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Dorchester Minerals LP Message Board

  • JAVELIN2625 JAVELIN2625 Dec 8, 2005 3:23 PM Flag

    IT IS AMAZING

    that DMLP is trading where it is. Based on current natural gas pricing, the distribution will be higher than it could average over a typical year. But, with gas at or slightly above $10, DMLP should be able to distribute $2.80 annually which based on a 9% yield should be trading at about $31 right now. Really amazing to see unit holders selling into the market at this price level.

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    • It would not be a good deal if they ran out of gas in 10 years. I am not expecting that to happen, but the assets do actually deplete. So that is a significant factor in the market pricing.

      Figuring and filling out the tax from Dorchester is a lot easier than it used to be, now that they are a member of http://www.ptpcoalition.org

      Thanks for the comments on the royalty trust taxing. I was unaware of that 10.5% depletion allowance on royalties. I hope that when the info they send is plugged into the tax program, that is taken into account automatically.

    • That's very helpful. As I calculate it that should give you a current after tax return of around 8+%. Not bad in my book.

    • Current investors are probably not knowlegeable regarding the DMLP distribution tax treatment unless they do their own income tax return. Otherwise, they just sign their returns and don't pay much attention to this important issue.
      Every one who owns a position in DMLP will receive slightly different K-1 information every March. I can tell you from my particular situation that in 2004, 47% was taxable at my incremental income tax rate while 53% was royalty deduction and depreciation which lowered my basis and eventually will be taxed at the 15% capital gain rate (assuming that rate will still be in effect at the time).
      However, I know people who are retired and have so little taxable income and a high standard deduction that none of the distribution is taxable and only the reduced basis is taxed should they choose to sell.
      It all depends on an individual's tax situation. Hope this helps.

    • They can be blown up. Not easily but, it can be done.

      Google it. Loads of information on it.

    • I read a report that LNG tankers and storage facilities will not blow up because the LNG is not under pressure. It can catch fire I'm sure but the report said but it will not blow. I can't remember where I read this. Anybody have any opinion or insight on this?
      Regarding acquisitions, I don't think it is the right time. Too expensive.

    • Thanks for the heads up on Mcdep. I don't know what's in store, but something (very nebulous) is telling me to hold on, tight.

    • The DMLP reference in the Wulff write-up is on page three ( 3 ) of the December 11th posting with "Calpine" as part of the title ( on the mcdep site)

    • Right now someone is trying to buy NGT (see info on NGT on Yahoo). DMLP doesn't want to buy a production company (IMO) , but the mineral and royalty rights that the production company would tap. I believe there's a hint at DMLP's plans in this weeks MCDEP site posting re SJT, DMLP, etc. I also recall DMLP has authorization to use up to 5M units for acquisitions. Hopefully their negotiations (if ongoing) are fruitful for the exiting unitholders.

    • I agree.This is not a good time for the DMLP general partners to buy with gas at $14. Their last buy was about 2 years ago when they paid, I believe, about 2M units for the property they acquired. That was clearly a good buy for DMLP and good for the seller. We have to be patient now because at the current prices, property owners with mineral rights are expecting too much. But with 12 years of current reserves, we all know that if this partnership is to continue in a strong fashion, new acquisitions are necessary. We must be patient, unlike the typical GOOG owner.
      Regarding LNG, as a retired thermodynamics engineer, I believe that new LNG facilities should be located about 20 miles offshore to prevent possible terrorist activities, such as the one offshore Louisiana. There is an existing LNG facility on a river near Boston. If a terrorist fired an RPG (rocket propelled grenade) at a ship unloading in that port, the fireball would be a mile in diameter. The damage diameter would be much greater. LNG ports should only be offshore.
      In summary, when a traditional year occurs without a Katrina or Rita, DMLP will be able to buy new properties. We must be patient.

    • I understand that DMLP can grow their holdings but when was the last time they have been able to buy something. There is a lot of cash out there chasing energy deals and dmlp must pay with their partnership shares. This probably makes it hard for them to buy something without overpaying. I also agree that LNG will be a competitor in the next few years. I have heard that there are 19 new LNG facilities currently being contructed. However, the rest of the world will be competing to buy the same LNG. I think this will keep domestic natural gas prices high.

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DMLP
33.74-0.15(-0.44%)Aug 21 4:00 PMEDT

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