Dorchester Minerals LP
Annual Report 2017

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K ☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2017 or ☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition Period from ________to__________ Commission File Number: 000-50175 DORCHESTER MINERALS, L.P.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)81-0551518(I.R.S. Employer Identification No.) 3838 Oak Lawn Avenue, Suite 300Dallas, Texas 75219(Address of principal executive offices) (Zip Code) (214) 559-0300(Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:Title of each classCommon Units Representing Limited Partnership InterestsName of each exchange on which registeredNASDAQ Global Select Market SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:Title of ClassNone Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during thepreceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is notcontained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smallerreporting company, or an emerging growth company. See the definitions of "large accelerated filer”, “accelerated filer”, “smallerreporting company", and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☐Accelerated filer ☒Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.): Yes ☐ No ☒ The aggregate market value of the common units held by non-affiliates of the registrant (treating all managers, executive officers and10% unitholders of the registrant as if they may be affiliates of the registrant) was approximately $421,073,423 as of June 30, 2017,based on $14.45 per unit, the closing price of the common units as reported on the NASDAQ Global Select Market on such date. Number of Common Units outstanding as of March 8, 2018: 32,279,774 DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive proxy statement for the registrant's 2018 Annual Meeting of Unitholders to be held on May 16, 2018, areincorporated by reference in Part III of this Form 10-K. Such definitive proxy statement will be filed with the Securities and ExchangeCommission not later than 120 days subsequent to December 31, 2017. Table of Contents TABLE OF CONTENTSPART I ITEM 1.BUSINESS1 ITEM 1A.RISK FACTORS4 ITEM 1B. UNRESOLVED STAFF COMMENTS17 ITEM 2.PROPERTIES17 ITEM 3.LEGAL PROCEEDINGS21 ITEM 4.MINE SAFETY DISCLOSURES21 PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES21 ITEM 6.SELECTED FINANCIAL DATA23 ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS24 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK29 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA29 ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE29 ITEM 9A.CONTROLS AND PROCEDURES30 ITEM 9B.OTHER INFORMATION30 PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE30 ITEM 11.EXECUTIVE COMPENSATION30 ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDERMATTERS30 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE30 ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES30 PART IV ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES31 ITEM 16.FORM 10-K SUMMARY33 GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS34 SIGNATURES36 INDEX TO CONSOLIDATED FINANCIAL STATEMENTSF-1 Table of Contents PART I. ITEM 1. BUSINESS General Dorchester Minerals, L.P. is a publicly traded Delaware limited partnership that commenced operations on January 31, 2003, upon the combinationof Dorchester Hugoton, Ltd., Republic Royalty Company, L.P. and Spinnaker Royalty Company, L.P. Dorchester Hugoton was a publicly traded Texaslimited partnership, and Republic and Spinnaker were private Texas limited partnerships. Our common units are listed on the NASDAQ Global SelectMarket. American Stock Transfer & Trust Company is our registrar and transfer agent and its address and telephone number is 6201 15th Avenue,Brooklyn, NY 11219, (800) 937-5449. Our executive offices are located at 3838 Oak Lawn Avenue, Suite 300, Dallas, Texas, 75219-4541, and ourtelephone number is (214) 559-0300. We have established a website at www.dmlp.net that contains the last annual meeting presentation and a link to theNASDAQ website. You may obtain all current filings free of charge at our website. We will provide electronic or paper copies of our annual report onForm 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished to the Securities andExchange Commission (“SEC”) free of charge upon written request at our executive offices. In this report, the term "Partnership," as well as the terms "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. Our general partner is Dorchester Minerals Management LP, which is managed by its general partner, Dorchester Minerals Management GP LLC. As aresult, the Board of Managers of Dorchester Minerals Management GP LLC exercises effective control of our Partnership. In this report, the term "generalpartner" is used as an abbreviated reference to Dorchester Minerals Management LP. Our general partner also controls and owns, directly and indirectly,all of the partnership interests in Dorchester Minerals Operating LP and its general partner. Dorchester Minerals Operating LP owns working interests andother properties underlying our Net Profits Interests (or “NPIs”), provides day-to-day operational and administrative services to us and our general partner,and is the employer of all the employees who perform such services. In this report, the term "operating partnership" is used as an abbreviated reference toDorchester Minerals Operating LP. Our general partner and the operating partnership are Delaware limited partnerships, and the general partners of their general partners are Delawarelimited liability companies. These entities and our Partnership were initially formed in December 2001 in connection with the combination. Our whollyowned subsidiary, Dorchester Minerals Oklahoma LP and its general partner are Oklahoma entities that acquired our wholly owned acquisition subsidiaryand its general partner by merger on December 31, 2009. On March 31, 2010, we formed a new subsidiary, and it acquired all of the outstandingpartnership interests in Maecenas Minerals LLP, a Texas limited liability partnership. Our business may be described as the acquisition, ownership and administration of Royalty Properties and NPIs. The Royalty Properties consist ofproducing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in 574 counties and parishes in 25 states(“Royalty Properties”). The NPIs represent net profits overriding royalty interests in various properties owned by the operating partnership. Our partnership agreement requires that we distribute quarterly an amount equal to all funds that we receive from the Royalty Properties and the NPIsless certain expenses and reasonable reserves. Our partnership agreement allows us to grow by acquiring additional oil and natural gas properties, subject to the limitations described below. Theapproval of the holders of a majority of our outstanding common units is required for our general partner to cause us to acquire or obtain any oil andnatural gas property interest, unless the acquisition is complementary to our business and is made either: ●in exchange for our limited partner interests, including common units, not exceeding 20% of the common units outstanding after issuance; or ●in exchange for cash, if the aggregate cost of any acquisitions made for cash during the twelve-month period ending on the first to occur of theexecution of a definitive agreement for the acquisition or its consummation is no more than 10% of our aggregate cash distributions for the fourmost recent fiscal quarters. Unless otherwise approved by the holders of a majority of our common units, in the event that we acquire properties for a combination of cash andlimited partner interests, including common units, (i) the cash component of the acquisition consideration must be equal to or less than 5% of theaggregate cash distributions made by our Partnership for the four most recent quarters and (ii) the amount of limited partnership interests, includingcommon units, to be issued in such acquisition, after giving effect to such issuance, shall not exceed 10% of the common units outstanding. 1Table of Contents Credit Facilities and Financing Plans We do not have a credit facility in place, nor do we anticipate doing so. We do not anticipate incurring any debt, other than trade debt incurred in theordinary course of our business. Our partnership agreement prohibits us from incurring indebtedness, other than trade payables, (i) in excess of $50,000 inthe aggregate at any given time; or (ii) which would constitute "acquisition indebtedness" (as defined in Section 514 of the Internal Revenue Code of1986, as amended), in order to avoid unrelated business taxable income for federal income tax purposes. We may finance any growth of our businessthrough acquisitions of oil and natural gas properties by issuing additional limited partnership interests or with cash, subject to the limits described aboveand in our partnership agreement. Under our partnership agreement, we may also finance our growth through the issuance of additional partnership securities, including options, rights,warrants and appreciation rights with respect to partnership securities from time to time in exchange for the consideration and on the terms and conditionsestablished by our general partner in its sole discretion. However, we may not issue limited partnership interests that would represent over 20% of theoutstanding limited partnership interests immediately after giving effect to such issuance or that would have greater rights or powers than our commonunits without the approval of the holders of a majority of our outstanding common units. Except in connection with qualifying acquisitions, we do notcurrently anticipate issuing additional partnership securities. We have effective registration statements on Form S-4 registering an aggregate of 8,000,000common units that may be offered and issued by the Partnership from time to time in connection with asset acquisitions or other business combinationtransactions. During 2017, the Partnership issued 1,604,343 common units in connection with the consummation of the transactions contemplated by thatcertain Contribution, Exchange and Purchase Agreement dated June 28, 2017 between the Partnership and DSD Royalty, LLC and those certainContribution and Exchange Agreements dated June 30, 2017 between the Partnership and each of 1307, Ltd., SCW Capital, LP, Tortuga Oil & Gas, L.P.,Robert R. Penn, Squaretop Partners, L.P., Marshall Bryan Payne, MARI GST Non-Exempt Trust, Vaughn Petroleum (DMLP), LLC, James E. Raley, 2011Pete & Kay Allen Family Trust, Leslie A. Moriyama, Rokeby Investments, L.P., Browning C. Vaughn, The MDIG PPM Trust, The MDIG WWM Trust, TheMDIG AMM Trust, The MDIG SCM Trust and Quiscalus Ventures, LLC. At present, 6,395,657 units remain available under the Partnership’s registrationstatements on Form S-4. Regulation Many aspects of the production, pricing and marketing of crude oil and natural gas are regulated by federal and state agencies. Legislation affectingthe oil and natural gas industry is under constant review for amendment or expansion, which frequently increases the regulatory burden on affectedmembers of the industry. Exploration and production operations are subject to various types of regulation at the federal, state and local levels. Such regulation includes: ●permits for the drilling of wells; ●bonding requirements in order to drill or operate wells; ●the location and number of wells; ●the method of drilling and completing wells; ●the surface use and restoration of properties upon which wells are drilled; ●the plugging and abandonment of wells; ●numerous federal and state safety requirements; ●environmental requirements; ●property taxes and severance taxes; and ●specific state and federal income tax provisions. Oil and natural gas operations are also subject to various conservation laws and regulations. These regulations govern the size of drilling and spacingunits or proration units and the density of wells that may be drilled and the unitization or pooling of oil and natural gas properties. In addition, stateconservation laws establish a maximum allowable production from oil and natural gas wells. These state laws also generally prohibit the venting orflaring of natural gas and impose certain requirements regarding the ratability of production. These regulations can limit the amount of oil and natural gasthat the operators of our properties can produce. The transportation of oil and natural gas after sale by operators of our properties is sometimes subject to regulation by state authorities. The interstatetransportation of oil and natural gas is subject to federal governmental regulation, including regulation of tariffs and various other matters, primarily bythe Federal Energy Regulatory Commission. Customers and PricingThe pricing of oil and natural gas sales is primarily determined by supply and demand in the marketplace and can fluctuate considerably. As aroyalty owner and non-operator, we have extremely limited access to timely information, involvement, and operational control over the volumes of oiland natural gas produced and sold and the terms and conditions on which such volumes are marketed and sold. The operating partnership sells its Oklahoma Hugoton field natural gas production to DCP Midstream, LP, a gas processor and purchaser under aprocessing and purchase agreement. The agreement is automatically renewed annually unless cancelled by either party. We believe that the loss of DCPMidstream, LP or any single customer would not have a material adverse effect on us due to the availability of alternative purchasers in the area. 2Table of Contents Competition The energy industry in which we compete is subject to intense competition among many companies, both larger and smaller than we are, many ofwhich have financial and other resources greater than we have. Business Opportunities Agreement Pursuant to a business opportunities agreement among us, our general partner, the general partner of our general partner, and the owners of thegeneral partner of our general partner (the “GP Parties”), we have agreed that, except with the consent of our general partner, which it may withhold in itssole discretion, we will not engage in any business not permitted by our partnership agreement, and we will have no interest or expectancy in anybusiness opportunity that does not consist exclusively of the oil and natural gas business within a designated area that includes portions of TexasCounty, Oklahoma and Stevens County, Kansas. All opportunities that are outside the designated area or are not oil and natural gas business activities arecalled renounced opportunities. The parties also have agreed that, as long as the activities of the general partner, the GP Parties and their affiliates or manager designees areconducted in accordance with specified standards, or are renounced opportunities: ●our general partner, the GP Parties and their affiliates or the manager designees will not be prohibited from engaging in the oil and natural gasbusiness or any other business, even if such activity is in direct or indirect competition with our business activities; ●affiliates of our general partner, the GP Parties and their affiliates and the manager designees will not have to offer us any business opportunity; ●we will have no interest or expectancy in any business opportunity pursued by affiliates of our general partner, the GP Parties or their affiliatesand the manager designees; and ●we waive any claim that any business opportunity pursued by our general partner, the GP Parties or their affiliates and the manager designeesconstitutes a corporate opportunity that should have been presented to us. The standards specified in the business opportunities agreement generally provide that the GP Parties and their affiliates and manager designees mustconduct their business through the use of their own personnel and assets and not with the use of any personnel or assets of us, our general partner oroperating partnership. A manager designee or personnel of a company in which any affiliate of our general partner or any GP Party or their affiliates has aninterest or in which a manager designee is an owner, director, manager, partner or employee (except for our general partner and its general partner andtheir subsidiaries) is not allowed to usurp a business opportunity solely for his or her personal benefit, as opposed to pursuing, for the benefit of theseparate party an opportunity in accordance with the specified standards. In certain circumstances, if a GP Party or any subsidiary thereof, any officer of the general partner of our general partner or any of their subsidiaries, ora manager of the general partner of our general partner that is an affiliate of a GP Party signs a binding agreement to purchase oil and natural gas interests,excluding oil and natural gas working interests, then such party must notify us prior to the consummation of the transactions so that we may determinewhether to pursue the purchase of the oil and natural gas interests directly from the seller. If we do not pursue the purchase of the oil and natural gasinterests or fail to respond to the purchasing party's notice within the provided time, the opportunity will also be considered a renounced opportunity. In the event any GP Party or one of their subsidiaries acquires an oil and natural gas interest, including oil and natural gas working interests, in thedesignated area, it will offer to sell these interests to us within one month of completing the acquisition. This obligation also applies to any package of oiland natural gas interests, including oil and natural gas working interests, if at least 20% of the net acreage of the package is within the designated area;however, this obligation does not apply to interests purchased in a transaction in which the procedures described above were applied and followed by theapplicable affiliate. 3Table of Contents Operating Hazards and Uninsured Risks Our operations do not directly involve the operational risks and uncertainties associated with drilling for, and the production and transportation of,oil and natural gas. However, we may be indirectly affected by the operational risks and uncertainties faced by the operators of our properties, includingthe operating partnership, whose operations may be materially curtailed, delayed or canceled as a result of numerous factors, including: ●the presence of unanticipated pressure or irregularities in formations; ●accidents; ●title problems; ●weather conditions; ●compliance with governmental requirements; and ●shortages or delays in the delivery of equipment. Also, the ability of the operators of our properties to market oil and natural gas production depends on numerous factors, many of which are beyondtheir control, including: ●capacity and availability of oil and natural gas systems and pipelines; ●effect of federal and state production and transportation regulations; ●changes in supply and demand for oil and natural gas; and ●creditworthiness of the purchasers of oil and natural gas. The occurrence of an operational risk or uncertainty that materially impacts the operations of the operators of our properties could have a materialadverse effect on the amount that we receive in connection with our interests in production from our properties, which could have a material adverseeffect on our financial condition or result of operations. In accordance with customary industry practices, we maintain insurance against some, but not all, of the risks to which our business exposes us.While we believe that we are reasonably insured against these risks, the occurrence of an uninsured loss could have a material adverse effect on ourfinancial condition or results of operations. Employees As of March 8, 2018, the operating partnership had 24 full-time employees in our Dallas, Texas office and six full-time employees in field locations. ITEM 1A. RISK FACTORS Risks Related to Our Business Our cash distributions are highly dependent on oil and natural gas prices, which have historically been very volatile. Our quarterly cash distributions depend significantly on the prices realized from the sale of oil and, in particular, natural gas. Historically, the marketsfor oil and natural gas have been volatile and may continue to be volatile in the future. Various factors that are beyond our control will affect prices of oiland natural gas, such as: ●the worldwide and domestic supplies of oil and natural gas; ●the ability of the members of the Organization of Petroleum Exporting Countries and others to agree to and maintain oil prices and productioncontrols; ●political instability or armed conflict in oil-producing regions; ●the price and level of foreign imports; ●the level of consumer demand; ●the price and availability of alternative fuels; ●the availability of pipeline capacity; ●weather conditions; 4Table of Contents ●domestic and foreign governmental regulations and taxes; and ●the overall economic environment. Lower oil and natural gas prices may reduce the amount of oil and natural gas that is economic to produce and may reduce our revenues andoperating income. The volatility of oil and natural gas prices reduces the accuracy of estimates of future cash distributions to unitholders. We do not control operations and development of the Royalty Properties or the properties underlying the NPIs that the operating partnership doesnot operate, which could impact the amount of our cash distributions. As the owner of a fractional undivided mineral or royalty interest, we do not control the development of the Royalty or NPI properties or the volumesof oil and natural gas produced from them, and our ability to influence development of nonproducing properties is severely limited. Also, since one of ourstated business objectives is to avoid the generation of unrelated business taxable income, we are prohibited from participation in the development of ourproperties as a working interest or other expense-bearing owner. The decision to explore or develop these properties, including infill drilling, explorationof horizons deeper or shallower than the currently producing intervals, and application of enhanced recovery techniques will be made by the operator andother working interest owners of each property (including our lessees) and may be influenced by factors beyond our control, including but not limited tooil and natural gas prices, interest rates, budgetary considerations and general industry and economic conditions. Our unitholders are not able to influence or control the operation or future development of the properties underlying the NPIs. The operatingpartnership is unable to influence significantly the operations or future development of properties that it does not operate. The operating partnership andthe other current operators of the properties underlying the NPIs are under no obligation to continue operating the underlying properties. The operatingpartnership can sell any of the properties underlying the NPIs that it operates and relinquish the ability to control or influence operations. Any such saleor transfer must also simultaneously include the NPIs at a corresponding price. Our unitholders do not have the right to replace an operator. Our lease bonus revenue depends in significant part on the actions of third parties, which are outside of our control. Significant portions of the Royalty Properties are unleased mineral interests. With limited exceptions, we have the right to grant leases of theseinterests to third parties. We anticipate receiving cash payments as bonus consideration for granting these leases in most instances. Our ability toinfluence third parties' decisions to become our lessees with respect to these nonproducing properties is severely limited, and those decisions may beinfluenced by factors beyond our control, including but not limited to oil and natural gas prices, interest rates, budgetary considerations and generalindustry and economic conditions. The operating partnership may transfer or abandon properties that are subject to the NPIs. Our general partner, through the operating partnership, may at any time transfer all or part of the properties underlying the NPIs. Our unitholders arenot entitled to vote on any transfer; however, any such transfer must also simultaneously include the NPIs at a corresponding price. The operating partnership or any transferee may abandon any well or property if it reasonably believes that the well or property can no longerproduce in commercially economic quantities. This could result in termination of the NPIs relating to the abandoned well. Cash distributions are affected by production and other costs, some of which are outside of our control. The cash available for distribution that comes from our royalty and mineral interests, including the NPIs, is directly affected by increases inproduction costs and other costs. Some of these costs are outside of our control, including costs of regulatory compliance and severance and other similartaxes. Other expenditures are dictated by business necessity, such as drilling additional wells in response to the drilling activity of others. Our oil and natural gas reserves and the underlying properties are depleting assets, and there are limitations on our ability to replace them. Our revenues and distributions depend in large part on the quantity of oil and natural gas produced from properties in which we hold an interest. Overtime, all of our producing oil and natural gas properties will experience declines in production due to depletion of their oil and natural gas reservoirs,with the rates of decline varying by property. Replacement of reserves to maintain production levels requires maintenance, development or explorationprojects on existing properties, or the acquisition of additional properties. The timing and size of maintenance, development or exploration projects will depend on the market prices of oil and natural gas and on other factorsbeyond our control. Many of the decisions regarding implementation of such projects, including drilling or exploration on any unleased andundeveloped acreage, will be made by third parties. In addition, development possibilities by the operating partnership in the Hugoton field are limitedby the developed nature of that field and by regulatory restrictions. 5Table of Contents Our ability to increase reserves through future acquisitions is limited by restrictions on our use of cash and limited partnership interests foracquisitions and by our general partner's obligation to use all reasonable efforts such as NPIs to avoid unrelated business taxable income. In addition, theability of affiliates of our general partner to pursue business opportunities for their own accounts without tendering them to us in certain circumstancesmay reduce the acquisitions presented to us for consideration. Drilling activities on our properties may not be productive, which could have an adverse effect on future results of operations and financialcondition. The operating partnership may undertake drilling activities in limited circumstances on the properties underlying the NPIs, and third parties mayundertake drilling activities on our other properties. Any increases in our reserves will come from such drilling activities or from acquisitions. Drilling involves a wide variety of risks, including the risk that no commercially productive oil or natural gas reservoirs will be encountered. Thecost of drilling, completing and operating wells is often uncertain, and drilling operations may be delayed or canceled as a result of a variety of factors,including: ●pressure or irregularities in formations; ●equipment failures or accidents; ●unexpected drilling conditions; ●shortages or delays in the delivery of equipment; ●adverse weather conditions; and ●disputes with drill-site owners. Future drilling activities on our properties may not be successful. If these activities are unsuccessful, this failure could have an adverse effect on ourfuture results of operations and financial condition. In addition, under the terms of the NPIs, the costs of unsuccessful future drilling on the workinginterest properties that are subject to the NPIs will reduce amounts payable to us under the NPIs by 96.97% of these costs. Our ability to identify and capitalize on acquisitions is limited by contractual provisions and substantial competition. Our partnership agreement limits our ability to acquire oil and natural gas properties in the future, especially for consideration other than our limitedpartnership interests. Because of the limitations on our use of cash for acquisitions and on our ability to accumulate cash for acquisition purposes, we maybe required to attempt to effect acquisitions with our limited partnership interests. However, sellers of properties we would like to acquire may beunwilling to take our limited partnership interests in exchange for properties. Our partnership agreement obligates our general partner to use all reasonable efforts to avoid generating unrelated business taxable income.Accordingly, to acquire working interests we would have to arrange for them to be converted into overriding royalty interests, net profits interests, oranother type of interest that does not generate unrelated business taxable income. Third parties may be less likely to deal with us than with a purchaser towhich such a condition would not apply. These restrictions could prevent us from pursuing or completing business opportunities that might benefit usand our unitholders, particularly unitholders who are not tax-exempt investors. The duty of affiliates of our general partner to present acquisition opportunities to our Partnership is limited, pursuant to the terms of the businessopportunities agreement. Accordingly, business opportunities that could potentially be pursued by us might not necessarily come to our attention, whichcould limit our ability to pursue a business strategy of acquiring oil and natural gas properties. We compete with other companies and producers for acquisitions of oil and natural gas interests. Many of these competitors have substantiallygreater financial and other resources than we do. Any future acquisitions will involve risks that could adversely affect our business, which our unitholders generally will not have the opportunity toevaluate. Our current strategy contemplates that we may grow through acquisitions and development of our undeveloped property. We expect to participate indiscussions relating to potential acquisition and investment opportunities. If we consummate any additional acquisitions and investments, ourcapitalization and results of operations may change significantly, and our unitholders will not have the opportunity to evaluate the economic, financialand other relevant information that we will consider in connection with the acquisition, unless the terms of the acquisition require approval of ourunitholders. Additionally, our unitholders will bear 100% of the dilution from issuing new common units while receiving essentially 96% of the benefitas 4% of the benefit goes to our general partner. Acquisitions and business expansions involve numerous risks, including assimilation difficulties, unfamiliarity with new assets or new geographicareas and the diversion of management's attention from other business concerns. In addition, the success of any acquisition will depend on a number offactors, including the ability to estimate accurately the recoverable volumes of reserves, rates of future production and future net revenues attributable toreserves and to assess possible environmental liabilities. Our review and analysis of properties prior to any acquisition will be subject to uncertaintiesand, consistent with industry practice, may be limited in scope. We may not be able to successfully integrate any oil and natural gas properties that weacquire into our operations, or we may not achieve desired profitability objectives. 6Table of Contents A natural disaster or catastrophe could damage pipelines, gathering systems and other facilities that service our properties, which couldsubstantially limit our operations and adversely affect our cash flow. If gathering systems, pipelines or other facilities that serve our properties are damaged by any natural disaster, accident, catastrophe or other event,our income could be significantly interrupted. Any event that interrupts the production, gathering or transportation of our oil and natural gas, or whichcauses us to share in significant expenditures not covered by insurance, could adversely impact the market price of our limited partnership units and theamount of cash available for distribution to our unitholders. We do not carry business interruption insurance. A significant portion of the properties subject to the NPIs are geographically concentrated, which could cause net proceeds payable under the NPIsto be impacted by regional events. A significant portion of the properties subject to the NPIs are natural gas properties located in the Hugoton field in Oklahoma. Because of thisgeographic concentration, any regional events, including natural disasters that increase costs, reduce availability of equipment or supplies, reducedemand or limit production may impact the net proceeds payable under the NPIs more than if the properties were more geographically diversified. The number of prospective natural gas purchasers and methods of delivery are considerably less than would otherwise exist from a moregeographically diverse group of properties. As a result, natural gas sales after gathering and compression tend to be sold to one buyer, thereby increasingcredit risk. Under the terms of the NPIs, much of the economic risk of the underlying properties is passed along to us. Under the terms of the NPIs, virtually all costs that may be incurred in connection with the properties, including overhead costs that are not subject toan annual reimbursement limit, are deducted as production costs or excess production costs in determining amounts payable to us. Therefore, to theextent of the revenues from the burdened properties, we bear 96.97% of the costs of the working interest properties. If costs exceed revenues, we do notreceive any payments under the NPIs. However, except as described below, we are not required to pay any excess costs. The terms of the NPIs provide for excess costs that cannot be charged currently because they exceed current revenues to be accumulated and chargedin future periods, which could result in us not receiving any payments under the NPIs until all prior uncharged costs have been recovered by the operatingpartnership. Damages associated with the production and gathering of our oil and natural gas properties could affect our cash flow. The operating partnership owns and operates gathering systems and compression facilities. Casualty losses or damages from these operations wouldbe production costs under the terms of the NPIs and could adversely affect our cash flow. We may indirectly experience costs from repair or replacement of aging equipment. Some of the operating partnership's current working interest wells were drilled and have been producing since prior to 1954. The 132-mile Oklahomagas pipeline gathering system was originally installed in or about 1948 and because of its age is in need of periodic repairs and upgrades. Should majorcomponents of this system require significant repairs or replacement, the operating partnership may incur substantial capital expenditures in the operationof the Oklahoma properties, which, as production costs, would reduce our cash flow from these properties. Our cash flow is subject to operating hazards and unforeseen interruptions for which we may not be fully insured. Neither we nor the operating partnership are fully insured against certain risks, either because such insurance is not available or because of highpremium costs. Operations that affect the properties are subject to all of the risks normally incident to the oil and natural gas business, includingblowouts, cratering, explosions and pollution and other environmental damage, any of which could result in substantial decreases in the cash flow fromour royalty interests and other interests due to injury or loss of life, damage to or destruction of wells, production facilities or other property, clean-upresponsibilities, regulatory investigations and penalties and suspension of operations. Any uninsured costs relating to the properties underlying the NPIswill be deducted as a production cost in calculating the net proceeds payable to us. Governmental policies, laws and regulations could have an adverse impact on our business and cash distributions. Our business and the properties in which we hold interests are subject to federal, state and local laws and regulations relating to the oil and naturalgas industry as well as regulations relating to environmental, health, and safety matters. These laws and regulations can have a significant impact onproduction and costs of production. For example, in Oklahoma, where properties that are subject to the NPIs are located, regulators have the ability,directly or indirectly, to limit production from those properties, and such limitations or changes in those limitations could negatively impact us in thefuture. 7Table of Contents As another example, Oklahoma regulations currently require administrative hearings to change the concentration of the operating partnership’s gasproduction wells from one well for each 640 acres in the Guymon-Hugoton field. Previously, certain interested parties have sought regulatory changes inOklahoma for "infill," or increased density drilling similar to that which is available in Kansas, which allows one well for each 320 acres. ShouldOklahoma change its existing regulations to readily permit infill drilling, it is possible that a number of producers will commence increased densitydrilling in areas adjacent to the properties in Oklahoma that are subject to the NPIs. If the operating partnership or other operators of our properties do notdo the same, our production levels relating to these properties may decrease, or mineral owners may demand increased density drilling. Capitalexpenditures relating to increased density on the properties underlying the NPIs would be deducted from amounts payable to us under the NPIs. Environmental costs and liabilities and changing environmental regulation could affect our cash flow. As with other companies engaged in the ownership and production of oil and natural gas, we always have possible risk of exposure to environmentalcosts and liabilities because the costs associated with environmental compliance or remediation could reduce the amount we would receive from ourproperties. The properties in which we hold interests are subject to extensive federal, state, tribal and local regulatory requirements relating toenvironmental affairs, health and safety and waste management. Governmental authorities have the power to enforce compliance with applicableregulations and permits, which could increase production costs on our properties and affect their cash flow. Third parties may also have the right to pursuelegal actions to enforce compliance. Because we do not directly operate our properties, our direct liability under environmental laws is limited. It islikely, however, that expenditures in connection with environmental matters, individually or as part of normal capital expenditure programs, will affectthe net cash flow from our properties. Future environmental law developments, such as stricter laws, regulations or enforcement policies, couldsignificantly increase the costs of production from our properties and reduce our cash flow. The following is a summary of some of the existing environmental laws, rules and regulations that apply to oil and gas operations, and that mayindirectly affect our cash flow. The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). CERCLA, also known as the Superfund law, andcomparable state statutes impose strict liability, and under certain circumstances, joint and several liability, on classes of persons who are considered tobe responsible for the release of a hazardous substance into the environment. The term “hazardous substance” is specifically defined to excludepetroleum, including crude oil and any fraction thereof, natural gas and natural gas liquids. Despite this exclusion, certain materials that are commonlyused in connection with oil and gas operations are considered to be hazardous substances under CERCLA. Responsible persons include the current orformer owner or operator of the site where the release occurred, and anyone who disposed of or arranged for the disposal of a hazardous substance releasedat the site, regardless of whether the disposal of hazardous substances was lawful at the time of the disposal. Under CERCLA, such persons may be subjectto strict, joint and several liabilities for the costs of investigating releases of hazardous substances, cleaning up the hazardous substances that have beenreleased into the environment, for damages to natural resources and for certain health studies. In addition, it is not uncommon for neighboring landownersand other third-parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.The operators of our properties may be responsible under CERCLA for all or part of these costs. Although we are not an operator, our ownership of royaltyinterests could cause us to be responsible for all or part of such costs to the extent that CERCLA imposes such responsibilities on such parties as“owners.” The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage,disposal and cleanup of hazardous and non-hazardous wastes. Drilling fluids, produced water and many other wastes associated with the exploration,development and production of oil or gas are currently excluded from regulation under RCRA’s hazardous waste provisions. However, it is possible thatcertain oil and gas exploration and production wastes could be classified as hazardous wastes in the future. In addition, exploration and productionwastes are regulated under state laws analogous to RCRA. Many of our properties have produced oil and/or gas for many years. We have no knowledge ofcurrent and prior operators’ procedures with respect to the disposal of oil and gas wastes. Hydrocarbons or other solid or hazardous wastes may have beenreleased on or under our properties by the operators or prior operators. Our properties and the materials disposed or released on, at, under or from themmay be subject to CERCLA, RCRA and analogous state laws, and removal or remediation of such materials could be required by a governmentalauthority. The Federal Clean Air Act and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and otherrequirements, such as emissions controls. Existing laws and regulations and possible future laws and regulations may require our operators to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions and may imposestringent air permit requirements or use specific equipment or technologies to control emissions. The U.S. Environmental Protection Agency (“EPA”)continues to develop stringent regulations governing emissions of toxic air pollutants from oil and gas facilities. Specifically, on August 16, 2012, theEPA issued final regulations under the New Source Performance Standards (“NSPS”) and National Emission Standards for Hazardous Air Pollutants(“NESHAPs”). These regulations are designed to reduce volatile organic compound (“VOC”) emissions from hydraulically fractured wells and otherequipment. Under the regulations, since January 1, 2015 owners and operators of hydraulically fractured natural gas wells (wells drilled principally for theproduction of natural gas) have been required to use reduced emissions (“green”) completion technology to recover natural gas that formerly would havebeen flared or vented. On May 12, 2016, the EPA issued a suite of new final regulations designed to limit methane and VOC emissions. Among otherthings, these new rules apply green completion requirements to newly fractured and refractured oil wells. Obtaining permits and complying with thesenew requirements has the potential to increase costs of production and delay the development of our properties. 8Table of Contents In November 2016, the Bureau of Land Management (“BLM”) published a final version of its venting and flaring rule, which imposes stricterreporting obligations and limits venting and flaring of natural gas on federal and Indian lands. Some provisions of the venting and flaring rule went intoeffect on January 17, 2017. The BLM has announced that it is postponing until January 17, 2019, the implementation of other aspects of the venting andflaring rule, which were originally scheduled to come into effect on January 1, 2018. And, on February 22, 2018, the BLM issued a proposed rule whichwould rescind, modify, and retain portions of the November 2016 rule. In March 2015, the BLM released its new regulations governing hydraulicfracturing operations on federal and Indian lands, including requirements for chemical disclosure, well bore integrity and handling of flowback water. TheU.S. District Court of Wyoming has temporarily stayed implementation of this rule and a final decision is pending. In December 2017, the BLM repealedthe 2015 regulations, and environmental organizations and the State of California are suing the BLM and the Secretary of the U.S. Department of theInterior over the repeal. Each of these regulations, to the extent that they are reinstated or modified, may result in additional levels of regulation orcomplexity that could lead to operational delays, increased operating costs and additional regulatory burdens that could make it more difficult to performhydraulic fracturing and increase costs of compliance. The Federal Water Pollution Control Act (the “Clean Water Act”) and analogous state laws impose restrictions and strict controls on the discharge ofpollutants and fill material, including spills and leaks of oil and other substances into regulated waters, including wetlands. The discharge of pollutantsinto regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA, an analogous state agency, or, in the case of fillmaterial, the United States Army Corps of Engineers. In May 2015, EPA and the U.S. Army Corps of Engineers jointly announced a final rule defining the“Waters of the United States, “ which are protected under the Clean Water Act. The new rule, which would have made additional waters expressly Watersof the United States and, therefore, subject to the jurisdiction of the Clean Water Act, rather than subject to a case-specific evaluation, was stayed by theU.S. Court of Appeals for the Sixth Circuit before it took effect. On February 1, 2018, EPA officially delayed implementation of the 2015 rule until early2020. Meanwhile, the U.S. Army Corps of Engineers and the EPA could initiate rulemaking to revise the definition of “Waters of the United States.”Compliance with the Clean Water Act may restrict the location of certain facilities, require the mitigation of impacted wetlands, increase the cost ofcapital expenditures, and may result in permitting delays. Spill prevention, control, and countermeasure (“SPCC”) regulations promulgated under the Clean Water Act and later amended by the Oil PollutionsAct of 1990 impose obligations and liabilities related to the prevention of oil spills and damages resulting from such spills into or threatening waters ofthe United States or adjoining shorelines. For example, operators of certain oil and natural gas facilities that store oil in more than threshold quantities,the release of which could reasonably be expected to reach jurisdictional waters, must develop, implement, and maintain SPCC Plans. Federal and stateregulatory agencies can impose administrative, civil and criminal penalties for non-compliance with discharge permits or other requirements of the CleanWater Act and analogous state laws and regulations. The Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program require that permits be obtained before drilling saltwater disposal wells, and casing integrity monitoring be conducted periodically to ensure that the disposed waters are not leaking into groundwater. Inaddition, because some states have become concerned that the injection or disposal of produced water could, under certain circumstances, trigger orcontribute to seismic activity, they have adopted or are considering additional regulations regarding such disposal methods. Changes in regulations orthe inability to obtain permits for new disposal wells in the future may affect the ability of the operators of the Royalty Properties and the operators of theworking interests and other properties underlying our NPIs to dispose of produced water and ultimately increase the cost of operation of the RoyaltyProperties and the working interests and other properties underlying our NPIs or delay production schedules. For example, in 2014, the RailroadCommission of Texas (“RRC”) published a final rule governing permitting or re-permitting of disposal wells that would require, among other things, thesubmission of information on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections andstructure maps relating to the disposal area in question. If the permittee or an applicant of a disposal well permit fails to demonstrate that the injectedfluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismicactivity, then the RRC may deny, modify, suspend or terminate the permit application or existing operating permit for that well. Various state and federal statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds andtheir habitat, wetlands, and natural resources. These statutes include the Endangered Species Act, the Migratory Bird Treaty Act, the CWA, andCERCLA. The United States Fish and Wildlife Service (“USFWS”) may designate critical habitat and suitable habitat areas that it believes are necessaryfor the survival of threatened or endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to federalland use and private land use and could delay or prohibit land access or development. Where takings of, or harm to, species or damages to wetlands,habitat or natural resources occur or may occur, government entities or at times private parties may act to restrict or prevent oil and gas exploration orproduction activities or seek damages for harm to species, habitat or natural resources resulting from drilling or construction or production activities,including, for example, for releases of oil, wastes, hazardous substances or other regulated materials, and may seek natural resources damages and, in somecases, criminal penalties. Operations of the Royalty Properties and the working interests and other properties underlying our NPIs may be subject to the requirements of thefederal Occupational Safety and Health Act (“OSHA”) and comparable state statutes and their implementing regulations. The OSHA hazardcommunication standard, the EPA community right-to-know regulations under Title III of CERCLA and similar state statutes may require disclosure ofinformation about hazardous materials used, produced or otherwise managed during operation of the Royalty Properties and the working interests andother properties underlying our NPIs. These laws also require the development of risk management plans for certain facilities to prevent accidentalreleases of extremely hazardous substances and to minimize the consequences of such releases should they occur. 9Table of Contents The potential adoption of federal and state hydraulic fracturing legislation or executive orders could delay or restrict development of our oil andnatural gas properties. The Energy Policy Act of 2005 exempts hydraulic fracturing from federal regulation under the SDWA, provided that diesel fuel is not used in thefracturing process. In prior Congressional Sessions, legislation has been introduced that would have repealed this exemption. If similar legislation wereenacted, it could require hydraulic fracturing operations to meet permitting and financial assurance requirements, adhere to certain constructionspecifications, fulfill monitoring, reporting and recordkeeping obligations and meet plugging and abandonment requirements. Such federal legislationcould lead to operational delays or increased operating costs and could result in additional regulatory burdens that could make it more difficult toperform hydraulic fracturing. In 2010, the EPA asserted federal regulatory authority over hydraulic fracturing involving diesel additives through an informal policy statementposted on the agency’s website. Industry groups filed a lawsuit challenging the EPA’s decision. In February 2012, the EPA and industry reached asettlement under which the EPA agreed to issue hydraulic fracturing permitting guidance through the notice and comment process. The EPA published adraft guidance document in May 2012, and accepted comments through August 2012. In February 2014, the EPA published final guidance that broadlydefined diesel fuel and which requires the issuance of a Class II Underground Injection Control permit for hydraulic fracturing treatments using dieselfuel. These requirements may cause additional costs and delays in the hydraulic fracturing process using diesel fuel. The EPA has also asserted in certain cases involving alleged groundwater contamination that it has emergency authority under the SDWA to issueadministrative compliance orders to require clean-up of groundwater. Although the United States Supreme Court has held that such orders are subject topre-enforcement judicial review, the EPA maintains that it has the authority to continue to issue such orders. The EPA’s Office of Research and Development (“ORD”) has conducted a scientific study to investigate the possible relationships between hydraulicfracturing and drinking water. The ORD published a report in 2016, concluding that hydraulic fracturing operations do impact drinking water resourcesunder some circumstances but declining to reach conclusions about the frequency or severity of those impacts. In addition to the EPA study, there areother governmental reviews that focus on environmental aspects of hydraulic fracturing. In April 2012, President Obama issued an executive orderestablishing an interagency working group to coordinate Federal policies related to unconventional gas development. In addition, a committee of theUnited States House of Representatives has conducted an investigation of hydraulic fracturing. Furthermore, a number of federal agencies are analyzing,or have been requested to review, a variety of environmental issues associated with hydraulic fracturing. These or other investigations, initiatives, andstudies could result in additional efforts to regulate hydraulic fracturing. Beyond studying hydraulic fracturing, certain members of Congress have called upon the Government Accountability Office to investigate howhydraulic fracturing might adversely affect water resources and asked the Securities and Exchange Commission to investigate the natural gas industry andany possible misleading of investors or the public regarding the economic feasibility of pursuing natural gas deposits in shales by means of hydraulicfracturing. Any new federal restrictions on hydraulic fracturing resulting from these efforts could result in delays, additional permitting and financialassurance requirements, and more stringent construction requirements, thereby significantly increasing operating, capital and compliance costs. Such costincreases could delay or restrict development by operators of our oil and natural gas properties. Additionally, certain states in which our properties are located, including Texas and Wyoming, have adopted, and other states are consideringadopting, regulations that could impose more stringent permitting, public disclosure and well construction requirements on hydraulic-fracturingoperations or otherwise seek to ban fracturing activities altogether. For example, pursuant to legislation adopted by the State of Texas in June 2011, theRailroad Commission of Texas enacted a rule in December 2011, requiring public disclosure of certain information regarding additives, chemicalingredients, concentrations and water volumes used in hydraulic fracturing. In addition to state laws, local land use restrictions, such as city ordinances,may restrict or prohibit well drilling in general and/or hydraulic fracturing in particular. In response to a 2014 ballot initiative by the voters of the City ofDenton, Texas banning hydraulic fracturing, the Texas legislature enacted a statute preempting local government regulation of oil and gas activities,including hydraulic fracturing. In other states, however, local governments may retain the ability to directly or indirectly regulate hydraulic fracturing.State and local governments may also seek to regulate or recover costs of activities tangentially associated with hydraulic fracturing, such as increasedtruck traffic. In the event state, local, or municipal legal restrictions are adopted in areas where our properties are located, the cost of the operators of ouroil and natural gas properties complying with such requirements may be significant in nature, which may cause delays or curtailment in the pursuit ofexploration, development, or production activities, and perhaps even preclude the operators from drilling wells. The adoption of climate change legislation by Congress or executive orders or regulations could result in increased operating costs and reduceddemand for the oil and natural gas production from our properties. Congress has, from time to time, considered legislation to reduce greenhouse gas (“GHG”) emissions. To date, Congress has not passed a billspecifically addressing GHG regulation. Almost half of the states, however, have developed GHG emission inventories and/or regional GHG cap and tradeprograms. These cap and trade programs require major sources of emissions or major fuel producers to acquire and surrender emission allowancescorresponding with their annual emissions of GHGs. The number of allowances available for purchase is reduced each year until the overall GHGemission reduction goal is achieved. Many states also have enacted renewable portfolio standards, which require utilities to purchase a certain percentageof their energy from renewable fuel sources. 10Table of Contents In December 2009, the EPA determined that emissions of carbon dioxide, methane and other GHGs present an endangerment to human health and theenvironment by contributing to warming of the earth’s atmosphere and other climatic changes. These findings by the EPA required the agency to adoptregulations to restrict GHG emissions under the Federal Clean Air Act. In 2010, the EPA issued a final rule “tailoring” its New Source Review permittingand Federal Operating Permit programs to apply to facilities with certain thresholds of GHG emissions. This “Tailoring Rule” was challenged in court,and on June 23, 2014, the United States Supreme Court struck down the Tailoring Rule in Utility Air Regulatory Group v. Environmental ProtectionAgency. In its decision, the Court held that the EPA may not impose permitting requirements on facilities based solely on their emissions of GHGs. But,the Court also held that the EPA may regulate GHG emissions if a facility is otherwise subject to permitting based on the emissions of conventional, non-GHG pollutants. Thus, any new facilities or major modifications to existing facilities that exceed the federal New Source Review emission thresholds forconventional pollutants may be required to use “best available control technology” and energy efficiency measures to minimize GHG emissions. InDecember 2010, the EPA enacted final regulations on mandatory reporting of GHGs. Those regulations required owners or operators of facilities thatcontain petroleum and natural gas systems and emit 25,000 metric tons or more of GHGs per year (expressed as carbon dioxide equivalent or CO2E) toannually report carbon dioxide, methane and nitrous oxide emissions, beginning in September 2012. The EPA has indicated that it will use data collectedthrough the reporting rules to decide whether to promulgate future GHG emission limits. Although it is not possible at this time to predict whether or when Congress may act on climate change legislation, or whether EPA may promulgateadditional regulation of GHGs from the oil and gas industry, any laws or regulations that may be adopted to restrict or reduce emissions of GHGs couldrequire the operating partnership and oil and natural gas operators that develop our properties to incur increased operating costs and could have anadverse effect on demand for the oil and natural gas produced from the Royalty Properties. Our oil and natural gas reserve data and future net revenue estimates are uncertain. Estimates of proved reserves and related future net revenues are projections based on engineering data and reports of independent consultingpetroleum engineers hired for that purpose. The process of estimating reserves requires substantial judgment, resulting in imprecise determinations.Different reserve engineers may make different estimates of reserve quantities and related revenue based on the same data. Therefore, those estimatesshould not be construed as being accurate estimates of the current market value of our proved reserves. If these estimates prove to be inaccurate, ourbusiness may be adversely affected by lower revenues. We are affected by changes in oil and natural gas prices. Oil prices and natural gas prices mayexperience inverse price changes. Risks Inherent In An Investment In Our Common Units Cost reimbursement due our general partner may be substantial and reduce our cash available to distribute to our unitholders. Prior to making any distribution on the common units, we reimburse the general partner and its affiliates for reasonable costs and expenses ofmanagement. The reimbursement of expenses could adversely affect our ability to pay cash distributions to our unitholders. Our general partner has solediscretion to determine the amount of these expenses, subject to the annual limit of 5% of an amount primarily based on our distributions to partners forthat fiscal year. The annual limit includes carry-forward and carry-back features, which could allow costs in a year to exceed what would otherwise be theannual reimbursement limit. In addition, our general partner and its affiliates may provide us with other services for which we will be charged fees asdetermined by our general partner. Our net income as reported for tax and financial statement purposes may differ significantly from our cash flow that is used to determine cashavailable for distributions. Net income as reported for financial statement purposes is presented on an accrual basis in conformity with accounting principles generally acceptedin the United States of America. Unitholder K-1 tax statements are calculated based on applicable tax conventions, and taxable income as calculated foreach year will be allocated among unitholders who hold units on the last day of each month. Distributions, however, are calculated on the basis of actualcash receipts, changes in cash reserves, and disbursements during the relevant reporting period. Consequently, due to timing differences between thereceipt of proceeds of production and the point in time at which the production giving rise to those proceeds actually occurs, net income reported on ourconsolidated financial statements and on unitholder K-1's will not reflect actual cash distributions during that reporting period. Our unitholders have limited voting rights and do not control our general partner, and their ability to remove our general partner is limited. Our unitholders have only limited voting rights on matters affecting our business. The general partner of our general partner manages our activities.Our unitholders only have the right to annually elect the managers comprising the Advisory Committee of the Board of Managers of the general partnerof our general partner. Our unitholders do not have the right to elect the other managers of the general partner of our general partner on an annual or anyother basis. 11Table of Contents Our general partner may not be removed as our general partner except upon approval by the affirmative vote of the holders of at least a majority ofour outstanding common units (including common units owned by our general partner and its affiliates), subject to the satisfaction of certain conditions.Our general partner and its affiliates do not own sufficient common units to be able to prevent its removal as general partner, but they do own sufficientcommon units to make the removal of our general partner by other unitholders difficult. These provisions may discourage a person or group from attempting to remove our general partner or acquire control of us without the consent of ourgeneral partner. As a result of these provisions, the price at which our common units trade may be lower because of the absence or reduction of a takeoverpremium in the trading price. The control of our general partner may be transferred to a third party without unitholder consent. Our general partner may withdraw or transfer its general partner interest to a third party in a merger or in a sale of all or substantially all of its assetswithout the consent of our unitholders. Other than some transfer restrictions agreed to among the owners of our general partner relating to their interests inour general partner, there is no restriction in our partnership agreement or otherwise for the benefit of our limited partners on the ability of the owners ofour general partner to transfer their ownership interests to a third party. The new owner of the general partner would then be in a position to replace themanagement of our Partnership with its own choices. Our general partner and its affiliates have conflicts of interests, which may permit our general partner and its affiliates to favor their own interests tothe detriment of unitholders. We and our general partner and its affiliates share, and therefore compete for, the time and effort of general partner personnel who provide services tous. Officers of our general partner and its affiliates do not, and are not required to, spend any specified percentage or amount of time on our business. Infact, our general partner has a duty to manage our Partnership in the best interests of our unitholders, but it also has a duty to operate its business for thebenefit of its partners. Some of our officers are also involved in management and ownership roles in other oil and natural gas enterprises and have similarduties to them and devote time to their businesses. Because these shared officers function as both our representatives and those of our general partner andits affiliates and of third parties, conflicts of interest could arise between our general partner and its affiliates, on the one hand, and us or our unitholders,on the other, or between us or our unitholders on the one hand and the third parties for which our officers also serve management functions. As a result ofthese conflicts, our general partner and its affiliates may favor their own interests over the interests of unitholders. We may issue additional securities, diluting our unitholders' interests. We can and may issue additional common units and other capital securities representing limited partnership units, including options, warrants, rights,appreciation rights and securities with rights to distributions and allocations or in liquidation equal or superior to our common units; however, a majorityof the unitholders must approve such issuance if (i) the partnership securities to be issued will have greater rights or powers than our common units or (ii)if after giving effect to such issuance, such newly issued partnership securities represent over 20% of the outstanding limited partnership interests. If we issue additional common units, it will reduce our unitholders' proportionate ownership interest in us. This could cause the market price of thecommon units to fall and reduce the per unit cash distributions paid to our unitholders. In addition, if we issued limited partnership units with votingrights superior to the common units, it could adversely affect our unitholders' voting power. Our unitholders may not have limited liability in the circumstances described below and may be liable for the return of certain distributions. Under Delaware law, our unitholders could be held liable for our obligations to the same extent as a general partner if a court determined that theright of unitholders to remove our general partner or to take other action under our partnership agreement constituted participation in the "control" of ourbusiness. Our general partner generally has unlimited liability for the obligations of our Partnership, such as its debts and environmental liabilities, except forthose contractual obligations of our Partnership that are expressly made without recourse to the general partner. In addition, Section 17-607 of the Delaware Revised Uniform Limited Partnership Act provides that, under certain circumstances, a unitholder maybe liable for the amount of distribution for a period of three years from the date of distribution. Because we conduct our business in various states, the laws of those states may pose similar risks to our unitholders. To the extent to which weconduct business in any state, our unitholders might be held liable for our obligations as if they were general partners if a court or government agencydetermined that we had not complied with that state's partnership statute, or if rights of unitholders constituted participation in the "control" of ourbusiness under that state's partnership statute. In some of the states in which we conduct business, the limitations on the liability of limited partners for theobligations of a limited partnership have not been clearly established. 12Table of Contents We are dependent upon key personnel, and the loss of services of any of our key personnel could adversely affect our operations. Our continued success depends to a considerable extent upon the abilities and efforts of the senior management of our general partner, particularlyWilliam Casey McManemin, its Chief Executive Officer, Bradley J. Ehrman, its Chief Operating Officer and Leslie A. Moriyama, its Chief FinancialOfficer. The loss of the services of any of these key personnel could have a material adverse effect on the results of our operations. We have not obtainedinsurance or entered into employment agreements with any of these key personnel. We are dependent on service providers who assist us with providing Schedule K-1 tax statements to our unitholders. There are a very limited number of service firms that currently perform the detailed computations needed to provide each unitholder with estimateddepletion and other tax information to assist the unitholder in various United States income tax computations. There are also very few publicly tradedlimited partnerships that need these services. As a result, the future costs and timeliness of providing Schedule K-1 tax statements to our unitholders isuncertain. Tax Risks The tax consequences to a unitholder of the ownership and sale of common units will depend in part on the unitholder’s tax circumstances. Eachunitholder should, therefore, consult such unitholder’s own tax advisor about the federal, state and local tax consequences of the ownership ofcommon units. We generally do not obtain rulings or assurances from the IRS or state or local taxing authorities on matters affecting us. We generally have not requested, and do not intend to request, rulings from the Internal Revenue Service, or IRS, or state or local taxing authoritieswith respect to owning and disposing of our common units or other matters affecting us. It may be necessary to resort to administrative or courtproceedings in an effort to sustain some or all of those conclusions or positions taken or expressed by us, and some or all of those conclusions or positionsultimately may not be sustained. Our unitholders and general partner will bear, directly or indirectly, the costs of any contest with the IRS or other taxingauthority. Notwithstanding the foregoing, in 2013 we obtained a ruling from the IRS permitting us to aggregate the Minerals NPI and the Maecenas NPIfor federal income tax purposes effective January 1, 2013. Recently enacted U.S. tax legislation may adversely affect our business, results of operations and cash flow. On December 22, 2017, the President signed into law Public Law No. 115-97, a comprehensive tax reform bill commonly referred to as the TaxCuts and Jobs Act (the “Tax Act”) that makes significant changes to U.S. federal income tax laws. Among other changes, the Tax Act (i) introduces a newdeduction on certain pass-through income, (ii) repeals the partnership technical termination rule and (iii) imposes a new limitation on the deductibility ofinterest expense. Many of the provisions in the Tax Act, including the deduction related to certain pass-through income, are temporary and, withoutadditional legislation, will sunset on December 31, 2025. The Tax Act is complex and lacks administrative guidance, thus, the impact of certain aspectsof its provisions on us or an investment in our common units is currently unclear. There may be other material adverse effects resulting from the Tax Actthat we have not identified and that could have an adverse effect on our business, results of operations, financial conditions and cash flow. We will be subject to federal income tax and possibly certain state corporate income or franchise taxes if we are classified as a corporation and notas a partnership for federal income tax purposes. The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federalincome tax purposes. Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for U.S.federal income tax purposes unless we satisfy a "qualifying income" requirement. Based upon our current operations, we believe we satisfy the qualifyingincome requirement. However, we have not requested, and do not plan to request, a ruling from the IRS on this or any other matter affecting us. A changein our business or a change in current law (including administrative guidance relating to the Tax Act) could cause us to be treated as a corporation for U.S.federal income tax purposes or otherwise subject us to taxation as an entity. If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate,which is currently a maximum of 21%. Distributions to our unitholders would generally be taxed again as corporate distributions, and no income, gains,losses or deductions would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distributionto our unitholders would be substantially reduced. In addition, changes in current state law may subject us to additional entity-level taxation byindividual states. Several states have subjected, or are evaluating ways to subject, partnerships to entity-level taxation through the imposition of stateincome, franchise and other forms of taxation. Imposition of any such taxes may substantially reduce the cash available for distribution to ourunitholders. Therefore, treatment of us as a corporation or the assessment of a material amount of entity-level taxation would result in a material reductionin the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units. 13Table of Contents As stated above, we have not requested, and will not request, any ruling from the IRS as to our status as a partnership for federal income tax purposes.If the IRS were to challenge our federal income tax status, such a challenge could result in an audit of our unitholders’ tax returns and adjustments toitems on their tax returns that are unrelated to their ownership of our common units. In addition, our unitholders would bear the cost of any expensesincurred in connection with an examination of their personal tax returns. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial oradministrative changes or differing interpretations, possibly applied on a retroactive basis. The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modifiedby administrative, legislative or judicial changes or differing interpretations at any time. For example, from time to time, the President and members ofCongress propose and consider substantive changes to the existing U.S. federal income tax laws that affect publicly traded partnerships, includingelimination of partnership tax treatment for publicly traded partnerships. Any modification to the federal income tax laws and interpretations thereof mayor may not be retroactively applied and could make it more difficult or impossible for us to meet the exception to be treated as a partnership for federalincome tax purposes. Additionally, on January 19, 2017, the IRS and the U.S. Department of the Treasury publicly released the text of final regulations (the “FinalRegulations”) regarding qualifying income under Section 7704(d)(1)(E) of the Code, which provide that income earned from a royalty interest isqualifying income. On January 24, 2017, the Final Regulations were published in the Federal Register. Under current law, we believe that our royaltyincome is qualifying income for purposes of Section 7704(d)(1)(E) of the Code. If the Final Regulations remain effective in their current form, we believewe will continue to be able to meet the qualifying income requirement under the new rules. However, there are no assurances that the Final Regulationswill not be revised to take a position that is contrary to our interpretation of the current law. While the Tax Act does not negatively impact the final regulations or the qualifying income exception, we are unable to predict whether any of thesechanges or any other proposals will ultimately be enacted or adopted, or whether final qualifying income regulations will materially changeinterpretations of the current law. Any such changes could negatively impact the value of an investment in our common units. The IRS could reallocate items of income, gain, deduction and loss between transferors and transferees of common units if the IRS does not accept ourmonthly convention for allocating such items. In general, each of our items of income, gain, loss and deduction will, for federal income tax purposes, be determined annually, and one twelfth ofeach annual amount will be allocated to those unitholders who hold common units on the last business day of each month in that year. In certaincircumstances we may make these allocations in connection with extraordinary or nonrecurring events on a more frequent basis. As a result, transferees ofour common units may be allocated items of our income, gain, loss and deduction realized by us prior to the date of their acquisition of our commonunits. The U.S. Treasury Department has issued final Treasury Regulations that provide a safe harbor pursuant to which publicly traded partnerships mayuse a similar monthly simplifying convention to allocate tax items among transferors and transferee unitholders. Nonetheless, if this method is determinedto be an unreasonable method of allocation, our income, gain, loss and deduction would be reallocated among our unitholders and our general partner,and our unitholders may have more taxable income or less taxable loss. Our general partner is authorized to revise our method of allocation betweentransferors and transferees, as well as among our other unitholders whose common units otherwise vary during a taxable period, to conform to a methodpermitted or required by the Internal Revenue Code and the regulations or rulings promulgated thereunder. Our unitholders may not be able to deduct losses attributable to their common units. Any losses relating to our unitholders’ common units will be losses related to portfolio income and their ability to use such losses may be limited. Our unitholders’ partnership tax information may be audited. We will furnish our unitholders with a Schedule K-1 tax statement that sets forth their allocable share of income, gains, losses and deductions. Inpreparing this schedule, we will use various accounting and reporting conventions and various depreciation and amortization methods we have adopted.This schedule may not yield a result that conforms to statutory or regulatory requirements or to administrative pronouncements of the IRS. Further, ourtax return may be audited, and any such audit could result in an audit of our unitholders’ individual income tax returns as well as increased liabilities fortaxes because of adjustments resulting from the audit. An audit of our unitholders’ returns also could be triggered if the tax information relating to theircommon units is not consistent with the Schedule K-1 that we are required to provide to the IRS. 14Table of Contents Our unitholders may have more taxable income or less taxable loss with respect to their common units if the IRS does not respect our method fordetermining the adjusted tax basis of their common units. We have adopted a reporting convention that will enable our unitholders to track the basis of their individual common units or unit groups and usethis basis in calculating their basis adjustments under Section 743 of the Internal Revenue Code and gain or loss on the sale of common units. Thismethod does not comply with an IRS ruling that requires a portion of the combined tax basis of all common units to be allocated to each of the commonunits owned by a unitholder upon a sale or disposition of less than all of the common units and may be challenged by the IRS. If such a challenge issuccessful, our unitholders may have to recognize more taxable income or less taxable loss with respect to common units disposed of and common unitsthey continue to hold. Tax-exempt investors may recognize unrelated business taxable income. Generally, unrelated business taxable income, or UBTI, can arise from a trade or business unrelated to the exempt purposes of the tax-exempt entitythat is regularly carried on by either the tax-exempt entity or a partnership in which the tax-exempt entity is a partner. However, UBTI does not apply tointerest income, royalties (including overriding royalties) or net profits interests, whether the royalties or net profits are measured by production or bygross or taxable income from the property. Pursuant to the provisions of our partnership agreement, our general partner shall use all reasonable efforts toprevent us from realizing income that would constitute UBTI. In addition, our general partner is prohibited from incurring certain types and amounts ofindebtedness and from directly owning working interests or cost bearing interests and, in the event that any of our assets become working interests or costbearing interests, is required to assign such interests to the operating partnership subject to the reservation of a net profits overriding royalty interest.However, it is possible that we may realize income that would constitute UBTI in an effort to maximize unitholder value. Tax consequences of certain NPIs are uncertain. We are prohibited from owning working interests or cost-bearing interests. At the time of the creation of the Minerals NPI, we assigned to theoperating partnership all rights in any such working interests or cost-bearing interests that might subsequently be created from the mineral properties thatwere and are subject of the Minerals NPI. As additional working interests and other cost-bearing interests are created out of such mineral properties, theyare owned by the operating partnership pursuant to such original assignment, and we have executed various documents since the creation of the MineralsNPI to confirm such treatment under the original assignment. This treatment could be characterized differently by the IRS, and in such a case we areunable to predict, with certainty, all of the income tax consequences relating to the Minerals NPI as it relates to such working interests and other cost-bearing interests. Our unitholders may not be entitled to deductions for percentage depletion with respect to our oil and natural gas interests. Our unitholders will be entitled to deductions for the greater of either cost depletion or (if otherwise allowable) percentage depletion with respect tothe oil and natural gas interests owned by us. However, percentage depletion is generally available to a unitholder only if he qualifies under theindependent producer exemption contained in the Internal Revenue Code. For this purpose, an independent producer is a person not directly or indirectlyinvolved in the retail sale of oil, natural gas, or derivative products or the operation of a major refinery. If a unitholder does not qualify under theindependent producer exemption, he generally will be restricted to deductions based on cost depletion. Our unitholders may have more taxable income or less taxable loss on an ongoing basis if the IRS does not accept our method of allocating depletiondeductions. The Internal Revenue Code requires that income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to apartnership in exchange for a partnership interest in the partnership must be allocated so that the contributing partner is charged with, or benefits from,unrealized gain or unrealized loss, referred to as “Built-in Gain” and “Built-in Loss,” respectively, associated with the property at the time of itscontribution to the partnership. Our partnership agreement provides that the adjusted tax basis of the oil and natural gas properties contributed to us isallocated to the contributing partners for the purpose of separately determining depletion deductions. Any gain or loss resulting from the sale of propertycontributed to us will be allocated to the partners that contributed the property, in proportion to their percentage interest in the contributed property, totake into account any Built-in Gain or Built-in Loss. This method of allocating Built-in Gain and Built-in Loss is not specifically permitted by UnitedStates Treasury regulations, and the IRS may challenge this method. Such a challenge, if successful, could cause our unitholders to recognize moretaxable income or less taxable loss on an ongoing basis in respect of their common units. Our unitholders may have more taxable income or less taxable loss on an ongoing basis if the IRS does not accept our method of determining aunitholder's share of the basis of partnership property. Our general partner utilizes a method of calculating each unitholder's share of the basis of partnership property that results in an aggregate basis fordepletion purposes that reflects the purchase price of common units as paid by the unitholder. This method is not specifically authorized under applicableTreasury regulations, and the IRS may challenge this method. Such a challenge, if successful, could cause our unitholders to recognize more taxableincome or less taxable loss on an ongoing basis in respect of their common units. 15Table of Contents The ratio of the amount of taxable income that will be allocated to a unitholder to the amount of cash that will be distributed to a unitholder isuncertain, and cash distributed to a unitholder may not be sufficient to pay tax on the income we allocate to a unitholder. The amount of taxable income realized by a unitholder will be dependent upon a number of factors including: (i) the amount of taxable incomerecognized by us; (ii) the amount of any gain recognized by us that is attributable to specific asset sales that may be wholly or partially attributable toBuilt-in Gain and the resulting allocation of such gain to a unitholder, depending on the asset being sold; (iii) the amount of basis adjustment pursuant tothe Internal Revenue Code available to a unitholder based on the purchase price for any common units and the amount by which such price was greater orless than a unitholder’s proportionate share of inside tax basis of our assets attributable to the common units when the common units were purchased; and(iv) the method of depletion available to a unitholder. Therefore, it is not possible for us to predict the ratio of the amount of taxable income that will beallocated to a unitholder to the amount of cash that will be distributed to a unitholder. Unitholders may not receive cash distributions from us equal totheir share of our taxable income or even equal to the actual tax liability that results from that income. A unitholder may lose his status as a partner of our Partnership for federal income tax purposes if he lends our common units to a short seller to covera short sale of such common units. If a unitholder loans his common units to a short seller to cover a short sale of common units, he may be considered as having disposed of hisownership of those common units for federal income tax purposes. If so, the unitholder would no longer be a partner of our Partnership for tax purposeswith respect to those common units during the period of the loan and may recognize gain or loss from the disposition. As a result, during this period, anyof our income, gain, loss or deduction with respect to those common units would not be reportable, and any cash distributions received for those commonunits would be fully taxable and may be treated as ordinary income. If we are not notified (either directly or through a broker) of a sale or other transfer of common units, some distributions and federal income taxinformation or reports with respect to such units may not be provided to the purchaser or other transferee of the units and may instead continue to beprovided to the original transferor. If our transfer agent or any other nominee holding common units on behalf of a partner is not timely notified of a sale or other transfer of commonunits, and a proper transfer of ownership is not recorded on the appropriate books and records, some distributions and federal income tax information orreports with respect to these common units may not be made or provided to the transferee of the units and may instead continue to be made or provided tothe original transferor. Notwithstanding a transferee's failure to receive distributions and federal income tax information or reports from us with respect tothese units, the IRS may contend that such transferee is a partner for federal income tax purposes and that some allocations of income, gain, loss ordeduction by us should have been reported by such transferee. Alternatively, the IRS may contend that the transferor continues to be a partner for federalincome tax purposes and that allocations of income, gain, loss or deduction by us should have been reported by such transferor. If the transferor is nottreated as a partner for federal income tax purposes, any cash distributions received by such transferor with respect to the transferred units following thetransfer would be fully taxable as ordinary income to the transferor. Foreign, state and local taxes could be withheld on amounts otherwise distributable to a unitholder. A unitholder may be required to file tax returns and be subject to tax liability in the foreign, state or local jurisdictions where he resides and in eachstate or local jurisdiction in which we have assets or otherwise do business. We also may be required to withhold state income tax from distributionsotherwise payable to a unitholder, and state income tax may be withheld by others on royalty payments to us. If the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it may collect any resulting taxes (including anyapplicable penalties and interest) directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced. Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, itmay collect any resulting taxes (including any applicable penalties and interest) directly from us. We generally will have the ability to shift any such taxliability to our general partner and our unitholders in accordance with their interests in us during the year under audit, but there can be no assurance thatwe will be able to do so under all circumstances. If we are required to make payments of taxes, penalties and interest resulting from audit adjustments, ourcash available for distribution to our unitholders might be substantially reduced. 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 futureoperations or economic performance, or assumptions or forecasts related thereto), are forward-looking statements. These statements can be identified bythe use of forward-looking terminology including "may," "believe," "will," "expect," "anticipate," "estimate," "continue" or other similar words. Thesestatements discuss future expectations, contain projections of results of operations or of financial condition or state other forward-looking information. 16Table of Contents These forward-looking statements are made based upon management's current plans, expectations, estimates, assumptions and beliefs concerningfuture events impacting us and, therefore, involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees andthat actual results could differ materially from those expressed or implied in the forward-looking statements for a number of important reasons, includingthose discussed under "Risk Factors" and elsewhere in this report. You should read these statements carefully because they may discuss our expectations about our future performance, contain projections of ourfuture operating results or our future financial condition, or state other forward-looking information. Before you invest, you should be aware that theoccurrence of any of the events herein described in "Risk Factors" and elsewhere in this report could substantially harm our business, results ofoperations and financial condition and that upon the occurrence of any of these events, the trading price of our common units could decline, and youcould lose all or part of your investment. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Facilities Our office in Dallas consists of 11,847 square feet of leased office space. The operating partnership owns a field office in Hooker, Oklahoma. Properties We own two categories of properties: Royalty Properties and Net Profits Interests (“NPIs”). Royalty Properties We own Royalty Properties representing producing and nonproducing mineral, royalty, overriding royalty, net profits and leasehold interests inproperties located in 574 counties and parishes in 25 states. Acreage amounts listed herein represent our best estimates based on information provided tous as a royalty owner. Due to the significant number of individual deeds, leases and similar instruments involved in the acquisition and development ofthe Royalty Properties by us or our predecessors, acreage amounts are subject to change as new information becomes available. In addition, as a royaltyowner, our access to information concerning activity and operations on the Royalty Properties is limited. Most of our producing properties are subject toold leases and other contracts pursuant to which we are not entitled to well information. Some of our newer leases provide for access to technical data andother information. We may have limited access to public data in some areas through third party subscription services. Consequently, the exact number ofwells producing from or drilling on the Royalty Properties is not determinable. The primary manner by which we will become aware of activity on theRoyalty Properties is the receipt of division orders or other correspondence from operators or purchasers. Acreage Summary The following table sets forth, as of December 31, 2017, a summary of our gross and net acres, where applicable, of mineral, royalty, overridingroyalty and leasehold interests, and a compilation of the number of counties and parishes and states in which these interests are located. The majority ofour net mineral acres are unleased. Acreage amounts may not add across due to overlapping ownership among categories. Mineral Royalty OverridingRoyalty Leasehold Total Number of States 25 18 18 8 25 Number of Counties/Parishes 465 190 137 34 574 Gross Acres 2,313,000 624,000 209,000 33,000 3,125,000 Net Acres (where applicable) 379,000 ___ ___ ___ 379,000 Our net interest in production from royalty, overriding royalty and leasehold interests is based on lease royalty and other third-party contractualterms, which vary from property to property. Consequently, net acreage ownership in these categories is not determinable. Our net interest in productionfrom properties in which we own a royalty or overriding royalty interest may be affected by royalty terms negotiated by the previous mineral interestowners in such tracts and their lessees. Our interest in the majority of these properties is perpetual in nature. However, a minor portion of the properties aresubject to terms and conditions pursuant to which a portion of our interest may terminate upon cessation of production. 17Table of Contents The following table sets forth, as of December 31, 2017, the combined summary of total gross and net acres, where applicable, of mineral, royalty,overriding royalty and leasehold interests in each of the states in which these interests are located. StateGross(1)Net(1) StateGross(1)Net(1)Alabama105,0008,000 Missouri<500< 500Arkansas47,00015,000 Montana282,00063,000California1,000< 500 Nebraska3,000< 500Colorado23,0001,000 New Mexico42,0003,000Florida89,00025,000 New York23,00019,000Georgia4,0001,000 North Dakota292,00046,000Illinois5,0001,000 Oklahoma230,00017,000Indiana< 500< 500 Pennsylvania10,0006,000Kansas14,0002,000 South Dakota14,0001,000Kentucky2,0001,000 Texas1,646,000154,000Louisiana132,0003,000 Utah6,000< 500Michigan54,0003,000 Wyoming27,0001,000Mississippi72,0009,000 (1)< 500 means acreage owned did not round up to 1,000. Leasing Activity We received $2,399,000 during 2017 attributable to lease bonus on 16 leases or extension of existing leases, and 1 pooling election in lands locatedin 11 counties and parishes in four states. These leases reflected bonus payments ranging up to $40,000/acre and initial royalty terms ranging up to 25%. The following table sets forth a summary of leases and pooling elections consummated during 2015 through 2017. 2017 2016 2015 Number 17 37 14 Number of States 4 7 4 Number of Counties 11 22 10 Average Royalty 23.94% 24.92% 24.8%Average Bonus, $/acre(1) $3,330 $2,499 $305 Total Lease Bonus $2,399,000 $2,721,000 $53,000 (1)Based on net acreage weighted average. Payments received for gas storage, shut-in and delay rental payments, coal royalty, surface use agreements, litigation judgments and settlementproceeds are reflected in our consolidated financial statements in various categories including, but not limited to, other operating revenues and otherincome. Net Profits Interests We own net profits overriding royalty interests (referred to as the Net Profits Interests, or “NPIs”) in various properties owned by Dorchester MineralsOperating LP, 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.” We receive monthly payments from each of the five NPIs equaling 96.97% of the net profits actually realized bythe operating partnership from these properties in the preceding month. In the event costs, including budgeted capital expenditures, exceed revenues ona cash basis in a given month for properties subject to a Net Profits Interest, no payment is made and any deficit is accumulated and carried over andreflected in the following month's calculation of net profit. In the event an NPI has a deficit of cumulative revenue versus cumulative costs, the deficitwill be borne solely by the operating partnership. Minerals NPI production volumes and prices are within the consolidated financial statements in accordance with U.S. GAAP, although accrued netprofits income for the year ended December 31, 2015 from the Minerals NPI was zero because accrued cumulative capital costs exceeded accruedcumulative operating income on a temporary deficit basis. The amount included in Net Profits Income for the Minerals NPI properties for the years endedDecember 31, 2016 and December 31, 2017 was $4.6 million and $6.5 million, respectively. 18Table of Contents From a cash perspective, as of December 31, 2017, the Minerals NPI was in a surplus position and had outstanding capital commitments equalingcash on hand of $6.6 million. Acreage Summary The following tables set forth, as of December 31, 2017, information concerning properties owned by the operating partnership and subject to theNPIs. Acreage amounts listed under “Leasehold” reflect gross acres leased by the operating partnership and the working interest share (net acres) in thoseproperties. Acreage amounts listed under “Mineral” reflect gross acres in which the operating partnership owns a mineral interest and the undividedmineral interest (net acres) in those properties. The operating partnership's interest in these properties may be unleased, leased by others or a combinationthereof. Acreage amounts may not add across due to overlapping ownership among categories. In addition to amounts listed below, the operatingpartnership owns interests limited to certain wellbores located on lands in which we own mineral, royalty or leasehold interests. The acreage amountsassociated with the wellbore interests are included in Royalty Properties Acreage Summary and not in the table below. Mineral Royalty Leasehold Total Number of States 12 6 6 12 Number of Counties/Parishes 61 23 12 68 Gross Acres 50,000 ___ 91,000 141,000 Net Acres 6,000 ___ 75,000 81,000 The following table reflects the states in which the acreage amounts listed above are located. Mineral/Royalty Leasehold Total Gross Net(1) Gross Net(1) Gross Net(1) Oklahoma 12,000 1,000 80,000 74,000 92,000 75,000 Arkansas 1,000 < 500 8,000 1,000 9,000 1,000 All Others 38,000 5,000 3,000 < 500 41,000 5,000 Totals 50,000 6,000 91,000 75,000 141,000 81,000 _______________ (1)< 500 means acreage owned did not round up to 1,000. The leasehold acreage in Arkansas listed above includes all of the acreage in the Fayetteville Shale properties in which the operating partnershipparticipates as a working interest owner. Productive Well Summary The following table sets forth, as of December 31, 2017, the approximate combined number of producing wells on the properties subject to theNPIs. Gross wells refer to wells in which a working interest is owned. Net wells are determined by multiplying gross wells by our working interest inthose wells. ProductiveWells/Units(1) Location Gross Net Oklahoma 133 117 All others 800 30 Total 933 147 _______________ (1)Large, multi-well units which are forecasted in aggregate are included as one gross well. Drilling Activity During 2017, we received division orders or first payments for 409 new wells completed on our Royalty Properties and 52 new wells completed onour NPI Properties. The wells were located in 32 counties and parishes in seven states. Included in these totals are wells in which we own both a royaltyinterest and a net profits interest. Wells with such overlapping interests are counted in both categories. We have and will continue to consider a range of transaction structures for our unleased mineral interests including leasing to third parties, workinginterest participation through the operating partnership, electing non-consent under State laws, or a combination thereof. 19Table of Contents Oil and Natural Gas Reserves The following table reflects the Partnership's proved developed and total proved reserves at December 31, 2017. The reserves are based on thereports of two independent petroleum engineering consulting firms: Calhoun, Blair & Associates and LaRoche Petroleum Consultants, Ltd. CalhounBlair & Associates is registered with the Engineering Board of the State of Texas, and has been engaged in the business of oil and natural gasproperty evaluation since 1998. LaRoche Petroleum Consultants, Ltd. is registered with the Engineering Board of the State of Texas. The LaRochefirm has been engaged in the business of oil and natural gas property evaluation since its formation in 1979. Other than our filings with the SEC, wehave not filed the estimated proved reserves with, or included them in any reports to, any federal agency. Copies of the reports prepared by Calhoun,Blair & Associates and LaRoche Petroleum Consultants, Ltd. are attached hereto as Exhibits 99.1 and 99.2. As described above, the Partnership does not have information that would be available to a company with oil and natural gas operations becausedetailed information is not generally available to owners of royalty interests. The Partnership’s Chief Operating Officer (“COO”) gathers productioninformation and provides such information to our two independent petroleum engineering consulting firms who extrapolate from such informationestimates of the reserves attributable to the Royalty Properties and NPIs based on their expertise in the oil and natural gas fields where the RoyaltyProperties and NPIs are situated, as well as publicly available information. Ensuring compliance with generally accepted petroleum engineering andevaluation methods and procedures is the responsibility of the COO. Our COO has a bachelor’s degree in Petroleum Engineering from the Universityof Alberta, and has worked in the upstream oil and natural gas business in various capacities since 1996. The COO reports directly to the ChiefExecutive Officer (“CEO”). Our CEO ensures compliance with SEC guidance. Our CEO received his Bachelor of Science degree in PetroleumEngineering from Texas A&M University in 1984, and has been a Registered Professional Engineer in Texas since 1988. Summary of Oil and Gas Reserves as of Fiscal Year-End All Proved Developed and located in the United States Royalty Properties Net Profits Interests(1) Total Year Oil(2)(mbbls) Natural Gas(mmcf) Oil(2)(mbbls) Natural Gas(mmcf) Oil(2)(mbbls) Natural Gas(mmcf) 2017 6,688 24,327 1,623 22,594 8,311 46,921 2016 5,643 22,967 1,449 18,187 7,092 41,154 2015 4,631 23,618 1,047 25,752 5,678 49,370 (1)Reserves reflect 96.97% of the corresponding amounts assigned to the operating partnership’s interests in the properties underlyingthe Net Profits Interests. (2)Oil reserves include volumes attributable to natural gas liquids. Proved oil and natural gas reserves means those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can beestimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economicconditions, operating methods, and governmental regulations—prior to the time at which contracts providing the right to operate expire, unlessevidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Theproject to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within areasonable time. Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results ofOperations” for average sales prices. The Hugoton Field reflected in the Net Profits Interests above is the only significant field, defined as more than 15% of total proved developedreserves. Hugoton Field net sales volumes for the last three years are listed below: Production by Significant Field Oil Boe(1) Gas mcf 2017 47,000 1,388,000 2016 64,000 1,951,000 2015 ___ 2,066,000 (1)Oil revenues include volumes attributable to natural gas liquids. Title to Properties We believe we have satisfactory title to all of our assets. Record title to essentially all of our assets has undergone the appropriate filings in thejurisdictions in which such assets are located. Title to property may be subject to encumbrances. We believe that none of such encumbrances shouldmaterially detract from the value of our properties or from our interest in these properties or should materially interfere with their use in the operation ofour business. 20Table of Contents ITEM 3. LEGAL PROCEEDINGS The Partnership and the operating partnership are involved in legal and/or administrative proceedings arising in the ordinary course of theirbusinesses, none of which have predictable outcomes and none of which are believed to have any significant effect on financial position or operatingresults. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED UNITHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES Our common units began trading on the NASDAQ National Market (now the NASDAQ Global Select Market) on February 3, 2003. The followingtable summarizes the high and low sales information for the common units for the period indicated. 2017 2016 High Low High Low First Quarter $19.10 $15.50 $11.99 $8.57 Second Quarter $17.85 $14.21 $15.82 $10.71 Third Quarter $15.92 $13.90 $16.74 $13.55 Fourth Quarter $15.66 $14.30 $19.30 $14.45 As of December 31, 2017, there were 12,346 common unitholders. Beginning with the quarter ended March 31, 2003, as required by our partnership agreement, we distributed and will continue to distribute, on aquarterly basis, within 45 days of the end of the quarter, all of our available cash. Available cash means all cash and cash equivalents on hand at the endof that quarter, less any amount of cash reserves that our general partner determines is necessary or appropriate to provide for the conduct of its business orto comply with applicable laws or agreements or obligations to which we may be subject. Unitholder cash distributions per common unit for the past three years have been: Per Unit Amount 2017 2016 2015 First Quarter $0.306700 $0.147417 $0.306553 Second Quarter $0.322965 $0.257977 $0.167430 Third Quarter $0.284650 $0.252224 $0.194234 Fourth Quarter $0.386915 $0.241475 $0.199076 Distributions were paid on 30,675,431 units from the first quarter of 2015 through the first quarter of 2017. Beginning with the second quarter of2017, distributions were paid on 32,279,774 units. Fourth quarter distributions are paid in February of the following calendar year to unitholders ofrecord in January or February of such following year. The partnership agreement requires the next cash distribution to be paid by May 15, 2018. Please see "Fourth Quarter 2017 Distribution Indicated Price" discussion contained in “Item 7. __ Management's Discussion and Analysis of FinancialCondition and Results of Operations ___ Liquidity and Capital Resources ___ Distributions” for cash receipts and weighted average prices correspondingto the fourth quarter 2017 distribution. 21Table of Contents Performance Graph The following graph compares the performance of our common units with the performance of the NASDAQ Composite Index (the “NASDAQIndex”) and a peer group index from December 31, 2012 through December 31, 2017. The graph assumes that at the beginning of the period, $100 wasinvested in each of (1) our common units, (2) the NASDAQ Index, and (3) the peer group, and that all distributions or dividends were reinvested on thelast trading day of each quarter. We do not believe that any published industry or line-of-business index accurately reflects our business. Accordingly,we have created a special peer group index consisting of companies whose royalty trust units have been publicly traded on the New York StockExchange for the entire comparison period. Our peer group index includes the units of the following companies: Cross Timbers Royalty Trust, MesaRoyalty Trust, Sabine Royalty Trust, Permian Basin Royalty Trust, Hugoton Royalty Trust and the San Juan Basin Royalty Trust. 22Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES Period (a) Total Number ofUnits Purchased (b) Average PricePaidper Unit (c) Total Number ofUnits Purchased asPart of PubliclyAnnounced Plansor Programs (d) Maximum Numberof Units that MayYet Be PurchasedUnder the Plans orPrograms Month #1 (October 1, 2017 – October 31, 2017) - N/A - 83,249(1)Month #2 (November 1, 2017 – November 30,2017) 8,197(2) 15.00 8,197 83,249(1)Month #3 (December 1, 2017 – December 31,2017) - - - 83,249(1)Total 8,197(2) 15.00 8,197 83,249(1) (1)The number of common units that the operating partnership may grant under the Dorchester Minerals Operating LP Equity Incentive Program,which was approved by our common unitholders on May 20, 2015 (the “Equity Incentive Program”), each fiscal year may not exceed 0.333%of the number of common units outstanding at the beginning of the fiscal year. In 2017, the maximum number of common units that could bepurchased under the Equity Incentive Program was 102,149 common units. (2)Common units withheld from grants of common units made pursuant to the Equity Incentive Program to pay withholding taxes payable by thegrantee upon such grants. ITEM 6. SELECTED FINANCIAL DATA Basis of Presentation This table should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this document. Fiscal Year Ended December 31,(in thousands, except per unit data) 2017 2016 2015 2014 2013 Total operating revenues $57,291 $37,557 $31,870 $65,170 $65,869 Depreciation, depletion and amortization 9,302 8,507 10,068 10,050 13,143 Net income 38,424 20,967 13,255 45,239 43,576 Net income per common unit (basic and diluted) 1.18 0.66 0.42 1.42 1.37 Cash distributions(1) 37,797 27,202 36,608 60,539 55,015 Cash distributions per unit(1) 1.16 0.86 1.15 1.90 1.73 Total assets 92,047 67,211 73,729 97,509 112,785 Total liabilities 1,301 275 558 985 961 Partnership capital 90,746 66,936 73,171 96,524 111,824 ______________ (1)Because of depletion (which is usually higher in the early years of production), a portion of every distribution of revenues fromproperties represents a return of a limited partner's original investment. Until a limited partner receives cash distributions equal tohis original investment, in certain circumstances, 100% of such distributions may be deemed to be a return of capital. Cashdistributions by year exclude the fourth quarter distribution declared in January of the following year, but include the prior yearfourth quarter distribution declared in January of the current year. 23Table of Contents ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2017 Overview Our results during 2017 were mainly affected by industrywide increases in realized oil and natural gas prices and continued drilling activity in thePermian Basin. Significant results include the following: ●Net income of $38.4 million; ●Distributions of $36.4 million to our limited partners; ●Identification of 409 new wells completed on our Royalty Properties and 52 new wells completed on our NPI Properties. The wells were locatedin 32 counties and parishes in seven states. Included in these totals are wells in which we own both a royalty interest and a net profits interest.Wells with such overlapping interests are counted in both categories. ●Consummation of 17 leases and pooling elections of our mineral interest in undeveloped properties located in 11 counties and parishes in fourstates. ●Acquisition of 1,850 net royalty acres across 22,400 gross surface acres in Glasscock, Howard, Martin, Midland, Reagan and Upton Counties,Texas. Critical Accounting Policies We utilize the full cost method of accounting for costs related to our oil and natural gas properties. Under this method, all such costs are capitalizedand amortized on an aggregate basis over the estimated lives of the properties using the units-of-production method. These capitalized costs are subjectto a ceiling test that limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved oil and natural gasreserves discounted at 10% plus the lower of cost or market value of unproved properties. Our Partnership did not assign any book or market value tounproved properties, including nonproducing royalty, mineral and leasehold interests. The full cost ceiling is evaluated at the end of each quarter andwhen events indicate possible impairment. No impairments have been recorded since 2003. The discounted present value of our proved oil and natural gas reserves is a major component of the ceiling test calculation and requires manysubjective judgments. Estimates of reserves are forecasts based on engineering and geological analyses. Different reserve engineers could reach differentconclusions as to estimated quantities of natural gas or crude oil reserves based on the same information. Our reserve estimates are prepared byindependent consultants. The passage of time provides more qualitative information regarding reserve estimates, and revisions are made to priorestimates based on updated information. However, there can be no assurance that more 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 calculation of theceiling 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 thediscounted present value of our reserves are objectively determined. The ceiling test calculation requires use of the unweighted arithmetic average of thefirst 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 constant for the life of the properties. As a result, the present value is not necessarily an indication of the fair value of thereserves. Oil and natural gas prices have historically been volatile, and the prevailing prices at any given time may not reflect our Partnership’s or theindustry’s forecast of future prices. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For example, estimatesof uncollected revenues and unpaid expenses from Royalty Properties and NPIs operated by non-affiliated entities are particularly subjective due to theinability to gain accurate and timely information. Therefore, actual results could differ from those estimates. Please see “Item 1. Business—Customersand Pricing” and “Item 2. Properties—Royalty Properties” for additional discussion. Contractual Obligations Our office lease in Dallas, Texas comprises our contractual obligations. Payments due by Period ($ in Thousands) Contractual Obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Operating Lease Obligations $3,424 $136 $559 $632 $2,097 24Table of Contents Results of Operations Normally, our period-to-period changes in net income and cash flows from operating activities are principally determined by changes in oil andnatural gas sales volumes and prices, and to a lesser extent, by capital expenditures deducted under the NPI calculation. Our portion of oil and naturalgas sales volumes and weighted average sales prices are shown in the following table. Years Ended December 31, Accrual Basis Sales Volumes: 2017 2016 2015 Royalty Properties Gas Sales (mmcf) 3,753 3,271 3,704 Royalty Properties Oil Sales (mbbls) 784 620 524 Net Profits Interests Gas Sales (mmcf) 2,750 2,807 3,248 Net Profits Interests Oil Sales (mbbls) 349 381 399 Accrual Basis Weighted Averages Sales Price: Royalty Properties Gas Sales ($/mcf) $2.83 $2.05 $2.30 Royalty Properties Oil Sales ($/bbl) $45.27 $37.18 $42.23 Net Profits Interests Gas Sales ($/mcf) $2.60 $2.08 $2.49 Net Profits Interests Oil Sales ($/bbl) $44.71 $34.64 $49.46 Comparison of the twelve-month periods ended December 31, 2017, 2016 and 2015 Royalty Properties’ oil sales volumes increased 18% from 524 mbbls during 2015 to 620 mbbls during 2016 and further increased 26% to 784mbbls during 2017. These increases are primarily due to activity in the Permian Basin which more than offset natural declines in other regions. RoyaltyProperties’ gas sales volumes decreased 12% from 3,704 mmcf during 2015 to 3,271 mmcf during 2016, and then increased 15% to 3,753 mmcf during2017. The decrease in 2016 versus 2015 was primarily due to natural declines in the Fayetteville Shale. The increase in 2017 versus 2016 was primarilydue to new activity in Permian Basin. NPI properties’ oil sales volumes decreased 5% from 399 mbbls during 2015 to 381 mbbls during 2016 and subsequently decreased 8% to 349mbbls during 2017 due to decreased activity in the Bakken region partially offset by both increased activity in the Permian Basin and a large suspenserelease in the fourth quarter of 2017. NPI properties’ gas sales volumes decreased 14% from 3,248 mmcf during 2015 to 2,807 mmcf during 2016 andfurther decreased 2% to 2,750 mmcf in 2017 due to natural declines in the Fayetteville Shale, partially offset by increased activity in the Permian Basin. Weighted average oil sales prices attributable to the Royalty Properties decreased 12% from $42.23/bbl in 2015 to $37.18/bbl in 2016 andsubsequently increased 22% to $45.27/bbl in 2017. Royalty Properties’ weighted average gas sales prices decreased 11% from $2.30/mcf during 2015 to$2.05/mcf during 2016 and then increased 38% to $2.83/mcf during 2017. All fluctuations resulted from changing market conditions. Weighted average NPI properties’ gas sales prices decreased 16% from $2.49/mcf during 2015 to $2.08/mcf during 2016 and then increased 25% to$2.60/mcf in 2017. NPI properties’ weighted average oil sales prices decreased 30% from $49.46/bbl during 2015 to $34.64/bbl during 2016 andsubsequently increased 29% to $44.71/bbl in 2017. All fluctuations resulted from changing market conditions. Our operating revenues increased 18% from $31,870,000 during 2015 to $37,557,000 in 2016, and subsequently increased 53% to $57,291,000 in2017. In 2016, the effect on revenues of the continued decline in commodity prices was more than offset by higher lease bonus income and an increase inour Royalty Property oil sales compared to 2015. In 2017, increases in commodity prices for both oil and natural gas, and an increase in our RoyaltyProperty production and Net profits interests revenues resulted in the significant increase in operating revenues compared to 2016. Lease bonus income increased from $53,000 in 2015 to $2,721,000 in 2016, and then decreased to $2,399,000 in 2017. The 2016 and 2017 leasebonus income was the result of new leasing activity, primarily in the Permian Basin. Other income increased from $168,000 in 2015 to $262,000 in 2016, and then increased to $753,000 in 2017. The change in 2016 and 2017 otherincome was due to an increase of interest income and compensatory royalties paid on our royalty properties. Depletion, depreciation and amortization decreased 16% in 2016 versus prior year to $8,507,000 from $10,068,000 and subsequently increased 9%to $9,302,000 in 2017. Cash flow from operations and cash distributions to unitholders are not affected by depletion, depreciation and amortization. General and administrative (“G&A”) costs increased less than 1% from $4,967,000 in 2015 to $4,990,000 in 2016, primarily due to decreasedpayroll expenses offset by higher legal costs associated with royalty litigation. G&A costs then decreased 1% to $4,930,000 in 2017 compared to 2016primarily due to decreased royalty litigation legal expenses offset by office remodel costs. Net cash provided by operating activities increased 2% from $27,692,000 in 2015 to $28,278,000 in 2016 mainly due to higher Net Profits Interestsincome versus prior year and higher lease bonus income offset by higher accounts receivable related to royalty income. During 2017, net cash providedby operating activities increased 56% to $44,028,000 due to increases in both Royalty and Net Profits Interest income partially offset by an increase inour Net profits interest accounts receivable. During 2017 we had net cash used in investing activities of $616,000 which represents capital expendituresof $1,056,000 and cash contributed in an acquisition of royalty interests of $440,000. 25Table of Contents On June 28, 2017, the Partnership executed a definitive agreement to acquire producing and nonproducing mineral and royalty interests located inGlasscock, Howard, Martin, Midland, Reagan and Upton Counties, Texas. The properties consist of 1,850 net royalty acres across 22,400 gross surfaceacres. Approximately 75% of the total net royalty acres are located in the northwestern quarter of Reagan County and substantially overlap with thePartnership’s existing position. The transaction was consummated on June 30, 2017 and was structured as a non-taxable contribution and exchange. At the closing, in addition toconveying their interests to the Partnership, the contributing parties delivered funds in an amount equal to their cash receipts during the period fromApril 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. Climate Change Climate change has become the subject of an important public policy debate. In response to climate change concerns, many foreign countries areadopting climate change legislation and regulations. Although the United States Congress has considered adopting climate change legislation, it has yetto enact such legislation. At the state level, several states have adopted or are considering adopting climate change legislation, including GHG limits andcap-and-trade programs. The EPA issued an “Endangerment Finding” under Section 202(a) of the Clean Air Act, concluding greenhouse gas pollutionthreatens the public health and welfare of future generations and has since issued GHG monitoring and reporting regulations that went into effect January1, 2010, with the first annual reports of GHG emissions due in September 2012, and annually thereafter. The oil and gas industry is subject to these GHGreporting obligations. EPA has indicated that it will use data collected through the reporting rules to decide whether to promulgate future greenhouse gasemission limits. See also Item 1A Risk Factors – “Environmental costs and liabilities and changing environmental regulation could affect our cash flow”and “The adoption of climate change legislation by Congress or executive orders or regulations could result in increased operating costs and reduceddemand for the oil and natural gas production from our properties.” Stricter GHG emissions standards, increased oversight and regulation and moreextensive permit requirements, along with any future laws and regulations, could result in increased costs or additional operating restrictions whichcould have an effect on demand for oil and natural gas or on prices at which it can be sold. The current state of development of many state and federalclimate change regulatory initiatives makes it difficult to predict with certainty the future impact on us, including accurately estimating the relatedcompliance costs that the operating partnership and oil and natural gas operators that develop the Royalty Properties may incur. Texas Margin Tax Texas imposes a franchise tax (commonly referred to as the Texas margin tax) at a rate of 0.75% on gross revenues less certain deductions, asspecifically set forth in the Texas margin tax statute. The Texas margin tax applies to corporations and limited liability companies, general and limitedpartnerships (unless otherwise exempt), limited liability partnerships, trusts (unless otherwise exempt), business trusts, business associations, professionalassociations, joint stock companies, holding companies, joint ventures and certain other business entities having limited liability protection. Limited partnerships that receive at least 90% of their gross income from designated passive sources, including royalties from mineral properties andother non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, are generallyexempt from the Texas margin tax as “passive entities.” We believe our Partnership meets the requirements for being considered a “passive entity” forTexas margin tax purposes and, therefore, it is exempt from the Texas margin tax. If the Partnership is exempt from Texas margin tax as a passive entity,each unitholder that is considered a taxable entity under the Texas margin tax would generally be required to include its portion of Partnership revenuesin its own Texas margin tax computation. The Texas Administrative Code provides such income is sourced according to the principal place of business ofthe Partnership, which would be the state of Texas. Each unitholder is urged to consult an independent tax advisor regarding the requirements for filing state income, franchise and Texas margin taxreturns. 26Table of Contents Liquidity and Capital Resources Capital Resources Our primary sources of capital are our cash flow from the Royalty Properties and the NPIs. We are not directly liable for the payment of anyexploration, development or production costs. We do not have any transactions, arrangements or other relationships that could materially affect ourliquidity or the sustainability of capital resources. Pursuant to the terms of our partnership agreement, we cannot incur indebtedness, other than trade payables (i) in excess of $50,000 in the aggregateat any given time or (ii) which would constitute "acquisition indebtedness" (as defined in Section 514 of the Internal Revenue Code of 1986, asamended). Our only cash requirements are the distributions of all our net cash flow to our unitholders, the payment of oil and natural gas production andproperty taxes not otherwise deducted from gross production revenues and general and administrative expenses incurred on our behalf and allocated inaccordance with our partnership agreement. Since the distributions to our unitholders are, by definition, determined after the payment of all expensesactually paid by us, the only cash requirements that may create liquidity concerns for us are the payments of expenses. Since many of these expenses varydirectly with oil and natural gas prices and sales volumes, such as production taxes, we anticipate that sufficient funds will be available at all times forpayment of these expenses. Of the expenses that do not vary with oil and natural gas prices and sales volumes, most are reimbursements to our generalpartner for allocable general and administrative costs including home office rent, salaries, and employee benefit plans. Such reimbursements are generallylimited to 5% of an amount primarily based on annual distributions to our limited partners. Historically, all such reimbursements have been substantiallybelow the 5% limit established by the partnership agreement. Consequently, our business risks were essentially limited to distribution amount decreases.See “Item 1. Business – Credit Facilities and Financing Plans.” See “Item 1A. Risk Factors – Risks Related to our Business – Cash distributions areaffected by production and other costs, some of which are outside of our control.” See “Item 1A. Risk Factors – Risks Inherent In An Investment In OurCommon Units – Cost reimbursement due our general partner may be substantial and reduce our cash available to distribute to our unitholders." See"Notes to Consolidated Financial Statements – Note 3 – Related Party Transactions." Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material tounitholders. Expenses and Capital Expenditures Depending upon gas prices, the operating partnership plans to continue its efforts to increase production in Oklahoma by techniques that mayinclude fracture treating, deepening, recompleting, and drilling. Costs vary widely 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 owns and operates the wells, pipelines and central natural gas compression and dehydration facilities on its propertieslocated in Oklahoma. The operating partnership does not anticipate incurring significant expense to replace these facilities at this time. These capitaland operating costs are reflected in the NPI payments we receive from the operating partnership. In 1998, Oklahoma regulations removed production quantity restrictions in the Guymon-Hugoton field and did not address efforts by third parties topersuade Oklahoma to permit infill drilling in the Guymon-Hugoton field. Infill drilling could require considerable capital expenditures. The outcomeand the cost of such activities are unpredictable and could influence the amount we receive from the NPIs. The operating partnership believes it nowhas sufficient field compression and permits for vacuum operation for the foreseeable future. Liquidity and Working Capital Year-end cash and cash equivalents totaled $13,827,000 for 2017 and $8,212,000 for 2016. 27Table of Contents Distributions Distributions to limited partners and the general partner related to cash receipts for the period from October 2016 through December 2017 were asfollows: $ in Thousands Year Quarter Record Date Payment Date Per UnitAmount LimitedPartners GeneralPartner 2016 4th January 30, 2017 February 10, 2017 $0.241475 $7,407 $283 2017 1st May 1, 2017 May 11, 2017 0.306700 9,408 368 2017 2nd July 31, 2017 August 10, 2017 0.322965 10,425 368 2017 3rd October 30, 2017 November 9, 2017 0.284650 9,189 349 Total distributions paid in 2017 $36,429 $1,368 2017 4th January 29, 2018 February 8, 2018 $0.386915 $12,490 $449 In general, the limited partners are allocated 96% of the Royalty Properties’ net receipts and 99% of NPI net receipts. Net Profits Interests We receive monthly payments from the operating partnership equal to 96.97% of the net proceeds actually realized by the operating partnership fromthe properties underlying the Net Profits Interests (or “NPIs”). The operating partnership retains the 3.03% balance of these net proceeds. Net proceedsgenerally reflect gross proceeds attributable to oil and natural gas production actually received during the month, less production costs actually paidduring the same month, net of budgeted capital expenditures. Production costs generally reflect drilling, completion, operating and general andadministrative costs and exclude depletion, amortization and other non-cash costs. The operating partnership made NPI payments to us totaling$4,808,000 during October 2016 through September 2017, which payments reflected 96.97% of total net proceeds of $4,958,000 realized from September2016 through August 2017. Net proceeds realized by the operating partnership during September through November 2017 were reflected in NPI paymentsmade during October through December 2017. These payments were included in the fourth quarter distribution paid in early 2018 and are excluded fromthis 2017 analysis. Royalty Properties Revenues from the Royalty Properties are typically paid to us with proportionate severance (production) taxes deducted and remitted by others.Additionally, we generally pay ad valorem taxes, general and administrative costs, and marketing and associated costs because royalties and leasebonuses generally do not otherwise bear operating or similar costs. After deduction of the above described costs including cash reserves, our net cashreceipts from the Royalty Properties during October 2016 through September 2017 were $32,989,000, of which $31,669,000 (96%) was distributed to thelimited partners and $1,320,000 (4%) was distributed to the general partner. Proceeds received by us from the Royalty Properties during October throughDecember 2017 became part of the fourth quarter distribution paid in early 2018, which is excluded from this 2017 analysis. Distribution Determinations The actual calculation of distributions is performed each calendar quarter in accordance with our partnership agreement. The following calculationcovering the period October 2016 through September 2017 demonstrates the method: $ In Thousands LimitedPartners GeneralPartner 4% of Net Cash Receipts from Royalty Properties $__ $1,320 96% of Net Cash Receipts from Royalty Properties 31,669 __ 1% of NPI Payments to our Partnership __ 48 99% of NPI Payments to our Partnership 4,760 __ Total Distributions $36,429 $1,368 Operating Partnership Share (3.03% of Net Proceeds) __ 150 Total General Partner Share $1,518 % of Total 96% 4% In summary, our limited partners received 96%, and our general partner received 4% of the net cash generated by our activities and those of theoperating partnership during this period. Due to these fixed percentages, our general partner does not have any incentive distribution rights or otherright or arrangement that will increase its percentage share of net cash generated by our activities or those of the operating partnership. 28Table of Contents During the period October 2016 through September 2017, our Partnership's quarterly distribution payments to limited partners were based on all ofits available cash. Available cash means all cash and cash equivalents on hand at the end of that quarter, less any amount of cash reserves that our generalpartner determines is necessary or appropriate to provide for the conduct of its business or to comply with applicable laws or agreements or obligations towhich we may be subject. Our practice is to accrue funds quarterly for amounts incurred throughout the year but invoiced and paid annually or semi-annually (e.g. ad valorem taxes, deferred compensation contributions and payroll taxes). These amounts generally are not held for periods over one year. Fourth Quarter 2017 Distribution Indicated Price In an effort to provide information concerning prices of oil and natural gas sales that correspond to our quarterly distributions, managementcalculates the weighted average price by dividing gross revenues received by the net volumes of the corresponding product without regard to the timingof the production to which such sales may be attributable. This “indicated price” does not necessarily reflect the contractual terms for such sales and maybe affected by transportation costs, location differentials, and quality and gravity adjustments. While the relationship between the Partnership's cashreceipts and the timing of the production of oil and natural gas may be described generally, actual cash receipts may be materially impacted bypurchasers’ release of suspended funds and by prior period adjustments. Cash receipts attributable to the Partnership's Royalty Properties during the 2017 fourth quarter totaled approximately $11.6 million. These receiptsgenerally reflect oil sales during September through November 2017 and natural gas sales during August through October 2017. The weighted averageindicated prices for oil and natural gas sales during the 2017 fourth quarter attributable to the Royalty Properties were $46.51/bbl and $2.60/mcf,respectively. Cash receipts attributable to the Partnership's NPIs during the 2017 fourth quarter totaled approximately $2.3 million. These receipts generally reflectoil and natural gas sales from the properties underlying the NPIs during August through October 2017. The weighted average indicated prices for oil andnatural gas sales during the 2017 fourth quarter attributable to the NPIs were $43.17/bbl and $2.43/mcf, respectively. General and Administrative Costs In accordance with our partnership agreement, we bear all general and administrative and other overhead expenses subject to certain limitations. Wereimburse our general partner for certain allocable costs, including rent, wages, salaries and employee benefit plans. This reimbursement is limited to anamount equal to the sum of 5% of our distributions plus certain costs previously paid. Through December 31, 2017, the limitation was in excess of thereimbursement amounts actually paid or accrued. ITEM 7A. 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 notmeant to be precise indicators of expected future losses, but rather indicators of possible losses. Market Risk Related to Oil and Natural Gas Prices Essentially all of our assets and sources of income are from the Royalty Properties and the NPIs, which generally entitle us to receive a share of theproceeds from oil and natural gas production on those properties. Consequently, we are subject to market risk from fluctuations in oil and natural gasprices. Pricing for oil and natural gas production has been volatile and unpredictable for several years. We do not anticipate entering into financialhedging activities intended to reduce our exposure to oil and natural gas price fluctuations. 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 bematerial to us. We do not anticipate engaging in transactions in foreign currencies which could expose us to foreign currency related market risk. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements are set forth herein commencing on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 29Table of Contents ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2017. Based on this evaluation, ourChief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2017, our disclosure controls and procedures were effective,in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed,summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management,including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting Management acknowledges its responsibility for establishing and maintaining adequate internal control over financial reporting in accordance withRule 13a-15(f) promulgated under the Exchange Act. Management has also evaluated the effectiveness of its internal control over financial reporting inaccordance with generally accepted accounting principles within the guidelines of the Committee of Sponsoring Organizations of the TreadwayCommission framework (2013). Based on the results of this evaluation, management has determined that the Partnership’s internal control over financialreporting was effective as of December 31, 2017. The independent registered public accounting firm of Grant Thornton LLP, as auditors of thePartnership’s financial statements included in the Annual Report, has issued an attestation report on the Partnership’s internal control over financialreporting. Changes in Internal Controls There were no changes in our Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of1934) during the quarter ended December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control overfinancial reporting. ITEM 9B. OTHER INFORMATION None.PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item is incorporated herein by reference to the 2018 Proxy Statement, which will be filed with the Securities andExchange Commission not later than 120 days subsequent to December 31, 2017. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the 2018 Proxy Statement, which will be filed with the Securities andExchange Commission not later than 120 days subsequent to December 31, 2017. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS The information required by this item is incorporated herein by reference to the 2018 Proxy Statement, which will be filed with the Securities andExchange Commission not later than 120 days subsequent to December 31, 2017. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is incorporated herein by reference to the 2018 Proxy Statement, which will be filed with the Securities andExchange Commission not later than 120 days subsequent to December 31, 2017. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item is incorporated herein by reference to the 2018 Proxy Statement, which will be filed with the Securities andExchange Commission not later than 120 days subsequent to December 31, 2017. 30Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)Financial Statements and Schedules (1)See the Index to Consolidated Financial Statements on page F-1. (2)No schedules are required. (3)The exhibits required by Item 601 of Regulation S-K are as follows: NumberDescription2.1Contribution, Exchange and Purchase Agreement, dated June 28, 2017, by and between Dorchester Minerals, L.P. and DSD Royalty, LLC(incorporated by reference to Exhibit 2.1 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.2Participation Agreement, dated June 28, 2017, by and among Dorchester Minerals, L.P., 1307, Ltd., SCW Capital, LP, Tortuga Oil & Gas,L.P., Robert R. Penn, Squaretop Partners, L.P., Marshall Bryan Payne, MARI GST Non-Exempt Trust, Vaughn Petroleum (DMLP), LLC, JamesE. Raley, 2011 Pete & Kay Allen Family Trust, Leslie A. Moriyama, Rokeby Investments, L.P., Browning C. Vaughn, The MDIG PPM Trust,The MDIG WWM Trust, The MDIG AMM Trust, The MDIG SCM Trust and Quiscalus Ventures, LLC (incorporated by reference to Exhibit2.2 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.3Contribution and Exchange Agreement, dated June 30, 2017, by and between Dorchester Minerals, L.P. and 1307, Ltd. (incorporated byreference to Exhibit 2.3 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.4Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and SCW Capital, LP. (incorporatedby reference to Exhibit 2.4 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.5Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Tortuga Oil & Gas, L.P.(incorporated by reference to Exhibit 2.5 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.6Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Robert R. Penn. (incorporated byreference to Exhibit 2.6 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.7Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Squaretop Partners, L.P.(incorporated by reference to Exhibit 2.7 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.8Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Marshall Bryan Payne.(incorporated by reference to Exhibit 2.8 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.9Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and MARI GST Non-Exempt Trust.(incorporated by reference to Exhibit 2.9 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.10Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Vaughn Petroleum (DMLP), LLC.(incorporated by reference to Exhibit 2.10 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.11Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and James E. Raley. (incorporated byreference to Exhibit 2.11 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.12Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and 2011 Pete & Kay Allen FamilyTrust. (incorporated by reference to Exhibit 2.12 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.13Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Leslie A. Moriyama.(incorporated by reference to Exhibit 2.13 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.14Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Rokeby Investments, L.P.(incorporated by reference to Exhibit 2.14 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.15Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Browning C. Vaughn.(incorporated by reference to Exhibit 2.15 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017) 31Table of Contents 2.16Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and The MDIG PPM Trust.(incorporated by reference to Exhibit 2.16 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.17Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and The MDIG WWM Trust.(incorporated by reference to Exhibit 2.17 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.18Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and The MDIG AMM Trust.(incorporated by reference to Exhibit 2.18 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.19Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and The MDIG SCM Trust.(incorporated by reference to Exhibit 2.19 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)2.20Contribution and Exchange Agreement, dated June 30, 2017 by and between Dorchester Minerals, L.P. and Quiscalus Ventures, LLC.(incorporated by reference to Exhibit 2.20 to Dorchester Minerals’ Current Report on Form 8-K filed with the SEC on July 5, 2017)3.1Certificate of Limited Partnership of Dorchester Minerals, L.P. (incorporated by reference to Exhibit 3.1 to Dorchester Minerals’ RegistrationStatement on Form S-4, Registration Number 333-88282)3.2Amended and Restated Agreement of Limited Partnership of Dorchester Minerals, L.P. (incorporated by reference to Exhibit 3.2 to DorchesterMinerals’ Report on Form 10-K filed for the year ended December 31, 2002)3.3Amendment No. 1 to Amended and Restated Partnership Agreement of Dorchester Minerals, L.P. (incorporated by reference to Exhibit 3.1 toDorchester Minerals’ Current Report on Form 8-K filed with the SEC on December 22, 2017)3.4Certificate of Limited Partnership of Dorchester Minerals Management LP (incorporated by reference to Exhibit 3.4 to DorchesterMinerals’ Registration Statement on Form S-4, Registration Number 333-88282)3.5Amended and Restated Agreement of Limited Partnership of Dorchester Minerals Management LP (incorporated by reference to Exhibit 3.4to Dorchester Minerals’ Report on Form 10-K for the year ended December 31, 2002)3.6Certificate of Formation of Dorchester Minerals Management GP LLC (incorporated by reference to Exhibit 3.7 to Dorchester Minerals’Registration Statement on Form S-4, Registration Number 333-88282)3.7Amended and Restated Limited Liability Company Agreement of Dorchester Minerals Management GP LLC (incorporated by reference toExhibit 3.6 to Dorchester Minerals’ Report on Form 10-K for the year ended December 31, 2002)3.8Certificate of Formation of Dorchester Minerals Operating GP LLC (incorporated by reference to Exhibit 3.10 to Dorchester Minerals’Registration Statement on Form S-4, Registration Number 333-88282)3.9Limited Liability Company Agreement of Dorchester Minerals Operating GP LLC (incorporated by reference to Exhibit 3.11 toDorchester Minerals’ Registration Statement on Form S-4, Registration Number 333-88282)3.10Certificate of Limited Partnership of Dorchester Minerals Operating LP (incorporated by reference to Exhibit 3.12 to Dorchester Minerals’Registration Statement on Form S-4, Registration Number 333-88282)3.11Amended and Restated Agreement of Limited Partnership of Dorchester Minerals Operating LP (incorporated by reference to Exhibit 3.10 toDorchester Minerals’ Report on Form 10-K for the year ended December 31, 2002)3.12Certificate of Limited Partnership of Dorchester Minerals Oklahoma LP (incorporated by reference to Exhibit 3.11 to Dorchester Minerals’Annual Report on Form 10-K for the year ended December 31, 2002)3.13Agreement of Limited Partnership of Dorchester Minerals Oklahoma LP (incorporated by reference to Exhibit 3.12 to Dorchester Minerals’Annual Report on Form 10-K for the year ended December 31, 2002)3.14Certificate of Incorporation of Dorchester Minerals Oklahoma GP, Inc. (incorporated by reference to Exhibit 3.13 to Dorchester Minerals’Annual Report on Form 10-K for the year ended December 31, 2002)3.15Bylaws of Dorchester Minerals Oklahoma GP, Inc. (incorporated by reference to Exhibit 3.14 to Dorchester Minerals’ Annual Report onForm 10-K for the year ended December 31, 2002)10.1Amended and Restated Business Opportunities Agreement dated as of December 13, 2001 by and between the Registrant, the GeneralPartner, Dorchester Minerals Management GP LLC, SAM Partners, Ltd., Vaughn Petroleum, Ltd., Smith Allen Oil & Gas, Inc., P.A. Peak,Inc., James E. Raley, Inc., and certain other parties (incorporated by reference to Exhibit 10.1 to Dorchester Minerals’ Annual Report onForm 10-K for the year ended December 31, 2002)10.2Transfer Restriction Agreement (incorporated by reference to Exhibit 10.2 to Dorchester Minerals’ Annual Report on Form 10-K for theyear ended December 31, 2002)10.3Registration Rights Agreement (incorporated by reference to Exhibit 10.3 to Dorchester Minerals’ Annual Report on Form 10-K for the yearended December 31, 2002)10.4Lock-Up Agreement by William Casey McManemin (incorporated by reference to Exhibit 10.4 to Dorchester Minerals’ Annual Report onForm 10-K for the year ended December 31, 2002) 32Table of Contents 10.5Form of Indemnity Agreement (incorporated by reference to Exhibit 10.1 to Dorchester Minerals’ Quarterly Report on Form 10-Q for thequarter ended June 30, 2004)10.6Dorchester Minerals Operating LP Equity Incentive Program (incorporated by reference to Annex A to Dorchester Minerals’ Proxy Statementon Schedule 14A filed with the SEC on March 16, 2015)21.1*Subsidiaries of the Registrant23.1*Consent of Grant Thornton LLP23.2*Consent of Calhoun, Blair & Associates23.3*Consent of LaRoche Petroleum Consultants, Ltd.31.1*Certification of Chief Executive Officer of our Partnership pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 NumberDescription31.2*Certification of Chief Financial Officer of our Partnership pursuant to Rule 13a-14(a) of the Securities Exchange Act of 193432.1**Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Sec. 135099.1*Report of Calhoun, Blair & Associates99.2*Report of LaRoche Petroleum Consultants, Ltd.101.INS**XBRL Instance Document101.SCH**XBRL Taxonomy Extension Schema Document101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document101.DEF**XBRL Taxonomy Extension Definition Document101.LAB**XBRL Taxonomy Extension Label Linkbase Document101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document_________________* Filed herewith** Furnished herewith ITEM 16. FORM 10-K SUMMARY None. 33Table of Contents GLOSSARY OF CERTAIN OIL AND NATURAL GAS TERMS The definitions set forth below shall apply to the indicated terms as used in this document. All volumes of natural gas referred to herein are stated atthe legal pressure base of the state or area where the reserves exist and at 60 degrees Fahrenheit and in most instances are rounded to the nearest majormultiple. "bbl" means a standard barrel of 42 U.S. gallons and represents the basic unit for measuring the production of crude oil, natural gas liquids andcondensate. "bcf” means one billion cubic feet under prescribed conditions of pressure and temperature and represents a unit for measuring the production ofnatural gas. “boe” means one barrel of oil equivalent, converting natural gas to oil at the ratio of 6 Mcf of natural gas to 1 Bbl of oil. Also see mcfe below. "Depletion" means (a) the volume of hydrocarbons extracted from a formation over a given period of time, (b) the rate of hydrocarbon extractionover a given period of time expressed as a percentage of the reserves existing at the beginning of such period, or (c) the amount of cost basis at thebeginning of a period attributable to the volume of hydrocarbons extracted during such period. "Division order" means a document to protect lessees and purchasers of production, in which all parties who may have a claim to the proceeds of thesale of production agree upon how the proceeds are to be divided. "Enhanced recovery" means the process or combination of processes applied to a formation to extract hydrocarbons in addition to those thatwould be produced utilizing the natural energy existing in that formation. Examples of enhanced recovery include water flooding and carbon dioxide(CO2) injection. "Estimated future net revenues" (also referred to as "estimated future net cash flow") means the result of applying current prices of oil and naturalgas to estimated future production from oil and natural gas proved reserves, reduced by estimated future expenditures, based on current costs to beincurred in developing and producing the proved reserves, excluding overhead. "Formation" means a distinct geologic interval, sometimes referred to as the strata, which has characteristics (such as permeability,porosity and hydrocarbon saturations) that distinguish it from surrounding intervals. "Gross acre" means the number of surface acres in which a working interest is owned. "Gross well" means a well in which a working interest is owned. "Lease bonus" means the initial cash payment made to a lessor by a lessee in consideration for the execution and conveyance of the lease. "Leasehold" means an acre in which a working interest is owned. "Lessee" means the owner of a lease of a mineral interest in a tract of land. "Lessor" means the owner of the mineral interest who grants a lease of his interest in a tract of land to a third party, referred to as the lessee. "Mineral interest" means the interest in the minerals beneath the surface of a tract of land. A mineral interest may be severed from the ownership ofthe surface of the tract. Ownership of a mineral interest generally involves four incidents of ownership: (1) the right to use the surface; (2) the right toincur costs and retain profits, also called the right to develop; (3) the right to transfer all or a portion of the mineral interest; and (4) the right to retainlease benefits, including bonuses and delay rentals. "mcf” means one thousand cubic feet under prescribed conditions of pressure and temperature and represents the basic unit for measuringthe production of natural gas. “mcfe” means one thousand cubic feet of natural gas equivalent, converting oil or condensate to natural gas at the ratio of 1 Bbl of oil or condensateto 6 Mcf of natural gas. This conversion ratio, which is typically used in the oil and gas industry, represents the approximate energy equivalent of a barrelof oil or condensate to an Mcf of natural gas. The sales price of one barrel of oil or condensate has been much higher than the sales price of six Mcf ofnatural gas over the last several years, so a six to one conversion ratio does not represent the economic equivalency of six Mcf of natural gas to one barrelof oil or condensate "mbbls" means one thousand standard barrels of 42 U.S. gallons and represents the basic unit for measuring the production of crude oil, natural gasliquids and condensate. "mmcf” means one million cubic feet under prescribed conditions of pressure and temperature and represents the basic unit for measuring theproduction of natural gas. "Net acre" means the product determined by multiplying gross acres by the interest in such acres. 34Table of Contents "Net well" means the product determined by multiplying gross oil and natural gas wells by the interest in such wells. "Net profits interest" means a non-operating interest that creates a share in gross production from another (operating or non-operating) interest in oiland natural gas properties. The share is determined by net profits from the sale of production and customarily provides for the deduction of capital andoperating costs from the proceeds of the sale of production. The owner of a net profits interest is customarily liable for the payment of capital andoperating costs only to the extent that revenue is sufficient to pay such costs but not otherwise. "Operator" means the individual or company responsible for the exploration, development, and production of an oil or natural gas well or lease. "Overriding royalty interest" means a royalty interest created or reserved from another (operating or non-operating) interest in oil and natural gasproperties. Its term extends for the same term as the interest from which it is created. “Payout” or “Back-in” occurs when the working interest owners who participate in the costs of drilling and completing a well recoup the costs andexpenses, or a multiple of the costs and expenses, of drilling and completing that well. Only then are the owners who chose not to contribute to theseinitial costs entitled to participate with the other owners in production and share in the expenses and revenues associated with the well. Thereversionary interest or back-in interest of an owner similarly occurs when the owner becomes entitled to a specified share of the working or overridingroyalty interest when specified costs have been recovered from production. "Proved developed reserves" means reserves that can be expected to be recovered (i) through existing wells with existing equipment and operatingmethods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extractionequipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. "Proved reserves" or “Proved oil and natural gas reserves” means those quantities of oil and natural gas, which, by analysis of geoscience andengineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, andunder existing economic conditions, operating methods, and governmental regulations—prior to the time at which contracts providing the right tooperate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for theestimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the projectwithin a reasonable time. "Royalty" means an interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the production fromthe leased acreage (or of the proceeds of the sale thereof) but generally does not require the owner to pay any portion of the costs of drilling or operatingthe wells on the leased acreage. "Severance tax" means an amount of tax, surcharge or levy recovered by governmental agencies from the gross proceeds of oil and natural gas sales.Severance tax may be determined as a percentage of proceeds or as a specific amount per volumetric unit of sales. Severance tax is usually withheld fromthe gross proceeds of oil and natural gas sales by the first purchaser (e.g., pipeline or refinery) of production. "Standardized measure of discounted future net cash flows" (also referred to as "standardized measure") means the pretax present value ofestimated future net revenues to be generated from the production of proved reserves calculated in accordance with SEC guidelines, net of estimatedproduction and future development costs, using prices and costs as of the date of estimation without future escalation, without giving effect to non-property related expenses such as general and administrative expenses, debt service and depreciation, depletion and amortization, and discountedusing an annual discount rate of 10%. "Undeveloped acreage" means lease acreage on which wells have not been drilled or completed to a point that would permit the production ofcommercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves. "Unitization" means the process of combining mineral interests or leases thereof in separate tracts of land into a single entity for administrative,operating or ownership purposes. Unitization is sometimes called "pooling" or "communitization" and may be voluntary or involuntary. "Working interest" (also referred to as an "operating interest") means a real property interest entitling the owner to receive a specified percentage ofthe proceeds of the sale of oil and natural gas production or a percentage of the production but requiring the owner of the working interest to bear thecost to explore for, develop and produce such oil and natural gas. A working interest owner who owns a portion of the working interest may participateeither as operator or by voting his percentage interest to approve or disapprove the appointment of an operator and certain activities in connection withthe development and operation of a property. 35Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized. DORCHESTER MINERALS, L.P. By:Dorchester Minerals Management LP, its general partner By:Dorchester Minerals Management GP LLC, its general partner By:/s/ William Casey McManemin William Casey McManemin Chief Executive Officer Date: March 8, 2018 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf ofthe Registrant and in the capacities and on the dates indicated. /s/ William Casey McManemin /s/ H.C. Allen, Jr.William Casey McManeminChief Executive Officer and Manager(Principal Executive Officer)Date: March 8, 2018 H.C. Allen, Jr.ManagerDate: March 8, 2018 /s/ James E. Raley /s/ Allen D. LassiterJames E. RaleyVice Chairman and ManagerDate: March 8, 2018 Allen D. LassiterManagerDate: March 8, 2018 /s/ Martha Ann Peak Rochelle /s/ C. W. RussellMartha Ann Peak RochelleManagerDate: March 8, 2018 C. W. RussellManagerDate: March 8, 2018 /s/ Ronald P. Trout /s/ Robert C. VaughnRonald P. TroutManagerDate: March 8, 2018 Robert C. VaughnManagerDate: March 8, 2018 36Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) INDEX TO CONSOLIDATED FINANCIAL STATEMENTSDorchester Minerals, L.P. Reports of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of December 31, 2017 and 2016F-4 Consolidated Income Statements for each of the Years Ended December 31, 2017, 2016 and 2015F-5 Consolidated Statement of Cash Flows for each of the Years Ended December 31, 2017, 2016 and 2015F-6 Consolidated Statements of Changes in Partnership Capital for each of the Years Ended December 31, 2017, 2016 and 2015F-7 Notes to Consolidated Financial StatementsF-8 Supplemental Oil and Natural Gas Data (Unaudited)F-13 Supplemental Quarterly Data (Unaudited)F-15 F-1Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM General Partner and UnitholdersDorchester Minerals, L.P. Opinion on internal control over financial reportingWe have audited the internal control over financial reporting of Dorchester Minerals, L.P. (a Delaware Limited Partnership) and subsidiaries (the“Partnership”) as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Partnership maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued byCOSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedfinancial statements of the Partnership as of and for the year ended December 31, 2017, and our report dated March 8, 2018 expressed an unqualifiedopinion on those financial statements. Basis for opinionThe Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectivenessof internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accountingfirm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws andthe applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Dallas, TexasMarch 8, 2018 F-2Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM General Partner and UnitholdersDorchester Minerals, L.P. Opinion on the financial statementsWe have audited the accompanying consolidated balance sheets of Dorchester Minerals, L.P. (a Delaware Limited Partnership) and subsidiaries (the“Partnership”) as of December 31, 2017 and 2016, the related consolidated statements of income, changes in partnership capital, and cash flows for eachof the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, thefinancial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2017 and 2016, and the results ofits operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generallyaccepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’sinternal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 8, 2018 expressed anunqualified opinion. Basis for opinionThese financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’sfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect tothe Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commissionand the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond tothose risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our auditsalso included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation ofthe financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ GRANT THORNTON LLP We have served as the Partnership’s auditor since 1998. Dallas, TexasMarch 8, 2018 F-3Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) CONSOLIDATED BALANCE SHEETSDecember 31,(Dollars in Thousands) 2017 2016 ASSETS Current assets: Cash and cash equivalents $13,827 $8,212 Trade and other receivables 6,198 4,351 Net profits interests receivable—related party 5,330 2,225 Total current assets 25,355 14,788 Property and leasehold improvements—at cost: Oil and natural gas properties (full cost method) 363,186 340,563 Accumulated full cost depletion (297,442) (288,163)Total 65,744 52,400 Leasehold improvements 1,573 625 Accumulated amortization (625) (602)Total 948 23 Total assets $92,047 $67,211 LIABILITIES AND PARTNERSHIP CAPITAL Current liabilities: Accounts payable and other current liabilities $599 $252 Current portion of deferred rent incentive 38 23 Total current liabilities 637 275 Deferred rent incentive less current portion 664 - Total liabilities 1,301 275 Commitments and contingencies (Note 4) Partnership capital: General partner 1,782 1,809 Unitholders 88,964 65,127 Total partnership capital 90,746 66,936 Total liabilities and partnership capital $92,047 $67,211 The accompanying notes are an integral part of these consolidated financial statements F-4Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) CONSOLIDATED INCOME STATEMENTSFor each of the Years Ended December 31,(Dollars in Thousands, except per unit amounts) 2017 2016 2015 Operating revenues: Royalties $46,125 $29,750 $30,654 Net profits interests 8,014 4,824 995 Lease bonus 2,399 2,721 53 Other 753 262 168 Total operating revenues 57,291 37,557 31,870 Costs and expenses Production taxes 2,175 1,360 1,336 Operating expenses 2,460 1,733 2,244 Depreciation, depletion and amortization 9,302 8,507 10,068 General and administrative expenses 4,930 4,990 4,967 Total costs and expenses 18,867 16,590 18,615 Net income $38,424 $20,967 $13,255 Allocation of net income: General partner $1,341 $736 $513 Unitholders $37,083 $20,231 $12,742 Net income per common unit (basic and diluted) $1.18 $0.66 $0.42 Weighted average basic and diluted common units outstanding (000's) 31,488 30,675 30,675 The accompanying notes are an integral part of these consolidated financial statements F-5Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) CONSOLIDATED STATEMENTS OF CASH FLOWSFor each of the Years Ended December 31,(Dollars in Thousands) 2017 2016 2015 Cash flows from operating activities: Net income $38,424 $20,967 $13,255 Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation, depletion and amortization 9,302 8,507 10,068 Amortization of deferred rent incentive (23) (54) (46)Changes in operating assets and liabilities: Trade and other receivables (1,727) (1,693) 2,122 Net profits interests receivable—related party (3,105) 780 2,787 Accounts payable and other current liabilities 455 (252) (571)Deferred rent liabilities 702 23 77 Net cash provided by operating activities 44,028 28,278 27,692 Cash flows (used in) provided by investing activities: Proceeds from sale of NPI reserves - - 140 Cash contributed in acquisition of royalty interests 440 - - Capital expenditures (1,056) - - Total cash flows (used in) provided by investing activities (616) - 140 Cash flows used in financing activities: Distributions paid to general partner and unitholders (37,797) (27,202) (36,608)Increase (decrease) in cash and cash equivalents 5,615 1,076 (8,776)Cash and cash equivalents at beginning of year 8,212 7,136 15,912 Cash and cash equivalents at end of year $13,827 $8,212 $7,136 Non-cash investing and financing activities: Fair value of common units issued for acquisition of royalty interests $23,183 $- $- The accompanying notes are an integral part of these consolidated financial statements F-6Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) CONSOLIDATED STATEMENT OF CHANGES IN PARTNERSHIP CAPITALFor each of the Years Ended December 31,(Dollars in Thousands) Year GeneralPartner Unitholders Total UnitholderUnits 2015 Balance at January 1, 2015 $2,692 $93,832 $96,524 30,675,431 Net income 513 12,742 13,255 Distributions ($1.153997 per Unit) (1,209) (35,399) (36,608) Balance at December 31, 2015 $1,996 $71,175 73,171 30,675,431 2016 Net income 736 20,231 20,967 Distributions ($0.856694 per Unit) (923) (26,279) (27,202) Balance at December 31, 2016 $1,809 $65,127 $66,936 30,675,431 2017 Net income 1,341 37,083 38,424 Acquisition of assets for units - 23,183 23,183 1,604,343 Distributions ($1.155790 per Unit) (1,368) (36,429) (37,797) Balance at December 31, 2017 $1,782 $88,964 $90,746 32,279,774 The accompanying notes are an integral part of these consolidated financial statements F-7Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Notes to Consolidated Financial Statements 1.General and Summary of Significant Accounting Policies Nature of Operations — In these Notes, the term “Partnership,” as well as the terms “us,” “our,” “we,” and “its” are sometimes used as abbreviatedreferences to Dorchester Minerals, L.P. itself or Dorchester Minerals, L.P. and its related entities. Our Partnership is a Dallas, Texas based owner ofproducing and nonproducing natural gas and crude oil royalty, net profits, and leasehold interests in 574 counties and 25 states. We are a publiclytraded Delaware limited partnership that was formed in December 2001, and commenced operations on January 31, 2003. Basis of Presentation — The consolidated financial statements herein have been prepared in accordance with accounting principles generallyaccepted in the United States (“U.S. GAAP”). Basic and Diluted Earnings Per Unit — Per-unit information is calculated by dividing the net income applicable to holders of our Partnership’scommon units by the weighted average number of units outstanding. The Partnership has no potentially dilutive securities and, consequently, basic anddilutive net income per unit do not differ. Principles of Consolidation — The consolidated financial statements include the accounts of Dorchester Minerals, L.P., Dorchester MineralsOklahoma, LP, Dorchester Minerals Oklahoma GP, Inc. Maecenas Minerals LLP, and Dorchester-Maecenas GP LLC. All significant intercompanybalances and transactions have been eliminated in consolidation. Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of Americarequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Forexample, estimates of uncollected revenues and unpaid expenses from royalties and net profits interests in properties operated by non-affiliated entitiesare particularly subjective due to our inability to gain timely information. Therefore, actual results could differ from those estimates. The discounted present value of our proved oil and natural gas reserves is a major component of the ceiling test calculation and requires manysubjective judgments. Estimates of reserves are forecasts based on engineering and geological analyses. Different reserve engineers could reach differentconclusions as to estimated quantities of oil and natural gas reserves based on the same information. The passage of time provides more qualitative andquantitative information regarding reserve estimates, and revisions are made to prior estimates based on updated information. However, there can be noassurance that more significant revisions will not be necessary in the future. Significant downward revisions could result in an impairment representing anon-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 thecalculation of depletion. See the discussion under Oil and Natural Gas Properties. General Partner—Our general partner is Dorchester Minerals Management LP, referred to in these Notes as “our general partner.” Our general partnerowns all of the partnership interests in Dorchester Minerals Operating LP, the operating partnership. See Note 3 —Related Party Transactions. Thegeneral partner is allocated 4% and 1% of our Royalty Properties’ net revenues and Net Profits Interest (or “NPI”) net proceeds actually received by theoperating partnership, respectively. Cash and Cash Equivalents—Our principal banking relationships are with major financial institutions. Cash balances in these accounts may, attimes, exceed federally insured limits. We have not experienced any losses in such cash accounts and do not believe we are exposed to any significantrisk on cash and cash equivalents. Short term investments with an original maturity of three months or less are considered to be cash equivalents and arecarried at cost, which approximates fair value. Concentration of Credit Risks—Our Partnership, as a royalty and NPI owner, has no control over the volumes or method of sale of oil and natural gasproduced and sold from the Royalty Properties and NPIs. It is believed that the loss of any single customer would not have a material adverse effect onthe consolidated results of our operations. Fair Value of Financial Instruments—The carrying amount of cash and cash equivalents, trade and other receivables and accounts payablesapproximates fair value because of the short maturity of those instruments. These estimated fair values may not be representative of actual values of thefinancial instruments that could have been realized as of year-end or that will be realized in the future. Receivables—Our Partnership’s trade and other receivables and net profits interests receivable consist primarily of Royalty Properties paymentsreceivable and NPI payments receivable, respectively. Most payments are received two to four months after production date. No allowance fordoubtful accounts is deemed necessary based upon our lack of historical write offs and review of current receivables. F-8Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Notes to Consolidated Financial Statements Oil and Natural Gas Properties — We utilize the full cost method of accounting for costs related to our oil and natural gas properties. Under thismethod, all such costs are capitalized and amortized on an aggregate basis over the estimated lives of the properties using the unit-of-productionmethod. These capitalized costs are subject to a ceiling test, which limits such pooled costs to the aggregate of the present value of future net revenuesattributable to proved oil and natural gas reserves discounted at 10% plus the lower of cost or market value of unproved properties. Our Partnershipdid not assign any value to unproved properties, including nonproducing royalty, mineral and leasehold interests. The full cost ceiling is evaluated atthe end of each quarter and when events indicate possible impairment. There have been no impairments for the years ended December 31, 2017, 2016,and 2015. While the quantities of proved reserves require substantial judgment, the associated prices of oil and natural gas reserves that are included in thediscounted present value of our reserves are objectively determined. The ceiling test calculation requires use of the unweighted arithmetic average of thefirst 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 constant for the life of the properties. As a result, the present value is not necessarily an indication of the fair value of thereserves. Oil and natural gas prices have historically been volatile, and the prevailing prices at any given time may not reflect our Partnership’s or theindustry’s forecast of future prices. Our Partnership’s properties are being depleted on the unit-of-production method using estimates of proved oil and natural gas reserves. Gains andlosses are recognized upon the disposition of oil and natural gas properties involving a significant portion (greater than 25%) of our Partnership’sreserves. Proceeds from other dispositions of oil and natural gas properties are credited to the full cost pool. Leasehold Improvements — Leasehold improvements include $702,000 received in 2017 as non-cash incentives in our office space lease and isoffset in liabilities as deferred rent. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related life of the lease.For leases with renewal periods at the Partnership’s option, we have used the original lease term, excluding renewal option periods to determine usefullife. Deferred rent will be amortized to general and administrative expense over the same term as the leasehold improvements. Asset Retirement Obligations — Based on the nature of our property ownership, we have no material obligation to record. Revenue Recognition — The pricing of oil and natural gas sales from the Royalty Properties and NPIs is primarily determined by supply anddemand in the marketplace and can fluctuate considerably. As a royalty owner, we have extremely limited involvement and operational control overthe volumes and method of sale of oil and natural gas produced and sold from the Royalty Properties and non-operated NPIs. Revenues from Royalty Properties and non-operated NPIs are recorded under the cash receipts approach as directly received from the remitters’statement accompanying the revenue check. Since the revenue checks are generally received two to four months after the production month, thePartnership accrues for revenue earned but not received by estimating production volumes and product prices. Income Taxes — We are treated as a partnership for income tax purposes and, as a result, our income or loss is includable in the tax returns of theindividual unitholders. Depletion of oil and natural gas properties is an expense allowable to each individual partner, and the depletion expense asreported on the consolidated financial statements will not be indicative of the depletion expense an individual partner or unitholder may be able todeduct for income tax purposes. Texas imposes a franchise tax (commonly referred to as the Texas margin tax) at a rate of 0.75% on gross revenues less certain deductions, asspecifically set forth in the Texas margin tax statute. The Texas margin tax applies to corporations and limited liability companies, general and limitedpartnerships (unless otherwise exempt), limited liability partnerships, trusts (unless otherwise exempt), business trusts, business associations, professionalassociations, joint stock companies, holding companies, joint ventures and certain other business entities having limited liability protection. F-9Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Notes to Consolidated Financial Statements Limited partnerships that receive at least 90% of their gross income from designated passive sources, including royalties from mineral properties andother non-operated mineral interest income, and do not receive more than 10% of their income from operating an active trade or business, are generallyexempt from the Texas margin tax as “passive entities.” We believe our Partnership meets the requirements for being considered a “passive entity” forTexas margin tax purposes and, therefore, it is exempt from the Texas margin tax. If the Partnership is exempt from Texas margin tax as a passive entity,each unitholder that is considered a taxable entity under the Texas margin tax would generally be required to include its portion of Partnership revenuesin its own Texas margin tax computation. The Texas Administrative Code provides that such income is sourced according to the principal place ofbusiness of the Partnership, which would be the state of Texas. 2.Acquisition for Units On June 28, 2017, the Partnership entered into a Contribution, Exchange and Purchase Agreement with DSD Royalty, LLC (the “DSD Agreement”)pursuant to which the Partnership would acquire an undivided 50% interest in certain mineral and royalty interests (the “Properties”) in exchange forcash (the “Cash Purchase Right”) and the remaining 50% undivided interest in the Properties in exchange for the Partnership’s common units of limitedpartnership interests (the “Units”) for aggregate consideration of approximately $23,183,000. Immediately after execution of the DSD Agreement, thePartnership entered into a Participation Agreement with related parties of the Partnership, including 1307, LTD., Mr. James E. Raley (a manager on theBoard of Managers), Quiscalus Ventures, LLC, Ms. Leslie A. Moriyama (the Partnership’s Chief Financial Officer), 2011 Pete & Kay Allen Family Trust,Vaughn Petroleum (DMLP), LLC, Rokeby Investment L.P., Browning C. Vaughn and MARI GST Non-Exempt Trust, along with parties unrelated to thePartnership, collectively, (the “Participants”) pursuant to which the Partnership assigned the Cash Purchase Right to the Participants in exchange for theParticipants’ assumption of the obligation to pay the cash consideration in connection with the consummation of the transactions contemplated by theDSD Agreement. Mr. William Casey McManemin, the Partnership’s Chairman and Chief Executive Officer and a manager on the Board of Managers, isthe sole manager of Cabana Management, LLC, the sole general partner of 1307, Ltd. Mr. Bradley J. Ehrman, the Partnership’s Chief Operating Officer, isthe sole member of Quiscalus Ventures, LLC. Mr. H.C. Allen, Jr., a manager on the Board of Managers, is a trustee of the Pete & Kay Allen Family Trust.Mr. Robert C. Vaughn, a manager on the Board of Managers, and his spouse are the only unit holders of Vaughn Petroleum (DMLP), LLC. Mr. Vaughn’sson, Robert C. Vaughn, Jr., is the sole manager of Prevelly Investments, LLC, the general partner of Rokeby Investment, L.P. Browning C. Vaughn is Mr.Vaughn’s daughter. Ms. Martha Rochelle, a manager on the Board of Managers is a trustee of the MARI GST Non-Exempt Trust. On June 30, 2017, ThePartnership entered into a Contribution and Exchange Agreement with the Participants (the “Participant Contribution Agreements”), pursuant to whicheach Participant acquired Units in exchange for the assets received by the Participant pursuant to the rights assigned to the Participant in theParticipation Agreement. The quantity of Units issued to the Participants was equal to the quantity issued pursuant to the DSD Agreement. The AdvisoryCommittee reviewed the transactions and found them to be fair and reasonable and approved the terms of the Participation Agreement and the ParticipantContribution Agreements and the transactions contemplated thereby. The value of common units issued to each related party pursuant to the ParticipantContribution Agreement with such related party is set forth opposite such related party's name below, which represents the approximate dollar value ofsuch related person's interest in the transaction: Name Value of CommonUnits Issued 1307, Ltd. $2,259,000 MARI GST Non-Exempt Trust $961,000 Vaughn Petroleum (DMLP), LLC $769,000 James E. Raley $288,000 2011 Pete & Kay Allen Family Trust $288,000 Leslie A. Moriyama $96,000 Rokeby Investments, L.P. $96,000 Browning C. Vaughn $96,000 Quiscalus Ventures, LLC $48,000 In accordance with the transactions contemplated by the DSD Agreement and the Participant Contribution Agreements, the Partnership issued toDSD 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. 3.Related Party Transactions Our general partner owns all of the partnership interests in the operating partnership. It is the employer of all personnel, owns the working interestsand other properties underlying our NPIs, and provides day-to-day operational and administrative services to us and the general partner. In accordancewith our partnership agreement, we reimburse the general partner for certain allocable general and administrative costs, including rent, salaries, employeeequity and benefit plans that are not direct expenses. These types of reimbursements are limited to 5% of distributions, plus certain costs previously paid.All such costs have been below the annual 5% limit amount, including the allowable surplus carryforward, for the years ended December 31, 2017, 2016,and 2015. Additionally, certain reimbursable direct expenses such as professional and regulatory fees and ad valorem and severance taxes, as well ascertain general and administrative costs that are related to regulatory matters, are not limited. Significant activity between the Partnership and theoperating partnership consists of the following: In Thousands From/To Operating Partnership 2017 2016 2015 Net Profits Interests Payments Receivable $5,330 $2,225 $3,005 Net Profits Interests Revenue $8,014 $4,824 $995 General & Administrative Amounts Payable/(Receivable) $9 $(146) $125 Total General & Administrative Expense $2,663 $2,673 $3,466  4.Commitments and Contingencies Our Partnership and the operating partnership are involved in other legal and/or administrative proceedings arising in the ordinary course of theirbusinesses, 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. F-10Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Notes to Consolidated Financial Statements Operating Leases - We have entered into an operating lease agreement in the ordinary course of our business activities. The third amendment to ouroffice lease was signed 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 the Partnership will receive a tenant improvement allowance of $702,000. The Partnership recognizes a deferred rent liability for the rentescalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed thestraight-line rent expense. For the tenant improvement allowance, the Partnership will record a deferred rent liability and will amortize the deferred rentover the lease term as a reduction to rent expense once in use. Rental expense related to the lease, including operating expenses and consumption of electricity, was $385,000, $272,000, and $231,000 for theyears ended December 31, 2017, 2016 and 2015, respectively. Minimum rental commitments under the terms of our office lease are as follows: Years Ended December 31, MinimumPayments 2018 $136,000 2019 $252,000 2020 $307,000 2021 $313,000 2022 $319,000 Thereafter $2,097,000 Total $3,424,000 5.Distribution To Holders Of Common Units Unitholder cash distributions per common unit have been: Per Unit Amount 2017 2016 2015 First Quarter $0.306700 $0.147417 $0.306553 Second Quarter $0.322965 $0.257977 $0.167430 Third Quarter $0.284650 $0.252224 $0.194234 Fourth Quarter $0.386915 $0.241475 $0.199076 Distributions were paid on 30,675,431 units from the first quarter of 2015 through the first quarter of 2017. Beginning with the second quarter of2017, distributions were paid on 32,279,774 units. Fourth quarter distributions are paid in February of the following calendar year to unitholders ofrecord in January or February of such following year. The partnership agreement requires the next cash distribution to be paid by May 15, 2018. 6.New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue fromContracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The guidancerequires entities to recognize revenue using the following five-step model: identify the contract with a customer, identify the performance obligationsin the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue asthe entity satisfies each performance obligation. Adoption of this standard could result in retrospective application, either in the form of recasting allprior periods presented or a cumulative adjustment to equity in the period of adoption. The guidance is effective for annual and interim reportingperiods beginning after December 15, 2017. F-11Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Notes to Consolidated Financial Statements On January 1, 2018 we adopted using the full retrospective method. The Partnership completed its review of a representative sample of revenuecontracts covering its material revenue streams and determined that there will be no impact to its consolidated financial statements, results of operationsor liquidity. When comparing the Partnership’s current revenue recognition to the new applied revenue recognition under Accounting StandardsCodification (ASC) 606, there will be no changes to the amount or timing of revenue being recognized. Therefore no quantitative adjustment will berequired to be made to the prior periods presented on the financial statements after the adoption of ASC 606. Upon adoption the Partnership has notaltered its existing information technology and internal controls outside of the contract review processes in order to identify impacts of future revenuecontracts the Partnership may enter into. The Partnership does not anticipate the disclosure requirements under the Accounting Standards Update to havea material change on presentation of revenue streams as compared to our existing U.S. GAAP. In February 2016, the FASB issued ASU 2016-02, which requires lessees to record most leases on the balance sheet. Under the new guidance,lease classification as either a finance lease or an operating lease will determine how lease-related revenue and expense are recognized. The guidanceis effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Partnership currently has leasecommitments of approximately $3 million that we believe may be subject to capitalization under ASU 2016-02. The lease obligations that will be inplace upon adaption of ASU 2016-02 may be significantly different than current obligations. We are still evaluating the impact of this on ourconsolidated financial statements.F-12 DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Supplemental Oil and Natural Gas Data(Unaudited) Oil and Natural Gas Reserve and Standardized Measure The NPIs represent net profits overriding royalty interests in various properties owned by the operating partnership. The Royalty Properties consistof producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests located in 574 counties and parishes in 25 states.Amounts set forth herein attributable to the NPIs reflect our 96.97% net share. Although new activity has occurred on certain of the Royalty Properties,based on engineering studies available to date, no events have occurred since December 31, 2017 that would have a material effect on our estimatedproved developed reserves. In accordance with U.S. GAAP and Securities and Exchange Commission rules and regulations, the following information is presented with regardto the Royalty Properties and NPIs oil and natural gas reserves, all of which are proved, developed and located in the United States. These rules requireinclusion as a supplement to the basic financial statements a standardized measure of discounted future net cash flows relating to proved oil and naturalgas reserves. The standardized measure, in management's opinion, should be examined with caution. The basis for these disclosures are petroleumengineers’ reserve studies which contain imprecise estimates of quantities and rates of production of reserves. Revision of prior year estimates can havea significant impact on the results. Changes in production costs may result in significant revisions to previous estimates of proved reserves and theirfuture value. Therefore, the standardized measure is not necessarily a best estimate of the fair value of oil and natural gas properties or of future net cashflows. The following summaries of changes in reserves and standardized measure of discounted future net cash flows were prepared from estimates ofproved reserves. The production volumes and reserve volumes included for properties formerly owned by Dorchester Hugoton are wellhead volumes,which differ from sales volumes shown in “Item 7. — Management's Discussion and Analysis of Financial Condition and Results of Operations”because of fuel, shrinkage and pipeline loss. The Standardized Measure of Discounted Future Net Cash Flows reflects adjustments for such fuel,shrinkage and pipeline loss. Oil (mbbls) Natural Gas (mmcf) 2017 2016 2015 2017 2016 2015 Estimated quantity, beginningof year 7,092 5,678 5,746 41,154 49,370 55,701 Revisions in previous estimates(1) 2,352 2,335 904 12,269 (1,718) 416 Production (1,133) (921) (972) (6,502) (6,498) (6,747)Estimated quantity, end of year 8,311 7,092 5,678 46,921 41,154 49,370 (1) Changes in oil reserves for the years ended December 31, 2017, 2016 and 2015, includes upward revisions of 2,352 mmbls, 2,335 mmblsand 904 mbbls, respectively, predominately due to ongoing development on our Permian Basin properties and well performance exceedingprevious projections in various areas.Changes in natural gas reserves for the years ended December 31, 2017, 2016 and 2015, include upward revisions of 12,269 mmcf in 2017as a result of increased Permian activity and higher gas prices extending economic limits, a downward revision of 1,718 mmcf in 2016 andan upward revision of 416 mmcf in 2015. The downward revision at year-end 2016 was predominately a result of shorter economic limits onproducing properties as a result of lower natural gas prices. F-13Table of ContentsDORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Supplemental Oil and Natural Gas Data(Unaudited) Standardized Measure of Discounted Future Net Cash Flows (Dollars in Thousands Except Where Noted) 2017 2016 2015 Future estimated gross revenues $405,137 $270,209 $275,883 Future estimated production costs (23,241) (15,820) (14,888)Future estimated net revenues 381,896 254,389 260,995 10% annual discount for estimated timing of cash flows (199,750) (132,864) (124,711)Standardized measure of discounted future estimated net cash flows $182,146 $121,525 $136,284 Sales of oil and natural gas produced, net of production costs $(49,504) $(31,481) $(28,069)Net changes in prices and production costs 37,552 (7,604) (174,054)Revisions of previous quantity estimates 63,621 24,043 14,906 Accretion of discount 12,152 13,628 30,143 Change in production rate and other (3,200) (13,345) (8,068)Net change in standardized measure of discounted future estimated net cash flows $60,621 $(14,759) $(165,142)Depletion of oil and natural gas properties (dollars per mcfe) $0.70 $0.70 $0.80 Property acquisition costs $22,623 $- $- Average oil price per barrel (1)(2) $43.74 $34.60 $41.54 Average natural gas price per mcf (1) $2.56 $2.00 $2.10 (1)Includes Royalty and NPI prices combined by volumetric proportions.(2)Includes oil and natural gas liquids prices combined by volumetric proportions. F-14Table of Contents DORCHESTER MINERALS, L.P.(A Delaware Limited Partnership) Supplemental Quarterly Data(Unaudited) Quarterly financial data for the last two years (in thousands except per unit data) is summarized as follows: 2017 Quarter Ended 2016 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 Total operating revenues $12,727 $12,553 $12,480 $19,531 $6,126 $10,009 $10,679 $10,743 Net income $8,522 $8,449 $7,224 $14,229 $1,498 $5,951 $6,647 $6,871 Net income per Unit (basic and diluted) $0.27 $0.26 $0.22 $0.43 $0.05 $0.19 $0.21 $0.21 Weighted average common unitsoutstanding 30,675 30,693 32,280 32,280 30,675 30,675 30,675 30,675 F-15Exhibit 21.1 Subsidiaries of Registrant 1.Dorchester Minerals Oklahoma LP, an Oklahoma limited partnership 2.Dorchester Minerals Oklahoma GP, Inc., an Oklahoma corporation 3.Maecenas Minerals LLP, a Texas limited liability partnership 4.Dorchester-Maecenas GP LLC, a Texas limited liability company Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated March 8, 2018, with respect to the consolidated financial statements and internal control over financial reportingincluded in the Annual Report of Dorchester Minerals, L.P. on Form 10-K for the year ended December 31, 2017. We consent to the incorporation byreference of said reports in the Registration Statements of Dorchester Minerals, L.P. on Forms S-4 (File No. 333-124544 and File No. 333-202918). /s/ GRANT THORNTON LLP Dallas, TexasMarch 8, 2018 Exhibit 23.2 CALHOUN, BLAIR & ASSOCIATESPetroleum Consultants4625 Greenville Avenue, Suite 102Dallas, Texas 75206214-522-4925Fax 214-346-0310Rgblair@swbell.net February 28, 2018 Dorchester Minerals, L.P.3838 Oak Lawn Avenue, Suite 300Dallas, Texas 75219-4541 Gentlemen: Calhoun, Blair & Associates does hereby consent to the incorporation by reference in the Registration Statements on Forms S-4 (No. 333-124544and No. 333-202918) of Dorchester Minerals, L.P. of our estimated reserves included in this Annual Report on Form 10-K including, without limitation,Exhibit 99.1, and to all references to our firm included in this Annual Report. /s/ Robert G. Blair, P.E. Calhoun, Blair & Associates Licensed Professional Engineer State of Texas #68057 Exhibit 23.3 February 28, 2018 Dorchester Minerals L.P.3838 Oak Lawn Avenue, Suite 300Dallas, Texas 75219-4541 Gentlemen: LaRoche Petroleum Consultants, Ltd. does hereby consent to the incorporation by reference in the Registration Statement on Form S-4 (No. 333-124544and No. 333-202918) of Dorchester Minerals, L.P. of our estimated reserves included in the Annual Report dated January 22, 2018, for the year endedDecember 31, 2017, on Form 10-K including, without limitation, Exhibit 99.2, and to references to our firm included in this Annual Report. LAROCHE PETROLEUM CONSULTANTS, LTD.By LPC, Inc. General Partner /s/ Joe A. Young Joe A. Young, Vice President Exhibit 31.1 CERTIFICATIONS I, William Casey McManemin, certify that: 1.I have reviewed this annual report on Form 10-K of Dorchester Minerals, L.P.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ William Casey McManemin William Casey McManemin Date: March 08, 2018 Chief Executive Officer of Dorchester Minerals Management GP LLC The General Partner of Dorchester Minerals Management LP The General Partner of Dorchester Minerals, L. P. Exhibit 31.2 I, Leslie Moriyama, certify that: 1.I have reviewed this annual report on Form 10-K of Dorchester Minerals, L.P.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. /s/ Leslie Moriyama Leslie Moriyama Date: March 08, 2018 Chief Financial Officer of Dorchester Minerals Management GP LLC, The General Partner of Dorchester Minerals Management LP The General Partner of Dorchester Minerals, L.P.EXHIBIT 32.1 CERTIFICATION PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002(18 U.S.C. SECTION 1350) In connection with the accompanying Annual Report of Dorchester Minerals, L.P. (the "Partnership") on Form 10-K for the period endedDecember 31, 2017 (the "Report”), each of the undersigned officers of Dorchester Minerals Management GP LLC, General Partner of Dorchester MineralsManagement LP, General Partner of the Partnership, hereby certifies that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/ William Casey McManemin William Casey McManemin Date: March 08, 2018 Chief Executive Officer /s/ Leslie Moriyama Leslie Moriyama Date: March 08, 2018 Chief Financial Officer Exhibit 99.1 CALHOUN, BLAIR & ASSOCIATESPetroleum Consultants4625 Greenville Avenue, Suite 102Dallas, Texas 75206214-522-4925Fax 214-346-0310Rgblair@swbell.net January 23, 2018 Dorchester Minerals Operating GP LLCGeneral Partner3838 Oak Lawn Avenue, Suite 300Dallas, Texas 75219-4541 Gentlemen: In accordance with your instructions we have prepared estimates of oil and gas reserves from certain leasehold and royalty interests owned byDorchester Minerals Operating LP, which consist of properties grouped by Hugoton NPI, Republic NPI, Spinnaker NPI, Minerals NPI and Bradley NPI. Wehave projected our estimates of future oil and gas production annually, as of December 31, 2017, for these properties. This report includes 100% of the oiland gas reserves owned by Dorchester Minerals Operating, LP, all of which are located in the contiguous United States. This report was prepared toprovide Dorchester Minerals Operating LP with Securities and Exchange Commission compliant reserve estimates. Information necessary for the preparation of these estimates was obtained from records furnished by Dorchester Minerals Operating LP, fromrecords on file with the state regulatory bodies, and from our own files. No special tests were obtained to assist in the preparation of this report. For thepurpose of this report, the individual well tests and production information as reported in the records on file with the state regulatory bodies wereaccepted as represented, together with all other factual data provided by Dorchester Minerals Operating LP, including the extent and character of theinterest appraised. The following table contains the estimated net reserves and revenues attributable to the property groups as of December 31, 2017. Hugoton NPI Republic NPI Spinnaker NPI Net Oil Reserves, BBL 0 34,350 60 Net Gas Reserves, MMCF 17,385.110 130.440 30.950 Net Products Reserves, BBL 424,460 1,050 390 Net Oil and Gas Revenue, $ 59,189,360 2,000,490 103,280 Net Operating Expense, $ 44,408,790 662,890 28,050 Net Taxes, $ 4,311,500 217,510 7,170 Net Capital Costs, $ 0 0 0 Net Income, $ 10,469,070 1,120,080 68,060 Net Present Worth at 10%, $ 6,337,840 727,990 42,010  Minerals NPI Bradley NPI Total NPI Net Oil Reserves, BBL 1,137,650 19,790 1,191,860 Net Gas Reserves, MMCF 5,695.580 57.740 23,299.810 Net Products Reserves, BBL 54,790 870 481,560 Net Oil and Gas Revenue, $ 68,998,320 1,182,330 131,473,770 Net Lease Operating Expense, $ 24,597,290 359,690 70,056,710 Net Taxes, $ 6,155,530 54,700 10,746,420 Net Capital Costs, $ 0 0 0 Net Income, $ 38,245,490 767,940 50,670,640 Net Present Worth at 10%, $ 25,937,390 547,230 33,592,460 All estimated reserves in this report are considered as proved developed producing. Proved developed producing reserves are those proved to ahigh degree of certainty by reason of actual completion or successful testing. Estimates of proved reserves were made using standard geological andengineering methods accepted by the petroleum industry. The method, or combination of methods, utilized was tempered by experience in the area, stateof development, quality and extent of the basic data and production history. These methods and procedures were appropriate for the purpose served bythis report and we have used all methods necessary under the circumstances to prepare this report. When the information was available and the method was applicable, oil and gas reserves in this report were estimated by the extrapolation ofhistorical trends of pressure decline as a function of cumulative production, oil and gas production decline as a function of time and oil and gasproduction decline as a function of cumulative production. For certain wells having a limited production history, reserves were estimated by analogy withnearby similar wells in the same formation. All gas volumes are raw wellhead gas volumes expressed at 60 degrees Fahrenheit and at a standard pressurebase of 14.65 pounds per square inch absolute. Reserves in this report are expressed as gross and net oil and gas production. Net oil and gas production represents those reserves net to theappraised interest after deducting all leasehold and royalty interests owned by others. Values of reserves are expressed in terms of net operating revenues,cash flow before taxes, and present worth. Net operating revenue is revenue, which would accrue to the appraised interests from the production and sale ofthe estimated net reserves. Cash flow before taxes is obtained by deducting severance and ad valorem taxes, net operating expenses and capital costs fromnet operating revenue. Oil and gas prices, net operating expenses and future capital costs were furnished by Dorchester Minerals Operating LP. Presentworth is defined as the future cash flow before taxes discounted at the rate of ten (10.00) percent per year compounded annually. For the purpose of thisreport no estimate was made of salvage value for the existing lease and well equipment, or costs involved in abandonment of the wells. Due to inherent uncertainties in future production rates, commodity prices and geologic conditions, the reserves included in this report areestimates only and should not be construed as being exact quantities. The revenues from such reserves and the actual costs related thereto could be moreor less than the estimated amounts. The scope of this investigation did not include an environmental study of these properties, nor was an on-site fieldinspection conducted. For the purpose of this report, it was necessary to assume that these properties are in compliance with existing governmentregulations. Because of governmental policies and uncertainties of supply and demand, the prices actually received for the reserves included in thisreport, and the costs incurred in recovering such reserves, may vary from price and cost assumptions in this report. In any case, estimates of reserves mayincrease or decrease as a result of future operation and as more production history becomes available. There are no known pending regulations that wouldaffect the ability of Dorchester Minerals Operating LP to recover the estimated reserves in this report.  The oil and gas prices included in this report were provided by Dorchester Minerals Operating LP and were adjusted for BTU, fuel and line lossesas well as for local markets. The Hugoton prices were determined as an unweighted arithmetic average of the Panhandle Eastern (Texas and Oklahoma)first day of the month price during the twelve month period of 2017. The benchmark gas price for the Hugoton operated properties was $2.73 perMMBTU before adjustments for fuel and shrink. The benchmark prices for the other NPI properties were determined as an unweighted arithmetic averageof the NYMEX Henry Hub and West Texas Intermediate-Cushing first day of the month price during the twelve month period of 2017. The benchmarkoil, gas and plant products prices for the NPI properties were $51.34 per barrel, $2.98 per MMBTU and $32.10 per barrel respectively. The overallweighted average prices were $46.01 per barrel, $2.63 per MMBTU and $32.10 per barrel. Calhoun, Blair & Associates have not examined the title to these properties, nor has the actual degree or type of interest owned been independentlyconfirmed. We are independent petroleum engineers; we do not own an interest in these properties and are not employed on a contingent basis. Basicfield performance data together with our engineering work sheets are maintained on file in our office and are available for review. Calhoun Blair &Associates have met the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the “Standards Pertaining to theEstimating and Auditing of Oil and Gas Reserves Information” (revised February 2007) promulgated by the Society of Petroleum Engineers. The engineerresponsible for the preparation of reserve and revenue estimates in this report is Robert G. Blair. Mr. Blair is a Licensed Professional Engineer in the Stateof Texas who has 36 years of experience in the oil and gas industry. Mr. Blair earned his Bachelor of Science degree in Petroleum Engineering fromMississippi State University and his Master of Science in Management and Administrative Sciences from The University of Texas at Dallas. He hasprepared reserve reports for public and private filings for the past 34 years. Included in this report are summaries of gross and net oil and gas reserves grouped by Hugoton NPI, Republic NPI, Spinnaker NPI, Minerals NPIand Bradley NPI. Also included are projections of estimated annual gross and net oil and gas production, net operating revenue, severance and advalorem taxes, net operating expenses, net capital costs, cash flow before taxes, and present worth for all properties appraised as of December 31, 2017.Present worth of future cash flow is not meant to represent the Fair Market Value of these properties or of Dorchester Minerals Operating LP. Yours very truly, /s/ Robert G. Blair, P.E. Calhoun, Blair & Associates Licensed Professional Engineer State of Texas #68057 Exhibit 99.2 January 22, 2018 Mr. Brad EhrmanDorchester Minerals, L.P.3838 Oak Lawn, Suite 300Dallas, Texas 75219-4541 Dear Mr. Ehrman: At your request, LaRoche Petroleum Consultants, Ltd. (LPC) has estimated the proved reserves and future cash flow, as of December 31, 2017, to theDorchester Minerals, L.P. (DMLP) royalty interest in certain properties located onshore in the continental United States. This report was completed as ofthe date of this letter. This report was prepared to provide DMLP with Securities and Exchange Commission (SEC) compliant reserve estimates. It is ourunderstanding that the report comprises one-hundred (100%) percent of DMLP’s royalty interests of which one-hundred (100%) percent were evaluatedon a net reserve basis. We believe that the assumptions, data, methods, and procedures used in preparing this report, as set out below, are appropriate forthe purpose of this report. This report has been prepared using constant prices and costs and conforms to our understanding of the SEC guidelines,reserves definitions, and applicable financial accounting rules. We note that we have necessarily included composite projections of net oil and gas reserves for certain properties due to the limited information availableto DMLP as a royalty interest owner and relatively small net reserves attributable to any specific property within the composite group. Summarized below are LPC’s estimates of net reserves and future net cash flow. Future net cash flow is after deducting production and ad valorem taxesand operating expenses but before consideration of federal income taxes. The discounted cash flow values included in this report are intended torepresent the time value of money and should not be construed to represent an estimate of fair market value. We estimate the net reserves and future netcash flow to the DMLP interest, as of December 31, 2017, to be: Net Reserves Future Net Cash Flow (M$) Category Oil(Mbbl) Gas(MMcf) NGL(Mbbl) Total Present Worthat 10% Proved Developed Producing 5,635 24,327 1,053 $332,760 $149,571 The oil reserves include crude oil and condensate. Oil and natural gas liquid (NGL) reserves are expressed in barrels which are equivalent to 42United States gallons. Gas reserves are expressed in thousands of standard cubic feet (Mcf) at the contract temperature and pressure bases. 2435 N. Central Expy, Suite 1500 ● Richardson, Texas 75080Phone (214) 363-3337 ● Fax (214) 363-1608  The estimated reserves and future cash flow shown in this report are for proved developed producing reserves. No study was made to determine if proveddeveloped non-producing or proved undeveloped reserves might be established for these properties. This report does not include any value that could beattributed to interests in undeveloped acreage. Estimates of reserves for this report were prepared using standard geological and engineering methods generally accepted by the petroleum industry. Thereserves in this report have been estimated using deterministic methods. The method or combination of methods utilized in the evaluation of eachreservoir included consideration of the stage of development of the reservoir, quality and completeness of basic data, and production history. Recoveryfrom various reservoirs and leases was estimated after consideration of the type of energy inherent in the reservoirs, the structural positions of theproperties, and reservoir and well performance. In some instances, comparisons were made to similar properties for which more complete data wereavailable. We have used all methods and procedures that we considered necessary under the circumstances to prepare this report. We have excluded fromour consideration all matters as to which the controlling interpretation may be legal or accounting rather than engineering or geoscience. The estimated reserves and future cash flow amounts in this report are related to hydrocarbon prices. Historical prices through December 2017 were usedin the preparation of this report as required by SEC guidelines; however, actual future prices may vary significantly from the SEC prices. In addition,future changes in environmental and administrative regulations may significantly affect the ability of DMLP to produce oil and gas at the projectedlevels. Therefore, volumes of reserves actually recovered and amounts of cash flow actually received may differ significantly from the estimatedquantities presented in this report. Benchmark prices used in this report are based on the twelve-month, unweighted arithmetic average of the first day of the month price for the periodJanuary through December 2017. Gas prices are referenced to a Henry Hub price of $2.98 per MMBtu, as published in the Platts Gas Daily, and areadjusted for energy content, transportation fees, and regional price differentials. Oil and NGL prices are referenced to a West Texas Intermediate crude oilprice of $51.34 per barrel at Cushing Oklahoma and are adjusted for gravity, crude quality, transportation fees, and regional price differentials. Thesebenchmark prices are held constant in accordance with SEC guidelines. The weighted average prices after adjustments over the life of the properties are$47.66 per barrel for oil, $2.49 per Mcf for gas, and $25.48 per barrel for NGL. The interests evaluated in this report consist of only royalty interests that are not burdened by operating and capital costs. LPC has made no investigation of possible gas volume and value imbalances that may have resulted from the overdelivery or underdelivery to the DMLPinterest. Our projections are based on the DMLP interest receiving its net revenue interest share of estimated future gross oil, gas, and NGL production. Technical information necessary for the preparation of the reserve estimates herein was furnished by DMLP or was obtained from state regulatory agenciesand commercially available data sources. No special tests were obtained to assist in the preparation of this report. For the purpose of this report, theindividual well test and production data as reported by the above sources were accepted as represented together with all other factual data presented byDMLP including the extent and character of the interest evaluated.  An on-site inspection of the properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities beenexamined by LPC. The evaluation of potential environmental liability from the operation and abandonment of the properties is beyond the scope of this report. In addition,no evaluation was made to determine the degree of operator compliance with current environmental rules, regulations, and reporting requirements.Therefore, no estimate of the potential economic liability, if any, from environmental concerns is included in the projections presented herein. There are inherent uncertainties in the estimation and projection of future reserves and revenues. The reserves included in this report are estimates onlyand should not be construed as exact quantities. They may or may not be recovered; if recovered, the revenues therefrom and the costs related theretocould be more or less than the estimated amounts. These estimates should be accepted with the understanding that future development, productionhistory, changes in regulations, product prices, and operating expenses would probably cause us to make revisions in subsequent evaluations. A portionof these reserves are for producing wells that lack sufficient production history to utilize performance-related reserve estimates. Therefore, these reservesare based on estimates of reservoir volumes and recovery efficiencies along with analogies to similar production. These reserve estimates are subject to agreater degree of uncertainty than those based on substantial production and pressure data. It may be necessary to revise these estimates up or down in thefuture as additional performance data become available. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation ofengineering and geological data; therefore, our conclusions represent informed professional judgments only, not statements of fact. The results of our third-party study were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for publicdisclosure as an exhibit in filings made with the SEC by DMLP. DMLP makes periodic filings on Form 10-K with the SEC under the 1934 Exchange Act. Furthermore, DMLP has certain registration statements filed withthe SEC under the 1933 Securities Act into which any subsequently filed Form 10-K is incorporated by reference. We have consented to the incorporationby reference in the registration statements on Form S-3 and Form S-8 of DMLP of the references to our name as well as to the references to our third-partyreport for DMLP which appears in the December 31, 2017 annual report on Form 10-K and/or 10-K/A of DMLP. Our written consent for such use isincluded as a separate exhibit to the filings made with the SEC by DMLP. We have provided DMLP with a digital version of the original signed copy of this report letter. In the event there are any differences between the digitalversion included in filings made by DMLP and the original signed report letter, the original signed report letter shall control and supersede the digitalversion.  The technical persons responsible for preparing the reserve estimates presented herein meet the requirements regarding qualifications, independence,objectivity, and confidentiality set forth in the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgatedby the Society of Petroleum Engineers. The technical person primarily responsible for overseeing the preparation of reserve estimates herein is Joe A.Young. Mr. Young is a Licensed Professional Engineer in the State of Texas who has 36 years of engineering experience in the oil and gas industry andhas prepared and overseen preparation of reports for public filings for LPC for the past 21 years. LPC is an independent firm of petroleum engineers,geologists, and geophysicists; and are not employed on a contingent basis. Data pertinent to this report are maintained on file in our office. Very truly yours, LaRoche Petroleum Consultants, Ltd. State of Texas Registration Number F-1360 Joe A. Young Licensed Professional Engineer State of Texas No. 62866 JY:jc17-914 Please be advised that the digital document you are viewing is provided by LaRoche Petroleum Consultants, Ltd. (LPC) as a convenience to ourclients. The digital document is intended to be substantively the same as the original signed document maintained by LPC. The digital document issubject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document andthe original document, the original document shall control and supersede the digital document. 

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