unused borrowing capacity as of June 30, 2022[86](index=86&type=chunk)[199](index=199&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is commodity price volatility, mitigated by derivatives, alongside counterparty credit risk and interest rate risk on its **$86.0 million** variable-rate credit facility - The company's major market risk exposure is the pricing of oil, natural gas, and NGLs; it uses commodity derivative instruments to reduce exposure to price volatility[207](index=207&type=chunk) - As of June 30, 2022, the company had **seven derivative counterparties**, all rated **Baa1 or better by Moody's** and are lenders under the Credit Facility, mitigating counterparty risk[209](index=209&type=chunk) - The company is exposed to interest rate risk on its **$86.0 million** of outstanding borrowings under its Credit Facility; a **1% increase** in interest rates would have increased interest expense by **$0.4 million** for the first six months of 2022[211](index=211&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[213](index=213&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[214](index=214&type=chunk) [PART II – OTHER INFORMATION](index=37&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, but management anticipates no material adverse effect on its financial condition or operations from these pending matters - The Partnership is involved in routine litigation from time to time, but management does not expect any pending claims to have a material adverse effect on its financial condition or operations[217](index=217&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section highlights a new risk factor concerning rising inflation, which could lead to higher interest rates and a recession, potentially impacting cash generation and distributions - A new risk factor has been identified related to rising inflation, which could lead to increased interest rates and a recession[219](index=219&type=chunk) - An economic slowdown or recession could result in decreased drilling activity by operators and reduced demand for oil and natural gas, which would adversely affect cash flow and distributions[222](index=222&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the reporting period, the company had no unregistered sales or repurchases of its equity securities - There were no unregistered sales of equity securities or repurchases of equity securities by the issuer during the period[223](index=223&type=chunk)[224](index=224&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - No information was reported under this item[225](index=225&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including required officer certifications - A list of exhibits filed with the report is provided, including officer certifications pursuant to the Sarbanes-Oxley Act of 2002[227](index=227&type=chunk)

Black Stone Minerals, L.P. (NYSE:BSM) Q1 2022 Earnings Conference Call May 3, 2022 11:30 AM ET Company Participants Evan Kiefer – Vice President of Investor Relations Tom Carter – Chairman and Chief Executive Officer Jeff Wood – President and Chief Financial Officer Garrett Gremillion – Vice President of Engineering and Geology Thad Montgomery – Vice President of Land Conference Call Participants Leo Mariani – KeyBanc Derrick Whitfield – Stifel Ken Reese – Sagepoint TJ Schultz – RBC Capital Trafford Lamar – ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-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, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | --- | |----------------------------------------------------------------------------|-------------------------------------------------------------|--------------|------ ...

Financial Data and Key Metrics Changes - The company reported realized prices in Q4 2021 of over $73 per barrel of oil and $5.40 per Mcf gas, with prices up 14% from Q3 and doubling from Q4 2020 levels [8][9] - Adjusted EBITDA for Q4 was $77.6 million, slightly up from the previous quarter, while distributable cash flow was $71.3 million, also an increase from the last quarter [26] - For the full year, adjusted EBITDA totaled $292 million from 38,000 Boe per day of total production, with distributions paid amounting to $0.945 per unit [27] Business Line Data and Key Metrics Changes - Royalty volumes in Q4 totaled 35.2 MBoe per day, up 7% from Q3, driven by increases in Bakken, Louisiana, Haynesville, and Midland, Delaware production [9][22] - Working interest volumes continued to trend down in Q4 due to the decline of legacy production from Shelby Trough wells, with royalty volumes now representing 90% of total production [10][11] Market Data and Key Metrics Changes - The company had 95 rigs operating on its acreage at the end of the year, up over 60% from 59 rigs at the end of Q3 and more than doubling from 38 rigs at the end of 2020 [9] - The average spot price for gas in Q4 was $4.75 compared to an average settlement price of $5.83, with realized gas prices at $5.40 being 114% of the daily spot average [24][25] Company Strategy and Development Direction - The company is focusing on organic growth strategies, prioritizing new drilling activity on existing acreage rather than acquisitions, which is seen as providing higher returns to shareholders [16][17] - The company is optimistic about the Haynesville play benefiting from continued growth in LNG export volumes and is actively seeking to enhance drilling activity across its mineral portfolio [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the upcoming years, citing a strong balance sheet and a robust portfolio of growth opportunities [21] - The company expects royalty production in 2022 to be relatively flat compared to 2021 levels, with anticipated production gains in the Permian and Louisiana Haynesville plays offset by declines in legacy wells [28] Other Important Information - The company ended the year with $89 million drawn under its revolver, with a $400 million borrowing base, and reduced its debt balance to $58 million [31] - Management indicated that G&A expenses are expected to increase slightly due to normal cost inflation and selective hires to drive organic growth initiatives [30] Q&A Session Summary Question: Can you quantify the impact of prior period adjustments in Q4? - Management indicated that approximately 4,000 Boe per day was impacted through new well activity in Q4 due to timing of checks received [33] Question: What is the outlook for 2022 guidance regarding production? - Management clarified that while they expect a step down in production initially, they anticipate a slight increase in oil volumes throughout the year, particularly in the second half as new wells come online [46][47] Question: What are the plans regarding undeveloped acreage and payout ratios? - Management stated there are no divestiture plans, focusing instead on maximizing cash flow from existing assets, with expectations for payout ratios to increase as debt levels decrease [49][50]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 001-37362 Black Stone Minerals, L.P. (Exact Name of Registrant As Specified in its charter) Delaware 47-1846692 (State o ...

Black Stone Minerals, L.P. (NYSE:BSM) Q3 2021 Earnings Conference Call November 2, 2021 10:00 AM ET Company Participants Evan Kiefer – Vice President, Finance and Investor Relations Tom Carter – Chairman and Chief Executive Officer Jeff Wood – President and Chief Financial Officer Conference Call Participants Steve Decker – KeyBanc Derrick Whitfield – Stifel Operator Good morning, ladies and gentlemen, and welcome to the Black Stone Minerals Third Quarter Earnings Conference Call. [Operator Instructions] As ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Common Units Representing Limited Partner Interests BSM New York Stock Exchange Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _______________ to _______________ | --- | --- | |--------------------------- ...

Black Stone Minerals, L.P. (NYSE:BSM) Q2 2021 Results Conference Call August 3, 2021 10:00 AM ET Company Participants Evan Kiefer - VP, Finance and IR Tom Carter - Chairman and CEO Jeff Wood - President and CFO Conference Call Participants Brian Downey - Citigroup Pearce Hammond - Piper Sandler Operator Good day and thank year for standing by. Welcome to the Black Stone Minerals Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presen ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q2 2021 financial statements reflect a shift to net income from higher commodity prices, increased liabilities from derivatives, and decreased operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets remained stable at **$1.24 billion** as of June 30, 2021, while total liabilities significantly increased to **$218.2 million** due to higher commodity derivative liabilities | (In millions) | June 30, 2021 ($M) | December 31, 2020 ($M) | | :--- | :--- | :--- | | **Total Assets** | **$1,242.2** | **$1,244.0** | | Total Current Assets | $71.5 | $66.5 | | Net Property and Equipment | $1,163.1 | $1,172.1 | | **Total Liabilities** | **$218.2** | **$185.0** | | Total Current Liabilities | $95.1 | $39.9 | | Credit Facility | $96.0 | $121.0 | | Commodity derivative liabilities (Current + Long-term) | $85.5 | $21.2 | | **Total Equity** | **$725.7** | **$760.6** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2021 saw **net income of $15.4 million** driven by a **104% increase in contract revenue** from higher commodity prices, despite derivative losses, while H1 net income decreased due to derivative impacts | (In millions, except per unit) | Three Months Ended June 30, 2021 ($M) | Three Months Ended June 30, 2020 ($M) | Six Months Ended June 30, 2021 ($M) | Six Months Ended June 30, 2020 ($M) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$58.4** | **$38.5** | **$120.0** | **$221.6** | | Revenue from contracts | $117.9 | $57.7 | $207.4 | $150.7 | | Gain (loss) on derivatives | $(59.5) | $(19.2) | $(87.4) | $70.8 | | **Income (Loss) from Operations** | **$17.0** | **$(5.3)** | **$34.2** | **$75.2** | | **Net Income (Loss)** | **$15.4** | **$(8.4)** | **$31.6** | **$67.7** | | Net Income (Loss) per common unit (basic) | $0.05 | $(0.07) | $0.10 | $0.28 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2021 net cash from operations decreased to **$125.6 million** due to derivative settlements, with **$12.8 million** used in investing and **$113.6 million** in financing activities | (In millions) | Six Months Ended June 30, 2021 ($M) | Six Months Ended June 30, 2020 ($M) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | **$125.6** | **$158.0** | | Net Cash Provided by (Used in) Investing Activities | $(12.8) | $0.4 | | Net Cash Used in Financing Activities | $(113.6) | $(164.9) | | **Net Change in Cash and Cash Equivalents** | **$(0.8)** | **$(6.5)** | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail key accounting policies and events, including a **$20.8 million** Midland Basin acquisition, derivative positions, reaffirmed **$400 million** credit facility, and a **$0.25** per common unit quarterly distribution - In Q2 2021, the Partnership acquired mineral and royalty acreage in the northern Midland Basin for **$20.8 million**, consisting of **$10.0 million** in cash and **$10.8 million** in common units[35](index=35&type=chunk) - The Partnership uses fixed-price swap contracts to mitigate commodity price risk, with a net fair value liability of **$85.5 million** as of June 30, 2021[52](index=52&type=chunk)[53](index=53&type=chunk)[60](index=60&type=chunk) - The credit facility's borrowing base was reaffirmed at **$400.0 million** in April 2021, with **$96.0 million** outstanding and **$304.0 million** unused capacity as of June 30, 2021[78](index=78&type=chunk)[84](index=84&type=chunk) - On July 26, 2021, the Board approved a Q2 2021 distribution of **$0.25** per common unit, comprising a **$0.20** base and **$0.05** special distribution[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved Q2 2021 performance to higher commodity prices offsetting lower production and derivative losses, highlighting strategic acquisitions and strong liquidity despite ongoing COVID-19 uncertainty [Overview and Recent Developments](index=23&type=section&id=Overview%20and%20Recent%20Developments) The Partnership focuses on maximizing its mineral and royalty asset base, with recent activities including a **$20.8 million** Midland Basin acquisition, new development agreements, and a sustainability initiative - Closed a **$20.8 million** acquisition of mineral and royalty acreage in the northern Midland Basin, funded with **$10.0 million** cash and **$10.8 million** in common units[116](index=116&type=chunk) - Entered new development agreements with Aethon in the Shelby Trough and with operators to test the Austin Chalk formation in East Texas[119](index=119&type=chunk)[121](index=121&type=chunk) - Announced a sustainability initiative to use proceeds from solar development waivers to purchase carbon credits, offsetting mineral production emissions[124](index=124&type=chunk) [Business Environment](index=25&type=section&id=Business%20Environment) The business environment improved significantly in 2021 with commodity prices recovering to 2018 levels by July, and the U.S. rig count increasing, though COVID-19 uncertainty persists | Benchmark Prices | Q2 2021 ($) | Q2 2020 ($) | | :--- | :--- | :--- | | WTI spot oil price ($/Bbl) | $73.52 | $39.27 | | Henry Hub spot natural gas ($/MMBtu) | $3.79 | $1.76 | | U.S. Rotary Rig Count | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Oil | 372 | 188 | | Natural gas | 98 | 75 | | **Total** | **470** | **265** | - Commodity prices improved in late 2020 and fully recovered to 2018 levels by July 2021, reflecting rising demand and ongoing OPEC+ crude oil production limits[133](index=133&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 2021 total revenue increased **51.7%** to **$58.4 million** due to higher realized commodity prices, offsetting lower production, while H1 total revenue decreased **45.8%** due to negative derivative impacts Q2 2021 vs Q2 2020 Performance | Metric | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | Production (MBoe/d) | 38.2 | 42.6 | (10.3)% | | Realized Oil Price ($/Bbl) | $62.72 | $29.42 | 113.2% | | Realized Gas Price ($/Mcf) | $3.60 | $1.68 | 114.3% | | Revenue from contracts ($M) | $117.9 | $57.7 | 104.4% | | Gain (loss) on derivatives ($M) | $(59.5) | $(19.2) | 210.2% | | **Total Revenue ($M)** | **$58.4** | **$38.5** | **51.7%** | H1 2021 vs H1 2020 Performance | Metric | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | Production (MBoe/d) | 37.5 | 44.7 | (16.1)% | | Realized Oil Price ($/Bbl) | $58.09 | $38.24 | 51.9% | | Realized Gas Price ($/Mcf) | $3.25 | $1.82 | 78.6% | | Revenue from contracts ($M) | $207.4 | $150.7 | 37.6% | | Gain (loss) on derivatives ($M) | $(87.4) | $70.8 | NM | | **Total Revenue ($M)** | **$120.0** | **$221.6** | **(45.8)%** | - For the six months ended June 30, 2020, the company recognized a **$51.0 million** impairment on oil and natural gas properties due to sharp oil price decline, with no impairment in 2021[191](index=191&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are cash from operations and the credit facility, with **$304.0 million** available capacity and a **$5.0 million** capital expenditure budget for 2021, despite decreased operating cash flow - As of June 30, 2021, the company had **$96.0 million** outstanding on its credit facility, with an available borrowing capacity of **$304.0 million**[195](index=195&type=chunk)[84](index=84&type=chunk) - The 2021 capital expenditure budget for non-operated working interests is approximately **$5.0 million**, net of farmout reimbursements[202](index=202&type=chunk) - The decrease in operating cash flow for H1 2021 compared to H1 2020 was primarily due to net cash paid on derivative settlements versus net cash received in the prior year period[199](index=199&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Partnership manages commodity price volatility through derivatives, while also addressing counterparty credit risk and interest rate risk on its variable-rate credit facility - The company's major market risk is the pricing of oil, natural gas, and NGLs, mitigated by commodity derivative instruments to reduce price volatility[214](index=214&type=chunk) - As of June 30, 2021, the company had seven derivative counterparties, all rated Baa1 or better by Moody's[216](index=216&type=chunk) - The company is exposed to interest rate risk on its **$96.0 million** of outstanding variable-rate debt; a hypothetical **1%** increase would raise interest expense by **$0.5 million** for H1 2021[218](index=218&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[219](index=219&type=chunk) - No material changes occurred in internal control over financial reporting during Q2 2021[221](index=221&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, but management believes no pending legal matters will materially adversely affect its financial condition or operations - Management believes no pending litigation, disputes, or claims will have a material adverse effect on the company's financial condition or operations[224](index=224&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors from those previously disclosed in the 2020 Annual Report on Form 10-K - No material changes have occurred in the company's risk factors from those described in the 2020 Annual Report on Form 10-K[225](index=225&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On May 28, 2021, the company issued **1,087,498** common units valued at **$10.8 million** as partial consideration for a mineral interest acquisition, exempt from registration - On May 28, 2021, the company issued **1,087,498** common units valued at **$10.8 million** to partially fund a mineral interest acquisition[226](index=226&type=chunk) - The issuance was exempt from registration requirements under Section 4(a)(2) of the Securities Act, as it was made to accredited investors for investment purposes[227](index=227&type=chunk)