June 17, 2002; Dorchester Hugoton to Become Dorchester Minerals

In a few months, private companies Spinnaker Royalty and Republic Royalty are expected to combine with DHULZ to become Dorchester Minerals, L.P.  The new entity would have a market cap of more than $300 million compared to DHULZ at about $140 million.  Mr. William Casey McManemin will be chief executive officer.  Mr. McManemin has been directing the acquisition of royalty interests in promising oil and gas producing areas.  The combination with DHULZ creates a publicly traded security that may be used to make more acquisitions of royalty interests from taxable sellers who may want to postpone a tax on sale and/or who want liquidity to sell any amount at anytime.  The economic attractiveness of a tax-deferred exchange gives the buyer and seller incentives to get together.  As Dorchester Minerals makes acquisitions on an advantageous basis the stock may have extra appreciation in addition to the return expected from its oil and gas resources.

DHULZ provided investors with particularly strong returns during the 1980s as it gradually achieved a market price for its previously price-controlled production.  During the 1990s the stock offered high income that was passed directly to unit holders without being subject first to corporate taxation.  The founding general partner, Mr. Preston Peak, is still involved.

Throughout the history of DHULZ, limited partnerships in the energy industry have often been subject to the abuse of general partners unable to restrain their greed.  Mr. Peak has a distinguished record of treating his limited partners fairly.  We are glad to be able to point out that there are some honest partnerships in the energy industry.