DALLAS--(BUSINESS WIRE)--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,
|
|
June 30,
|
|
September 30,
|
|
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,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
||||
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,
|
|
June 30,
|
||||||||
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,
|
|
September 30,
|
||||||||
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,
|
|
June 30,
|
|
September 30,
|
|
September 30,
|
||||||||
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 |
|