The W.T. Carter properties, which were held in the Carter family since the 1880s, include approximately 200,000 fee mineral acres principally in East Texas. In 1998, these properties were rolled up into Black Stone Minerals as owners sought diversification, professional management and future growth. The acquisition of the former Kirby Lumber Company mineral estate from Santa Fe Energy in March 1992 was Black Stone’s first third-party acquisition and expanded its existing core area in East Texas. The Kirby acquisition contains over 400,000 additional gross mineral acres.

W.T. Carter / Kirby's success has been driven primarily by the discovery of five major producing fields. W.T. Carter & Bro., a predecessor to Black Stone, discovered the Double A Wells Field in 1984 and continued to develop the field until 1996, when it sold its working interest in the field to Comstock while retaining the mineral rights. Mariner discovered the Pine Island Bayou/Sandy Lake Field in 1994 in Jefferson County, Texas. Anadarko/UPR discovered Brookeland Field across Jasper, Newton, Polk and Tyler Counties, Texas. The field continues to remain very active. Two other major fields are the Constitution and East Sour Lake Fields, both located in Hardin County, Texas.

In early 1999, Black Stone acquired the mineral assets of Southern Minerals Corporation comprised of approximately 520,000 acres in southern Mississippi, New Mexico and Texas. SMC represents diversified mineral interests whose success has not been driven by any single well or unit. The most significant operator on SMC thus far has been focused on the Poplarville Field in Pearl River County, Mississippi. Substantial production is also derived from Hugoton Basin reserves in the Texas Panhandle.

In 1999, Black Stone purchased approximately 47,000 acres concentrated in the Rio Grande Valley of South Texas and also including acreage in 12 other states. The Four S properties represented family holdings and to accommodate the needs of the seller, a creative structure was used that included partial cash and partial equity. Production has principally been from the Deep Frio formation in the Santa Ana/Marks Field in South Texas, including Hidalgo County.

In the late 1990s Prize Energy Resources, L.P. sought to purchase a package of working interests and minerals from Pioneer Natural Resources. Through an ongoing relationship between the management teams of Black Stone and Prize and to assist Prize in making the Pioneer acquisition, Black Stone negotiated to purchase the minerals from Prize upon their closing with Pioneer. In September 1999, Black Stone acquired approximately 1.7 million gross mineral acres in 30 states in a tax-advantaged transaction with 66% of the purchase price paid in cash and the remainder in a like-kind exchange of properties. The Prize acquisition provided a significant addition to Black Stone’s mineral footprint and includes long-life producing royalty and working interests in over 2,000 wells as well as non-producing fee mineral acreage. Most production from Prize has come from properties in Kansas, Oklahoma and Texas. Drilling has been focused in the Hugoton Field, Stanton County, Kansas and the Hansford Field, Hansford and Ochiltree Counties, Texas.

In December 2000 Black Stone acquired 1.5 million gross mineral acres in an all cash transaction. The Prince properties include interests in over 2,200 wells and are characterized by long-life production stemming from a diverse set of properties in Michigan, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and 23 other states. The package also included all fee mineral properties formerly held by the Wiser Oil Company. The largest unit in the Prince acquisition is Cedar Hills producing from the Red River Formation in Bowman County, North Dakota.

In 2001, Kempner Minerals, L.P. contributed its mineral assets to Black Stone in exchange for partnership units. The Kempner fee mineral properties encompass approximately 69,000 gross acres throughout Texas and include interests in over 60 wells. The most prolific well drilled on Kempner is the Staley-Mangold Unit #2 oil well originally drilled by Stephens & Johnson in Archer County, Texas in 1937. This well along with other Kempner wells in Archer County continue to produce oil and account for a significant portion of the acquisition’s current value.

Black Stone acquired approximately 670,000 gross mineral acres in September 2001 in an all-cash transaction. In 2000, this mineral package was targeted for acquisition by Black Stone but Cortez Oil & Gas acquired the properties at the time. Approximately one year later, Cortez sold the mineral interests, royalties and minor working interest properties to Black Stone. The Cortez acquisition holds interests in over 1,200 wells characterized mostly by mid- to long-life production. The mineral acreage covers 17 states but is concentrated in Michigan, Oklahoma and Texas and in the Permian Basin, Mid-Continent and the Eastern United States.

In September 2002, Black Stone Natural Resources I (“Fund I”) acquired 660,000 gross mineral acres from Ocean Energy in an all-cash transaction. The package was comprised of a diverse spread of properties located in 22 states and including over 3,000 wells but concentrated in the Mid-Continent and Texas. The properties had a strong current cash flow component in addition to significant upside potential through future drilling in prolific areas. Black Stone was able to complete the acquisition at a highly competitive price and the seller, who was in the process of being purchased by Devon, was able to receive a higher price for the assets than Devon had assigned.

Fund I closed its second acquisition on January 14, 2004, acquiring over 2.8 million acres from Toreador Resources Corp. in an all-cash transaction. Toreador had used its royalty and fee mineral properties as a source of funding for its international operations before deciding to monetize them in a sale to Black Stone. The timely nature of this transaction for Toreador, which was in need of greater financial flexibility, allowed Black Stone to be opportunistic and pay an attractive price for these fee mineral properties. The assets, which include the Matador Ranches in West Texas, consisted of over 600 wells located in 16 states and concentrated in Alabama, Mississippi and Texas.

In mid-2004 Black Stone purchased the Pure Resources (“Pure”) mineral estate previously owned by International Paper. The assets cover an estimated 5.6 million acres in 10 states but are concentrated in the Gulf Coast. The package included large, contiguous acreage blocks that had largely remained unleased and thus were highly attractive to Black Stone because of the potential to induce activity across the minerals. In order to provide the seller flexibility to attempt to create a 1031 tax-advantaged transaction, Black Stone delayed closing for nine months from the effective date. The acquisition was the third and final transaction for Fund I, which was fully deployed upon closing, and the first for Black Stone Natural Resources II (“Fund II”), Black Stone’s second institutionally-supported partnership. The balance of the purchase price was acquired by additional affiliated single-purpose investment vehicles.

In 2003, Black Stone solicited Kaiser Francis Oil Company (“KFOC”) to sell its mineral and royalty properties in the DJ Basin, which consists of seven pay zones, is long-lived and is the largest field in Colorado. In June 2004, KFOC held an auction for a group of properties and allowed separate bids for the working interests and the ORRIs. On October 1, 2004, Fund II acquired overriding royalty interests in approximately 120 producing wells and lands located in three counties.

In late 2004, Fund II closed on the acquisition of a package of mineral interests in four producing units, covering 2,560 acres in Vernon Field, Jackson Parish, Louisiana. Fund II bought 351 acres carved out of the four units and royalties covering all of the units. At the time of the acquisition, 21 wells were known to be producing and another five wells commenced production soon after closing. Anadarko Petroleum Corporation, the original operator, sold its Vernon properties to EXCO Resources in early 2007.

In mid-2005, Fund II and an affiliated single-purpose investment vehicle executed a term royalty agreement with Energy Corporation of America (“ECA”). The agreement provides for a 90 percent royalty interest in 312 long-life, producing gas wells located in the Appalachian Basin in West Virginia, Pennsylvania and Kentucky. Black Stone also acquired a 50 percent royalty interest in 181 development wells that were subsequently drilled by ECA in Kentucky and West Virginia. The term of the agreement is for 20 years, after which the interests will revert back to ECA. Although not originally contemplated, ECA has drilled many of the development wells to a deeper formation called the Marcellus Shale.

In 2005, Fund II closed the purchase of a package of ORRIs and minor non-operated working interests located in the Antrim Shale in Michigan from O’Neal Resources. The package consisted primarily of ORRIs in multiple units covering approximately 9,000 acres and producing from the Antrim Shale in northeast Michigan. At the time of the acquisition, the majority of production was from 60 gas wells within two units, Churchill Point and Comstock Hills.

In June 2007, Dominion Exploration & Production, the largest operator of O’Neal wells, sold its interest to HighMount Exploration & Production, a subsidiary of Loews Corporation.

In January 2006, Fund II purchased 2,300 mineral acres over the Barnett Shale in Johnson County, Texas. Although all of the acreage was held by production, a large number of proved undeveloped locations remained as well as additional upside potential from infill drilling. The acquisition included 19 PDP wells, 5 wells drilling, 16 PUD locations and 6 probable locations, almost all based on 1,000’ spacing. Chesapeake Energy, the sole operator on the properties, has drilled most of the acreage on 500’ spacing, and some operators in the Barnett Shale have announced 250’ spacing for some areas.

In October 2006, Fund II closed on the purchase of an undivided 75% interest in 640 acres in Tyler County, Texas. The acreage is located in the central western Texas portion of the Austin Chalk play and all 640 acres are leased to Plains Exploration & Production Company. The acquisition was strategic in that it was directly adjacent to existing assets and acreage.

In November 2006, Fund II purchased mineral interests in 26,000 non-producing acres in Amite, Adams, Franklin and Jefferson Counties, Mississippi in proximity of the Floyd Marine Shale play.

In November 2006, Fund II purchased interests in approximately 48,000 mineral acres in Denton, Tarrant, Johnson, Hood, Parker, Palo Pinto, Somerville, Bosque and Erath Counties, Texas, in Cimarron and Texas Counties, Oklahoma and in Conway County, Arkansas. At the time of purchase, approximately 53% of the acreage was leased to operators including Devon, Burlington, EOG and El Paso. In addition, there were approximately 320 PDP wells principally producing from the Barnett Shale with interests varying from 0.005% to 10.38%.

In December 2006, Fund II closed on the purchase of a package of non-operated working interests in Carthage Field, Panola County, Texas. The acquisition included interests in 176 PDP, 10 PDNP and 20 PUD wells primarily operated by Chevron and BP. Although most wells had targeted the Cotton Valley in the past, in 2008 BP announced plans to drill a well targeting the Haynesville Shale.

In December 2006 Fund II closed on the purchase of overriding royalty interests covering 20,800 gross acres in Newark East Field, Johnson County, Texas. The acquisition included 147 PDP wells, 11 PDNP wells, and 183 PUD wells. Chesapeake Energy is the sole operator on the properties. The ORRIs in part cover acreage acquired in the Mize transaction in January 2006 thus increasing Fund II’s interest in those properties.

In 2007, Fund II and an affiliated special purpose vehicle purchased a large package of mineral interests, overriding royalty interests and non-operated working interests in the Rockies. The properties include approximately 150,000 acres of federal and private lands located in Wyoming and several other Western states. The assets’ value is comprised of 96% ORRIs and 4% working interests. The majority of the acquisition value is derived from the Pinedale Anticline Field located in Sublette County, Wyoming. In Pinedale, 75 PDP wells were producing at acquisition and significant drilling opportunities exist as the majority of the acreage has been drilled on 40 or 80 acre spacing. Shell, BP and Williams are the operators for the Pinedale properties. Additional assets include ORRIs in the Prairie Dog / Recluse Field, the Madden Deep Unit and Coal Gulch, all located in Wyoming.

In 2007 Fund II purchased a package of non-operated working interests in Southeast Poteau Field in Le Flore County, Oklahoma. These coal-bed methane properties are situated under approximately 7,621 gross, 2,600 net contiguous acres and are focused on the Hartshorne. At acquisition, there were 14 vertical and 54 horizontal PDP wells and 33 PUDs. Vectra was the last acquisition for Fund II.

In December 2007 Black Stone purchased a diversified package of non-operated working interests in 15 states and primarily in the Rockies, Permian Basin, Mid-Continent, Eastern Texas and Northern Louisiana regions. Approximately 255 different companies operate the wells. The acquisition was the first for Black Stone Natural Resources III (“Fund III”), our third institutionally-supported fund.

Beginning in July 2008, Black Stone began acquiring on behalf of Fund III undivided mineral interests from various mineral owners in the northern portion of the Barnett Shale oil play in Montague County, Texas. Ultimately 10,677 gross acres (1,277 net) were purchased in the play. At the time of acquisition, the acreage was in an undeveloped area of the play but drilling was expanding in its direction.

On November 20, 2008 Fund III closed the purchase of a 12.0% interest in 218,219 net mineral acres in the Appalachian basin. The seller was Pennsylvania Mineral Group, LLC. The diversified mineral position is located across approximately 40 counties primarily in Pennsylvania, West Virginia and Maryland. While current production is limited, approximately 85% of the acreage is currently leased to operators including Samson, Chief, Carrizo, Chesapeake, Range and Marathon.

On January 9, 2009, Fund III and an affiliated single-purpose entity completed the acquisition of TLW Investments, LLC (“TLWI”), a diversified non-operated working interest portfolio. The properties include interests in approximately 6,000 wells and are located primarily in Oklahoma, Texas, New Mexico, Arkansas and Louisiana. TLWI was owned 100% by Thomas L. Ward, co-founder of Chesapeake Energy Company and now CEO of SandRidge Energy, Inc.