Dorchester Minerals, L.p. · NASDAQ:DMLP
Dorchester Minerals, L.p — Shareholder Meeting (May 2020)
33 slides from Dorchester Minerals, L.p's shareholder meeting presentation, May 18, 2020
Slide 1: Virtual Annual Meeting May 18, 2020
Dorchester Minerals, L.P. DMLP NASDAQ Dorchester Minerals, LP VIRTUAL ANNUAL MEETING May 18, 2020 DMLP NASDAQ
Slide 2: Forward-Looking Statements
Dorchester Minerals, L.P. DMLP NASDAQ Forward-Looking Statements Portions of this presentation may constitute, and our officers and representatives from time to time may make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Refo
Slide 3: Outline
OUTLINE • Trends and Observations • Distributions • Minerals NPI Activity • Production and Reserves • Property Discussion • Summary DMLP NASDAQ
Slide 4: Trends and Observations
Dorchester Minerals, L.P. DMLP NASDAQ Trends and Observations Challenging Environment on All Fronts • Pressure on both prices and volumes • Drop in rig count is likely a leading indicator of production roll-over • Financial stability of our operators/lessees • Industry consolidation is a likely outc
Slide 5: 2019 Distributions
Dorchester Minerals, L.P. DMLP NASDAQ 2019 Distributions Cash Distributions Paid in Calendar 2019 • Reflects Q4 2018 thru Q3 2019 activity Composition of 2019 Revenues Royalty Net Profits Lease Bonus Revenues Interests & Other Millions $ Payments Revenues 60 $54.7 55 $54.7 MM $12.6 MM $12.0 MM 50 45
Slide 6: 2019 LP Distributions
Dorchester Minerals, L.P. DMLP NASDAQ 2019 LP Distributions Components and Prices • Cumulative LP distributions of $881 MM ($29.54/unit) from inception through 2019 • Royalty properties contributed 69% to total 2019 Revenues • Gross Revenue 71% oil & liquids sales, 14% gas sales, 15% other LP Dist
Slide 7: Minerals NPI
Dorchester Minerals, L.P. DMLP NASDAQ Minerals NPI Trailing 12 Months Activity through March 2020 • Trailing 12 months operating margin of 67% • NPI was in surplus status for the past 12 months Bakken 3/31/20 Capital Commitments of $3.2 MM = Cash Reserved Trailing 12 Months Revenue $26.2 MM Trailing
Slide 8: 2019 NPI Net Operating Income
Dorchester Minerals, L.P. DMLP NASDAQ 2019 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 9: Total Production
Dorchester Minerals, L.P. DMLPNASDAQ Total Production • Oil production increased by 103% between 2014 and 2019 • Gas production decreased by 18% between 2014 and 2019 • Plant Product production increased by 223% between 2014 and 2019 Daily Oil Rate (boed) Daily Gas Rate (Mcfd) Daily Plant Products R
Slide 10: Royalty and NPI Production
Dorchester Minerals, L.P. DMLPNASDAQ Royalty and NPI Production Royalty Production NPI Production • Oil has been driven by robust Midland Basin • Oil has been driven by Bakken development participation and contributions from • Gas decline is suppressed by associated gas Permian APO WI from Bakken an
Slide 11: Composition of Production
Dorchester Minerals, L.P. DMLP NASDAQ Composition of Production Contribution from Diverse Sources • Production growth has come from new plays in mature basins • Legacy assets provide low-decline production base • Production from dry gas basins continues to decline Daily Oil Rate (boed) Daily Gas Rat
Slide 12: 2019 Reserves
Dorchester Minerals, L.P. DMLP NASDAQ 2019 Reserves Geographic Split Mid- Bakken • Total Proved Reserves of 103.7 Bcfe on 12/31/2019 Continent Other 8% Midland • All reserves are Proved Developed Producing (PDP) 6% 11% 28% Barnett • Balanced product mix 44% oil, 44% natural gas, 3% 12% plant produ
Slide 13: 2019 Reserve Revisions
Dorchester Minerals, L.P. DMLP NASDAQ 2019 Reserve Revisions • Midland and Delaware Basins were major drivers of upward oil and gas revisions • Q1 2019 Acquisition added 6.6 Bcfe of PDP reserves • History of Reserve Revisions Year-end reserves exceeded initial 2003 reserves by 10% Equivalent Reser
Slide 14: Mineral Portfolio Overview
Dorchester Minerals, L.P. DMLP NASDAQ Mineral Portfolio Overview Note: Net Mineral Acre (nma) counts are limited to Executive Mineral Interests 14
Slide 15: Bakken/Three Forks
Dorchester Minerals, L.P. DMLP NASDAQ Bakken/Three Forks • 83,600 gross ac (10,442 net ac) in six core ND • 1,124 gross producing wells at year-end 2019 counties majority unleased minerals 2019 40 Participation, 15 Non-Consent • Rig count 54 in May 2019 to 15 in May 2020 YTD 2020 5 Parti
Slide 16: Permian Basin
Dorchester Minerals, L.P. DMLP NASDAQ Permian Basin 16
Slide 17: Permian Basin
Dorchester Minerals, L.P. DMLP NASDAQ Permian Basin 2009 2019 • Primarily Central Basin Platform • Primarily Wolfcamp, Spraberry, Bone Springs • Conventional and low-decline EOR • Growth exclusively horizontal development • Denver Unit, Wasson, Seminole, Spraberry • Delaware contribution is growing
Slide 18: Midland Basin
Dorchester Minerals, L.P. DMLP NASDAQ Midland Basin • 251,000 gross ac (15,440 net ac) in core • Largest sources are Midland and Upton Co. • Unleased at some depth in numerous tracts • Growth in NPI production is a result of after- • Operator Exposure PE, PXD, CXO payout interest (APO) in Non-Cons
Slide 19: Delaware Basin
Dorchester Minerals, L.P. DMLP NASDAQ Delaware Basin • DMLP Position • Silvertip Prospect Area (Loving County) • 13,538 gross ac (911 net ac) located in Loving, • Active development in 2019/2020 Reeves and Ward Co., TX and Lea Co., NM • Potential for increased well density • Majority of tracts are l
Slide 20: Delaware Basin
Dorchester Minerals, L.P. DMLP NASDAQ Delaware Basin • Winkler County Prospect Area • Wolfcamp/Bone Springs WINKLER • 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% BOOTHFALLS 2722-27 (3 wells) 990,000 cumulative BOE (
Slide 21: 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 22: Appendix
APPENDIX DMLP NASDAQ
Slide 23: G&A Expense
Dorchester Minerals, L.P. DMLP NASDAQ G&A Expense* • Modest headcount increase in 2019 vs 2018 to support public company compliance and A&D work • Base and Incentive Compensation is discretionary – not formulaic • Approximately 18% discretionary in 2019 ($0.03/unit) • No dilutive equity or phantom e
Slide 24: 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 $2.8 MM Mgmt LP is 2.7X 10.9 %
Slide 25: 2019 Reserves
Dorchester Minerals, L.P. DMLP NASDAQ 2019 Reserves History of Positive Reserve Revisions • Cumulative Reserve Revisions have exceeded 100% of Current Reserves • Production has exceeded initial reserves by 113.2 Bcfe Equivalent Reserves (Bcfe) 120 94.0 Initial Reserves 103.7 Total Reserves 100 80 60
Slide 26: Royalty Liquids Production
Dorchester Minerals, L.P. DMLP NASDAQ Royalty Liquids Production • Incremental contribution from 1,140 wells in 2019 with an average NRI of 0.3535% • Underlying year‐over‐year decline of 31% excluding 2019 wells • Legacy production declined 15% in last 6 months of 2019 Daily Liquids Rate (boed) 10,0
Slide 27: Minerals NPI
Dorchester Minerals, L.P. DMLPNASDAQ Minerals NPI Production by Product • Added 86 new wells in 2019 located in North Dakota and Texas • Since Year-end 2016 gas production has been flat, while oil production increased by 110% • Oil increase due to Bakken participation and Permian APO activity • Rece
Slide 28: Price Differentials
Dorchester Minerals, L.P. DMLP NASDAQ Price Differentials • Comparison of highest contributing Basins’ realized prices to NYMEX monthly averages. • Recent Bakken gas premium related to payment on BTU-adjusted prices Realized Oil Price Realized Gas Price $100 $5 $90 $80 $4 $70 $60 $3 $50 $40 $2 $30 $
Slide 29: 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 30: 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 31 15 0.000% 1.710% Ecto
Slide 31: Royalty Cash Receipts
Dorchester Minerals, L.P. DMLP NASDAQ 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 r
Slide 32: 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 33: Dorchester Minerals, LP
Dorchester Minerals, L.P. DMLP NASDAQ Dorchester Minerals, LP VIRTUAL ANNUAL MEETING May 18, 2020 DMLP NASDAQ