DORCHESTER MINERALS, L.P.

Previous wording

This discussion, which presents our results of operations for the three and six months ended June 30, 2026 and 2025, 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 nine months ended September 30, 2026 and 2025, 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

As of June 30, 2026, we own a net profits overriding royalty interest (referred to as the “Net Profits Interest”, or “NPI”) in various properties owned by Dorchester Minerals Operating LP (the “Operating Partnership”), a Delaware limited partnership owned directly and indirectly by our General Partner. We receive a monthly payment from the NPI equaling 96.97% of the net profits actually realized by the Operating Partnership from these properties in the preceding month. In the event that costs, including budgeted capital expenditures, exceed revenues on a cash basis in a given month for properties subject to the Net Profits Interest, no payment is made, and any deficit is accumulated and reflected in the following month's calculation of net profit.

Current wording

As of September 30, 2026, we own a net profits overriding royalty interest (referred to as the “Net Profits Interest”, or “NPI”) in various properties owned by Dorchester Minerals Operating LP (the “Operating Partnership”), a Delaware limited partnership owned directly and indirectly by our General Partner. We receive a monthly payment from the NPI equaling 96.97% of the net profits actually realized by the Operating Partnership from these properties in the preceding month. In the event that costs, including budgeted capital expenditures, exceed revenues on a cash basis in a given month for properties subject to the Net Profits Interest, no payment is made, and any deficit is accumulated and reflected in the following month's calculation of net profit. In the event the NPI has a deficit of cumulative revenue versus cumulative costs, the deficit will be borne solely by the Operating Partnership.

Previous wording

From a cash perspective, as of June 30, 2026, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, of $10.4 million.

Current wording

From a cash perspective, as of September 30, 2026, the NPI was in a deficit of $4.7 million and had outstanding capital commitments, primarily in the Bakken region, of $20.6 million.

Previous wording

Global oil markets are contending with tariff impacts, geopolitical tensions, including the recent military conflict in Iran, and oil supply dynamics, including the evolving OPEC+ production strategy, potential constraints on Iranian, Russian, and Venezuelan oil exports, disruptions to the flow of oil through the Strait of Hormuz, and the withdrawal of the United Arab Emirates from OPEC and OPEC+. It is unclear how recent volatility in commodity prices will affect changes in North American production activity and oil producers are evaluating a range of scenarios in anticipation of oil price pressure in light of the foregoing. Gas producers could prove to be beneficiaries of potentially lower associated gas production in oil-weighted basins if oil production is curtailed. Larger, well-capitalized producers that comprise a greater portion of present North American shale production, are better able to withstand a broader range of commodity prices.

Current wording

Global oil markets are contending with tariff impacts, geopolitical tensions, including the ongoing military conflict in Iran, and oil supply dynamics, including the evolving OPEC+ production strategy, potential constraints on Iranian, Russian, and Venezuelan oil exports, disruptions to the flow of oil through the Strait of Hormuz, and the withdrawal of the United Arab Emirates from OPEC and OPEC+. It is unclear how recent volatility in commodity prices will affect North American production activity, and oil producers are evaluating a range of scenarios in anticipation of oil price pressure in light of the foregoing. Gas producers could prove to be beneficiaries of potentially lower associated gas production in oil-weighted basins if oil production is curtailed. Larger, well-capitalized producers that comprise a greater portion of present North American shale production are better able to withstand a broader range of commodity prices.

Previous wording

On July 31, 2026, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral and royalty interests totaling approximately 3,100 net royalty acres located in five counties across the Williston Basin in North Dakota in exchange for 835,958 common units representing limited partnership interests in the Partnership valued at $23.1 million and issued pursuant to the Partnership’s registration statement on Form S-4. At closing, in addition to conveying mineral and royalty interests to the Partnership, the contributors delivered funds to the Partnership in an amount equal to their cash receipts during the period from April 1, 2026 through June 30, 2026 of $3.6 million, which will be included in the calculation of the Partnership’s third quarter 2026 cash distribution to unitholders.

Current wording

On October 30, 2026, pursuant to a non-taxable contribution and exchange agreement with Hillside Exploration Assets, LLC, a Texas limited liability company (the “Contributor”), the Partnership acquired mineral and royalty interests totaling approximately 4,300 net royalty acres located in three counties across the Williston Basin in North Dakota in exchange for 1,250,000 common units representing limited partnership interests in the Partnership valued at $37.3 million and issued pursuant to the Partnership’s registration statement on Form S-4. At closing, in addition to conveying mineral and royalty interests to the Partnership, the Contributor delivered funds to the Partnership in an amount equal to its cash receipts during the period from July 1, 2026 through October 30, 2026 of $0.4 million, which will be included in the calculation of the Partnership’s fourth quarter 2026 cash distribution to unitholders.

Previous wording

On August 29, 2025, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 3,050 net royalty acres located in Adams County, Colorado in exchange for 915,694 common units representing limited partnership interests in the Partnership valued at $23.0 million and issued pursuant to the Partnership’s registration statement on Form S-4. We believe that the acquisition is considered complementary to our business. The transaction was accounted for as an acquisition of assets under U.S. GAAP. Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired. Final settlement net cash received of $4.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2026.

Current wording

On August 29, 2025, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 3,050 net royalty acres located in Adams County, Colorado in exchange for 915,694 common units representing limited partnership interests in the Partnership valued at $23.0 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 $1.2 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2025. Final settlement net cash received of $4.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2026.

Previous wording

Three and Six Months Ended June 30, 2026 as compared to Three and Six Months Ended June 30, 2025

Current wording

Three and Nine Months Ended September 30, 2026 as compared to Three and Nine Months Ended September 30, 2025

Previous wording

Our period-to-period changes in net income and cash flows from operating activities are principally determined by changes in oil and natural gas sales volumes and prices, and to a lesser extent, by capital expenditures deducted under the NPI calculation. Our portion of oil and natural gas sales volumes and average sales prices are shown in the following table. Oil sales volumes include volumes attributable to natural gas liquids and oil sales prices include natural gas liquids prices combined by volumetric proportions.

Current wording

Our portion of oil and natural gas sales volumes and average sales prices are shown in the following table. Oil sales volumes include volumes attributable to natural gas liquids and oil sales prices include natural gas liquids prices combined by volumetric proportions.

Previous wording

The increase in oil sales volumes attributable to our Royalty Properties from the second quarter of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells on legacy acreage in the Permian Basin, increased baseline production from legacy wells in the Permian Basin, and Rockies wells acquired in the third quarter of 2025. The increase in oil sales volumes attributable to our Royalty Properties from the first six months of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells on legacy acreage in the Permian Basin, and suspense releases on first time payments and increased baseline production from Rockies wells acquired in the third quarter of 2025, partially offset by decreased baseline production in the Permian Basin, particularly in the first quarter of 2026 compared to the same period of 2025, and lower suspense releases on new wells on legacy acreage in the Rockies in the first quarter of 2026 compared to the same period of 2025. The increase in natural gas sales volumes attributable to our Royalty Properties from the second quarter and first six months of 2025 to the same periods of 2026 is primarily a result of higher suspense releases on new wells on legacy acreage in the Permian Basin, and suspense releases on first time payments and increased baseline production from Rockies wells acquired in the third quarter of 2025, partially offset by decreased baseline production in the Permian Basin and lower suspense releases on new wells on legacy acreage in the Rockies in the first quarter of 2026 compared to the same period of 2025.

Current wording

The increase in oil sales volumes attributable to our Royalty Properties from the third quarter of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells on legacy acreage in the Permian Basin and Bakken region and increased baseline production in the Rockies and Bakken region from wells acquired in the third quarters of 2025 and 2026, respectively. The increase in oil sales volumes attributable to our Royalty Properties from the first nine months of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells and increased baseline production on legacy acreage in the Permian Basin and suspense releases on first time payments and increased baseline production from the Rockies wells acquired in the third quarter of 2025. Natural gas sales volumes attributable to our Royalty Properties remained relatively flat from the third quarter of 2025 to the same period of 2026 primarily as a result of decreased baseline production from legacy wells in the Permian Basin being largely offset by increased baseline production in the Rockies and Bakken region from wells acquired in the third quarters of 2025 and 2026, respectively. The increase in natural gas sales volumes attributable to our Royalty Properties from the first nine months of 2025 to the same period of 2026 is primarily a result of suspense releases on first time payments, particularly in the first quarter of 2026, and increased baseline production from the Rockies wells acquired in the third quarter of 2025, increased baseline production in the Bakken region from wells acquired in the third quarter of 2026, and higher suspense releases on new wells on legacy acreage in the Permian Basin, particularly during the first and second quarters of 2026, partially offset by decreased baseline production from legacy wells in the Permian Basin.

Previous wording

The increase in oil sales volumes attributable to our NPI properties from the second quarter of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells in the Permian Basin and increased baseline production in the Bakken region and Rockies, partially offset by decreased baseline production on legacy wells in the Permian Basin. The increase in oil sales volumes attributable to our NPI properties from the first six months of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells in the Permian Basin and Bakken region, increased baseline production in the Bakken region and Rockies, and the recognition of sales volumes from July 2021 through May 2025 associated with the $15.5 million of legal settlement proceeds received by the Operating Partnership in the first quarter of 2026 from resolution of ordinary course litigation affecting certain leasehold in Midland County, Texas, which is owned by the Operating Partnership and subject to the NPI. This increase was partially offset by decreased baseline production on legacy wells in the Permian Basin. The increase in natural gas sales volumes attributable to our NPI properties from the second quarter of 2025 to the same period of 2026 is primarily a result of increased baseline production in the Permian Basin, Bakken region, and Mid-Continent. The increase in natural gas sales volumes attributable to our NPI properties from the first six months of 2025 to the same period of 2026 is primarily due to the recognition of sales volumes from July 2021 through May 2025 associated with legal settlement proceeds noted above and increased baseline production in the Bakken region and Mid-Continent in the second quarter of 2026 compared to the same period of 2025, partially offset by decreased baseline production on legacy wells in the Permian Basin, particularly in the first quarter of 2026 compared to the same period of 2025.

Current wording

The increase in oil sales volumes attributable to our NPI properties from the third quarter of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells in the Permian Basin and Bakken region, partially offset by decreased baseline production on legacy wells in the Permian Basin. The increase in oil sales volumes attributable to our NPI properties from the first nine months of 2025 to the same period of 2026 is primarily a result of higher suspense releases on new wells in the Permian Basin and Bakken region, increased baseline production in the Bakken region, and the recognition of sales volumes from July 2021 through May 2025 associated with the $15.5 million of legal settlement proceeds received by the Operating Partnership in the first quarter of 2026 from resolution of ordinary course litigation affecting certain leasehold in Midland County, Texas, which is owned by the Operating Partnership and subject to the NPI. This increase was partially offset by decreased baseline production on legacy wells in the Permian Basin. The decrease in natural gas sales volumes attributable to our NPI properties from the third quarter of 2025 to the same period of 2026 is primarily a result of decreased baseline production in the Permian Basin and Bakken region and lower suspense releases on new wells in the Mid-Continent. The increase in natural gas sales volumes attributable to our NPI properties from the first nine months of 2025 to the same period of 2026 is primarily due to the recognition of sales volumes from July 2021 through May 2025 associated with legal settlement proceeds noted above and increased baseline production in the Bakken region and Mid-Continent, particularly in the second quarter of 2026 compared to the same period of 2025, partially offset by decreased baseline production on legacy wells in the Permian Basin, particularly in the first and third quarters of 2026 compared to the same periods of 2025.

Previous wording

Operating costs, including production taxes, attributable to our Royalty Properties increased 123% from the second quarter of 2025 to the same period of 2026 and 46% from the first six months of 2025 to the same period of 2026. This is primarily a result of higher proportionate oil production taxes due to higher oil sales revenue, higher post-production costs, such as compression, transportation, processing, and marketing, due to higher oil and natural gas sales volumes, and higher ad valorem taxes, partially offset by lower proportionate natural gas production taxes due to lower natural gas sales revenue.

Current wording

Operating costs, including production taxes, attributable to our Royalty Properties increased 15% from the third quarter of 2025 to the same period of 2026 and 34% from the first nine months of 2025 to the same period of 2026. The increase from the third quarter of 2025 to the same period of 2026 is primarily a result of higher proportionate oil production taxes due to higher oil sales revenue, and the increase from the first nine months of 2025 to the same period of 2026 is primarily a result of higher proportionate oil production taxes due to higher oil sales revenue, higher post-production costs, such as compression, transportation, processing, and marketing, due to higher oil and natural gas sales volumes, and higher ad valorem taxes.

Previous wording

Depreciation, depletion and amortization increased 8% from the second quarter of 2025 to the same period of 2026 and 17% from the first six months of 2025 to the same period of 2026. 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 decreased 8% from the third quarter of 2025 to the same period of 2026 and increased 8% from the first nine months of 2025 to the same period of 2026. 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 33% from the second quarter of 2025 to the same period of 2026. The increase is primarily attributable to higher professional services fees and increased compensation expenses, including an expanded Operating Partnership equity program designed for employee retention. General and administrative expenses increased 12% from the first six months of 2025 to the same period of 2026. The increase is primarily attributable to higher professional services fees and increased compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, partially offset by lower regulatory fees due to the Partnership’s S-4 filing in the first quarter of 2025.

Current wording

General and administrative expenses increased 9% from the third quarter of 2025 to the same period of 2026. The increase is primarily attributable to increased compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, partially offset by lower professional services fees. General and administrative expenses increased 11% from the first nine months of 2025 to the same period of 2026. The increase is primarily attributable to increased compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, and higher professional services fees, partially offset by lower regulatory fees due to the Partnership’s S-4 filing in the first quarter of 2025.

Previous wording

Net cash provided by operating activities increased 38% from the first six months of 2025 to the same period of 2026 primarily due to higher revenue receipts attributable to our Royalty Properties and higher NPI payment receipts, partially offset by lower lease bonus receipts and higher general and administrative expense payments.

Current wording

Net cash provided by operating activities increased 34% from the first nine months of 2025 to the same period of 2026 primarily due to higher revenue receipts attributable to our Royalty Properties, higher NPI payment receipts, and higher lease bonus receipts, partially offset by higher general and administrative expense payments.

Previous wording

Cash receipts attributable to our Royalty Properties during the second quarter of 2026 totaled $50.4 million. Approximately 66% of these receipts reflect oil sales during March 2026 through May 2026 and natural gas sales during February 2026 through April 2026, and approximately 34% 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 2026 were $70.37/bbl and $1.68/mcf, respectively.

Current wording

Cash receipts attributable to our Royalty Properties during the third quarter of 2026 totaled $37.0 million. Approximately 80% of these receipts reflect oil sales during June 2026 through August 2026 and natural gas sales during May 2026 through July 2026, and approximately 20% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the third quarter of 2026 were $68.53/bbl and $1.61/mcf, respectively.

Previous wording

Cash receipts attributable to the Partnership's NPI during the second quarter of 2026 totaled $16.6 million. Approximately 21% of these receipts reflect oil and natural gas sales during February 2026 through April 2026, and approximately 79% from prior sales periods including $15.5 million of proceeds from the previously announced settlement and mutual release agreement affecting certain leasehold in Midland County, Texas. The average realized prices for oil and natural gas sales cash receipts attributable to the NPI properties during the second quarter of 2026 were $67.87/bbl and $3.56/mcf, respectively.

Current wording

Cash receipts attributable to the Partnership's NPI during the third quarter of 2026 totaled $3.0 million. Approximately 50% of these receipts reflect oil and natural gas sales during May 2026 through July 2026, and approximately 50% from prior sales periods. The average realized prices for oil and natural gas sales cash receipts attributable to the NPI properties during the third quarter of 2026 were $79.29/bbl and $0.89/mcf, respectively.

Previous wording

The Partnership leases its office space at 3838 Oak Lawn Avenue, Suite 300, Dallas, Texas, through an operating lease (the “Office Lease”). The third amendment to our Office Lease was executed in April 2017 for a term of 129 months, beginning June 1, 2018 and expiring February 28, 2029. The fourth amendment to our Office Lease was executed in May 2026 for a term of 86 months, beginning March 1, 2029 and expiring April 30, 2036. Under the third and fourth amendments to the Office Lease, monthly rental payments range from $25,000 to $52,000. Future maturities of Office Lease liabilities representing monthly cash rental payment obligations are summarized in Note 7 to the unaudited condensed consolidated financial statements included in “Item 1 – Financial Statements” of this Quarterly Report.

Current wording

The Partnership leases its office space at 3838 Oak Lawn Avenue, Suite 300, Dallas, Texas, through an operating lease (the “Office Lease”). The third amendment to our Office Lease was executed in April 2017 for a term of 129 months, beginning June 1, 2018 and expiring February 28, 2029. The fourth amendment to our Office Lease was executed in May 2026 for a term of 86 months, beginning March 1, 2029 and expiring April 30, 2036. Under the third and fourth amendments to the Office Lease, monthly rental payments range from $25,000 to $52,000. Future maturities of Office Lease liabilities representing monthly cash rental payment obligations are summarized as follows:

Previous wording

Cash and cash equivalents totaled $72.5 million at June 30, 2026 and $41.9 million at December 31, 2025.

Current wording

Cash and cash equivalents totaled $55.7 million at September 30, 2026 and $41.9 million at December 31, 2025.