In This Article:
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Revenue: $196 million for Q1 2025.
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Adjusted EBITDA: $169 million with an 86.4% margin.
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Free Cash Flow: $127 million, an 11% increase year over year.
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Oil and Gas Royalty Production: 31,100 barrels of oil equivalent per day, 25% growth year over year.
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Water Segment Revenue: $69 million, 3% growth sequentially and 11% growth year over year.
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Net Cash Position: $460 million in cash and cash equivalents, zero debt as of March 31.
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Near Term Well Inventory: 24.3 net wells, a 7% increase sequentially and 38% increase year over year.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Texas Pacific Land Corp (NYSE:TPL) set quarterly records in both oil and gas royalty production and water segment revenues.
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Oil and gas royalty production increased by 25% year over year, driven by strong development activity in key subregions.
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Water segment revenues grew by 11% year over year, reflecting robust volume gains in water sales and produced water royalties.
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TPL maintains a strong financial position with zero debt and $460 million in cash and cash equivalents.
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The company anticipates significant revenue from easement renewals, with CPI escalators expected to increase payments by approximately 35% starting in 2026.
Negative Points
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There is potential for a downturn in activity if oil prices remain below $60 for a sustained period.
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Some operators have announced intentions to drop rigs and frac spreads, indicating cautious evaluation of activity plans.
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TPL's revenue streams are exposed to commodity price fluctuations, which could impact cash flow in a depressed pricing environment.
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The desalination unit's commercial scale potential is still under evaluation, with ongoing construction and testing.
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The M&A landscape in the basin may face challenges due to volatility, potentially affecting deal flow and widening bid-ask spreads.
Q & A Highlights
Q: Can you provide insights on the growth of produced water volumes in the Delaware Basin, considering the shift to deeper, more water-wet intervals? A: Tyler Glover, CEO, noted that higher water cuts are being observed as operators move to second and third-tier formations, with some pads seeing as high as 10 to 1 water-to-oil ratios. He expects produced water volumes to grow rapidly over the next decade, necessitating disposal, beneficial reuse, and increased treatment and reuse to manage these volumes effectively.
Q: How do the new pipeline projects by Water Bridge, Western, and Eris impact TPL? A: Tyler Glover, CEO, explained that these projects benefit the basin by preventing potential bottlenecks in water handling, which could otherwise hinder mineral development. Specifically, TPL will receive payments for barrels moved through the Western Pathfinder pipeline, benefiting from both existing and new barrels.