filings.toolsItem 1. Financial Statements.
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Item 1. Financial Statements.
TEXAS PACIFIC LAND CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share amounts)
(Unaudited)
| September 30, 2025 | December 31, 2024 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 531,808 | $ | 369,835 | |||||||
| Accounts receivable and accrued receivables, net | 127,786 | 126,670 | |||||||||
| Prepaid expenses and other current assets | 77,578 | 5,318 | |||||||||
| Tax like-kind exchange escrow | — | 1,546 | |||||||||
| Total current assets | 737,172 | 503,369 | |||||||||
| Royalty interests acquired, net | 405,917 | 432,401 | |||||||||
| Real estate acquired | 179,129 | 143,178 | |||||||||
| Property, plant and equipment, net | 137,527 | 122,578 | |||||||||
| Intangible assets, net | 33,431 | 35,188 | |||||||||
| 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 | 14,042 | 1,163 | |||||||||
| Other assets | 17,696 | 10,143 | |||||||||
| Total assets | $ | 1,524,914 | $ | 1,248,020 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Accounts payable and accrued expenses | $ | 38,549 | $ | 26,958 | |||||||
| Ad valorem and other taxes payable | 7,527 | 8,418 | |||||||||
| Income taxes payable | 9,892 | 4,388 | |||||||||
| Unearned revenue | 11,932 | 6,797 | |||||||||
| Total current liabilities | 67,900 | 46,561 | |||||||||
| Deferred taxes payable | 52,505 | 47,401 | |||||||||
| Unearned revenue - noncurrent | 19,664 | 20,636 | |||||||||
| Operating lease liabilities | 16,509 | 453 | |||||||||
| Accrued liabilities - noncurrent | 372 | 504 | |||||||||
| Total liabilities | 156,950 | 115,555 | |||||||||
| Commitments and contingencies (Note 12) | — | — | |||||||||
| Equity: | |||||||||||
| Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of September 30, 2025 and December 31, 2024 | — | — | |||||||||
| Common stock, $0.01 par value; 46,536,936 shares authorized as of September 30, 2025 and December 31, 2024, 22,979,410 and 22,971,803 outstanding as of September 30, 2025 and December 31, 2024, respectively | 231 | 231 | |||||||||
| Treasury stock, at cost; 106,666 and 114,273 shares as of September 30, 2025 and December 31, 2024, respectively | (151,242) | (168,843) | |||||||||
| Additional paid-in capital | 6,610 | 19,900 | |||||||||
| Accumulated other comprehensive income | 3,465 | 3,583 | |||||||||
| Retained earnings | 1,508,900 | 1,277,594 | |||||||||
| Total equity | 1,367,964 | 1,132,465 | |||||||||
| Total liabilities and equity | $ | 1,524,914 | $ | 1,248,020 |
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Oil and gas royalties | $ | 108,705 | $ | 94,444 | $ | 314,956 | $ | 276,377 | |||||||||||||||
| Water sales | 44,578 | 36,211 | 108,968 | 113,987 | |||||||||||||||||||
| Produced water royalties | 32,268 | 27,727 | 90,705 | 76,034 | |||||||||||||||||||
| Easements and other surface-related income | 16,715 | 14,280 | 71,163 | 51,496 | |||||||||||||||||||
| Land sales | 819 | 901 | 819 | 2,145 | |||||||||||||||||||
| Total revenues | 203,085 | 173,563 | 586,611 | 520,039 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Salaries and related employee expenses | 14,387 | 14,030 | 43,031 | 39,262 | |||||||||||||||||||
| Water service-related expenses | 16,428 | 11,731 | 36,005 | 36,767 | |||||||||||||||||||
| General and administrative expenses | 5,591 | 12,520 | 17,356 | 27,731 | |||||||||||||||||||
| Depreciation, depletion and amortization | 14,963 | 5,762 | 40,603 | 13,695 | |||||||||||||||||||
| Ad valorem and other taxes | 2,625 | 2,189 | 6,701 | 5,990 | |||||||||||||||||||
| Total operating expenses | 53,994 | 46,232 | 143,696 | 123,445 | |||||||||||||||||||
| Operating income | 149,091 | 127,331 | 442,915 | 396,594 | |||||||||||||||||||
| Other income, net | 6,088 | 8,086 | 15,649 | 31,249 | |||||||||||||||||||
| Income before income taxes | 155,179 | 135,417 | 458,564 | 427,843 | |||||||||||||||||||
| Income tax expense | 33,941 | 28,823 | 100,534 | 92,243 | |||||||||||||||||||
| Net income | $ | 121,238 | $ | 106,594 | $ | 358,030 | $ | 335,600 | |||||||||||||||
| Other comprehensive loss — periodic pension costs, net of income taxes for the three and nine months ended September 30, 2025 and 2024 of $10, $6, $31 and $17, respectively | (40) | (21) | (118) | (63) | |||||||||||||||||||
| Total comprehensive income | $ | 121,198 | $ | 106,573 | $ | 357,912 | $ | 335,537 | |||||||||||||||
| Net income per share of common stock | |||||||||||||||||||||||
| Basic | $ | 5.27 | $ | 4.64 | $ | 15.58 | $ | 14.60 | |||||||||||||||
| Diluted | $ | 5.27 | $ | 4.63 | $ | 15.56 | $ | 14.58 | |||||||||||||||
| Weighted average number of shares of common stock outstanding | |||||||||||||||||||||||
| Basic | 22,984,883 | 22,979,781 | 22,984,317 | 22,990,213 | |||||||||||||||||||
| Diluted | 23,010,258 | 23,012,169 | 23,008,282 | 23,016,733 | |||||||||||||||||||
| Cash dividends per share of common stock | $ | 1.60 | $ | 11.17 | $ | 4.80 | $ | 13.51 |
See accompanying notes to condensed consolidated financial statements.
TEXAS PACIFIC LAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 358,030 | $ | 335,600 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion and amortization | 40,603 | 13,695 | |||||||||
| Share-based compensation | 11,375 | 8,989 | |||||||||
| Deferred taxes | 5,104 | 2,163 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Operating assets, excluding income taxes | (16,021) | 5,806 | |||||||||
| Operating liabilities, excluding income taxes | 27,643 | 4,423 | |||||||||
| Income taxes payable | 5,504 | (2,578) | |||||||||
| Prepaid income taxes | — | (4,002) | |||||||||
| Cash provided by operating activities | 432,238 | 364,096 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Deposit for acquisition | (71,108) | (42,952) | |||||||||
| Acquisitions of real estate | (35,951) | (1,026) | |||||||||
| Purchases of fixed assets | (30,878) | (16,451) | |||||||||
| Acquisition of royalty interests, net of post-close adjustments | (3,546) | (120,334) | |||||||||
| Acquisition of a business | — | (45,000) | |||||||||
| Post-close adjustment from seller related to prior year asset acquisition | 3,878 | — | |||||||||
| Cash used in investing activities | (137,605) | (225,763) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Dividends paid | (111,031) | (310,550) | |||||||||
| Shares exchanged for tax withholdings | (14,795) | (1,623) | |||||||||
| Cash settlement of common stock repurchases | (8,380) | (22,795) | |||||||||
| Cash used in financing activities | (134,206) | (334,968) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 160,427 | (196,635) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 371,381 | 730,549 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 531,808 | $ | 533,914 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Income taxes paid | $ | 89,865 | $ | 96,648 | |||||||
| Supplemental non-cash investing and financing information: | |||||||||||
| Increase in accounts payable related to purchases of fixed assets | $ | 3,444 | $ | 5,543 | |||||||
| (Decrease) increase in accrued dividends on unvested stock awards | $ | (386) | $ | 564 | |||||||
| Addition of operating lease right-of-use asset, net of lease incentive | $ | 13,593 | $ | — |
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
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 882,000 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”).
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, 2024 (“2024 Annual Report”). 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 September 30, 2025, the results of its operations for the three and nine months ended September 30, 2025 and 2024, and its cash flows for the nine months ended September 30, 2025 and 2024. 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 Quarterly Report on Form 10-Q (this “Quarterly Report”), and these interim financial statements and footnotes should be read in conjunction with the audited financial statements and footnotes included in our 2024 Annual Report. The results for the interim periods shown in this Quarterly Report are not necessarily indicative of future financial results.
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 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 our strategies and objectives and provide a framework for timely and rational allocation of resources within our businesses. 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. See Note 14, “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 condensed consolidated balance sheets that correspond to the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||
| Cash and cash equivalents | $ | 531,808 | $ | 369,835 | ||||||||||||||||
| Tax like-kind exchange escrow | — | 1,546 | ||||||||||||||||||
| Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | 531,808 | $ | 371,381 |
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, 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.
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 the Acquired Assets, 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 cost analysis. These fair values are considered Level 3 assets in the fair value hierarchy. There was no goodwill recorded in connection with 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):
| Real estate acquired | $ | 12,100 | ||||||
| Property, plant and equipment | 17,200 | |||||||
| Intangible assets | 15,700 | |||||||
| Total consideration and fair value | $ | 45,000 |
For the three and nine months ended September 30, 2025, revenues from the acquisition were approximately $2.1 million and $3.7 million, respectively, and operating expenses were $1.6 million and $3.8 million, respectively. From August 20, 2024 through September 30, 2024, revenues and operating expenses from the acquisition were approximately $0.7 million and $0.1 million, respectively. The revenues and expenses from the acquisition are included in our condensed consolidated statements of income.
4. Oil and Gas Royalty Interests
As of September 30, 2025 and December 31, 2024, the net book value of the oil and gas royalty interests we owned was as follows (in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||||||
| 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) | 446,739 | 447,071 | ||||||||||||
| Total royalty interests | 446,739 | 447,071 | ||||||||||||
| Less: accumulated depletion | (40,822) | (14,670) | ||||||||||||
| Royalty interests, net | $ | 405,917 | $ | 432,401 |
*(1)*Royalty interests assigned through the Declaration of Trust dated February 1, 1888. Nonparticipating perpetual royalty interests in 185,369 NRA as of September 30, 2025 and December 31, 2024.
*(2)*Royalty interests assigned through the Declaration of Trust dated February 1, 1888. Nonparticipating perpetual royalty interests in 5,308 NRA as of September 30, 2025 and December 31, 2024.
*(3)*Royalty interest in 16,074 and 15,897 NRA as of September 30, 2025 and December 31, 2024, respectively.
During the nine months ended September 30, 2025, we acquired oil and gas royalty interests in 177 NRA for a purchase price of approximately $3.5 million, net of post-close adjustments. In addition, we received a $3.9 million post-close adjustment from the seller of oil and gas interests we acquired in 2024 related to curative title defects. During the nine months ended September 30, 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-close adjustments, in an all-cash transaction.
There were no sales of oil and gas royalty interests during the nine months ended September 30, 2025 or 2024.
Depletion expense was $10.1 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively. Depletion expense was $26.2 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively.
5. Real Estate Activity
As of September 30, 2025 and December 31, 2024, we owned the following land and real estate (in thousands, except number of acres):
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| Number of Acres | Net Book Value | Number of Acres | Net Book Value | |||||||||||||||||||||||
| Land (surface rights) (1) | 798,626 | $ | — | 798,643 | $ | — | ||||||||||||||||||||
| Real estate acquired | 83,427 | 179,129 | 74,493 | 143,178 | ||||||||||||||||||||||
| Total real estate | 882,053 | $ | 179,129 | 873,136 | $ | 143,178 |
*(1)*Real estate assigned through the Declaration of Trust.
Land Acquisitions
During the nine months ended September 30, 2025, we acquired 8,147 acres of land in Martin County, Texas for an aggregate purchase price of $31.4 million in an all-cash transaction. Additionally, we acquired 787 acres of land for an aggregate purchase price of $4.5 million during the nine months ended September 30, 2025.
During the nine months ended September 30, 2024, we acquired 4,120 acres of land in a business combination with a fair value of $12.1 million. See further discussion of the business combination at Note 3, “Assets Acquired in a Business Combination.” Additionally, we acquired 640 acres of land for an aggregate purchase price of $1.0 million during the nine months ended September 30, 2024.
Land Sales
During the nine months ended September 30, 2025, we sold 17 acres of land in Texas for an aggregate sales price of $0.8 million. During the nine months ended September 30, 2024, we sold 91 acres of land in Texas for an aggregate sales price of $2.1 million.
6. Property, Plant and Equipment
Property, plant and equipment, net consisted of the following as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Property, plant and equipment, at cost: | ||||||||||||||
| Water service-related assets | $ | 191,938 | $ | 167,855 | ||||||||||
| Furniture, fixtures and equipment | 13,376 | 9,932 | ||||||||||||
| Other | 598 | 598 | ||||||||||||
| Total property, plant and equipment, at cost | 205,912 | 178,385 | ||||||||||||
| Less: accumulated depreciation | (68,385) | (55,807) | ||||||||||||
| Property, plant and equipment, net | $ | 137,527 | $ | 122,578 |
Depreciation expense was $4.2 million and $3.4 million for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense was $12.6 million and $9.7 million for the nine months ended September 30, 2025 and 2024, respectively.
7. Intangible Assets
Intangible assets, net consisted of the following as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Intangible assets, at cost: | ||||||||||||||
| Saltwater disposal easement | $ | 17,557 | $ | 17,557 | ||||||||||
| Contracts acquired in a business combination | 15,700 | 15,700 | ||||||||||||
| Groundwater rights acquired | 3,846 | 3,846 | ||||||||||||
| Total intangible assets, at cost (1) | 37,103 | 37,103 | ||||||||||||
| Less: accumulated amortization | (3,672) | (1,915) | ||||||||||||
| Intangible assets, net | $ | 33,431 | $ | 35,188 |
*(1)*The remaining weighted average amortization period for total intangible assets was 10.3 years as of September 30, 2025.
Amortization of intangible assets was $0.6 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively. Amortization of intangible assets was $1.8 million and $1.0 million for the nine months ended
September 30, 2025 and 2024, respectively. The estimated future amortization expense of intangible assets for each of the next five years and thereafter is as follows (in thousands):
| Year | Estimated Future Amortization Expense | ||||||||||
| Remainder of 2025 | $ | 585 | |||||||||
| 2026 | 2,342 | ||||||||||
| 2027 | 2,342 | ||||||||||
| 2028 | 2,342 | ||||||||||
| 2029 | 2,342 | ||||||||||
| 2030 and thereafter | 23,478 | ||||||||||
| Total expected amortization expense | $ | 33,431 |
8. 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, together with the 2021 Plan, the “Plans”). As of September 30, 2025, share-based compensation granted under the Plans included restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”). RSUs granted under the 2021 Plan vest in one-third annual increments over three years, 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 under the 2021 Directors Plan vest in full on the date of grant.
Incentive Plan for Employees
The maximum aggregate number of shares of the Company’s common stock, par value $0.01 per share (the “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 September 30, 2025, 122,086 shares of Common Stock remained available under the 2021 Plan for future grants.
The following table summarizes activity related to RSUs granted under the 2021 Plan for the nine months ended September 30, 2025:
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of RSUs | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||||||||||||||||||||||||||||||||||
| Nonvested at beginning of period | 23,212 | $ | 509 | |||||||||||||||||||||||||||||||||||||||||||||||
| Granted (1) | 6,504 | 1,372 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Vested (2) | (12,059) | 498 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cancelled and forfeited | (48) | 1,372 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nonvested at end of period | 17,609 | $ | 833 |
*(1)*RSUs vest in one-third annual increments over a three-year period.
*(2)*Of the 12,059 RSUs that vested during the nine months ended September 30, 2025, 4,754 RSUs were surrendered by employees to the Company upon vesting to settle tax withholding obligations.
The following table summarizes activity related to PSUs granted under the 2021 Plan for the nine months ended September 30, 2025:
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||
| Number of Target PSUs | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||||||||||
| Nonvested at beginning of period | 21,078 | $ | 573 | |||||||||||||||||||||||
| Granted (1) | 3,848 | 1,644 | ||||||||||||||||||||||||
| Vested (2) | (7,182) | 452 | ||||||||||||||||||||||||
| Cancelled and forfeited | — | — | ||||||||||||||||||||||||
| Nonvested at end of period | 17,744 | $ | 854 |
*(1)*The PSUs were granted on February 15, 2025 and include 1,924 RTSR PSUs (defined below) (based on target) with a grant date fair value of $1,915 per share and 1,924 FCF PSUs (defined below) (based on target) with a grant date fair value of $1,372 per share. If the maximum performance levels described in the PSU agreements are achieved, the actual number of shares that will ultimately vest under the PSU agreements will exceed target PSUs by 100% (i.e., a collective 3,848 additional shares would be issued).
*(2)*Vested PSUs are based on the original number of PSUs granted (i.e., target units). The actual number of shares delivered upon vesting of PSUs during the nine months ended September 30, 2025 totaled 14,364 shares, of which 6,250 shares were surrendered by employees to the Company upon vesting to settle tax withholding obligations.
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. Because 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, treasury shares, or shares reacquired by the Company in any manner. As of September 30, 2025, 23,031 shares of Common Stock remained available under the 2021 Directors Plan for future grants. On January 1, 2025, the Company granted 1,188 RSAs with a grant date fair value of $1,106 per share, which vested in full on the grant date.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Salaries and related employee expenses (employee awards) | $ | 3,493 | $ | 2,935 | $ | 10,061 | $ | 7,855 | ||||||||||||||||||
| General and administrative expenses (director awards) | — | — | 1,314 | 1,134 | ||||||||||||||||||||||
| Total share-based compensation expense (1) | $ | 3,493 | $ | 2,935 | $ | 11,375 | $ | 8,989 |
*(1)*The Company recognized a tax benefit of $0.7 million and $0.6 million related to share-based compensation for the three months ended September 30, 2025 and 2024, respectively. The Company recognized a tax benefit of $2.4 million and $1.9 million related to share-based compensation for the nine months ended September 30, 2025 and 2024, respectively.
As of September 30, 2025, there was $15.6 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 1.1 years.
9. Other Income, Net
Other income, net for the three and nine months ended September 30, 2025 and 2024 was as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Other income, net: | ||||||||||||||||||||||||||
| Interest earned on cash and cash equivalents, net | $ | 5,879 | $ | 7,913 | $ | 15,002 | $ | 28,475 | ||||||||||||||||||
| Expected return on pension assets, net | 219 | 143 | 657 | 428 | ||||||||||||||||||||||
| Miscellaneous income (expense), net | (10) | 30 | (10) | 2,346 | ||||||||||||||||||||||
| Total other income, net | $ | 6,088 | $ | 8,086 | $ | 15,649 | $ | 31,249 |
10. Income Taxes
The calculation of our effective tax rate was as follows for the three and nine months ended September 30, 2025 and 2024 (in thousands, except percentages):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Income before income taxes | $ | 155,179 | $ | 135,417 | $ | 458,564 | $ | 427,843 | ||||||||||||||||||
| Income tax expense | $ | 33,941 | $ | 28,823 | $ | 100,534 | $ | 92,243 | ||||||||||||||||||
| Effective tax rate | 21.9 | % | 21.3 | % | 21.9 | % | 21.6 | % |
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.
One Big Beautiful Bill Act
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, extending key provisions of the 2017 Tax Cuts and Job Act including, but not limited to, federal bonus depreciation and deductions for domestic research and development (“R&D”) expenditures. Tax law changes in the OBBBA impacting the Company are primarily with respect to accelerated depreciation on the purchases of fixed assets and R&D expenditures under IRC Section 174. These changes did not result in a material impact to the Company’s consolidated financial statements.
11. 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 basic and diluted EPS for the three and nine months ended September 30, 2025 and 2024 (in thousands, except number of shares and per share data):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Net income | $ | 121,238 | $ | 106,594 | $ | 358,030 | $ | 335,600 | ||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||||||||
| Weighted average shares outstanding for basic earnings per share | 22,984,883 | 22,979,781 | 22,984,317 | 22,990,213 | ||||||||||||||||||||||
| Basic earnings per share | $ | 5.27 | $ | 4.64 | $ | 15.58 | $ | 14.60 | ||||||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||||||||
| Weighted average shares outstanding for basic earnings per share | 22,984,883 | 22,979,781 | 22,984,317 | 22,990,213 | ||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Incentive and equity compensation plans | 25,375 | 32,388 | 23,965 | 26,520 | ||||||||||||||||||||||
| Weighted average shares outstanding for diluted earnings per share | 23,010,258 | 23,012,169 | 23,008,282 | 23,016,733 | ||||||||||||||||||||||
| Diluted earnings per share | $ | 5.27 | $ | 4.63 | $ | 15.56 | $ | 14.58 |
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 the shares of restricted stock vest. Certain stock awards granted are not included in the dilutive securities in the table above as they were anti-dilutive for the three and nine months ended September 30, 2025. There were no anti-dilutive securities for the three and nine months ended September 30, 2024.
12. 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 September 30, 2025, 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 September 30, 2025.
Lease Commitments
As of September 30, 2025 and December 31, 2024, we have recorded right-of-use assets of $14.0 million and $1.2 million, respectively, and lease liabilities of $17.7 million and $1.3 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. During the three months ended September 30, 2025, the Company entered into a new office lease, expiring in May 2036, for the relocation of its headquarters in Dallas, Texas. The office lease agreements require monthly rent payments, and the operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost was $0.4 million and $0.8 million, respectively, for the three and nine months ended September 30, 2025, and $0.2 million and $0.6 million, respectively, for the three and nine months ended September 30, 2024.
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 10.3 years. The weighted average discount rate of our operating leases is 6.6%.
Future minimum lease payments are as follows (in thousands):
| Year ending December 31, | Amount | |||||||
| Remainder of 2025 | $ | 188 | ||||||
| 2026 | 1,613 | |||||||
| 2027 | 2,401 | |||||||
| 2028 | 2,275 | |||||||
| 2029 | 2,338 | |||||||
| 2030 and thereafter | 16,623 | |||||||
| Total lease payments | 25,438 | |||||||
| Less: imputed interest | (7,770) | |||||||
| Total operating lease liabilities | $ | 17,668 |
13. Changes in Equity
The following tables present changes in our equity for the nine months ended September 30, 2025 and 2024 (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 nine months ended September 30, 2025: | |||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | 22,971,803 | $ | 231 | $ | (168,843) | $ | 19,900 | $ | 3,583 | $ | 1,277,594 | $ | 1,132,465 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 120,652 | 120,652 | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid — $1.60 per share of common stock | — | — | — | — | — | (37,434) | (37,434) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 25,890 | — | 38,253 | (17,778) | — | (15,602) | 4,873 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (10,448) | — | (14,260) | — | — | — | (14,260) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $11 | — | — | — | — | (39) | — | (39) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | 22,987,245 | 231 | (144,850) | 2,122 | 3,544 | 1,345,210 | 1,206,257 | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 116,140 | 116,140 | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid — $1.60 per share of common stock | — | — | — | — | — | (36,782) | (36,782) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 119 | — | 174 | 3,311 | — | (66) | 3,419 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (38) | — | (51) | — | — | — | (51) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $10 | — | — | — | — | (39) | — | (39) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | 22,987,326 | 231 | (144,727) | 5,433 | 3,505 | 1,424,502 | 1,288,944 | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 121,238 | 121,238 | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid — $1.60 per share of common stock | — | — | — | — | — | (36,815) | (36,815) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 1,602 | — | 2,332 | 1,177 | — | (25) | 3,484 | ||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock and related excise taxes | (9,000) | — | (8,363) | — | — | — | (8,363) | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (518) | — | (484) | — | — | — | (484) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $10 | — | — | — | — | (40) | — | (40) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of September 30, 2025 | 22,979,410 | $ | 231 | $ | (151,242) | $ | 6,610 | $ | 3,465 | $ | 1,508,900 | $ | 1,367,964 |
| Common Stock | Treasury Stock | Additional Paid-in Capital | Accum. Other Comp. Income (Loss) | Retained Earnings | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| For the nine months ended September 30, 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 | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 114,589 | 114,589 | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid — $1.17 per share of common stock | — | — | — | — | — | (26,894) | (26,894) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | — | — | — | 2,700 | — | (58) | 2,642 | ||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock and related excise taxes | (10,087) | — | (6,344) | — | — | — | (6,344) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $5 | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2024 | 22,983,392 | 231 | (158,296) | 15,863 | 1,789 | 1,346,834 | 1,206,421 | ||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 106,594 | 106,594 | ||||||||||||||||||||||||||||||||||||||||
| Dividends paid — $1.17 per share of common stock | — | — | — | — | — | (26,915) | (26,915) | ||||||||||||||||||||||||||||||||||||||||
| Special dividends paid — $10.00 per share of common stock | — | — | — | — | — | (229,834) | (229,834) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 1,599 | — | 2,430 | 528 | — | (521) | 2,437 | ||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock and related excise taxes | (7,387) | — | (6,134) | — | — | — | (6,134) | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (479) | — | (416) | — | — | — | (416) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $6 | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of September 30, 2024 | 22,977,125 | $ | 231 | $ | (162,416) | $ | 16,391 | $ | 1,768 | $ | 1,196,158 | $ | 1,052,132 |
Stock Repurchase Program
On November 1, 2022, our board of directors (the “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. The 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. As of September 30, 2025, the remaining amount authorized under the approved stock repurchase program was $170.2 million.
For the nine months ended September 30, 2025 and 2024, we repurchased $8.3 million and $22.7 million shares of our Common Stock, respectively.
14. 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 three and nine months ended September 30, 2025 and 2024.
The Land and Resource Management segment encompasses the business of managing our approximately 882,000 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.
The following tables present segment financial results for Land and Resource Management (“LRM”) and Water Service and Operations (“WSO”) and the reconciliation to consolidated financial results for the three and nine months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 108,705 | $ | — | $ | 108,705 | $ | 94,444 | $ | — | $ | 94,444 | ||||||||||||||||||||||||||||||||||||||||||||
| Water sales | — | 44,578 | 44,578 | — | 36,211 | 36,211 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Produced water royalties | — | 32,268 | 32,268 | — | 27,727 | 27,727 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 12,741 | 3,974 | 16,715 | 11,303 | 2,977 | 14,280 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Land sales | 819 | — | 819 | 901 | — | 901 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 122,265 | 80,820 | 203,085 | 106,648 | 66,915 | 173,563 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 7,298 | 7,089 | 14,387 | 7,182 | 6,848 | 14,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 16,428 | 16,428 | — | 11,731 | 11,731 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 3,431 | 2,160 | 5,591 | 10,359 | 2,161 | 12,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 10,453 | 4,510 | 14,963 | 2,135 | 3,627 | 5,762 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 2,614 | 11 | 2,625 | 2,189 | — | 2,189 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 23,796 | 30,198 | 53,994 | 21,865 | 24,367 | 46,232 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income | 98,469 | 50,622 | 149,091 | 84,783 | 42,548 | 127,331 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income, net | 4,827 | 1,261 | 6,088 | 6,446 | 1,640 | 8,086 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 103,296 | 51,883 | 155,179 | 91,229 | 44,188 | 135,417 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 22,536 | 11,405 | 33,941 | 19,359 | 9,464 | 28,823 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 80,760 | $ | 40,478 | $ | 121,238 | $ | 71,870 | $ | 34,724 | $ | 106,594 |
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 314,956 | $ | — | $ | 314,956 | $ | 276,377 | $ | — | $ | 276,377 | ||||||||||||||||||||||||||
| Water sales | — | 108,968 | 108,968 | — | 113,987 | 113,987 | ||||||||||||||||||||||||||||||||
| Produced water royalties | — | 90,705 | 90,705 | — | 76,034 | 76,034 | ||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 61,568 | 9,595 | 71,163 | 43,643 | 7,853 | 51,496 | ||||||||||||||||||||||||||||||||
| Land sales | 819 | — | 819 | 2,145 | — | 2,145 | ||||||||||||||||||||||||||||||||
| Total revenues | 377,343 | 209,268 | 586,611 | 322,165 | 197,874 | 520,039 | ||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 21,727 | 21,304 | 43,031 | 20,127 | 19,135 | 39,262 | ||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 36,005 | 36,005 | — | 36,767 | 36,767 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | 10,392 | 6,964 | 17,356 | 21,022 | 6,709 | 27,731 | ||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 27,279 | 13,324 | 40,603 | 3,641 | 10,054 | 13,695 | ||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 6,667 | 34 | 6,701 | 5,988 | 2 | 5,990 | ||||||||||||||||||||||||||||||||
| Total operating expenses | 66,065 | 77,631 | 143,696 | 50,778 | 72,667 | 123,445 | ||||||||||||||||||||||||||||||||
| Operating income | 311,278 | 131,637 | 442,915 | 271,387 | 125,207 | 396,594 | ||||||||||||||||||||||||||||||||
| Other income, net | 12,399 | 3,250 | 15,649 | 25,390 | 5,859 | 31,249 | ||||||||||||||||||||||||||||||||
| Income before income taxes | 323,677 | 134,887 | 458,564 | 296,777 | 131,066 | 427,843 | ||||||||||||||||||||||||||||||||
| Income tax expense | 70,804 | 29,730 | 100,534 | 63,807 | 28,436 | 92,243 | ||||||||||||||||||||||||||||||||
| Net income | $ | 252,873 | $ | 105,157 | $ | 358,030 | $ | 232,970 | $ | 102,630 | $ | 335,600 |
Interest income by segment is included in other income, net in the table above.
The following tables present purchases of fixed assets, total assets and property, plant and equipment, net by segment for the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Purchases of Fixed Assets: | ||||||||||||||||||||||||||
| Land and resource management | $ | 10,050 | $ | 66 | $ | 10,214 | $ | 210 | ||||||||||||||||||
| Water services and operations | 10,556 | 9,767 | 24,108 | 21,784 | ||||||||||||||||||||||
| Total purchases of fixed assets | $ | 20,606 | $ | 9,833 | $ | 34,322 | $ | 21,994 |
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Assets: | ||||||||||||||
| Land and resource management | $ | 1,290,694 | $ | 1,024,188 | ||||||||||
| Water services and operations | 234,220 | 223,832 | ||||||||||||
| Total consolidated assets | $ | 1,524,914 | $ | 1,248,020 | ||||||||||
| Property, plant and equipment, net: | ||||||||||||||
| Land and resource management | $ | 7,666 | $ | 4,805 | ||||||||||
| Water services and operations | 129,861 | 117,773 | ||||||||||||
| Total consolidated property, plant and equipment, net | $ | 137,527 | $ | 122,578 |
15. Oil and Gas Producing Activities
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, natural gas liquids (“NGL”) or approximately 6,000 cubic feet of gas. For the three months ended September 30, 2025 and 2024, our share of oil and gas produced was approximately 36.3 thousand and 28.3 thousand Boe per day, respectively. For the nine months ended September 30, 2025 and 2024, our share of oil and gas produced was approximately 33.6 thousand and 26.0 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):
| September 30, 2025 | December 31, 2024 | |||||||||||||
| Oil, natural gas and NGL interests | ||||||||||||||
| Proved | $ | 190,101 | $ | 150,984 | ||||||||||
| Unproved | 256,638 | 296,087 | ||||||||||||
| Total oil, natural gas and NGL interests | 446,739 | 447,071 | ||||||||||||
| Less: accumulated depletion | (40,822) | (14,670) | ||||||||||||
| Royalty interests, net | $ | 405,917 | $ | 432,401 |
The Company owns approximately 207,000 NRA as of September 30, 2025. 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.”
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:
Revolving Credit Facility
On October 23, 2025, the Company entered into a credit agreement, which provides for a revolving credit facility (the “Credit Facility”) in the aggregate principal amount of up to $500.0 million, and the ability to request potential increases in the commitments of the lenders of up to an additional $250.0 million; provided that any such request for an increase must be in a minimum amount of $50.0 million or, if less, the amount remaining available for all such increases. The Credit Facility and all borrowings thereunder will mature on October 23, 2029. Borrowings on the facility will generally bear interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25% to 2.50% based on TPL’s consolidated total leverage ratio. The Credit Facility is initially unsecured, with a springing security interest if TPL’s consolidated total leverage ratio is at or over 2.50 to 1.0, which would then require pledge of stock of subsidiaries. The Credit Facility also contains customary financial and other affirmative covenants, negative covenants, and events of default. The Credit Facility remained undrawn as of November 5, 2025.
Royalty Interest Acquisition
On November 3, 2025, we acquired approximately 17,306 NRA located primarily in the Midland basin in Martin, Howard, Midland, and other counties for an aggregate purchase price of $474.1 million in an all-cash transaction. A deposit for the acquisition of $71.1 million was held in escrow as of September 30, 2025 and is recorded in prepaid expenses and other current assets on the condensed consolidated balance sheet and reported as a cash outflow in the investing section of the condensed consolidated statements of cash flows. The final purchase price and acreage interests are subject to customary closing conditions and adjustments.
Dividends Declared
On November 3, 2025, our Board declared a quarterly cash dividend of $1.60 per share, payable on December 15, 2025 to stockholders of record at the close of business on December 1, 2025.
Proposed Stock Split
On November 3, 2025, our Board approved a three-for-one stock split of the Company’s Common Stock. The stock split is expected to be completed in December 2025, subject to finalization of the effective date as determined by the Board.
The stock split had not yet been effected as of September 30, 2025, and accordingly, the accompanying financial statements and per-share data do not reflect the impact of the stock split. The stock split will be reflected in future financial statements following its effective date. The Board has approved the stock split, subject to there not being any material changes in the Company’s financial condition or results of operations or the market price for the Common Stock that would cause the Board to change its view on the desirability of effecting the stock split.
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