Dorchester Minerals, L.p. · NASDAQ:DMLP
Dorchester Minerals, L.p — Shareholder Meeting (May 2019)
36 slides from Dorchester Minerals, L.p's shareholder meeting presentation, May 15, 2019
Slide 1: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals, L.P. DMLP NASDAQ Dorchester Minerals, LP ANNUAL MEETING May 15, 2019 DMLP NASDAQ
Slide 2: Forward-Looking Statements
Dorchester Minerals, L.P. DMLP NASDAQ Forward-Looking Statements Portions of this document may 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 A
Slide 3: Outline
OUTLINE • Observations and Trends • Distributions • Minerals NPI Activity • Production and Reserves • Property Discussion • Acquisition • Summary DMLP NASDAQ
Slide 4: Observations and Trends
Dorchester Minerals, L.P. DMLP NASDAQ Observations and Trends Increased Volatility Based on Many Factors • Production Volumes Pad Operations Drilling & Completion M&A and operational consolidation Reduced rig count Investment community focused on capital discipline and free cash flow resul
Slide 5: 2018 Distributions
Dorchester Minerals, L.P. DMLP NASDAQ 2018 Distributions Cash Distributions Paid in Calendar 2018 • Reflects Q4 2017 thru Q3 2018 activity Composition of 2018 Revenues Royalty Net Profits Lease Bonus Revenues Interests & Other Millions $ $49.4 Payments Revenues 50 $49.4 MM $9.3 MM $5.5 MM 45 40 35 3
Slide 6: 2018 Distributions: Components and Prices
Dorchester Minerals, L.P. DMLP NASDAQ 2018 Distributions Components and Prices • Cumulative DMLP distributions of $812 MM ($27.53/unit) from inception through 2018 • Royalty properties contributed 77% to total 2018 Revenues • Gross Revenue 73% oil & liquids sales, 19% gas sales, 8% other LP Distri
Slide 7: Minerals NPI
Dorchester Minerals, L.P. DMLP NASDAQ Minerals NPI Activity from August 2013 through March 2018 • NPI Payments to DMLP for trailing 12 months through March 2019 total $7.9MM • NPI deficits in 2018 due to new Bakken capital commitments Balance ($ Millions) NPI Payments 2014 2015 2016 2017 2018 2019 7
Slide 8: Minerals NPI: Trailing Months Activity
Dorchester Minerals, L.P. DMLP NASDAQ Minerals NPI Trailing 12 Months Activity through March 2019 • Trailing 12 months operating margin of 68% • NPI was in deficit for 5 out of past 12 months Bakken 3/31/19 Capital Commitments Trailing 12 Months Revenue $26.2 MM of $8.2 MM Trailing 12 Months Expense
Slide 9: 2018 NPI Net Operating Income
Dorchester Minerals, L.P. DMLP NASDAQ 2018 NPI Net Operating Income NPI contributions to distributions are not proportionate to production • Oil from Bakken and Permian represent the majority of Net Operating Income • Natural gas from Fayetteville and Hugoton are much smaller contributors due to low
Slide 10: Total Production
Dorchester Minerals, L.P. DMLP NASDAQ Total Production • Oil production increased by 168% between 2013 and 2018 • Gas production decreased by 28% between 2013 and 2018 Daily Gas Rate (Mcfd) Daily Oil Rate (boed) 1,000,000 10,000 100,000 1,000 10,000 100 1,000 10 2013 2014 2015 2016 2017 2018 2019 No
Slide 11: Royalty and NPI Production
Dorchester Minerals, L.P. DMLP NASDAQ Royalty and NPI Production Royalty Production NPI Production • Oil was driven by robust Midland Basin • Oil was driven by Bakken participation development and contributions from Permian APO WI • Gas decline is suppressed by associated • Gas production is predomi
Slide 12: Composition of Production
Dorchester Minerals, L.P. DMLP NASDAQ Composition of Production Contribution from Diverse Sources • New plays have replaced declines in legacy assets • Opportunities for production growth in mature basins Daily Oil Rate (boed) Daily Gas Rate (Mcfd) 4,000 30,000 25,000 3,000 20,000 2,000 15,000 10,00
Slide 13: 2018 Reserves
Dorchester Minerals, L.P. DMLPNASDAQ 2018 Reserves • Total Proved Reserves of 98.5 Bcfe on 12/31/2018 • All reserves are Proved Developed Producing (PDP) • Demonstrated history of positive revisions new plays, infill drilling, and new technology • Year‐end reserves exceeded initial 2003 reserves b
Slide 14: 2018 Reserve Composition
Dorchester Minerals, L.P. DMLPNASDAQ 2018 Reserve Composition • Permian and Bakken comprise 92% of total oil reserves • Hugoton and Permian comprise 48% of total gas reserves • Permian comprises 46% of total plant product reserves Geographic Breakdown Royalty‐NPI Split Equivalent Reserves (Bcfe) Bak
Slide 15: 2018 Reserve Revisions
Dorchester Minerals, L.P. DMLP NASDAQ 2018 Reserve Revisions • Midland Basin was a major driver of upward oil revisions • Permian activity partially offset natural declines in conventional gas reserves Equivalent Reserves (Bcfe) 110 Total Natural Gas Reserves (Bcf) 2018 Prod. 98.5 100 13.9 Bcfe Rese
Slide 16: Bakken/Three Forks
Dorchester Minerals, L.P. DMLP NASDAQ Bakken/Three Forks • 83,600 gross ac (10,442 net ac) in six core ND counties • Majority of mineral interests are unleased • Year‐end 2018 PDP reserves of 1.67 MMboe (RI & WI) Well Average Average Count APO GWI APO NRI Completed/Producing 730 1.864% 1.920% Drilli
Slide 17: Bakken/Three Forks
Dorchester Minerals, L.P. DMLP NASDAQ Bakken/Three Forks • 2018 exit rate 1,095 boed (74% NPI) • 14 participation elections YTD 2019 • Rig count decreased from 60 in May 2018 to 54 in May 2019 • Production has increased despite drop in rigs due to operational efficiencies Well Count Daily Producti
Slide 18: Permian Basin
Dorchester Minerals, L.P. DMLP NASDAQ Permian Basin DMLP Acquisition Note: In some cases the 2019 Acquisition shapefiles may reflect the unit outlines rather than individual ownership tracts. 18
Slide 19: Permian Basin
Dorchester Minerals, L.P. DMLP NASDAQ Permian Basin • Permian volumes have shifted dramatically from Legacy Permian properties on Central Basin Platform to Midland Basin • Delaware Basin is a source of growing production 2008 Net Royalty Revenue ($MM) 2018 Net Royalty Revenue ($MM) 7.00 7.00 Midland
Slide 20: Midland Basin
Dorchester Minerals, L.P. DMLP NASDAQ Midland Basin Royalty Production (boed) Wolfcamp/Spraberry 1,600 • 251,000 gross ac (15,440 net ac) 1,400 Horizontal Wells • Unleased at some depths in numerous tracts 1,200 Vertical Wells 1,000 800 600 400 200 0 2012 2013 2014 2015 2016 2017 2018 2019 NPI Produ
Slide 21: Delaware Basin
Dorchester Minerals, L.P. DMLP NASDAQ Delaware Basin Wolfcamp / Bone Springs • 13,538 gross ac (911 net ac) located in Loving, Reeves and Ward counties, Texas and Lea County, New Mexico • 640 gross ac of ORRI’s • Majority of tracts are leased at 1/4 royalty • Prospective in multiple zones within the
Slide 22: Delaware Basin: Winkler County Example
Dorchester Minerals, L.P. DMLP NASDAQ Delaware Basin Winkler County Example • Wolfcamp / Bone Springs • Varying undivided mineral interests in 6,400 gross BULLET 27‐12 1H acres in Block 27 • 90% leased/HBP with average NRI of 8.940% • Majority of eastern wells are drilled awaiting completion resul
Slide 23: Q1 2019 Acquisition
Dorchester Minerals, L.P. DMLP NASDAQ Q1 2019 Acquisition • Producing and nonproducing mineral, royalty and net profits interests • Diversified mineral portfolio ‐ 76,000 net acres in 172 counties in 14 states • Issued 2,400,000 LP units to sellers Bakken/Three Forks (ND & MT) 1,700 net mineral acre
Slide 24: Q1 2019 Acquisition
Dorchester Minerals, L.P. DMLPNASDAQ Q1 2019 Acquisition • 1,300 net acres in McKenzie Co. ND core area • Ongoing MB and TF1 development with significant upside potential in TF2 IP > 7,000 boepd Well Count Completed/Producing 266 DMLP Drilling/DUC/Confidential 6 Acquisition Permitted (Q1 2019) 7 Act
Slide 25: Our Goal and Our Principles
Dorchester Minerals, L.P. DMLP NASDAQ Our Goal and Our Principles We Want to: • Assemble and actively manage a portfolio of properties that will enable unitholders to benefit from multiple commodity price and development cycles We will be: • Conscientious about G&A • Aligned • UBTI‐Free We are: • No
Slide 26: Appendix
APPENDIX DMLP NASDAQ
Slide 27: 2018 Reserves
Dorchester Minerals, L.P. DMLP NASDAQ 2018 Reserves History of Positive Reserve Revisions • Cumulative Reserve Revisions have exceeded 100% of Current Reserves • Production has exceeded initial reserves by 96.9 Bcfe Equivalent Reserves (Bcfe) 120 94.0 Initial Reserves 98.5 Total Reserves 100 80 60 2
Slide 28: Royalty Liquids Production
Dorchester Minerals, L.P. DMLP NASDAQ Royalty Liquids Production • Underlying year‐over‐year decline of 23% excluding 2018 wells • Legacy production declined 10% in last 6 months of 2018 Daily Liquids Rate (boed) 10,000 Total Royalty Production 1,000 Royalty Production from wells producing as of 12/
Slide 29: Minerals NPI Production by Product
Dorchester Minerals, L.P. DMLPNASDAQ Minerals NPI Production by Product • Added 94 new wells in 2018 located in North Dakota and Texas • Since Year‐end 2016 gas production has been flat, while oil production increased by 80% • Oil increase due to Bakken participation and Permian APO activity Daily G
Slide 30: Hugoton Operated Properties
Dorchester Minerals, L.P. DMLP NASDAQ Hugoton Operated Properties Hugoton Field – Oklahoma Panhandle • Divested Kansas operations in Sept 2014 – average net sales of 2.8 MMcfd • Ongoing well optimization and cost‐saving initiatives, but limited upside potential Daily Gas Rate (Mcfd) Daily Oil Rate (
Slide 31: Price Differentials
Dorchester Minerals, L.P. DMLP NASDAQ Price Differentials • Comparison of highest contributing Basins’ realized prices to NYMEX monthly averages. Realized Oil Price Realized Gas Price $100 $6 $90 $5 $80 $70 $4 $60 $50 $3 $40 $2 $30 $20 $1 $10 $0 $0 Aug‐18 Nov‐18 Dec‐18 Aug‐18 Nov‐18 Dec‐18 Jun‐18 Ju
Slide 32: Non-Consent/Non-Participation
Dorchester Minerals, L.P. DMLP NASDAQ 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 by Operator • Unleased mineral owner
Slide 33: Non-Consent/Non-Participation
Dorchester Minerals, L.P. DMLP NASDAQ Non-Consent/Non-Participation Texas • Unleased mineral owner backs in for full working interest after operator recovers 100% of costs Selected Texas Total N/C Paid Out Average Average Counties Well Count Well Count BPO NRI APO NRI Howard 33 7 0.000% 2.405% Ector
Slide 34: Net Royalty Acres?
Dorchester Minerals, L.P. DMLP NASDAQ Net Royalty Acres? Complex mineral ownership is not well represented by Net Royalty Acres • Royalty rates and lease status vary by depth • Royalty rates vary by contract • Single section example from Upton Co. Floating NPRI Mineral Interest Spraberry burdening 1
Slide 35: Management Ownership
Dorchester Minerals, L.P. DMLP NASDAQ 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 4.0 % Mgmt GP $2.3 MM Mgmt LP is 2.9X 11.5 %
Slide 36: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals, L.P. DMLP NASDAQ Dorchester Minerals, LP ANNUAL MEETING May 15, 2019 DMLP NASDAQ