Item 1. Financial Statements

TEXAS PACIFIC LAND CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share amounts)

			December 31, 2024						December 31, 2023
ASSETS
Cash and cash equivalents			$	369,835					$	725,169
Accounts receivable and accrued receivables, net			126,670						128,971
Prepaid expenses and other current assets			5,318						2,944
Tax like-kind exchange escrow			1,546						5,380
Total current assets			503,369						862,464
Royalty interests acquired, net			432,401						46,609
Real estate acquired			143,178						130,024
Property, plant and equipment, net			122,578						89,587
Intangible assets, net			35,188						21,025
Real estate and royalty interests assigned through the Declaration of Trust, no value assigned:
Land (surface rights)			—						—
1/16th and 1/128th nonparticipating perpetual royalty interests			—						—
Operating lease right-of-use assets			1,163						1,861
Other assets			10,143						4,828
Total assets			$	1,248,020					$	1,156,398
LIABILITIES AND EQUITY
Accounts payable and accrued expenses			$	26,958					$	22,501
Ad valorem and other taxes payable			8,418						10,761
Income taxes payable			4,388						4,795
Unearned revenue			6,797						6,330
Total current liabilities			46,561						44,387
Deferred taxes payable			47,401						42,365
Unearned revenue - noncurrent			20,636						25,006
Operating lease liabilities			453						1,170
Accrued liabilities - noncurrent			504						274
Total liabilities			115,555						113,202
Commitments and contingencies (Note 13)			—						—
Equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of December 31, 2024 and 2023			—						—
Common stock, $0.01 par value; 46,536,936 shares authorized as of December 31, 2024 and 2023, 22,971,803 and 23,007,681 outstanding as of December 31, 2024 and 2023, respectively			231						78
Treasury stock, at cost; 114,273 and 86,929 shares as of December 31, 2024 and 2023, respectively			(168,843)						(144,998)
Additional paid-in capital			19,900						14,613
Accumulated other comprehensive income			3,583						1,831
Retained earnings			1,277,594						1,171,672
Total equity			1,132,465						1,043,196
Total liabilities and equity			$	1,248,020					$	1,156,398

See accompanying notes to consolidated financial statements.

F-4

TEXAS PACIFIC LAND CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND TOTAL COMPREHENSIVE INCOME

(in thousands, except shares and per share amounts)

			Years Ended December 31,
			2024						2023						2022
Revenues:
Oil and gas royalties			$	373,331					$	357,394					$	452,434
Water sales			150,724						112,203						84,725
Produced water royalties			104,123						84,260						72,234
Easements and other surface-related income			73,257						70,932						48,348
Land sales			4,388						6,806						9,681
Total revenues			705,823						631,595						667,422
Expenses:
Salaries and related employee expenses			53,621						43,384						41,402
Water service-related expenses			46,124						33,566						17,463
General and administrative expenses			34,483						46,450						22,020
Depreciation, depletion and amortization			25,162						14,757						15,376
Ad valorem and other taxes			7,295						7,385						8,854
Total operating expenses			166,685						145,542						105,115
Operating income			539,138						486,053						562,307
Other income, net			39,683						31,508						6,548
Income before income taxes			578,821						517,561						568,855
Income tax expense:
Current			120,257						110,517						121,230
Deferred			4,604						1,399						1,263
Total income tax expense			124,861						111,916						122,493
Net income			$	453,960					$	405,645					$	446,362
Amortization of net actuarial costs, net of income taxes of $(182), $(27), and $9 for the years ended December 31, 2024, 2023 and 2022, respectively			(684)						(103)						32
Net actuarial (loss) gain on pension plan, net of income taxes of $483, $(157), and $931 as of December 31, 2024, 2023 and 2022, respectively			2,436						(582)						3,491
Total other comprehensive income (loss)			1,752						(685)						3,523
Total comprehensive income			$	455,712					$	404,960					$	449,885
Net income per share of common stock
Basic			$	19.75					$	17.60					$	19.27
Diluted			$	19.72					$	17.59					$	19.26
Weighted average number of shares of common stock outstanding
Basic			22,986,197						23,044,305						23,165,871
Diluted			23,019,751						23,059,845						23,180,427

See accompanying notes to consolidated financial statements.

F-5

TEXAS PACIFIC LAND CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except shares and per share amounts)

									Common Stock																		Treasury Stock						Additional Paid-in Capital						Accum. Other Comp. Inc/(Loss)						Retained Earnings												Total Equity
									Shares						Amount
Balances as of January 1, 2022									23,234,085						$	78											$	(15,417)					$	28					$	(1,007)					$	668,029											$	651,711
Net income									—						—												—						—						—						446,362												446,362
Repurchases of common stock									(146,877)						—												(87,900)						—						—						—												(87,900)
Regular dividends paid and accrued — $4.00 per share of common stock									—						—												—						—						—						(92,737)												(92,737)
Special dividends paid and accrued — $6.67 per share of common stock									—						—												—						—						—						(154,742)												(154,742)
Share-based compensation, net of forfeitures									2,097						—												940						8,265						—						(773)												8,432
Shares exchanged for tax withholdings									(2,268)						—												(1,762)						—						—						—												(1,762)
Periodic pension costs, net of income taxes of $940									—						—												—						—						3,523						—												3,523
Balances as of December 31, 2022									23,087,037						78												(104,139)						8,293						2,516						866,139												772,887
Net income									—						—												—						—						—						405,645												405,645
Repurchases of common stock and related excise taxes									(82,857)						—												(42,801)						—						—						—												(42,801)
Regular dividends paid and accrued — $4.33 per share of common stock									—						—												—						—						—						(99,972)												(99,972)
Share-based compensation, net of forfeitures									6,996						—												4,006						6,320						—						(140)												10,186
Shares exchanged for tax withholdings									(3,495)						—												(2,064)						—						—						—												(2,064)
Periodic pension costs, net of income taxes of $184									—						—												—						—						(685)						—												(685)
Balances as of December 31, 2023									23,007,681						78												(144,998)						14,613						1,831						1,171,672												1,043,196
Net income									—						—												—						—						—						453,960												453,960
Issuance of common stock related to stock split									—						153												—						(153)						—						—												—
Repurchases of common stock and related excise taxes									(42,902)						—												(29,350)						—						—						—												(29,350)
Regular dividends paid and accrued — $5.11 per share of common stock									—						—												—						—						—						(117,474)												(117,474)
Special dividends paid and accrued — $10.00 per share of common stock									—						—												—						—						—						(229,834)												(229,834)
Share-based compensation, net of forfeitures									9,972						—												7,128						5,440						—						(730)												11,838
Shares exchanged for tax withholdings									(2,948)						—												(1,623)						—						—						—												(1,623)
Periodic pension costs, net of income taxes of $301									—						—												—						—						1,752						—												1,752
Balances as of December 31, 2024									22,971,803						$	231											$	(168,843)					$	19,900					$	3,583					$	1,277,594											$	1,132,465

See accompanying notes to consolidated financial statements.

F-6

TEXAS PACIFIC LAND CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			Years Ended December 31,
			2024						2023						2022
Cash flows from operating activities:
Net income			$	453,960					$	405,645					$	446,362
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			25,162						14,757						15,376
Share-based compensation			12,498						10,343						8,432
Pension curtailment/settlement gains			(4,616)						—						—
Deferred taxes			4,604						1,399						1,263
Changes in operating assets and liabilities:
Receivables and other assets			(610)						(24,457)						(13,833)
Prepaid income taxes			—						4,809						(4,809)
Income taxes payable			(407)						1,628						(25,916)
Unearned revenue			(3,903)						5,140						1,938
Operating liabilities, excluding income taxes			6,327						(3,240)						10,015
Ad valorem and other taxes payable			(2,343)						2,264						8,321
Cash provided by operating activities			490,672						418,288						447,149
Cash flows from investing activities:
Acquisition of royalty interests, net of post-closing adjustments			(395,577)						(3,566)						(1,662)
Acquisition of a business			(45,000)						—						—
Acquisition of intangible assets			—						(21,403)						—
Acquisition of real estate			(1,476)						(20,320)						(633)
Purchase of fixed assets			(29,696)						(15,028)						(19,212)
Proceeds from sale of fixed assets			—						5						106
Cash used in investing activities			(471,749)						(60,312)						(21,401)
Cash flows from financing activities:
Dividends paid			(347,309)						(99,972)						(247,281)
Repurchases of common stock			(29,159)						(42,573)						(87,765)
Shares exchanged for tax withholdings			(1,623)						(2,064)						(1,762)
Cash used in financing activities			(378,091)						(144,609)						(336,808)
Net (decrease) increase in cash, cash equivalents and restricted cash			(359,168)						213,367						88,940
Cash, cash equivalents and restricted cash, beginning of period			730,549						517,182						428,242
Cash, cash equivalents and restricted cash, end of period			$	371,381					$	730,549					$	517,182
Supplemental disclosure of cash flow information:
Income taxes paid			$	120,669					$	104,079					$	151,956
Supplemental non-cash investing and financing information:
Nonmonetary exchange of assets			$	—					$	880					$	4,174
(Decrease) increase in accounts payable related to capital expenditures			$	(273)					$	403					$	(245)
Accrued dividends on unvested stock awards			$	730					$	158					$	198
Operating lease right-of-use assets			$	—					$	—					$	1,364

See accompanying notes to consolidated financial statements.

F-7

TEXAS PACIFIC LAND CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

Organization

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL,” the “Company,” “our,” “we,” or “us”) is a Delaware corporation and one of the largest landowners in the State of Texas with approximately 873,000 surface acres of land, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 16,000 additional net royalty acres (normalized to 1/8th) (“NRA”) for a collective total of approximately 207,000 NRA, principally concentrated in the Permian Basin.

Our revenues are derived from oil and gas royalties, water sales, produced water royalties, easements and other surface-related (“SLEM”) income and land sales.

On January 11, 2021, we completed our reorganization from a business trust, Texas Pacific Land Trust (the “Trust”), organized under a Declaration of Trust dated February 1, 1888 (the “Declaration of Trust”), into Texas Pacific Land Corporation, a corporation formed and existing under the laws of the State of Delaware (the “Corporate Reorganization”).

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our consolidated accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with the current year presentation.

Segment Reporting

Operating segments are based on components of the Company that engage in business activity that earn revenues and incur expenses and (a) whose operating results are regularly reviewed by our chief operating decision maker (“CODM”) to make decisions about resource allocation and performance and (b) for which discrete financial information is available. The measure of profit or loss that the CODM uses to assess performance and allocated resources to our reportable segments is Net Income. Our chief executive officer is the CODM and uses Net Income to evaluate income generated by each segment in his determination of allocating resources to each segment. As a result, the Company operates two operating segments which represent our reportable segments: Land and Resource Management and Water Services and Operations. The segments enable the alignment of strategies and objectives of TPL and provide a framework for timely and rational allocation of resources within businesses. See Note 15, “Business Segment Reporting” for further information regarding our segments.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Actual results could differ from those estimates. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

Revenue Recognition

Oil and Gas Royalties

Oil and gas royalties are received in connection with royalty interests owned by TPL. Oil and gas royalties are reported net of production taxes and are recognized as revenue when crude oil and natural gas products are removed from the respective mineral reserve locations. Oil and gas royalty payments are generally received one to two months after the crude oil and gas products are removed. An accrual for amounts not received during the month crude oil and natural gas products are removed is included in accounts receivable and accrued receivables, net based on historical trends.

F-8

The oil and gas royalties which we receive are dependent upon the market prices for oil and gas, and locational and contractual price differences. The market prices for oil and gas are subject to national and international economic and political conditions and subject to significant price fluctuations.

TPL has analyzed public reports of drilling activities by the oil companies operating where we have an oil and gas royalty interest in an effort to identify unpaid royalties associated with royalty interests we own. Rights to certain oil and gas royalties we believe to be due and payable may be subject to dispute with the oil company involved as a result of disagreements with respect to drilling and related engineering information. Disputed oil and gas royalties are recorded when these contingencies are resolved.

Water Sales

Water sales revenue encompasses the sale and delivery of sourced, produced and treated water to operators and other customers, royalties received related to areas of mutual interest (“AMI”), and royalties received pursuant to legacy agreements with operators. In certain instances, we enter into agreements with third parties to provide various water services, including but not limited to, the purchase, sale or transfer of water within a specific geographic area, also known as an AMI. Our performance obligation is deemed satisfied upon the delivery of water at which point, revenue is recognized. In instances where a third party other than the customer is involved in the sale and/or transport of water, such as a revenue share agreement, brokered water sale transaction or third party acquisition of water, the Company will either be acting as the principal or the agent in the water sales transaction. If the Company is deemed to be acting as a principal, the associated revenues are reported on a gross basis in water sales revenue and the corresponding costs associated with the sale are reported as an operating expense in water service-related expenses in the consolidated income statement. If the Company is deemed to be acting as an agent, principally in brokered water transactions, the associated water sales revenue is reported net of the corresponding costs associated with the sale and included in the water sales revenue line item on the consolidated income statement.

Purchases of water from third parties, transfer costs and treatment expenses associated with water sales are included in water service-related expenses.

Produced Water Royalties

Produced water royalties represent revenue from the transfer and disposal of saltwater from producing oil and gas wells on our land. Revenue is recognized when the water is transported across or injected into our land.

Easements and Other Surface-Related Income

Easement contracts represent contracts which permit companies to install pipelines, electric lines and other equipment on land owned by TPL. When TPL receives a signed contract and payment, we make available the respective parcel of land to the grantee. Easement income is recognized upon the execution of the easement agreement, or in the event of a renewal upon receipt of the renewal payment, as at that point in time, we have satisfied our performance obligation and the customer has right of use.

Leases of our surface acreage include, but are not limited to, facility, roadway and surface leases with a typical lease term of 10 years and generally require fixed annual payments. Lease cancellations are allowed under certain circumstances, but initial lease deposits are generally nonrefundable. The initial lease deposits and annual payments are recorded as unearned revenue upon receipt and amortized over the life of the lease. Advance lease payments are deferred and amortized over the appropriate accounting period.

Other surface-related income includes revenue from permits, material sales, and renewable energy sources. Revenue from permits is recognized upon execution of the contract and receipt of payment. Revenue from material sales is recognized upon the removal of materials by the customer. Revenue from renewable energy sources, such as wind and solar power, generally consist of leases, some of which may include a provision for future royalties once certain circumstances occur. As discussed above, lease payments are recorded as unearned revenue and amortized over the life of the lease. Royalties are recognized based upon actual production.

Land Sales and Exchanges

We consider purchasers of land to be our customers as land management, leasing and sales are normal operating activities for TPL. Revenue is recognized on land sales when the performance obligation to the purchaser (customer) is complete. Revenue from land exchanges is recognized based upon the estimated fair value of the consideration exchanged.

F-9

Cash, Cash Equivalents and Restricted Cash

We consider investments in bank deposits, money market funds, and other highly-liquid cash investments, such as U.S. Treasury bills and commercial paper, with original maturities of three months or less to be cash equivalents. Our cash equivalents are considered Level 1 assets in the fair value hierarchy.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that correspond to the same such amounts shown in the consolidated statements of cash flows (in thousands):

						December 31, 2024						December 31, 2023
Cash and cash equivalents						$	369,835					$	725,169
Tax like-kind exchange escrow						1,546						5,380
Total cash, cash equivalents and restricted cash shown in the statement of cash flows						$	371,381					$	730,549

Receivables

Receivables consist primarily of royalty income due related to our oil, gas and produced water royalties and trade accounts receivable related to water and material sales. An allowance is recorded for expected credit losses and is based upon our historical write-off experience, aging of trade accounts receivable and collectability patterns of our customers. The allowance for expected credit loss was approximately $0.2 million as of December 31, 2024 and 2023.

Accrual of Oil and Gas Royalties

The Company accrues oil and gas royalties, which are included in accounts receivable and accrued receivables, net. An accrual is necessary due to the time lag between the removal of crude oil and natural gas products from the respective mineral reserve locations and generation of the actual payment by operators. The oil and gas royalty accrual is based upon historical production volumes, estimates of the timing of future payments and recent market prices for oil and gas. Accrued oil and gas royalties included in accounts receivable and accrued receivables, net totaled $60.7 million and $52.2 million as of December 31, 2024 and 2023, respectively.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.

The fair value accounting standards establish a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs used in measuring fair value, as follows:

Level 1 – Inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since inputs are based on quoted prices that are readily and regularly available in an active market, Level 1 inputs require the least amount of judgment.

Level 2 – Inputs are based on quoted prices for similar instruments in active markets, or are observable either directly or indirectly. Inputs are obtained from various sources including financial institutions and brokers.

Level 3 – Inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised by us in determining fair value is greatest for fair value measurements categorized in Level 3.

We use the highest level of observable market data if such data is available without undue cost and effort.

F-10

Business Combinations and Asset Acquisitions

Our acquisition activities generally include acquisitions of royalty interests and/or land (real estate), and at times, may also include acquisitions of intangible assets or other tangible assets.

When accounting for acquisition activities, we evaluate whether a transaction meets the definition of a business. We first apply a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, we further consider whether the set of assets acquired have, at a minimum, inputs and processes that have the ability to create outputs in the form of revenue. If the assets acquired meet this criteria, the transaction is accounted for as a business combination.

Acquisitions that qualify as an asset acquisition are accounted for using a cost accumulation model whereby the purchase price of the acquisition is allocated to the assets acquired on a relative fair value basis on the date of acquisition. Inputs used to determine such fair values are primarily based upon internally developed models, publicly-available drilling information, a risk-adjusted discount rate and/or publicly-available data regarding transactions consummated by other buyers and sellers, as applicable. These fair values are considered Level 2 and Level 3 assets in the fair value hierarchy. Any associated acquisition costs are capitalized.

Acquisitions that qualify as a business combination are accounted for using the acquisition method of accounting. The fair value of consideration transferred for an acquisition is allocated to the assets acquired and liabilities assumed based on their fair value on a nonrecurring basis on the acquisition date and are subject to fair value adjustments under certain circumstances. The excess of the consideration transferred over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Conversely, in the event the fair value of assets acquired and liabilities assumed is greater than the consideration transferred, a bargain purchase gain is recognized.

Determining the fair value of assets acquired and liabilities assumed requires judgment and often involves the use of significant estimates and assumptions as fair values are not always readily determinable. Different techniques may be used to determine fair values, including market prices (where available), comparisons to transactions involving the acquisition of similar assets and liabilities and the discounted net present value of estimated future cash flows, among others. We engage third-party valuation firms when appropriate to assist in the fair value determination of assets acquired and liabilities assumed. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred. We may adjust the amounts recognized in connection with an acquisition during a measurement period not to exceed one year from the date of acquisition, as a result of subsequently obtaining additional information that existed at the acquisition date.

Royalty Interests Acquired

Royalty interests acquired represent royalty interests in proved and unproved oil and gas properties. The cost of acquired oil and gas royalties are capitalized and are accounted for under the successful efforts method. As unproved properties are determined to have proved reserves, the related costs are transferred to proved properties and become subject to depletion at that time.

Estimates of crude oil, natural gas, and NGL reserves affect the calculation of depletion and impairment and also the unaudited standardized measure disclosures associated with our oil and gas royalty interests. We engaged an independent consulting petroleum firm, with assistance from us, to prepare an estimate of proved developed producing reserves, future production and income attributable to our royalty interests as of December 31, 2024. All reserve estimates involve an assessment of the uncertainty relating to the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of such data. For depletion purposes, and as required by the guidelines and definitions established by the Securities and Exchange Commission (the “SEC”), the reserve estimates were based on the average prices during the 12-month period prior to December 31, 2024 determined as an unweighted arithmetic average of the first day of the month for each month within the period. Any significant variance in the assumptions could materially affect the estimated quantity of reserves, which could affect the carrying value of our oil and gas royalty interests and/or the rate of depletion related to the oil and gas royalty interests.

F-11

Depletion of Royalty Interests Acquired

Capitalized costs for proved oil and gas royalty interests are depleted on a unit-of-production basis over total proved reserves. For depletion of proved oil and gas properties, interests are grouped in a reasonable aggregation of properties with common geological structural features or stratigraphic conditions.

Real Estate and Royalty Interests Assigned Through the Declaration of Trust

The fair market value of the land and royalty interests that were assigned through the Declaration of Trust (referred to as “Assigned” land and royalty interests) was not determined in 1888 when the Trust was formed; therefore, no value is assigned in the accompanying consolidated balance sheets to the Assigned land and royalty interests. Consequently, in the consolidated statements of income and total comprehensive income, no allowance has been made for depletion and no cost has been deducted from the proceeds of sales of the Assigned land and royalty interests. Even though the 1888 value of real properties cannot be precisely determined, we have concluded that the effect of this matter is no longer significant to our financial position or results of operations. Minimal real estate improvements are made to land

Impairment of Long-Lived Assets

We evaluate long-lived assets, including intangible assets with finite lives and royalty interests acquired with proved oil and gas reserves, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When assessing the asset for impairment, we compare the undiscounted future net cash flows to the carrying value to determine recoverability. If the carrying value exceeds the undiscounted future net cash flows, the fair value of the asset is determined and an impairment is recognized based on the amount by which the carrying value exceeds the fair value. Fair value is determined primarily by discounted cash flows, supported by available market valuations, if applicable.

The factors used to determine fair value of proved oil and gas royalty interests include estimates of proved reserves, future commodity prices, timing of future production, and a risk-adjusted discount rate. If pricing conditions decline or are depressed, or if there is a negative impact on one or more of the other components of the calculation, we may incur proved property impairments in future periods. Factors used in the assessment of fair value of unproved oil and gas royalty interests include, but are not limited to, commodity price outlooks and current and future operator activity in the Permian.

No impairments were recorded for the years ended December 31, 2024, 2023 or 2022.

Amortization of Intangible Assets

Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 13 to 20 years.

Property, Plant and Equipment

Property, plant and equipment is carried at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Costs associated with our development of infrastructure for sourcing and treating water are capitalized.

Research and Development Activities

Research and development activities relate to the Company’s initiative to develop an energy-efficient desalination and treatment process for surface discharge and beneficial reuse of produced water. Costs for tangible assets used in these activities that have an alternative future use to the Company are capitalized. All other research and development related expenses are expensed when incurred.

Depreciation Expense

We account for depreciation of property, plant and equipment on the straight-line method over the estimated useful lives of the assets. Depreciable lives by category are as follows:

			Range of Estimated Useful Lives (in years)
Water wells and other water-related assets			3						to						20
Furniture, fixtures and equipment			3						to						15

F-12

Leases

We lease certain facilities under operating leases. A determination of whether a contract contains a lease is made at the inception of the arrangement. Our leased facilities include our administrative offices located in Dallas and Midland, Texas.

Our leases generally contain options to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy. Therefore, substantially all of the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability as the options to extend are not reasonably certain at lease commencement. Short-term leases with an initial term of 12 months or less are not recognized in the right-to-use asset and lease liability on the consolidated balance sheets.

The lease liabilities are measured at the lease commencement date and determined using the present value of the minimum lease payments not yet paid and our incremental borrowing rate, which approximates the rate at which we would borrow, on a collateralized basis, over the term of a lease in the applicable currency environment. The interest rate implicit in the lease is generally not determinable in transactions where we are the lessee.

For real estate leases, we account for lease components and non-lease components (such as common area maintenance) as a single lease component. Certain real estate leases require reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Certain leases contain fixed lease payments for items such as common area maintenance and parking. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities. See Note 13, “Commitments and Contingencies” for additional information.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The liability for unrecognized tax benefits was zero as of December 31, 2024 and 2023. We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated statements of income and total comprehensive income.

Share-Based Compensation

The Company utilizes the closing stock price on the date of grant to determine the fair value of stock awards and service-vesting awards, which for the Company includes restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”) with a performance condition. For PSUs with a market condition, grant date fair value is determined using a Monte Carlo simulation model. Unvested awards are entitled to dividends or dividend equivalents which are accrued and distributed to award recipients at the time such awards vest. Dividends are forfeitable if the related award is forfeited. For RSAs, RSUs and PSUs with performance conditions, forfeitures are recognized in the period in which they occur. For PSU awards with market conditions, forfeitures are only recognized if the award recipient does not render the required service during the measurement period.

Share-based compensation expense for restricted stock awards with no requisite service period is recognized in the financial statements immediately on date of grant. Share-based compensation expense for RSUs and RSAs with a requisite service period is recognized in the financial statements over the awards’ vesting periods using the graded-vesting method.

F-13

Share-based compensation expense for PSU awards with performance conditions is recognized ratably over the measurement period at such time as the awards are probable and estimable. Share-based compensation expense for PSU awards with market conditions is recognized ratably over the measurement period regardless of whether the market condition is satisfied if the service for the award is rendered. Share-based compensation is reported on the consolidated statements of income and total comprehensive income as a component of salaries and related employee expenses for employee awards and in general and administrative expenses for director awards.

Net Income Per Share

Basic income per share is based on the weighted average number of shares outstanding during the period. Diluted net income per share is computed based upon the weighted average number of shares outstanding during the period plus unvested shares issued pursuant to our equity and deferred compensation plans. See Note 12, “Earnings Per Share.”

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), acquired is recorded as treasury stock. The cost associated with issuance of treasury stock is based on the average cost of treasury stock as of the date of issuance.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income and other gains and losses affecting capital that, under GAAP, are excluded from net income.

Concentrations of Credit Risk

We invest our cash and cash equivalents (which include U.S. Treasury bills, money market funds, and commercial paper with maturities of three months or less) among three major financial institutions in an attempt to minimize exposure to risk from any one of these entities. As of December 31, 2024 and 2023, we had cash and cash equivalents deposited in our financial institutions in excess of federally-insured levels. We regularly monitor the financial condition of these financial institutions and believe that we are not exposed to any significant credit risk in cash and cash equivalents.

Significant Customers

Three customers represented, in the aggregate, 40.9% of TPL’s total revenues for the year ended December 31, 2024. Three customers represented, in the aggregate, 42.5% of TPL’s total revenues for the year ended December 31, 2023. Four customers represented, in the aggregate, 51.8% of TPL’s total revenues for the year ended December 31, 2022.

3. Assets Acquired in a Business Combination

On August 20, 2024, we acquired 4,120 acres of land along with other surface-related tangible and intangible assets (collectively referred to as the “Acquired Assets”) from an unaffiliated seller for total consideration of $45.0 million, in an all-cash transaction. There were no liabilities assumed by the Company in this transaction. The Acquired Assets generate revenue streams across water sales, produced water royalties, and SLEM revenue, and provide additional commercial growth opportunities for the Company to expand water sourcing and produced water opportunities to both new and existing customers. The Acquired Assets are located in the Midland Basin.

F-14

The Acquired Assets included the following:

Acquired Assets						Balance Sheet Classification						Business Segment
4,120 acres of land						Real estate acquired						Land and Resource Management
Water sourcing assets, including water pits, water wells, pipes and electrical infrastructure						Property, plant and equipment						Water Services and Operations
A 25% non-operating working interest in an existing saltwater disposal (“SWD”) system						Property, plant and equipment						Water Services and Operations
Contractual right to a 10% royalty on produced water revenue generated from the SWD system						Intangible assets						Water Services and Operations
Contractual right to a 7.5% royalty on revenue generated from nonhazardous oilfield solids waste disposal site						Intangible assets						Land and Resource Management

The combination of the 25% non-operating working interest and the 10% royalty interest from the SWD system entitles the Company to 32.5% of produced water revenues generated from the SWD system. As a 25% non-operating working interest owner, the Company is also responsible for its 25% share of operating expenses associated with the SWD system. The operator of the SWD system is responsible for the day-to-day management and operations. Of the 4,120 acres of land acquired, 392 acres are leased to, and operated by, an environmental solution (“ES”) company that operates a nonhazardous oilfield solids waste disposal site. The ES company pays a 7.5% royalty, on revenue generated, to the Company. The Company reports the royalty received as SLEM revenue.

The acquisition was accounted for as a business combination using the acquisition method, and therefore, the Acquired Assets were recorded based on their fair value on a nonrecurring basis on the date of acquisition and are subject to fair value adjustments under certain circumstances. In determining the fair values of assets acquired, management made estimates, judgements and assumptions. Inputs used to determine fair values of assets included internally-developed models, risk-adjusted discount rates by asset class, publicly available data on land sales comparisons and other costs analysis. These fair values are considered Level 3 assets in the fair value hierarchy. There was no goodwill recorded on this acquisition. The purchase price allocation was finalized during the year ended December 31, 2024.

The following table presents the allocation of fair value by asset class (in thousands):

						December 31, 2024
Real estate acquired						$	12,100
Property, plant and equipment						17,200
Intangible assets						15,700
Total consideration and fair value						$	45,000

The Company incurred $0.1 million of transaction-related costs related to this asset acquisition during the year ended December 31, 2024 and such costs are included in general and administrative expenses in the consolidated statements of income.

From August 20, 2024 through December 31, 2024, revenues and operating expenses from the business combination were approximately $1.4 million and $1.5 million, respectively, and are included in our consolidated statements of income. Pro forma financial information is not disclosed as the acquisition was deemed not to have a material impact on our results of operations.

F-15

4. Oil and Gas Royalty Interests

As of December 31, 2024 and 2023, we owned the following oil and gas royalty interests (in thousands):

						December 31, 2024						December 31, 2023
Oil and gas royalty interests:
1/16th nonparticipating perpetual royalty interests (1)						$	—					$	—
1/128th nonparticipating perpetual royalty interests (2)						—						—
Royalty interests acquired, at cost (3)						447,071						51,494
Total royalty interests						447,071						51,494
Less: accumulated depletion						(14,670)						(4,885)
Royalty interests, net						$	432,401					$	46,609

(1) Nonparticipating perpetual royalty interests in 370,737 gross royalty acres as of December 31, 2024 and 2023.

(2) Nonparticipating perpetual royalty interests in 84,934 gross royalty acres as of December 31, 2024 and 2023.

(3) Royalty interest in 15,897 and 4,302 net royalty acres as of December 31, 2024 and 2023, respectively.

Royalty Interests Assigned Through the Declaration of Trust

The fair market value of the Trust’s Assigned royalty interests was not determined in 1888 when the Trust was formed, and accordingly, the Assigned royalty interests were recorded with no value. See Note 2, “Summary of Significant Accounting Policies — Real Estate and Royalty Interests Assigned Through the Declaration of Trust” for further information regarding the Assigned royalty interests. The Assigned royalty interests include 1/16th and 1/128th royalty interests.

Royalty Interest Transactions

For the year ended December 31, 2024, we completed two separate acquisitions of oil and gas royalty interests, acquiring a total of 11,596 NRA for an aggregate purchase price of approximately $395.5 million, net of post-closing adjustments, as further described below.

• In August 2024, we acquired oil and gas royalty interests in 4,106 NRA in Culberson County, Texas for a purchase price of approximately $120.3 million, net of post-closing adjustments, in an all-cash transaction. The acquisition was accounted for as an asset acquisition, and the allocation of the purchase price was $63.5 million to proved properties and $56.8 million to unproved properties. The acquisition was completed in conjunction with another entity that assigned a share of its interest in a purchase and sales agreement with an unaffiliated seller to the Company. Each party paid a pro-rata share of the purchase price and closing costs to the unaffiliated seller.

• In October 2024, we acquired oil and gas royalty interests in 7,490 NRA located primarily in the Midland Basin in Martin, Midland and other counties in Texas and New Mexico, with over 80% of the acquired interests adjacent to or overlapping existing TPL surface and royalty acreage for a purchase price of approximately $275.2 million, net of post-closing adjustments, in an all-cash transaction. The acquisition was accounted for as an asset acquisition, and the allocation of the purchase price was $57.4 million to proved properties and $217.8 million to unproved properties.

For the year ended December 31, 2023, we acquired oil and gas royalty interests in 119 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $3.6 million.

Depletion expense was $9.8 million, $2.0 million and $1.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

F-16

5. Real Estate Activity

As of December 31, 2024 and 2023, TPL owned the following land and real estate (in thousands, except number of acres):

						December 31, 2024												December 31, 2023
						Number of Acres						Net Book Value						Number of Acres						Net Book Value
Land (surface rights) (1)						798,643						$	—					798,999						$	—
Real estate acquired						74,493						143,178						69,447						130,024
Total real estate						873,136						$	143,178					868,446						$	130,024

*(1)*Real estate assigned through the Declaration of Trust.

The Assigned land held by TPL was recorded with no value at the time of acquisition. See Note 2, “Summary of Significant Accounting Policies — Real Estate and Royalty Interests Assigned Through the Declaration of Trust” for further information regarding the Assigned land. Real estate acquired includes land parcels which have either been acquired through foreclosure or transactions with third parties.

Land Acquisitions

For the year ended December 31, 2024, we acquired 4,120 acres through a business combination with a fair value of $12.1 million. See further discussion of the business combination in Note 3, “Assets Acquired in a Business Combination.” Additionally, we acquired 1,009 acres of land for an aggregate purchase price of $1.5 million for the year ended December 31, 2024.

For the year ended December 31, 2023, we acquired 12,141 acres of land for an aggregate purchase price of $20.0 million.

Land Sales

For the year ended December 31, 2024, we sold 439 acres of land for an aggregate sales price of $4.4 million. For the year ended December 31, 2023, we sold 18,061 acres of land for an aggregate sales price of $6.8 million. For the year ended December 31, 2022, we sold 6,392 acres of land for an aggregate sales price of approximately $9.7 million.

6. Property, Plant and Equipment

Property, plant and equipment, net consisted of the following as of December 31, 2024 and 2023 (in thousands):

						December 31, 2024						December 31, 2023
Property, plant and equipment, at cost:
Water service-related assets (1)						$	167,855					$	136,340
Furniture, fixtures and equipment						9,932						9,801
Other						598						598
Total property, plant and equipment, at cost						178,385						146,739
Less: accumulated depreciation						(55,807)						(57,152)
Property, plant and equipment, net						$	122,578					$	89,587

*(1)*Includes $17.2 million of assets acquired in a business combination. For further information, see Note 3, “Assets Acquired in a Business Combination.”

Depreciation expense was $13.6 million, $12.2 million and $14.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

F-17

7. Intangible Assets

Intangible assets, net consisted of the following as of December 31, 2024 and 2023 (in thousands):

						December 31, 2024						December 31, 2023
Intangible assets, at cost:
Saltwater disposal easement						$	17,557					$	17,557
Contracts acquired in a business combination (1)						15,700						—
Groundwater rights acquired						3,846						3,846
Total intangible assets, at cost (2)						37,103						21,403
Less: accumulated amortization						(1,915)						(378)
Intangible assets, net						$	35,188					$	21,025

*(1)*See further discussion in Note 3, “Assets Acquired in a Business Combination.”

*(2)*The remaining weighted average amortization period for total intangible assets was 11.8 years as of December 31, 2024.

Amortization of intangible assets was $1.5 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively. There was no amortization of intangible assets for the year ended December 31, 2022. The estimated future annual amortization expense of intangible assets for each of the next five years and thereafter is as follows (in thousands):

Year						Estimated Future Annual Amortization Expense
2025						$	2,342
2026						2,342
2027						2,342
2028						2,342
2029						2,342
2030 and thereafter						23,478

8. Pension and Other Postretirement Benefits

TPL has a defined contribution plan available to all eligible employees. Qualifying participants may receive a matching contribution based on the amount participants contribute to the plan up to 6% of their qualifying compensation. TPL contributed approximately $0.9 million, $0.8 million and $0.7 million to the defined contribution plan for the years ended December 31, 2024, 2023 and 2022, respectively.

The Restated Texas Pacific Land Corporation Employees’ Pension Plan (the “Pension Plan”) is a noncontributory defined benefit pension plan qualified under Section 401 of the Internal Revenue Code of 1986, as amended (the “Code”), and is available to all eligible employees who have completed one year of continuous service with TPL during which they completed at least 1,000 hours of service. The Pension Plan provides for a normal retirement benefit at age 65. Contributions to the Pension Plan reflect benefits accrued with respect to participants’ services to date, as well as the amount actuarially determined to pay lifetime benefits to participants and their beneficiaries upon retirement.

During 2024, the Company irrevocably transferred $3.4 million of the Pension Plan’s defined benefit obligations and related plan assets to a third-party insurance company in an annuity buyout. The transaction resulted in no changes to the benefits to be received by the retired and deferred vested participants. The Company recognized a realized non-cash settlement gain on the annuity buyout of $0.7 million. The gain is included in other income (expense) on the consolidated statement of income.

Effective December 31, 2024, the Pension Plan was frozen for benefit accruals and closed to new participants. This event resulted in a non-cash curtailment gain of $3.9 million for the year ended December 31, 2024. The gain is included in other income (expense) on the consolidated statement of income.

F-18

The following table sets forth the Pension Plan’s changes in benefit obligation, changes in fair value of assets, and funded status as of December 31, 2024 and 2023 using a measurement date of December 31 (in thousands):

			December 31, 2024						December 31, 2023
Change in projected benefits obligation:
Projected benefit obligation at beginning of year			$	10,553					$	8,177
Curtailment gain			(3,864)						—
Annuity buyout settlement			(3,439)						—
Service cost			1,848						1,537
Interest cost			503						423
Actuarial gain (loss)			(1,812)						658
Benefits paid			(222)						(242)
Projected benefit obligation at end of year			$	3,567					$	10,553
Change in Pension Plan assets:
Fair value of Pension Plan assets at beginning of year			$	14,201					$	11,650
Annuity buyout settlement			(3,439)						—
Actual return on Pension Plan assets			2,071						725
Contributions by employer			—						2,068
Benefits paid			(222)						(242)
Fair value of Pension Plan assets at end of year			12,611						14,201
Funded status at end of year			$	9,044					$	3,648

The projected Pension Plan benefit obligation as of December 31, 2024 was impacted by changes in assumptions used as of that date compared to assumptions used as of December 31, 2023. These changes included an increase in the discount rate from 5.00% as of December 31, 2023 to 5.75% as of December 31, 2024. The effect of the assumption changes was a decrease in the projected benefit obligation of approximately $1.9 million.

Amounts recognized on the consolidated balance sheets as of December 31, 2024 and 2023 consisted of (in thousands):

			December 31, 2024						December 31, 2023
Assets			$	9,044					$	3,648
Liabilities			—						—
			$	9,044					$	3,648

The Pension Plan asset is included in other assets on the consolidated balance sheets.

Amounts recognized in accumulated other comprehensive income on the consolidated balance sheets consisted of the following as of December 31, 2024 and 2023 (in thousands):

			December 31, 2024						December 31, 2023
Net actuarial gain			$	4,371					$	2,319
Amounts recognized in accumulated other comprehensive income, before taxes			4,371						2,319
Income tax expense			(918)						(488)
Amounts recognized in accumulated other comprehensive income, after taxes			$	3,453					$	1,831

F-19

Net periodic pension (benefit) cost for the years ended December 31, 2024, 2023 and 2022 included the following components (in thousands):

			Years Ended December 31,
			2024						2023						2022
Components of net periodic (benefit) cost:
Curtailment gain			$	(3,864)					$	—					$	—
Realized gain on settlement			(752)						—						—
Service cost			1,848						1,537						2,870
Interest cost			503						423						336
Expected return on Pension Plan assets			(964)						(807)						(741)
Recognized actuarial (gain) loss			(114)						(130)						41
Net periodic pension (benefit) cost			$	(3,343)					$	1,023					$	2,506

Service cost, a component of net periodic pension (benefit) cost, is reflected in our consolidated statements of income and total comprehensive income within salaries and related employee expenses. The other components of net periodic pension (benefit) cost are included in other income, net on the consolidated statements of income and total comprehensive income.

Other changes in Pension Plan assets and benefit obligations recognized in other comprehensive (income) loss for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Net actuarial (gain) loss			$	(2,919)					$	739					$	(4,422)
Recognized actuarial gain (loss)			866						130						(41)
Total recognized in other comprehensive (income) loss, before taxes			$	(2,053)					$	869					$	(4,463)
Total recognized in net benefit cost and other comprehensive (income) loss, before taxes			$	(5,396)					$	1,892					$	(1,958)

TPL reclassified $0.6 million (net of income tax benefit of $0.1 million) out of accumulated other comprehensive loss for net periodic pension (benefit) cost to other income, net for the year ended December 31, 2024, $0.5 million (net of income tax benefit of $0.1 million) for the year ended December 31, 2023 and $0.4 million (net of income tax benefit of $0.1 million) for the year ended December 31, 2022.

The following table summarizes the projected benefit obligation in excess of Pension Plan assets and Pension Plan assets in excess of accumulated benefit obligation as of December 31, 2024 and 2023 (in thousands):

			December 31, 2024						December 31, 2023
Projected benefit obligation in excess of Pension Plan assets:
Projected benefit obligation			$	3,567					$	10,553
Fair value of Pension Plan assets			$	12,611					$	14,201
Plan assets in excess of accumulated benefit obligation:
Accumulated benefit obligation			$	3,567					$	6,417
Fair value of Pension Plan assets			$	12,611					$	14,201

F-20

The following are weighted-average assumptions used to determine benefit obligations and costs as of December 31, 2024, 2023 and 2022:

			Years Ended December 31,
			2024						2023						2022
Weighted average assumptions used to determine benefit obligations as of December 31:
Discount rate			5.75		%				5.00		%				5.25		%
Rate of compensation increase			N/A (1)						7.29		%				7.29		%
Weighted average assumptions used to determine benefit costs for the years ended December 31:
Discount rate			5.00		%				5.25		%				3.00		%
Expected return on Pension Plan assets			7.00		%				7.00		%				7.00		%
Rate of compensation increase			7.29		%				7.29		%				7.29		%

*(1)*As the Pension plan was frozen effective December 31, 2024, this assumption is not applicable in the calculation of the benefit obligations as of December 31, 2024.

The expected return on Pension Plan assets assumption of 7.0% was selected by TPL based on historical real rates of return for the current asset mix and an assumption with respect to future inflation. The rate was determined based on a long-term allocation of about two-thirds fixed income and one-third equity securities; historical real rates of return of about 2.5% and 8.5% for fixed income and equity securities, respectively; and assuming a long-term inflation rate of 2.5%.

The Pension Plan has a formal investment policy statement. The Pension Plan’s investment objective is balanced income, with a moderate risk tolerance. This objective emphasizes current income through a 30.0% to 80.0% allocation to fixed income securities, complemented by a secondary consideration for capital appreciation through an equity allocation in the range of 20.0% to 60.0%. Diversification is achieved through investment in equities and bonds. The asset allocation is reviewed annually with respect to the target allocations and rebalancing adjustments and/or target allocation changes are made as appropriate. Our current funding policy is to maintain the Pension Plan’s fully funded status on an ERISA minimum funding basis.

The fair values of the Pension Plan assets (all considered Level 1 assets in the fair value hierarchy) are classified by major asset category as of December 31, 2024 and 2023, were as follows (in thousands):

			December 31, 2024						December 31, 2023
Cash and cash equivalents — money markets			$	574					$	1,179
Equities			8,600						8,182
Equity funds			1,049						401
Fixed income funds			—						1,000
Taxable bonds			2,388						3,439
Total			$	12,611					$	14,201

While no funding requirements are expected for 2025, management intends to fund the Pension Plan for 2025 to the extent of any minimum amount required under ERISA.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following 10-year period (in thousands):

F-21

Year ending December 31,						Amount
2025						$	32
2026						37
2027						43
2028						93
2029						93
2030 to 2034						611

9. Share-Based Compensation

The Company grants share-based compensation to employees under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”) and to its non-employee directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan (the “2021 Directors Plan” and, with the 2021 Plan, collectively referred to herein as the “Plans”). In conjunction with the three-for-one stock split effected on March 26, 2024, the Plans were adjusted to increase the authorized number of shares that may be issued under the Plans. As of December 31, 2024, share-based compensation granted under the Plans included RSAs, RSUs and PSUs. Currently, all awards granted under the Plans are entitled to receive dividends (which are accrued and distributed to award recipients upon vesting) or have dividend equivalent rights. Dividends and dividend equivalent rights are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited. RSUs granted under the 2021 Plan vest in one-third increments and PSUs granted under the 2021 Plan cliff vest at the end of three years if the applicable performance metrics are achieved (as discussed further below). RSAs granted prior to October 31, 2023 under the 2021 Directors Plan vested on the first anniversary of the award. Effective October 31, 2023, the 2021 Directors Plan was amended such that RSAs vest in full on the date of grant.

Incentive Plan for Employees

The maximum aggregate number of shares of Common Stock that may be issued under the 2021 Plan is 225,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of December 31, 2024, 136,238 shares of Common Stock remained available under the 2021 Plan for future grants.

The following table summarizes activity related to RSAs and RSUs under the 2021 Plan for the years ended December 31, 2024 and 2023:

						Years Ended December 31,
						2024																								2023
						Restricted Stock Awards (1)												Restricted Stock Units (2)												Restricted Stock Awards (1)												Restricted Stock Units (2)
						Number of RSAs						Weighted-Average Grant-Date Fair Value per Share						Number of RSUs						Weighted-Average Grant-Date Fair Value per Share						Number of RSAs						Weighted-Average Grant-Date Fair Value per Share						Number of RSUs						Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period						—						$	—					18,675						$	527					4,011						$	417					16,836						$	441
Granted						—						—						12,655						481						—						—						8,544						641
Vested (3)						—						—						(7,812)						507						(3,891)						417						(5,592)						441
Cancelled and forfeited						—						—						(306)						528						(120)						417						(1,113)						534
Nonvested at end of period						—						$	—					23,212						$	509					—						$	—					18,675						$	527

*(1)*As of December 31, 2023, all RSAs have vested or have been forfeited. No additional RSAs have been granted since December 29, 2021.

*(2)*RSUs vest in one-third increments over a three-year period.

F-22

*(3)*Of the 7,812 RSUs that vested during the year ended December 31, 2024, 2,948 RSUs were surrendered by employees to the Company upon vesting to settle tax withholdings. Of the 9,483 RSUs that vested during the year ended December 31, 2023, 3,495 RSUs were surrendered by employees to the Company upon vesting to settle tax withholding obligations.

The following table summarizes activity related to PSUs under the 2021 Plan for the years ended December 31, 2024 and 2023:

						Years Ended December 31,
						2024												2023
						Number of Target PSUs						Weighted-Average Grant-Date Fair Value per Share						Number of Target PSUs						Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period (1)						12,738						$	595					7,182						$	452
Granted (2)						8,340						538						5,556						781
Vested						—						—						—						—
Cancelled and forfeited						—						—						—						—
Nonvested at end of period						21,078						$	573					12,738						$	595

*(1)*Nonvested PSUs as of January 1, 2024 included 6,369 RTSR (as defined below) PSUs and 6,369 FCF (as defined below) PSUs. If the maximum amount of the performance metrics described in the applicable PSU agreements are achieved, the actual number of shares that will ultimately vest pursuant to the PSU agreements will exceed target PSUs by 100% (i.e., a collective 12,738 additional shares would be issued).

*(2)*The PSUs were granted on February 13, 2024 and include 4,170 RTSR PSUs (based on target) with a grant date fair value of $602 per share and 4,170 FCF PSUs (based on target) with a grant date fair value of $475 per share. If the maximum amount of the performance metrics described in the applicable PSU agreements are achieved, the actual number of shares that will ultimately vest pursuant to the PSU agreements will exceed target PSUs by 100% (i.e., a collective 8,340 additional shares would be issued).

Each PSU has a value equal to one share of Common Stock. The PSUs will vest three years after grant if certain performance metrics are met, as follows: 50% of the PSUs may be earned based on the Company’s relative total stockholder return (“RTSR”) over the applicable three-year measurement period compared to the SPDR® S&P® Oil & Gas Exploration & Production ETF (“XOP”) Index, and 50% of the PSUs may be earned based on the cumulative free cash flow per share (“FCF”) over the three-year vesting period. As the RTSR PSUs are market-based awards, their grant date fair value was determined using a Monte Carlo simulation model that uses the same input assumptions as the Black-Scholes model to determine the expected potential ranking of the Company against the XOP Index (i.e., the probability of satisfying the market condition defined in the awards). Expected volatility in the model was estimated based on the volatility of historical stock prices over a period matching the expected term of the awards. The risk-free interest rate was based on U.S. Treasury yield constant maturities for a term matching the expected term of the awards. The inputs for the Monte Carlo simulation model are designated as Level 2 within the fair value hierarchy.

Equity Plan for Non-Employee Directors

The maximum aggregate number of shares of Common Stock that may be issued under the 2021 Directors Plan is 30,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of December 31, 2024, 24,219 shares of Common Stock remained available under the 2021 Directors Plan for future grants.

F-23

The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the years ended December 31, 2024 and 2023:

																		Years Ended December 31,
																		2024																					2023
												Restricted Stock Awards																		Restricted Stock Awards
																		Number of RSAs						Weighted-Average Grant-Date Fair Value per Share																		Number of RSAs						Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period																		1,134						$	781																	2,097						$	427
Granted (1)																		2,160						524																		1,458						781
Vested																		(3,294)						612																		(2,421)						474
Cancelled and forfeited																		—						—																		—						—
Nonvested at end of period																		—						$	—																	1,134						$	781

*(1)*RSAs granted prior to October 31, 2023 vest on the first anniversary of the grant date and RSAs granted on or after October 31, 2023 vest in full on the date of grant.

Share-Based Compensation Expense

The following table summarizes our share-based compensation expense by line item in the consolidated statements of income (in thousands):

			Years Ended December 31,
			2024						2023						2022
Salaries and related employee expenses (employee awards)			$	11,364					$	9,124					$	7,583
General and administrative expenses (director awards)			1,134						1,219						849
Total share-based compensation expense (1)			$	12,498					$	10,343					$	8,432

*(1)*The Company recognized a tax benefit of $2.6 million, $2.2 million and $1.8 million related to share-based compensation for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024, there was $10.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under existing share-based plans expected to be recognized over a weighted average period of 1.0 year.

10. Other Income, Net

Other income, net, includes interest earned on our cash balances, and other miscellaneous income (expense). Miscellaneous income (expense) includes insurance proceeds and gains and losses on disposals of capital assets.

Other income, net for the years ended December 31, 2024, 2023 and 2022 was as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Other income, net:
Interest earned on cash and cash equivalents, net			$	32,140					$	28,630					$	6,207
Curtailment gain (1)			3,864						—						—
Realized gain on pension settlement (1)			752						—						—
Other employee pension costs			575						514						363
Miscellaneous other income (expense), net (2)			2,352						2,364						(22)
Total other income, net			$	39,683					$	31,508					$	6,548

F-24

*(1)*See Note 8, “Pension and Other Postretirement Benefits” for discussion of curtailment gain and realized gain on pension settlement.

*(2)*For the year ended December 31, 2024, miscellaneous income (expense), net includes $1.9 million of proceeds from a settlement with a title company regarding a defect in title to property acquired in a prior year. For the year ended December 31, 2023, miscellaneous other income (expense), net includes $1.4 million of interest and damages resulting from an arbitration settlement with an operator. See Note 13, “Commitments and Contingencies” for further information regarding the arbitration.

11. Income Taxes

The income tax provision charged to operations for the years ended December 31, 2024, 2023 and 2022 was as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Current:
U.S. Federal			$	116,323					$	106,721					$	117,395
State and local			3,934						3,796						3,835
Current income tax expense			120,257						110,517						121,230
Deferred expense			4,604						1,399						1,263
Total income tax expense			$	124,861					$	111,916					$	122,493

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21% for the years ended December 31, 2024, 2023 and 2022 to income before Federal income taxes as a result of the following (in thousands):

			Years Ended December 31,
			2024						2023						2022
Computed tax expense at the statutory rate of 21%			$	121,552					$	108,688					$	119,460
Reduction in income taxes resulting from:
State taxes			3,182						3,439						3,045
Executive compensation			1,803						1,117						1,146
Research and development credit			(850)						—						—
Statutory depletion			(653)						(682)						(823)
Prior year tax adjustments			75						(305)						(13)
Correction of historical tax depletion			—						—						805
Estimated penalties and interest			—						—						(763)
Other, net			(248)						(341)						(364)
Total income tax expense			$	124,861					$	111,916					$	122,493
Effective tax rate			21.6		%				21.6		%				21.5		%

F-25

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):

			December 31, 2024						December 31, 2023
Unearned revenue			$	5,879					$	6,717
Stock compensation			2,677						2,097
Other			533						760
Total deferred tax assets			9,089						9,574
Property, plant and equipment			20,723						17,532
Real estate and royalty interests			33,581						33,215
Pension plan asset			1,901						767
Other, net			285						425
Total deferred tax liabilities			56,490						51,939
Deferred taxes payable			$	(47,401)					$	(42,365)

TPL is subject to taxation in the United States, Texas and New Mexico. TPL is no longer subject to U.S. Federal income tax examination by tax authorities for tax years before 2021.

12. Earnings Per Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares outstanding during the period. Diluted EPS is computed based upon the weighted average number of shares outstanding during the period plus unvested RSAs and other nonvested awards granted pursuant to our incentive and equity compensation plans. The computation of diluted EPS reflects the potential dilution that could occur if all outstanding awards under the incentive and equity compensation plans were converted into shares of Common Stock or resulted in the issuance of shares of Common Stock that would then share in the earnings of the Company. The number of dilutive securities is computed using the treasury stock method.

The following table sets forth the computation of EPS for the years ended December 31, 2024, 2023 and 2022 (in thousands, except number of shares and per share data):

			Years Ended December 31,
			2024						2023						2022
Net income			$	453,960					$	405,645					$	446,362
Basic earnings per share:
Weighted average shares outstanding for basic earnings per share			22,986,197						23,044,305						23,165,871
Basic earnings per share			$	19.75					$	17.60					$	19.27
Diluted earnings per share:
Weighted average shares outstanding for basic earnings per share			22,986,197						23,044,305						23,165,871
Effect of dilutive securities:
Stock-based incentive plan			33,554						15,540						14,556
Weighted average shares outstanding for diluted earnings per share			23,019,751						23,059,845						23,180,427
Diluted earnings per share			$	19.72					$	17.59					$	19.26

RSAs are included in the number of shares of Common Stock issued and outstanding, but omitted from the basic earnings per share calculation until such time as the RSAs vest. Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the year ended December 31, 2023. There were no dilutive securities for the year ended December 31, 2024.

F-26

13. Commitments and Contingencies

Litigation

Management is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Company’s financial condition, results of operations or liquidity as of December 31, 2024, other than as described below.

Prior to January 1, 2022, ad valorem taxes with respect to our historical royalty interests were paid directly by third parties pursuant to an existing arrangement. After the completion of our Corporate Reorganization, we received notice from a third party that it no longer intended to pay the ad valorem taxes related to such historical royalty interests. In order to protect the historical royalty interests from any potential tax liens for non-payment of ad valorem taxes, we have accrued and/or paid such ad valorem taxes since January 1, 2022. While we intend to seek reimbursement from the third party for such taxes, we are unable to estimate the amount and/or likelihood of such reimbursement, and accordingly, no loss recovery receivable has been recorded as of December 31, 2024.

Lease Commitments

As of December 31, 2024 and 2023, we have recorded right-of-use assets of $1.2 million and $1.9 million, respectively, and lease liabilities for $1.3 million and $2.0 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. The office lease agreements require monthly rent payments and expire in December 2025 and July 2027, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost was $0.9 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively.

While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations. There are no residual value guarantees in our lease commitments. The weighted-average lease term for our operating lease liabilities is approximately 23 months. The weighted average discount rate of our operating leases is 4.7%.

Future minimum lease payments were as follows as of December 31, 2024 (in thousands):

Year ending December 31,						Amount
2025						$	826
2026						316
2027						187
Total lease payments						1,329
Less: imputed interest						(79)
Total operating lease liabilities						$	1,250

Rent expense for these lease agreements amounted to approximately $0.8 million for each of the years ended December 31, 2024, 2023 and 2022.

14. Equity

Increase in Authorized Shares of Common Stock

As of December 31, 2023, the Company had authorized shares consisting of 1,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”), and 7,756,156 shares of Common Stock, par value $0.01 per share. On March 1, 2024, we filed a Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware, pursuant to which the Certificate of Incorporation was amended and restated to provide that the total number of authorized shares of capital stock of the Company be increased to 47,536,936 shares of capital stock, consisting of 1,000,000 shares of Preferred Stock and 46,536,936 shares of Common Stock.

F-27

Common Stock Split

On March 26, 2024, we effected a three-for-one stock split in the form of a stock dividend of two additional shares of Common Stock for every share of Common Stock outstanding to stockholders of record as of March 18, 2024. All share, RSA, RSU, PSU and per share information has been retroactively adjusted to reflect the stock split. The shares of Common Stock retained a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock.”

Dividends

For the year ended December 31, 2024, we paid total regular cash dividends of $5.11 per share of Common Stock and special dividends of $10.00 per share of Common Stock. For the year ended December 31, 2023, we paid total regular cash dividends of $4.33 per share of Common Stock.

Stock Repurchase Program

On November 1, 2022, our Board approved a stock repurchase program, which became effective January 1, 2023, to purchase up to an aggregate of $250.0 million of our outstanding Common Stock. The Company opportunistically repurchases stock under the stock repurchase program with funds generated by cash from operations. This stock repurchase program may be suspended from time to time, modified, extended or discontinued by the Board at any time. Purchases under the stock repurchase program may be made through a combination of open market repurchases in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, and/or other transactions at the Company’s discretion, including under a Rule 10b5-1 trading plan implemented by the Company, and are subject to market conditions, applicable legal requirements and other factors.

For the year ended December 31, 2024 and 2023, we repurchased shares of our Common Stock in amounts totaling $29.2 million and $42.4 million, respectively.

15. Business Segment Reporting

During the periods presented, we reported our financial performance based on the following reportable segments: Land and Resource Management and Water Services and Operations. We eliminate inter-segment revenues and expenses, if any, upon consolidation. There were no inter-segment revenues for the years ended December 31, 2024, 2023 and 2022.

The Land and Resource Management segment encompasses the business of managing our approximately 873,000 surface acres of land and our approximately 207,000 NRA of oil and gas royalty interests, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases, and land and material sales.

The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment primarily consist of revenue generated from sales of sourced and treated water as well as revenue from produced water royalties.

F-28

The following table presents segment financial results for Land and Resource Management (“LRM”) and Water Service and Operations (“WSO”) and the reconciliation to consolidated (“Cons”) financial results for the years ended December 31, 2024, 2023 and 2022 (in thousands):

			Years Ended December 31,
			2024																		2023																		2022
			LRM						WSO						Cons						LRM						WSO						Cons						LRM						WSO						Cons
Revenues:
Oil and gas royalties			$	373,331					$	—					$	373,331					$	357,394					$	—					$	357,394					$	452,434					$	—					$	452,434
Water sales			—						150,724						150,724						—						112,203						112,203						—						84,725						84,725
Produced water royalties			—						104,123						104,123						—						84,260						84,260						—						72,234						72,234
Easements and other surface-related income			63,074						10,183						73,257						67,905						3,027						70,932						44,860						3,488						48,348
Land sales			4,388						—						4,388						6,806						—						6,806						9,681						—						9,681
Total revenues			440,793						265,030						705,823						432,105						199,490						631,595						506,975						160,447						667,422
Expenses:
Salaries and related employee expenses			27,493						26,128						53,621						21,945						21,439						43,384						22,054						19,348						41,402
Water service-related expenses			—						46,124						46,124						—						33,566						33,566						—						17,463						17,463
General and administrative expenses			25,531						8,952						34,483						39,078						7,372						46,450						14,978						7,042						22,020
Depreciation, depletion and amortization			10,968						14,194						25,162						3,073						11,684						14,757						2,234						13,142						15,376
Ad valorem and other taxes			7,257						38						7,295						7,382						3						7,385						8,848						6						8,854
Total operating expenses			71,249						95,436						166,685						71,478						74,064						145,542						48,114						57,001						105,115
Operating income			369,544						169,594						539,138						360,627						125,426						486,053						458,861						103,446						562,307
Other income, net			31,707						7,976						39,683						30,384						1,124						31,508						6,491						57						6,548
Income before income taxes			401,251						177,570						578,821						391,011						126,550						517,561						465,352						103,503						568,855
Income tax expense			86,350						38,511						124,861						84,305						27,611						111,916						100,311						22,182						122,493
Net income			$	314,901					$	139,059					$	453,960					$	306,706					$	98,939					$	405,645					$	365,041					$	81,321					$	446,362

Interest income by segment is included in other income, net in the table above.

The following tables present capital expenditures, total assets, and property, plant and equipment, net by segment (in thousands):

			Years Ended December 31,
			2024						2023						2022
Capital Expenditures:
Land and resource management			$	279					$	241					$	393
Water services and operations			29,144						15,190						18,574
Total capital expenditures			$	29,423					$	15,431					$	18,967

F-29

			December 31, 2024						December 31, 2023
Assets:
Land and resource management			$	1,024,188					$	975,136
Water services and operations			223,832						181,262
Total consolidated assets			$	1,248,020					$	1,156,398
Property, plant and equipment, net:
Land and resource management			$	4,805					$	5,322
Water services and operations			117,773						84,265
Total consolidated property, plant and equipment, net			$	122,578					$	89,587

16. Subsequent Events

We evaluated events that occurred after the balance sheet date through the date these financial statements were issued, and the following events that met recognition or disclosure criteria were identified:

Dividends Declared

On February 18, 2025, our Board declared a quarterly cash dividend of $1.60 per share, payable on March 17, 2025 to stockholders of record at the close of business on March 3, 2025.

17. Supplemental Oil and Gas Reserve Information (Unaudited)

The Company’s oil and natural gas reserves are attributable solely to properties within the United States.

Our Share of Oil and Gas Produced

We measure our share of oil and gas produced in barrels of oil equivalent (“Boe”). One Boe equals one barrel of crude oil, condensate, NGLs (natural gas liquids) or approximately 6,000 cubic feet of gas. For the years ended December 31, 2024, 2023 and 2022, our share of oil and gas produced was approximately 26.8, 23.5 and 21.3 thousand Boe per day, respectively.

Capitalized Oil and Natural Gas Costs

Aggregate capitalized costs related to oil and natural gas production activities with applicable accumulated depletion are as follows (in thousands):

			December 31, 2024						December 31, 2023
Oil, natural gas and NGL interests
Proved			$	150,984					$	29,222
Unproved			296,087						22,272
Total oil, natural gas and NGL interests			447,071						51,494
Accumulated depletion			(14,670)						(4,885)
Net oil, natural gas and NGL interests capitalized			$	432,401					$	46,609

The Company owns approximately 207,000 NRA as of December 31, 2024. Of our total NRA, approximately 191,000 was acquired in 1888 and was recorded with no value. The remaining approximately 16,000 NRA have been acquired over recent years and are included in royalty interests acquired on the consolidated balance sheet. See additional discussion in Note 4, “Oil and Gas Royalty Interests.”

F-30

Costs Incurred in Oil and Natural Gas Activities

Costs incurred in oil, natural gas and NGL acquisition and development activities are as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Acquisition costs
Proved			$	121,018					$	3,566					$	1,258
Unproved			274,559						—						404
Total			$	395,577					$	3,566					$	1,662

Results of Operations from Oil and Natural Gas Producing Activities

The following table sets forth the revenues and expenses related to the production and sale of oil and natural gas (in thousands). It does not include any general and administrative costs and, therefore, is not necessarily indicative of the net operating results of the Company oil and natural gas operations.

			Years Ended December 31,
			2024						2023						2022
Oil and natural gas revenues (1)			$	373,331					$	357,394					$	452,434
Ad valorem taxes			(6,952)						(7,200)						(8,734)
Depletion expense			(9,785)						(1,982)						(1,027)
Income tax expense			(76,917)						(75,284)						(95,307)
Results of operations from oil and natural gas			$	279,677					$	272,928					$	347,366

*(1)*Oil and natural gas revenues are reported net of production taxes.

F-31

Analysis of Changes in Oil and Natural Gas PDP Reserves

Proved developed producing (“PDP”) reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, or in which the cost of the required equipment is relatively minor compared to the cost of a new well. The Company’s oil and gas properties are located in the Permian Basin.

The PDP reserve estimates and their associated future net cash flows were prepared by Ryder Scott Company, L.P. (“Ryder Scott”), an independent third-party petroleum engineering firm, as of December 31, 2024. The reserve report covers only PDP reserves and does not include undeveloped minerals or royalties. The oil and natural gas PDP reserve estimates represent the Company’s net ownership interest in its proved properties and were estimated in accordance with guidelines established by the SEC. Since reserve studies were not completed in prior periods and the comparative information herein is based on the reserve report as of December 31, 2024, the Company rolled volumes backward from 2024 to 2021 without revisions in prior estimates for these time frames.

The following table presents changes in estimated PDP reserves and was prepared in accordance with the rules and regulations of the SEC:

			Crude Oil and Condensate (MBbls)****(1)						Natural Gas (MMcf)****(1)						Natural Gas Liquids (MBbls)****(1)						Total (MBoe)****(1)
Net PDP reserves at January 1, 2022			14,190						88,579						13,579						42,533
Extensions and discoveries			5,427						24,441						3,949						13,449
Acquisition of reserves			17						62						9						37
Production			(3,401)						(13,086)						(2,208)						(7,791)
Net PDP reserves at December 31, 2022			16,233						99,996						15,329						48,228
Extensions and discoveries			6,858						31,196						5,010						17,067
Acquisition of reserves			89						664						102						302
Production			(3,701)						(14,528)						(2,453)						(8,575)
Net PDP reserves at December 31, 2023			19,479						117,328						17,988						57,022
Extensions and discoveries			5,587						23,483						3,824						13,324
Acquisition of reserves			2,378						13,317						2,042						6,639
Production			(4,118)						(17,074)						(2,841)						(9,804)
Net PDP reserves at December 31, 2024			23,326						137,054						21,013						67,181
Net PDP reserves
December 31, 2022			16,233						99,996						15,329						48,228
December 31, 2023			19,479						117,328						17,988						57,022
December 31, 2024			23,326						137,054						21,013						67,181

*(1)*Commonly used definitions in the oil and gas industry not previously defined: MBbls represents one thousand barrels of crude oil, condensate or NGLs. MMcf represents one million cubic feet of natural gas. MBoe represents one thousand Boe.

F-32

Standardized Measure of Oil and Gas

The standardized measure of discounted future net cash flows before income taxes related to the oil and natural gas PDP reserves of the interests is as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Future cash inflows			$	2,566,234					$	2,150,816					$	2,662,176
Future production costs			(191,879)						(157,805)						(205,483)
Future income taxes			(423,633)						(422,629)						(528,926)
Future net cash flows			1,950,722						1,570,382						1,927,767
Less: 10% annual discount			(942,086)						(748,864)						(932,146)
Standard measure of discounted future net cash flows			$	1,008,636					$	821,518					$	995,621

Reserve estimates and future cash flows are based on the average market prices for sales of oil and natural gas adjusted for basis differentials, on the first calendar day of each month during the year. The average prices used for 2024, 2023 and 2022 were $76.32, $78.21 and $94.14 per barrel for crude oil and $2.13, $2.64 and $6.36 per Mcf for natural gas, respectively.

Future production costs are computed primarily by the Company’s petroleum engineers by estimating the expenditures to be incurred in producing the oil and gas PDP reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. A discount factor of 10% was used to reflect the timing of future net cash flows. The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, and a discount factor more representative of the time value of money and the risks inherent in oil and natural gas reserve estimates.

Changes in Standardized Measure of Oil and Gas

Changes in the standardized measure of discounted future net cash flows before income taxes related to the oil and natural gas PDP reserves of the interests are as follows (in thousands):

			Years Ended December 31,
			2024						2023						2022
Standardized measure - beginning of year			$	821,518					$	995,621					$	616,919
Sales, net of production costs			(366,379)						(350,194)						(443,700)
Net changes of prices and production costs related to future production			10,003						(426,381)						401,411
Extensions and discoveries			330,825						441,343						486,327
Acquisition of reserves			125,918						5,827						1,259
Net change in income taxes			1,424						51,996						(103,905)
Accretion of discount			104,269						126,879						78,618
Changes in timing and other			(18,942)						(23,573)						(41,308)
Standardized measure - end of year			$	1,008,636					$	821,518					$	995,621

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F-33