Black Stone Minerals, L.P. Announces $340 Million Acquisition of Mineral and Royalty Interests and Private Placement of Cumulative Convertible Preferred Units

Completes New Farmout Arrangement That Further Supports Development
Activity in East Texas; Schedules Conference Call for 10:30 Central Time
Today

HOUSTON–(BUSINESS WIRE)–Black Stone Minerals, L.P. (NYSE:BSM) (“Black Stone Minerals,” “Black
Stone,” or “the Partnership”) announces it has entered into a definitive
agreement to acquire a diverse set of mineral and royalty assets for
$340 million, to be funded primarily by the private placement of newly
issued Series B Cumulative Convertible Preferred Units to an affiliate
of The Carlyle Group. Black Stone also announces it has entered into a
farmout agreement that covers substantially all of the Partnership's
remaining working interests in the Shelby Trough area of East Texas
targeting the Haynesville and Bossier shales for the next several years.

Management Commentary

Thomas L. Carter, Jr., Black Stone Minerals’ President, Chief Executive
Officer, and Chairman, commented, “Black Stone has several transactions
to announce today that provide benefits to the Partnership both near-
and long-term. First, we’re acquiring a sizable and diverse mineral and
royalty package that substantially expands our Permian and other
positions, complements our overall existing asset base extremely well,
and is immediately accretive to our distributable cash flow per unit. We
see a great opportunity to actively manage these assets to generate
lease bonus and move more lands into development. I am confident these
assets will contribute to the growth of our Partnership for years to
come.”

Mr. Carter continued, “And with this acquisition we have also
established a new relationship with a high-quality capital provider in
The Carlyle Group. Carlyle has a well-earned track record of success,
and we’re excited to partner with them on this important transaction.
Finally, the new farmout announced today is another example of how we’re
able to create value from our core mineral and royalty business.
Together, these transactions further improve our ability to grow
production and increase cash flow for the benefit of our unitholders,
while reducing working interest capital expenditures.”

Acquisition Overview

Black Stone Minerals has agreed to acquire a diverse mineral and royalty
package for $340 million from subsidiaries of Noble Energy, Inc.
(“Noble”). Highlights of the transaction include the following:

• Approximately 1.1 million gross (140,000 net) mineral acres, 380,000
  gross acres of non-participating royalty interests (“NPRI”), and
  600,000 gross acres of overriding royalty interests (“ORRI”)
  collectively spread over 20 states with significant concentrations in
  Texas, Oklahoma, and North Dakota.
• Increases the Partnership’s exposure in the greater Permian Basin
  through the addition of approximately 8,300 net royalty acres1
  in the Midland Basin and approximately 7,200 net royalty acres in the
  Delaware Basin, as well as increases Black Stone’s exposure to the
  Bakken/Three Forks play by over 10,000 net royalty acres.
• Assets to be acquired also include positions in the Powder River Basin
  in Wyoming, the SCOOP play in Oklahoma, and the Granite Wash play in
  Texas.
• Estimated average daily production for November 2017 of 2.6 MBoe/d,
  excluding NGLs (56% oil/44% natural gas).
• Annualized current run-rate cash flows of approximately $34 million
  per year.

The transaction is expected to close on November 28, 2017 with an
effective date as of July 1, 2017.

Including the acquisition of Noble’s assets, Black Stone has closed or
entered into agreements on 135 transactions in 2017 totaling
approximately $500 million ($428 million in cash, $72 million in
equity). These transactions include a total of approximately 250,000 net
mineral acres as well as 380,000 gross acres of non-participating
royalty interests and 600,000 gross acres of overriding royalty
interests. Among these mineral and royalty interests are approximately
18,000 net royalty acres in the core Midland and Delaware basins and
approximately 57,000 net royalty acres in the core of the Shelby Trough
region of the Haynesville/Bossier play. These acquisitions have also
increased Black Stone’s position in the Bakken/Three Forks plays, the
Powder River Basin, STACK/SCOOP plays, the Central Basin Platform, the
Cotton Valley play, and various other plays in East Texas.

Series B Cumulative Convertible Preferred Units

Black Stone Minerals has entered into a definitive agreement to issue
$300 million of Series B Cumulative Convertible Preferred Units (the
“Series B Preferred Units”) to an affiliate of The Carlyle Group
(“Carlyle”) at $20.3926 per preferred unit, representing a 15% premium
to the trailing 20-day volume-weighted average price of the common
units. Summary terms of the preferred units include:

• Distributions of 7.0% per annum for six years, and thereafter a
  distribution equal to the greater of 7.0% or the yield on the 10-year
  Treasury plus 5.5%.
• The Series B Preferred Units are convertible into common units of BSM
  on a one-to-one basis at the purchaser’s option after two years. Black
  Stone can convert the Series B Preferred Units after two years,
  subject to certain conditions including minimum price and volume
  thresholds for Black Stone’s common units.
• The Series B Preferred Units may be redeemed by the Partnership after
  six years at 105% of the issuance price, and at 100% of the issuance
  price each two-year anniversary thereafter. The purchaser cannot force
  redemption by Black Stone.

The transaction is expected to close on November 28, 2017, and Black
Stone intends to use the proceeds to partially fund the Noble
acquisition.

David Albert, Co-Head of the Carlyle Energy Mezzanine Opportunities
Fund, commented, “Tom Carter and his team have built a best-in-class oil
and gas minerals company. We are thrilled to be partnered with them, and
to provide capital to Black Stone Minerals to support this important and
synergistic asset acquisition.”

Pivotal Farmout Transaction

On November 21, 2017, Black Stone entered into a farmout agreement with
Pivotal Petroleum Partners (“Pivotal”), a portfolio company of Tailwater
Capital LLC, that covers substantially all of the Partnership's
remaining working interests in the Shelby Trough area of East Texas
targeting the Haynesville and Bossier shales for the next several years.

Mr. Carter remarked, “The Shelby Trough is a part of our portfolio where
we have seen operators become increasingly active over the last year. As
we’ve previously discussed, Black Stone has assembled an
industry-leading mineral position in this part of the
Haynesville/Bossier play. We’ve also been able to attract
well-capitalized, high-quality operators to our acreage and have
provided incentives to allow for its active development. Following our
farmout earlier this year with Canaan Resource Partners, we created a
similarly sized working interest opportunity on our minerals that we are
now farming out. With this transaction, we have essentially eliminated
future drilling and completion capital requirements related to our
working interest assets in the Shelby Trough for the foreseeable future,
yet we will continue to benefit from the working interest through a
meaningful retained economic interest in those wells through the
farmout, in addition to our base royalty. The tremendous success we are
seeing from our operating partners there exposes us to continued
significant growth in our royalty production and revenues from this
play. We are focused on managing and growing our mineral and royalty
business, and this is a great example of how we were able to add value
to that core business from the working interest optionality embedded in
our portfolio.”

Transaction highlights include:

• Farmout covers majority of Black Stone Minerals’ Haynesville and
  Bossier shale acreage under active development agreements in the
  Shelby Trough in Angelina and San Augustine counties, Texas.
• Pivotal will receive the Partnership's working interest in the
  remaining 20% of Black Stone's working interest in the XTO
  Energy-operated wells (10% working interest on an 8/8ths basis) not
  covered by the previously announced farmout with Canaan Resource
  Partners, as well as 100% of Black Stone's working interest (ranging
  from approximately 12.5% to 25% on an 8/8ths basis) in wells operated
  by its other major operator in the area.
• Once Pivotal achieves a preferred return, the majority of the
  farmed-out working interest and associated net revenue interests
  revert to Black Stone with minimal future capital obligations.
• Pivotal is obligated to fund Black Stone's working interest in over 80
  wells across several development areas, subject to certain conditions.
  After fulfilling its initial obligation, Pivotal will have the option
  to continue funding development of the areas, also subject to certain
  conditions for up to a total term of eight years.

Impact to Multi-Year Outlook

Management expects the announced transactions to have positive impacts
on a number of key performance measures in the coming years, including
increased production, reduced capital obligations, and higher
distributable cash flow per unit. The Partnership expects to provide an
updated multi-year outlook in the first quarter of 2018.

Production

Black Stone has purposefully pivoted from direct working interests to
carried interests, as well as expanded its mineral and royalty base
significantly. Even with the reduction in projected working interest
production volumes as a result of the Pivotal farmout, Black Stone
expects total production volumes will increase compared to previous
guidance as a result of expanded mineral ownership and activity in the
Haynesville/Bossier, as well as the announced Noble acquisition and the
incorporation of recent industry operating and permitting activity
across the asset base. Higher margin royalty production volumes are
expected to make up a larger percentage of that improved production
forecast.

Net Working Interest Capital Expenditures

Through the Pivotal and the Canaan Resource Partners transactions, Black
Stone has farmed out all of its working interest capital expenditures
associated with drilling and completing wells in the Shelby Trough for
the foreseeable future while ensuring development capital will continue
to be invested in the area. The Partnership estimates that total capital
expenditures by its partners in the farmout programs will exceed $100
million per annum under full development.

Cash Flow Available for Distribution and Distribution Coverage

The higher production levels and reduced working interest capital
expenditures are expected to benefit cash distributions available for
both common and subordinated unitholders. Black Stone anticipates the
transactions announced today and the improved outlook for its base
business will allow for subordinated units to convert into common units
at a conversion ratio greater than previously provided in public
disclosure. Even after taking into account the increase in conversion
ratio, the Partnership expects to generate higher levels of
distributable cash flow per unit, which would allow for increased common
unit distributions compared to previous guidance and/or increased levels
of distribution coverage.

As discussed below under “Forward-Looking Statements,” there are a
number of factors that could cause the Partnership’s actual results to
differ materially from this outlook.

Advisors

BofA Merrill Lynch and Barclays served as lead placement agents to Black
Stone in connection with the private placement of the Series B
Cumulative Convertible Preferred Units. Vinson & Elkins LLP acted as
legal counsel in connection with the private placement and Porter Hedges
LLP advised Black Stone on the Noble acquisition.

Conference Call

The Partnership will host a conference call to discuss these recent
developments on November 27, 2017 at 10:30 a.m. Central time (11:30 a.m.
Eastern time). Dial-in information is provided below. A telephonic
replay of the conference call will be available approximately two hours
after the call.

Presentation materials, as well as access to the live webcast of the
conference call, can be accessed through the Investors section of the
Partnership’s website at www.blackstoneminerals.com.

About Black Stone Minerals, L.P.

Black Stone Minerals is one of the largest owners of oil and natural gas
mineral interests in the United States. The Partnership owns mineral
interests and royalty interests in 41 states and 64 onshore basins in
the continental United States. The Partnership also owns and selectively
participates as a non-operating working interest partner in established
development programs, primarily on its mineral and royalty holdings. The
Partnership expects that its large, diversified asset base and
long-lived, non-cost-bearing mineral and royalty interests will result
in production and reserve growth, as well as increasing quarterly
distributions to its unitholders.

Forward-Looking Statements

This news release includes forward-looking statements. All statements,
other than statements of historical facts, included in this news release
that address activities, events, or developments that the Partnership
expects, believes, or anticipates will or may occur in the future are
forward-looking statements. Terminology such as "will," "may," "should,"
"expect," "anticipate," "plan," "project," "intend," "estimate,"
"believe," "target," "continue," "potential," the negative of such
terms, or other comparable terminology often identify forward-looking
statements. Except as required by law, Black Stone Minerals undertakes
no obligation, and does not intend, to update these forward-looking
statements to reflect events or circumstances occurring after this news
release. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this news
release. All forward-looking statements are qualified in their entirety
by these cautionary statements. These forward-looking statements involve
risks and uncertainties, many of which are beyond the control of Black
Stone Minerals, which may cause the Partnership’s actual results to
differ materially from those implied or expressed by the forward-looking
statements. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are
not limited to, those summarized below:

• the Partnership’s ability to complete the transactions described in
  this press release;
• the Partnership’s ability to execute its business strategies;
• the volatility of realized oil and natural gas prices;
• the level of production on the Partnership’s properties;
• regional supply and demand factors, delays, or interruptions of
  production;
• the Partnership’s ability to replace its oil and natural gas reserves;
  and
• the Partnership’s ability to identify, complete, and integrate
  acquisitions.

For an important discussion of risks and uncertainties that may impact
our operations, see our annual and quarterly filings with the Securities
and Exchange Commission, which are available on our website.

1 A net royalty acre (“NRA”) is the economic equivalent of
one surface acre leased at a 1/8th royalty

Contacts

Black Stone Minerals, L.P.
Brent Collins, 713-445-3200
Vice
President, Investor Relations
[email protected]