DORCHESTER MINERALS, L.P.

Previous wording

The following discussion contains forward-looking statements. For a description of limitations inherent in forward-looking statements, see page 1 of this Quarterly Report on Form 10-Q.

Current wording

The following discussion contains forward-looking statements. For a description of limitations inherent in forward-looking statements, see page 1 of this Quarterly Report.

Previous wording

This discussion, which presents our results of operations for the three months ended March 31, 2025 and 2024, should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes.

Current wording

This discussion, which presents our results of operations for the three and six months ended June 30, 2025 and 2024, should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes.

Previous wording

From a cash perspective, as of March 31, 2025, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $3.0 million.

Current wording

From a cash perspective, as of June 30, 2025, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $7.3 million.

Previous wording

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with West Texas Minerals LLC, a Delaware limited liability company, Carrollton Mineral Partners, LP, a Texas limited partnership, Carrollton Mineral Partners Fund II, LP, a Texas limited partnership, Carrollton Mineral Partners III, LP, a Texas limited partnership, Carrollton Mineral Partners III-B, LP, a Texas limited partnership, Carrollton Mineral Partners IV, LP, a Texas limited partnership, CMP Permian, LP, a Texas limited partnership, CMP Glasscock, LP, a Texas limited partnership, and Carrollton Royalty, LP, a Texas limited partnership (collectively, the “Contributors”), the Partnership acquired mineral, royalty, and overriding royalty interests in producing and non-producing oil and natural gas properties representing approximately 14,225 net mineral acres located in 14 counties across New Mexico and Texas in exchange for 6,721,144 common units representing limited partnership interests in the Partnership valued at $202.6 million and issued pursuant to the Partnership’s registration statements on Form S-4. Final settlement net cash received, net of capitalized transaction costs paid, of $1.9 million is included in the net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2025.

Current wording

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with West Texas Minerals LLC, a Delaware limited liability company, Carrollton Mineral Partners, LP, a Texas limited partnership, Carrollton Mineral Partners Fund II, LP, a Texas limited partnership, Carrollton Mineral Partners III, LP, a Texas limited partnership, Carrollton Mineral Partners III-B, LP, a Texas limited partnership, Carrollton Mineral Partners IV, LP, a Texas limited partnership, CMP Permian, LP, a Texas limited partnership, CMP Glasscock, LP, a Texas limited partnership, and Carrollton Royalty, LP, a Texas limited partnership (collectively, the “Contributors”), the Partnership acquired mineral, royalty, and overriding royalty interests in producing and non-producing oil and natural gas properties representing approximately 14,225 net mineral acres located in 14 counties across New Mexico and Texas in exchange for 6,721,144 common units representing limited partnership interests in the Partnership valued at $202.6 million and issued pursuant to the Partnership’s registration statements on Form S-4. Final settlement net cash received, net of capitalized transaction costs paid, of $2.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2025.

Previous wording

On March 28, 2024, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 1,485 net royalty acres located in two counties in Colorado in exchange for 505,369 common units representing limited partnership interests in the Partnership valued at $17.0 million and issued pursuant to the Partnership’s registration statement on Form S-4. At closing, in addition to conveying mineral interests to the Partnership, the contributors delivered funds to the Partnership in an amount equal to their cash receipts during the period from January 1, 2024 through March 25, 2024 of $4.0 million. The contributed cash of $4.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2024.

Current wording

On March 28, 2024, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 1,485 net royalty acres located in two counties in Colorado in exchange for 505,369 common units representing limited partnership interests in the Partnership valued at $17.0 million and issued pursuant to the Partnership’s registration statement on Form S-4. Contributed cash delivered at closing and final settlement net cash received, net of capitalized transaction costs paid, of $4.4 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2024.

Previous wording

Three Months Ended March 31, 2025 as compared to Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 as compared to Three and Six Months Ended June 30, 2024

Previous wording

The increase in oil sales volumes attributable to our Royalty Properties from the first quarter of 2024 to the same period of 2025 is primarily a result of higher suspense releases on new wells on legacy acreage, suspense releases on first time payments from properties acquired in the third quarter of 2024, and increased baseline production from legacy wells and wells acquired in the third quarter of 2024 in the Permian Basin and increased baseline production from wells acquired in the first and third quarters of 2024 in the Rockies, partially offset by lower suspense releases on new wells and decreased baseline production in the Bakken region. The increase in natural gas sales volumes attributable to our Royalty Properties from the first quarter of 2024 to the same period of 2025 is primarily a result of higher suspense releases on new wells on legacy acreage, suspense releases on first time payments from properties acquired in the third quarter of 2024, and increased baseline production from legacy wells and wells acquired in the third quarter of 2024 in the Permian Basin and increased baseline production from wells acquired in the first and third quarters of 2024 in the Rockies, partially offset by lower suspense releases on new wells in the Mid-Continent and East Texas.

Current wording

The decrease in oil sales volumes attributable to our Royalty Properties from the second quarter of 2024 to the same period of 2025 is primarily a result of lower suspense releases on new wells on legacy acreage and decreased baseline production from legacy wells, partially offset by suspense releases on first time payments and increased baseline production from Permian Basin properties acquired in the third quarter of 2024. The increase in oil sales volumes attributable to our Royalty Properties from the first six months of 2024 to the same period of 2025 is primarily a result of suspense releases on first time payments and increased baseline production from Permian Basin properties acquired in the third quarter of 2024, increased baseline production from Rockies wells acquired in the first and third quarters of 2024, and increased second quarter of 2025 baseline production from Permian Basin legacy wells, partially offset by lower suspense releases on new wells on legacy acreage in the Permian Basin in the second quarter of 2025. The increases in natural gas sales volumes attributable to our Royalty Properties from the second quarter and first six months of 2024 to the same periods of 2025 are primarily a result of suspense releases on first time payments and increased baseline production from Permian Basin properties acquired in the third quarter of 2024 and increased baseline production from wells acquired in the first and third quarters of 2024 in the Rockies, partially offset by lower suspense releases on new wells on legacy acreage in the Permian Basin in the second quarter of 2025 and lower suspense releases on new wells on legacy acreage and decreased baseline production on legacy wells in the Mid-Continent and East Texas.

Previous wording

The decrease in oil sales volumes attributable to our NPI properties from the first quarter of 2024 to the same period of 2025 is primarily a result of decreased baseline production in the Permian Basin and Bakken region and lower suspense releases on new wells in the Bakken region, partially offset by higher suspense releases on new wells in the Permian Basin. The decrease in natural gas sales volumes attributable to our NPI properties from the first quarter of 2024 to the same period of 2025 is primarily a result of decreased baseline production in the Bakken region and decreased Fayetteville Shale production due to higher prior period adjustments, partially offset by increased baseline production in the Permian Basin.

Current wording

The increase in oil sales volumes attributable to our NPI properties from the second quarter of 2024 to the same period of 2025 is primarily a result of higher suspense releases on new wells in the Permian Basin, partially offset by lower suspense releases on new wells in the Bakken region. The decrease in oil sales volumes attributable to our NPI properties from the first six months of 2024 to the same period of 2025 is primarily a result of decreased baseline production in the Permian Basin and Bakken region and lower suspense releases on new wells in the Bakken region, partially offset by higher suspense releases on new wells in the Permian Basin in the second quarter of 2025. Natural gas sales volumes attributable to our NPI properties remained flat from the second quarter of 2024 to the same period of 2025. The lack of change is primarily a result of higher suspense release on new wells in the Permian Basin, offset by decreased baseline production and lower suspense releases on new wells in the Mid-Continent and Bakken region and decreased Fayetteville Shale production in 2025 and higher prior period adjustments in 2024. The decrease in natural gas sales volumes attributable to our NPI properties from the first six months of 2024 to the same period of 2025 is primarily a result of decreased baseline production and lower suspense releases on new wells in the Mid-Continent and Bakken region and decreased Fayetteville Shale production in 2025 and to higher prior period adjustments in 2024, partially offset by increased suspense releases on new wells in the Permian Basin.

Previous wording

Operating costs, including production taxes, increased 70% from the first quarter of 2024 to the same period of 2025. The increase is primarily a result of higher proportionate production taxes due to higher oil and natural gas sales revenue, higher proportionate post-production costs, such as compression, transportation, processing, and marketing, due to higher oil and natural gas sales volumes, and higher ad valorem taxes attributable to our Royalty Properties.

Current wording

Operating costs, including production taxes, decreased 28% from the second quarter of 2024 to the same period of 2025. The decrease is primarily the result of lower proportionate production taxes and post-production costs, such as transportation, due to lower oil sales volumes and revenue. Operating costs, including production taxes, increased 13% from the first six months of 2024 to the same period of 2025. The increase is primarily a result of higher proportionate production taxes due to higher oil and natural gas sales revenue, higher proportionate post-production costs, such as compression, transportation, processing, and marketing, due to higher oil and natural gas sales volumes, and higher ad valorem taxes attributable to our Royalty Properties.

Previous wording

Depreciation, depletion and amortization increased 142% from the first quarter of 2024 to the same period of 2025. Depletion is the amount of cost basis of oil and natural gas properties at the beginning of a period attributable to the volume of reserves extracted during such period, calculated on a units-of-production basis. Estimates of proved developed producing reserves are a major component in the calculation of depletion. We adjust our depletion rate each quarter for significant changes in our estimates of oil and natural gas reserves, including recent acquisitions and suspense releases on new wells.

Current wording

Depreciation, depletion and amortization increased 92% from the second quarter of 2024 to the same period of 2025 and 116% from the first six months of 2024 to the same period of 2025. Depletion is the amount of cost basis of oil and natural gas properties at the beginning of a period attributable to the volume of reserves extracted during such period, calculated on a units-of-production basis. Estimates of proved developed producing reserves are a major component in the calculation of depletion. We adjust our depletion rate each quarter for significant changes in our estimates of oil and natural gas reserves, including recent acquisitions and suspense releases on new wells.

Previous wording

General and administrative expenses increased 32% from the first quarter of 2024 to the same period of 2025. The increase is primarily a result of increased legal and professional service fees, higher regulatory filing fees due to the Partnership’s S-4 registration statement filing in the first quarter of 2025, and higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention.

Current wording

General and administrative expenses increased 11% from the second quarter of 2024 to the same period of 2025. The increase is primarily a result of increased data services costs and higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, partially offset by decreased legal fees. General and administrative expenses increased 23% from the first six months of 2024 to the same period of 2025. The increase is primarily a result of increased legal fees in the first quarter of 2025, higher regulatory filing fees due to the Partnership’s S-4 registration statement filing in the first quarter of 2025, increased data service costs, and higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention.

Previous wording

Net cash provided by operating activities increased 19% from the first quarter of 2024 to the same period of 2025 primarily due to higher revenue receipts attributable to our Royalty Properties, net of production taxes and operating expenses, partially offset by lower NPI payment receipts and higher general and administrative expenses.

Current wording

Net cash provided by operating activities increased 11% from the first six months of 2024 to the same period of 2025 primarily due to higher revenue receipts attributable to our Royalty Properties, net of production taxes and operating expenses and higher lease bonus receipts, partially offset by lower NPI payment receipts and higher general and administrative expenses.

Previous wording

Cash receipts attributable to our Royalty Properties during the first quarter of 2025 totaled $34.2 million. Approximately 68% of these receipts reflect oil sales during December 2024 through February 2025 and natural gas sales during November 2024 through January 2025, and approximately 32% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the first quarter of 2025 were $63.00/bbl and $2.19/mcf, respectively.

Current wording

Cash receipts attributable to our Royalty Properties during the second quarter of 2025 totaled $26.6 million. Approximately 73% of these receipts reflect oil sales during March 2025 through May 2025 and natural gas sales during February 2025 through April 2025, and approximately 27% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the second quarter of 2025 were $59.60/bbl and $2.46/mcf, respectively.

Previous wording

Cash receipts attributable to the Partnership's NPI during the first quarter of 2025 totaled $4.8 million. Approximately 74% of these receipts reflect oil and natural gas sales during November 2024 through January 2025, and approximately 26% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the NPI properties during the first quarter of 2025 were $58.83/bbl and $1.97/mcf, respectively.

Current wording

Cash receipts attributable to the Partnership's NPI during the second quarter of 2025 totaled $3.1 million. Approximately 66% of these receipts reflect oil and natural gas sales during February 2025 through April 2025, and approximately 34% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the NPI properties during the second quarter of 2025 were $60.73/bbl and $3.09/mcf, respectively.

Previous wording

Our primary sources of capital, on both a short-term and long-term basis, are our cash flows from the Royalty Properties and the NPI. Our partnership agreement requires that we distribute quarterly an amount equal to all funds that we receive from Royalty Properties and NPIs (other than cash proceeds received by the Partnership from a public or private offering of securities of the Partnership) less certain expenses and reasonable reserves. Additional cash requirements include the payment of oil and natural gas production and property taxes not otherwise deducted from gross production revenues and general and administrative expenses incurred on our behalf and allocated to the Partnership in accordance with the partnership agreement. Because the distributions to our unitholders are, by definition, determined after the payment of all expenses actually paid by us, the only cash requirements that may create liquidity concerns for us are the payment of expenses. Because many of these expenses vary directly with oil and natural gas sales prices and volumes, we anticipate that sufficient funds will be available at all times for payment of these expenses. See Note 5 to the unaudited condensed consolidated financial statements included in “Item 1 – Financial Statements” of this Quarterly Report on Form 10-Q for additional information regarding cash distributions to unitholders.

Current wording

Our primary sources of capital, on both a short-term and long-term basis, are our cash flows from the Royalty Properties and the NPI. Our partnership agreement requires that we distribute quarterly an amount equal to all funds that we receive from Royalty Properties and NPIs (other than cash proceeds received by the Partnership from a public or private offering of securities of the Partnership) less certain expenses and reasonable reserves. Additional cash requirements include the payment of oil and natural gas production and property taxes not otherwise deducted from gross production revenues and general and administrative expenses incurred on our behalf and allocated to the Partnership in accordance with the partnership agreement. Because the distributions to our unitholders are, by definition, determined after the payment of all expenses actually paid by us, the only cash requirements that may create liquidity concerns for us are the payment of expenses. Because many of these expenses vary directly with oil and natural gas sales prices and volumes, we anticipate that sufficient funds will be available at all times for payment of these expenses. See Note 5 to the unaudited condensed consolidated financial statements included in “Item 1 – Financial Statements” of this Quarterly Report for additional information regarding cash distributions to unitholders.

Previous wording

Cash and cash equivalents totaled $41.5 million at March 31, 2025 and $42.5 million at December 31, 2024.

Current wording

Cash and cash equivalents totaled $36.5 million at June 30, 2025 and $42.5 million at December 31, 2024.

Previous wording

As of March 31, 2025, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our Annual Report for the year ended December 31, 2024.

Current wording

As of June 30, 2025, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our Annual Report.