Dorchester Minerals, L.p. · NASDAQ:DMLP
Dorchester Minerals, L.p — Shareholder Meeting (May 2014)
42 slides from Dorchester Minerals, L.p's shareholder meeting presentation, May 12, 2014
Slide 1: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals Dorchester Minerals, LP Annual Meeting May 14, 2014
Slide 2: Forward-Looking Statements
Dorchester Minerals 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 should under
Slide 3: Overview of 2013 Results
Dorchester Minerals Overview of 2013 Results Activity » Reserves » Production » Distributions
Slide 4: Dorchester Minerals
Dorchester Minerals
Slide 5: 2013 Activity
Dorchester Minerals 2013 Activity Decreased activity in dry gas plays — Fayetteville Shale and Barnett Shale Sustained Bakken activity — Transition to infield development and downspacing Expanding Permian activity — Increased vertical and initial horizontal development Evolving strategy in the Miner
Slide 6: Overview of 2013 Results
Dorchester Minerals Overview of 2013 Results Sas
Slide 7: 2013 Reserves
Dorchester 2013 Reserves Total Proved Reserves of 91.0 Bcfe on 12/31/2013 All reserves are Proved Developed Producing (PDP) Demonstrated history of positive revisions Cumulative revisions since inception account for 117% of total reserves at year-end Driving factors including new plays, field extens
Slide 8: 2013 Reserves: Revisions to Reported PDP Reserves
Dorchester Minerals NRSDAO! 2013 Reserves ¢ Revisions to Reported PDP Reserves Equivalent Reserves (Bcfe) 100 90 80 70 + 60 50 40 - 73.4 91.0 Total Reserves 2013 Revisions 2013 Pro Forma 12/31/2012 12/31/2013 12/31/2013 Reserves Pro Forma Reserves 8
Slide 9: 2013 Reserves: Composition of Proved Reserves
2013 Reserves * Composition of Proved Reserves Geographic Breakdown Bakken Rockies 6% Permian Bamett Shale 1% Mid- Hugoton Continent 24% 1% South TX! Gulf Coast 58% Fayetteville Shale 11% Royalty-NPI Split Equivalent Reserves (Bcfe) 70 60 50 40 30 20 10 O 77 Royalty -_ [rem 33.3 Bofe NPI = Oil & PP
Slide 10: Overview of 2013 Results
Dorchester Minerals ; Overview of 2013 Results ss | ee 10
Slide 11: 2013 Production
Dorchester 2013 Production * Total Production of 12.6 Bcfe — 75% of total production was natural gas, 25% oil, condensate and NGLs — High quality properties + Diverse portfolio > Low decline rate Historical Production Geographic Breakdown South TX Daily Production (Mcfed) Mid- Guilt Coast 40,000 35,
Slide 12: 2013 Production: Diverse Sources of Production
Dorchester 2013 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 36,000 30,000 yo Bakker 25,000 Fayetteville Miscellaneous a Mid-Continent 18,000 S. TX/Gulf Coas
Slide 13: 2013 Production: Components of Production
Dorchester 2013 Production * Components of Production - Oil production has increased due to robust Bakken and Permian activity - Gas production has decreased due to reduced Barnett and Fayetteville activity and natural declines in Hugoton field Daily Oil Rate (boepd) Daily Gas Rate (Mcfd) Daily Plan
Slide 14: Overview of 2013 Results
Dorchester Minerals Overview of 2013 Results 14
Slide 15: 2013 Distributions
Dorchester M 2013 Distributions * Cash Distributions Paid in Calendar 2013 - Reflects Q4 2012 to Q3 2013 activity Royalty Revenue $48.6 MM LP Distribution $53.1 MM. NPI Revenue $10.8 MM Total Revenue $60.9 MM. GP Distribution $1.9 MM. Other Revenue $1.5 MM Total Expenses $5.9 MM 15
Slide 16: 2013 Distributions: Components and Prices
Dorchester Minerals 2013 Distributions * Distribution Components and Prices — Royalty properties contributed 78% to total 2013 distributions — Gross Revenue > 26% gas sales, 70% oil & NGL sales, 4% other revenue — Relative contributions from NPI's has decreased > gas weighted, CAPEX exposure Distrib
Slide 17: Dorchester Minerals, LP Annual Meeting
Dorchester Minerals Dorchester Minerals, LP Annual Meeting May 14, 2014 7
Slide 18: Appendix
Dorchester Minerals Appendix 18
Slide 19: Portfolio Overview
Dorchester Minerals Portfolio Overview * Geographically Diverse — 574 counties in 25 states — 378,000 net mineral acres (2,308,000 gross acres) - Varying NPRI's, ORRY's and leasehold interests in an additional 860,000 gross acres — Majority of acreage is undeveloped — Wide geographic spread includin
Slide 20: 2013 Reserves: History of Positive Reserve Revisions
Dorchester Minerals 2013 Reserves * History of Positive Reserve Revisions - Cumulative Reserve Revisions have exceeded 100% of Current Reserves Equivalent Reserves (Bcfe) 120 106.5 Initial Reserves 100 ‘Acquisitions 81.0 ‘oe 80 2003-2013 be Production 40 (125.1 Bfe) ja Revisions 20 0 (18.6) Pro Form
Slide 21: 2013 Production: Portfolio Shifted Toward Royalties
Dorchester Minerals 2013 Production * Portfolio Has Shifted Toward Royalties — Largely due to mineral acquisitions, new drilling on legacy properties, and natural declines in Hugoton field > But the trend is reversing Daily Equivalent Rate (Mcfed) 40,000 35,000 30,000 —a 25,000 20,000 15,000 10,000
Slide 22: 2013 Production: Plant Products Contribution
Dorchester 2013 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 total PP revenue based on pro
Slide 23: 2013 Production: Plant Products Example
Dorchester 2013 Production * Plant Products Example — Permian Royalty — Calculated PP Volumes are highly dependent on operators’ marketing elections — May be reported by operator as a BTU adjustment to natural gas sales price (resulting in a premium to index) or a separate PP volume stream Net Reven
Slide 24: Royalty Overview
Dorchester Royalty Overview * Leasing and Development Activity — Consummated 33 leases in 21 counties/ parishes in six states — Lease bonus payments up to $5,500/acre — Initial royalty terms up to 25% — Identified 503 new wells on royalty properties in ten states — Fayetteville Shale activity decrea
Slide 25: Net Profits Interests Overview
Dorchester Net Profits Interests Overview * NPI Provides 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 additional v
Slide 26: 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 > 53% in Q4 2013 - Minerals NPI volumes prior to Q3 2011 were not included in DMLP results Daily Equivalent Rate (Mcfed) 20,000 18,00
Slide 27: Net Profits Interests Production
Dorchester Minerals 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) 8,000 — OMiscellaneous| 7,000 -} mFaye
Slide 28: 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 on its undeveloped mineral interests by the Creation of the Mine
Slide 29: Minerals NPI
Dorchester Minerals Minerals NPI + What is the Minerals NPI and How Does it Work? Lease to third party for royalty and optional participation right Participation right assigned to DMOLP DMOLP pays 100% of costs Royalty and receives 100% of revenue (100% of cash flow) plus interest equivalent on tota
Slide 30: Minerals NPI Cash Flow
Dorchester Minerals Minerals NPI + Minerals NPI Cash Flow — Inception through Q1 2014 Cumulative Revenue $67.5 MM Cumulative Expense (LOE, taxes, etc) ($14.0 MM) Cumulative Operating Income $53.5 MM = $5.4 MM Distributed Cumulative Investment/Commitments ($55.4 MM) porary anand committed Cumulative
Slide 31: Fayetteville Shale
Dorchester Fayetteville Shale + Eastern Arkoma Basin — Northern Arkansas — DMLP owns 23,336 gross/11,464 net acres in 196 sections — 403 wells producing 4.6 MMcfd at year-end 2013 > 45% from Working Interests — Production has decreased as a result of decreased activity — 136 total wells permitted in
Slide 32: Bakken/Three Forks
Dorchester 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 312 wells to date + Average royalty of all leases in unit (~16% r
Slide 33: Bakken/Three Forks
Dorchester Bakken/Three Forks * Six County Core Area - Current development activity on DMLP acreage + 379 .wells completed as producers + 59wells permitted and/or proposed by operator + 88 wells in various stages of drilling or completion (or cto 526 wells/permits — 12 rigs currently drilling on DML
Slide 34: Permian Basin
Dorchester Permian Basin Legacy Permian and emerging Wolfcamp Unleased at some depth in numerous tracts Gross Net Gross ut - Region Mineral Mineral NPRVORRI ‘Acres ‘Acres ‘Acres 263,750 | 22,207 | 155,469 304979 | 35,603 | 143,585 ‘Other Permian a aaort | 17917 | 40,304 Midland Basin Production (boe
Slide 35: Hugoton Operated Properties
Dorchester Minerals Hugoton Operated Properties * Hugoton Field —- Oklahoma Panhandle & SW Kansas — 2013 production within 2.7% of projection — Year-over-year production decline of 7.0% with a 0.4% increase in net reserves — World-class asset but limited upside potential = Ongoing well optimization
Slide 36: Appalachia
Dorchester Appalachia ¢ Marcellus Shale — New York and Pennsylvania Concentrated acreage position + 32,395 gross acres/24,494 net acres + 70% in Allegany and Steuben Counties, NY Challenging political environment in New York has limited activity relative to Pennsylvania Operators: Anadarko, Chesapea
Slide 37: Appalachia
Dorchester Minerals Appalachia * Southern Tier NY & Northern Tier PA , ] - al | Sthuyter _ | \ Allegany | — Steuben “ smear! Cattaraugus = 43,216nma_ | 4,714 nma Chemung | Tioga} NY | 308nma | 163nma | NY PA ¢ > McKean PA | 4,158 nma ‘Clearfield. | s79nma, Y a - 37
Slide 38: Distributions
Dorchester Distributions + Distribution Determinations - Period from October 2012 through September 2013 ($ thousands) Limited General Partners. Partner ‘4% of Net Cash Receipts from Royalty Properties $1,767 96% of Net Cash Receipts from Royalty Properties $42,410 1% of Net Profits Interests Paid t
Slide 39: Management Ownership
Dorchester Minerals 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 Mgmt LP*mamp $6.3 MM es Mgmt GP 9 ies Nigmt GP mm $1.9 MIM }
Slide 40: Effects of Operating Leverage
Dorchester Minerals Effects of Operating Leverage * Royalty Interest vs. NPI Royalty Interest Net Profits Interest Production Volume 1,000 Mf 4,000 Mof 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% Royalty 25%
Slide 41: 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 a typical cash receipt cycle : Ca
Slide 42: Peer Group Comparison
Dorchester 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) 250 200 150 2