TPL Texas Pacific Land Corporation

Earnings Call to be held 7:30 am CT on Thursday, November 7, 2024

Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or “TPL”) today announced its financial and operating results for the third quarter of 2024.

Third Quarter 2024 Highlights

• Acquired mineral interests across approximately 4,106 net royalty acres located in the northern Delaware Basin for a purchase price of $120.3 million, net of post-close adjustments, in an all-cash transaction

• Acquired approximately 4,120 surface acres and other surface-related assets located in the core of the Midland Basin for a purchase price of $45.0 million, in an all-cash transaction

• Royalty production of 28.3 thousand barrels of oil equivalent (“Boe”) per day

• As of September 30, 2024, TPL’s royalty acreage had an estimated 6.9 net well permits, 11.8 net drilled but uncompleted wells, 3.4 net completed wells, and 79.2 net producing wells. Net producing wells added during the quarter had an average lateral length of approximately 7,659 ft.

• Consolidated net income of $106.6 million, or $4.63 per share (diluted)

• Adjusted EBITDA(1) of $144.1 million

• Free cash flow (1) of $106.9 million

• Special cash dividend of $10.00 per share was paid on July 15, 2024

• Quarterly cash dividend of $1.17 per share was paid on September 17, 2024

Nine Months Ended September 30, 2024 Highlights

• The Company announced the development of a new energy-efficient method of produced water desalination and treatment. The Company has successfully conducted a technology pilot and is progressing towards the construction of a larger test facility with an initial capacity of 10,000 barrels of produced water per day.

• Three-for-one stock split effected March 26, 2024

• Royalty production of 26.0 thousand Boe per day

• Consolidated net income of $335.6 million, or $14.58 per share (diluted)

• Adjusted EBITDA(1) of $449.4 million

• Free cash flow (1) of $337.3 million

• $310.6 million of total cash dividends paid through September 30, 2024 (composed of a $10.00 per share special dividend and $1.17 per share in regular quarterly cash dividends)

• $22.7 million of common stock repurchases

(1) Reconciliations of Non-GAAP measures are provided in the tables below.

“Our strong results this quarter showcase the benefit of a strategy predicated on robust active management on our legacy assets combined with opportunistic growth,” said Tyler Glover, Chief Executive Officer of the Company. “Record royalty production during the quarter was driven by our outstanding legacy royalty position, and we anticipate that our recently announced acquisitions will also meaningfully enhance our royalty production going forward. In addition, we continue to execute on new opportunities leveraging our surface and water assets, with prior acquisitions of strategic surface acreage and pore-space easements facilitating numerous new commercial agreements with high-quality operator customers. The 37% increase to the regular dividend announced today is largely supported by our recent acquisitions, which we expect to provide a substantial uplift to our near-term financial results and to strengthen our long-term growth outlook.”

Financial Results for the Third Quarter of 2024 - Sequential

The Company reported net income of $106.6 million for the third quarter of 2024 compared to net income of $114.6 million for the second quarter of 2024.

Total revenues for the third quarter of 2024 were $173.6 million compared to $172.3 million for the second quarter of 2024. The increase in revenues was primarily due to a $4.6 million increase in oil and gas royalty revenue and a $2.4 million increase in produced water royalties, partially offset by a $4.4 million decrease in water sales compared to the second quarter of 2024. The decrease in water sales was principally due to a decrease of 9.0% in water sales volumes for the third quarter of 2024 compared to the second quarter of 2024. The Company’s share of production was 28.3 thousand Boe per day for the third quarter of 2024 versus 24.9 thousand Boe per day for the second quarter of 2024, and the average realized price was $38.04 per Boe in the third quarter of 2024 compared to $41.44 per Boe in the second quarter of 2024. TPL's revenue streams are directly impacted by commodity prices and development and operating decisions made by its customers.

Total operating expenses were $46.2 million for the third quarter of 2024 compared to $39.1 million for the second quarter of 2024. The change in operating expenses was principally related to an increase in legal and professional fees during the third quarter of 2024, partially offset by a decrease in water service-related expenses over the same period.

Financial Results for the Third Quarter of 2024 - Year Over Year

Total revenues for the nine months ended September 30, 2024 were $520.0 million compared to $464.9 million for the same period of 2023. All revenue streams, except land sales and easements and other surface-related income, increased for the nine months ended September 30, 2024 with the $28.2 million increase in water sales being the biggest contributor. The growth in water sales was principally due to an increase of 27.6% in water sales volumes for the nine months ended September 30, 2024 compared to the same period of 2023. Additionally, oil and gas royalty revenue increased $17.7 million primarily due to higher production volumes for the nine months ended September 30, 2024 compared to the same period of 2023. Oil and gas royalty revenue for the nine months ended September 30, 2023 included an $8.7 million settlement with an operator with respect to unpaid oil and gas royalties for older production periods. Excluding the impact of the $8.7 million settlement on oil and gas royalty revenues for the nine months ended September 30, 2023, oil and gas royalty revenue for the nine months ended September 30, 2024 increased $26.4 million over the same period of 2023. The Company’s share of production was 26.0 thousand Boe per day for the nine months ended September 30, 2024 versus 22.6 thousand Boe per day for the same period of 2023. The average realized price was $40.60 per Boe for the nine months ended September 30, 2024 versus $42.49 per Boe for the same period of 2023. TPL’s revenue streams are directly impacted by commodity prices and development and operating decisions made by its customers.

Total operating expenses were $123.4 million for the nine months ended September 30, 2024 compared to $112.7 million for the same period of 2023. The change in operating expenses was principally related to an increase in water service-related expenses due to the 27.6% increase in water sales volumes for the nine months ended September 30, 2024 compared to the same period of 2023.

Quarterly Dividend Declared

On November 4, 2024, the Company's Board of Directors declared a quarterly cash dividend of $1.60 per share, payable on December 16, 2024 to stockholders of record at the close of business on December 2, 2024.

Conference Call and Webcast Information

The Company will hold a conference call on Thursday, November 7, 2024 at 7:30 a.m. Central Time to discuss third quarter results. A live webcast of the conference call will be available on the Investors section of the Company’s website at www.TexasPacific.com. To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software.

The conference call can also be accessed by dialing 1-877-407-4018 or 1-201-689-8471. The telephone replay can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing the conference ID# 13745174. The telephone replay will be available starting shortly after the call through November 21, 2024.

About Texas Pacific Land Corporation

Texas Pacific Land Corporation is one of the largest landowners in the State of Texas with approximately 873,000 acres of land, with the majority of its ownership concentrated in the Permian Basin. The Company is not an oil and gas producer, but its surface and royalty ownership provide revenue opportunities throughout the life cycle of a well. These revenue opportunities include fixed fee payments for use of our land, revenue for sales of materials (caliche) used in the construction of infrastructure, providing sourced water and/or treated produced water, revenue from our oil and gas royalty interests, and revenues related to saltwater disposal on our land. The Company also generates revenue from pipeline, power line and utility easements, commercial leases and temporary permits related to a variety of land uses including midstream infrastructure projects and hydrocarbon processing facilities.

Visit TPL at www.TexasPacific.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on TPL’s beliefs, as well as assumptions made by, and information currently available to, TPL, and therefore involve risks and uncertainties that are difficult to predict. Generally, future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” and the words “believe,” “anticipate,” “continue,” “intend,” “expect” and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, references to strategies, plans, objectives, expectations, intentions, assumptions, future operations and prospects and other statements that are not historical facts. You should not place undue reliance on forward-looking statements. Although TPL believes that plans, intentions and expectations reflected in or suggested by any forward-looking statements made herein are reasonable, TPL may be unable to achieve such plans, intentions or expectations and actual results, and performance or achievements may vary materially and adversely from those envisaged in this news release due to a number of factors including, but not limited to: the initiation or outcome of potential litigation; and any changes in general economic and/or industry specific conditions. These risks, as well as other risks associated with TPL are also more fully discussed in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. You can access TPL’s filings with the Securities and Exchange Commission (“SEC”) through the SEC's website at www.sec.gov and TPL strongly encourages you to do so. Except as required by applicable law, TPL undertakes no obligation to update any forward-looking statements or other statements herein for revisions or changes after this communication is made.

FINANCIAL AND OPERATIONAL RESULTS

(unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2024

 

September 30,

2023(2)

Company’s share of production volumes(1):

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

1,046

 

 

967

 

 

3,003

 

 

2,642

Natural gas (MMcf)

 

 

4,654

 

 

3,851

 

 

12,312

 

 

10,405

NGL (MBbls)

 

 

779

 

 

661

 

 

2,073

 

 

1,784

Equivalents (MBoe)

 

 

2,600

 

 

2,270

 

 

7,128

 

 

6,160

Equivalents per day (MBoe/d)

 

 

28.3

 

 

24.9

 

 

26.0

 

 

22.6

 

 

 

 

 

 

 

 

 

Oil and gas royalty revenue (in thousands):

 

 

 

 

 

 

 

 

Oil royalties

 

$

75,427

 

$

74,747

 

$

222,788

 

$

193,969

Natural gas royalties

 

 

4,201

 

 

2,367

 

 

13,630

 

 

23,210

NGL royalties

 

 

14,816

 

 

12,699

 

 

39,959

 

 

32,800

Total oil and gas royalties

 

$

94,444

 

$

89,813

 

$

276,377

 

$

249,979

 

 

 

 

 

 

 

 

 

Realized prices (1):

 

 

 

 

 

 

 

 

Oil ($/Bbl)

 

$

75.53

 

$

80.93

 

$

77.68

 

$

76.88

Natural gas ($/Mcf)

 

$

0.98

 

$

0.66

 

$

1.20

 

$

2.41

NGL ($/Bbl)

 

$

20.57

 

$

20.78

 

$

20.84

 

$

19.88

Equivalents ($/Boe)

 

$

38.04

 

$

41.44

 

$

40.60

 

$

42.49

______________________________  

(1)

Term

 

Definition

 

Bbl

 

One stock tank barrel of 42 U.S. gallons liquid volume used herein in reference to crude oil, condensate or NGLs.

 

MBbls

 

One thousand barrels of crude oil, condensate or NGLs.

 

MBoe

 

One thousand Boe.

 

MBoe/d

 

One thousand Boe per day.

 

Mcf

 

One thousand cubic feet of natural gas.

 

MMcf

 

One million cubic feet of natural gas.

 

NGL

 

Natural gas liquids. Hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline.

 

 

 

 

(2)

The metrics and dollars provided for the nine months ended September 30, 2023 exclude the impact of an $8.7 million settlement with an operator with respect to unpaid oil and gas royalties.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts) (unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

Revenues:

 

 

 

 

 

 

 

 

Oil and gas royalties

 

$

94,444

 

$

89,813

 

$

276,377

 

$

258,644

Water sales

 

 

36,211

 

 

40,650

 

 

113,987

 

 

85,799

Produced water royalties

 

 

27,727

 

 

25,301

 

 

76,034

 

 

61,824

Easements and other surface-related income

 

 

14,280

 

 

16,570

 

 

51,496

 

 

51,865

Land sales

 

 

901

 

 

—

 

 

2,145

 

 

6,806

Total revenues

 

 

173,563

 

 

172,334

 

 

520,039

 

 

464,938

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Salaries and related employee expenses

 

 

14,030

 

 

12,771

 

 

39,262

 

 

32,688

Water service-related expenses

 

 

11,731

 

 

14,824

 

 

36,767

 

 

24,496

General and administrative expenses

 

 

4,029

 

 

3,673

 

 

12,626

 

 

10,738

Legal and professional fees

 

 

8,316

 

 

2,307

 

 

14,680

 

 

28,471

Ad valorem and other taxes

 

 

2,189

 

 

1,444

 

 

5,990

 

 

5,425

Land sales expenses

 

 

175

 

 

—

 

 

425

 

 

49

Depreciation, depletion and amortization

 

 

5,762

 

 

4,093

 

 

13,695

 

 

10,881

Total operating expenses

 

 

46,232

 

 

39,112

 

 

123,445

 

 

112,748

 

 

 

 

 

 

 

 

 

Operating income

 

 

127,331

 

 

133,222

 

 

396,594

 

 

352,190

 

 

 

 

 

 

 

 

 

Other income, net

 

 

8,086

 

 

13,220

 

 

31,249

 

 

20,239

Income before income taxes

 

 

135,417

 

 

146,442

 

 

427,843

 

 

372,429

Income tax expense

 

 

28,823

 

 

31,853

 

 

92,243

 

 

79,894

Net income

 

$

106,594

 

$

114,589

 

$

335,600

 

$

292,535

 

 

 

 

 

 

 

 

 

Net income per share of common stock (1)

 

 

 

 

 

 

 

 

Basic

 

$

4.64

 

$

4.99

 

$

14.60

 

$

12.69

Diluted

 

$

4.63

 

$

4.98

 

$

14.58

 

$

12.68

 

 

 

 

 

 

 

 

 

Weighted average number of shares of common stock outstanding (1)

 

 

 

 

 

 

 

 

Basic

 

 

22,979,781

 

 

22,987,971

 

 

22,990,213

 

 

23,054,073

Diluted

 

 

23,012,169

 

 

23,013,793

 

 

23,016,733

 

 

23,072,955

__________________________

(1)

All share and share price amounts reflect the three-for-one stock split effected on March 26, 2024.

SEGMENT OPERATING RESULTS

(dollars in thousands) (unaudited)

 

 

 

Three Months Ended

 

 

September 30, 2024

 

June 30, 2024

Revenues:

 

 

 

 

 

 

 

 

Land and resource management:

 

 

 

 

 

 

 

 

Oil and gas royalties

 

$

94,444

 

54

%

 

$

89,813

 

52

%

Easements and other surface-related income

 

 

11,303

 

7

%

 

 

14,219

 

8

%

Land sales

 

 

901

 

—

%

 

 

—

 

—

%

Total land and resource management revenue

 

 

106,648

 

61

%

 

 

104,032

 

60

%

 

 

 

 

 

 

 

 

 

Water services and operations:

 

 

 

 

 

 

 

 

Water sales

 

 

36,211

 

21

%

 

 

40,650

 

24

%

Produced water royalties

 

 

27,727

 

16

%

 

 

25,301

 

15

%

Easements and other surface-related income

 

 

2,977

 

2

%

 

 

2,351

 

1

%

Total water services and operations revenue

 

 

66,915

 

39

%

 

 

68,302

 

40

%

Total consolidated revenues

 

$

173,563

 

100

%

 

$

172,334

 

100

%

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

Land and resource management

 

$

71,870

 

67

%

 

$

80,129

 

70

%

Water services and operations

 

 

34,724

 

33

%

 

 

34,460

 

30

%

Total consolidated net income

 

$

106,594

 

100

%

 

$

114,589

 

100

%

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2024

 

September 30, 2023

Revenues:

 

 

 

 

 

 

 

 

Land and resource management:

 

 

 

 

 

 

 

 

Oil and gas royalties

 

$

276,377

 

54

%

 

$

258,644

 

56

%

Easements and other surface-related income

 

 

43,643

 

8

%

 

 

49,826

 

11

%

Land sales

 

 

2,145

 

—

%

 

 

6,806

 

1

%

Total land and resource management revenue

 

 

322,165

 

62

%

 

 

315,276

 

68

%

 

 

 

 

 

 

 

 

 

Water services and operations:

 

 

 

 

 

 

 

 

Water sales

 

 

113,987

 

22

%

 

 

85,799

 

19

%

Produced water royalties

 

 

76,034

 

15

%

 

 

61,824

 

13

%

Easements and other surface-related income

 

 

7,853

 

1

%

 

 

2,039

 

—

%

Total water services and operations revenue

 

 

197,874

 

38

%

 

 

149,662

 

32

%

Total consolidated revenues

 

$

520,039

 

100

%

 

$

464,938

 

100

%

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

Land and resource management

 

$

232,970

 

69

%

 

$

217,860

 

74

%

Water services and operations

 

 

102,630

 

31

%

 

 

74,675

 

26

%

Total consolidated net income

 

$

335,600

 

100

%

 

$

292,535

 

100

%

 

 

 

 

 

 

 

 

 

NON-GAAP PERFORMANCE MEASURES AND DEFINITIONS

In addition to amounts presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we also present certain supplemental non-GAAP performance measurements. These measurements are not to be considered more relevant or accurate than the measurements presented in accordance with GAAP. In compliance with the requirements of the SEC, our non-GAAP measurements are reconciled to net income, the most directly comparable GAAP performance measure. For all non-GAAP measurements, neither the SEC nor any other regulatory body has passed judgment on these non-GAAP measurements.

EBITDA, Adjusted EBITDA and Free Cash Flow

EBITDA is a non-GAAP financial measurement of earnings before interest expense, taxes, depreciation, depletion and amortization. Its purpose is to highlight earnings without finance, taxes, and depreciation, depletion and amortization expense, and its use is limited to specialized analysis. We calculate Adjusted EBITDA as EBITDA plus employee share-based compensation. Its purpose is to highlight earnings without non-cash activity such as share-based compensation and other non-recurring or unusual items, if applicable. We calculate Free Cash Flow as Adjusted EBITDA less current income tax expense and capital expenditures. Its purpose is to provide an additional measure of operating performance. We have presented EBITDA, Adjusted EBITDA and Free Cash Flow because we believe that these metrics are useful supplements to net income in analyzing the Company’s operating performance. Our definitions of EBITDA, Adjusted EBITDA and Free Cash Flow may differ from computations of similarly titled measures of other companies.

The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and Free Cash Flow for the three months ended September 30, 2024 and June 30, 2024 and for the nine months ended September 30, 2024 and September 30, 2023 (in thousands):

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 2024

 

June 30, 2024

 

September 30, 2024

 

September 30, 2023

Net income

 

$

106,594

 

 

$

114,589

 

 

$

335,600

 

 

$

292,535

 

Add:

 

 

 

 

 

 

 

 

Income tax expense

 

 

28,823

 

 

 

31,853

 

 

 

92,243

 

 

 

79,894

 

Depreciation, depletion and amortization

 

 

5,762

 

 

 

4,093

 

 

 

13,695

 

 

 

10,881

 

EBITDA

 

 

141,179

 

 

 

150,535

 

 

 

441,538

 

 

 

383,310

 

Add:

 

 

 

 

 

 

 

 

Employee share-based compensation

 

 

2,935

 

 

 

2,700

 

 

 

7,855

 

 

 

7,217

 

Adjusted EBITDA

 

 

144,114

 

 

 

153,235

 

 

 

449,393

 

 

 

390,527

 

Less:

 

 

 

 

 

 

 

 

Current income tax expense

 

 

(27,416

)

 

 

(30,766

)

 

 

(90,080

)

 

 

(80,928

)

Capital expenditures

 

 

(9,833

)

 

 

(6,499

)

 

 

(21,994

)

 

 

(10,387

)

Free Cash Flow

 

$

106,865

 

 

$

115,970

 

 

$

337,319

 

 

$

299,212

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106128184/en/

Investor Relations IR@TexasPacific.com