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)
| June 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 248,612 | $ | 144,809 | |||||||
| Accounts receivable and accrued receivables, net | 174,770 | 164,905 | |||||||||
| Prepaid expenses and other current assets | 5,062 | 5,295 | |||||||||
| Tax like-kind exchange escrow | — | 595 | |||||||||
| Prepaid income taxes | — | 3,716 | |||||||||
| Total current assets | 428,444 | 319,320 | |||||||||
| Royalty interests acquired, net | 820,373 | 840,024 | |||||||||
| Real estate acquired | 289,291 | 179,129 | |||||||||
| Property, plant and equipment, net | 182,877 | 164,538 | |||||||||
| Intangible assets, net | 31,675 | 32,846 | |||||||||
| 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 | — | — | |||||||||
| Equity investment | 50,000 | 50,000 | |||||||||
| Financing receivable, net | 20,376 | — | |||||||||
| Operating lease right-of-use assets | 13,130 | 13,683 | |||||||||
| Other assets | 23,308 | 23,738 | |||||||||
| Total assets | $ | 1,859,474 | $ | 1,623,278 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Accounts payable and accrued expenses | $ | 40,775 | $ | 39,578 | |||||||
| Ad valorem and other taxes payable | 5,431 | 8,912 | |||||||||
| Income taxes payable | 28,933 | 4,007 | |||||||||
| Unearned revenue | 18,986 | 20,107 | |||||||||
| Credit facility | — | — | |||||||||
| Total current liabilities | 94,125 | 72,604 | |||||||||
| Deferred taxes payable | 59,298 | 54,107 | |||||||||
| Unearned revenue - noncurrent | 18,036 | 21,072 | |||||||||
| Operating lease liabilities | 15,513 | 16,175 | |||||||||
| Accrued liabilities - noncurrent | 104 | 413 | |||||||||
| Total liabilities | 187,076 | 164,371 | |||||||||
| Commitments and contingencies (Note 12) | — | — | |||||||||
| Equity: | |||||||||||
| Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of June 30, 2026 and December 31, 2025 | — | — | |||||||||
| Common stock, $0.01 par value; 139,610,808 shares authorized as of June 30, 2026 and December 31, 2025, 68,974,683 and 68,938,230 outstanding as of June 30, 2026 and December 31, 2025, respectively | 691 | 691 | |||||||||
| Treasury stock, at cost; 283,545 and 319,998 shares as of June 30, 2026 and December 31, 2025, respectively | (132,673) | (151,242) | |||||||||
| Additional paid-in capital | 7,011 | 9,906 | |||||||||
| Accumulated other comprehensive income | 3,433 | 4,150 | |||||||||
| Retained earnings | 1,793,936 | 1,595,402 | |||||||||
| Total equity | 1,672,398 | 1,458,907 | |||||||||
| Total liabilities and equity | $ | 1,859,474 | $ | 1,623,278 |
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Oil and gas royalties | $ | 145,589 | $ | 95,006 | $ | 263,756 | $ | 206,251 | |||||||||||||||
| Water sales | 39,733 | 25,577 | 86,596 | 64,390 | |||||||||||||||||||
| Produced water royalties | 37,075 | 30,737 | 70,604 | 58,437 | |||||||||||||||||||
| Easements and other surface-related income | 23,662 | 36,223 | 40,977 | 54,448 | |||||||||||||||||||
| Land sales | — | — | 20,944 | — | |||||||||||||||||||
| Total revenues | 246,059 | 187,543 | 482,877 | 383,526 | |||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Salaries and related employee expenses | 15,562 | 14,072 | 30,549 | 28,644 | |||||||||||||||||||
| Water service-related expenses | 11,570 | 8,451 | 25,857 | 19,577 | |||||||||||||||||||
| General and administrative expenses | 8,004 | 5,693 | 16,635 | 11,765 | |||||||||||||||||||
| Depreciation, depletion and amortization | 16,639 | 13,699 | 30,682 | 25,640 | |||||||||||||||||||
| Ad valorem and other taxes | 2,467 | 1,877 | 5,009 | 4,076 | |||||||||||||||||||
| Total operating expenses | 54,242 | 43,792 | 108,732 | 89,702 | |||||||||||||||||||
| Operating income | 191,817 | 143,751 | 374,145 | 293,824 | |||||||||||||||||||
| Interest expense | (973) | — | (1,965) | — | |||||||||||||||||||
| Other income, net | 2,854 | 5,240 | 5,082 | 9,561 | |||||||||||||||||||
| Income before income taxes | 193,698 | 148,991 | 377,262 | 303,385 | |||||||||||||||||||
| Income tax expense | 39,768 | 32,851 | 80,430 | 66,593 | |||||||||||||||||||
| Net income | $ | 153,930 | $ | 116,140 | $ | 296,832 | $ | 236,792 | |||||||||||||||
| Other comprehensive loss — periodic pension costs, net of income taxes for the three and six months ended June 30, 2026 and 2025 of $96, $10, $191, $21, respectively | (358) | (39) | (717) | (78) | |||||||||||||||||||
| Total comprehensive income | $ | 153,572 | $ | 116,101 | $ | 296,115 | $ | 236,714 | |||||||||||||||
| Net income per share of common stock | |||||||||||||||||||||||
| Basic | $ | 2.23 | $ | 1.68 | $ | 4.30 | $ | 3.43 | |||||||||||||||
| Diluted | $ | 2.23 | $ | 1.68 | $ | 4.30 | $ | 3.43 | |||||||||||||||
| Weighted average number of shares of common stock outstanding | |||||||||||||||||||||||
| Basic | 68,974,580 | 68,961,978 | 68,966,839 | 68,952,087 | |||||||||||||||||||
| Diluted | 69,034,580 | 69,040,740 | 69,019,380 | 69,026,862 | |||||||||||||||||||
| Cash dividends per share of common stock | $ | 0.60 | $ | 0.53 | $ | 1.20 | $ | 1.06 |
See accompanying notes to condensed consolidated financial statements.
TEXAS PACIFIC LAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 296,832 | $ | 236,792 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Land sale with financing arrangement | (20,944) | — | |||||||||
| Depreciation, depletion and amortization | 30,682 | 25,640 | |||||||||
| Share-based compensation | 9,451 | 7,882 | |||||||||
| Deferred taxes | 5,191 | 1,329 | |||||||||
| Other | 111 | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Operating assets, excluding income taxes | (8,549) | 8,154 | |||||||||
| Operating liabilities, excluding income taxes | (6,549) | (1,964) | |||||||||
| Income taxes payable | 24,926 | (207) | |||||||||
| Prepaid income taxes | 3,716 | — | |||||||||
| Cash provided by operating activities | 334,867 | 277,626 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of fixed assets | (29,201) | (12,277) | |||||||||
| Acquisition of real estate | (110,162) | (4,505) | |||||||||
| Acquisition of royalty interests, net of post-close adjustments | — | (3,546) | |||||||||
| Post-close adjustment from seller related to prior year asset acquisition | — | 3,878 | |||||||||
| Cash used in investing activities | (139,363) | (16,450) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Dividends paid | (83,183) | (74,216) | |||||||||
| Shares exchanged for tax withholdings | (9,113) | (14,311) | |||||||||
| Cash settlement of common stock repurchases | — | (100) | |||||||||
| Cash used in financing activities | (92,296) | (88,627) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 103,208 | 172,549 | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 145,404 | 371,381 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 248,612 | $ | 543,930 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Income taxes paid | $ | 46,406 | $ | 65,450 | |||||||
| Interest paid | $ | 1,307 | $ | — | |||||||
| Supplemental non-cash investing and financing information: | |||||||||||
| (Decrease) increase in accounts payable related to purchases of fixed assets | $ | (1,360) | $ | 1,439 | |||||||
| Accrued dividends on unvested stock awards | $ | (222) | $ | (411) | |||||||
| Financing receivable from land sale | $ | 21,425 | $ | — | |||||||
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 land and royalty owners in the State of Texas with approximately 894,000 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 33,000 additional net royalty acres (normalized to 1/8th) (“NRA”) for a collective total of approximately 224,000 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 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, 2025 (“2025 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 June 30, 2026, the results of its operations for the three and six months ended June 30, 2026 and 2025, and its cash flows for the six months ended June 30, 2026 and 2025. 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 2025 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 allocate 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.
On December 22, 2025, we effected a three-for-one forward stock split of our common stock, par value $0.01 per share (“Common Stock”). The record date for the stock split was December 12, 2025. The shares of Common Stock retained a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock.”
Unless the context otherwise requires, all share and per share information (including information regarding treasury shares, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”)) have been retroactively adjusted to reflect the stock split.
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):
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||
| Cash and cash equivalents | $ | 248,612 | $ | 144,809 | ||||||||||||||||
| Tax like-kind exchange escrow | — | 595 | ||||||||||||||||||
| Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ | 248,612 | $ | 145,404 |
Financing Receivable, Net
We may enter into land sale transactions that include either explicit or implied seller financing arrangements. In such transactions, the land sale is recognized upon completion of the performance obligation which we consider to be when control of the land transfers to the buyer. As the contract price is collected over time, a net financing receivable is recorded at the date of sale for the difference between the contract price and the land sale revenue recognized, which represents the total contract consideration discounted for the time value of money imputed at a market-based rate of return. The carrying value of our financing receivable approximates its fair value and is classified as Level 3 within the fair value hierarchy.
Financing receivables are subsequently measured at amortized cost, with the difference between the contractual payments and the initial carrying value recognized as interest income over the term of the arrangement using the effective interest method. Interest income is included in other income, net in the condensed consolidated statements of income.
We evaluate our financing receivable for expected credit losses based on the credit quality of the counterparty, the underlying collateral, and other relevant factors. As of June 30, 2026, no allowance for expected credit losses was recorded.
3. Oil and Gas Royalty Interests
As of June 30, 2026 and December 31, 2025, the net book value of the oil and gas royalty interests we owned was as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| 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) | 897,437 | 897,437 | ||||||||||||
| Total royalty interests | 897,437 | 897,437 | ||||||||||||
| Less: accumulated depletion | (77,064) | (57,413) | ||||||||||||
| Royalty interests, net | $ | 820,373 | $ | 840,024 |
*(1)*Royalty interests assigned through the Declaration of Trust. Nonparticipating perpetual royalty interests in 185,369 NRA as of June 30, 2026 and December 31, 2025.
*(2)*Royalty interests assigned through the Declaration of Trust. Nonparticipating perpetual royalty interests in 5,308 NRA as of June 30, 2026 and December 31, 2025.
*(3)*Royalty interest in 33,380 NRA as of June 30, 2026 and December 31, 2025.
There were no acquisitions of oil and gas royalty interests during the six months ended June 30, 2026. During the six months ended June 30, 2025, we acquired oil and gas royalty interests for a purchase price of approximately $3.5 million, net of post-closing adjustments. In addition, during the six months ended June 30, 2025, we received a $3.9 million post-closing adjustment from the seller related to curative title defects for a prior year acquisition. There were no sales of oil and gas royalty interests during the six months ended June 30, 2026 or 2025.
Depletion expense was $11.1 million and $8.7 million for the three months ended June 30, 2026 and 2025, respectively. Depletion expense was $19.7 million and $16.0 million for the six months ended June 30, 2026 and 2025, respectively.
4. Real Estate Activity
As of June 30, 2026 and December 31, 2025, we owned the following land and real estate (in thousands, except number of acres):
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Number of Acres | Net Book Value | Number of Acres | Net Book Value | |||||||||||||||||||||||
| Land (surface rights) (1) | 797,947 | $ | — | 798,626 | $ | — | ||||||||||||||||||||
| Real estate acquired | 96,059 | 289,291 | 83,427 | 179,129 | ||||||||||||||||||||||
| Total real estate | 894,006 | $ | 289,291 | 882,053 | $ | 179,129 |
*(1)*Real estate assigned through the Declaration of Trust.
Land Acquisitions
During the six months ended June 30, 2026, we acquired land for an aggregate purchase price of $110.2 million. The acquisitions included land in Shackelford and Jones Counties, Texas, in connection with our data center and power generation initiatives. Additionally, we acquired land in Winkler County, Texas. During the six months ended June 30, 2025, we acquired land for an aggregate purchase price of $4.5 million.
Land Sales
During the six months ended June 30, 2026, we entered into an agreement with Chevron U.S.A. Inc., a subsidiary of Chevron Corporation (NYSE: CVX) (“Chevron”) to provide land and brackish water resources for Chevron’s recently announced development known as Project Kilby, involving a large-scale power generation facility Chevron is developing to support a customer data center in Reeves County, Texas. As part of the agreement, we sold land for aggregate consideration of $42.5 million and acquired the exclusive right to source aquifer-derived water for the power generation facility and other associated aspects of the project. The consideration consisted of a nominal cash payment received at closing and annual payments due to us through 2046.
This agreement also provides for a put option held by the developer and a call option held by us regarding our repurchase of the land if certain development milestones are not achieved.
We recognized land sales revenue of $20.9 million at closing and recorded a financing receivable for the deferred consideration. The financing receivable was recorded at its present value of $20.9 million, which represents the contractual payments of $42.4 million discounted at an effective interest rate of 7.5%.
As of June 30, 2026, the carrying value of the financing receivable was $21.4 million, of which $1.0 million is included in current assets on the condensed consolidated balance sheets. Interest income recognized on the financing receivable was $0.4 million and $0.5 million for the three and six months ended June 30, 2026, respectively.
There were no land sales for the six months ended June 30, 2025.
5. Property, Plant and Equipment
Property, plant and equipment, net consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Property, plant and equipment, at cost: | ||||||||||||||
| Water service-related assets | $ | 246,177 | $ | 218,657 | ||||||||||
| Furniture, fixtures and equipment | 12,408 | 12,087 | ||||||||||||
| Other | 598 | 598 | ||||||||||||
| Total property, plant and equipment, at cost | 259,183 | 231,342 | ||||||||||||
| Less: accumulated depreciation | (76,306) | (66,804) | ||||||||||||
| Property, plant and equipment, net | $ | 182,877 | $ | 164,538 |
Depreciation expense was $4.8 million and $4.3 million for the three months ended June 30, 2026 and 2025, respectively. Depreciation expense was $9.5 million and $8.3 million for the six months ended June 30, 2026 and 2025, respectively.
6. Intangible Assets
Intangible assets, net consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| 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 | (5,428) | (4,257) | ||||||||||||
| Intangible assets, net | $ | 31,675 | $ | 32,846 |
*(1)*The remaining weighted average amortization period for total intangible assets was 8.9 years as of June 30, 2026.
Amortization of intangible assets was $0.6 million for both of the three months ended June 30, 2026 and 2025. Amortization of intangible assets was $1.2 million for both of the six months ended June 30, 2026 and 2025. 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 2026 | $ | 1,171 | |||||||||
| 2027 | 2,342 | ||||||||||
| 2028 | 2,342 | ||||||||||
| 2029 | 2,342 | ||||||||||
| 2030 | 2,342 | ||||||||||
| 2031 and thereafter | 21,136 | ||||||||||
| Total expected amortization expense | $ | 31,675 |
7. Credit Facility
On October 23, 2025, the Company entered into a revolving credit agreement (the “Credit Facility”) providing for total commitments of $500.0 million, with the ability, subject to lender approval, to increase total commitments by up to $250.0 million, in minimum increments of $50.0 million. The Credit Facility matures on October 23, 2029. The facility remains undrawn as of June 30, 2026.
Borrowings under the Credit Facility bear interest at variable rates based on the Company’s consolidated total leverage ratio, using a base rate or SOFR-based rate plus an applicable margin. The Company also pays commitment fees on the unused portion of the Credit Facility and customary letter of credit fees.
The Credit Facility is unsecured; however, it becomes subject to a springing security interest on substantially all equity securities of the Company’s subsidiaries if the Company’s consolidated total leverage ratio exceeds 2.50 to 1.0. The Credit Facility contains customary financial and other covenants and other customary provisions. As of June 30, 2026, the Company was in compliance with all covenants under the Credit Facility.
As of June 30, 2026, unamortized debt issuance costs related to the Credit Facility were $4.2 million. For the three months ended June 30, 2026, interest expense related to the Credit Facility was $1.0 million, including $0.3 million of amortization of debt issuance costs. For the six months ended June 30, 2026, interest expense related to the Credit Facility was $2.0 million, including $0.6 million of amortization of debt issuance costs.
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 Texas Pacific Land Corporation 2021 Non-Employee Director Stock and Deferred Compensation Plan (the “2021 Directors Plan” and, together with the 2021 Plan, the “Plans”). As of June 30, 2026, share-based compensation granted under the Plans included RSAs, RSUs and 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 Common Stock that may be issued under the 2021 Plan is 675,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of June 30, 2026, 320,816 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 six months ended June 30, 2026:
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of RSUs | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||||||||||||||||||||||||||||||||||
| Nonvested at beginning of period | 52,704 | $ | 277 | |||||||||||||||||||||||||||||||||||||||||||||||
| Granted (1) | 23,290 | 432 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Vested (2) | (27,075) | 246 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Cancelled and forfeited | (58) | 452 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nonvested at end of period | 48,861 | $ | 368 |
*(1)*RSUs vest in one-third annual increments over a three-year period.
*(2)*Of the 27,075 RSUs that vested during the six months ended June 30, 2026, 10,633 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 six months ended June 30, 2026:
| Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Number of Target PSUs | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||||||||||
| Nonvested at beginning of period | 53,232 | $ | 285 | |||||||||||||||||||||||
| Granted (1) | 13,872 | 557 | ||||||||||||||||||||||||
| Vested (2) | (16,668) | 260 | ||||||||||||||||||||||||
| Cancelled and forfeited | — | — | ||||||||||||||||||||||||
| Nonvested at end of period | 50,436 | $ | 368 |
*(1)*The PSUs were granted on February 15, 2026 and include 6,936 RTSR PSUs (defined below) (based on target) with a grant date fair value of $681 per share and 6,936 FCF PSUs (defined below) (based on target) with a grant date fair value of $432 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., an aggregate of 13,872 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 six months ended June 30, 2026 totaled 27,925 shares, of which 11,492 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 90,000 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 June 30, 2026, 64,407 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 six months ended June 30, 2026:
| Six Months Ended June 30, 2026 | ||||||||||||||
| Number of RSAs | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||
| Nonvested at beginning of period | — | $ | — | |||||||||||
| Granted (1)(2) | 4,686 | 305 | ||||||||||||
| Vested | (4,686) | 305 | ||||||||||||
| Cancelled and forfeited | — | — | ||||||||||||
| Nonvested at end of period | — | $ | — |
*(1)*RSAs vest in full on the date of grant.
*(2)*Of the 4,686 RSAs that were granted during the six months ended June 30, 2026, 1,108 RSAs were deferred at the election of certain directors pursuant to the 2021 Directors Plan until the year following the director’s termination as a director.
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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Salaries and related employee expenses (employee awards) | $ | 4,279 | $ | 3,485 | $ | 8,021 | $ | 6,568 | ||||||||||||||||||
| General and administrative expenses (director awards) | 109 | — | 1,430 | 1,314 | ||||||||||||||||||||||
| Total share-based compensation expense (1) | $ | 4,388 | $ | 3,485 | $ | 9,451 | $ | 7,882 |
*(1)*The Company recognized a tax benefit of $0.9 million and $0.7 million related to share-based compensation for the three months ended June 30, 2026 and 2025, respectively. The Company recognized a tax benefit of $2.0 million and $1.7 million related to share-based compensation for the six months ended June 30, 2026 and 2025, respectively.
As of June 30, 2026, there was $22.9 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 1.3 years.
9. Other Income, Net
Other income, net for the three and six months ended June 30, 2026 and 2025 was as follows (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Other income, net: | ||||||||||||||||||||||||||
| Interest earned on cash and cash equivalents, net | $ | 1,890 | $ | 5,021 | $ | 3,440 | $ | 9,124 | ||||||||||||||||||
| Interest earned on financing receivable, net | 392 | — | 523 | — | ||||||||||||||||||||||
| Expected return on pension assets, net | 545 | 219 | 1,092 | 437 | ||||||||||||||||||||||
| Miscellaneous income (expense), net | 27 | — | 27 | — | ||||||||||||||||||||||
| Total other income, net | $ | 2,854 | $ | 5,240 | $ | 5,082 | $ | 9,561 |
10. Income Taxes
The calculation of our effective tax rate was as follows for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Income before income taxes | $ | 193,698 | $ | 148,991 | $ | 377,262 | $ | 303,385 | ||||||||||||||||||
| Income tax expense | $ | 39,768 | $ | 32,851 | $ | 80,430 | $ | 66,593 | ||||||||||||||||||
| Effective tax rate | 20.5 | % | 22.0 | % | 21.3 | % | 21.9 | % |
During the three months ended June 30, 2026, we executed an agreement with an eligible taxpayer to purchase up to $60.0 million of transferrable federal tax credits for $55.8 million, resulting in an estimated tax benefit of $4.2 million. The estimated tax benefit recognized for the three and six months ended June 30, 2026, was included in our estimated annual effective tax rate and reduced income tax expense during the period.
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.
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 six months ended June 30, 2026 and 2025 (in thousands, except number of shares and per share data):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net income | $ | 153,930 | $ | 116,140 | $ | 296,832 | $ | 236,792 | ||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||||||||
| Weighted average shares outstanding for basic earnings per share | 68,974,580 | 68,961,978 | 68,966,839 | 68,952,087 | ||||||||||||||||||||||
| Basic earnings per share | $ | 2.23 | $ | 1.68 | $ | 4.30 | $ | 3.43 | ||||||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||||||||
| Weighted average shares outstanding for basic earnings per share | 68,974,580 | 68,961,978 | 68,966,839 | 68,952,087 | ||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Incentive and equity compensation plans | 60,000 | 78,762 | 52,541 | 74,775 | ||||||||||||||||||||||
| Weighted average shares outstanding for diluted earnings per share | 69,034,580 | 69,040,740 | 69,019,380 | 69,026,862 | ||||||||||||||||||||||
| Diluted earnings per share | $ | 2.23 | $ | 1.68 | $ | 4.30 | $ | 3.43 |
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 six months ended June 30, 2026 and 2025.
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 June 30, 2026, 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 June 30, 2026.
Lease Commitments
As of June 30, 2026 and December 31, 2025, we had right-of-use assets of $13.1 million and $13.7 million, respectively, and lease liabilities of $18.0 million and $17.8 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. The leases for our Dallas and Midland offices expire in May 2036 and July 2027, respectively. The office lease agreements require monthly rent payments, and operating lease expense is recognized on a straight-line basis over the lease term. Operating lease costs were $0.6 million and $1.1 million for the three and six months ended June 30, 2026, respectively. Operating lease costs were $0.2 million and $0.4 million for the three and six months ended June 30, 2025, respectively.
The weighted-average lease term for our operating lease liabilities is approximately 9.8 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 2026 | $ | 1,249 | ||||||
| 2027 | 2,401 | |||||||
| 2028 | 2,275 | |||||||
| 2029 | 2,338 | |||||||
| 2030 | 2,403 | |||||||
| 2031 and thereafter | 14,220 | |||||||
| Total lease payments | 24,886 | |||||||
| Less: imputed interest | (6,870) | |||||||
| Total operating lease liabilities | $ | 18,016 |
13. Changes in Equity
The following tables present changes in our equity for the six months ended June 30, 2026 and 2025 (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 six months ended June 30, 2026: | |||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | 68,938,230 | $ | 691 | $ | (151,242) | $ | 9,906 | $ | 4,150 | $ | 1,595,402 | $ | 1,458,907 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 142,902 | 142,902 | ||||||||||||||||||||||||||||||||||||||||
| Regular dividends paid and accrued — $0.60 per share of common stock | — | — | — | — | — | (41,796) | (41,796) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 57,967 | — | 27,397 | (6,997) | — | (15,045) | 5,355 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (22,010) | — | (9,063) | — | — | — | (9,063) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $95 | — | — | — | — | (359) | — | (359) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2026 | 68,974,187 | $ | 691 | $ | (132,908) | $ | 2,909 | $ | 3,791 | $ | 1,681,463 | $ | 1,555,946 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 153,930 | 153,930 | ||||||||||||||||||||||||||||||||||||||||
| Regular dividends paid and accrued — $0.60 per share of common stock | — | — | — | — | — | (41,387) | (41,387) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 611 | — | 286 | 4,102 | — | (70) | 4,318 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (115) | — | (51) | — | — | — | (51) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $96 | — | — | — | — | (358) | — | (358) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2026 | 68,974,683 | $ | 691 | $ | (132,673) | $ | 7,011 | $ | 3,433 | $ | 1,793,936 | $ | 1,672,398 | ||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-in Capital | Accum. Other Comp. Income (Loss) | Retained Earnings | Total Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| For the six months ended June 30, 2025: | |||||||||||||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | 68,915,409 | $ | 231 | $ | (168,843) | $ | 19,900 | $ | 3,583 | $ | 1,277,594 | $ | 1,132,465 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 120,652 | 120,652 | ||||||||||||||||||||||||||||||||||||||||
| Regular dividends paid and accrued — $0.53 per share of common stock | — | — | — | — | — | (37,434) | (37,434) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 77,670 | — | 38,253 | (17,778) | — | (15,602) | 4,873 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (31,344) | — | (14,260) | — | — | — | (14,260) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $11 | — | — | — | — | (39) | — | (39) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | 68,961,735 | $ | 231 | $ | (144,850) | $ | 2,122 | $ | 3,544 | $ | 1,345,210 | $ | 1,206,257 | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 116,140 | 116,140 | ||||||||||||||||||||||||||||||||||||||||
| Regular dividends paid and accrued — $0.53 per share of common stock | — | — | — | — | — | (36,782) | (36,782) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation, net of forfeitures | 357 | — | 174 | 3,311 | — | (66) | 3,419 | ||||||||||||||||||||||||||||||||||||||||
| Shares exchanged for tax withholdings | (114) | — | (51) | — | — | — | (51) | ||||||||||||||||||||||||||||||||||||||||
| Periodic pension costs, net of income taxes of $10 | — | — | — | — | (39) | — | (39) | ||||||||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | 68,961,978 | $ | 231 | $ | (144,727) | $ | 5,433 | $ | 3,505 | $ | 1,424,502 | $ | 1,288,944 | ||||||||||||||||||||||||||||||||||
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 June 30, 2026, the remaining amount authorized under the approved stock repurchase program was $170.2 million.
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 six months ended June 30, 2026 and 2025.
The Land and Resource Management segment encompasses the business of managing our approximately 894,000 surface acres of land and our approximately 224,000 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 Services and Operations (“WSO”) and the reconciliation to consolidated financial results for the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 145,589 | $ | — | $ | 145,589 | $ | 95,006 | $ | — | $ | 95,006 | ||||||||||||||||||||||||||||||||||||||||||||
| Water sales | — | 39,733 | 39,733 | — | 25,577 | 25,577 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Produced water royalties | — | 37,075 | 37,075 | — | 30,737 | 30,737 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 18,278 | 5,384 | 23,662 | 33,491 | 2,732 | 36,223 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Land sales | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | 163,867 | 82,192 | 246,059 | 128,497 | 59,046 | 187,543 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 8,347 | 7,215 | 15,562 | 7,025 | 7,047 | 14,072 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 11,570 | 11,570 | — | 8,451 | 8,451 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 5,245 | 2,759 | 8,004 | 3,648 | 2,045 | 5,693 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 11,695 | 4,944 | 16,639 | 9,137 | 4,562 | 13,699 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 2,279 | 188 | 2,467 | 1,864 | 13 | 1,877 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 27,566 | 26,676 | 54,242 | 21,674 | 22,118 | 43,792 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income | 136,301 | 55,516 | 191,817 | 106,823 | 36,928 | 143,751 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (779) | (194) | (973) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other income, net | 2,140 | 714 | 2,854 | 4,156 | 1,084 | 5,240 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 137,662 | 56,036 | 193,698 | 110,979 | 38,012 | 148,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 28,230 | 11,538 | 39,768 | 24,410 | 8,441 | 32,851 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 109,432 | $ | 44,498 | $ | 153,930 | $ | 86,569 | $ | 29,571 | $ | 116,140 |
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | |||||||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 263,756 | $ | — | $ | 263,756 | $ | 206,251 | $ | — | $ | 206,251 | ||||||||||||||||||||||||||
| Water sales | — | 86,596 | 86,596 | — | 64,390 | 64,390 | ||||||||||||||||||||||||||||||||
| Produced water royalties | — | 70,604 | 70,604 | — | 58,437 | 58,437 | ||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 32,727 | 8,250 | 40,977 | 48,827 | 5,621 | 54,448 | ||||||||||||||||||||||||||||||||
| Land sales | 20,944 | — | 20,944 | — | — | — | ||||||||||||||||||||||||||||||||
| Total revenues | 317,427 | 165,450 | 482,877 | 255,078 | 128,448 | 383,526 | ||||||||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 15,905 | 14,644 | 30,549 | 14,429 | 14,215 | 28,644 | ||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 25,857 | 25,857 | — | 19,577 | 19,577 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | 10,740 | 5,895 | 16,635 | 6,961 | 4,804 | 11,765 | ||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 20,889 | 9,793 | 30,682 | 16,826 | 8,814 | 25,640 | ||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 4,809 | 200 | 5,009 | 4,053 | 23 | 4,076 | ||||||||||||||||||||||||||||||||
| Total operating expenses | 52,343 | 56,389 | 108,732 | 42,269 | 47,433 | 89,702 | ||||||||||||||||||||||||||||||||
| Operating income | 265,084 | 109,061 | 374,145 | 212,809 | 81,015 | 293,824 | ||||||||||||||||||||||||||||||||
| Interest expense | (1,572) | (393) | (1,965) | — | — | — | ||||||||||||||||||||||||||||||||
| Other income, net | 3,721 | 1,361 | 5,082 | 7,572 | 1,989 | 9,561 | ||||||||||||||||||||||||||||||||
| Income before income taxes | 267,233 | 110,029 | 377,262 | 220,381 | 83,004 | 303,385 | ||||||||||||||||||||||||||||||||
| Income tax expense | 56,878 | 23,552 | 80,430 | 48,268 | 18,325 | 66,593 | ||||||||||||||||||||||||||||||||
| Net income | $ | 210,355 | $ | 86,477 | $ | 296,832 | $ | 172,113 | $ | 64,679 | $ | 236,792 |
Interest income by segment is included in other income, net in the tables 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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Purchases of Fixed Assets: | ||||||||||||||||||||||||||
| Land and resource management | $ | 76 | $ | 161 | $ | 293 | $ | 164 | ||||||||||||||||||
| Water services and operations | 20,847 | 3,647 | 27,548 | 13,552 | ||||||||||||||||||||||
| Total purchases of fixed assets | $ | 20,923 | $ | 3,808 | $ | 27,841 | $ | 13,716 |
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Assets: | ||||||||||||||
| Land and resource management | $ | 1,569,215 | $ | 1,332,180 | ||||||||||
| Water services and operations | 290,259 | 291,098 | ||||||||||||
| Total consolidated assets | $ | 1,859,474 | $ | 1,623,278 | ||||||||||
| Property, plant and equipment, net: | ||||||||||||||
| Land and resource management | $ | 7,050 | $ | 7,336 | ||||||||||
| Water services and operations | 175,827 | 157,202 | ||||||||||||
| Total consolidated property, plant and equipment, net | $ | 182,877 | $ | 164,538 |
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 June 30, 2026 and 2025, our share of oil and gas produced was approximately 39.7 thousand and 33.2 thousand Boe per day, respectively. For the six months ended June 30, 2026 and 2025, our share of oil and gas produced was approximately 38.4 thousand and 32.2 thousand Boe per day, respectively.
Capitalized Oil and Gas Costs
Aggregate capitalized costs related to oil and gas production activities with applicable accumulated depletion are as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Oil, natural gas and NGL interests | ||||||||||||||
| Proved | $ | 390,027 | $ | 369,282 | ||||||||||
| Unproved | 507,410 | 528,155 | ||||||||||||
| Total oil, natural gas and NGL interests | 897,437 | 897,437 | ||||||||||||
| Less: accumulated depletion | (77,064) | (57,413) | ||||||||||||
| Net oil, natural gas and NGL interests capitalized | $ | 820,373 | $ | 840,024 |
The Company owns approximately 224,000 NRA as of June 30, 2026. Of our total NRA, approximately 191,000 was acquired in 1888 and was recorded with no value. The remaining approximately 33,000 NRA have been acquired over recent years and are included in royalty interests acquired on the condensed consolidated balance sheets. See additional discussion in Note 3, “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:
Dividends Declared
On August 4, 2026, our Board declared a quarterly cash dividend of $0.60 per share, payable on September 15, 2026 to stockholders of record at the close of business on September 1, 2026.
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