Dorchester Minerals, L.p. · NASDAQ:DMLP
Dorchester Minerals, L.p — Shareholder Meeting (May 2016)
42 slides from Dorchester Minerals, L.p's shareholder meeting presentation, May 17, 2016
Slide 1: Annual Meeting
Dorchester Minerals, LP NASDAQ: DMLP. Dorchester Minerals, LP Annual Meeting May 18, 2016
Slide 2: Forward-Looking Statements
Dorchester Minerals, LP NASDAQ: DMLP. Forward-Looking Statements Portions of this documentmay constitute, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Ac
Slide 3: Presentation Outline
Dorchester Minerals, LP NASDAQ: DMLP. Presentation Outline * Overview of 2015 Distributions Minerals NPI Status Reserves & Production Property Discussion . .
Slide 4: Overview of 2015
Dorchester Minerals, LP NASDAQ: DMLP. Overview of 2015 * Challenging Price Environment — Dramatic decline in resource play activity — Attractiveness of WI/NPI participation is minimal at best + Midland Basin Position is a Bright Spot — Drilling and completion efficiencies result in higher recoveries
Slide 5: 2015 Distributions
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Distributions * Cash Distributions Paid in Calendar 2015 — Reflects Q4 2014 to Q3 2015 activity Royalty NPI Revenue Revenue $34.4 MM $8.4 MM Total Revenue $43.6 MM LP GP Distribution Distribution $35.4 MM $1.2 MM Other Revenue $0.8 MM Total Expenses $7.0 MM
Slide 6: 2015 Distributions
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Distributions * Components and Prices — Royalty properties contributed 79% to total 2015 LP distributions — Gross Revenue > 38% gas sales, 53% oil & NGL sales, 9% KS divestiture & other - Minerals NPI contributed to Q4 2015 distribution which was paid in Q1
Slide 7: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI ¢ Activity from August 2013 through March 2016 — Reached surplus in September 2015 for the first time since July 2013 — NPI payments totaling $1.5MM for Sept 2015, Oct 2015, Feb 2016 and Mar 2016 — March 2016 payment to be included in the Q2 2016 di
Slide 8: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI * Inception-To-Date Activity through March 2016 Cumulative Revenue $112.7MM Outstanding Capital Commitments Cumulative Expense (LOE, taxes, etc.) _($ 26.3MM) Cumulative Operating Income $86.4MM By Play Cumulative CAPEX Spent ($ 72.9MM) Bakken ($ 5.7
Slide 9: 2015 Reserves
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Reserves * Total Proved Reserves of 83.4 Bcfe on 12/31/2015 All reserves are Proved Developed Producing (PDP) Demonstrated history of positive revisions Cumulative revisions since inception account for 154% of total reserves at year-end Driving factors incl
Slide 10: 2015 Reserves
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Reserves * Revisions to Reported PDP Reserves Equivalent Reserves (Bcfe) 100 90 | 80 70 60 50 40 duction 12.6 Befe 83.4 Total Reserves 2015 Revisions 77.6 2015 Pro Forma 12/31/2014 Reserves 12/31/2015 Pro Forma 12/31/2015 Reserves 10
Slide 11: 2015 Reserves
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Reserves * Composition of Proved Reserves — Royalty reserves increased from 60% at YE 2014 to 62% at YE 2015 Geographic Breakdown Royal: PIS Equivalent Reserves (Bcfe) 70 60 Permian Basin 50 Barnett Shale 31% 40 o% Mid. 30 es Hugoton 20 20% South TX! 40 Gul
Slide 12: 2015 Production
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Production « Natural Gas Production — Production trend reflects reduced activity in dry gas plays and natural reservoir declines Daily Gas Rate (Mcfd) 100,000 ‘Sale of Kansa: Hugoton Ops- 10,00 Started reporting oe Plant Product = 1,000 + 2006 2007 2008 200
Slide 13: 2015 Production
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Production * Oil and Plant Products Production — Stable base production from large, mature Permian oil fields — Recent Bakken declines have been partially offset by new development in Permian Daily Oil Rate (bopd) Daily Plant Products Rate (boepd) 10,000 |
Slide 14: 2015 Production
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Production * Contribution from Diverse Sources — New plays have replaced declines in legacy assets — Opportunities for production growth in mature basins Daily Equivalent Rate (Mcfed) pj mia. South TX! 35,000 | conten GufCoatt T% 30,000 25,000 20,000 15,000
Slide 15: Net Profits Interests Production
Dorchester Minerals, LP NASDAQ: DMLP. Net Profits Interests Production * Relative contribution of NPIs has shifted over time — Hugoton accounted for 96% of NPI production at inception > 43% in Q4 2015 — Minerals NPI volumes prior to Q3 2011 were not included in DMLP results Daily Equivalent Rate (Mc
Slide 16: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI * Production by Product — Gas production has declined since 2012, but oil production has increased by over 250% during the same period — Decreased Bakken activity led to oil decline in 2015 Daily Oil Rate (boepd) Daily Gas Rate (Mcfd) Daily Plant Pr
Slide 17: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI * Natural Gas Production by Area — Drygas from Fayetteville has dominated historical production — High-BTU associated gas from the Bakken/Permian has increased in recent years Daily Equivalent Rate (Mcfed) 5,000 Other Mid-Continent Fayetteville 4,00
Slide 18: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI * Oil and Plant Products Production by Area — Production spike in late 2014 was a result of multi-well pads in Bakken — Reduction of working interest participation in Permian (2014) and Bakken (2015) Daily Equivalent Rate (boepd) 1,400 Other 1,200 +
Slide 19: Bakken/Three Forks
Dorchester Minerals, LP NASDAQ: DMLP. Bakken/Three Forks Williston Basin — 70,390 gross ac (8,905 net ac) — 2015 exit rate > 770 boepd (73% NPI) from 565 wells — 32 wells producing but not in pay — 38 wells drillingWOC/confidential — Bakken rig count dropped from 181 at YE 2014 to 27 in May 2016 Zer
Slide 20: Core Midland Basin
Dorchester Minerals, LP NASDAQ: DMLP. Core Midland Basin « Wolfcamp/Spraberry NPI Production (boepd) — 229,000 gross ac (11,500 net ac) sa Participation — Unleased at some depth in numerous 400 GNon-Consent Legacy tracts 300 "e wre 2009 2010 2011 2012 2013 2014 2015 Royalty Production (boepd) 500 Ho
Slide 21: Core Midland Basin
Dorchester Minerals, LP NASDAQ: DMLP. Core Midland Basin * Glasscock County Example — 10,240 gross ac (1,120 net ac) with average NRI of 1.688% — Horizontal activity on 4 of 16 sections RSP Permian Calverley 9-4 (8 wells) + 4 wells producing - in pay + 2.wells drilling/WOC + 2.wells permitted not sp
Slide 22: Core Midland Basin
Dorchester Minerals, LP NASDAQ: DMLP. Core Midland Basin * Midland County Example — 2,749 gross ac (412 net ac) with average NRI of 1.875% — Produced 518,000 boe from six wells in first four months Pioneer Natural Res. Preston 5 (24 wells) + 6 wells producing NOT in pay + 10 wells driliing)WOC + 8 w
Slide 23: Annual Meeting
Dorchester Minerals, LP NASDAQ: DMLP. Dorchester Minerals, LP Annual Meeting May 18, 2016 23
Slide 24: Appendix
Dorchester Minerals, LP NASDAQ: DMLP. Appendix 24
Slide 25: Portfolio Overview
Dorchester Minerals, LP NASDAQ: DMLP. Portfolio Overview * Geographically Diverse — 574 counties in 25 states — 377,000 net mineral acres (2,307,000 gross acres) — Varying NPRI’s, ORRI’s and leasehold interests in an additional 859,000 gross acres — Majority of acreage is undeveloped —deep rights un
Slide 26: 2015 Reserves
Dorchester Minerals, LP NASDAQ: DMLP 2015 Reserves * History of Positive Reserve Revisions — Cumulative Reserve Revisions have exceeded 100% of Current Reserves Equivalent Reserves (Bcfe) 106.5 __ Initial Reserves 100 Acquisitions 3 Total Loy Reserves 80 5 60 2003-2015 40 Production ii (151.7 Befe)
Slide 27: 2015 Production
Dorchester Minerals, LP NASDAQ: DMLP 2015 Production Portfolio Has Shifted Over Time 2003-2012 > Royalties increased from 48% to 60% due to mineral acquisitions, new drilling on legacy properties, and natural declines in Hugoton field 2013-2014 > Royalties decreased to 52% due to large WI in Bakken/
Slide 28: 2015 Production
Dorchester Minerals, LP NASDAQ: DMLP. 2015 Production « Plant Products Contribution — Plant Products (PP) includes all production revenue other than that from oil and gas — Volumes may be reported in barrels, cubic feet, gallons, bushels, etc. (or none) — Equivalent PP volumes are calculated from to
Slide 29: Net Profits Interests Overview
Dorchester Minerals, LP NASDAQ: DMLP. Net Profits Interests Overview * NPI Provides Exposure to Working Interest Potential Witioat Generating UBTI Currently five NPI groups - Capitalize on strong negotiating position to capture additional value — Leverage information franchise — Working Interests de
Slide 30: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. 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 on its undeveloped mineral interests by the
Slide 31: Minerals NPI
Dorchester Minerals, LP NASDAQ: DMLP. Minerals NPI + What is the Minerals NPI and How Does it Work? DMLP I Lease to third party for — = Participation right royalty andoptional [|-——p> assigned oe SOLD Participation right Y Y DMOLP pays 100% of costs Royalty and receives 100% of revenue (100% of cash
Slide 32: Non-Consent/Non-Participation
Dorchester Minerals, LP Non-Consent/Non-Participation + Texas — Unleased mineral owner backs in for full working interest after operator recovers 100% of costs NRI 100% 100% WI 50% 100% NRI to DMOLP’ 0% 0% 100% 200% 300% North Dakota ‘ Costs Recovered — Unleased mineral owner receives 16% royalty an
Slide 33: Non-Consent/Non-Participation
Dorchester Minerals, LP NASDAQ: DMLP. Non-Consent/Non-Participation Texas — Unleased mineral owner backs in for full working interest after operator recovers 100% of costs Selected Texas Nic Paid Out © Average Average Counties Well Count WellCount BPONRI APO NRI Ector 63 28 000% | 43.065% Gaines 16
Slide 34: Williston Basin
Dorchester Minerals, LP NASDAQ: DMLP * Williston Basin — 70,390 gross ac (8,905 net ac) in six core North Dakota counties Well Average Average Count BPONRI APO NRI Completed as Producers 97 | 0.874% | 2.096% DrillingiCompletion (orconfidential) | 38 | 1.9947% | 1.711% Permitted AND Proposed ° : = Pe
Slide 35: Bakken/Three Forks
Dorchester Minerals, LP NASDAQ: DMLP. Bakken/Three Forks « Non-Consent Elections — A Look Back — Payout depends on actual CAPEX spent, production, oil prices, etc. — Numerous wells likely to payout in the future > cannot predict how many or when Cumulative Production (BOE) 800,000 700,000 Back-in WI
Slide 36: Fayetteville Shale
Dorchester Minerals, LP NASDAQ: DMLP. Fayetteville Shale * Eastern Arkoma Basin NPI Production (Mofd) 4,000 Last new Wi well Sept 2014 — 23,336 gross ac (11,464 net ac) in 196 sections 3,000 — 487 wells producing at year-end - 2015 exit rate > 3.4 MMcfd (43% WI) 2000 — Rig Count dropped to zero in 2
Slide 37: Hugoton Operated Properties
Dorchester Minerals, LP NASDAQ: DMLP. Hugoton Operated Properties * Hugoton Field - Oklahoma Panhandle — Divested Kansas operations in Sept 2014 — average net sales of 2.8 MMcfd — 2015 production 1% above YE 2014 projection — Year-over-year production decline of 5% with a 3% decrease in net reserves
Slide 38: Royalty Cash Receipts
Dorchester Minerals, LP NASDAQ: DMLP. 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 a typical cash
Slide 39: Management Ownership
Dorchester Minerals, LP NASDAQ: DMLP. 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 3.3% Mgmt GP $1.2 MM Mgmt LP is 3.5 Mgmt L
Slide 40: Distributions
Dorchester Minerals, LP NASDAQ: DMLP. Distributions * Distribution Determinations — Period from October 2014 through September 2015 ($ thousands) Limited General Partners Partner 4% of Net Cash Receipts from Royalty Properties $——— $1,124 96% of Net Cash Receipts from Royalty Properties $26,986 1% o
Slide 41: Peer Group Comparison
Dorchester Minerals, LP NASDAQ: DMLP. Peer Group Comparison « Market Performance — Pure royalties lack operating leverage inherent in net profits interests > Less volatility — Outperformance in low price environment due to lower fixed cost structure 5-Year Normalized Returns (distributions reinveste
Slide 42: Annual Meeting
Dorchester Minerals, LP NASDAQ: DMLP. Dorchester Minerals, LP Annual Meeting May 18, 2016