Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding management’s expectations, hopes, intentions or strategies regarding the future. Words or phrases such as “expects” and “believes”, or similar expressions, when used in this Quarterly Report on Form 10-Q or other filings with the Securities and Exchange Commission (the “SEC”), are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Company’s future operations and prospects, the markets for real estate in the areas in which the Company owns real estate, applicable zoning regulations, the markets for oil and gas including actions of other oil and gas producers or consortiums worldwide such as the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (collectively referred to as “OPEC+”), expected competition, management’s intent, beliefs or current expectations with respect to the Company’s future financial performance and other matters. All forward-looking statements in this Report are based on information available to us as of the date this Report is filed with the SEC, and we assume no responsibility to update any such forward-looking statements, except as required by law. All forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the factors discussed in Item 1A. “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023, and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 21, 2024 and the condensed consolidated financial statements and accompanying notes included, in Part I, Item 1 of this Quarterly Report on Form 10-Q. Period-to-period comparisons of financial data are not necessarily indicative, and therefore, should not be relied upon as indicators, of the Company’s future performance.

Overview

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 one of the largest landowners in the State of Texas with approximately 868,000 surface acres of land in West Texas, with the majority of our ownership 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, all located in the western part of Texas.

The Company was originally organized under a Declaration of Trust, dated February 1, 1888, to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company. We completed our reorganization on January 11, 2021 from a business trust, Texas Pacific Land Trust, into Texas Pacific Land Corporation, a corporation formed and existing under the laws of the state of Delaware.

We are not an oil and gas producer. Our business activity is generated from surface and royalty interest ownership in West Texas, primarily in the Permian Basin. Our revenues are derived from oil and gas royalties, water sales, produced water royalties, easements and other surface-related income and land sales. Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue and net income are subject to substantial fluctuations from quarter to quarter and year to year. In addition to fluctuations in response to changes in the market price for oil and gas, our financial results are also subject to decisions by the owners and operators of not only the oil and gas wells to which our oil and gas royalty interests relate, but also to other owners and operators in the Permian Basin as it relates to our other revenue streams, principally water sales, produced water royalties, easements, and other surface-related revenue.

For a further overview of our business and business segments, see Item 1. “Business — General” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Market Conditions

Average oil prices during 2024 have increased slightly compared to average oil prices during 2023. Oil prices continue to be impacted by certain actions by OPEC+, geopolitical factors, and evolving global supply and demand trends,

among other factors. Average natural gas prices during 2024 have decreased compared to average natural gas prices during 2023. Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitical issues, among other factors. Since mid-2022, the Waha Hub located in Pecos County, Texas has at times experienced significant negative price differentials relative to Henry Hub, located in Erath, Louisiana, due in part to growing local Permian natural gas production and limited natural gas pipeline takeaway capacity. Midstream infrastructure is currently under construction by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Changes in global and domestic macro-economic conditions could result in additional shifts in oil and gas supply and demand in future periods. Although our revenues are directly and indirectly impacted by changes in oil and natural gas prices, we believe our royalty interests (which require no capital expenditures or operating expense burden from us for well development), strong balance sheet, and liquidity position will help us navigate through potential commodity price volatility.

Permian Basin Activity

The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas production in the United States, covering approximately 86,000 square miles across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies operating in the Permian Basin continue to maintain robust drilling and development activity. Per the U.S. Energy Information Administration, Permian production is currently in excess of 6.0 million barrels per day, which is higher than the average daily production of any year prior to 2024.

With our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin. Below are metrics for the three months ended March 31, 2024 and 2023:

						Three Months Ended March 31,
						2024						2023
Oil and Gas Pricing Metrics:**(1)
WTI Cushing average price per bbl						$	77.50					$	75.93
Henry Hub average price per mmbtu						$	2.15					$	2.64
Activity Metrics specific to the Permian Basin:**(1)(2)
Average monthly horizontal permits						592						680
Average monthly horizontal wells drilled						521						535
Average weekly horizontal rig count						301						338
DUCs as of March 31 for each applicable year						4,536						4,986
Total Average US weekly horizontal rig count (2)						560						697

(1) Commonly used definitions in the oil and gas industry provided in the table above are defined as follows: WTI Cushing represents West Texas Intermediate. Bbl represents one barrel of 42 U.S. gallons of oil. Mmbtu represents one million British thermal units, a measurement used for natural gas. DUCs represent drilled but uncompleted wells. DUC classification is based on well data and date stamps provided by Enverus. DUCs is based on wells that have a drilled/spud date stamp but do not have a completed or first production date stamp. Excludes wells that have been labeled plugged and abandoned or permit expired and wells drilled/spud more than five years ago.

(2) Permian Basin specific information per Enverus analytics. US weekly horizontal rig counts per Baker Hughes United States Rotary Rig Count for horizontal rigs. Statistics for similar data are also available from other sources. The comparability between these other sources and the sources used by the Company may differ.

The metrics above show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the three months ended March 31, 2024 and 2023. Oil prices in 2024 to date have increased compared to the same period in 2023, while natural gas prices in 2024 to date have declined compared to the same period last year. Although E&P companies broadly continue to deploy capital at a measured pace, drilling and development activities across the Permian Basin have remained robust. As we are a significant landowner in the Permian Basin and not an oil and gas producer, our revenue is affected by the development decisions made by companies that operate in the areas where we own royalty interests and land. Accordingly, these decisions made by others affect, both directly and indirectly, our oil and gas royalties, produced water royalties, water sales, and other surface-related income.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash and cash flows generated from our operations. Our primary liquidity and capital requirements are for capital expenditures related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital and general corporate needs.

We continuously review our liquidity and capital resources. If market conditions were to change and our revenues were to decline significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could seek alternative sources of funding. We have no debt or credit facilities, nor any off-balance sheet arrangements as of March 31, 2024.

As of March 31, 2024, we had cash and cash equivalents of $837.1 million that we expect to utilize, along with cash flow from operations, to provide capital to support our business, to repurchase our common stock, par value $0.01 per share (the “Common Stock”) subject to market conditions, to pay dividends subject to the discretion of our board of directors (the “Board”), for potential acquisitions and for general corporate purposes. For the three months ended March 31, 2024, we paid $26.9 million in dividends to our stockholders and we repurchased $10.3 million of our Common Stock (including share repurchases not settled at the end of the period).

During the three months ended March 31, 2024, we invested approximately $5.6 million in Texas Pacific Water Resources LLC projects to maintain and/or enhance our water sourcing assets.

We believe that cash from operations, together with our cash and cash equivalents balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.

Cash Flows from Operating Activities

For the three months ended March 31, 2024 and 2023, net cash provided by operating activities was $147.2 million and $114.8 million, respectively. Our cash flow provided by operating activities is primarily from oil, gas and produced water royalties, water and land sales, easements, and other surface-related income. Cash flows used in operations generally consist of operating expenses associated with our revenue streams, general and administrative expenses and income taxes.

The increase in cash flows provided by operating activities for the three months ended March 31, 2024 compared to the same period of 2023 was primarily related to an increase in operating income and changes in working capital requirements during 2024 as compared to 2023.

Cash Flows Used in Investing Activities

For the three months ended March 31, 2024 and 2023, net cash used in investing activities was $2.2 million and $1.7 million, respectively. Our cash flows used in investing activities are primarily related to acquisitions of land, acquisitions of intangible assets, such as subsurface easements, and capital expenditures related to our water services and operations segment.

The increase in net cash used by investing activities was due to the $0.5 million increase in capital expenditures during the three months ended March 31, 2024 compared to the same period of 2023.

Cash Flows Used in Financing Activities

For the three months ended March 31, 2024 and 2023, net cash used in financing activities was $38.5 million and $32.8 million, respectively. Our cash flows used in financing activities primarily consist of activities which return capital to our stockholders such as payment of dividends and repurchases of our Common Stock.

During the three months ended March 31, 2024 and 2023, we paid total dividends of $26.9 million and $25.1 million, respectively. During the three months ended March 31, 2024 and 2023, we repurchased $10.3 million and $6.7 million of our Common Stock, respectively (including share repurchases not settled at the end of the period).

Results of Operations - Consolidated

The following table shows our consolidated results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

			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

For the Three Months Ended March 31, 2024 as Compared to the Three Months Ended March 31, 2023

Consolidated Revenues and Net Income:

Total revenues increased 19.0%, to $174.1 million for the three months ended March 31, 2024 compared to $146.4 million for the three months ended March 31, 2023. This increase was principally related to a $15.4 million increase in water sales, a $5.7 million increase in easements and other surface-related income, a $3.0 million increase in oil and gas royalty revenue and a $2.9 million increase in produced water royalties over the same period. Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $114.4 million for the three months ended March 31, 2024 was 32.2% higher than the comparable period of 2023 principally as a result of the increase in revenues discussed above.

Consolidated Expenses:

Salaries and related employee expenses. Salaries and related employee expenses were $12.5 million for the three months ended March 31, 2024 compared to $10.6 million for the comparable period of 2023. The increase in salaries and related employee expenses is principally related to market compensation adjustments that take effect annually at the start of the year.

Water service-related expenses. Water service-related expenses increased $4.6 million to $10.2 million for the three months ended March 31, 2024 compared to the same period of 2023. Certain types of water-related expenses, including, but not limited to, transfer, treatment, and water purchases, will vary from period to period as our customers’ needs and requirements change. The increase in water service-related expenses for the three months ended March 31, 2024 is principally

related to the 70.9% increase in water sales over the same period of 2023. Water sales were impacted not only by increased customer volumes, but also by higher demand within shorter time commitments, and resulted in increased water treatment, purchase and transfer expenses. Additionally, a focus on increasing water production from existing wells resulted in increased repairs and maintenance expense. While these dynamics in demand resulted in an 80.5% increase in water service-related expenses for the three months ended March 31, 2024 compared to the same period of 2023, the operational decision to meet these demands resulted in increased revenues and operating income over the same time period.

General and administrative expenses. General and administrative expenses increased $1.4 million to $4.9 million for the three months ended March 31, 2024 compared to the same period of 2023. During the three months ended March 31, 2024, stock awards that were vested in full on the grant date were granted to members of the Company’s Board which resulted in immediate recognition of the grant date fair value of the awards on the date of grant. See further discussion of this change in Note 7, “Share-Based Compensation” in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. The increased board compensation expense for the three months ended March 31, 2024 resulting from this policy change is a one-time event.

Legal and professional fees. Legal and professional fees were $4.1 million for the three months ended March 31, 2024 compared to $16.6 million for the comparable period of 2023. The decrease is principally related to a reduction in legal expenses associated with stockholder matters that occurred during the prior year.

Ad valorem and other taxes. Ad valorem and other taxes were $2.4 million for the three months ended March 31, 2024, compared to $1.6 million for the three months ended March 31, 2023. The increase in ad valorem and other taxes is related to regulatory increases in estimated tax values driven by increased oil pricing and new production. Prior to January 1, 2022, the 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 on January 11, 2021, we received notice from a third party that it no longer intended to pay the ad valorem taxes related to such historical royalty interests. While we continue to believe the obligation to pay these ad valorem taxes belongs to the third party, we have accrued and/or paid an estimate of such taxes in order to protect the royalty interests from any potential tax liens for nonpayment of ad valorem taxes. While we intend to seek reimbursement from the third party following payment of such taxes, we are unable to determine the amount and/or likelihood of such reimbursement, and accordingly, have not recorded a loss recovery receivable as of March 31, 2024.

Other income, net. Other income, net was $9.9 million and $5.4 million for the three months ended March 31, 2024 and 2023, respectively. The increase in other income, net is primarily related to increased interest income earned on our cash balances during 2024. Higher cash balances and higher interest rates during this period contributed to the increase in interest income.

Total income tax expense. Total income tax expense was $31.6 million and $23.8 million for the three months ended March 31, 2024 and 2023, respectively. The increase in income tax expense is primarily related to increased operating income resulting from increased consolidated revenues.

Segment Results of Operations

We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. We eliminate any inter-segment revenues and expenses upon consolidation.

We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 13, “Business Segment Reporting” in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. We monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our results of operations for the three months ended March 31, 2024 continue to benefit from activity in the Permian Basin. Our oil and gas royalty revenues have increased due to increased royalty production. Additionally, revenues derived from water sales, easements and other surface-related income, and produced water royalties have also been positively impacted by our active management of our surface and royalty interests.

For the Three Months Ended March 31, 2024 as Compared to the Three Months Ended March 31, 2023

The following is an analysis of our operating results for the comparable periods by reportable segment (in thousands):

						Three Months Ended March 31,
						2024												2023
Revenues:
Land and resource management:
Oil and gas royalties						$	92,120					53		%				$	89,130					61		%
Easements and other surface-related income						18,121						10		%				14,493						10		%
Land sales						1,244						1		%				400						—		%
Total land and resource management revenue						111,485						64		%				104,023						71		%
Water services and operations:
Water sales						37,126						21		%				21,729						15		%
Produced water royalties						23,006						13		%				20,134						14		%
Easements and other surface-related income						2,525						2		%				476						—		%
Total water services and operations revenue						62,657						36		%				42,339						29		%
Total consolidated revenues						$	174,142					100		%				$	146,362					100		%
Net income:
Land and resource management						$	80,971					71		%				$	65,343					75		%
Water services and operations						33,446						29		%				21,225						25		%
Total consolidated net income						$	114,417					100		%				$	86,568					100		%

Land and Resource Management

Land and Resource Management segment revenues increased $7.5 million, or 7.2%, to $111.5 million for the three months ended March 31, 2024 as compared to the same period of 2023. The increase in Land and Resource Management segment revenues is related to a $3.6 million increase in easements and other surface-related income and a $3.0 million increase in oil and gas royalty revenue for three months ended March 31, 2024 compared to the same period of 2023.

Oil and gas royalties. Oil and gas royalty revenue was $92.1 million for the three months ended March 31, 2024 compared to $89.1 million for the three months ended March 31, 2023, an increase of 3.4%. Oil and gas royalties for the three months ended March 31, 2023 included an $8.7 million settlement with an operator with respect to unpaid oil and gas royalties for older production periods. Excluding the $8.7 million settlement, oil and gas royalties increased $11.7 million due to higher production volume for the three months ended March 31, 2024 compared to the same period of 2023. Our share of production increased to 24.8 thousand per barrels of oil equivalent (“Boe”) per day for the three months ended March 31, 2024 compared to 20.9 thousand Boe per day for the same period of 2023. The average realized price declined 4.6% to $42.71 per Boe for the three months ended March 31, 2024 from $44.76 per Boe for the three months ended March 31, 2023.

The financial and operational data by royalty stream is presented in the table below for the three months ended March 31, 2024 and 2023:

						Three Months Ended March 31,
						2024						2023 (2)
Our share of production volumes (1)**:
Oil (MBbls)						990						792
Natural gas (MMcf)						3,806						3,306
NGL (MBbls)						633						539
Equivalents (MBoe)						2,258						1,882
Equivalents per day (MBoe/d)						24.8						20.9
Oil and gas royalty revenue (in thousands):
Oil royalties						$	72,614					$	56,894
Natural gas royalties						7,062						10,956
NGL royalties						12,444						12,615
Total oil and gas royalties						$	92,120					$	80,465
Realized prices:
Oil ($/Bbl)						$	76.77					$	75.23
Natural gas ($/Mcf)						$	2.01					$	3.58
NGL ($/Bbl)						$	21.24					$	25.28
Equivalents ($/Boe)						$	42.71					$	44.76

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

*(2)*The metrics provided for the three months ended March 31, 2023 exclude the impact of the $8.7 million settlement of oil and gas royalties discussed above.

Easements and other surface-related income. Easements and other surface-related income was $18.1 million for the three months ended March 31, 2024, an increase of 25.0% compared to $14.5 million for the three months ended March 31, 2023. Easements and other surface-related income includes revenue related to the use and crossing of our land for oil and gas exploration and production, renewable energy, and agricultural operations. The increase in easements and other surface-related income is principally related to increases of $5.7 million in pipeline easements and was partially offset by decreases in wellbore easements and material sales for the three months ended March 31, 2024 compared to the same period of 2023. The amount of income derived from pipeline easements is a function of the term of the easement, the size of the easement, and the number of easements entered into for any given period. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” above for additional discussion of development activity in the Permian Basin during the three months ended March 31, 2024.

Net income. Net income for the Land and Resource Management segment increased 23.9% to $81.0 million for the three months ended March 31, 2024 compared to $65.3 million for the three months ended March 31, 2023. Segment operating income increased $17.4 million for the three months ended March 31, 2024 compared to the same period of 2023, largely driven by the $12.4 million decrease in legal and professional fees and the $7.5 million increase in segment revenues. Expenses are discussed further above under “Results of Operations - Consolidated.”

Water Services and Operations

Water Services and Operations segment revenues increased 48.0% to $62.7 million for the three months ended March 31, 2024 as compared with revenues of $42.3 million for the same period of 2023. The increase in Water Services and Operations segment revenues is principally due to increases in water sales revenue and produced water royalties, which are

discussed below. As discussed in “Market Conditions” above, our segment revenues are directly influenced by development decisions made by our customers and the overall activity level in the Permian Basin. Accordingly, our segment revenues and sales volumes, as further discussed below, will fluctuate from period to period based upon those decisions and activity levels.

Water sales. Water sales revenue increased $15.4 million, or 70.9% to $37.1 million for the three months ended March 31, 2024, compared to the same period of 2023. The growth in water sales is principally due to an increase of 51.3% in water sales volumes for the three months ended March 31, 2024, compared to the same period of 2023.

Produced water royalties. Produced water royalties are received from the transfer or disposal of produced water on our land. Produced water royalties are contractual and not paid as a matter of right. We do not operate any salt water disposal wells. Produced water royalties were $23.0 million for the three months ended March 31, 2024 compared to $20.1 million for the same period in 2023. This increase is principally due to increased produced water volumes for the three months ended March 31, 2024 compared to the same period of 2023.

Net income. Net income for the Water Services and Operations segment was $33.4 million for the three months ended March 31, 2024 compared to $21.2 million for the three months ended March 31, 2023. Segment operating income increased $13.7 million for the three months ended March 31, 2024 compared to the same period of 2023. The increase is principally due to the $20.3 million increase in segment revenues. Expenses are discussed further above under “Results of Operations - Consolidated.”

Non-GAAP Performance Measures

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

EBITDA, Adjusted EBITDA and Free Cash Flow

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

The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and Free Cash Flow for the three months ended March 31, 2024 and 2023 (in thousands):

						Three Months Ended March 31,
						2024						2023
Net income						$	114,417					$	86,568
Add:
Income tax expense						31,567						23,773
Depreciation, depletion and amortization						3,840						3,404
EBITDA						149,824						113,745
Add:
Employee share-based compensation						2,220						2,156
Adjusted EBITDA						152,044						115,901
Less:
Current income tax expense						(31,898)						(24,079)
Capital expenditures						(5,662)						(3,773)
Free Cash Flow						$	114,484					$	88,049

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. For a full discussion of our accounting policies please refer to Note 2 to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K filed with the SEC on February 21, 2024.

There have been no material changes to our critical accounting policies or in the estimates and assumptions underlying those policies, from those provided in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Annual Report on Form 10-K.

New Accounting Pronouncements

For further information regarding recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements” in this Quarterly Report on Form 10-Q.