{"id":55890,"date":"2023-09-01T17:21:19","date_gmt":"2023-09-01T21:21:19","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/dorchester-minerals-now-undervalued-after-recent-unit-price-pullback-nasdaqdmlp\/"},"modified":"2023-09-01T17:21:22","modified_gmt":"2023-09-01T21:21:22","slug":"dorchester-minerals-now-undervalued-after-recent-unit-price-pullback-nasdaqdmlp","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=55890","title":{"rendered":"Dorchester Minerals: Now Undervalued After Recent Unit Price Pullback (NASDAQ:DMLP)"},"content":{"rendered":"
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After the recent pullback in its unit price, I now consider Dorchester Minerals, L.P.<\/strong> (NASDAQ:DMLP<\/span>) undervalued after previously having a hold rating on it. Dorchester’s unit price has fallen 7% since I last looked at it, despite oil prices increasing by several dollars over that time frame.<\/span><\/p>\n

There seems to be some confusion around one of Dorchester’s proposed amendments to its partnership agreement, and that confusion may be contributing to its recent underperformance.<\/p>\n

While it may appear that Dorchester is asking for permission to make significantly larger acquisitions without unitholder approval, the proposed amendment would actually only increase the size of its potential acquisitions by around 2%.<\/p>\n

Dorchester is currently allowed to issue approximately 26 million common units (with a current market value of around $730 million) for an all-equity acquisition. It is also currently allowed to spend approximately $16 million for an all-cash acquisition.<\/span><\/p>\n

However, if the acquisition is made via a combination of cash and equity, then it is currently allowed to issue around 4.3 million common units and spend $8 million in cash. This would limit the size of a combined cash and equity acquisition to around 18% of what it could do with an all-equity acquisition. Dorchester’s proposed amendment would put the combined cash and equity acquisition limits more in-line with the individual limits for all-cash and all-equity acquisitions.<\/p>\n

Acquisitions<\/h2>\n

Here’s a look at Dorchester’s acquisitions since the start of 2021. Over that period, Dorchester has announced six acquisitions involving total consideration of 4.409 million common units that were worth $100.1 million at the time of the deal. Dorchester has typically paid for acquisitions only with equity.<\/p>\n

<\/span><\/p>\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n\n
Acquisition Closing Date<\/td>\nUnits<\/td>\n$ Million<\/td>\n<\/tr>\n
June 2021<\/td>\n725,000<\/td>\n$12.2<\/td>\n<\/tr>\n
December 2021<\/td>\n1,580,000<\/td>\n$31.3<\/td>\n<\/tr>\n
March 2022<\/td>\n570,000<\/td>\n$14.8<\/td>\n<\/tr>\n
September 2022<\/td>\n816,719<\/td>\n$20.4<\/td>\n<\/tr>\n
July 2023<\/td>\n343,750<\/td>\n$11.0<\/td>\n<\/tr>\n
August 2023<\/td>\n374,000<\/td>\n$10.4<\/td>\n<\/tr>\n
Total<\/td>\n4,409,469<\/td>\n$100.1<\/td>\n<\/tr>\n<\/table>\n

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