DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this report that are not historical facts (including any statements concerning plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), are forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” “estimate,” “continue”“continue,” or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition or state other “forward-looking”forward-looking information. In this report, the term “Partnership,” as well as the terms “DMLP,” “us,” “our,” “we,” and “its” are sometimes used as abbreviated references to Dorchester Minerals, L.P. itself or Dorchester Minerals, L.P. and its related entities.the Partnership.

These forward-looking statements are made based upon management’smanagement's current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and, therefore, involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements for a number of important reasons.reasons, including those discussed under “Item 1A – Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”) and in this report, in the Partnership’s other filings with the SEC and elsewhere in this report. Examples of such reasons include, but are not limited to, changes in the price or demand for oil and natural gas, public health crises including the worldwide coronavirus (COVID-19) outbreak beginning in early 2020 and its ongoing variants, the conflict in Ukraine, the conflict between Israel and Hamas, changes in the operations on or development of our properties, changes in economic and industry conditions and changes in regulatory requirements (including changes in environmental requirements) and our financial position, business strategy and other plans and objectives for future operations. These and other factors are set forth in our filings with the Securities and Exchange Commission.

You should read these statements carefully because they may discuss our expectations about our future performance, contain projections of our future operating results or our future financial condition, or state other “forward-looking”forward-looking information. Before you invest, you should be aware that the occurrenceoccurrence of any of the events herein described in “Item 1A – Risk Factors” in the Partnership’s Annual Report and its other filings with the SEC and elsewhere in this report could substantially harm our business, results of operations and financial condition and that upon the occurrence of any of these events, the trading price of our common units could decline, and you could lose all or part of your investment.

PART I– FINANCIAL INFORMATION

See attached financial statements on the following pages.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

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

CONDENSEDCONSOLIDATEDINCOME STATEMENTS

(In Thousands, except Incomeper Unit)unit amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN PARTNERSHIP CAPITAL

(In Thousands)

(Unaudited)

The accompanying notes areare an integral part of these condensed consolidated financial statementsstatements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Description of the Business

1     Basis of Presentation:Dorchester Minerals, L.P. (the “Partnership”) is a publicly traded Delaware limited partnership that was formed in December 2001, and 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”).

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements includeof the accounts of Dorchester Minerals, L.P. and its wholly-owned subsidiaries Dorchester Minerals Oklahoma LP, Dorchester Minerals Oklahoma GP, Inc., Maecenas Minerals LLP, and Dorchester-Maecenas GP LLC. All significant intercompany balances and transactionsPartnership have been eliminatedprepared in consolidation.

accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements do not include all of the disclosures required for complete annual financial statements prepared in conformity with U.S. GAAP. Therefore, the accompanying unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report. The accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring adjustments unless indicated otherwise) that are, in the opinion of management, necessary for the fair statementpresentation of our financial position and operating results for the interim period. Interim period results are not necessarily indicative of the results for the calendar year. See “Management’s Discussion and AnalysisFor more information regarding limitations on the forward-looking statements contained herein, see page 1 of Financial Condition and Results of Operations” for additional information. Per-unitthis Quarterly Report on Form 10-Q. Per unit information is calculated by dividing the income or loss applicable to holders of ourthe Partnership’s common units by the weighted average number of units outstanding. The Partnership has no potentially dilutive securities and, consequently, basic and dilutivediluted income per unit do not differ. These interim financial statements should be read in conjunction with the

The unaudited condensed consolidated financial statements include the accounts of the Partnership and notes thereto includedits 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.

Segment Reporting

Recent Events

Recent Events – In January 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain ofcoronavirus (“COVID-19”) and the significant risks to the international community and economies as the virus spread globally beyond its point of origin. In March 2020, the WHO classified COVID-19 as a pandemic, based on the rapid increase in exposure globally, and thereafter, COVID-19 continued to spread throughout the U.S. and worldwide. Multiple variants emerged in 2021 and became highly transmissible, which contributed to pricing volatility during 2021 to date. While in May 2023, the WHO determined that COVID-19 is now an established and ongoing health issue which no longer constitutes a public health emergency of international concern, the financial results of companies in the oil and natural gas industry have been impacted materially as a result of changing market conditions. Such circumstances generally increase uncertainty in the Partnership’s annual report on Form 10-K for the year ended December 31, 2016.accounting estimates.

Fair ValueFurthermore, during 2022 and 2023, multiple global military conflicts arose, causing instability in the international economy which may lead to significant market and other disruptions, including disruptions to the oil and gas industry, significant volatility in commodity prices and supply of Financial Instruments- The carrying amountenergy resources, instability in financial markets, supply chain interruptions, political and social instability and other material and adverse effects on macroeconomic conditions. It is not possible at this time to predict or determine the ultimate consequences of cashthese ongoing conflicts.

We are continuing to closely monitor the overall impact and cash equivalents, trade receivables and payables approximates fair value becausethe evolution of the short maturityCOVID-19 pandemic, including the ongoing spread of those instruments.any variants, along with future OPEC actions and the ongoing global military conflicts which arose during 2022 and 2023, on all aspects of our business, including how these events may impact our future operations, financial results, liquidity, employees, and operators. While conditions have significantly improved with the increase in domestic vaccination programs, the reduction in global constraints and the reduced spread of COVID-19 overall, the long-term impact of COVID-19 remains uncertain as responses to COVID-19 and newly emerging variants continue to evolve. Although the WHO, in May 2023, determined that COVID-19 is now an established and ongoing health issue which no longer constitutes a public health emergency of international concern, additional actions may be required in response to the COVID-19 pandemic on a national, state, and local level by governmental authorities, and such actions may further adversely affect general and local economic conditions if there is a resurgence in the spread of COVID-19. Furthermore, the ongoing global military conflicts could continue during 2024 and could lead to significant market and other disruptions, including disruptions to the oil and gas industry, significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and other material and adverse effects on macroeconomic conditions. We cannot predict the long-term impact of these events on our liquidity, financial position, results of operations or cash flows due to uncertainties including the severity of COVID-19 or any of the ongoing variants, and the duration and international impact of the ongoing global military conflicts. These estimated fair values may not be representativesituations remain fluid and unpredictable, and we are actively managing our response.

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. GAAP. 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 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 quarter close or that will be realizedMarch 31,2024 includes $12.0 million of net proved oil and natural gas properties acquired in the future.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. GAAP. 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. 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.

2     Commitments

On August 31, 2023, pursuant to a non-taxable contribution and Contingencies: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. We believe that the acquisition is considered complementary to our business. The transaction was accounted for as an acquisition of assets under U.S. GAAP. 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. 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 three months ended March 31,2024.

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

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. GAAP. 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 three months ended March 31, 2023. 

Our Partnership and Dorchester Minerals Operating LP, a Delaware limited partnership owned directly and indirectly by our general partner,General Partner are involved in legal and/or administrative proceedings arising in the ordinary course of their businesses, none of which have predictable outcomes and none of which are believed to have any significant effect on our consolidated financial position, cash flows, or operating results.

 Operating Leases - We have entered into an operating lease agreement in the ordinary course of our business activities. The third amendment to our office lease was signed on On April 17, 2017, for a term of 129 months beginning June 1, 2018. The lease is for our office space at 3838 Oak Lawn Avenue, Suite 300, Dallas, Texas, and now expires in 2029. Under the third amendment to the office lease, monthly rental payments will range from $25,000 - $30,000 and 18, 2024, the Partnership will receive a tenant improvement allowance of approximately $700,000. The Partnership recognizes a deferred rent liabilityannounced its cash distribution for the rent escalations when the amountfirst quarter of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense. For the tenant improvement allowance, the Partnership will record a deferred rent liability and will amortize the deferred rent over the lease term as a reduction to rent expense once in use.

3     Acquisition for Common Units:On June 30, 2017, pursuant to a Contribution, Exchange and Purchase Agreement with DSD Royalty, LLC, a Texas limited liability company (“DSD”), the Partnership acquired producing and nonproducing royalty and mineral interests located in the Midland Basin in exchange for consideration valued at approximately $23,183,000, half in cash (the “Cash Consideration”) and half in common units representing limited partner interests in the Partnership (“Common Units”), based on a price2024 of $14.98 per Common Unit (calculated based on the average closing price of Common Units during the period beginning 15 trading days immediately prior to the closing date and ending two trading days prior to the closing date) (the “DSD Agreement”). Prior to the closing of the DSD Agreement, the Partnership entered into a Participation Agreement with certain officers of the Partnership and entities affiliated with certain officers and directors of the Partnership (the “Participants”), pursuant to which the Partnership agreed to assign an undivided 50% interest in its rights under the DSD Agreement to the Participants in exchange for the Participants’ assumption of the obligation to pay the Cash Consideration on behalf of the Partnership (the “Participation Agreement”). On June 30, 2017, in connection with the closing of the DSD Agreement, the Participants contributed to the Partnership their respective assets received pursuant to the Participation Agreement in exchange for common units of the Partnership based on a price of $14.98 per Common Unit (calculated in the same manner as the price of Common Units issued pursuant to the DSD Agreement) pursuant to Contribution and Exchange Agreements with the Partnership (the “Participant Contribution Agreements”). In accordance with the transactions contemplated by the DSD Agreement and the Participant Contribution Agreements, the Partnership issued to DSD and the Participants an aggregate of 1,604,343 Common Units pursuant to the Partnership’s registration statements on Form S-4. After the issuance, 6,395,657 Common Units remain available under the Partnership’s registration statements on Form S-4.

4       Distributions to Holders of Common Units:Unitholder cash distributions$0.781837 per common unit, since 2015 have been:

Distributions beginning withrepresenting activity for the second quarterthree-month period ended March 31, 2024, payable to common unitholders of 2017 were paid on 32,279,774 units; previous distributions set forth above were paid on 30,675,431 units. The third quarter 2017record as of April 29, 2024. This distribution will be paid on NovemberMay 9, 2017. Fourth quarter distributions shown above are paid in the first calendar quarter of the following year. Our2024. The partnership agreement requires the fourth quarternext cash distribution to be paid by February August 14, 2018.

5       New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The guidance requires entities to recognize revenue using the following five-step model: identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue as the entity satisfies each performance obligation. Adoption of this standard could result in retrospective application, either in the form of recasting all prior periods presented or a cumulative adjustment to equity in the period of adoption. The company plans to adopt this standard using the modified retrospective method upon its effective date. The guidance is effective for annual and interim reporting periods beginning after December 15, 2017.

 Our Partnership’s revenues are substantially attributable to oil and gas sales. Based on substantial completion of review of our contracts, we believe the timing and presentation of revenues under ASU 2014-09 will be materially consistent with our current revenue recognition policy as described above. The Partnership will continue to monitor specific developments for our industry as it relates to ASU 2014-09.2024.

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

Objective

This discussion, which presents our results of operations for the three months ended March 31, 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.

Overview

We own producing and nonproducing mineral, royalty, overriding royalty, net profits and leasehold interests. We refer to these interests as the Royalty Properties. We currently own Royalty Properties in 574594 counties and parishes in 2528 states.

 WeAs of March 31, 2024, we own a net profits overriding royalty interestsinterest (referred to as the Net Profits Interests,Interest, or “NPIs”“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 refer to Dorchester Minerals Operating LP as the “operating partnership” or “DMOLP.”General Partner. We receive a monthly paymentspayment from the NPI equaling 96.97% of the net profits actually realized by the operating partnershipOperating Partnership from these properties in the preceding month. In the event that costs, including budgeted capital expenditures, exceed revenues on a cash basis in a given month for properties subject to athe Net Profits Interest, no payment is made, and any deficit is accumulated and carried over and reflected in the following month's calculation of net profit.

 Each of the five NPIs have previously had cumulative revenue that exceeded cumulative costs, such excess constituting net proceeds on which NPI payments were determined. In the event anthe NPI has a deficit of cumulative revenue versus cumulative costs, the deficit will be borne solely by the operating partnership.Operating Partnership.

 Minerals NPI production volumes and prices are withinFrom a cash perspective, as of March 31, 2024, the consolidated financial statements in accordance with U.S. GAAP. Our financial statements will continue to reflect such information even if the NPI is in temporary deficit due to capital expenditures.

 As of September 30, 2017, the Minerals NPI was in a surplus position and had outstanding capital commitments, primarily in the Bakken region, equaling cash on hand of $7,400,000.$4.0 million.

Commodity Price Risks

The pricing of oil and natural gas sales is primarily determined by supply and demand in the global marketplace and can fluctuate considerably. As a royalty owner and non-operator, we have extremely limited access to timely information and no operational control over the volumes of oil and natural gas produced and sold or the terms and conditions on which such volumes are marketed and sold.

Our profitability is affected by oil and natural gas market prices. Oil and natural gas market prices have fluctuated significantly in recent years in response to changes in the supply and demand for oil and natural gas in the market, along with domestic and international political and economic conditions.

In January 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) and the significant risks to the international community and economies as the virus spread globally beyond its point of origin. In March 2020, the WHO classified COVID-19 as a pandemic, based on the rapid increase in exposure globally, and thereafter, COVID-19 continued to spread throughout the U.S. and worldwide. In addition, in early March 2020, oil prices dropped sharply and continued to decline, briefly reaching negative levels, as a result of multiple factors affecting the supply and demand in global oil and natural gas markets, including (i) actions taken by OPEC members and other exporting nations impacting commodity price and production levels and (ii) a significant decrease in demand due to the COVID-19 pandemic. Additionally, multiple variants emerged in 2021 and became highly transmissible, which contributed to additional pricing and demand volatility during 2021 to date. However, conditions have significantly improved since 2022 with the increase in domestic vaccination programs, a reduction in global constraints and a reduced spread of COVID-19 overall and in May 2023, the WHO determined that COVID-19 is now an established and ongoing health issue which no longer constitutes a public health emergency of international concern. Nevertheless, the long term impact of COVID-19 remains uncertain.

Furthermore, during 2022 and 2023, multiple global military conflicts arose, causing instability in the international economy which may lead to significant market and other disruptions, including disruptions to the oil and gas industry, significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability and other material and adverse effects on macroeconomic conditions. It is not possible at this time to predict or determine the ultimate consequences of these ongoing conflicts.

As a result of the lifting of certain restrictions put in place in response to COVID-19 and the global supply shortage of oil and natural gas caused by the Russian invasion of Ukraine, in addition to other changing market conditions, oil and natural gas market prices sharply increased during the first half of 2022 followed by a slight softening in oil prices during the second half of 2022 due to higher inflation and rising interest rates. During the first quarter of 2023, with the exception of a decline of oil prices in March in reaction to the U.S. regional bank instability, oil prices remained generally in line with those seen in the later portion of 2022. Despite the decline in oil prices we have seen during 2023, demand and market prices for oil and natural gas remain resilient, due in part to global travel trending towards pre-COVID-19 levels and the recently announced OPEC+ production cuts. However, commodity prices have historically been volatile, and we cannot predict events which may lead to future fluctuations in these prices. Although the WHO in May 2023 determined that COVID-19 is now an established and ongoing health issue which no longer constitutes a public health emergency of international concern, additional actions may be required in response to the COVID-19 pandemic on a national, state, and local level by governmental authorities, and such actions may further adversely affect general and local economic conditions if there is a resurgence in the spread of COVID-19. The long term effects of COVID-19 remain uncertain. Similarly, the length, impact and outcome of the ongoing military conflicts are highly unpredictable and could lead to significant market disruptions and increased volatility in oil and natural gas prices and supply of energy resources along with instability in the global commodity and financial markets.

Results of Operations

ThreeAcquisitions for Common Units

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. 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.

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 three months ended March 31, 2023.

and Nine Three Months Ended September 30, 2017March 31, 2024 as compared to Three and Nine Months Ended March 31, 2023September30, 2016

Normally, our period-to-periodOur 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.prices, and to a lesser extent, by capital expenditures deducted under the NPI calculation. Our portion of oil and natural gas sales volumes and weighted average sales prices were:are shown in the following table. Oil sales volumes include volumes attributable to natural gas liquids and oil sales prices include natural gas liquids prices combined by volumetric proportions.

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

OilThe increase in oil sales volumes attributable to our Royalty Properties duringfrom the thirdfirst quarter increased 27% from 163 mbbls in 2016of 2023 to 207 mbbls in the same period of 2017. Oil sales volumes attributable to the first nine months of 2016 increased 26% from 451 mbbls to 569 mbbls in the same period of 2017. The increase in volumes during the third quarter and first nine months of 2017 compared to the same periods of 20162024 is mainly a result of increased Permian Basin production from new wells. Natural gas sales volumes attributable to our Royalty Properties during the third quarter increased 25% from 775 mmcf in 2016 to 967 mmcf in the same period of 2017. Natural gas sales volumes during the first nine months increased 9% from 2,461 mmcf in 2016 to 2,681 mmcf in the same period of 2017. The increase in volumes during the third quarter and first nine months of 2017 compared to the same periods of 2016 is mainlyprimarily a result of increased production in the Permian Basin, Bakken region, and from acquired wells in South Texas, partially offset by decreased productionlower suspense releases on new wells in the Fayetteville Shale play.

Oil sales volumes attributable to our NPIs during the third quarter and first nine months of 2016 were 84 mbbls and 307 mbbls, respectively, resulting in decreases of 29% and 35% to 60 mbbls and 200 mbbls, respectively, during the same periods of 2017.Permian Basin. The decrease in oil sales volumes is mainly due to natural reservoir declines. Natural gas sales volumes attributable to our NPIs duringRoyalty Properties from the thirdfirst quarter increased 5% from 599 mmcf in 2016of 2023 to 631 mmcf in the same period of 2017 due to2024 is primarily a higher numberresult of lower suspense releases in 2017. During the first nine months of 2017, NPI natural gas volumes decreased 10% from 1,996 mmcf in 2016 to 1,799 mmcfon new wells in the same period of 2017. The decreasePermian Basin and East Texas and lower suspense releases from acquired wells in gas sales volumes is mainly due to natural reservoir declinesSouth Texas, partially offset by increased production in addition to the lower amount ofPermian Basin and East Texas and higher suspense releases in the first quarter of 2017 as compared to the first quarter of 2016.

Our third quarter net operating revenues increased 17% from $10,679,000 during 2016 to $12,480,000 during the same period of 2017. Current quarter increase in royalty revenues is primarily due to higher oil and natural gas prices, partially offset by a decrease in both net profits interests income and lease bonus income versus the prior year. Our first nine months net operating revenues increased 41% from $26,814,000 during 2016 to $37,760,000 during the same period of 2017. These increases are primarily a result of an increase in royalty revenues resulting from higher oil and natural gas prices and sales volumes.Mid-Continent.

Third quarter operating costs and expenses increased 46% from $902,000 during 2016 to $1,320,000 during the same period of 2017. Our first nine months operating costs increased 54% from $2,180,000 during 2016 to $3,358,000 during the same period of 2017. The increasesdecrease in both periods are primarily a result of higher production taxes due to higher oil and natural gas sales prices.

General and administrative expenses of $1,050,000 duringvolumes attributable to our NPI properties from the thirdfirst quarter of 2016 increased 9% to $1,141,000 during the same period of 2017 primarily as a result of costs related to our office remodel. General and administrative expenses of $3,967,000 during the first nine months of 2016 decreased 5% compared to $3,764,000 during the same period of 2017. The decrease is primarily due to lower information technology costs and lower legal costs associated with royalty litigation partially offset by increased costs related to our office remodel as compared2023 to the same period of 2016.2024 is primarily a result of lower suspense releases on new wells in the Permian Basin, partially offset by increased production and higher suspense releases on new wells in the Bakken region.

Depletion and amortization Operating costs, of $2,080,000 duringincluding production taxes, decreased 3% from the thirdfirst quarter of 2016 increased 34%2023 to $2,795,000 during the same period of 2017 due2024. The decrease is primarily a result of lower ad valorem taxes attributable to additionalour Royalty Properties.

ThirdGeneral and administrative expenses increased 19% from the first quarter net income allocableof 2023 to common units increased 8% from $6,417,000 during 2016 to $6,951,000 during the same period of 2017 mainly due to higher royalty income. Our first nine months net income allocable to common units increased by 71% from $13,600,000 compared to $23,292,000 during the same period of 2017.2024. The increase is mainly due toprimarily a result of higher royalty income due to higher oilcompensation expenses, including an expanded Operating Partnership equity program designed for employee retention, and natural gas prices and sales volumes.increased professional service fees.

Net cash provided by operating activities increased 45%decreased 28% from $21,563,000 during the first ninethree months of 20162023 to $31,274,000 during the same period of 2017.2024. The changedecrease is mainly driven by higher oil and natural gas sales prices. Net cash provided by investing activities increased from $0 to $331,000 mainlyprimarily due to the cash contributed with the acquisition of royalty interests.lower NPI payment receipts.

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 weighted 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. 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 thirdfirst quarter of 20172024 totaled approximately $10,000,000. These$24.5 million. Approximately 71% of these receipts generally reflect oil sales during June 2017December 2023 through August 2017February 2024 and natural gas sales during May 2017November 2023 through July 2017.January 2024, and approximately 29% from prior sales periods. The weighted average indicated prices for oil and natural gas sales received during the 2017 third quartercash receipts attributable to the Royalty Properties during the first quarter of 2024 were $41.36/$63.89/bbl and $2.75/$2.37/mcf, respectively.

Cash receipts attributable to our NPIsNet Profits Interest during the thirdfirst quarter of 20172024 totaled approximately $1,100,000. These$6.8 million. Approximately 65% of these receipts generally reflect oil and natural gas sales during November 2023 through January 2024, and approximately 35% from the properties underlying the NPIs during May 2017 through July 2017.prior sales periods. The weighted average indicated prices for oil and natural gas sales receivedcash receipts attributable to the NPI properties during the 2017 thirdfirst quarter attributable to our NPIsof 2024 were $38.89/$65.12/bbl and $2.75/$2.27/mcf, respectively.

On June 28, 2017, the Partnership executed a definitive agreement to acquire producing and nonproducing mineral and royalty interests located in Glasscock, Howard, Martin, Midland, Reagan and Upton Counties, Texas. The properties consist

 The transaction was consummated on June 30, 2017 and was structured as a non-taxable contribution and exchange. At the closing, in addition to conveying their interests to the Partnership, the contributing parties delivered funds in an amount equal to their cash receipts during the period from April 1, 2017 through June 30, 2017 and attributable to production on the subject properties on or after September 1, 2016, amounting to approximately $614,000, and the Partnership issued an aggregate of 1,604,343 common units of the Partnership to the contributing parties.

Liquidity and Capital Resources

Capital Resources

Our primary sources of capital, on both a short-term and long-term basis, are our cash flowsflows from the NPIsRoyalty Properties and the NPI. Our partnership agreement requires that we distribute quarterly an amount equal to all funds that we receive from Royalty Properties. Our onlyProperties and NPIs (other than cash proceeds received by the Partnership from a public or private offering of securities of the Partnership) less certain expenses and reasonable reserves. Additional cash requirements are the distributions to our unitholders,include the payment of oil and natural gas production and property taxes not otherwise deducted from gross production revenues and general and administrative expenses incurred on our behalf and allocated to the Partnership in accordance with ourthe partnership agreement. Because the distributions to our unitholders are, by definition, determined after the payment of all expenses actually paid by us, the only cash requirements that may create liquidity concerns for us are the paymentspayment of expenses. Because mostmany of these expenses vary directly with oil and natural gas sales prices and volumes, we anticipate that sufficient funds will be available at all times for payment of these expenses. See Note 4 of the Notes5 to the Condensed Consolidatedunaudited condensed consolidated financial statements included in “Item 1 – Financial StatementsStatements” of this Quarterly Report on Form 10-Q for the amounts and dates ofadditional information regarding cash distributions to unitholders.

Contractual Obligations

The Partnership leases its office space at 3838 Oak Lawn Avenue, Suite 300, Dallas, Texas, through an operating lease (the “Office Lease”). The third amendment to our Office Lease was executed in April 2017 for a term of 129 months, beginning June 1, 2018 and expiring in 2029. 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 March 31, 2024 are summarized as follows:

We are not directly liable for the payment of any exploration, development or production costs. We do not have any transactions, arrangements or other relationships that could materially affect our liquidity or the availability of capital resources. We have not guaranteed the debt of any other party, nor do we have any other arrangements or relationships with other entities that could potentially result in unconsolidated debt.

PursuantTo the extent necessary to the terms ofavoid unrelated business taxable income, our partnership agreement we cannot incurprohibits us from incurring indebtedness, other thanexcluding trade payables, (i) in excess of $50,000 in the aggregate at any given time or (ii) which would constitute “acquisition indebtedness” (as defined in Section 514 of the Internal Revenue Code of 1986, as amended).

ExpensesWe currently expect to have sufficient liquidity to fund our distributions to unitholders and Capital Expenditures

The operating partnership continues to assess the opportunity to increase production based on prevailing market conditions in Oklahoma with techniquesoperations despite potential material uncertainties that may include fracture treating, deepening, recompleting,impact us as a result of the ongoing world military conflicts, including in Israel and drilling. Costs vary widelyin Ukraine and are not predictable as each effort requires specific engineering. Such activities by the operating partnership could influence the amount we receive from the NPIs.

The operating partnership ownsrise during 2022 and operates the wells, pipelines2023 in inflation and interest rates. Although demand and market prices for oil and natural gas compressionremain resilient due in part to global travel trending towards pre-COVID-19 levels and dehydration facilities locatedthe recently announced OPEC+ production cuts, we cannot predict events that may lead to future price volatility. Our ability to fund future distributions to unitholders may be affected by the prevailing economic conditions in Oklahoma. The operating partnership does not anticipate incurring significant expensethe oil and natural gas market and other financial and business factors, including the possible resurgence of COVID-19 and any ongoing variants, along with the military conflict between Russia and Ukraine which are beyond our control. If market conditions were to replace these facilities at this time. These capitalchange 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 are reflectedwere to increase significantly, our cash flows and liquidity could be reduced. Despite the significant improvement in conditions since the NPI paymentsbeginning of the COVID-19 pandemic, the current economic environment is volatile, and therefore, we receive fromcannot predict the operating partnership.

In 1998, Oklahoma regulations removed production quantity restrictions inultimate long-term impact that COVID-19 or the Guymon-Hugoton fieldongoing military conflict between Russia and did not address efforts by third parties to persuade Oklahoma to permit infill drilling in the Guymon-Hugoton field. Infill drilling could require considerable capital expenditures. The outcome and the cost of such activities are unpredictable and could influence the amount we receive from the NPIs. The operating partnership believes it now has sufficient field compression and permits for vacuum operation for the foreseeable future.Ukraine will have on our liquidity or cash flows.

Liquidity and Working Capital

Cash and cash equivalents totaled $11,557,000$37.7 million at September 30, 2017March 31, 2024 and $8,212,000$47.0 million at December 31, 2016.2023.

Critical Accounting Policies and Estimates

We utilize the full cost methodAs of accounting for costs relatedMarch 31, 2024, there have been no significant changes to our oilcritical accounting policies and natural gas properties. Under this method, all such costs are capitalized and amortized on an aggregate basis over the estimated lives of the properties using the units-of-production method. These capitalized costs are subject to a ceiling test, however, which limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved oil and natural gas reserves discounted at 10% plus the lower of cost or market value of unproved properties. The full cost ceiling is evaluated at the end of each quarter and when events indicate possible impairment. 

The discounted present value ofrelated estimates previously disclosed in our proved oil and natural gas reserves is a major component of the ceiling calculation and requires many subjective judgments. Estimates of reserves are forecasts based on engineering and geological analyses. Different reserve engineers may reach different conclusions as to estimated quantities of natural gas or crude oil reserves based on the same information. Our reserve estimates are prepared by independent consultants. The passage of time provides more qualitative information regarding reserve estimates, and revisions are made to prior estimates based on updated information. However, there can be no assurance that significant revisions will not be necessary in the future. Significant downward revisions could result in an impairment representing a non-cash charge to income. In addition to the impact on the calculation of the ceiling test, estimates of proved reserves are also a major component of the calculation of depletion.

While the quantities of proved reserves require substantial judgment, the associated prices of oil and natural gas reserves that are included in the discounted present value of our reserves are objectively determined. The ceiling test calculation requires use of the unweighted arithmetic average of the first day of the month price during the 12-month period ending on the balance sheet date and costs in effect as of the last day of the accounting period, which are generally held constantAnnual Report for the life of the properties. As a result, the present value is not necessarily an indication of the fair value of the reserves. Oil and natural gas prices have historically been volatile and the prevailing prices at any given time may not reflect our Partnership’s or the industry’s forecast of future prices.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, estimates of uncollected revenues and unpaid expenses from Royalty Properties and NPI properties operated by non-affiliated entities are particularly subjective due to our inability to gain accurate and timely information. Therefore, actual results could differ from those estimates.

item 3.             Quantitative and Qualitative Disclosures About Market Risk

The following information provides quantitative and qualitative information about our potential exposures to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in oil and natural gas prices, interest rates and currency exchange rates. The disclosures are not meant to be precise indicators of expected future losses but, rather, indicators of possible losses.year ended December 31, 2023.

Market Risk Related to Oil and Natural Gas Prices

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Essentially all ofThere have been no significant changes in our assets and sources of income are from Royalty Properties and NPIs, which generally entitle us to receive a share of the proceeds based on oil and natural gas production from those properties. Consequently, we are subjectexposure to market risk from fluctuations in oil and natural gas prices. Pricing for oil and natural gas production has been unpredictable for several years. We do not anticipate entering into financial hedging activities intended to reduceduring the three months ended March 31, 2024. For a discussion of our exposure to oil and natural gas price fluctuations.market risk, refer to Item 7A of Part I of the Partnership’s Annual Report for the year ended December 31, 2023.

Absence of Interest Rate and Currency Exchange Rate Risk

We do not anticipate having a credit facility or incurring any debt other than trade debt. Therefore, we do not expect interest rate risk to be material to us. We do not anticipate engaging in transactions in foreign currencies that could expose us to foreign currency related market risk.

item

ITEM 4.            Controls and Procedures

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, our principal executive officer and principal financial officer carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based on their evaluation, they have concluded that our disclosure controls and procedures were effective.

Changes in Internal ControlsControl

There were no changes in our internal controls (ascontrol over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) during the quarter ended September 30, 2017March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.

PART II– OTHER INFORMATION

Item

ITEM 1.             Legal Proceedings

LEGAL PROCEEDINGS

The Partnership and the operating partnershipOperating Partnership are involved in legal and/or administrative proceedings arising in the ordinary course of their businesses, none of which have predictable outcomes,, and none of which are believed to have any significant effect on consolidated financial position, cash flows, or operating results.

ITEM 2.     ISSUER PURCHASES OF EQUITY SECURITIESThere have been no material changes to the Partnership’s risk factors as disclosed under “Item 1A – Risk Factors” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.