Item 1.01 Entry into a Material Definitive Agreement.
Noble Purchase and Sale Agreement
On
November 22, 2017, Black Stone Minerals Company, L.P. (BSMC), a Delaware limited partnership and wholly owned subsidiary of Black Stone Minerals, L.P. (the Partnership), a Delaware limited partnership, entered into a
Purchase and Sale Agreement (the Noble Purchase Agreement) by and among Noble Energy Inc., a Delaware corporation (Noble), Noble Energy Wyco, LLC, a Delaware limited liability company (Wyco), and Rosetta Resources
Operating LP, a Delaware limited partnership (Rosetta and together with Noble, and Wyco, collectively, the Asset Sellers), and Noble Energy US Holdings, LLC, a Delaware limited liability company (Noble Holdings
and together with the Asset Sellers, collectively, the Sellers) pursuant to which, on November 28, 2017 (the Closing Date), BSMC (i) purchased all of the Asset Sellers respective right, title, and interest in
and to certain fee mineral interests and other
non-cost-bearing
royalty interests and (ii) purchased one hundred percent (100%) of the issued and outstanding securities of Samedan Royalty, LLC, a Delaware
limited liability company, from Noble Holdings (such acquisition described in (i) and (ii) above, the Noble Acquisition). The Noble Acquisition included approximately 1.1 million gross (140,000 net) mineral acres, 380,000 gross
acres of
non-participating
royalty interests, and 600,000 gross acres of overriding royalty interests collectively spread over 20 states with significant concentrations in Texas, Oklahoma, and North Dakota.
The purchase price for the Noble Acquisition was approximately $335 million in cash. To fund the purchase price, the Partnership
used (i) the approximate $300 million proceeds from the Private Placement (as defined below) and (ii) approximately $35 million from borrowings under its revolving credit facility.
The Noble Purchase Agreement contains customary representations, warranties, and covenants of BSMC and the Sellers. BSMC, on the one hand, and
the Sellers, on the other hand, agreed to indemnify each other and their shareholders, members, officers, directors, employees, agents, lenders, advisors, representatives, accountants, attorneys, and consultants against certain losses resulting from
breaches of their respective representations, warranties, and covenants, subject to certain negotiated limitations and survival periods set forth in the Noble Purchase Agreement. The closing of the Noble Acquisition was subject to satisfaction of
customary closing conditions.
The effective date of the Noble Acquisition for purposes of determining adjustments to the purchase price
was 12:01 a.m. Central Standard Time, on July 1, 2017.
The foregoing description of the Noble Purchase Agreement does not purport to
be complete and is qualified in its entirety by reference to the text of the Noble Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Series B Preferred Unit Purchase Agreement
On November 22, 2017, the Partnership entered into a Series B Preferred Unit Purchase Agreement (the Preferred Purchase
Agreement) with Mineral Royalties One, L.L.C., a Delaware limited liability company and affiliate of The Carlyle Group (the Purchaser). Pursuant to the Preferred Purchase Agreement, on the Closing Date, the Partnership issued and
sold in a private placement (the Private Placement) 14,711,219 Series B Cumulative Convertible Preferred Units representing limited partner interests in the Partnership (the Preferred Units) to the Purchaser for a cash
purchase price of $20.3926 per Preferred Unit (the Issue Price), resulting in proceeds to the Partnership of approximately $300 million. The closing of the Private Placement (the Closing) was subject to customary closing
conditions, including the concurrent closing of the Noble Acquisition. Proceeds from the Private Placement were used to partially fund the Noble Acquisition.
The Preferred Purchase Agreement contains customary representations, warranties, and covenants of the Partnership and the Purchaser. The
Partnership, on the one hand, and the Purchaser, on the other hand, agreed to indemnify each other and their respective officers, directors, managers, employees, agents, counsel, accountants, investment bankers, and other representatives against
certain losses resulting from breaches of their respective representations, warranties, and covenants, subject to certain negotiated limitations and survival periods set forth in the Preferred Purchase Agreement.
Pursuant to the Preferred Purchase Agreement, in connection with the Closing, Black Stone Minerals GP, L.L.C., the general partner of the
Partnership (the General Partner), executed Amendment No. 2 to First Amended and Restated Agreement of Limited Partnership of the Partnership (Amendment No. 2) to adopt the Supplemental Terms Annex B to the First
Amended and Restated Agreement of Limited Partnership of the Partnership (Annex B), which authorizes and establishes the rights and preferences of the Preferred Units. Amendment No. 2 and Annex B are described in more detail under
Item 5.03 of this Current Report on Form
8-K.
Pursuant to the Preferred Purchase Agreement, in connection with the Closing, the Partnership
agreed to enter into a Registration Rights Agreement (the Registration Rights Agreement) with the Purchaser, pursuant to which, among other things, the Partnership gives the Purchaser certain rights to require the Partnership to file and
maintain one or more registration statements with respect to the resale of the Preferred Units and the common units representing limited partner interests in the Partnership (Common Units) that are issuable upon conversion of the
Preferred Units (the Conversion Unit Registrable Securities and collectively with the Preferred Units, the Registrable Securities), and under certain circumstances, to require the Partnership to initiate underwritten
offerings for the Registrable Securities. The Registration Rights Agreement is described in more detail under the heading Registration Rights Agreement under Item 1.01 of this Current Report on Form
8-K.
The foregoing description of the Preferred Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of the Preferred Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated herein by
reference.
Registration Rights Agreement
On the Closing Date, in connection with the Closing, the Partnership entered into the Registration Rights Agreement with the Purchaser relating
to the registered resale of the Registrable Securities. Pursuant to the Registration Rights Agreement, the Partnership is required to use its commercially reasonable efforts to file a registration statement for such registered resale and to cause
the registration statement to become effective (i) with respect to the Conversion Unit Registrable Securities, no later than November 28, 2019 and (ii) with respect to the Preferred Units issued and sold under the Preferred Purchase
Agreement (the Preferred Unit Registrable Securities), no earlier than 180 days following the 66
th
month anniversary of the Closing Date and no later than 180 days following the
receipt of written request to effect such registration from the Purchaser, provided that the Purchaser owns at least $100 million of Preferred Unit Registrable Securities as of the date of such request. If the Partnership fails to cause such
registration statements to become effective by such dates, the Partnership will be required to pay certain amounts to the holders of the Registrable Securities as liquidated damages. In certain circumstances, and subject to customary qualifications
and limitations, the holders of Conversion Unit Registrable Securities will have piggyback registration rights on offerings initiated by certain other holders, and the Purchaser will have the right to request that the Partnership initiate up to four
Underwritten Offerings (as defined in the Registration Rights Agreement) of Registrable Securities. Generally, holders of Registrable Securities will cease to have rights under the Registration Rights Agreement on the fourth anniversary of the date
on which all Preferred Units have been converted into Common Units pursuant to Annex B, unless such rights cease earlier pursuant to the terms of the Registration Rights Agreement.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference
to the text of the Registration Rights Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form
8-K
and incorporated herein by reference.