What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 107 added, 81 removed, 237 unchanged (44% of the section changed)

5 unchanged sentences

(In Thousands)

September 30,

Current assets:

27 unchanged sentences

General Partner

( 1,065 ) 113

Unitholders ( 40,088 and 39,583 common units issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)

Unitholders ( 47,340 and 39,583 common units issued and outstanding as of September 30, 2024 and December 31, 2023, respectively)

397,229 185,444

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating revenues:

$ 31,636 $ 23,613 $ 56,513 $ 48,297

Net profits interest

5,244 5,830 10,842 20,777

Lease bonus and other

480 1,176 984 1,712

Total operating revenues

37,360 30,619 68,339 70,786

Costs and expenses:

Operating, including production taxes

3,515 2,754 6,138 5,472

Depreciation, depletion and amortization

7,666 5,337 14,586 11,978

General and administrative

2,551 2,724 5,820 5,462

Total costs and expenses

13,732 10,815 26,544 22,912

$ 23,628 $ 19,804 $ 41,795 $ 47,874

Allocation of net income:

General Partner

$ 826 $ 656 $ 1,431 $ 1,416

$ 22,802 $ 19,148 $ 40,364 $ 46,458

Net income per common unit (basic and diluted)

$ 0.57 $ 0.50 $ 1.01 $ 1.21

Weighted average basic and diluted common units outstanding

40,088 38,372 39,847 38,372

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Unitholder Units

Three Months Ended June 30, 2023

Balance at April 1, 2023

Three Months Ended September 30, 2023

Balance at July 1, 2023

$ ( 60 ) $ 145,392 $ 145,332 38,372

1,029 28,434 29,463

Acquisitions of oil and natural gas properties for common units

- 35,777 35,777 1,211

Distributions ($ 0.676818 per common unit)

( 931 ) ( 26,203 ) ( 27,134 )

Balance at June 30, 2023

Balance at September 30, 2023

$ 38 $ 183,400 $ 183,438 39,583

Three Months Ended June 30, 2024

Balance at April 1, 2024

Three Months Ended September 30, 2024

Balance at July 1, 2024

$ ( 1,065 ) $ 171,611 $ 170,546 40,088

1,273 35,140 36,413

Acquisitions of oil and natural gas properties for common units

- 218,622 218,622 7,252

Distributions ($ 0.702058 per common unit)

( 974 ) ( 28,144 ) ( 29,118 )

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 766 ) $ 397,229 $ 396,463 47,340

1 unchanged sentence

Unitholder Units

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Balance at January 1, 2023

1 unchanged sentence

2,445 74,892 77,337

Acquisitions of oil and natural gas properties for common units

- 35,777 35,777 1,211

Distributions ($ 2.550813 per common unit)

( 3,083 ) ( 98,111 ) ( 101,194 )

Balance at June 30, 2023

Balance at September 30, 2023

$ 38 $ 183,400 $ 183,438 39,583

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Balance at January 1, 2024

1 unchanged sentence

2,704 75,504 78,208

Acquisition of assets for common units

Acquisitions of oil and natural gas properties for common units

- 235,663 235,663 7,757

1 unchanged sentence

( 3,583 ) ( 99,382 ) ( 102,965 )

Balance at June 30, 2024

Balance at September 30, 2024

$ ( 766 ) $ 397,229 $ 396,463 47,340

4 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities

$ 57,388 $ 68,081

Cash flows provided by investing activities:

2 unchanged sentences

Distributions paid to General Partner and unitholders

( 73,847 ) ( 74,060 )

Decrease in cash and cash equivalents

( 11,864 ) ( 5,430 )

Increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

47,025 40,754

Cash and cash equivalents at end of period

$ 35,161 $ 35,324

Non-cash investing and financing activities:

Fair value of common units issued for acquisition of oil and natural gas properties

Fair value of common units issued for acquisitions of oil and natural gas properties

The accompanying notes are an integral part of these condensed consolidated financial statements.

6 unchanged sentences

(the “Partnership”) is a publicly traded Delaware limited partnership that commenced operations on January 31, 2003.

Our business may be described as the acquisition, ownership and administration of Royalty Properties (which consists of producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in 594 counties and parishes in 28 states (“Royalty Properties”)) and net profits overriding royalty interests (referred to as the Net Profits Interest, or “NPI”).

Our business may be described as the acquisition, ownership and administration of Royalty Properties (which consist of producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in 594 counties and parishes in 28 states (“Royalty Properties”)) and net profits overriding royalty interests (referred to as the Net Profits Interest, or “NPI”).

Basis of Presentation

9 unchanged sentences

The Partnership has no potentially dilutive securities and, consequently, basic and diluted income per unit do not differ.

The unaudited condensed consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiaries Dorchester Minerals Oklahoma LP, Dorchester Minerals Oklahoma GP, Inc., Maecenas Minerals LLP, Dorchester-Maecenas GP LLC, The Buffalo Co., A Limited Partnership, and DMLPTBC GP LLC.

All significant intercompany balances and transactions have been eliminated in consolidation.

15 unchanged sentences

ASU 2023 - 07 is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted.

Management is currently evaluating ASU 2023 - 07 to determine its impact on the Partnership's disclosures.

We do not anticipate this update to have a material impact on the Partnership’s financial position, results of operations, or cash flows.

2 unchanged sentences

Acquisitions for Common Units

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with West Texas Minerals LLC, a Delaware limited liability company, Carrollton Mineral Partners, LP, a Texas limited partnership, Carrollton Mineral Partners Fund II, LP, a Texas limited partnership, Carrollton Mineral Partners III, LP, a Texas limited partnership, Carrollton Mineral Partners III-B, LP, a Texas limited partnership, Carrollton Mineral Partners IV, LP, a Texas limited partnership, CMP Permian, LP, a Texas limited partnership, CMP Glasscock, LP, a Texas limited partnership, and Carrollton Royalty, LP, a Texas limited partnership (collectively, the “Contributors”), the Partnership acquired mineral, royalty, and overriding royalty interests in producing and non-producing oil and natural gas properties representing approximately 14,225 net mineral acres located in 14 counties across New Mexico and Texas in exchange for 6,721,144 common units representing limited partnership interests in the Partnership valued at $ 202.6 million and issued pursuant to the Partnership’s registration statements on Form S- 4.

We believe that the acquisition is considered complementary to our business.

The transaction was accounted for as an acquisition of assets under U.S.

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

At closing, in addition to conveying mineral, royalty and overriding royalty interests to the Partnership, the Contributors delivered funds to the Partnership in an amount equal to their cash receipts during the period from July 1, 2024 through September 25, 2024 of $ 5.9 million.

This contributed cash generally reflects receipts from the two months ended August 31, 2024.

The contributed cash, net of capitalized transaction costs paid, of $ 5.8 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

The condensed consolidated balance sheet as of September 30, 2024 includes $ 193.9 million of net proved oil and natural gas properties acquired in the transaction.

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired mineral interests totaling approximately 1,204 net royalty acres located in Weld County, Colorado in exchange for 530,000 common units representing limited partnership interests in the Partnership valued at $ 16.0 million and issued pursuant to the Partnership’s registration statement on Form S- 4.

We believe that the acquisition is considered complementary to our business.

The transaction was accounted for as an acquisition of assets under U.S.

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

At closing, in addition to conveying mineral interests to the Partnership, the contributors delivered funds to the Partnership in an amount equal to their cash receipts during the period from July 1, 2024 through September 25, 2024 of $ 0.9 million.

This contributed cash generally reflects receipts from the two months ended August 31, 2024.

The contributed cash, net of capitalized transaction costs paid, of $ 0.9 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

The condensed consolidated balance sheet as of September 30, 2024 includes $ 14.6 million of net proved oil and natural gas properties acquired in the transaction.

On March 28, 2024, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 1,485 net royalty acres located in two counties in Colorado in exchange for 505,369 common units representing limited partnership interests in the Partnership valued at $ 17.0 million and issued pursuant to the Partnership’s registration statement on Form S- 4.

2 unchanged sentences

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

Contributed cash delivered at closing and final settlement net cash received, net of capitalized transaction costs paid, of $ 4.4 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2024.

The condensed consolidated balance sheet as of June 30, 2024 includes $ 12.1 million of net proved oil and natural gas properties acquired in the transaction.

The condensed consolidated balance sheet as of September 30, 2024 includes $ 12.4 million of net proved oil and natural gas properties acquired in the transaction.

On September 29, 2023, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired mineral and royalty interests totaling approximately 716 net royalty acres located in three counties in Texas in exchange for 494,000 common units representing limited partnership interests in the Partnership valued at $ 14.4 million and issued pursuant to the Partnership’s registration statement on Form S- 4.

2 unchanged sentences

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $ 0.8 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

The condensed consolidated balance sheet as of December 31, 2023 includes $ 13.4 million of net proved oil and natural gas properties acquired in the transaction.

3 unchanged sentences

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $ 0.2 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

The condensed consolidated balance sheet as of December 31, 2023 includes $ 10.1 million of net proved oil and natural gas properties acquired in the transaction.

Final settlement net cash received, net of capitalized transaction costs paid, of $ 0.2 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2024.

On July 12, 2023, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral and royalty interests totaling approximately 900 net royalty acres located in 13 counties and parishes across Louisiana, New Mexico, and Texas in exchange for 343,750 common units representing limited partnership interests in the Partnership valued at $ 11.0 million and issued pursuant to the Partnership’s registration statement on Form S- 4.

2 unchanged sentences

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $ 0.5 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

The condensed consolidated balance sheet as of December 31, 2023 includes $ 10.4 million of net proved oil and natural gas properties acquired in the transaction.

3 unchanged sentences

Accordingly, the cost of the acquisition was allocated on a relative fair value basis and transaction costs were capitalized as a component of the cost of the assets acquired.

Final settlement net cash received, net of capitalized transaction costs paid, of $ 0.5 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2023.

Commitments and Contingencies

1 unchanged sentence

Distributions to Holders of Common Units

On July 18, 2024, the Partnership announced its cash distribution for the second quarter of 2024 of $ 0.702058 per common unit, representing activity for the three -month period ended June 30, 2024, payable to common unitholders of record as of July 29, 2024.

This distribution will be paid on August 8, 2024.

The partnership agreement requires the next cash distribution to be paid by November 14, 2024.

On October 17, 2024, the Partnership announced its cash distribution for the third quarter of 2024 of $ 0.995785 per common unit, representing activity for the three -month period ended September 30, 2024, payable to common unitholders of record as of October 28, 2024.

This distribution will be paid on November 7, 2024.

The partnership agreement requires the next cash distribution to be paid by February 14, 2025.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1 unchanged sentence

For a description of limitations inherent in forward-looking statements, see page 1 of this Quarterly Report on Form 10-Q.

This discussion, which presents our results of operations for the three and six months ended June 30, 2024 and 2023, should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes.

This discussion, which presents our results of operations for the three and nine months ended September 30, 2024 and 2023, should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes.

We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes.

2 unchanged sentences

We currently own Royalty Properties in 594 counties and parishes in 28 states.

As of June 30, 2024, we own a net profits overriding royalty interest (referred to as the Net Profits Interest, or “NPI”) in various properties owned by Dorchester Minerals Operating LP (the “Operating Partnership”), a Delaware limited partnership owned directly and indirectly by our General Partner.

As of September 30, 2024, we own a net profits overriding royalty interest (referred to as the Net Profits Interest, or “NPI”) in various properties owned by Dorchester Minerals Operating LP (the “Operating Partnership”), a Delaware limited partnership owned directly and indirectly by our General Partner.

We receive a monthly payment from the NPI equaling 96.97% of the net profits actually realized by the Operating Partnership from these properties in the preceding month.

1 unchanged sentence

In the event the NPI has a deficit of cumulative revenue versus cumulative costs, the deficit will be borne solely by the Operating Partnership.

From a cash perspective, as of June 30, 2024, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $3.8 million.

From a cash perspective, as of September 30, 2024, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $3.3 million.

Commodity Price Risks

6 unchanged sentences

Acquisitions for Common Units

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with West Texas Minerals LLC, a Delaware limited liability company, Carrollton Mineral Partners, LP, a Texas limited partnership, Carrollton Mineral Partners Fund II, LP, a Texas limited partnership, Carrollton Mineral Partners III, LP, a Texas limited partnership, Carrollton Mineral Partners III-B, LP, a Texas limited partnership, Carrollton Mineral Partners IV, LP, a Texas limited partnership, CMP Permian, LP, a Texas limited partnership, CMP Glasscock, LP, a Texas limited partnership, and Carrollton Royalty, LP, a Texas limited partnership (collectively, the “Contributors”), the Partnership acquired mineral, royalty, and overriding royalty interests in producing and non-producing oil and natural gas properties representing approximately 14,225 net mineral acres located in 14 counties across New Mexico and Texas in exchange for 6,721,144 common units representing limited partnership interests in the Partnership valued at $202.6 million and issued pursuant to the Partnership’s registration statements on Form S-4.

This contributed cash generally reflects receipts from the two months ended August 31, 2024.

The contributed cash, net of capitalized transaction costs paid, of $5.8 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired mineral interests totaling approximately 1,204 net royalty acres located in Weld County, Colorado in exchange for 530,000 common units representing limited partnership interests in the Partnership valued at $16.0 million and issued pursuant to the Partnership’s registration statement on Form S-4.

This contributed cash generally reflects receipts from the two months ended August 31, 2024.

The contributed cash, net of capitalized transaction costs paid, of $0.9 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

On March 28, 2024, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral interests totaling approximately 1,485 net royalty acres located in two counties in Colorado in exchange for 505,369 common units representing limited partnership interests in the Partnership valued at $17.0 million and issued pursuant to the Partnership’s registration statement on Form S-4.

Contributed cash delivered at closing and final settlement net cash received, net of capitalized transaction costs paid, of $4.4 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2024

Contributed cash delivered at closing and final settlement net cash received, net of capitalized transaction costs paid, of $4.4 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

On September 29, 2023, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired mineral and royalty interests totaling approximately 716 net royalty acres located in three counties in Texas in exchange for 494,000 common units representing limited partnership interests in the Partnership valued at $14.4 million and issued pursuant to the Partnership’s registration statement on Form S-4.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $0.8 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

On August 31, 2023, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral and royalty interests totaling approximately 568 net royalty acres located in three counties in Texas in exchange for 374,000 common units representing limited partnership interests in the Partnership valued at $10.4 million and issued pursuant to the Partnership’s registration statement on Form S-4.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $0.2 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

Final settlement net cash received, net of capitalized transaction costs paid, of $0.2 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2024.

On July 12, 2023, pursuant to a non-taxable contribution and exchange agreement with multiple unrelated third parties, the Partnership acquired mineral and royalty interests totaling approximately 900 net royalty acres located in 13 counties and parishes across Louisiana, New Mexico, and Texas in exchange for 343,750 common units representing limited partnership interests in the Partnership valued at $11.0 million and issued pursuant to the Partnership’s registration statement on Form S-4.

Contributed cash delivered at closing, net of capitalized transaction costs paid, of $0.5 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

On September 30, 2022, pursuant to a non-taxable contribution and exchange agreement with Excess Energy, LLC, a Texas limited liability company, the Partnership acquired mineral, royalty and overriding royalty interests totaling approximately 2,100 net royalty acres located in 12 counties across Texas and New Mexico in exchange for 816,719 common units representing limited partnership interests in the Partnership valued at $20.4 million and issued pursuant to the Partnership's registration statement on Form S-4.

Final settlement net cash received, net of capitalized transaction costs paid, of $0.5 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the six months ended June 30, 2023.

Three and Six Months Ended June 30, 2024 as compared to Three and Six Months Ended June 30, 2023

Final settlement net cash received, net of capitalized transaction costs paid, of $0.5 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023.

Three and Nine Months Ended September 30, 2024 as compared to Three and Nine Months Ended September 30, 2023

Our period-to-period changes in net income and cash flows from operating activities are principally determined by changes in oil and natural gas sales volumes and prices, and to a lesser extent, by capital expenditures deducted under the NPI calculation.

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Accrual basis sales volumes:

9 unchanged sentences

Both oil and natural gas sales price changes reflected in the table above resulted from changing market conditions.

The increase in oil sales volumes attributable to our Royalty Properties from the second quarter and first six months of 2023 to the same periods of 2024 is primarily a result of higher suspense releases on new wells and increased baseline production in the Permian Basin and higher suspense releases on first time payments and increased baseline production in South Texas from wells acquired in the third quarter of 2023 and 2022.

The increase in natural gas sales volumes attributable to our Royalty Properties from the second quarter of 2023 to the same period of 2024 is primarily a result of higher suspense releases on new wells and increased baseline production in the Permian Basin and Mid-Continent, increased baseline production in South Texas from wells acquired in the third quarter of 2023, and higher suspense releases on new wells in East Texas from wells acquired in the third quarter of 2022, partially offset by decreased production from legacy wells in the Fayetteville Shale and Barnett Shale.

The increase in natural gas sales volumes attributable to our Royalty Properties from the first six months of 2023 to the same period of 2024 is primarily attributable to higher suspense releases on new wells and increased baseline production in the Permian Basin and Mid-Continent, increased baseline production in South Texas from wells acquired in the third quarter of 2023, and higher suspense releases on first time payments and increased baseline production in East Texas from wells acquired in the third quarter of 2022, partially offset by lower suspense releases on first time payments from acquired wells in South Texas during the first quarter of 2024 compared to the same period of 2023, primarily attributable to wells acquired in the third quarter of 2022, and decreased production from legacy wells in the Fayetteville Shale and Barnett Shale.

The decrease in oil sales volumes attributable to our NPI properties from the second quarter of 2023 to the same period of 2024 is primarily the result of decreased baseline production in the Permian Basin and lower suspense releases on new wells in the Permian Basin and Bakken region, partially offset by increased baseline production in the Bakken region.

The decrease in oil sales volumes attributable to our NPI properties from the first six months of 2023 to the same period of 2024 is primarily the result of decreased baseline production and lower suspense releases on new wells in the Permian Basin, partially offset by increased baseline production and higher suspense releases on new wells in the Bakken region during the second quarter of 2024 compared to the same period of 2023.

The increase in natural gas sales volumes attributable to our NPI properties from the second quarter of 2023 to the same period of 2024 is primarily the result of increased baseline production and higher suspense releases in the Mid-Continent.

The decrease in natural gas sales volumes attributable to our NPI properties from the first six months of 2023 to the same period of 2024 is primarily the result of lower suspense releases on new wells in the Permian Basin, partially offset by higher suspense releases on new wells in the Mid-Continent and increased baseline production and higher suspense releases on new wells in the Bakken region during the second quarter of 2024 compared to the same period of 2023.

Operating costs, including production taxes, increased 28% from the second quarter of 2023 to the same period of 2024 and 12% from the first six months of 2023 to the same period of 2024.

The increases are primarily a result of higher proportionate taxes due to higher oil and natural gas sales volumes and higher oil sales prices attributable to our Royalty Properties.

Depreciation, depletion and amortization increased 44% from the

second quarter of

2023 to the same period of

2024 and 22% from the first six months of 2023 to the same period of 2024.

We adjust our depletion rate each quarter for significant changes in our estimates of oil and natural gas reserves, including recent acquisitions.

General and administrative expenses decreased 6% from the second quarter of 2023 to the same period of 2024.

The decrease is primarily a result of one-time, non-recurring professional services expenses of $1.2 million related to an unsuccessful acquisition in the second quarter of 2023, partially offset by higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, and increased professional service fees in the second quarter of 2024.

General and administrative expenses increased 7% from the first six months of 2023 to the same period of 2024.

The increase is primarily a result of higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, and increased legal and professional service fees, partially offset by a decrease resulting from one-time, non-recurring professional services expenses of $1.2 million related to an unsuccessful acquisition in the second quarter of 2023.

Net cash provided by operating activities decreased 16% from the first six months of 2023 to the same period of 2024.

The decrease is primarily due to lower NPI payment receipts and higher general and administrative expense payments, partially offset by higher Royalty revenue receipts, net of production taxes and operating expenses.

The increase in oil sales volumes attributable to our Royalty Properties from the third quarter and first nine months of 2023 to the same periods of 2024 is primarily a result of higher suspense releases on new wells and increased baseline production in the Permian Basin and Bakken region, increased baseline production in South Texas from wells acquired in the third quarter of 2023 and 2022, and higher suspense releases on first time payments and increased baseline production in the Rockies from wells acquired in the first quarter of 2024 and 2022.

The increase in natural gas sales volumes attributable to our Royalty Properties from the third quarter of 2023 to the same period of 2024 is primarily a result of higher suspense releases on new wells and increased baseline production in the Permian Basin and Mid-Continent and higher suspense releases on first time payments and increased baseline production in the Rockies from wells acquired in the first quarter of 2024 and 2022, partially offset by decreased baseline production and lower suspense releases from first time payments on acquired wells in South Texas.

The increase in natural gas sales volumes attributable to our Royalty Properties from the first nine months of 2023 to the same period of 2024 is primarily attributable to higher suspense releases on new wells and increased baseline production in the Permian Basin and Mid-Continent, higher suspense releases on first time payments and increased baseline production in East Texas from wells acquired in the third quarter of 2022, and higher suspense releases from first time payments in the Rockies from wells acquired in the first quarter of 2024, partially offset by decreased baseline production and lower suspense releases from first time payments on acquired wells in South Texas and decreased production from legacy wells in the Fayetteville Shale, Barnett Shale, and Southeast.

The increase in oil sales volumes attributable to our NPI properties from the third quarter of 2023 to the same period of 2024 is primarily the result of increased baseline production in the Permian Basin and Bakken region and higher suspense releases on new wells in the Bakken region, partially offset by lower suspense releases on new wells in the Permian Basin.

The decrease in oil sales volumes attributable to our NPI properties from the first nine months of 2023 to the same period of 2024 is primarily the result of lower suspense releases on new wells in the Permian Basin, partially offset by increased baseline production in the Permian Basin and Bakken region and higher suspense releases on new wells in the Bakken region.

The increase in natural gas sales volumes attributable to our NPI properties from the third quarter of 2023 to the same period of 2024 is primarily the result of increased baseline production in the Permian Basin, Bakken region, and Mid-Continent.

The decrease in natural gas sales volumes attributable to our NPI properties from the first nine months of 2023 to the same period of 2024 is primarily the result of lower suspense releases on new wells in the Permian Basin, partially offset by higher suspense releases on new wells in the Bakken region and Mid-Continent and increased baseline production the Permian Basin, Bakken region, and Mid-Continent during the second and third quarters of 2024 compared to the same periods of 2023.

Operating costs, including production taxes, increased 11% from the third quarter of 2023 to the same period of 2024 and 12% from the first nine months of 2023 to the same period of 2024.

The increases are primarily a result of higher proportionate operating expenses and oil production taxes due to higher oil and natural gas sales volumes and higher oil sales revenue, partially offset by lower proportionate natural gas production taxes due to lower natural gas sales revenue driven by lower natural gas sales prices and lower ad valorem taxes.

Depreciation, depletion and amortization increased 52% from the third quarter of 2023 to the same period of 2024 and 32% from the first nine months of 2023 to the same period of 2024.

Depletion is the amount of cost basis of oil and natural gas properties at the beginning of a period attributable to the volume of reserves extracted during such period, calculated on a units-of-production basis.

Estimates of proved developed producing reserves are a major component in the calculation of depletion.

We adjust our depletion rate each quarter for significant changes in our estimates of oil and natural gas reserves, including recent acquisitions and suspense releases on new wells.

General and administrative expenses increased 3% from the third quarter of 2023 to the same period of 2024 and 5% from the first nine months of 2023 to the same period of 2024.

The increases are primarily a result of higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention, and increased professional service fees, partially offset by a decrease resulting from one-time, non-recurring professional services expenses of $1.2 million related to an unsuccessful acquisition in the first nine months of 2023.

Net cash provided by operating activities remained consistent from the first nine months of 2023 to the same period of 2024 primarily due to higher Royalties revenue receipts, net of production taxes and operating expenses, partially offset by lower NPI payment receipts and higher general and administrative expenses.

In an effort to provide the reader with information concerning prices of oil and natural gas sales that correspond to our quarterly distributions, management calculates the average price by dividing gross revenues received by the net volumes of the corresponding product without regard to the timing of the production to which such sales may be attributable.

1 unchanged sentence

While the relationship between our cash receipts and the timing of the production of oil and natural gas may be described generally, actual cash receipts may be materially impacted by purchasers’ release of suspended funds and by purchasers’ prior period adjustments.

Cash receipts attributable to our Royalty Properties during the second quarter of 2024 totaled $26.1 million.

Approximately 74% of these receipts reflect oil sales during March 2024 through May 2024 and natural gas sales during February 2024 through April 2024, and approximately 26% from prior sales periods.

The average indicated prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the second quarter of 2024 were $70.48/bbl and $1.53/mcf, respectively.

Cash receipts attributable to our Net Profits Interest during the second quarter of 2024 totaled $6.4 million.

Approximately 69% of these receipts reflect oil and natural gas sales during February 2024 through April 2024, and approximately 31% from prior sales periods.

The average indicated prices for oil and natural gas sales cash receipts attributable to the NPI properties during the second quarter of 2024 were $67.51/bbl and $2.24/mcf, respectively.

Cash receipts attributable to our Royalty Properties during the third quarter of 2024 totaled $40.2 million.

Approximately 54% of these receipts reflect oil sales during June 2024 through August 2024 and natural gas sales during May 2024 through July 2024, and approximately 46% from prior sales periods.

The average indicated prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the third quarter of 2024 were $69.91/bbl and $1.08/mcf, respectively.

Cash receipts attributable to contributed cash from the two acquisitions closed September 30, 2024, totaled approximately $6.8 million.

This generally reflects receipts from the two months ended August 31, 2024.

Cash receipts attributable to our NPI during the third quarter of 2024 totaled $6.0 million.

Approximately 70% of these receipts reflect oil and natural gas sales during May 2024 through July 2024, and approximately 30% from prior sales periods.

The average indicated prices for oil and natural gas sales cash receipts attributable to the NPI properties during the third quarter of 2024 were $65.51/bbl and $1.27/mcf, respectively.

Liquidity and Capital Resources

10 unchanged sentences

Under the third amendment to the Office Lease, monthly rental payments range from $25,000 to $30,000.

Future maturities of Office Lease liabilities representing monthly cash rental payment obligations as of June 30, 2024 are summarized as follows:

Future maturities of Office Lease liabilities representing monthly cash rental payment obligations as of September 30, 2024 are summarized as follows:

(In Thousands)

12 unchanged sentences

Liquidity and Working Capital

Cash and cash equivalents totaled $35.2 million at June 30, 2024 and $47.0 million at December 31, 2023.

Cash and cash equivalents totaled $56.5 million at September 30, 2024 and $47.0 million at December 31, 2023.

Critical Accounting Policies and Estimates

As of June 30, 2024, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our Annual Report for the year ended December 31, 2023.

As of September 30, 2024, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our Annual Report for the year ended December 31, 2023.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our exposure to market risk during the three months ended June 30, 2024.

There have been no significant changes in our exposure to market risk during the three months ended September 30, 2024.

For a discussion of our exposure to market risk, refer to Item 7A of Part I of the Partnership’s Annual Report for the year ended December 31, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements