Dorchester Minerals, L.p. · NASDAQ:DMLP
Dorchester Minerals, L.p — Shareholder Meeting (May 2013)
41 slides from Dorchester Minerals, L.p's shareholder meeting presentation, May 13, 2013
Slide 1: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals Dorchester Minerals, LP Annual Meeting May 15, 2013
Slide 2: Forward-Looking Statements
Dorchester Minerals ‘SDAQ: DMLP Forward-Looking Statements Portions of this document may constitute "forward-looking statements" as defined by federal law. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or
Slide 3: Overview of 2012 Results
Dorchester Minerals Overview of 2012 Results Es: Reserves » Production » Distributions
Slide 4: Overview of 2012 Results
Dorchester Minerals Overview of 2012 Results
Slide 5: 2012 Activity
Dorchester Minerals ‘SDAQ: DMILI 2012 Activity Decreased activity in dry gas plays — Fayetteville Shale and Barnett Shale Increased activity in liquids-rich gas plays — Anadarko Basin Impactful development in oil plays — Bakken and Permian Basin Initial activity on partnership’s Marcellus acreage —
Slide 6: Overview of 2012 Results
Dorchester Minerals Overview of 2012 Results freee fy |
Slide 7: 2012 Reserves
Dorchester Minerals ‘SDAQ: DML! 2012 Reserves * Total Proved Reserves of 86.0 Bcfe on 12/31/2012 - All reserves are Proved Developed Producing (PDP) - Demonstrated history of positive revisions - Cumulative revisions since inception account for 103% of total reserves at year-end - Driving factors in
Slide 8: 2012 Reserves
Dorchester Minerals 2012 Reserves * Revisions to Reported PDP Reserves Equivalent Reserves (Bcfe) 100 Total Reserves 90 | eee 86.0 80 SS 2012 Revisions 70 60 50 74.9 2012 Pro Forma 12/31/2011 12/31/2012 12/31/2012 Reserves Pro Forma Reserves 8
Slide 9: 2012 Reserves
2012 Reserves Dorchester Minerals ‘SDAQ: DMLP * Composition of DMLP Reserves Geographic Breakdown Rockies wen 5% — im Hugoton 24% Gulf Coast 10% Fayetteville Shale 11% Royalty-NPI Split Equivalent Reserves (Bcfe) Royalty NPI 9
Slide 10: Overview of 2012 Results
Dorchester Minerals Overview of 2012 Results ee 10
Slide 11: 2012 Production
Dorchester Minerals ‘SDAQ: DMLP 2012 Production * Total Production of 13.5 Bcfe -— 80% of total production was gas and plant products, 20% oil and condensate - High quality properties + Diverse portfolio > Low decline rate Historical Production Geographic Breakdown Daily Production (Mcfed) Mid- Rock
Slide 12: 2012 Production
Dorchester Minerals 2012 Production ¢ Diverse Sources of Production — New plays have replaced declines in legacy assets - Opportunities for production growth in mature basins Daily Equivalent Rate (Mcfed) 40,000 35,000 Bakken 30,000 Barnett 25,000 Fayetteville Miscellaneous 20,000 Mid-Continent 15,0
Slide 13: Overview of 2012 Results
Dorchester Minerals Overview of 2012 Results 13
Slide 14: 2012 Distributions
Dorchester Minerals ‘SDAQ: DMLP 2012 Distributions * Cash Distributions Paid in Calendar 2012 — Reflects Q4 2011 to Q3 2012 activity Royalty NPI Other Revenue Revenue Revenue $47.2 MM $10.5 MM $4.8 MM Total Revenue $62.5 MM LP GP Distribution Distribution $54.9 MM $2.0 MM 14
Slide 15: 2012 Distributions
Dorchester Minerals 2012 Distributions * Distribution Components and Prices - Royalty properties contributed 75% to total 2012 distributions -— Gross Revenue > 30% gas & plant product sales, 61% oil sales, 9% other revenue — Relative contributions from NPI’s has decreased > heavily weighted to gas D
Slide 16: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals Dorchester Minerals, LP Annual Meeting May 15, 2013 16
Slide 17: Appendix
Dorchester Minerals Appendix 17
Slide 18: Portfolio Overview
Portfolio Overview * Geographically Diverse — 574 counties in 25 states — 378,000 net mineral acres (2,308,000 gross acres) - Varying NPRI’s, ORRI’s and leasehold interests in an additional 860,000 gross acres - Majority of acreage is undeveloped - Wide geographic spread including most major produci
Slide 19: 2012 Reserves
Dorchester Minerals 2012 Reserves * History of Positive Reserve Revisions — Cumulative Reserve Revisions have exceeded 100% of Current Reserves Equivalent Reserves (Bcfe) 120 110 100 + 90 80 70 5 60 | 50 5 40 30 20 10 (0) -10 109.5 _ Initial Reserves Acquisitions Total Reserves 2003-2012 Production
Slide 20: 2012 Production
Dorchester Mi nerals 2012 Production ¢ Historical Production Profile - Portfolio has shifted toward royalties over time, but net profits interests have a new source of production growth after payout of the Minerals NPI Daily Equivalent Rate (Mcfed) 40,000 Minerals 35,000 NPI Payout 30,000 || 25,000
Slide 21: 2012 Production
Dorchester Minerals ‘SDAQ: DMILI 2012 Production ¢ Plant Products Contribution - Plant Products (PP) includes all production revenue other than that from oil and gas - Volume may be reported in barrels, cubic feet, gallons, bushels, etc. (or none) - Equivalent PP volumes are estimated based on the r
Slide 22: Royalty Overview
Royalty Overview ¢ Leasing and Development Activity Consummated 66 leases/elections on 3,382 net acres in 24 counties/ parishes in seven states Lease bonus payments up to $7,000/acre Initial royalty terms up to 25% Identified 404 new wells on royalty properties in eight states Fayetteville Shale act
Slide 23: Net Profits Interests Overview
Dorchester Minerals Net Profits Interests Overview ¢ NPI Provides LP Exposure to Working Interest Potential Without Generating UBTI Four NPI groups were created at the time of formation in 2003 and two additional NPI groups created subsequently - Capitalize on strong negotiating position to capture
Slide 24: Net Profits Interests Production
Dorchester Minerals Net Profits Interests Production * Relative contribution of NPI’s has shifted over time — Hugoton accounted for 96% of NPI production at inception > 57% at year-end 2012 — Minerals NPI volumes prior to Q3 2011 were not included in DMLP results Daily Equivalent Rate (Mcfed) 20,000
Slide 25: Net Profits Interests Production
Dorchester Minerals ‘SDAQ: DMLP Net Profits Interests Production * Non-Hugoton NPI Production — NewAreas: MT Bakken (2005), Fayetteville (2006), ND Bakken (2008), Permian (2010) - Additional participation opportunities in West Texas and Bakken Daily Equivalent Rate (Mcfed) 6,000 ~ OMiscellaneous Bak
Slide 26: Minerals NPI
Dorchester Minerals Minerals NPI ¢ What is the Minerals NPI and How Does it Work? Upon its formation, Dorchester Minerals, LP (DMLP, the public partnership and owner of the mineral interests) provided for future development opportunities onits undeveloped mineral interests by the creation of the Min
Slide 27: Minerals NPI
Minerals NPI ¢ What is the Minerals NPI and How Does it Work? DMLP Y Lease to third party for royalty and optional |———+| Participation right Dorchester Minerals ‘SDAQ: DMLP Participation right assigned to DMOLP Royalty (100% of cash flow) J 7 DMOLP pays 100% of costs and receives 100% ofrevenue plu
Slide 28: Minerals NPI
Minerals NPI ¢ Minerals NPI Cash Flow — Inception through Q1 2013 Cumulative Revenue Cumulative Expense (LOE, taxes, etc) Dorchester Minerals ‘SDAQ: DMLP $49.6 MM ($9.9 MM) Cumulative Operating Cumulative Operating Income Cumulative Investment/Commitments Income exceeded Cumulative Investments in Q3
Slide 29: Fayetteville Shale
Dorchester Minerals Fayetteville Shale ¢ Eastern Arkoma Basin — Northern Arkansas - DMLP owns 23,336 gross/11,464 net acres in 196 sections — June 2006: Leased 9,800 net acres in 179 sections for 25% royalty with optional participation in 111 sections (subject to Minerals NPI) — June 2011: Leases co
Slide 30: Fayetteville Shale
Fayetteville Shale * 2012 Production Results -— 374 wells producing at year-end 2012 2.9 MMcfd (WI) 2.9 MMefd (RI) - Produced 2.3 Bef in 2012 52% from wells completed since January 2011 5.8 MMcfd Net Daily Production (Mcfd) Normalized Production Rate (Mcfd) 8,000 10,000 7,000 {| SNet RI Production —
Slide 31: 2012 Reserves
Dorchester Minerals *« 2012 Reserves - Total reserves of 9.1 Befe on 12/31/2012 > 53% royalty — Year-over-year reserves declined 18% + Lower natural gas price assumption negatively affected economic limits + Reduced activity compared to previous years — only 46 wells added in 2012 Gas Reserves (Bcf)
Slide 32: Bakken/Three Forks
Dorchester Minerals ‘SDAQ: DMLP Bakken/Three Forks ¢ Williston Basin — Northwestern North Dakota - Diversified acreage position + 70,390 gross acres/8,905 net acres - Operators: Continental, COP, EOG, Hess, Marathon, Oasis - Elected non-consent option in 285 wells to date (193 in pay status) + Avera
Slide 33: Six County Core Area
¢ Six County Core Area - Current development activityon DMLP acreage + 273wells completed as producers + 56 wells in various stages of drilling or completion (or confidential) > 361 wells/permits + 32 wells permitted and/or proposed by operator - Eight rigs currently drilling on DMLP acreage Selecte
Slide 34: Hugoton Operated Properties
Dorchester Minerals ‘SDAQ: DMLP Hugoton Operated Properties ¢ Hugoton Field - Oklahoma Panhandle & SW Kansas — 2012 production within 1.8% of projection - Year-over-year production decline of 6.0% with a 2.4% decrease in net reserves - World-class asset but limited upside potential — Ongoing well op
Slide 35: Appalachia
Appalachia Devonian Shale — New York and Pennsylvania Concentrated acreage position * 32,395 gross acres/24,494net acres + 70% in Allegany and Steuben Counties, NY Challenging political environment in New York has limited activity relative to Pennsylvania Potential targets + Upper Devonian oil (shal
Slide 36: Appalachia
Dorchester Minerals Appalachia ¢ Southern Tier NY & Northern Tier PA NY ———_] Se 7 *-aenlaer| a | % Allegany | Steuben geuiuna Ld 4 Cattaraugus 13,216nma_ | 4,714nma Chemung | Tioga ? 308nma | 163nma Clearfield 579nma _—~ [@ Horizontal Marcellus Wells & Active Permits] 36
Slide 37: Distributions
Dorchester Minerals {SDAQ: DNL! Distributions * Distribution Determinations - Period from October 2011 through September 2012 ($ thousands) Limited General Partners Partner 4% of Net Cash Receipts from Royalty Properties $1,855 96% of Net Cash Receipts from Royalty Properties $44,520 $————- 1% of Ne
Slide 38: Management Ownership
Dorchester Minerals ‘SDAQ: DML! Management Ownership ¢ Alignment of GP and LP interests - GP has no incentive distribution rights — fixed sharing ratio -— Management's LP interest exceeds its GP interest — Not incentivized to make dilutive transactions 2012 Cash Distributions $56.9 MM 3.5% 2 meme NV
Slide 39: Effects of Operating Leverage
Dorchester Minerals ‘SDAQ: DMLP Effects of Operating Leverage * Royalty Interest vs. NPI Royalty Interest Net Profits Interest Production Volume 1,000 Mcf 1,000 Mcf Gas Price $4.00/Mcf $4.00/Mcf Revenue $4,000 $4,000 Fixed Production Costs ($0) ($1,000) Operating Income $4,000 $3,000 Net Interest 25
Slide 40: Royalty Cash Receipts
Dorchester Minerals Royalty Cash Receipts ¢ Long delay between production and cash distribution - Cash receipts extend over multiple months due to adjustments, releases, etc. - Prices can change dramatically between production and payment of distribution — Example of atypical cash receipt cycle : -
Slide 41: Peer Group Comparison
Dorchester Minerals Peer Group Comparison ¢ Market Performance — Pure royalties lack operating leverage inherent in net profits interests > Less volatility - Outperformance in low price environment (mid-2009) due to lower fixed cost structure 5-Year Normalized Returns (distributions reinvested) 250