Dorchester Minerals(DMLP) - 2025 Q1 - Quarterly Report

Filing Information This section details Dorchester Minerals, L.P.'s Form 10-Q filing for Q1 2025, confirming SEC compliance and non-shell status Form 10-Q Details This section details Dorchester Minerals, L.P.'s Form 10-Q filing for Q1 2025, confirming SEC compliance and non-shell status - The report is a Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the period ended March 31, 2025[1] - Dorchester Minerals, L.P. (DMLP) is a Delaware limited partnership, with its common units traded on the NASDAQ Global Select Market[1][2][3] - The registrant has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days. It has also submitted all required Interactive Data Files[3] - The registrant is not a shell company, and the number of common units outstanding as of May 8, 2025, was 47,339,756[4] Disclosure Regarding Forward-Looking Statements This section highlights forward-looking statements, cautioning that actual results may differ due to various risks including commodity prices and geopolitical events Forward-Looking Statements This section highlights forward-looking statements, cautioning that actual results may differ due to various risks including commodity prices and geopolitical events - Statements in the report that are not historical facts are considered forward-looking, identified by words like 'may,' 'believe,' 'will,' 'expect,' 'anticipate,' and 'estimate'[8] - These statements are based on management's current plans and expectations but involve risks and uncertainties, meaning actual results could differ materially[9] - Key reasons for potential differences include changes in oil and natural gas prices/demand, public health crises, conflicts in Ukraine and the Middle East, operational changes, economic conditions, and regulatory requirements[9] - Investors are advised to review 'Item 1A – Risk Factors' in the Annual Report on Form 10-K and this Quarterly Report, as these risks could substantially harm the business and lead to a decline in common unit trading price[9][10] Part I – Financial Information This part presents Dorchester Minerals, L.P.'s unaudited condensed consolidated financial statements and management's discussion for Q1 2025 Item 1. Financial Statements (Unaudited) This section presents Dorchester Minerals, L.P.'s unaudited condensed consolidated financial statements and accompanying notes for Q1 2025 Condensed Consolidated Balance Sheets The balance sheets show a decrease in total assets and partnership capital from December 2024 to March 2025, with a slight increase in total liabilities Condensed Consolidated Balance Sheet Highlights (In Thousands) | Item | March 31, 2025 | December 31, 2024 | Change | % Change | | :---------------------------------- | :------------- | :---------------- | :----- | :------- | | Cash and cash equivalents | $41,545 | $42,508 | $(963) | (2.26)% | | Total current assets | $68,461 | $67,832 | $629 | 0.93% | | Oil and natural gas properties (net) | $279,673 | $298,011 | $(18,338) | (6.15)% | | Total assets | $349,038 | $366,812 | $(17,774) | (4.85)% | | Total liabilities | $5,903 | $5,024 | $879 | 17.49% | | Total partnership capital | $343,135 | $361,788 | $(18,653) | (5.16)% | Condensed Consolidated Income Statements Q1 2025 saw increased operating revenues but a slight net income decrease due to higher costs, particularly depreciation and depletion Condensed Consolidated Income Statement Highlights (Three Months Ended March 31, In Thousands, except per unit amounts) | Item | 2025 | 2024 | Change | % Change | | :---------------------------------- | :----- | :----- | :----- | :------- | | Royalties | $37,830 | $24,877 | $12,953 | 52.07% | | Net profits interest | $4,793 | $5,598 | $(805) | (14.38)% | | Total operating revenues | $43,164 | $30,979 | $12,185 | 39.33% | | Total costs and expenses | $25,522 | $12,812 | $12,710 | 99.20% | | Net income | $17,642 | $18,167 | $(525) | (2.89)% | | Net income per common unit | $0.36 | $0.44 | $(0.08) | (18.18)% | | Weighted average common units outstanding | 47,340 | 39,605 | 7,735 | 19.53% | Condensed Consolidated Statements of Changes in Partnership Capital Partnership capital decreased in Q1 2025 due to distributions, while Q1 2024 saw an increase from net income and unit acquisitions Changes in Partnership Capital (Three Months Ended March 31, In Thousands) | Item | March 31, 2025 | January 1, 2025 | March 31, 2024 | January 1, 2024 | | :------------------------------------------ | :------------- | :-------------- | :------------- | :-------------- | | Balance at period start | $361,788 | $361,788 | $185,557 | $185,557 | | Net income | $17,642 | - | $18,167 | - | | Acquisitions for common units | - | - | $17,041 | - | | Distributions | $(36,295) | - | $(41,412) | - | | Balance at period end | $343,135 | $361,788 | $179,353 | $185,557 | - Distributions per common unit decreased from $1.007874 in Q1 2024 to $0.739412 in Q1 2025[20] Condensed Consolidated Statements of Cash Flows Operating cash flow increased in Q1 2025, but significant distributions led to a net decrease in cash and cash equivalents for the current quarter Condensed Consolidated Cash Flow Highlights (Three Months Ended March 31, In Thousands) | Item | 2025 | 2024 | Change | % Change | | :------------------------------------------ | :----- | :----- | :----- | :------- | | Net cash provided by operating activities | $33,394 | $27,967 | $5,427 | 19.41% | | Net cash contributed in acquisitions | $1,938 | $4,157 | $(2,219) | (53.38)% | | Distributions paid | $(36,295) | $(41,412) | $5,117 | (12.36)% | | Decrease in cash and cash equivalents | $(963) | $(9,288) | $8,325 | (89.63)% | | Cash and cash equivalents at end of period | $41,545 | $37,737 | $3,808 | 10.09% | - Non-cash investing activities included the issuance of common units for oil and natural gas property acquisitions, valued at $17.0 million in Q1 2024, with no such activity in Q1 2025[23] Notes to the Condensed Consolidated Financial Statements These notes provide essential context for the financial statements, covering business, accounting policies, acquisitions, and distributions 1. Business and Basis of Presentation The Partnership acquires and administers Royalty Properties and NPI across 28 states, with unaudited financials prepared under U.S. GAAP - The Partnership's business involves the acquisition, ownership, and administration of Royalty Properties (producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests) in 594 counties and parishes across 28 states, and net profits overriding royalty interests (NPI)[25] - The financial statements are unaudited, prepared under U.S. GAAP and SEC rules, and include normal and recurring adjustments; interim results are not necessarily indicative of calendar year results[26] 2. Summary of Significant Accounting Policies This section details accounting estimates and recent pronouncements, including the adoption of ASU 2023-07 and evaluation of ASU 2024-03 - The preparation of financial statements requires management to make estimates and assumptions, which are evaluated on an ongoing basis[28] - The Partnership adopted ASU 2023-07, 'Segment Reporting,' for its fiscal year 2024 annual and interim financial statements, applying it retrospectively[29] - Management is currently evaluating ASU 2024-03, 'Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,' effective for annual periods beginning after December 15, 2026, to determine its impact[30] 3. Acquisitions for Common Units In 2024, the Partnership acquired mineral and royalty interests in New Mexico, Texas, and Colorado by issuing common units - On September 30, 2024, the Partnership acquired approximately 14,225 net mineral acres in New Mexico and Texas for 6,721,144 common units valued at $202.6 million[32] - Also on September 30, 2024, royalty interests totaling approximately 1,204 net royalty acres in Weld County, Colorado, were acquired for 530,000 common units valued at $16.0 million[33] - On March 28, 2024, mineral interests totaling approximately 1,485 net royalty acres in Colorado were acquired for 505,369 common units valued at $17.0 million, plus $4.0 million in contributed cash[34] 4. Commitments and Contingencies Routine legal and administrative proceedings are not expected to significantly impact the Partnership's financial position or results - The Partnership and Dorchester Minerals Operating LP are involved in ordinary course legal and administrative proceedings[35] - These proceedings are not expected to have a significant effect on consolidated financial position, cash flows, or operating results[35] 5. Distributions to Holders of Common Units A cash distribution of $0.725835 per common unit for Q1 2025 was announced, with the next distribution due by August 14, 2025 - A cash distribution of $0.725835 per common unit for Q1 2025 was announced on April 24, 2025, payable May 15, 2025[36] - The partnership agreement requires the next cash distribution to be paid by August 14, 2025[36] 6. Segment Reporting The Partnership operates as a single segment, with the CEO assessing performance and allocating resources based on consolidated Net income - The Partnership manages its business activities on a consolidated basis and operates in a single operating and reportable segment[37] - The CEO uses Net income from the Condensed Consolidated Income Statements to assess financial performance and allocate resources[38] - Disaggregated operating revenues and significant segment expenses are presented separately on the income statements, with no other significant segment items requiring disclosure[38] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial condition and results, covering business overview, commodity risks, tariffs, operations, and liquidity Overview The Partnership owns Royalty Properties and a 96.97% Net Profits Interest (NPI) across 28 states, with the NPI in a surplus position - The Partnership owns Royalty Properties in 594 counties and parishes in 28 states[41] - The Partnership holds a Net Profits Interest (NPI) in properties of Dorchester Minerals Operating LP, receiving 96.97% of monthly net profits[42] - As of March 31, 2025, the NPI was in a surplus position with $3.0 million in cash on hand for outstanding capital commitments, primarily in the Bakken region[43] Commodity Price Risks Profitability is highly sensitive to fluctuating oil and natural gas prices, influenced by global supply, demand, and geopolitical factors - Oil and natural gas prices, driven by global supply and demand, fluctuate significantly due to factors like geopolitical conflicts (Ukraine, Middle East), interest rates, and OPEC+ actions[44][45] - As a royalty owner and non-operator, the Partnership has limited access to information and no operational control over production volumes or sales terms[44] Tariffs and Trading Relationships Tariffs and trade uncertainties may impact raw material costs and global oil markets, with the ultimate effect on the Partnership remaining unclear - U.S. government tariffs and potential retaliatory tariffs from foreign jurisdictions create uncertainty regarding economic conditions, raw material costs, and inflation[46] - Global oil markets are contending with tariff impacts, geopolitical tensions, and evolving OPEC+ production strategies, leading oil producers to evaluate various scenarios[47] - Larger, well-capitalized producers are better positioned to withstand a broader range of commodity prices[47] Results of Operations Q1 2025 results show increased Royalty Properties volumes and prices, decreased NPI volumes, higher costs, and a slight net income decrease Acquisitions for Common Units (Results of Operations Context) This section reiterates 2024 acquisitions of mineral and royalty interests in New Mexico, Texas, and Colorado via common unit exchanges - On September 30, 2024, the Partnership acquired approximately 14,225 net mineral acres in New Mexico and Texas for 6,721,144 common units ($202.6 million)[48] - Also on September 30, 2024, 1,204 net royalty acres in Weld County, Colorado, were acquired for 530,000 common units ($16.0 million)[49] - On March 28, 2024, 1,485 net royalty acres in Colorado were acquired for 505,369 common units ($17.0 million) and $4.0 million in cash[50] Three Months Ended March 31, 2025 as compared to Three Months Ended March 31, 2024 Q1 2025 saw increased Royalty Properties volumes and natural gas prices, decreased NPI volumes, higher costs, and a slight net income decline Accrual Basis Sales Volumes (Three Months Ended March 31) | Item | 2025 | 2024 | % Change | | :-------------------------------- | :--- | :--- | :------- | | Royalty Properties natural gas sales (mmcf) | 1,482 | 1,268 | 17% | | Royalty Properties oil sales (mbbls) | 518 | 343 | 51% | | NPI natural gas sales (mmcf) | 436 | 489 | (11)% | | NPI oil sales (mbbls) | 136 | 176 | (23)% | Accrual Basis Average Sales Prices (Three Months Ended March 31) | Item | 2025 | 2024 | % Change | | :-------------------------------- | :----- | :----- | :------- | | Royalty Properties natural gas sales ($/mcf) | $3.51 | $1.62 | 117% | | Royalty Properties oil sales ($/bbl) | $63.00 | $66.59 | (5)% | | NPI natural gas sales ($/mcf) | $3.91 | $1.52 | 157% | | NPI oil sales ($/bbl) | $61.33 | $66.39 | (8)% | - Operating costs, including production taxes, increased 70% due to higher sales revenue, volumes, and ad valorem taxes[56] - Depreciation, depletion, and amortization increased 142%, primarily due to changes in estimated proved developed producing reserves and recent acquisitions[57] - General and administrative expenses increased 32% due to higher legal/professional fees, regulatory filing fees (S-4 registration), and compensation expenses[58] - Net cash provided by operating activities increased 19% due to higher Royalty Properties revenue receipts, partially offset by lower NPI payments and increased G&A expenses[59] - Average realized prices for Royalty Properties cash receipts in Q1 2025 were $63.00/bbl for oil and $2.19/mcf for natural gas[61] - For NPI, they were $58.83/bbl for oil and $1.97/mcf for natural gas[62] Liquidity and Capital Resources Primary capital sources are Royalty Properties and NPI cash flows, with liquidity expected to be sufficient despite market volatility and debt limitations - Primary capital sources are cash flows from Royalty Properties and NPIs, with quarterly distributions mandated after expenses and reserves[63] - The Partnership leases its office space through an operating lease expiring in 2029, with total lease payments of $1,457 thousand and a total lease obligation of $974 thousand as of March 31, 2025[64] - The partnership agreement prohibits indebtedness (excluding trade payables) exceeding $50,000 to avoid unrelated business taxable income[65] - Despite global military conflicts, inflation, and interest rates, the Partnership expects sufficient liquidity for distributions and operations, but acknowledges that market conditions and geopolitical factors could impact future cash flows[66][67] - Cash and cash equivalents decreased slightly from $42.5 million at December 31, 2024, to $41.5 million at March 31, 2025[68] Critical Accounting Policies and Estimates No significant changes to critical accounting policies and estimates were reported since the December 31, 2024 Annual Report - No significant changes to critical accounting policies and estimates were reported as of March 31, 2025, compared to the Annual Report for December 31, 2024[69] Item 3. Quantitative and Qualitative Disclosures About Market Risk No significant changes in market risk exposure occurred in Q1 2025, with detailed discussion available in the Annual Report - No significant changes in market risk exposure occurred during the three months ended March 31, 2025[71] - For a detailed discussion of market risk, refer to Item 7A of Part II of the Partnership's Annual Report for the year ended December 31, 2024[71] Item 4. Controls and Procedures Disclosure controls were effective as of March 31, 2025, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures were evaluated and deemed effective by principal officers as of March 31, 2025 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025[72] Changes in Internal Control No material changes in internal control over financial reporting occurred during Q1 2025 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[73] Part II – Other Information This part covers legal proceedings, risk factors, equity security sales, other information, and exhibits for the reporting period Item 1. Legal Proceedings Routine legal and administrative proceedings are not expected to significantly impact the Partnership's financial position or results - The Partnership and Operating Partnership are involved in legal and administrative proceedings in the ordinary course of business[75] - None of these proceedings are believed to have any significant effect on consolidated financial position, cash flows, or operating results[75] Item 1A. Risk Factors No material changes to the Partnership's risk factors were reported since the December 31, 2024 Annual Report - No material changes to the Partnership's risk factors were reported as of March 31, 2025, compared to the Annual Report for December 31, 2024[76] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Operating Partnership purchased 14,335 common units in Q1 2025 under a Rule 10b5-1 plan for equity awards Issuer Purchases of Equity Securities (Three Months Ended March 31, 2025) | Period | Total Number of Units Purchased | Average Price Paid per Unit | Total Number of Units Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs | | :----------------------------------- | :------------------------------ | :-------------------------- | :----------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | January 1, 2025 – January 31, 2025 | 7,500 | $31.69 | 7,500 | 150,141 | | February 1, 2025 – February 28, 2025 | 6,835 | $30.91 | 6,835 | 143,306 | | March 1, 2025 – March 31, 2025 | - | N/A | - | 143,306 | | Total | 14,335 | $31.32 | 14,335 | 143,306 | - Purchases were made by the Operating Partnership, an affiliate, via a Rule 10b5-1 plan adopted November 5, 2024, to satisfy equity awards under the Equity Incentive Program[77] - The maximum number of common units that can be granted under the Equity Incentive Program each fiscal year is 0.333% of outstanding common units at the beginning of the fiscal year, totaling 157,641 units in 2025[77] Item 5. Other Information No executive officers or directors adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - No executive officers or directors adopted or terminated Rule 10b5-1 trading plans during the three months ended March 31, 2025[79] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL data - The exhibits include organizational documents such as Certificates of Limited Partnership and Amended and Restated Agreements of Limited Partnership for Dorchester Minerals, L.P. and its affiliates[80] - Certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a)/15d-14(a) and 18 U.S.C. Sec. 1350) are filed or furnished[80] - XBRL Instance Document and Taxonomy Extension documents (Schema, Calculation, Definition, Label, Presentation Linkbase) are included for interactive data filing[82] Signatures This section contains the duly authorized signatures of Dorchester Minerals, L.P.'s CEO and CFO for the May 8, 2025 filing Signatures This section contains the duly authorized signatures of Dorchester Minerals, L.P.'s CEO and CFO for the May 8, 2025 filing - The report is signed by Bradley Ehrman, Chief Executive Officer, and Leslie Moriyama, Chief Financial Officer, on May 8, 2025[85]