What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-10-31 · 96 added, 136 removed, 208 unchanged (53% of the section changed)

5 unchanged sentences

(In Thousands)

September 30,

Current assets:

27 unchanged sentences

General Partner

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

( 2,656 ) ( 1,997 )

Unitholders ( 47,340 common units issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

345,791 363,785

Total partnership capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Operating revenues

$ 37,830 $ 24,877

Net profits interest

1 unchanged sentence

Total operating revenues

43,164 30,979

Costs and expenses

3 unchanged sentences

Total costs and expenses

25,522 12,812

$ 17,642 $ 18,167

Allocation of net income

General Partner

$ 17,010 $ 17,562

Net income per common unit (basic and diluted)

$ 0.36 $ 0.44

Weighted average basic and diluted common units outstanding

47,340 39,605

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

5 unchanged sentences

Unitholder Units

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 September 30, 2023

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

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 September 30, 2024

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

General Partner

Unitholder Units

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance at January 1, 2024

1 unchanged sentence

605 17,562 18,167

Acquisitions of oil and natural gas properties for common units

Acquisition of oil and natural gas properties for common units

- 17,041 17,041 505

1 unchanged sentence

( 1,517 ) ( 39,895 ) ( 41,412 )

Balance at September 30, 2023

Balance at March 31, 2024

$ ( 799 ) $ 180,152 $ 179,353 40,088

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Balance at January 1, 2025

1 unchanged sentence

632 17,010 17,642

Acquisitions of oil and natural gas properties for common units

- 235,663 235,663 7,757

Distributions ($ 0.739412 per common unit)

( 1,291 ) ( 35,004 ) ( 36,295 )

Balance at September 30, 2024

Balance at March 31, 2025

$ ( 2,656 ) $ 345,791 $ 343,135 47,340

4 unchanged sentences

(In Thousands)

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by operating activities

$ 33,394 $ 27,967

Cash flows provided by investing activities:

2 unchanged sentences

Distributions paid to General Partner and unitholders

Increase in cash and cash equivalents

( 36,295 ) ( 41,412 )

Decrease in cash and cash equivalents

( 963 ) ( 9,288 )

Cash and cash equivalents at beginning of period

42,508 47,025

Cash and cash equivalents at end of period

$ 41,545 $ 37,737

Non-cash investing and financing activities:

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

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

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

15 unchanged sentences

Interim period results are not necessarily indicative of the results for the calendar year.

For more information regarding limitations on the forward-looking statements contained herein, see page 1 of this Quarterly Report on Form 10 -Q.

Per unit information is calculated by dividing the income or loss applicable to holders of the Partnership’s common units by the weighted average number of units outstanding.

2 unchanged sentences

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

Segment Reporting

The Partnership operates in a single operating and reportable segment.

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance.

The Partnership’s Chief Executive Officer (“CEO”) has been determined to be the chief operating decision maker and allocates resources and assesses performance based upon financial information at the consolidated level.

Summary of Significant Accounting Policies

6 unchanged sentences

Recent Accounting Pronouncements

Recently Adopted Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 07, “Segment Reporting (Topic 280 ):

1 unchanged sentence

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023 - 07, as well as all existing segment disclosures in ASC 280 on an interim and annual basis.

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.

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

We adopted this standard for our fiscal year 2024 annual consolidated financial statements and interim condensed consolidated financial statements thereafter and have applied this standard retrospectively for all prior periods presented in the consolidated financial statements.

See Note 6 — Segment Reporting for further information.

Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024 - 03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses” (“ASU 2024 - 03” ), which requires public entities to disclose additional information about certain costs and expenses included in relevant expense captions presented on the income statement.

ASU 2024 - 03 is effective for annual periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

Management is currently evaluating ASU 2024 - 03 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.

The Partnership considers the applicability and impact of all ASUs.

5 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.

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.

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.

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.

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.

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.

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, 2024 includes $ 193.7 million of net proved oil and natural gas properties acquired in the transaction.

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.

Final settlement net cash received, net of capitalized transaction costs paid, of $ 1.9 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2025.

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired royalty 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.

1 unchanged sentence

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, 2024 includes $ 14.6 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 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.

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

1 unchanged sentence

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.

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 January 1, 2024 through March 25, 2024 of $ 4.0 million.

The contributed cash of $4.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2024.

The condensed consolidated balance sheet as of December 31, 2024 includes $ 12.3 million of net proved oil and natural gas properties acquired in the transaction.

On September 30, 2022, pursuant to a non-taxable contribution and exchange agreement with Excess Energy, LLC, a Texas limited liability company (“Excess”), 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.

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.

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.

Commitments and Contingencies

1 unchanged sentence

Distributions to Holders of Common Units

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.

On April 24, 2025, the Partnership announced its cash distribution for the first quarter of 2025 of $ 0.725835 per common unit, representing activity for the three -month period ended March 31, 2025, payable to common unitholders of record as of May 5, 2025.

This distribution will be paid on May 15, 2025.

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

Segment Reporting

The Partnership manages its business activities on a consolidated basis and operates in a single operating and reportable segment.

Operating segments are defined as components of a public entity that engages in business activities and for which discrete financial information and operating results are available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.

As disclosed in Note 1 – Business and Basis of Presentation, our business may be described as the acquisition, ownership and administration of Royalty Properties and the NPI.

See Note 2 – Summary of Significant Accounting Policies in the Partnership’s Annual Report for a summarization of the Partnerships revenue recognition policy.

The Partnership’s Chief Executive Officer (“CEO”) has been determined to be the chief operating decision maker of the Partnership.

The CEO uses Net income, as reported on our Condensed Consolidated Income Statements, to assess financial performance and allocate resources on a consolidated basis.

The CEO manages and evaluates the results of the Partnership on a consolidated basis, and Net income is used to evaluate key operating decisions, such as making strategic acquisitions, determining transaction structures to capitalize on the development of the properties underlying our mineral interests, and allocating resources for general and administrative expenditures.

The CEO does not review condensed consolidated balance sheet assets when assessing segment performance and deciding how to allocate resources.

Disaggregated operating revenues of the Partnership’s single segment and all significant segment expenses are presented separately on the Partnership’s Condensed Consolidated Income Statements.

There are no other significant segment expenses or other segment items that would require disclosure.

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 nine months ended September 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 months ended March 31, 2025 and 2024, 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 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.

As of March 31, 2025, 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 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.

From a cash perspective, as of March 31, 2025, the NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $3.0 million.

Commodity Price Risks

4 unchanged sentences

It is not possible for us to predict or determine how these factors might affect oil and natural gas market prices in the future.

We continue to monitor factors impacting commodity supply and demand situations, including changes to tariff and import/export regulations by the United States or other countries, and assess their impact on our business.

Tariffs and Trading Relationships

In April 2025, the U.S.

government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China.

Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions.

Additionally, the U.S.

government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions.

Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we own properties.

Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.

Global oil markets are contending with tariff impacts, geopolitical tensions, and oil supply dynamics, including the evolving OPEC+ production strategy and potential constraints on Iranian, Russian, and Venezuelan oil exports.

While recent volatility in commodity prices is not immediately driving changes in North American production activity, oil producers are evaluating a range of scenarios in anticipation of oil price pressure in light of the foregoing.

Gas producers could prove to be beneficiaries of potentially lower associated gas production in oil-weighted basins if oil production is curtailed.

Larger, well-capitalized producers, that comprise a greater portion of present North American shale production, are better able to withstand a broader range of commodity prices.

Results of Operations

1 unchanged sentence

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.

Final settlement net cash received, net of capitalized transaction costs paid, of $1.9 million is included in the net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2025.

On September 30, 2024, pursuant to a non-taxable contribution and exchange agreement with an unrelated third party, the Partnership acquired royalty 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.

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 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 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

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 January 1, 2024 through March 25, 2024 of $4.0 million.

The contributed cash of $4.0 million is included in net cash contributed in acquisitions on the condensed consolidated statement of cash flows for the three months ended March 31, 2024.

Three Months Ended March 31, 2025 as compared to Three Months Ended March 31, 2024

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

Nine Months Ended

September 30,

Accrual basis sales volumes:

3 unchanged sentences

NPI oil sales (mbbls)

Accrual basis average sales price:

Accrual basis average sales prices:

Royalty Properties natural gas sales ($/mcf)

3 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 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.

The increase in oil sales volumes attributable to our Royalty Properties from the first quarter of 2024 to the same period of 2025 is primarily a result of higher suspense releases on new wells on legacy acreage, suspense releases on first time payments from properties acquired in the third quarter of 2024, and increased baseline production from legacy wells and wells acquired in the third quarter of 2024 in the Permian Basin and increased baseline production from wells acquired in the first and third quarters of 2024 in the Rockies, partially offset by lower suspense releases on new wells and decreased baseline production in the Bakken region.

The increase in natural gas sales volumes attributable to our Royalty Properties from the first quarter of 2024 to the same period of 2025 is primarily a result of higher suspense releases on new wells on legacy acreage, suspense releases on first time payments from properties acquired in the third quarter of 2024, and increased baseline production from legacy wells and wells acquired in the third quarter of 2024 in the Permian Basin and increased baseline production from wells acquired in the first and third quarters of 2024 in the Rockies, partially offset by lower suspense releases on new wells in the Mid-Continent and East Texas.

The decrease in oil sales volumes attributable to our NPI properties from the first quarter of 2024 to the same period of 2025 is primarily a result of decreased baseline production in the Permian Basin and Bakken region and lower suspense releases on new wells in the Bakken region, partially offset by higher suspense releases on new wells in the Permian Basin.

The decrease in natural gas sales volumes attributable to our NPI properties from the first quarter of 2024 to the same period of 2025 is primarily a result of decreased baseline production in the Bakken region and decreased Fayetteville Shale production due to higher prior period adjustments, partially offset by increased baseline production in the Permian Basin.

Operating costs, including production taxes, increased 70% from the first quarter of 2024 to the same period of 2025.

The increase is primarily a result of higher proportionate production taxes due to higher oil and natural gas sales revenue, higher proportionate post-production costs, such as compression, transportation, processing, and marketing, due to higher oil and natural gas sales volumes, and higher ad valorem taxes attributable to our Royalty Properties.

Depreciation, depletion and amortization increased 142% from the first quarter of 2024 to the same period of 2025.

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.

1 unchanged sentence

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.

General and administrative expenses increased 32% from the first quarter of 2024 to the same period of 2025.

The increase is primarily a result of increased legal and professional service fees, higher regulatory filing fees due to the Partnership’s S-4 registration statement filing in the first quarter of 2025, and higher compensation expenses, including an expanded Operating Partnership equity program designed for employee retention.

Net cash provided by operating activities increased 19% from the first quarter of 2024 to the same period of 2025 primarily due to higher revenue receipts attributable to our Royalty Properties, 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.

This “indicated price” does not necessarily reflect the contract terms for such sales and may be affected by transportation costs, location differentials, and quality and gravity adjustments.

This “realized price” does not necessarily reflect the contract terms for such sales and may be affected by transportation costs, location differentials, and quality and gravity adjustments.

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 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.

Cash receipts attributable to our Royalty Properties during the first quarter of 2025 totaled $34.2 million.

Approximately 68% of these receipts reflect oil sales during December 2024 through February 2025 and natural gas sales during November 2024 through January 2025, and approximately 32% from prior sales periods.

The average realized prices for oil and natural gas sales cash receipts attributable to the Royalty Properties during the first quarter of 2025 were $63.00/bbl and $2.19/mcf, respectively.

Cash receipts attributable to the Partnership's NPI during the first quarter of 2025 totaled $4.8 million.

Approximately 74% of these receipts reflect oil and natural gas sales during November 2024 through January 2025, and approximately 26% from prior sales periods.

The average realized prices for oil and natural gas sales cash receipts attributable to the NPI properties during the first quarter of 2025 were $58.83/bbl and $1.97/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 September 30, 2024 are summarized as follows:

Future maturities of Office Lease liabilities representing monthly cash rental payment obligations as of March 31, 2025 are summarized as follows:

(In Thousands)

8 unchanged sentences

We cannot predict events that may lead to future oil and natural gas price volatility.

Our ability to fund future distributions to unitholders may be affected by the prevailing economic conditions in the oil and natural gas market and other financial and business factors, including the possible resurgence of COVID-19 and any ongoing variants, along with global military conflicts, including in Ukraine and the Middle East, which are beyond our control.

If market conditions were to change due to declines in oil prices or uncertainty created by a resurgence of COVID-19 or any ongoing variants and our revenues were reduced significantly or our operating costs were to increase significantly, our cash flows and liquidity could be reduced.

The current economic environment is volatile, and we cannot predict the ultimate long-term impact on our liquidity or cash flows from factors outside of our control, including those related to COVID-19 or ongoing global military conflicts in Ukraine and the Middle East.

Our ability to fund future distributions to unitholders may be affected by the prevailing economic conditions in the oil and natural gas market and other financial and business factors, including global military conflicts, including in Ukraine and the Middle East and changes to tariff and import/export regulation by the United States or other countries, which are beyond our control.

If market conditions were to change due to declines in oil prices or uncertainty created by military conflicts or changes in trade policy and our revenues were reduced significantly or our operating costs were to increase significantly, our cash flows and liquidity could be reduced.

The current economic environment is volatile, and we cannot predict the ultimate long-term impact on our liquidity or cash flows from factors outside of our control, including those related to changes to tariff and import/export regulations by the United States or other countries or ongoing global military conflicts in Ukraine and the Middle East.

Liquidity and Working Capital

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

Cash and cash equivalents totaled $41.5 million at March 31, 2025 and $42.5 million at December 31, 2024.

Critical Accounting Policies and Estimates

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.

As of March 31, 2025, 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, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.

There have been no significant changes in our exposure to market risk during the three months ended March 31, 2025.

For a discussion of our exposure to market risk, refer to Item 7A of Part II of the Partnership’s Annual Report for the year ended December 31, 2024.

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