Item 1. Financial Statements

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share amounts)

(Unaudited)

			March 31, 2024						December 31, 2023
ASSETS
Cash and cash equivalents			$	837,100					$	725,169
Accounts receivable and accrued receivables, net			121,807						128,971
Prepaid expenses and other current assets			4,921						2,944
Tax like-kind exchange escrow			—						5,380
Total current assets			963,828						862,464
Real estate acquired			129,774						130,024
Property, plant and equipment, net			92,200						89,587
Royalty interests acquired, net			46,154						46,609
Intangible assets, net			20,741						21,025
Real estate and royalty interests assigned through the Declaration of Trust, no value assigned:
Land (surface rights)			—						—
1/16th nonparticipating perpetual royalty interest			—						—
1/128th nonparticipating perpetual royalty interest			—						—
Other assets			6,473						6,689
Total assets			$	1,259,170					$	1,156,398
LIABILITIES AND EQUITY
Accounts payable and accrued expenses			$	23,322					$	22,501
Ad valorem and other taxes payable			4,180						10,761
Income taxes payable			36,603						4,795
Unearned revenue			6,766						6,330
Total current liabilities			70,871						44,387
Deferred taxes payable			42,034						42,365
Unearned revenue - noncurrent			22,717						25,006
Accrued liabilities - noncurrent			1,099						1,444
Total liabilities			136,721						113,202
Commitments and contingencies			—						—
Equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of March 31, 2024 and December 31, 2023			—						—
Common stock, $0.01 par value; 46,536,936 and 7,756,156 shares authorized as of March 31, 2024 and December 31, 2023, respectively, and 22,993,479 and 23,007,681 (as adjusted for stock split) outstanding as of March 31, 2024 and December 31, 2023, respectively			231						78
Treasury stock, at cost; 92,597 and 86,929 shares as of March 31, 2024 and December 31, 2023, respectively			(151,952)						(144,998)
Additional paid-in capital			13,163						14,613
Accumulated other comprehensive income			1,810						1,831
Retained earnings			1,259,197						1,171,672
Total equity			1,122,449						1,043,196
Total liabilities and equity			$	1,259,170					$	1,156,398

See accompanying notes to condensed consolidated financial statements.

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND TOTAL COMPREHENSIVE INCOME

(in thousands, except shares and per share amounts)

(Unaudited)

			Three Months Ended March 31,
			2024						2023
Revenues:
Oil and gas royalties			$	92,120					$	89,130
Water sales			37,126						21,729
Produced water royalties			23,006						20,134
Easements and other surface-related income			20,646						14,969
Land sales			1,244						400
Total revenues			174,142						146,362
Expenses:
Salaries and related employee expenses			12,461						10,593
Water service-related expenses			10,212						5,656
General and administrative expenses			4,924						3,552
Legal and professional fees			4,057						16,628
Ad valorem and other taxes			2,357						1,574
Land sales expenses			250						3
Depreciation, depletion and amortization			3,840						3,404
Total operating expenses			38,101						41,410
Operating income			136,041						104,952
Other income, net			9,943						5,389
Income before income taxes			145,984						110,341
Income tax expense			31,567						23,773
Net income			$	114,417					$	86,568
Other comprehensive loss — periodic pension costs, net of income taxes of $6 for the three months ended March 31, 2024 and 2023			(21)						(25)
Total comprehensive income			$	114,396					$	86,543
Net income per share of common stock
Basic			$	4.97					$	3.75
Diluted			$	4.97					$	3.75
Weighted average number of shares of common stock outstanding
Basic			23,003,001						23,079,251
Diluted			23,020,249						23,095,193
Cash dividends per share of common stock			$	1.17					$	1.08

See accompanying notes to condensed consolidated financial statements.

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

			Three Months Ended March 31,
			2024						2023
Cash flows from operating activities:
Net income			$	114,417					$	86,568
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			3,840						3,404
Share-based compensation			3,354						2,473
Deferred taxes			(331)						(306)
Changes in operating assets and liabilities:
Operating assets, excluding income taxes			5,602						(2,076)
Operating liabilities, excluding income taxes			(11,446)						640
Income taxes payable			31,808						19,263
Prepaid income taxes			—						4,809
Cash provided by operating activities			147,244						114,775
Cash flows from investing activities:
Purchase of fixed assets			(2,238)						(1,749)
Proceeds from sale of fixed assets			—						5
Cash used in investing activities			(2,238)						(1,744)
Cash flows from financing activities:
Dividends paid			(26,907)						(25,061)
Settlement of common stock repurchases			(10,341)						(6,837)
Shares exchanged for tax withholdings			(1,207)						(939)
Cash used in financing activities			(38,455)						(32,837)
Net increase in cash, cash equivalents and restricted cash			106,551						80,194
Cash, cash equivalents and restricted cash, beginning of period			730,549						517,182
Cash, cash equivalents and restricted cash, end of period			$	837,100					$	597,376
Supplemental disclosure of cash flow information:
Income taxes paid			$	—					$	—
Supplemental non-cash investing and financing information:
Increase in accounts payable related to capital expenditures			$	3,424					$	2,024

See accompanying notes to condensed consolidated financial statements.

TEXAS PACIFIC LAND CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business Segments

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 868,000 surface acres of land in West Texas, 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 4,000 additional net royalty acres (normalized to 1/8th) (“NRA”) for a collective total of approximately 195,000 NRA located in the western part of Texas.

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

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 (“Common Stock”). 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.

Common Stock Split

On March 26, 2024, we effected a three-for-one stock split in the form of a stock dividend of two shares of Common Stock for every share of Common Stock outstanding to stockholders of record as of March 18, 2024. All shares, stock awards, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance stock units (“PSUs”) and per share information have been retroactively adjusted to reflect the stock split. The three-for-one stock split was not applied to shares held as treasury stock. The shares of Common Stock retain 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.”

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. The condensed consolidated financial statements herein include all adjustments which are, in the opinion of management, necessary to fairly state the financial position of the Company as of March 31, 2024 and the results of its operations and its cash flows for the three months ended March 31, 2024 and 2023, respectively. Such adjustments are of a normal nature and all intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, and accordingly these interim financial statements and footnotes should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2023. The results for the interim periods shown in this report are not necessarily indicative of future financial results.

We operate our business in two segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. 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 13, “Business Segment Reporting” for further information regarding our segments.

2. Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. 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.

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 sum to the total of the same such amounts shown in the consolidated statements of cash flows as of March 31, 2024 and December 31, 2023 (in thousands):

						March 31, 2024						December 31, 2023
Cash and cash equivalents						$	837,100					$	725,169
Tax like-kind exchange escrow						—						5,380
Total cash, cash equivalents and restricted cash shown in the statement of cash flows						$	837,100					$	730,549

3. Real Estate Activity

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

						March 31, 2024												December 31, 2023
						Number of Acres						Net Book Value						Number of Acres						Net Book Value
Land (surface rights) (1)						798,958						$	—					798,999						$	—
Real estate acquired						69,447						129,774						69,447						130,024
Total real estate situated in Texas						868,405						$	129,774					868,446						$	130,024

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

For the three months ended March 31, 2024, we sold 41 acres of land in Texas for an aggregate sales price of $1.2 million. There were no significant land sales for the three months ended March 31, 2023. There were no land acquisitions for the three months ended March 31, 2024 or 2023.

4. Property, Plant and Equipment

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

			March 31, 2024						December 31, 2023
Property, plant and equipment, at cost:
Water service-related assets			$	141,920					$	136,340
Furniture, fixtures and equipment			9,884						9,801
Other			598						598
Total property, plant and equipment, at cost			152,402						146,739
Less: accumulated depreciation			(60,202)						(57,152)
Property, plant and equipment, net			$	92,200					$	89,587

Depreciation expense was $3.1 million and $3.0 million for the three months ended March 31, 2024 and 2023, respectively.

5. Oil and Gas Royalty Interests

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

						March 31, 2024						December 31, 2023
Oil and gas royalty interests:
1/16th nonparticipating perpetual royalty interests (1)						$	—					$	—
1/128th nonparticipating perpetual royalty interests (1)						—						—
Royalty interests acquired, at cost						51,494						51,494
Total royalty interests						51,494						51,494
Less: accumulated depletion						(5,340)						(4,885)
Royalty interests, net						$	46,154					$	46,609

*(1)*Royalty interests assigned through the Declaration of Trust.

There were no sales or acquisitions of oil and gas royalty interests during the three months ended March 31, 2024 or 2023.

Depletion expense was $0.5 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively.

6. Intangible Assets

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

			March 31, 2024						December 31, 2023
Intangible assets, at cost:
Saltwater disposal easement			$	17,557					$	17,557
Groundwater rights acquired			3,846						3,846
Total intangible assets, at cost (1)			21,403						21,403
Less: accumulated amortization			(662)						(378)
Intangible assets, net			$	20,741					$	21,025

*(1)*The remaining weighted average amortization period for total intangible assets was 18.5 years as of March 31, 2024.

There were no intangible asset acquisitions for the three months ended March 31, 2024 or 2023.

Amortization of intangible assets was $0.3 million for the three months ended March 31, 2024. There was no amortization of intangible assets for the three months ended March 31, 2023. The estimated future annual amortization expense of intangible assets is $0.9 million for the remainder of 2024, $1.1 million for each year of 2025 through 2029, and $14.3 million thereafter.

7. 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, 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 March 31, 2024, share-based compensation granted under the Plans has included these award types: stock awards, 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 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 stock awards granted vest in full on the date of grant.

Incentive Plan for Employees

The maximum aggregate number of shares of the Company’s 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, treasury shares, or shares reacquired by the Company in any manner. As of March 31, 2024, 136,596 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 three months ended March 31, 2024 and 2023:

						Three Months Ended March 31,
						2024																								2023
						Restricted Stock Awards												Restricted Stock Units												Restricted Stock Awards												Restricted Stock Units
						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 (1)						—						$	—					18,675						$	527					4,011						$	417					16,836						$	441
Granted (2)						—						—						12,297						478						—						—						8,544						641
Vested (3)						—						—						(6,213)						484						—						—						(3,810)						368
Cancelled and forfeited						—						—						(306)						528						—						—						—						—
Nonvested at end of period						—						$	—					24,453						$	514					4,011						$	417					21,570						$	533

*(1)*RSAs were granted on December 29, 2021: 5,979 shares vested on December 29, 2022, 120 shares were forfeited during 2023 and 3,891 shares vested on December 29, 2023.

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

*(3)*Of the 6,213 shares that vested during the three months ended March 31, 2024, 2,469 shares were surrendered upon vesting by employees to the Company to settle tax withholdings.

The following table summarizes activity related to PSUs for the three months ended March 31, 2024 and 2023:

						Three Months Ended March 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 include 6,369 RTSR (as defined below) PSUs and 6,369 FCF (as defined below) PSUs. If the maximum performance metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e. a collective 12,738 additional units 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 performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 8,340 additional units 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 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 PSU is a market-based award, its 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 award. Expected volatility in the model was estimated based on the volatility of historical stock prices over a period matching the expected term of the award. The risk-free interest rate was based on U.S. Treasury yield constant maturities for a term matching the expected term of the award.

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, treasury shares, or shares reacquired by the Company in any manner. As of March 31, 2024, 24,219 shares of Common Stock remained available under the 2021 Directors Plan for future grants.

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

						Three Months Ended March 31,
						2024												2023
						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)						—						—						1,458						781
Vested						(1,134)						781						(1,785)						416
Cancelled and forfeited						—						—						—						—
Nonvested at end of period						—						$	—					1,770						$	730

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

In January 2024, the Company granted a total of 2,160 shares of Common Stock with a grant date fair value of $524 per share, the closing price of its Common Stock on the date of grant, to the members of the Company’s board of directors (the “Board”). The stock awards were vested 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 condensed consolidated statements of income (in thousands):

			Three Months Ended March 31,
			2024						2023
Salaries and related employee expenses (employee awards)			$	2,220					$	2,156
General and administrative expenses (director awards)			1,134						317
Total share-based compensation expense (1)			$	3,354					$	2,473

*(1)*The Company recognized a tax benefit of $0.7 million and $0.5 million related to share-based compensation for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was $16.6 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 1.7 years.

8. Other Income, Net

Other income, net, includes interest earned on our cash balances, other employee pension costs, 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 three months ended March 31, 2024 and 2023 was as follows (in thousands):

			Three Months Ended March 31,
			2024						2023
Other income, net:
Interest earned on cash and cash equivalents, net			$	9,801					$	5,258
Other employee pension costs			142						128
Miscellaneous other income (expense), net			—						3
Total other income, net			$	9,943					$	5,389

9. Income Taxes

The calculation of our effective tax rate was as follows for the three months ended March 31, 2024 and 2023 (in thousands, except percentages):

			Three Months Ended March 31,
			2024						2023
Income before income taxes			$	145,984					$	110,341
Income tax expense			$	31,567					$	23,773
Effective tax rate			21.6		%				21.5		%

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items.

10. 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 restricted stock and other unvested 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 three months ended March 31, 2024 and 2023 (in thousands, except number of shares and per share data):

			Three Months Ended March 31,
			2024						2023
Net income			$	114,417					$	86,568
Basic earnings per share:
Weighted average shares outstanding for basic earnings per share			23,003,001						23,079,251
Basic earnings per share			$	4.97					$	3.75
Diluted earnings per share:
Weighted average shares outstanding for basic earnings per share			23,003,001						23,079,251
Effect of dilutive securities:
Incentive and equity compensation plans			17,248						15,942
Weighted average shares outstanding for diluted earnings per share			23,020,249						23,095,193
Diluted earnings per share			$	4.97					$	3.75

Restricted stock, if any, is included in the number of shares of Common Stock issued and outstanding, but omitted from the basic EPS calculation until such time as the shares of restricted stock vest. Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the three months ended March 31, 2024 and 2023.

11. 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 March 31, 2024.

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 March 31, 2024.

12. Changes in Equity

The following tables present changes in our equity for the three months ended March 31, 2024 and 2023 (in thousands, except shares and per share amounts):

			Common Stock																		Treasury Stock						Additional Paid-in Capital						Accum. Other Comp. Income (Loss)						Retained Earnings						Total Equity
			Shares						Amount
For the three months ended March 31, 2024:
Balances as of December 31, 2023			23,007,681						$	78											$	(144,998)					$	14,613					$	1,831					$	1,171,672					$	1,043,196
Net income			—						—												—						—						—						114,417						114,417
Issuance of common stock related to stock split			—						153												—						(153)						—						—						—
Dividends paid — $1.17 per share of common stock			—						—												—						—						—						(26,907)						(26,907)
Share-based compensation, net of forfeitures			8,373						—												4,698						(1,297)						—						15						3,416
Repurchases of common stock and related excise taxes			(20,106)						—												(10,445)						—						—						—						(10,445)
Shares exchanged for tax withholdings			(2,469)						—												(1,207)						—						—						—						(1,207)
Periodic pension costs, net of income taxes of $6			—						—												—						—						(21)						—						(21)
Balances as of March 31, 2024			22,993,479						$	231											$	(151,952)					$	13,163					$	1,810					$	1,259,197					$	1,122,449

			Common Stock																		Treasury Stock						Additional Paid-in Capital						Accum. Other Comp. Income (Loss)						Retained Earnings						Total Equity
			Shares						Amount
For the three months ended March 31, 2023:
Balances as of December 31, 2022			23,087,037						$	78											$	(104,139)					$	8,293					$	2,516					$	866,139					$	772,887
Net income			—						—												—						—						—						86,568						86,568
Dividends paid — $1.08 per share of common stock			—						—												—						—						—						(25,061)						(25,061)
Share-based compensation, net of forfeitures			5,268						—												3,033						(560)						—						(103)						2,370
Repurchases of common stock and related excise taxes			(10,881)						—												(6,749)						—						—						—						(6,749)
Shares exchanged for tax withholdings			(1,464)						—												(939)						—						—						—						(939)
Periodic pension costs, net of income taxes of $6			—						—												—						—						(25)						—						(25)
Balances as of March 31, 2023			23,079,960						$	78											$	(108,794)					$	7,733					$	2,491					$	927,543					$	829,051

Increase in Authorized Shares of Common Stock

On March 1, 2024, the Company increased its authorized shares of capital stock to 47,536,936 consisting of 1,000,000 shares of Preferred Stock and 46,536,936 shares of Common Stock. For further information see Note 1, “Organization and Description of Business Segments.”

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 million of our outstanding Common Stock.

The Company repurchases stock under the stock repurchase program opportunistically 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 will be subject to market conditions, applicable legal requirements and other factors.

For the three months ended March 31, 2024 and 2023, we repurchased shares of our Common Stock in amounts totaling $10.3 million and $6.7 million, respectively.

13. Business Segment Reporting

During the periods presented, we reported our financial performance based on the following segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of our strategies and objectives and provide a framework for timely and rational allocation of resources within businesses. We eliminate any inter-segment revenues and expenses upon consolidation.

The Land and Resource Management segment encompasses the business of managing our approximate 868,000 surface acres of land and our approximate 195,000 NRA of oil and gas royalty interests in West Texas, 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.

The following table presents segment financial results for the three months ended March 31, 2024 and 2023 (in thousands):

						Three Months Ended March 31,
						2024						2023
Revenues:
Land and resource management						$	111,485					$	104,023
Water services and operations						62,657						42,339
Total consolidated revenues						$	174,142					$	146,362
Net income:
Land and resource management						$	80,971					$	65,343
Water services and operations						33,446						21,225
Total consolidated net income						$	114,417					$	86,568
Capital expenditures:
Land and resource management						$	51					$	175
Water services and operations						5,611						3,598
Total capital expenditures						$	5,662					$	3,773
Depreciation, depletion and amortization:
Land and resource management						$	693					$	618
Water services and operations						3,147						2,786
Total depreciation, depletion and amortization						$	3,840					$	3,404

The following table presents total assets and property, plant and equipment, net by segment as of March 31, 2024 and December 31, 2023 (in thousands):

			March 31, 2024						December 31, 2023
Assets:
Land and resource management			$	1,069,160					$	975,136
Water services and operations			190,010						181,262
Total consolidated assets			$	1,259,170					$	1,156,398
Property, plant and equipment, net:
Land and resource management			$	5,179					$	5,322
Water services and operations			87,021						84,265
Total consolidated property, plant and equipment, net			$	92,200					$	89,587

14. Oil and Gas Producing Activities

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. As of March 31, 2024 and 2023, our share of oil and gas produced was approximately 24.8 and 20.9 thousand Boe per day, respectively. Reserves related to our royalty interests are not presented because the information is unavailable.

There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where we have a royalty interest. The number of DUC wells is determined using uniform drilling spacing units with pooled interests for all wells awaiting completion. We have identified 694 and 675 DUC wells subject to our royalty interest (an estimated 10.3 and 9.7 net DUC wells) as of March 31, 2024 and December 31, 2023, respectively.

15. 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 May 6, 2024, our Board declared a quarterly cash dividend of $1.17 per share, payable on June 17, 2024 to stockholders of record at the close of business on June 3, 2024.