Excerpt:

Activity Update

Rig Activity

As of December 31, 2020, Black Stone had 38 rigs operating across its acreage position, a 31% increase to rig activity on the Company's acreage as of September 30, 2020 and below the 95 rigs operating on the Company's acreage as of December 31, 2019.

Shelby Trough Development Update

As announced in June 2020, Black Stone entered into an incentive agreement with XTO Energy Inc. ("XTO"). The agreement allowed for royalty relief on 13 existing drilled but uncompleted wells ("DUCs") in San Augustine County, Texas provided the wells were turned to sales by March 31, 2021. As of January 18, 2021, XTO had turned all 13 DUCs to sales. Black Stone is also working with XTO on a mutually beneficial agreement that will help facilitate Black Stone attracting another operator to develop its acreage in San Augustine.

In Angelina County, Texas, Aethon Energy (“Aethon”) has successfully spud the initial two program wells under the development agreement signed in May of 2020. Under the terms of that agreement, Aethon will drill a minimum of four wells on Black Stone acreage in the first program year ending in September 2021, escalating to a minimum of 15 wells per program year starting with the third program year.

Austin Chalk Update

Black Stone is currently working with several operators to test and develop areas of the Austin Chalk in East Texas where the Company has significant acreage positions. Recent drilling results have shown that advances in fracturing and other completion techniques can dramatically improve well performance from the Austin Chalk formation. In February of 2021, Black Stone entered into an agreement with a large, publicly traded independent operator by which the operator will undertake a program to drill, test, and complete wells in the Austin Chalk formation on certain of the Company’s acreage in East Texas. If successful, the operator has the option to expand its drilling program over a significant acreage position owned and controlled by the Company.

Black Stone is also working with existing operators across its East Texas Austin Chalk position to encourage new development utilizing current completion techniques.

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