Black Stone continually seeks acquisition opportunities that will provide our targeted returns to our partners. These opportunities include fee mineral properties, overriding royalty interests and non-operated working interests. Over the course of Black Stone’s history, the company has spent approximately $955 million on acquisitions. Potential sellers include public and private companies, family partnerships, trusts and others. In all transactions Black Stone strives to accomplish the following:

• Negotiating a fair purchase price.
• Structuring a purchase to meet the seller’s expectations or specific needs (cash or alternative structures).
• Timely property evaluation, due diligence and closing.

Black Stone typically focuses on larger acquisitions with a component of producing income with a preference for a large mineral base. Black Stone can pursue properties with (1) long or short life reserves, (2) gas or oil reserves and (3) acreage that is concentrated in one area or diversified throughout several basins. Desired properties have the following characteristics:

• Minimum size of $5 million, with certain exceptions.
• Underlying production with history to support future income.
• Executive rights preferred in mineral transactions.
• Potential for reserve growth through leasing and drilling.

Black Stone’s mineral acquisition strategy is based on the premise that owners of large mineral positions should sell their properties if they do not actively explore or proactively lease them. By freeing up capital and resources through the financial evaluation of minerals, companies can focus on their core competencies, namely exploration and development. For mineral properties with large acreage positions, Black Stone can offer an attractive price due to the fact that:

• A diversified mineral footprint can be statistically significant.
• Economies of scale can be realized if properties overlap with Black Stone’s existing mineral holdings.
• We will invest time to actively manage the properties and seek to achieve their full potential.

If not willing to “actively manage” its property base, a mineral owner can receive an attractive offer from Black Stone allowing them to monetize the future value of its mineral holdings.