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What changed in Texas Pacific Land Corporation's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Texas Pacific Land Corporation's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+384 added−339 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in Texas Pacific Land Corporation's 2024 10-K

384 paragraphs added · 339 removed · 258 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

113 edited+78 added−25 removed39 unchanged
Biggest changeInc/(Loss) Retained Earnings Net Proceeds From All Sources Total Equity Shares Shares Amount Shares Amount Balances as of January 1, 2021 7,756,156 — $ — $ — — $ — $ (2,693) $ — $ 487,877 $ 485,184 Net income — — — — — — — 269,980 — 269,980 Conversion of Sub-shares into shares of common stock (7,756,156) 7,756,156 78 — — — — 487,799 (487,877) — Repurchases of common stock — (14,791) — — 14,791 (19,903) — — — (19,903) Dividends paid and accrued — $11.00 per share of common stock — — — — — — — (85,264) — (85,264) Share-based compensation, net of forfeitures — 3,330 — 28 (3,330) 4,486 — (4,486) — 28 Periodic pension costs, net of income taxes of $448 — — — — — — 1,686 — — 1,686 Balances as of December 31, 2021 — 7,744,695 78 28 11,461 (15,417) (1,007) 668,029 — 651,711 Net income — — — — — — — 446,362 — 446,362 Repurchases of common stock — (48,959) — — 48,959 (87,900) — — — (87,900) Regular dividends paid and accrued — $12.00 per share of common stock — — — — — — — (92,737) — (92,737) Special dividends paid and accrued - $20.00 per share of common stock — — — — — — — (154,742) — (154,742) Share-based compensation, net of forfeitures — 699 — 8,265 (699) 940 — (773) — 8,432 Shares exchanged for tax withholdings — (756) — — 756 (1,762) — — — (1,762) Periodic pension costs, net of income taxes of $940 — — — — — — 3,523 — — 3,523 Balances as of December 31, 2022 — 7,695,679 78 8,293 60,477 (104,139) 2,516 866,139 — 772,887 Net income — — — — — — — 405,645 — 405,645 Repurchases of common stock, including excise taxes of $384 — (27,619) — — 27,619 (42,801) — — — (42,801) Regular dividends paid and accrued — $13.00 per share of common stock — — — — — — — (99,972) — (99,972) Share-based compensation, net of forfeitures — 2,332 — 6,320 (2,332) 4,006 — (140) — 10,186 Shares exchanged for tax withholdings — (1,165) — — 1,165 (2,064) — — — (2,064) Periodic pension costs, net of income taxes of $184 — — — — — — (685) — — (685) Balances as of December 31, 2023 — 7,669,227 $ 78 $ 14,613 86,929 $ (144,998) $ 1,831 $ 1,171,672 $ — $ 1,043,196 See accompanying notes to consolidated financial statements.
Biggest changeInc/(Loss) Retained Earnings Total Equity Shares Amount Balances as of January 1, 2022 23,234,085 $ 78 $ (15,417) $ 28 $ (1,007) $ 668,029 $ 651,711 Net income — — — — — 446,362 446,362 Repurchases of common stock (146,877) — (87,900) — — — (87,900) Regular dividends paid and accrued — $4.00 per share of common stock — — — — — (92,737) (92,737) Special dividends paid and accrued — $6.67 per share of common stock — — — — — (154,742) (154,742) Share-based compensation, net of forfeitures 2,097 — 940 8,265 — (773) 8,432 Shares exchanged for tax withholdings (2,268) — (1,762) — — — (1,762) Periodic pension costs, net of income taxes of $940 — — — — 3,523 — 3,523 Balances as of December 31, 2022 23,087,037 78 (104,139) 8,293 2,516 866,139 772,887 Net income — — — — — 405,645 405,645 Repurchases of common stock and related excise taxes (82,857) — (42,801) — — — (42,801) Regular dividends paid and accrued — $4.33 per share of common stock — — — — — (99,972) (99,972) Share-based compensation, net of forfeitures 6,996 — 4,006 6,320 — (140) 10,186 Shares exchanged for tax withholdings (3,495) — (2,064) — — — (2,064) Periodic pension costs, net of income taxes of $184 — — — — (685) — (685) Balances as of December 31, 2023 23,007,681 78 (144,998) 14,613 1,831 1,171,672 1,043,196 Net income — — — — — 453,960 453,960 Issuance of common stock related to stock split — 153 — (153) — — — Repurchases of common stock and related excise taxes (42,902) — (29,350) — — — (29,350) Regular dividends paid and accrued — $5.11 per share of common stock — — — — — (117,474) (117,474) Special dividends paid and accrued — $10.00 per share of common stock — — — — — (229,834) (229,834) Share-based compensation, net of forfeitures 9,972 — 7,128 5,440 — (730) 11,838 Shares exchanged for tax withholdings (2,948) — (1,623) — — — (1,623) Periodic pension costs, net of income taxes of $301 — — — — 1,752 — 1,752 Balances as of December 31, 2024 22,971,803 $ 231 $ (168,843) $ 19,900 $ 3,583 $ 1,277,594 $ 1,132,465 See accompanying notes to consolidated financial statements.
Share-Based Compensation The Company utilizes the closing stock price on the date of grant to determine the fair value of stock awards and service-vesting awards, which for the Company includes stock awards, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”) with a performance condition.
Share-Based Compensation The Company utilizes the closing stock price on the date of grant to determine the fair value of stock awards and service-vesting awards, which for the Company includes restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”) with a performance condition.
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”).
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”). 2.
Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.
Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.
Purchases under the stock repurchase program may be made through a combination of open market repurchases in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, and/or other transactions at the Company’s discretion, including under a Rule 10b5-1 trading plan implemented by the Company, and will be subject to market conditions, applicable legal requirements and other factors.
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.
Royalty Interests Assigned Through the Declaration of Trust The fair market value of the Trust’s Assigned royalty interests was not determined in 1888 when the Trust was formed, and accordingly, these Assigned royalty interests were recorded with no value.
Royalty Interests Assigned Through the Declaration of Trust The fair market value of the Trust’s Assigned royalty interests was not determined in 1888 when the Trust was formed, and accordingly, the Assigned royalty interests were recorded with no value.
Since inputs are based on quoted prices that are readily and regularly available in an active market, Level 1 inputs require the least judgment. Level 2 – Inputs are based on quoted prices for similar instruments in active markets, or are observable either directly or indirectly. Inputs are obtained from various sources including financial institutions and brokers.
Since inputs are based on quoted prices that are readily and regularly available in an active market, Level 1 inputs require the least amount of judgment. Level 2 – Inputs are based on quoted prices for similar instruments in active markets, or are observable either directly or indirectly. Inputs are obtained from various sources including financial institutions and brokers.
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 10,000 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.
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 (if any), treasury shares, or shares reacquired by the Company in any manner.
The other components of net periodic benefit cost are included in other income, net on the consolidated statements of income and total comprehensive income.
The other components of net periodic pension (benefit) cost are included in other income, net on the consolidated statements of income and total comprehensive income.
Leases of our surface acreage include, but are not limited to, facility, roadway and surface leases with a typical lease term of ten years and generally require fixed annual payments. Lease cancellations are allowed under certain circumstances, but initial lease deposits are generally nonrefundable.
Leases of our surface acreage include, but are not limited to, facility, roadway and surface leases with a typical lease term of 10 years and generally require fixed annual payments. Lease cancellations are allowed under certain circumstances, but initial lease deposits are generally nonrefundable.
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 December 31, 2023.
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 December 31, 2024.
Expected volatility in the model was estimated based on the volatility of historical stock prices over a period matching the expected term of the award. The risk-free interest rate was based on U.S. Treasury yield constant maturities for a term matching the expected term of the award.
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.
An allowance is recorded for expected credit losses and is based upon our historical write-off experience, aging of trade accounts receivable and collectability patterns of our customers. The allowance for expected credit loss was approximately $0.2 million as of December 31, 2023 and 2022, respectively.
An allowance is recorded for expected credit losses and is based upon our historical write-off experience, aging of trade accounts receivable and collectability patterns of our customers. The allowance for expected credit loss was approximately $0.2 million as of December 31, 2024 and 2023.
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. Revenue Recognition Oil and Gas Royalties Oil and gas royalties are received in connection with royalty interests owned by TPL.
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. Revenue Recognition Oil and Gas Royalties Oil and gas royalties are received in connection with royalty interests owned by TPL.
Rights to certain oil and gas royalties we believe to be due and payable may be subject to dispute with the oil company involved as a result of disagreements F-7 Table of Contents with respect to drilling and related engineering information. Disputed oil and gas royalties are recorded when these contingencies are resolved.
Rights to certain oil and gas royalties we believe to be due and payable may be subject to dispute with the oil company involved as a result of disagreements with respect to drilling and related engineering information. Disputed oil and gas royalties are recorded when these contingencies are resolved.
F-10 Table of Contents When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.
TPL is no longer subject to U.S. Federal income tax examination by tax authorities for tax years before 2020. 11. Earnings Per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares outstanding during the period.
TPL is no longer subject to U.S. Federal income tax examination by tax authorities for tax years before 2021. 12. Earnings Per Share Basic earnings per share (“EPS”) is computed based on the weighted average number of shares outstanding during the period.
An accrual for amounts not received during the month crude oil and natural gas products are removed is included in accounts receivable and accrued receivables, net based on historical trends. The oil and gas royalties which we receive are dependent upon the market prices for oil and gas, and locational and contractual price differences.
An accrual for amounts not received during the month crude oil and natural gas products are removed is included in accounts receivable and accrued receivables, net based on historical trends. F-8 Table of Contents The oil and gas royalties which we receive are dependent upon the market prices for oil and gas, and locational and contractual price differences.
Consequently, in the consolidated statements of income and total comprehensive income, no allowance is made for depletion and no cost is deducted from the proceeds of sales of the Assigned land and royalty interests.
Consequently, in the consolidated statements of income and total comprehensive income, no allowance has been made for depletion and no cost has been deducted from the proceeds of sales of the Assigned land and royalty interests.
Lease Commitments As of December 31, 2023 and 2022, we have recorded right-of-use assets of $1.9 million and $2.5 million, respectively, and lease liabilities for $2.0 million and $2.8 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas.
Lease Commitments As of December 31, 2024 and 2023, we have recorded right-of-use assets of $1.2 million and $1.9 million, respectively, and lease liabilities for $1.3 million and $2.0 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas.
The office lease agreements require monthly rent payments and expire in December 2025 and July 2027, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost for each of the years ended December 31, 2023 and 2022 was $0.8 million.
The office lease agreements require monthly rent payments and expire in December 2025 and July 2027, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost was $0.9 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively.
F-4 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF EQUITY (in thousands, except shares and per share amounts) Sub-share Certificates Common Stock Additional Paid-in Capital Treasury Stock Accum. Other Comp.
F-5 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF EQUITY (in thousands, except shares and per share amounts) Common Stock Treasury Stock Additional Paid-in Capital Accum. Other Comp.
F-6 Table of Contents TEXAS PACIFIC LAND CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
F-7 Table of Contents TEXAS PACIFIC LAND CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.
See Note 12, “Commitments” for additional information. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.
See Note 13, “Commitments and Contingencies” for additional information. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.
Diluted EPS is computed based upon the weighted average number of shares outstanding during the period plus unvested restricted stock and other unvested awards granted pursuant to our incentive and equity compensation plans.
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 liability for unrecognized tax benefits is zero as of December 31, 2023 and 2022. We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated statements of income and total comprehensive income.
The liability for unrecognized tax benefits was zero as of December 31, 2024 and 2023. We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated statements of income and total comprehensive income.
Share-based compensation expense for stock awards is recognized in the financial statements immediately on date of grant as there is no requisite service period. Share-based compensation expense for RSUs and RSAs is recognized in the financial statements over the awards’ vesting periods using the graded-vesting method.
Share-based compensation expense for restricted stock awards with no requisite service period is recognized in the financial statements immediately on date of grant. Share-based compensation expense for RSUs and RSAs with a requisite service period is recognized in the financial statements over the awards’ vesting periods using the graded-vesting method.
The oil and gas royalty accrual is based upon historical production volumes, estimates of the timing of future payments and recent market prices for oil and gas. Accrued oil and gas royalties included in accounts receivable and accrued receivables, net totaled $52.2 million and $50.1 million as of December 31, 2023 and 2022, respectively.
The oil and gas royalty accrual is based upon historical production volumes, estimates of the timing of future payments and recent market prices for oil and gas. Accrued oil and gas royalties included in accounts receivable and accrued receivables, net totaled $60.7 million and $52.2 million as of December 31, 2024 and 2023, respectively.
Share-Based Compensation Expense The following table summarizes our share-based compensation expense by line item in the consolidated statements of income (in thousands): Years Ended December 31, 2023 2022 2021 Salaries and related employee expenses (employee awards) $ 9,124 $ 7,583 $ 28 General and administrative expenses (director awards) 1,219 849 — Total share-based compensation expense (1) $ 10,343 $ 8,432 $ 28 (1) The Company recognized a tax benefit of $2.2 million and $1.8 million related to share-based compensation for the years ended December 31, 2023 and 2022, respectively.
Share-Based Compensation Expense The following table summarizes our share-based compensation expense by line item in the consolidated statements of income (in thousands): Years Ended December 31, 2024 2023 2022 Salaries and related employee expenses (employee awards) $ 11,364 $ 9,124 $ 7,583 General and administrative expenses (director awards) 1,134 1,219 849 Total share-based compensation expense (1) $ 12,498 $ 10,343 $ 8,432 (1) The Company recognized a tax benefit of $2.6 million, $2.2 million and $1.8 million related to share-based compensation for the years ended December 31, 2024, 2023 and 2022, respectively.
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. Since the completion of our Corporate Reorganization, we have received notice from a third party that they no longer intend to pay the ad valorem taxes related to such historical royalty interests.
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.
F-18 Table of Contents Incentive Plan for Employees The maximum aggregate number of shares of the Company’s Common Stock that may be issued under the 2021 Plan is 75,000 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.
Incentive Plan for Employees The maximum aggregate number of shares of 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 (if any), treasury shares, or shares reacquired by the Company in any manner.
As the RTSR PSU is a market-based award, its grant date fair value was determined using a Monte Carlo simulation model that uses the same input assumptions as the Black-Scholes model to determine the expected potential ranking of the Company against the XOP Index, i.e., the probability of satisfying the market condition defined in the award.
As 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).
Commitments 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 December 31, 2023.
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 December 31, 2024, other than as described below.
RSUs granted under the 2021 Plan vest in one-third increments and PSUs granted under the 2021 Plan cliff vest at the end of three years if the performance metrics are achieved (as discussed further below). RSAs granted under the 2021 Directors Plan vest on the first anniversary of the award.
RSUs granted under the 2021 Plan vest in one-third increments and PSUs granted under the 2021 Plan cliff vest at the end of three years if the applicable performance metrics are achieved (as discussed further below). RSAs granted prior to October 31, 2023 under the 2021 Directors Plan vested on the first anniversary of the award.
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 February 13, 2024, our board of directors declared a quarterly cash dividend of $3.50 per share, payable on March 15, 2024 to stockholders of record at the close of business on March 1, 2024. 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 February 18, 2025, our Board declared a quarterly cash dividend of $1.60 per share, payable on March 17, 2025 to stockholders of record at the close of business on March 3, 2025. 17.
For the year ended December 31, 2022, we sold 6,392 acres of land in Texas for an aggregate sales price of $9.7 million. For the year ended December 31, 2021, we sold 30 acres of land in Texas for an aggregate sales price of approximately $0.7 million.
For the year ended December 31, 2022, we sold 6,392 acres of land for an aggregate sales price of approximately $9.7 million. 6.
(2) Nonparticipating perpetual royalty interests in 84,934 gross royalty acres as of December 31, 2023 and 2022. (3) Royalty interest in 4,302 and 4,182 net royalty acres as of December 31, 2023 and 2022, respectively.
(2) Nonparticipating perpetual royalty interests in 84,934 gross royalty acres as of December 31, 2024 and 2023. (3) Royalty interest in 15,897 and 4,302 net royalty acres as of December 31, 2024 and 2023, respectively.
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”).
Share-Based Compensation The Company grants share-based compensation to employees under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”) and to its non-employee directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan (the “2021 Directors Plan” and, with the 2021 Plan, collectively referred to herein as the “Plans”).
Future minimum lease payments were as follows as of December 31, 2023 (in thousands): Year ending December 31, Amount 2024 $ 854 2025 826 2026 316 2027 187 Total lease payments 2,183 Less: imputed interest (159) Total operating lease liabilities $ 2,024 Rent expense for these lease agreements amounted to approximately $0.8 million for each of the years ended December 31, 2023, 2022 and 2021. 13.
Future minimum lease payments were as follows as of December 31, 2024 (in thousands): Year ending December 31, Amount 2025 $ 826 2026 316 2027 187 Total lease payments 1,329 Less: imputed interest (79) Total operating lease liabilities $ 1,250 Rent expense for these lease agreements amounted to approximately $0.8 million for each of the years ended December 31, 2024, 2023 and 2022. 14.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands): December 31, 2023 December 31, 2022 Cash and cash equivalents $ 725,169 $ 510,834 Tax like-kind exchange escrow 5,380 6,348 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 730,549 $ 517,182 Receivables Receivables consist primarily of royalty income due related to our oil, gas and produced water royalties and trade accounts receivable related to water and material sales.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that correspond to the same such amounts shown in the consolidated statements of cash flows (in thousands): December 31, 2024 December 31, 2023 Cash and cash equivalents $ 369,835 $ 725,169 Tax like-kind exchange escrow 1,546 5,380 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 371,381 $ 730,549 Receivables Receivables consist primarily of royalty income due related to our oil, gas and produced water royalties and trade accounts receivable related to water and material sales.
Water Sales Water sales revenue encompasses sales of water to operators and other customers, royalties received related to areas of mutual interest (“AMI”), and royalties received pursuant to legacy agreements with operators.
Water Sales Water sales revenue encompasses the sale and delivery of sourced, produced and treated water to operators and other customers, royalties received related to areas of mutual interest (“AMI”), and royalties received pursuant to legacy agreements with operators.
These changes included a decrease in the discount rate from 5.25% as of December 31, 2022 to 5.00% as of December 31, 2023. The effect of the assumption changes was an increase in the projected benefit obligation of approximately $0.6 million.
These changes included an increase in the discount rate from 5.00% as of December 31, 2023 to 5.75% as of December 31, 2024. The effect of the assumption changes was a decrease in the projected benefit obligation of approximately $1.9 million.
Contributions to the Pension Plan reflect benefits accrued with respect to participants’ services to date, as well as the amount actuarially determined to pay lifetime benefits to participants and their beneficiaries upon retirement.
The Pension Plan provides for a normal retirement benefit at age 65. Contributions to the Pension Plan reflect benefits accrued with respect to participants’ services to date, as well as the amount actuarially determined to pay lifetime benefits to participants and their beneficiaries upon retirement.
Other changes in Pension Plan assets and benefit obligations recognized in other comprehensive (income) loss for the years ended December 31, 2023, 2022 and 2021 (in thousands): Years Ended December 31, 2023 2022 2021 Net actuarial (gain) loss $ 739 $ (4,422) $ (1,990) Recognized actuarial gain (loss) 130 (41) (144) Total recognized in other comprehensive (income) loss, before taxes $ 869 $ (4,463) $ (2,134) Total recognized in net benefit cost and other comprehensive (income) loss, before taxes $ 1,892 $ (1,958) $ 978 TPL reclassified less than $0.6 million (net of income tax benefit of less than $0.2 million) out of accumulated other comprehensive loss for net periodic benefit cost to other income, net for the year ended December 31, 2023, $0.4 million (net of income tax benefit of less than $0.1 million) for the year ended December 31, 2022 and $0.2 million (net of income tax benefit of less than $0.1 million) for the year ended December 31, 2021.
Other changes in Pension Plan assets and benefit obligations recognized in other comprehensive (income) loss for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands): Years Ended December 31, 2024 2023 2022 Net actuarial (gain) loss $ (2,919) $ 739 $ (4,422) Recognized actuarial gain (loss) 866 130 (41) Total recognized in other comprehensive (income) loss, before taxes $ (2,053) $ 869 $ (4,463) Total recognized in net benefit cost and other comprehensive (income) loss, before taxes $ (5,396) $ 1,892 $ (1,958) TPL reclassified $0.6 million (net of income tax benefit of $0.1 million) out of accumulated other comprehensive loss for net periodic pension (benefit) cost to other income, net for the year ended December 31, 2024, $0.5 million (net of income tax benefit of $0.1 million) for the year ended December 31, 2023 and $0.4 million (net of income tax benefit of $0.1 million) for the year ended December 31, 2022.
Oil and Gas Royalty Interests As of December 31, 2023 and 2022, we owned the following oil and gas royalty interests (in thousands): December 31, 2023 December 31, 2022 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) 51,494 47,928 Total royalty interests 51,494 47,928 Less: accumulated depletion (4,885) (2,903) Royalty interests, net $ 46,609 $ 45,025 (1) Nonparticipating perpetual royalty interests in 370,737 gross royalty acres as of December 31, 2023 and 2022.
Oil and Gas Royalty Interests As of December 31, 2024 and 2023, we owned the following oil and gas royalty interests (in thousands): December 31, 2024 December 31, 2023 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) 447,071 51,494 Total royalty interests 447,071 51,494 Less: accumulated depletion (14,670) (4,885) Royalty interests, net $ 432,401 $ 46,609 (1) Nonparticipating perpetual royalty interests in 370,737 gross royalty acres as of December 31, 2024 and 2023.
Organization and Description of Business Segments Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest landowners in the State of Texas with approximately 868,000 surface acres of land in West Texas, principally concentrated in the Permian Basin.
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 873,000 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 4,000 additional net royalty acres (normalized to 1/8th) (“NRA”) for a collective total of approximately 195,000 NRA located in the western part of Texas.
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.
As of December 31, 2023, 8,793 shares of Common Stock remained available under the 2021 Directors Plan for future grants.
As of December 31, 2024, 24,219 shares of Common Stock remained available under the 2021 Directors Plan for future grants.
F-23 Table of Contents 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.
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 23 months.
F-14 Table of Contents The following table sets forth the Pension Plan’s changes in benefit obligation, changes in fair value of assets, and funded status as of December 31, 2023 and 2022 using a measurement date of December 31 (in thousands): December 31, 2023 December 31, 2022 Change in projected benefits obligation: Projected benefit obligation at beginning of year $ 8,177 $ 11,324 Service cost 1,537 2,870 Interest cost 423 336 Actuarial gain (loss) 658 (6,111) Benefits paid (242) (242) Projected benefit obligation at end of year $ 10,553 $ 8,177 Change in Pension Plan assets: Fair value of Pension Plan assets at beginning of year $ 11,650 $ 10,713 Actual return on Pension Plan assets 725 (947) Contributions by employer 2,068 2,126 Benefits paid (242) (242) Fair value of Pension Plan assets at end of year 14,201 11,650 Funded status at end of year $ 3,648 $ 3,473 The projected Pension Plan benefit obligation as of December 31, 2023 was impacted by changes in assumptions used as of that date compared to assumptions used as of December 31, 2022.
F-18 Table of Contents The following table sets forth the Pension Plan’s changes in benefit obligation, changes in fair value of assets, and funded status as of December 31, 2024 and 2023 using a measurement date of December 31 (in thousands): December 31, 2024 December 31, 2023 Change in projected benefits obligation: Projected benefit obligation at beginning of year $ 10,553 $ 8,177 Curtailment gain (3,864) — Annuity buyout settlement (3,439) — Service cost 1,848 1,537 Interest cost 503 423 Actuarial gain (loss) (1,812) 658 Benefits paid (222) (242) Projected benefit obligation at end of year $ 3,567 $ 10,553 Change in Pension Plan assets: Fair value of Pension Plan assets at beginning of year $ 14,201 $ 11,650 Annuity buyout settlement (3,439) — Actual return on Pension Plan assets 2,071 725 Contributions by employer — 2,068 Benefits paid (222) (242) Fair value of Pension Plan assets at end of year 12,611 14,201 Funded status at end of year $ 9,044 $ 3,648 The projected Pension Plan benefit obligation as of December 31, 2024 was impacted by changes in assumptions used as of that date compared to assumptions used as of December 31, 2023.
As of December 31, 2023, 55,089 shares of Common Stock remained available under the 2021 Plan for future grants.
As of December 31, 2024, 136,238 shares of Common Stock remained available under the 2021 Plan for future grants.
Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Costs associated with our development of infrastructure for sourcing and treating water are capitalized. We account for depreciation of property, plant and equipment on the straight-line method over the estimated useful lives of the assets.
Amortization of Intangible Assets Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 13 to 20 years. Property, Plant and Equipment Property, plant and equipment is carried at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Costs associated with our development of infrastructure for sourcing and treating water are capitalized.
Amounts recognized in the balance sheets as of December 31, 2023 and 2022 consist of (in thousands): December 31, 2023 December 31, 2022 Assets $ 3,648 $ 3,473 Liabilities — — $ 3,648 $ 3,473 Amounts recognized in accumulated other comprehensive income on the Consolidated Balance Sheets consist of the following as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Net actuarial gain $ 2,319 $ 3,189 Amounts recognized in accumulated other comprehensive income, before taxes 2,319 3,189 Income tax expense (488) (673) Amounts recognized in accumulated other comprehensive income, after taxes $ 1,831 $ 2,516 F-15 Table of Contents Net periodic benefit cost for the years ended December 31, 2023, 2022 and 2021 include the following components (in thousands): Years Ended December 31, 2023 2022 2021 Components of net periodic benefit cost: Service cost $ 1,537 $ 2,870 $ 3,225 Interest cost 423 336 264 Expected return on Pension Plan assets (807) (741) (521) Recognized actuarial (gain) loss (130) 41 144 Net periodic benefit cost $ 1,023 $ 2,506 $ 3,112 Service cost, a component of net periodic benefit cost, is reflected in our consolidated statements of income and total comprehensive income within salaries and related employee expenses.
Amounts recognized in accumulated other comprehensive income on the consolidated balance sheets consisted of the following as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Net actuarial gain $ 4,371 $ 2,319 Amounts recognized in accumulated other comprehensive income, before taxes 4,371 2,319 Income tax expense (918) (488) Amounts recognized in accumulated other comprehensive income, after taxes $ 3,453 $ 1,831 F-19 Table of Contents Net periodic pension (benefit) cost for the years ended December 31, 2024, 2023 and 2022 included the following components (in thousands): Years Ended December 31, 2024 2023 2022 Components of net periodic (benefit) cost: Curtailment gain $ (3,864) $ — $ — Realized gain on settlement (752) — — Service cost 1,848 1,537 2,870 Interest cost 503 423 336 Expected return on Pension Plan assets (964) (807) (741) Recognized actuarial (gain) loss (114) (130) 41 Net periodic pension (benefit) cost $ (3,343) $ 1,023 $ 2,506 Service cost, a component of net periodic pension (benefit) cost, is reflected in our consolidated statements of income and total comprehensive income within salaries and related employee expenses.
Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the year ended December 31, 2023. 12.
Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the year ended December 31, 2023. There were no dilutive securities for the year ended December 31, 2024. F-26 Table of Contents 13.
See Note 12, “Commitments” for further information regarding the arbitration. 10. Income Taxes The income tax provision charged to operations for the years ended December 31, 2023, 2022 and 2021 was as follows (in thousands): Years Ended December 31, 2023 2022 2021 Current: U.S.
Income Taxes The income tax provision charged to operations for the years ended December 31, 2024, 2023 and 2022 was as follows (in thousands): Years Ended December 31, 2024 2023 2022 Current: U.S.
F-5 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income $ 405,645 $ 446,362 $ 269,980 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 14,757 15,376 16,257 Share-based compensation 10,343 8,432 28 Deferred taxes 1,399 1,263 220 Changes in operating assets and liabilities: Receivables and other assets (24,457) (13,833) (47,603) Prepaid income taxes 4,809 (4,809) — Income taxes payable 1,628 (25,916) 25,029 Unearned revenue 5,140 1,938 (1,910) Operating liabilities, excluding income taxes (3,240) 10,015 3,152 Ad valorem and other taxes payable 2,264 8,321 10 Cash provided by operating activities 418,288 447,149 265,163 Cash flows from investing activities: Acquisitions of intangible assets (21,403) — — Acquisition of real estate (20,320) (633) (535) Acquisition of royalty interests (3,566) (1,662) — Purchase of fixed assets (15,028) (19,212) (15,548) Proceeds from sales of fixed assets 5 106 1,086 Cash used in investing activities (60,312) (21,401) (14,997) Cash flows from financing activities: Dividends paid (99,972) (247,281) (85,264) Repurchases of common stock (42,573) (87,765) (19,684) Shares exchanged for tax withholdings (2,064) (1,762) — Cash used in financing activities (144,609) (336,808) (104,948) Net increase in cash, cash equivalents and restricted cash 213,367 88,940 145,218 Cash, cash equivalents and restricted cash, beginning of period 517,182 428,242 283,024 Cash, cash equivalents and restricted cash, end of period $ 730,549 $ 517,182 $ 428,242 Supplemental disclosure of cash flow information: Income taxes paid $ 104,079 $ 151,956 $ 68,223 Supplemental non-cash investing and financing information: Nonmonetary exchange of assets $ 880 $ 4,174 $ — (Decrease) increase in accounts payable related to capital expenditures $ 403 $ (245) $ 867 Accrued dividends on unvested stock awards $ 158 $ 198 $ — Share repurchases and associated excise taxes not settled at the end of the period $ 582 $ 354 $ 219 Issuance of common stock $ — $ — $ 78 Operating lease right-of-use assets $ — $ 1,364 $ — See accompanying notes to consolidated financial statements.
F-6 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 453,960 $ 405,645 $ 446,362 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 25,162 14,757 15,376 Share-based compensation 12,498 10,343 8,432 Pension curtailment/settlement gains (4,616) — — Deferred taxes 4,604 1,399 1,263 Changes in operating assets and liabilities: Receivables and other assets (610) (24,457) (13,833) Prepaid income taxes — 4,809 (4,809) Income taxes payable (407) 1,628 (25,916) Unearned revenue (3,903) 5,140 1,938 Operating liabilities, excluding income taxes 6,327 (3,240) 10,015 Ad valorem and other taxes payable (2,343) 2,264 8,321 Cash provided by operating activities 490,672 418,288 447,149 Cash flows from investing activities: Acquisition of royalty interests, net of post-closing adjustments (395,577) (3,566) (1,662) Acquisition of a business (45,000) — — Acquisition of intangible assets — (21,403) — Acquisition of real estate (1,476) (20,320) (633) Purchase of fixed assets (29,696) (15,028) (19,212) Proceeds from sale of fixed assets — 5 106 Cash used in investing activities (471,749) (60,312) (21,401) Cash flows from financing activities: Dividends paid (347,309) (99,972) (247,281) Repurchases of common stock (29,159) (42,573) (87,765) Shares exchanged for tax withholdings (1,623) (2,064) (1,762) Cash used in financing activities (378,091) (144,609) (336,808) Net (decrease) increase in cash, cash equivalents and restricted cash (359,168) 213,367 88,940 Cash, cash equivalents and restricted cash, beginning of period 730,549 517,182 428,242 Cash, cash equivalents and restricted cash, end of period $ 371,381 $ 730,549 $ 517,182 Supplemental disclosure of cash flow information: Income taxes paid $ 120,669 $ 104,079 $ 151,956 Supplemental non-cash investing and financing information: Nonmonetary exchange of assets $ — $ 880 $ 4,174 (Decrease) increase in accounts payable related to capital expenditures $ (273) $ 403 $ (245) Accrued dividends on unvested stock awards $ 730 $ 158 $ 198 Operating lease right-of-use assets $ — $ — $ 1,364 See accompanying notes to consolidated financial statements.
Federal income tax rate of 21% for the years ended December 31, 2023, 2022 and 2021 to income before Federal income taxes as a result of the following (in thousands): Years Ended December 31, 2023 2022 2021 Computed tax expense at the statutory rate of 21% $ 108,688 $ 119,460 $ 76,234 Reduction in income taxes resulting from: Statutory depletion (682) (823) (584) State taxes 3,439 3,045 1,740 Executive compensation 1,117 1,146 1,687 Prior year tax adjustments (305) (13) 18 Correction of historical tax depletion — 805 12,975 Estimated penalties and interest — (763) 1,022 Other, net (341) (364) (55) Total income tax expense $ 111,916 $ 122,493 $ 93,037 Effective tax rate 21.6 % 21.5 % 25.6 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows (in thousands): December 31, 2023 December 31, 2022 Unearned revenue $ 6,717 $ 5,621 Stock compensation 2,097 1,256 Other 760 48 Total deferred tax assets 9,574 6,925 Property, plant and equipment 17,532 16,958 Real estate and royalty interests 33,215 30,387 Pension plan asset 767 731 Other, net 425 — Total deferred tax liabilities 51,939 48,076 Deferred taxes payable $ (42,365) $ (41,151) TPL is subject to taxation in the United States and Texas.
Federal income tax rate of 21% for the years ended December 31, 2024, 2023 and 2022 to income before Federal income taxes as a result of the following (in thousands): Years Ended December 31, 2024 2023 2022 Computed tax expense at the statutory rate of 21% $ 121,552 $ 108,688 $ 119,460 Reduction in income taxes resulting from: State taxes 3,182 3,439 3,045 Executive compensation 1,803 1,117 1,146 Research and development credit (850) — — Statutory depletion (653) (682) (823) Prior year tax adjustments 75 (305) (13) Correction of historical tax depletion — — 805 Estimated penalties and interest — — (763) Other, net (248) (341) (364) Total income tax expense $ 124,861 $ 111,916 $ 122,493 Effective tax rate 21.6 % 21.6 % 21.5 % F-25 Table of Contents The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands): December 31, 2024 December 31, 2023 Unearned revenue $ 5,879 $ 6,717 Stock compensation 2,677 2,097 Other 533 760 Total deferred tax assets 9,089 9,574 Property, plant and equipment 20,723 17,532 Real estate and royalty interests 33,581 33,215 Pension plan asset 1,901 767 Other, net 285 425 Total deferred tax liabilities 56,490 51,939 Deferred taxes payable $ (47,401) $ (42,365) TPL is subject to taxation in the United States, Texas and New Mexico.
If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 1,852 additional units would be issued). F-19 Table of Contents Each PSU has a value equal to one share of Common Stock.
If the maximum amount of the performance metrics described in the applicable PSU agreements are achieved, the actual number of shares that will ultimately vest pursuant to the PSU agreements will exceed target PSUs by 100% (i.e., a collective 8,340 additional shares would be issued). Each PSU has a value equal to one share of Common Stock.
Level 3 – Inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised by us in determining fair value is greatest for fair value measurements categorized in Level 3.
Level 3 – Inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised by us in determining fair value is greatest for fair value measurements categorized in Level 3. We use the highest level of observable market data if such data is available without undue cost and effort.
Royalty Interest Transactions For the year ended December 31, 2023, we acquired oil and gas royalty interests in 119 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $3.6 million.
The acquisition was accounted for as an asset acquisition, and the allocation of the purchase price was $57.4 million to proved properties and $217.8 million to unproved properties. For the year ended December 31, 2023, we acquired oil and gas royalty interests in 119 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $3.6 million.
See Note 14, “Business Segment Reporting” for further information regarding our segments. 2. Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our consolidated accounts and the accounts of our wholly owned subsidiaries.
Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our consolidated accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Real Estate Activity As of December 31, 2023 and 2022, TPL owned the following land and real estate (in thousands, except number of acres): December 31, 2023 December 31, 2022 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) (1) 798,999 $ — 817,060 $ — Real estate acquired 69,447 130,024 57,306 109,704 Total real estate situated in Texas 868,446 $ 130,024 874,366 $ 109,704 (1) Real estate assigned through the Declaration of Trust.
Real Estate Activity As of December 31, 2024 and 2023, TPL owned the following land and real estate (in thousands, except number of acres): December 31, 2024 December 31, 2023 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) (1) 798,643 $ — 798,999 $ — Real estate acquired 74,493 143,178 69,447 130,024 Total real estate 873,136 $ 143,178 868,446 $ 130,024 (1) Real estate assigned through the Declaration of Trust.
Intangible Assets Intangible assets, net consisted of the following as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Intangible assets, at cost: Saltwater disposal easement $ 17,557 $ — Groundwater rights acquired 3,846 — Total intangible assets, at cost (1) 21,403 — Less: accumulated amortization (378) — Intangible assets, net $ 21,025 $ — (1) The remaining weighted average amortization period for total intangible assets was 18.8 years as of December 31, 2023.
Intangible Assets Intangible assets, net consisted of the following as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Intangible assets, at cost: Saltwater disposal easement $ 17,557 $ 17,557 Contracts acquired in a business combination (1) 15,700 — Groundwater rights acquired 3,846 3,846 Total intangible assets, at cost (2) 37,103 21,403 Less: accumulated amortization (1,915) (378) Intangible assets, net $ 35,188 $ 21,025 (1) See further discussion in Note 3, “Assets Acquired in a Business Combination.” (2) The remaining weighted average amortization period for total intangible assets was 11.8 years as of December 31, 2024.
If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 2,394 additional units would be issued).
If the maximum amount of the performance metrics described in the applicable PSU agreements are achieved, the actual number of shares that will ultimately vest pursuant to the PSU agreements will exceed target PSUs by 100% (i.e., a collective 12,738 additional shares would be issued).
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 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.
Share-based compensation expense for PSU awards with performance conditions is recognized ratably over the measurement period at such time as the awards are probable and estimable. Share-based compensation expense for PSU awards with market conditions is recognized ratably over the measurement period whether the market condition is satisfied or not if the service for the award is rendered.
Share-based compensation expense for PSU awards with market conditions is recognized ratably over the measurement period regardless of whether the market condition is satisfied if the service for the award is rendered.
Treasury bills, money market funds, and commercial paper with maturities of three months or less) among two major financial institutions in an attempt to minimize exposure to risk from any one of these entities. As of December 31, 2023 and 2022, we had cash and cash equivalents deposited in our financial institutions in excess of federally-insured levels.
Concentrations of Credit Risk We invest our cash and cash equivalents (which include U.S. Treasury bills, money market funds, and commercial paper with maturities of three months or less) among three major financial institutions in an attempt to minimize exposure to risk from any one of these entities.
(2) The PSUs were granted on February 10, 2023 and include 926 RTSR PSUs (based on target) with a grant date fair value of $2,761 per share and 926 FCF PSUs (based on target) with a grant date fair value of $1,924 per share.
(2) The PSUs were granted on February 13, 2024 and include 4,170 RTSR PSUs (based on target) with a grant date fair value of $602 per share and 4,170 FCF PSUs (based on target) with a grant date fair value of $475 per share.
Four customers represented, in the aggregate, 51.8% of TPL’s total revenues for the year ended December 31, 2022. Three customers represented, in the aggregate, 41.0% of TPL’s total revenues for the year ended December 31, 2021.
Significant Customers Three customers represented, in the aggregate, 40.9% of TPL’s total revenues for the year ended December 31, 2024. Three customers represented, in the aggregate, 42.5% of TPL’s total revenues for the year ended December 31, 2023. Four customers represented, in the aggregate, 51.8% of TPL’s total revenues for the year ended December 31, 2022. 3.
The weighted-average lease term for our operating lease liabilities is approximately 33 months. The weighted average discount rate of our operating leases is 4.7%.
The weighted average discount rate of our operating leases is 4.7%.
Financial Statements TEXAS PACIFIC LAND CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except shares and per share amounts) December 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 725,169 $ 510,834 Accounts receivable and accrued receivables, net 128,971 103,983 Prepaid expenses and other current assets 2,944 7,427 Tax like-kind exchange escrow 5,380 6,348 Prepaid income taxes — 4,809 Total current assets 862,464 633,401 Real estate acquired 130,024 109,704 Property, plant and equipment, net 89,587 85,478 Royalty interests acquired, net 46,609 45,025 Intangible assets, net 21,025 — Real estate and royalty interests assigned through the Declaration of Trust, no value assigned: Land (surface rights) — — 1/16th nonparticipating perpetual royalty interest — — 1/128th nonparticipating perpetual royalty interest — — Operating lease right-of-use assets 1,861 2,525 Other assets 4,828 1,294 Total assets $ 1,156,398 $ 877,427 LIABILITIES AND EQUITY Accounts payable and accrued expenses $ 22,501 $ 23,443 Ad valorem and other taxes payable 10,761 8,497 Income taxes payable 4,795 3,167 Unearned revenue 6,330 4,488 Total current liabilities 44,387 39,595 Deferred taxes payable 42,365 41,151 Unearned revenue - noncurrent 25,006 21,708 Operating lease liabilities 1,170 1,955 Accrued liabilities - noncurrent 274 131 Total liabilities 113,202 104,540 Commitments and contingencies — — Equity: Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of December 31, 2023 and 2022 — — Common stock, $0.01 par value; 7,756,156 shares authorized and 7,669,227 and 7,695,679 outstanding as of December 31, 2023 and 2022, respectively 78 78 Treasury stock, at cost; 86,929 and 60,477 shares as of December 31, 2023 and 2022, respectively (144,998) (104,139) Additional paid-in capital 14,613 8,293 Accumulated other comprehensive income 1,831 2,516 Retained earnings 1,171,672 866,139 Total equity 1,043,196 772,887 Total liabilities and equity $ 1,156,398 $ 877,427 See accompanying notes to consolidated financial statements.
Financial Statements TEXAS PACIFIC LAND CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except shares and per share amounts) December 31, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 369,835 $ 725,169 Accounts receivable and accrued receivables, net 126,670 128,971 Prepaid expenses and other current assets 5,318 2,944 Tax like-kind exchange escrow 1,546 5,380 Total current assets 503,369 862,464 Royalty interests acquired, net 432,401 46,609 Real estate acquired 143,178 130,024 Property, plant and equipment, net 122,578 89,587 Intangible assets, net 35,188 21,025 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 1,163 1,861 Other assets 10,143 4,828 Total assets $ 1,248,020 $ 1,156,398 LIABILITIES AND EQUITY Accounts payable and accrued expenses $ 26,958 $ 22,501 Ad valorem and other taxes payable 8,418 10,761 Income taxes payable 4,388 4,795 Unearned revenue 6,797 6,330 Total current liabilities 46,561 44,387 Deferred taxes payable 47,401 42,365 Unearned revenue - noncurrent 20,636 25,006 Operating lease liabilities 453 1,170 Accrued liabilities - noncurrent 504 274 Total liabilities 115,555 113,202 Commitments and contingencies (Note 13) — — Equity: Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of December 31, 2024 and 2023 — — Common stock, $0.01 par value; 46,536,936 shares authorized as of December 31, 2024 and 2023, 22,971,803 and 23,007,681 outstanding as of December 31, 2024 and 2023, respectively 231 78 Treasury stock, at cost; 114,273 and 86,929 shares as of December 31, 2024 and 2023, respectively (168,843) (144,998) Additional paid-in capital 19,900 14,613 Accumulated other comprehensive income 3,583 1,831 Retained earnings 1,277,594 1,171,672 Total equity 1,132,465 1,043,196 Total liabilities and equity $ 1,248,020 $ 1,156,398 See accompanying notes to consolidated financial statements.
We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy.
Our leased facilities include our administrative offices located in Dallas and Midland, Texas. Our leases generally contain options to extend or terminate the lease. We reevaluate our leases on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and how they align with our operating strategy.
The following table summarizes the projected benefit obligation in excess of Pension Plan assets and Pension Plan assets in excess of accumulated benefit obligation as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Projected benefit obligation in excess of Pension Plan assets: Projected benefit obligation $ 10,553 $ 8,177 Fair value of Pension Plan assets $ 14,201 $ 11,650 Plan assets in excess of accumulated benefit obligation: Accumulated benefit obligation $ 6,417 $ 5,277 Fair value of Pension Plan assets $ 14,201 $ 11,650 F-16 Table of Contents The following are weighted-average assumptions used to determine benefit obligations and costs as of December 31, 2023, 2022 and 2021: Years Ended December 31, 2023 2022 2021 Weighted average assumptions used to determine benefit obligations as of December 31: Discount rate 5.00 % 5.25 % 3.00 % Rate of compensation increase 7.29 % 7.29 % 7.29 % Weighted average assumptions used to determine benefit costs for the years ended December 31: Discount rate 5.25 % 3.00 % 2.75 % Expected return on Pension Plan assets 7.00 % 7.00 % 7.00 % Rate of compensation increase 7.29 % 7.29 % 7.29 % The expected return on Pension Plan assets assumption of 7.0% was selected by TPL based on historical real rates of return for the current asset mix and an assumption with respect to future inflation.
The following table summarizes the projected benefit obligation in excess of Pension Plan assets and Pension Plan assets in excess of accumulated benefit obligation as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Projected benefit obligation in excess of Pension Plan assets: Projected benefit obligation $ 3,567 $ 10,553 Fair value of Pension Plan assets $ 12,611 $ 14,201 Plan assets in excess of accumulated benefit obligation: Accumulated benefit obligation $ 3,567 $ 6,417 Fair value of Pension Plan assets $ 12,611 $ 14,201 F-20 Table of Contents The following are weighted-average assumptions used to determine benefit obligations and costs as of December 31, 2024, 2023 and 2022: Years Ended December 31, 2024 2023 2022 Weighted average assumptions used to determine benefit obligations as of December 31: Discount rate 5.75 % 5.00 % 5.25 % Rate of compensation increase N/A (1) 7.29 % 7.29 % Weighted average assumptions used to determine benefit costs for the years ended December 31: Discount rate 5.00 % 5.25 % 3.00 % Expected return on Pension Plan assets 7.00 % 7.00 % 7.00 % Rate of compensation increase 7.29 % 7.29 % 7.29 % (1) As the Pension plan was frozen effective December 31, 2024, this assumption is not applicable in the calculation of the benefit obligations as of December 31, 2024.
Dividends and dividend equivalent rights are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited.
Currently, all awards granted under the Plans are entitled to receive dividends (which are accrued and distributed to award recipients upon vesting) or have dividend equivalent rights. Dividends and dividend equivalent rights are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited.
This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time.
The Company opportunistically repurchases stock under the stock repurchase program with funds generated by cash from operations. This stock repurchase program may be suspended from time to time, modified, extended or discontinued by the Board at any time.
See Note 11, “Earnings Per Share.” Treasury Stock Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired Common Stock is recorded as treasury stock. The cost associated with issuance of treasury stock is based on the average cost of treasury stock as of the date of issuance.
See Note 12, “Earnings Per Share.” Treasury Stock Treasury stock purchases are accounted for under the cost method whereby the entire cost of the shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), acquired is recorded as treasury stock.
(2) RSUs vest in one-third increments over a three-year period. (3) Of the 3,161 shares that vested during the year ended December 31, 2023, 1,165 shares were surrendered upon vesting by employees to the Company to settle tax withholding obligations.
Of the 9,483 RSUs that vested during the year ended December 31, 2023, 3,495 RSUs were surrendered by employees to the Company upon vesting to settle tax withholding obligations.
Other Income, Net Other income, net, includes interest earned on our cash balances, other employee pension costs, and other miscellaneous income (expense). Miscellaneous income (expense) includes insurance proceeds and gains and losses on disposals of capital assets.
Miscellaneous income (expense) includes insurance proceeds and gains and losses on disposals of capital assets.
The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Restricted Stock Awards Restricted Stock Awards Number of RSAs Weighted-Average Grant-Date Fair Value per Share Number of RSAs Weighted-Average Grant-Date Fair Value per Share Nonvested at beginning of period 699 $ 1,281 — $ — Granted (1) 486 2,344 784 1,277 Vested (807) 1,423 — — Cancelled and forfeited — — (85) 1,249 Nonvested at end of period 378 $ 2,344 699 $ 1,281 (1) RSAs vest on the first anniversary of the grant date.
F-23 Table of Contents The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 Restricted Stock Awards Restricted Stock Awards Number of RSAs Weighted-Average Grant-Date Fair Value per Share Number of RSAs Weighted-Average Grant-Date Fair Value per Share Nonvested at beginning of period 1,134 $ 781 2,097 $ 427 Granted (1) 2,160 524 1,458 781 Vested (3,294) 612 (2,421) 474 Cancelled and forfeited — — — — Nonvested at end of period — $ — 1,134 $ 781 (1) RSAs granted prior to October 31, 2023 vest on the first anniversary of the grant date and RSAs granted on or after October 31, 2023 vest in full on the date of grant.
F-3 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND TOTAL COMPREHENSIVE INCOME (in thousands, except shares and per share amounts) Years Ended December 31, 2023 2022 2021 Revenues: Oil and gas royalties $ 357,394 $ 452,434 $ 286,468 Water sales 112,203 84,725 67,766 Produced water royalties 84,260 72,234 58,081 Easements and other surface-related income 70,932 48,057 37,616 Land sales and other operating revenue 6,806 9,972 1,027 Total revenues 631,595 667,422 450,958 Expenses: Salaries and related employee expenses 43,384 41,402 40,012 Water service-related expenses 33,566 17,463 13,233 General and administrative expenses 14,928 13,285 11,638 Legal and professional fees 31,522 8,735 7,281 Ad valorem and other taxes 7,385 8,854 144 Depreciation, depletion and amortization 14,757 15,376 16,257 Total operating expenses 145,542 105,115 88,565 Operating income 486,053 562,307 362,393 Other income, net 31,508 6,548 624 Income before income taxes 517,561 568,855 363,017 Income tax expense (benefit): Current 110,517 121,230 93,265 Deferred 1,399 1,263 (228) Total income tax expense 111,916 122,493 93,037 Net income $ 405,645 $ 446,362 $ 269,980 Amortization of net actuarial costs, net of income taxes of $(27), $9, and $30 for the years ended December 31, 2023, 2022 and 2021, respectively (103) 32 114 Net actuarial (loss) gain on pension plan, net of income taxes of $(157), $931, and $418 as of December 31, 2023, 2022 and 2021, respectively (582) 3,491 1,572 Total other comprehensive income (loss) (685) 3,523 1,686 Total comprehensive income $ 404,960 $ 449,885 $ 271,666 Net income per share of common stock Basic $ 52.81 $ 57.80 $ 34.83 Diluted $ 52.77 $ 57.77 $ 34.83 Weighted average number of shares of common stock outstanding Basic 7,681,435 7,721,957 7,752,027 Diluted 7,686,615 7,726,809 7,752,054 See accompanying notes to consolidated financial statements.
F-4 Table of Contents TEXAS PACIFIC LAND CORPORATION CONSOLIDATED STATEMENTS OF INCOME AND TOTAL COMPREHENSIVE INCOME (in thousands, except shares and per share amounts) Years Ended December 31, 2024 2023 2022 Revenues: Oil and gas royalties $ 373,331 $ 357,394 $ 452,434 Water sales 150,724 112,203 84,725 Produced water royalties 104,123 84,260 72,234 Easements and other surface-related income 73,257 70,932 48,348 Land sales 4,388 6,806 9,681 Total revenues 705,823 631,595 667,422 Expenses: Salaries and related employee expenses 53,621 43,384 41,402 Water service-related expenses 46,124 33,566 17,463 General and administrative expenses 34,483 46,450 22,020 Depreciation, depletion and amortization 25,162 14,757 15,376 Ad valorem and other taxes 7,295 7,385 8,854 Total operating expenses 166,685 145,542 105,115 Operating income 539,138 486,053 562,307 Other income, net 39,683 31,508 6,548 Income before income taxes 578,821 517,561 568,855 Income tax expense: Current 120,257 110,517 121,230 Deferred 4,604 1,399 1,263 Total income tax expense 124,861 111,916 122,493 Net income $ 453,960 $ 405,645 $ 446,362 Amortization of net actuarial costs, net of income taxes of $(182), $(27), and $9 for the years ended December 31, 2024, 2023 and 2022, respectively (684) (103) 32 Net actuarial (loss) gain on pension plan, net of income taxes of $483, $(157), and $931 as of December 31, 2024, 2023 and 2022, respectively 2,436 (582) 3,491 Total other comprehensive income (loss) 1,752 (685) 3,523 Total comprehensive income $ 455,712 $ 404,960 $ 449,885 Net income per share of common stock Basic $ 19.75 $ 17.60 $ 19.27 Diluted $ 19.72 $ 17.59 $ 19.26 Weighted average number of shares of common stock outstanding Basic 22,986,197 23,044,305 23,165,871 Diluted 23,019,751 23,059,845 23,180,427 See accompanying notes to consolidated financial statements.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

50 edited+19 added−35 removed23 unchanged
Biggest changeIn addition, certain cyber incidents, such as surveillance, may remain undetected for some period of time. While we utilize various systems, procedures and controls to mitigate exposure to such risk, cyber incidents and attacks are continually evolving and unpredictable. Our information technology systems and any insurance coverage for protecting against cybersecurity risks may not be sufficient.
Biggest changeEven without a direct breach of our systems, cybersecurity attacks on such third parties could adversely impact our business and reputation. In addition, certain cyber incidents, such as surveillance, may remain undetected for some period of time.
As oil and gas wells age, their production capacity may decline absent additional investment. However, the owners and operators of the oil and gas wells make all decisions as to investments in, and production from, those wells and our royalties are dependent upon decisions made by those operators, among other factors.
As oil and gas wells age, their production capacity may decline absent additional investment. However, the owners and operators of the oil and gas wells make all decisions as to investments in, and production from, those wells and our royalties are dependent upon decisions made by those owners and operators, among other factors.
Our business and financial results are subject to major trends in our industry, such as decarbonization, and may be adversely affected by future developments out of our control. Much of the value of the land we own and upon which we receive royalties is based on the oil and natural gas reserves located there.
Our business and financial results are subject to major trends in our industry, such as decarbonization, and may be adversely affected by future developments that are out of our control. Much of the value of the land we own and upon which we receive royalties is based on the oil and natural gas reserves located there.
Declines, as well as anticipated declines, in oil and gas prices have in the past resulted in, and may in the future result in, lower capital expenditures, project modifications, delays or cancellations, general business disruptions, and delays in payment of, or nonpayment of, amounts that are owed to us, which would adversely affect our earnings, cash flow and financial condition.
Declines, as well as anticipated declines, in oil and gas prices have in the past resulted, and may in the future result, in lower capital expenditures, project modifications, delays or cancellations, general business disruptions, and delays in payment, or nonpayment, of amounts that are owed to us, which could in the future, adversely affect our earnings, cash flow and financial condition.
Our results may continue to be impacted by producer discretion on development pacing and capital expenditures. 9 Table of Contents We face the risks of doing business in a new and rapidly evolving market for TPWR and may not be able to successfully address such risks and achieve acceptable levels of success or profits.
Our results may continue to be impacted by producer discretion on development pacing and capital expenditures. 8 Table of Contents We face the risks of doing business in a new and rapidly evolving market for TPWR and may not be able to successfully address such risks and achieve acceptable levels of success or profits.
The implementation of SRAs could limit the volume of produced water disposed on the Company’s surface within the SRAs or, in certain cases, could direct additional volumes of produced water to SWDs on the Company’s surface outside of SRAs. These limitations and/or redirections may cause TPWR to adapt its business plans and could affect TPWR’s financial performance.
The implementation of SRAs could limit the volume of produced water disposed on the Company’s surface within the SRAs or, in certain cases, could direct additional volumes of produced water to SWDs on the Company’s surface outside of SRAs. These limitations and/or redirections may require TPWR to adapt its business plans and could affect TPWR’s financial performance.
These laws and regulations may increase the costs and timing of planning, designing, drilling, installing, operating and abandoning water wells, source water and treatment facilities and impact our customers’ ability to transport, store and/or dispose of produced water in certain locations.
These laws and regulations may increase the costs and timing of planning, designing, drilling, installing, operating and abandoning water wells and sourced water and treatment facilities and impact our customers’ ability to transport, store and/or dispose of produced water in certain locations.
District Court for the Northern District of Texas (or, if such court does not have jurisdiction, any district court in Dallas County in the State of Texas) will be the sole and exclusive forums for any derivative action brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees or stockholders, any action or proceeding asserting a claim against us or any of our directors, officers, employees or agents arising pursuant to, or seeking to enforce any right, obligation or remedy under any provision of the DGCL, the laws of the State of Texas, our amended and restated certificate of incorporation or our amended and restated bylaws or any action asserting a claim against us or any of our directors, officers, employees or agents governed by the internal affairs doctrine, in each such case, subject to the applicable court having personal jurisdiction over the indispensable parties named as defendants.
District Court for the Northern District of Texas in Dallas, Texas (or, if such court does not have jurisdiction, any district court in Dallas County in the State of Texas) will be the sole and exclusive forums for 12 Table of Contents any derivative action brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees or stockholders, any action or proceeding asserting a claim against us or any of our directors, officers, employees or agents arising pursuant to, or seeking to enforce any right, obligation or remedy under any provision of the DGCL, the laws of the State of Texas, the laws of the State of New York, our amended and restated certificate of incorporation or our Bylaws or any action asserting a claim against us or any of our directors, officers, employees or agents governed by the internal affairs doctrine, in each such case, subject to the applicable court having personal jurisdiction over the indispensable parties named as defendants in such action or proceeding.
The completion of the Corporate Reorganization may implicate conditions and covenants, contained in certain agreements to which the Trust was, and now TPL Corporation is, a party and thereby may cause us to lose certain benefits that the Trust historically received.
The completion of the Corporate Reorganization implicated conditions and covenants contained in certain agreements to which the Trust was, and now TPL Corporation is, a party and thereby may cause us to lose certain benefits that the Trust historically received.
Supply shortages and/or price increases could lead to a reduction in revenues and an increase in our operating costs and could have a material impact on our business segments and earnings, cash flow and financial condition.
Supply shortages and/or price increases could lead to a reduction in revenues and an increase in our operating costs, which would have a material impact on our business segments and earnings, cash flow and financial condition.
In addition, we are subject to Section 203 of the Delaware General Corporation Law (“DGCL”), which could have the effect of delaying or preventing a change of control that you may favor.
In addition, we are subject to Section 203 of the Delaware General Corporation Law, as amended (“DGCL”), which could have the effect of delaying or preventing a change of control that you may favor.
The loss of key members of our management team or difficulty attracting and retaining experienced technical personnel could reduce our competitiveness and prospects for future success. The successful implementation of our strategies and handling of other issues integral to our future success will depend, in part, on our experienced management team, including with respect to the business of TPWR.
The loss of key members of our management team or difficulty attracting and retaining experienced technical personnel could reduce our competitiveness and prospects for future success. The successful implementation of our strategies and handling of other issues integral to our future success depends, in part, on our experienced management team, including with respect to the business of TPWR.
These measures have at times resulted in a reduction of global economic activity and volatility in the global financial markets. The scale and duration of the impact of these factors remain unknowable but could lead to a decrease in our revenues and have a material impact on our business segments and earnings, cash flow and financial condition.
These events and conditions have, at times, resulted in a reduction of global economic activity and volatility in the global financial markets. The scale and duration of the impact of these factors remain unknowable but could lead to a decrease in our revenues and have a material impact on our business segments and earnings, cash flow and financial condition.
The market price of our Common Stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our results of operations due to factors related to our business; • our quarterly or annual earnings, or those of other companies in our industry; 12 Table of Contents • changes to the regulatory and legal environment under which we operate; • changes in accounting standards, policies, guidance, interpretations or principles; • the failure of securities analysts to cover, or positively cover, our Common Stock; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • investor perception of our Company and our industry; • actual or anticipated fluctuations in commodities prices; and • domestic and worldwide economic and geopolitical conditions.
The market price of our Common Stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • actual or anticipated fluctuations in our results of operations due to factors related to our business; • our quarterly or annual earnings, or those of other companies in our industry; • changes to the regulatory and legal environment under which we operate; • changes in accounting standards, policies, guidance, interpretations or principles; • reports issued by securities analysts; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • investor perception of our Company and our industry; • actual or anticipated fluctuations in commodities prices; and • domestic and worldwide economic and geopolitical conditions.
Accordingly, a significant portion of our revenues is reliant on the management and actions of third parties, over whom we have no control. There can be no assurance that such third parties will take actions or make decisions that will be beneficial to us, which could result in adverse effects on our financial results and performance.
Accordingly, a significant portion of our revenues is reliant on the management and actions of third parties, over whom we have no control. Such third parties may not take actions or make decisions that will be beneficial to us, which could result in adverse effects on our financial results and performance.
However, any repurchase will be within the discretion of our Board and will depend upon many factors, including market and business conditions, the trading price of our Common Stock, available cash and cash flow, capital requirements and the nature of other investment opportunities.
Any future repurchase under the stock repurchase program will be within the discretion of our Board and will depend upon many factors, including market and business conditions, the trading price of our Common Stock, available cash and cash flow, capital requirements and the nature of other investment opportunities.
Our business could be negatively affected by supply shortages and/or price increases driven by the increased costs of materials and logistics as a result of macroeconomic conditions, including the prolonged Ukraine/Russia conflict, general inflationary pressures, labor shortages, part or equipment availability, manufacturing capacity, tariffs, trade disputes and barriers, natural disasters or pandemics and the effects of climate change.
Our business could be negatively affected by supply shortages and/or price increases driven by the increased costs of materials and logistics as a result of macroeconomic conditions, including geopolitical conflicts, general inflationary pressures, labor shortages, part or equipment availability, manufacturing capacity, tariffs, trade disputes and barriers, natural disasters or pandemics and the effects of climate change.
We are not an oil and gas producer. Our revenues from oil and gas royalties are subject to the actions of others. We are not an oil and gas producer. Our oil and gas income is derived primarily from perpetual non-participating oil and gas royalty interests that we have retained.
We are not an oil and gas producer. Our revenues from oil and gas royalties are subject to the actions of others. We are not an oil and gas producer. Our oil and gas royalty revenue is derived primarily from perpetual non-participating oil and gas royalty interests that we have retained or acquired.
We have encountered and may continue to encounter the challenges, uncertainties and difficulties frequently experienced in new and rapidly evolving markets with respect to the business of TPWR, including: • pricing pressure driven by new competition; • volatile and/or unexpected operating and maintenance costs; • lack of sufficient customers or loss of significant customers for the new line of business; • increased regulation, including with respect to environmental and geological uses and impacts on industry operations; and • uncertainty with outsourced 3rd party provider(s) providing water treatment services.
We have encountered and may continue to encounter the challenges, uncertainties and difficulties frequently experienced in new and rapidly evolving markets with respect to the business of TPWR, including, but not limited to: • pricing pressure driven by new competition; • volatile and/or unexpected operating and maintenance costs; • lack of sufficient customers or loss of significant customers for the new line of business; • increased regulation, including with respect to environmental and geological uses and impacts on industry operations; and • uncertainty regarding outsourced third-parties providing water treatment services.
Our technologies, systems, networks, and those of the operators on our properties, vendors, suppliers, and other business 10 Table of Contents partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary, personal and other information, or other disruption of business activities.
Our technologies, systems and networks, and those of the operators on our properties and our vendors, suppliers and other business partners, have in certain instances been, and may in the future become, the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary, personal and other information, or other disruption of business activities.
Supply chain issues may disrupt the operations and development activities of operators on our land, upon whom much of our revenue relies, which could negatively affect our revenues from oil and gas royalties, easements and our water offerings.
Supply chain issues may disrupt the operations and development activities of operators on our land, upon whom a significant portion of our revenue relies, which could negatively affect our revenues from oil and gas royalties, easements and 10 Table of Contents our water offerings.
If our amended and restated certificate of incorporation is amended to allow for the issuance of additional Common Stock, holders of our Common Stock could be diluted because of equity issuances for proposed acquisitions or capital market transactions or equity awards proposed to be granted to our directors, officers and employees subject to any required vote of holders of our Common Stock under our amended and restated certificate of incorporation and amended and restated bylaws.
Holders of our Common Stock could be diluted because of equity issuances for proposed acquisitions or capital market transactions or equity awards proposed to be granted to our directors, officers and employees subject to any required vote of holders of our Common Stock under our amended and restated certificate of incorporation and our amended and restated bylaws (“the Bylaws”).
Our amended and restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover.
Our amended and restated certificate of incorporation, Bylaws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover.
We may be required to incur significant legal fees and other expenses related to activist stockholder matters, and the attention of our management may be diverted by such activism. While we welcome our stockholders’ constructive input, there can be no assurance that stockholder actions would not result in negative impacts to the Company.
We have incurred, and may in the future be required to incur, significant legal fees and other expenses related to activist stockholder matters, and the attention of our management may be diverted by such activism. While we welcome our stockholders’ constructive input, stockholder actions may result in negative impacts to the Company.
Our ability to sell land can be, therefore, largely dependent on the actions of adjoining landowners. Demand for TPWR’s products and services is substantially dependent on the levels of expenditures by our customers. Demand for TPWR’s products and services depends substantially on demand and expenditures by our customers for the exploration, development and production of oil and natural gas reserves.
Our ability to sell land can be, therefore, largely dependent on the actions of adjoining landowners. Demand for TPWR’s products and services is substantially dependent on the levels of expenditures by our customers.
Cyber incidents or attacks targeting systems and infrastructure used by the oil and gas industry may adversely impact our operations, and if we are unable to obtain and maintain adequate protection of our data, our business may be adversely impacted.
Cyber incidents or attacks targeting the systems and infrastructure used by us, our operators, other third parties with whom we do business or the oil and gas industry in general may adversely impact our operations, and if we are unable to obtain and maintain adequate protection of our data, our business may be adversely impacted.
Any of these impacts could materially and adversely affect our business and operating results, and the market price of our Common Stock could be subject to significant fluctuation or otherwise be adversely affected by stockholder activism.
Any of these impacts could materially and adversely affect our business and operating 13 Table of Contents results, and the market price of our Common Stock could be subject to significant fluctuation or otherwise be adversely affected by stockholder activism. Item 1B. Unresolved Staff Comments. Not Applicable.
The decision is currently subject to an appeal, and, therefore, we have not yet taken any action to amend the amended and restated certificate of incorporation. 13 Table of Contents In addition, our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more series of preferred stock having such designations, powers, preferences, privileges and relative, participating, optional and special rights, and qualifications, limitations and restrictions as the Board may generally determine in its sole discretion.
In addition, our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more series of preferred stock having such designations, powers, preferences, privileges and relative, 11 Table of Contents participating, optional and special rights, and qualifications, limitations and restrictions as the Board may generally determine in its sole discretion.
In addition, the possibility of taxes on energy sources, including oil and gas, may affect the demand for crude oil and natural gas and the operating costs for third party operators on our royalty properties.
In addition, the possibility of taxes on energy sources, including oil and gas, may affect the demand for crude oil and natural gas and the operating costs for third-party operators on our royalty properties. Our business could be negatively affected as a result of the actions of activists.
The loss of key members of our management team could have an adverse effect on our business. If we cannot retain our experienced personnel or attract additional experienced personnel, our ability to compete could be harmed. Global health threats may adversely affect our business.
The loss of key members of our management team could have an adverse effect on our business. If we cannot retain our experienced personnel or attract additional experienced personnel, our ability to compete within our industry could be harmed. We face direct and indirect supply chain risks that may adversely affect our business.
When lower market prices for oil and gas occur, they will have an adverse effect on our oil and gas royalties. The market prices for oil and gas are subject to US and global macroeconomic and geopolitical conditions and infrastructure and logistical constraints, amongst others, and, in the past, have been subject to significant price fluctuations.
Market prices for oil and gas are subject to US and global macroeconomic and geopolitical conditions and infrastructure and logistical constraints, amongst others, and, in the past, have been subject to significant price fluctuations.
We and our operators increasingly rely on information technology systems to operate our respective businesses, and the oil and gas industry depends on digital technologies in exploration, development, production, and processing activities. Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow.
We and our operators increasingly rely on information technology systems to operate our respective businesses, and the oil and gas industry depends on digital technologies in exploration, development, production, and processing activities.
Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred stock could affect the residual value of our Common Stock. We may not continue the Trust’s historical practice of declaring cash dividends.
Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred stock could affect the residual value of our Common Stock. We may not continue to pay dividends or to pay dividends at the same rate as previously paid.
These provisions include, among others: (a) the ability of our remaining directors to fill vacancies on our Board (except in an instance where a director is removed by stockholders and the resulting vacancy is filled by stockholders); (b) the inability of stockholders to call a special meeting of stockholders; (c) rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and (d) the right of our Board to issue preferred stock without stockholder approval.
These provisions include, among others: (a) the ability of our remaining directors to fill vacancies on our Board; (b) the ability of our Board to adopt, amend or repeal bylaws; (c) rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and (d) the right of our Board to issue preferred stock without stockholder approval.
Our business could be negatively affected as a result of stockholder activism, which could cause us to incur significant expense, hinder execution of our business strategy, and impact the trading value of our securities.
Our business could be negatively affected as a result of stockholder activism, which could cause us to incur significant expense, hinder execution of our business strategy, and impact the trading value of our securities. In the past, we have been the subject of stockholder activism, and we are subject to the risks associated with any ongoing or future such activism.
These expenditures are generally dependent on our customers’ overall financial position, capital allocation priorities, and views of future oil and natural gas prices.
Demand for TPWR’s products and services is substantially dependent on demand and expenditures by our customers for the exploration, development and production of oil and natural gas reserves. These expenditures are generally dependent on our customers’ overall financial position, capital allocation priorities, and views of future oil and natural gas prices.
Our revenues depend on natural and environmental conditions with respect to operations that result in royalties to us, or that use our water services.
Risks Related to Our Industry Our business and financial results could be disrupted by natural or human causes beyond our control . Our revenues depend on natural and environmental conditions with respect to operations that result in royalties to us, or that use our water services.
The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our Common Stock.
The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our Common Stock. For example, we could grant the holders of preferred stock the right to elect members of the Board or to veto specified transactions.
TPWR has adapted lead times for ordering parts and equipment to mitigate supply chain issues, but given the uncertainty surrounding the macroeconomic factors and geopolitical situation, there can be no assurance that we will not suffer adverse effects on our business operations in the future.
TPWR has adapted lead times for ordering parts and equipment to mitigate supply chain issues in the past and will use its best efforts to adapt to additional supply chain issues in the future, but given the uncertainty surrounding the macroeconomic factors and geopolitical situation, supply chain issues may negatively affect our business operations in the future.
In the past, the Company has been the subject of stockholder activism, and we are subject to the risks associated with any ongoing or future such activism. Stockholder activism, including potential proxy contests, requires significant time and attention by management and our Board, potentially interfering with our ability to execute our strategic plan.
Stockholder activism, including potential proxy contests, requires significant time and attention by management and our Board, potentially interfering with our ability to execute our strategic plan.
District Court for the Northern District of Texas as the sole and exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against the Company and our directors and officers. 14 Table of Contents Our amended and restated certificate of incorporation provides that unless the Company otherwise determines, the Court of Chancery of the State of Delaware (or, if such court does not have jurisdiction, the U.S.
District Court for the Northern District of Texas as the sole and exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against the Company and our directors and officers.
Risks Related to our Business Our oil and gas royalties are dependent upon the market prices of oil and gas which fluctuate. The oil and gas royalties that we receive are dependent upon the market prices for oil and gas.
In that case, the market price of our stock could decline and you could lose part or all of your investment in our stock. Risks Related to Our Business Our oil and gas royalties are dependent upon the market prices of oil and gas which fluctuate.
Risks Related to the Corporate Reorganization The completion of the Corporate Reorganization may implicate conditions and covenants contained in certain agreements to which the Trust was a party and thereby may cause us to lose certain benefits that the Trust historically received.
A third party has refused to continue to fulfill its obligations under existing arrangements to which the Trust was a party in connection with the completion of our Corporate Reorganization, and thereby may cause us to lose certain benefits that the Trust historically received.
We will evaluate whether to pay cash dividends on our Common Stock in the future and we cannot guarantee the timing, amount or payment of dividends, if any.
These factors could result in a change in our current dividend policy. We will evaluate whether to repurchase our outstanding Common Stock in the future and we cannot guarantee the timing or amount of share repurchases, if any.
While we intend to seek reimbursement from the third party following payment of such taxes, there can be no assurance that we will be successful in getting reimbursed. Taking on the cost of such payments will have an adverse impact on our business and results of operations. The Corporate Reorganization may have adverse tax consequences.
While we intend to seek reimbursement from the third party following payment of such taxes, there can be no assurance that we will be successful in getting reimbursed, and accordingly, no loss recovery receivable has been recorded as of December 31, 2024.
As cyber security threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. There can be no assurance that our business, finances, systems and assets will not be compromised in a cyber attack.
As cybersecurity threats continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. Any actual or perceived cybersecurity incident could adversely affect our business, financial position or results of operations.
We have received an indication from one such obligor that it does not intend to continue to make the ad valorem tax payments that it has been making to date.
We have received an indication from one such obligor that it does not intend to continue to make ad valorem tax payments related to 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.
Price fluctuations for oil and gas have been particularly volatile in recent years due to supply and demand fundamentals, Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (collectively referred to as “OPEC+”) actions, the prolonged Ukraine/Russia conflict and general economic cycles, among other factors.
Price fluctuations for oil and gas have been particularly volatile in recent years due to supply and demand constraints, worldwide energy conservation measures, OPEC and OPEC+ actions, global conflicts in major oil producing regions, especially in Eastern Europe and the Middle East, and general economic cycles, among other factors.
Item 1A. Risk Factors. An investment in our securities involves a degree of risk. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also have a material adverse effect on us.
Additional risks not presently known to us or that we currently deem immaterial may also have a material adverse effect on us. If any of the following risks actually occur, our financial condition, results of operations, cash flows or business could be harmed.
The increased volatility of our stock price following the Corporate Reorganization may have a material adverse effect on our business, financial condition and results of operations.
Taking on the cost of such payments will have an adverse impact on our business and results of operations. Risks Related to Our Common Stock The market price of our Common Stock may fluctuate significantly.
Removed
If any of the following risks actually occur, our financial condition, results of operations, cash flows or business could be harmed. In that case, the market price of our stock could decline and you could lose part or all of your investment in our stock.
Added
Item 1A. Risk Factors. An investment in our securities involves a degree of risk. The risks described below, and other risks noted throughout this Annual Report on Form 10-K, including those risks identified in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are not the only ones facing us.
Removed
The Company continues to actively engage with the Texas Railroad Commission and evaluate the potential effect of SRAs on the Company’s produced water royalties. Our business and financial results could be disrupted by natural or human causes beyond our control .
Added
The oil and gas royalties that we receive are dependent upon the market prices for oil and gas, and decreases in such prices for oil and gas negatively impact the revenue realized on our oil and gas royalties.
Removed
Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, such as the outbreak of COVID-19.
Added
Reductions in market prices for oil and gas could also lead to decreased exploration and development activity by the operators of the properties on which we own oil and gas royalty interests, which could reduce our revenue potential with respect to such interests.
Removed
A significant outbreak of contagious diseases in the human population and resulting widespread health crisis could adversely affect the economies and financial markets of many countries, resulting in an economic downturn, reduced demand for oil and gas and interruption to supply chains related to oil and gas.
Added
We continue to actively engage with the Texas Railroad Commission and evaluate the potential effect of SRAs on our produced water royalties. Our estimated proved developed producing reserves are based on many assumptions that may prove to be inaccurate. Any inaccuracies in these estimates or underlying assumptions may materially affect the quantities and present value of our reserves.
Removed
The reduction of economic activity and reduced global demand for oil and gas related to such outbreaks and actions taken by governments to mitigate the spread of a virus or other infectious agent could lead to an increase in our operating costs and have a material impact on our business segments and earnings, cash flow and financial condition.
Added
It is not possible to measure underground accumulations of oil, natural gas, and NGL with precision. Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil and natural gas and assumptions concerning future oil and natural gas prices, production levels, ultimate recoveries and operating and development costs.
Removed
We face direct and indirect supply chain risks that may adversely affect our business.
Added
In estimating our proved developed producing (“PDP”) reserves, we and Ryder Scott Company, L.P.
Removed
If the Company is unable to obtain consents to, or approval or waiver of, any such conditions or covenants, or is unable to obtain an acknowledgement that any such benefits shall continue for the benefit of TPL Corporation, we may not be entitled to all benefits and other rights under such agreements, which may have an adverse impact on the business and results of operations.
Added
("Ryder Scott"), an independent third-party petroleum engineering firm, must make various assumptions with respect to many matters that may prove to be incorrect, including: • future oil, natural gas, and NGL prices; • unexpected complications from offset well development; • production rates; • reservoir pressures, decline rates, drainage areas and reservoir limits; • interpretation of subsurface conditions including geological and geophysical data; • potential for water encroachment or mechanical failures; • levels and timing of capital expenditures, lease operating expenses, production taxes and income taxes, and availability of funds for such expenditures; and • effects of government regulation. 9 Table of Contents If any of these assumptions prove to be incorrect, our estimates of PDP reserves, the classifications of reserves based on risk of recovery and our estimates of the future net cash flows from our reserves could change significantly.
Removed
Certain counterparties may withhold consent to, or approval or waiver of, certain conditions or covenants in order to obtain more favorable terms from us.
Added
Our historical estimates of proved, developed and producing reserves and related valuations as of December 31, 2024 were prepared by Ryder Scott, which conducted a well-by-well review of all wells in which we have a mineral or royalty interest for the period covered by its reserve report using information provided by us.
Removed
If the Company is unable to obtain consents to, or approval or waiver of, any such conditions or covenants, or if the Company is unable to obtain acknowledgement from any counterparties 11 Table of Contents that any such benefits shall continue for the benefit of TPL Corporation, then we may decide to enforce our rights and interests by initiating legal action.
Added
Over time, we may make material changes to reserve estimates. Some of our reserve estimates were made without the benefit of a lengthy production history, which are less reliable than estimates based on a lengthy production history. Our reserve estimates could differ materially from those reserve estimates of operators developing on our acreage.
Removed
In the meantime, and pending the outcome of any such legal proceeding to enforce our rights, we may be unable to continue to obtain all benefits and other rights under such agreements that would otherwise be transferred to us as part of the Corporate Reorganization. This may have an adverse impact on TPL’s business and results of operations.
Added
Numerous changes over time to the assumptions on which our reserve estimates are based, as described above, may result in the actual quantities of oil and natural gas that are ultimately recovered being different from our reserve estimates.
Removed
The amount of such taxes depends on the valuations determined by various county taxing authorities with respect to our royalty interests and the tax rates used in assessing such ad valorem taxes.
Added
While we utilize various systems, procedures and controls to mitigate exposure to cybersecurity attacks and prevent cybersecurity incidents, such systems, procedures and controls may be breached as a result of third-party action, employee error, third-party or employee malfeasance or otherwise.
Removed
Consequently, the amount of ad valorem taxes that may be assessed against our royalty interests may vary from year to year, and we are unable to reliably predict the amount of any such increases or decreases in future years.
Added
Globally, cybersecurity attacks are increasing in number, and the threat actors are increasingly organized and well financed, or at times supported by state actors. In addition, geopolitical tensions or conflicts may create a heightened risk of cybersecurity attacks.
Removed
We have accrued an estimate of such taxes and are making payments on a current basis in order to protect the royalty interests from any potential tax liens for nonpayment of future ad valorem taxes.
Added
Because the techniques used to obtain unauthorized access or to sabotage systems change frequently, we may not be able to anticipate these techniques and implement adequate preventative or protective measures. Our cyber liability insurance coverage may not be sufficient or may not be available in the future on acceptable terms, or at all.
Removed
We have obtained an opinion from counsel that the Corporate Reorganization and the Distribution qualified as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. The opinion of counsel does not address any U.S. state or local or non-U.S. tax consequences of the Corporate Reorganization and the Distribution.
Added
In addition, our cyber liability insurance policy may cover only a portion of losses incurred in investigating or remediating a cybersecurity incident, if at all, and may not cover all claims made against us.
Removed
The opinion assumed that the Corporate Reorganization and the Distribution was completed according to the terms of certain of the operative agreements and required regulatory filings, and relied on the facts as stated therein and in other ancillary agreements and documents.
Added
The issuance of additional Common Stock in the future would dilute other stockholders.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

17 edited+1 added−2 removed10 unchanged
Biggest changeThese quarterly updates include cybersecurity risk assessment updates from TPL’s Director of Information Technology, including key risk indicators, the steps management has taken to monitor and control such cybersecurity risk exposure, and continuous improvement efforts. In addition to the risk management experience of the Audit Committee members, Ms. Duganier holds the CERT Cybersecurity Oversight Certification from Carnegie Mellon University.
Biggest changeThroughout the year, the Audit Committee receives quarterly IT and cybersecurity updates unless there is a notable event that requires immediate communication. These quarterly updates include cybersecurity risk assessment updates from our Director of Information Technology, including key risk indicators, the steps management has taken to monitor and control such cybersecurity risk exposure, and continuous improvement efforts.
We regularly collaborate with the Company’s internal audit department and third parties with security and infrastructure expertise for review and evaluation of the Company’s cybersecurity risk program and the associated IT control environment. We engage third-party service providers to perform annual external penetration testing, disaster recovery testing, and security incident simulations.
We regularly collaborate with the Company’s internal audit department and third parties with security and infrastructure expertise for review and evaluation of the Company’s cybersecurity risk program and the associated IT control environment. We engage third-party service providers to perform annual external and internal penetration testing, disaster recovery testing, and security incident simulations.
Cyber Risk Management and Strategy Overview We employ a risk-based approach to cybersecurity which aligns with corporate strategy, risk management and governance, and adaptable information technology (“IT”) infrastructure.
Cyber Risk Management and Strategy Overview We employ a risk-based approach to cybersecurity which aligns with our corporate strategy, risk management and governance, and adaptable information technology (“IT”) infrastructure.
Both the IT Operating Committee and the IT Steering Committee meet on a quarterly basis. The IT Operating Committee reviews monthly reports on cybersecurity incident prevention, mitigation, detection, and remediation and reviews the Company’s plans and policies related to IT processes on an annual basis.
Both the IT Operating Committee and the IT Steering Committee meet on a quarterly basis. The IT Operating Committee reviews monthly reports on cybersecurity incident prevention, mitigation, detection, and remediation and reviews our plans and policies related to IT processes on an annual basis.
TPL’s information security program is designed to ensure that management and the Board are adequately informed about, and provided with the tools necessary to monitor, (i) material risks from cybersecurity threats and (ii) the Company’s efforts related to the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Our information security program is designed to ensure that management and the Board are adequately informed about, and provided with the tools necessary to monitor, (i) material risks from cybersecurity threats and (ii) our efforts related to the prevention, detection, mitigation, and remediation of cybersecurity incidents.
We also employ (i) network and endpoint intrusion prevention and detection throughout our infrastructure, (ii) systems that monitor our infrastructure and alert our management of potential cybersecurity issues and vulnerabilities, and (iii) a seasoned process for managing and installing patches for third-party applications.
We also employ (i) network and endpoint intrusion prevention and detection 14 Table of Contents throughout our infrastructure, (ii) systems that monitor our infrastructure and alert our management of potential cybersecurity issues and vulnerabilities, and (iii) a seasoned process for managing and installing patches for third-party applications.
We have also implemented the following protective and preventative measures: • identity management and access control safeguards; • encryption of data in transit and at rest; 16 Table of Contents • system and network security and monitoring; • information protection and governance; and, • ongoing systems and equipment maintenance.
We have also implemented the following protective and preventative measures: • identity management and access control safeguards; • encryption of data in transit and at rest; • system and network security and monitoring; • information protection and governance; and • ongoing systems and equipment maintenance.
The Director of Information Technology oversees risk management and strategy through (i) an IT operating committee (“the IT Operating Committee”) made up of the Director of Information Technology, the CISO, and the Company’s department heads, which is responsible for the establishment and review of the Company’s IT governance, risk management and compliance, and (ii) an IT steering committee (the “IT Steering Committee”) made up of the Company’s executives, which provides guidance and oversight to support and achieve TPL’s IT objectives, including cybersecurity.
The Director of Information Technology oversees risk management and strategy through (i) an IT operating committee (the “IT Operating Committee”) made up of the Director of Information Technology, the CISO, and our department heads, which is responsible for the establishment and review of our IT governance, risk management and compliance, and (ii) an IT steering committee (the “IT Steering Committee”) made up of our executives, which provides guidance and oversight to support and achieve our IT objectives, including cybersecurity objectives.
Third-Party Risk Management We have implemented and continue to maintain the Company’s IT policies, standards, procedures, and controls to oversee, identify and manage cybersecurity risks associated with all third-party service providers.
Third-Party Risk Management We have implemented and continue to maintain our IT policies, standards, procedures, and controls to oversee, identify and manage cybersecurity risks associated with all third-party service providers.
The Director of Information Technology also coordinates with the Company’s internal audit department and the Audit Committee to ensure cybersecurity is represented and addressed within the Company’s enterprise risk management strategy. 18 Table of Contents
The Director of Information Technology also coordinates with our internal audit department and the Audit Committee to ensure cybersecurity is represented and addressed within our enterprise risk management strategy. 16 Table of Contents
There can be no guarantee that our policies and procedures will be properly followed in every instance or that those policies and procedures will be effective. Our risk factors, which can found be found in Item 1A. “Risk Factors,” include further detail about the material cybersecurity risks we face.
Despite these efforts, our policies and procedures may not be properly followed in every instance and may not always be effective. Our risk factors, which can found be found in Part I, Item 1A. “Risk Factors,” include further detail about the material cybersecurity risks we face.
We have devoted substantial financial and personnel resources to implement and maintain security measures to meet regulatory requirements, and we intend to continue to make significant investments to maintain the security of our data and cybersecurity infrastructure.
Item 1C. Cybersecurity We have established policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats. We have devoted substantial financial and personnel resources to implement and maintain security measures to meet regulatory requirements, and we intend to continue to make significant investments to maintain the security of our data and cybersecurity infrastructure.
The qualifications of the Director of Information Technology include over 30 years of IT management, cybersecurity, and information governance experience. The CISO, who reports to the Director of Information Technology, has 21 years of cybersecurity, IT management, and infrastructure consulting experience and is a certified CISO.
The CISO, who reports to the Director of Information Technology, has 21 years of cybersecurity, IT management, and infrastructure consulting experience and is a certified CISO. The Director of Information Technology is regularly informed about the latest developments in cybersecurity, including potential threats, vulnerabilities, and innovative risk management techniques.
We have had no cybersecurity incidents to date, and can provide no assurance that there will not be incidents in the future or that they will not materially affect us, including our business strategy, results of operations, or financial condition.
We have had no cybersecurity incidents or other risks from cybersecurity threats to date that have materially affected, or are reasonably likely to materially affect, us, including our business strategy, results of operations, or financial condition.
Role of the Board The Board has delegated to the Audit Committee of the Board (the “Audit Committee”) primary responsibility for overseeing enterprise risk management, including oversight of risks from cybersecurity threats.
Role of the Board The Board has delegated to the Audit Committee primary responsibility for overseeing enterprise risk management, including oversight of risks from cybersecurity threats. The Audit Committee periodically reviews TPL’s policies and practices, including incident response plans, for managing cybersecurity risks to ensure that such policies and practices are appropriately tailored to our risk framework.
The Director of Information Technology is regularly informed about the latest developments in cybersecurity, 17 Table of Contents including potential threats, vulnerabilities, and innovative risk management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
Role of Management TPL’s cybersecurity risk is managed utilizing a multi-tiered approach by the Company’s Director of Information Technology. In addition to the Director of Information Technology, the Company also engages the services of a third party chief information security officer (“CISO”).
In addition to the Director of Information Technology, we also engage the services of a third-party chief information security officer (“CISO”). The qualifications of the Director of Information Technology include over 30 years of IT management, cybersecurity, and information governance experience.
Removed
Item 1C. Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure. We have established policies, standards, processes and practices for assessing, identifying, and managing material risks from cybersecurity threats.
Added
In addition to the risk management experience of the Audit Committee members, Barbara J. Duganier, a member of the Audit Committee, holds the CERT Cybersecurity Oversight Certification from Carnegie Mellon University. 15 Table of Contents Role of Management Our cybersecurity risk is managed utilizing a multi-tiered approach by our Director of Information Technology.
Removed
The Audit Committee periodically reviews TPL’s policies and practices, including incident response plans, for managing cybersecurity risks to ensure that such policies and practices are appropriately tailored to TPL’s risk framework. Throughout the year, the Audit Committee receives quarterly IT and cybersecurity updates unless there is a notable event that requires immediate communication.

Item 2. Properties

Properties — owned and leased real estate

3 edited+3 added−1 removed0 unchanged
Biggest changeThe following table shows our surface ownership and NPRI ownership by county as of December 31, 2023: Number of Acres County Surface 1/128th Royalty 1/16th Royalty Andrews 12,121 — — Callahan — — 80 Coke — — 1,183 Concho 2,592 — — Crane 3,622 265 5,198 Culberson 270,893 — 111,513 Ector 19,888 33,633 11,793 El Paso 16,613 — — Fisher — — 320 Glasscock 27,227 3,600 11,111 Howard 4,788 3,099 1,840 Hudspeth 154,247 — 1,008 Jeff Davis 8,293 — 7,555 Loving 63,284 6,107 48,066 Midland 28,372 12,945 13,120 Mitchell 3,842 1,760 586 Nolan 1,600 2,488 3,157 Palo Pinto — — 800 Pecos 43,377 320 16,895 Presidio — — 3,200 Reagan — 6,162 1,274 Reeves 187,320 3,013 116,691 Stephens — 2,817 160 Sterling 5,212 640 2,080 Taylor 690 — 966 Upton 6,661 6,903 9,101 Winkler 7,804 1,182 3,040 Total 868,446 84,934 370,737 19 Table of Contents As of December 31, 2023, the Company owned additional royalty interests in the following counties: County Number of Net Royalty Acres (1) Culberson 810 Glasscock 1,062 Howard 770 Loving 10 Martin 578 Midland 450 Reagan 115 Reeves 191 Upton 315 Total 4,302 (1) Normalized to 1/8th.
Biggest changeThe following table shows our surface ownership and NPRI ownership by county as of December 31, 2024 (1) : Number of Acres County Surface 1/128th Royalty 1/16th Royalty Andrews 12,121 — — Callahan — — 80 Coke — — 1,183 Concho 2,592 — — Crane 3,622 265 5,198 Culberson 270,853 — 111,513 Ector 19,888 33,633 11,793 El Paso 16,613 — — Fisher — — 320 Glasscock 27,227 3,600 11,111 Howard 5,156 3,099 1,840 Hudspeth 154,247 — 1,008 Jeff Davis 8,293 — 7,555 Lea (2) 640 — — Loving 63,070 6,107 48,066 Martin 3,943 — — Midland 28,365 12,945 13,120 Mitchell 3,842 1,760 586 Nolan 1,600 2,488 3,157 Palo Pinto — — 800 Pecos 43,377 320 16,895 Presidio — — 3,200 Reagan — 6,162 1,274 Reeves 187,320 3,013 116,691 Stephens — 2,817 160 Sterling 5,212 640 2,080 Taylor 690 — 966 Upton 6,661 6,903 9,101 Winkler 7,804 1,182 3,040 Total 873,136 84,934 370,737 (1) Counties are located in the State of Texas unless otherwise noted.
Additionally, the Company also owns a 1/128th NPRI under 84,934 acres of land (5,308 NRA) and a 1/16th NPRI under 370,737 acres of land (185,369 NRA) in the western part of Texas.
Additionally, we own a 1/128th NPRI under 84,934 acres of land (5,308 NRA) and a 1/16th NPRI under 370,737 acres of land (185,369 NRA) in the Permian Basin.
Item 2. Properties. As of December 31, 2023, TPL owned the surface estate in 868,446 acres of land, comprised of numerous separate tracts, located in the western part of Texas. There were no material liens or encumbrances on the Company’s title to the surface estate in those tracts.
Item 2. Properties. As of December 31, 2024, we owned the surface estate in 873,136 acres of land, comprised of numerous separate tracts, principally located in the Permian Basin. There were no material liens or encumbrances on our title to the surface estate in those tracts.
Removed
The Company leases office space in Dallas, Texas for its corporate headquarters and in Midland, Texas for TPWR.
Added
(2) County is located in the State of New Mexico. 17 Table of Contents As of December 31, 2024, we owned additional royalty interests in the following counties (1) : County Number of NRA Culberson 4,947 Ector 73 Glasscock 2,057 Howard 1,245 Lea (2) 59 Loving 215 Martin 2,779 Midland 2,513 Reagan 591 Reeves 246 Upton 974 Ward 192 Winkler 6 Total 15,897 (1) Counties are located in the State of Texas unless otherwise noted.
Added
(2) County is located in the State of New Mexico. We lease office space in Dallas, Texas for our corporate headquarters and in Midland, Texas for TPWR. Item 3. Legal Proceedings. There are no material pending legal proceedings to which we are a party or of which any of our property is the subject. Item 4. Mine Safety Disclosures.
Added
Not applicable. 18 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−0 removed0 unchanged
Biggest changeJanuary 11, 2021 December 31, 2021 December 31, 2022 December 31, 2023 Texas Pacific Land Corporation $100 $145 $277 $187 Reference Group $100 $190 $258 $279 SPDR S&P Oil & Gas Exploration & Production ETF $100 $146 $212 $220 The information contained in the graph above is furnished and therefore not to be considered “filed” with the SEC, and is not incorporated by reference into any document that incorporates this Annual Report on Form 10-K by reference.
Biggest change“Executive Compensation.” January 11, 2021 December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 Texas Pacific Land Corporation $100 $145 $277 $187 $403 Reference Group $100 $189 $256 $276 $353 SPDR S&P Oil & Gas Exploration & Production ETF (“XOP”) $100 $146 $212 $220 $217 The information contained in the graph above is furnished and therefore not to be considered “filed” with the SEC or “soliciting material” under the Exchange Act and is not incorporated by reference into any document that incorporates this Annual Report on Form 10-K by reference, irrespective of any general incorporation by reference language contained in such document.
The Board has determined to pay dividends on a quarterly basis in March, June, September and December of each year, subject to the discretion of the Board. Such dividends will depend upon the Company’s earnings, capital requirements and financial position, applicable requirements of law, general economic conditions and other factors considered relevant by the Board.
The Board has determined to pay dividends on a quarterly basis in March, June, September and December of each year, subject to the discretion of the Board. Such dividends will depend upon our earnings, capital requirements and financial position, applicable requirements of law, general economic conditions and other factors considered relevant by the Board.
Purchases under the stock repurchase program may be made through a combination of open market repurchases in compliance with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended, privately negotiated transactions, and/or other transactions at the Company’s discretion, including under a Rule 10b5-1 trading plan implemented by the Company, and will be subject to market conditions, applicable legal requirements and other factors. 21 Table of Contents Performance Graph The following graph compares the cumulative total return from January 11, 2021 (the date of our Corporate Reorganization) through December 31, 2023 of TPL common stock; the SPDR ® S&P ® Oil & Gas Exploration & Production ETF (“XOP”), which includes TPL; and the Reference Group.
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 Exchange Act, privately negotiated transactions, and/or other transactions at our discretion, including under a Rule 10b5-1 trading plan implemented by us, and will be subject to market conditions, applicable legal requirements and other factors. 19 Table of Contents Performance Graph The following graph compares the cumulative total return from January 11, 2021 (the date of our Corporate Reorganization) through December 31, 2024 of our Common Stock; the SPDR ® S&P ® Oil & Gas Exploration & Production ETF (“XOP”), which includes TPL; and the Reference Group.
The Company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Board at any time.
We intend to purchase Common Stock under the repurchase program opportunistically with funds generated by cash from operations. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Board at any time.
Item 5. Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities. Market Information Our Common Stock is traded on the NYSE under the ticker symbol “TPL.” The Company had 200 registered holders of its Common Stock as of February 14, 2024.
Item 5. Market for Registrant’s Common Equity, Related Security Holder Matters and Issuer Purchases of Equity Securities. Market Information Our Common Stock is traded on the NYSE under the ticker symbol “TPL.” We had 186 registered holders of our Common Stock as of February 12, 2025.
The graph assumes that $100 was invested at the beginning of the period and that all dividends were reinvested for each TPL, the XOP, and the Reference Group. The Reference Group consists of the companies referenced in Item 11 “Executive Compensation” in this Annual Report on Form 10-K.
The graph assumes that $100 was invested at the beginning of the period and that all dividends were reinvested for each of TPL, the XOP, and the Reference Group. The Reference Group consists of the companies referenced in Part III, Item 11.
The Company is not a party to any agreement that would limit its ability to pay dividends in the future.
We are not a party to any agreement that would limit our ability to pay dividends in the future.
Issuer Purchases of Common Stock During the three months ended December 31, 2023, the Company repurchased shares of its Common Stock as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 through October 31, 2023 1,181 $ 1,847 1,181 November 1 through November 30, 2023 1,228 1,693 1,228 December 1 through December 31, 2023 3,844 1,557 3,844 Total 6,253 $ 1,639 6,253 $ 207,583,010 (1) On November 1, 2022, our Board approved a stock repurchase program to purchase up to an aggregate of $250 million of our outstanding Common Stock effective beginning January 1, 2023.
Issuer Purchases of Common Stock During the three months ended December 31, 2024, we repurchased shares of our Common Stock as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 through October 31, 2024 2,211 $ 1,035 2,211 $ 182,598,808 November 1 through November 30, 2024 1,418 1,403 1,418 $ 180,609,626 December 1 through December 31, 2024 1,693 1,233 1,693 $ 178,522,926 Total 5,322 $ 1,196 5,322 (1) On November 2, 2022, we announced that our Board approved a stock repurchase program to purchase up to an aggregate of $250.0 million of our outstanding Common Stock effective beginning January 1, 2023.
Dividends For the year ended December 31, 2023 and 2022, the Company paid the following regular and special cash dividends per share: Years Ended December 31, 2023 2022 Regular Special Regular Special 1st Quarter $ 3.25 $ — $ 3.00 $ — 2nd Quarter 3.25 — 3.00 20.00 3rd Quarter 3.25 — 3.00 — 4th Quarter 3.25 — 3.00 — Total $ 13.00 $ — $ 12.00 $ 20.00 The Company has paid a cash dividend each year for the preceding 67 years.
Dividends For the year ended December 31, 2024 and 2023, we paid the following regular and special cash dividends per share: Years Ended December 31, 2024 2023 Regular Special Regular Special 1st Quarter $ 1.17 $ — $ 1.08 $ — 2nd Quarter 1.17 — 1.08 — 3rd Quarter 1.17 10.00 1.08 — 4th Quarter 1.60 — 1.09 — Total $ 5.11 $ 10.00 $ 4.33 $ — We have paid a cash dividend each year for the preceding 68 years.
Added
This number is based on the actual number of holders registered at such date and does not include holders whose shares are held in “street name” by brokers and other nominees.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+24 added−18 removed11 unchanged
Biggest changeOur definitions of Adjusted EBITDA and Free Cash Flow may differ from computations of similarly titled measures of other companies. 30 Table of Contents The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and Free Cash Flow for the years ended December 31, 2023, 2022, and 2021 (in thousands): Years Ended December 31, 2023 2022 2021 Net income $ 405,645 $ 446,362 $ 269,980 Add: Income tax expense 111,916 122,493 93,037 Depreciation, depletion and amortization 14,757 15,376 16,257 EBITDA 532,318 584,231 379,274 Add: Employee share-based compensation 9,124 7,583 — Severance costs — — 6,680 Conversion costs related to corporate reorganization — — 2,026 Adjusted EBITDA 541,442 591,814 387,980 Less: Current income tax expense (110,517) (121,230) (93,265) Capital expenditures (15,431) (18,967) (16,415) Free Cash Flow $ 415,494 $ 451,617 $ 278,300 Off-Balance Sheet Arrangements The Company has not engaged in any off-balance sheet arrangements.
Biggest changeThe following table presents a reconciliation of EBITDA, Adjusted EBITDA and free cash flow to net income for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 Net income $ 453,960 $ 405,645 Add: Income tax expense 124,861 111,916 Depreciation, depletion and amortization 25,162 14,757 EBITDA 603,983 532,318 Add (deduct): Employee share-based compensation 11,364 9,124 Pension curtailment and settlement gain (4,616) — Adjusted EBITDA 610,731 541,442 Deduct: Current income tax expense (120,257) (110,517) Capital expenditures (29,423) (15,431) Free Cash Flow $ 461,051 $ 415,494 Off-Balance Sheet Arrangements The Company has not engaged in any off-balance sheet arrangements.
Accordingly, these decisions made by others affect not only our production and produced water disposal volumes, but also directly impact our surface-related income and water sales. Liquidity and Capital Resources Overview Our principal sources of liquidity are cash and cash flows generated from our operations.
Accordingly, these decisions made by others affect not only our share of production volumes and produced water disposal volumes, but also directly impact our surface-related income and water sales. Liquidity and Capital Resources Overview Our principal sources of liquidity are cash and cash flows generated from our operations.
Expenses are discussed further above under “Results of Operations.” Non-GAAP Performance Measures In addition to amounts presented in accordance with GAAP, we also present certain supplemental non-GAAP performance measurements. These measurements are not to be considered more relevant or accurate than the measurements presented in accordance with GAAP.
Expenses are discussed further above under “Results of Operations — Consolidated.” Non-GAAP Performance Measures In addition to amounts presented in accordance with GAAP, we also present certain supplemental non-GAAP performance measurements. These measurements are not to be considered more relevant or accurate than the measurements presented in accordance with GAAP.
Consistent with our disclosure policies, we include the following discussion related to what we believe to be our most critical accounting policies that require our most difficult, subjective or complex judgment. Accrual of Oil and Gas Royalties The Company accrues oil and gas royalties.
Consistent with our disclosure policies, we include the following discussion related to what we believe to be our most critical accounting policies that require our most difficult, subjective or complex judgment and estimates. Accrual of Oil and Gas Royalties The Company accrues oil and gas royalties.
In addition to fluctuations in response to changes in the market price for oil and gas, our financial results are also subject to decisions by the owners and operators of not only the oil and gas wells to which our oil and gas royalty interests relate, but also to other owners and operators in the Permian Basin as it relates to our other revenue streams, principally water sales, easements and other surface-related revenue.
In addition to fluctuations in response to changes in the market price for oil and gas, our financial results are subject to decisions by not only the owners and operators of oil and gas wells to which our oil and gas royalty interests relate, but also to other owners and operators in the Permian Basin as it relates to our other revenue streams, principally water sales, produced water royalties, easements and other surface-related revenue.
Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those factors presented in Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those factors presented in Part I, Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements included in Part II, Item 8 of this Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.
MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The increase in Water Services and Operations segment revenues is principally due to increases in water sales revenue and produced water royalties, which are discussed below. As discussed in “Market Conditions” above, our segment revenues are directly influenced by development decisions made by our customers and the overall activity level in the Permian Basin.
The increase in Water Services and Operations segment revenues was principally due to increases in water sales revenue and produced water royalties, which are discussed below. As discussed in “Market Conditions” and “Permian Basin Activity” above, our segment revenues are directly influenced by development decisions made by our customers and the overall activity level in the Permian Basin.
If market conditions were to change and our revenues were to decline significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could seek alternative sources of funding. We have no debt or credit facilities, nor any off-balance sheet arrangements as of December 31, 2023.
If market conditions were to change and our revenues were to decline significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could seek alternative sources of funding. We had no debt, credit facilities, or any off-balance sheet arrangements as of December 31, 2024.
This section generally discusses the results of our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022. For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7.
This section generally discusses the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7.
Easements and other surface-related income includes revenue related to the use and crossing of our land for oil and gas exploration and production, renewable energy, and agricultural operations.
Easements and other surface-related income includes revenue related to the use and crossing of our land for oil and gas 26 Table of Contents exploration and production, renewable energy, and agricultural operations.
Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” above for additional discussion of development activity in the Permian Basin during the year ended December 31, 2023.
Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Permian Basin Activity” above for additional discussion of development activity in the Permian Basin during the year ended December 31, 2024. Land sales .
As of December 31, 2023, we had cash and cash equivalents of $725.2 million that we expect to utilize, along with cash flow from operations, to provide capital to support our business, to repurchase our Common Stock subject to market conditions, to pay dividends subject to the discretion of our Board, for potential acquisitions and for general corporate purposes.
As of December 31, 2024, we had cash and cash equivalents of $369.8 million that we expect to utilize, along with cash flow from operations, to provide capital to 22 Table of Contents support our business, to pay dividends subject to the discretion of our Board, to repurchase shares of our Common Stock subject to market conditions, for potential acquisitions and for general corporate purposes.
Our oil and gas royalty revenue, and, in turn, our results of operations for the year ended December 31, 2023 have been impacted by lower average commodity prices compared to 2022.
Our oil and gas royalty revenue, and, in turn, our results of operations for the year ended December 31, 2024 have been impacted by lower average commodity prices compared to 2023. However, our oil and gas royalty revenues increased for the year ended December 31, 2024 due to increased royalty production.
The growth in water sales is principally due to an increase of 21.8% in water sales volumes for the years ended December 31, 2023 compared to the year ended December 31, 2022. Produced water royalties. Produced water royalties are royalties received from the transfer or disposal of produced water on our land.
The growth in water sales was principally due to an increase of 31.0% in water sales volumes for the year ended December 31, 2024 compared to the year ended December 31, 2023. Produced water royalties. Produced water royalties are royalties received from the transfer or disposal of produced water on our land.
Midstream infrastructure is currently under construction by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Changes in macro-economic conditions, including rising interest rates and lower global economic activity, could result in additional shifts in oil and gas supply and demand in future periods.
Midstream infrastructure is currently being developed by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Changes in global and domestic macro-economic conditions could result in additional shifts in oil and gas supply and demand in future periods.
Overview TPL was originally organized in 1888 as a business trust to hold title to extensive tracts of land in numerous counties in West Texas which were previously the property of the Texas and Pacific Railway Company. As discussed in Item 1.
Overview TPL was originally organized in 1888 as a business trust to hold title to extensive tracts of land in the State of Texas that were previously the property of the Texas and Pacific Railway Company.
Accordingly, our segment revenues and sales volumes, as further discussed below, will fluctuate from period to period based upon those decisions and activity levels. Water sales . Water sales revenue increased $27.5 million, or 32.4% to $112.2 million for the year ended December 31, 2023 compared to the same period of 2022.
Accordingly, our segment revenues and sales volumes, as further discussed below, will fluctuate from period to period based upon those decisions and activity levels. Water sales . Water sales revenue increased $38.5 million, or 34.3% to $150.7 million for the year ended December 31, 2024 compared to 2023.
Cash Flows Used in Investing Activities For the years ended December 31, 2023 and 2022, net cash used in investing activities was $60.3 million and $21.4 million, respectively. Our cash flows used in investing activities are primarily related to land acquisitions, intangible assets such as subsurface easements, and capital expenditures related to our water services and operations segment.
Cash Flows Used in Investing Activities For the years ended December 31, 2024 and 2023, net cash used in investing activities was $471.7 million and $60.3 million, respectively. Our cash flows used in investing activities are primarily related to acquisitions and capital expenditures related to our water services and operations segment.
Below are metrics for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Oil and Gas Pricing Metrics: (1) WTI Cushing average price per bbl $ 77.58 $ 94.90 Henry Hub average price per mmbtu $ 2.53 $ 6.45 Activity Metrics specific to the Permian Basin: (1)(2) Average monthly horizontal permits 499 627 Average monthly horizontal wells drilled 422 511 Average weekly horizontal rig count 323 318 DUCs as of December 31 for each applicable year 4,656 4,526 Total Average US weekly horizontal rig count (2) 620 659 (1) Commonly used definitions in the oil and gas industry provided in the table above are defined as follows: WTI Cushing represents West Texas Intermediate.
The metrics below show selected benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 Oil and Gas Pricing Metrics: (1) WTI Cushing average price per bbl $ 76.63 $ 77.58 Henry Hub average price per mmbtu $ 2.19 $ 2.53 Waha Hub natural gas average price per mmbtu $ 0.14 $ 1.68 Activity Metrics specific to the Permian Basin: (1)(2) Average monthly horizontal permits 654 499 Average monthly horizontal wells drilled 504 422 Average weekly horizontal rig count 296 323 DUCs as of December 31 for each applicable year 4,536 4,656 Total Average US weekly horizontal rig count (2) 536 620 (1) Commonly used definitions in the oil and gas industry provided in the table above are defined as follows: WTI Cushing represents West Texas Intermediate.
The decrease in cash flows provided by operating activities for the year ended December 31, 2023 compared to the same period of 2022, was primarily related to changes in working capital requirements over the same time period.
The increase in cash flows provided by operating activities for the year ended December 31, 2024 compared to the same period of 2023 was primarily driven by an increase in operating income and changes in working capital requirements.
For the year ended December 31, 2022, we sold 6,392 acres of land for an aggregate sales price of approximately $9.7 million. Net income. Net income for the Land and Resource Management segment decreased 16.0% to $306.7 million for the year ended December 31, 2023 compared to $365.0 million for the comparable period in 2022.
For the year ended December 31, 2023, we sold 18,061 acres of land for an aggregate sales price of approximately $6.8 million. Net income. Net income for the Land and Resource Management segment increased to $314.9 million for the year ended December 31, 2024 compared to $306.7 million for 2023.
An accrual is necessary due to the time lag between the removal of crude oil and natural gas products from the respective mineral reserve locations and generation of the actual payment by operators. The oil and gas royalty accrual is based upon historical production volumes, estimates of the timing of future payments and recent market prices for oil and gas.
An accrual is necessary due to the time lag between the removal of crude oil and natural gas products from the respective mineral reserve locations and generation of the actual payment by operators.
Produced water royalties are contractual and not paid as a matter of right. We do not operate any salt water disposal wells. Produced water royalties were $84.3 million for the year ended December 31, 2023 compared to $72.2 million for the same period in 2022.
Produced water royalties are contractual and not paid as a matter of right. We do not operate any saltwater disposal wells. Produced water royalties were $104.1 million for the year ended December 31, 2024 compared to $84.3 million in 2023. This increase was principally due to increased produced water volumes for the year ended December 31, 2024 compared to 2023.
Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue and net income are subject to substantial fluctuations from quarter to quarter and year to year.
Our revenues are derived from oil and gas royalties, water sales, produced water royalties, easements and other surface-related income and land sales. Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue and net income are subject to substantial fluctuations from quarter to quarter and year to year.
Land sales and other operating revenue . Land sales and other operating revenue was $6.8 million and $10.0 million for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2023, we sold 18,061 acres of land for an aggregate sales price of $6.8 million.
Land sales were $4.4 million and $6.8 million for the years ended December 31, 2024 and 2023, respectively. For the year ended December 31, 2024, we sold 439 acres of land for an aggregate sales price of $4.4 million.
We have presented EBITDA, Adjusted EBITDA and Free Cash Flow because we believe that these metrics are useful supplements to net income in analyzing the Company's operating performance.
We calculate free cash flow as Adjusted EBITDA less current income tax expense and capital expenditures. The purpose of presenting free cash flow is to provide an additional measure of operating performance. We have presented EBITDA, Adjusted EBITDA and free cash flow because we believe that these metrics are useful supplements to net income in analyzing the Company's operating performance.
In compliance with the requirements of the SEC, our non-GAAP measurements are reconciled to net income, the most directly comparable GAAP performance measure. For all non-GAAP measurements, neither the SEC nor any other regulatory body has passed judgment on these non-GAAP measurements.
In compliance with the requirements of the SEC, our non-GAAP measurements are reconciled to net income, the most directly comparable GAAP performance measure.
Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $405.6 million for the year ended December 31, 2023 was 9.1% lower than the comparable period of 2022, principally as a result of both the decrease in revenues discussed above and the increase in operating expenses discussed further below under “Consolidated Expenses.” Consolidated Expenses: Salaries and related employee expenses .
Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $454.0 million for the year ended December 31, 2024 was 11.9% higher than 2023, principally as a result of the increase in total revenues, partially offset by an increase in operating expenses, as discussed below. 24 Table of Contents Consolidated Expenses: Salaries and related employee expenses .
Expenses are discussed further above under “Results of Operations.” 29 Table of Contents Water Services and Operations Water Services and Operations segment revenues increased 24.3%, to $199.5 million for the year ended December 31, 2023 as compared with $160.4 million for the comparable period of 2022.
Expenses are discussed further above under “Results of Operations — Consolidated.” Water Services and Operations Water Services and Operations segment revenues increased 32.9%, to $265.0 million for the year ended December 31, 2024 compared to $199.5 million for 2023.
EBITDA, Adjusted EBITDA and Free Cash Flow EBITDA is a non-GAAP financial measurement of earnings before interest, taxes, depreciation, depletion and amortization. Its purpose is to highlight earnings without finance, taxes, and depreciation, depletion and amortization expense, and its use is limited to specialized analysis. We calculate Adjusted EBITDA as EBITDA excluding employee share-based compensation.
The purpose of presenting EBITDA is to highlight earnings without finance, taxes, and depreciation, depletion and amortization expense, and its use is limited to specialized analysis. We calculate Adjusted EBITDA as EBITDA plus employee share-based compensation and less pension curtailment and settlement gain.
Other income, net was $31.5 million and $6.5 million for the years ended December 31, 2023 and 2022, respectively. The increase in other income, net is primarily related to increased interest income earned on our cash balances during 2023. Higher cash balances and interest yields during this period contributed to the increase in interest income. Total income tax expense.
The increase in other income, net was primarily related to increased interest income earned on our cash balances during 2024. Higher interest yields during the year ended December 31, 2024 contributed to the increase in interest income.
Exploration and production (“E&P”) companies active in the Permian have generally increased their drilling and development activity in 2023 compared to recent prior year activity levels. Per the U.S.
Exploration and production (“E&P”) companies active in the Permian have generally increased their drilling and development activity in 2024 compared to recent prior year activity levels. Per the U.S. Energy Information Administration (“EIA”), Permian production averaged approximately 6.3 million barrels per day during 2024, which represents the highest annual production ever.
Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitical issues, among other factors. In 2023, domestic natural gas prices have declined in part to growing supply.
Average natural gas prices during 2024 decreased compared to average prior year natural gas prices. Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitics, among other factors.
The reportable segments presented are consistent with our reportable segments discussed in Note 14, “Business Segment Reporting” in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. We monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
“Financial Statements and Supplementary Data.” We monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The Company received payment from the operator for the full amount in January 2024. 28 Table of Contents The table below provides financial and operational data by royalty stream for the years ended December 31, 2023 and 2022 and excludes the O&G Settlement discussed above: Years Ended December 31, 2023 2022 Our share of production volumes (1) (2) : Oil (MBbls) 3,701 3,401 Natural gas (MMcf) 14,528 13,086 NGL (MBbls) 2,453 2,208 Equivalents (MBoe) 8,575 7,791 Equivalents per day (MBoe/d) 23.5 21.3 Oil and gas royalties (in thousands) (2) : Oil royalties $ 273,304 $ 307,606 Natural gas royalties 29,915 74,866 NGL royalties 45,510 69,962 Total oil and gas royalties $ 348,729 $ 452,434 Realized prices (2) : Oil ($/Bbl) $ 77.33 $ 94.69 Natural gas ($/Mcf) $ 2.23 $ 6.19 NGL ($/Bbl) $ 20.05 $ 34.25 Equivalents ($/Boe) $ 42.58 $ 60.81 (1) Commonly used definitions in the oil and gas industry not previously defined: Boe represents barrels of oil equivalent.
The table below provides financial and operational data by royalty stream for the years ended December 31, 2024 and 2023: Years Ended December 31, 2024 2023 (2) Our share of production volumes (1) : Oil (MBbls) 4,118 3,701 Natural gas (MMcf) 17,074 14,528 NGL (MBbls) 2,841 2,453 Equivalents (MBoe) 9,804 8,575 Equivalents per day (MBoe/d) 26.8 23.5 Oil and gas royalties (in thousands): Oil royalties $ 298,074 $ 273,304 Natural gas royalties 18,512 29,915 NGL royalties 56,745 45,510 Total oil and gas royalties $ 373,331 $ 348,729 Realized prices: Oil ($/Bbl) $ 75.80 $ 77.33 Natural gas ($/Mcf) $ 1.17 $ 2.23 NGL ($/Bbl) $ 21.60 $ 20.05 Equivalents ($/Boe) $ 39.87 $ 42.58 (1) Commonly used definitions in the oil and gas industry not previously defined: MBbls represents one thousand barrels of crude oil, condensate or NGLs.
During the year ended December 31, 2023, we paid total dividends of $100.0 million, consisting of cumulative paid cash dividends of $13.00 per share. During the year ended December 31, 2022, we paid total dividends of $247.3 million consisting of cumulative cash dividends of $12.00 per share and a special dividend of $20.00 per share.
Return of Capital to Shareholders During the year ended December 31, 2024, we paid total dividends to our stockholders of $347.3 million, consisting of cumulative regular cash dividends of $5.11 per share and a special dividend of $10.00 per share.
General and administrative expenses increased $1.6 million to $14.9 million for the year ended December 31, 2023 from $13.3 million for the same period of 2022.
General and administrative expenses. General and administrative expenses decreased $12.0 million to $34.5 million for the year ended December 31, 2024 from $46.5 million for the same period of 2023.
For the year ended December 31, 2023, we paid $100.0 million in dividends to our stockholders and repurchased $42.4 million of our Common Stock (including the share repurchases not settled at the end of the period). 24 Table of Contents We acquired intangible assets of $21.4 million during the year ended December 31, 2023, consisting of a SWD easement and groundwater rights.
During the year ended December 31, 2023, we paid total dividends of $100.0 million consisting of cumulative regular cash dividends of $4.33 per share. We repurchased $29.2 million and $42.4 million of our Common Stock (in each case, including share repurchases not settled at the end of the period) during the years ended December 31, 2024 and 2023, respectively.
This increase is principally due to increased produced water volumes for the year ended December 31, 2023 compared to the same period of 2022. Net income . Net income for the Water Services and Operations segment was $98.9 million for the year ended December 31, 2023 compared to $81.3 million for the year ended December 31, 2022.
Net income for the Water Services and Operations segment was $139.1 million for the year ended December 31, 2024 compared to $98.9 million for the year ended December 31, 2023. Segment operating income increased $44.2 million for the year ended December 31, 2024 compared to 2023.
Market Conditions Global Oil and Natural Gas Market Impact in 2023 Average oil and gas prices during 2023 have declined compared to average prices during 2022. Oil prices continue to be impacted by certain actions by OPEC+, geopolitical factors, and evolving global supply and demand trends, among other factors.
Market Conditions Average oil prices for the year ended December 31, 2024 were relatively flat compared to average oil prices during the same period last year. Oil prices continue to be impacted by certain actions by OPEC+, geopolitics, and evolving global supply and demand trends, among other factors.
We believe that cash from operations, together with our cash and cash equivalents balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future. Cash Flows from Operating Activities For the years ended December 31, 2023 and 2022, net cash provided by operating activities was $418.3 million and $447.1 million, respectively.
We believe that cash from operations, together with our cash and cash equivalents balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for at least the next 12 months.
The increase in easements and other surface-related income is principally related to increases of $13.6 million in pipeline easements and $5.3 million in material sales (caliche and sand) for the year ended December 31, 2023 compared to the same period of 2022.
The decrease in easements and other surface-related income was principally related to a decrease of $5.1 million in wellbore easements for the year ended December 31, 2024 compared to 2023.
Energy Information Administration (“EIA”), Permian production is approximately six million barrels per day, which is higher than the average daily production of any year prior to 2023. 23 Table of Contents With our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin.
The EIA currently estimates that Permian oil production for December 2024 was approximately 6.5 million barrels per day. 21 Table of Contents Due to our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin.
Segment Results of Operations We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. We eliminate any inter-segment revenues and expenses upon consolidation. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results.
We eliminate any inter-segment revenues and expenses, if any, upon consolidation. We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 15, “Business Segment Reporting” in the notes to our consolidated financial statements included under Part II, Item 8.
This decrease was principally due to the $95.0 million decrease in oil and gas royalty revenue and was partially offset by the combined increase of $39.5 million in water sales and produced water royalties, and the $22.9 million increase in easements and other surface-related income, over the same period.
This increase was principally due to the $38.5 million increase in water sales, the $19.9 million increase in produced water royalties and the $15.9 million increase in oil and gas royalty revenue in 2024 over 2023.
Oil and gas royalty revenue was $357.4 million for the year ended December 31, 2023 compared to $452.4 million for the year ended December 31, 2022, a decrease of 21.0%. Oil and gas royalties for the year ended December 31, 2023 included an $8.7 million recovery, discussed further in the following paragraph.
Oil and gas royalty revenue was $373.3 million for the year ended December 31, 2024 compared to $357.4 million for the year ended December 31, 2023, an increase of 4.5%.
Our share of crude oil, natural gas and NGL production volumes was 23.5 thousand Boe per day for the year ended December 31, 2023 compared to 21.3 thousand Boe per day for the same period of 2022.
Excluding the impact of the $8.7 million recovery on 2023 revenue, oil and gas royalties for the year ended December 31, 2024 increased $24.6 million due to increased production volumes over 2023. Our share of production volumes increased to 26.8 thousand Boe per day for the year ended December 31, 2024 compared to 23.5 thousand Boe per day for 2023.
Salaries and related employee expenses were $43.4 million for the year ended December 31, 2023 compared to $41.4 million for the comparable period of 2022. The increase in salaries and related employee expenses is principally related to market compensation adjustments. 26 Table of Contents Water service-related expenses .
Salaries and related employee expenses were $53.6 million for the year ended December 31, 2024 compared to $43.4 million for 2023.
The increase in general and administrative expenses during the year ended December 31, 2023 compared to the same period of 2022 was principally related to increased expenses for technology applications and increased board fees due to the expansion of our board to 10 directors in April 2022. Legal and professional fees .
The decrease in general and administrative expenses during the year ended December 31, 2024 compared to the same period of 2023 was principally related to a reduction in legal and professional fees associated with stockholder matters that occurred during 2023. Depreciation, depletion and amortization .
The decrease in Land and Resource Management segment revenues is due to a $95.0 million decrease in oil and gas royalties for the year ended December 31, 2023 compared to the same period of 2022.
The increase in Land and Resource Management segment revenues was related to a $15.9 million increase in oil and gas royalty revenue, partially offset by a decrease in easements and other surface-related income of $4.8 million and a decrease in land sales of $2.4 million for the year ended December 31, 2024 compared to 2023. Oil and gas royalties .
(2) The metrics provided exclude the impact of the $8.7 million of oil and gas royalties from the O&G Settlement discussed above. Easements and other surface-related income. Easements and other surface-related income was $67.9 million for the year ended December 31, 2023, an increase of 52.4% compared to $44.6 million for the year ended December 31, 2022.
Easements and other surface-related income . Easements and other surface-related income was $10.2 million for the year ended December 31, 2024, an increase of $7.2 million compared to $3.0 million for the year ended December 31, 2023.
Segment operating income increased $22.0 million for the year ended December 31, 2023 compared to the same period of 2022. The increase is principally due to the $39.0 million increase in segment revenues which were partially offset by the $16.1 million increase in water service-related expenses and the $5.4 million increase in income tax expense.
The increase was principally due to a $65.5 million increase in segment revenues which were partially offset by a $12.6 million increase in water service-related expenses and a $10.9 million increase in income tax expense.
Water service-related expenses increased $16.1 million to $33.6 million for the year ended December 31, 2023 compared to the same period of 2022. Certain types of water service-related expenses, including, but not limited to, transfer, treatment, and water purchases, will vary from period to period as our customers’ needs and requirements change.
Certain types of water service-related expenses, including, but not limited to, treatment, transfer, water purchases, repairs and maintenance, equipment rental, and fuel costs vary from period to period as our customers’ needs and requirements change. Right of way and other expenses also vary from period to period depending on the location of customer delivery.
Total income tax expense was $111.9 million and $122.5 million for the years ended December 31, 2023 and 2022, respectively. The decrease in income tax expense is primarily related to decreased operating income resulting from decreased oil and gas royalty revenue and increased operating expenses.
Total income tax expense was $124.9 million and $111.9 million for the years ended December 31, 2024 and 2023, respectively. The increase in income tax expense was primarily related to increased operating income resulting from increased consolidated revenues. Segment Results of Operations We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations.
“Business — General — Corporate Reorganization,” on January 11, 2021, we completed our Corporate Reorganization from a business trust to a corporation changing our name from Texas Pacific Land Trust to Texas Pacific Land Corporation. For an overview of our business and discussion of our business segments, see Item 1.
On January 11, 2021, we completed our Corporate Reorganization from a business trust to a corporation and changed our name from Texas Pacific Land Trust to Texas Pacific Land Corporation. Our business activity is generated from our surface and royalty interest ownership, primarily in the Permian Basin.
Cash Flows Used in Financing Activities For the years ended December 31, 2023 and 2022, net cash used in financing activities was $144.6 million and $336.8 million, respectively. Our cash flows used in financing principally consist of activities which return capital to our stockholders such as payment of dividends and repurchases of our Common Stock.
Capital expenditures for the years ended December 31, 2024 and 2023 were $29.7 million and $15.0 million, respectively. 23 Table of Contents Cash Flows Used in Financing Activities For the years ended December 31, 2024 and 2023, net cash used in financing activities was $378.1 million and $144.6 million, respectively.
MBbls represents one thousand barrels of crude oil, condensate or NGLs. Mcf represents one thousand cubic feet of natural gas. MMcf represents one million cubic feet of natural gas. MBoe represents one thousand Boe. MBoe/d represents one thousand Boe per day.
Mcf represents one thousand cubic feet of natural gas. MMcf represents one million cubic feet of natural gas. MBoe represents one thousand Boe. MBoe/d represents one thousand Boe per day. (2) The metrics and dollars provided for the year ended December 31, 2023 exclude the impact of the $8.7 million recovery of oil and gas discussed above.
Its purpose is to highlight earnings without non-cash activity such as share-based compensation and/or other non-recurring or unusual items. We calculate Free Cash Flow as Adjusted EBITDA less current income tax expense and capital expenditures. Its purpose is to provide an additional measure of operating performance.
We have excluded the pension curtailment and settlement gain from the calculation of Adjusted EBITDA as such gain is a non-recurring item and is not related to our core business. The purpose of presenting Adjusted EBITDA is to highlight earnings without non-cash activity such as share-based compensation and other non-recurring or unusual items, if applicable.
Additionally, we invested approximately $15.2 million in TPWR projects to maintain and/or enhance our water sourcing assets, of which $3.1 million related to water wells and related infrastructure acquired in conjunction with the acquisition of groundwater rights during the year ended December 31, 2023.
Additionally, during the year ended December 31, 2024, we invested approximately $21.7 million to maintain and/or enhance our water sourcing assets. Cash Flows from Operating Activities For the years ended December 31, 2024 and 2023, net cash provided by operating activities was $490.7 million and $418.3 million, respectively.
Segment operating income decreased $98.2 million for the year ended December 31, 2023 compared to the same period of 2022, largely driven by the $95.0 million decrease in oil and gas royalty revenue.
Segment operating income increased $8.9 million for the year ended December 31, 2024 compared to 2023. The increase was principally due to a $15.9 million increase in oil and gas royalty revenue and a $13.5 million decrease in general and administrative expenses, partially offset by increased depletion expense and salaries and related employee expenses.
Excluding the $8.7 million recovery, oil and gas royalties decreased $103.7 million due to lower average commodity prices during the year ended December 31, 2023 compared to the same period of 2022. The average realized prices declined 30.0% to $42.58 per Boe for the year ended December 31, 2023 from $60.81 per Boe for the same period of 2022.
The average realized prices decreased to $39.87 per Boe for the year ended December 31, 2024 from $42.58 per Boe for 2023.
While these dynamics in demand resulted in a 92.2% increase in water service-related expenses for the year ended December 31, 2023 compared to the same period of 2022, the operational decision to meet these demands resulted in increased revenues and operating income over the same time period. General and administrative expenses.
Additionally, contract labor expenses for the year ended December 31, 2024 increased over 2023, principally as a result of the 34.3% increase in water sales over the same period. Water service-related expenses . Water service-related expenses increased $12.6 million to $46.1 million for the year ended December 31, 2024 compared to 2023.
New Accounting Pronouncements For further information regarding recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies” in Item 8. “Financial Statements and Supplementary Data.”
The oil and gas royalty accrual is based upon historical production volumes, estimates of the timing of future payments and recent market prices for oil and gas. 28 Table of Contents Recent Accounting Pronouncements For further information regarding recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included under Part II, Item 8.
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“Business — General.” Our business activity is generated from our surface and royalty interest ownership in West Texas, primarily in the Permian Basin. Our revenues are primarily derived from oil, gas and produced water royalties, sales of water and land, easements, and commercial leases.
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While average oil prices for the year ended December 31, 2024 were generally flat compared to the same period in 2023, Henry Hub and Waha Hub natural gas prices for the year ended December 31, 2024 declined compared to the same period last year.
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The metrics above show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the years ended December 31, 2023 and 2022. Our oil and gas royalties are impacted by both oil and gas prices as well as production levels.
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E&P companies generally have continued to deploy capital at a measured pace as drilling and development activities across the Permian Basin have remained strong overall. Although average rig counts during the year ended December 31, 2024 were lower compared to the same period last year, increased drilling and completion efficiencies have allowed operators to maintain robust levels of well development.
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Oil and gas prices in 2023 have declined compared to the comparable period in 2022. Despite declining commodity prices, drilling and development activities across the Permian generally remained strong in 2023.
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As we evaluate our current capital structure, capital allocation priorities, business fundamentals, and investment opportunities, we have set a target cash and cash equivalents balance of approximately $700 million. Above this target, we will seek to deploy the majority of our free cash flow towards dividends and share repurchases.
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The SWD easement covers approximately 49,000 acres and provides us future disposal opportunities to service injection customers seeking disposal solutions located outside of core basins. The groundwater rights provide us access to additional water volumes outside of our existing surface footprint to assist in managing fluctuations in customer demand.
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In addition, we repurchased $29.2 million of our Common Stock (including share repurchases not settled at the end of the period).
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Acquisitions of intangible assets and land increased $21.4 million and $19.7 million, respectively, for the year ended December 31, 2023 compared to the same period of 2022 and were partially offset by a decrease of $4.2 million in capital expenditures during the same time period.
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Acquisition Activity We completed the following asset acquisitions and business combination during 2024: • Acquired mineral interests across 7,490 NRA located primarily in the Midland Basin in Martin, Midland and other counties in Texas and New Mexico for cash consideration of $275.2 million, net of post-closing adjustments. • Acquired mineral interests across 4,106 NRA located in Culberson County, Texas for a purchase price of $120.3 million, net of post-closing adjustments. • Acquired 4,120 surface acres in Martin County, Texas along with other surface-related tangible and intangible assets in a business combination for total consideration of $45.0 million.
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We repurchased $42.4 million and $87.9 million of our Common Stock (including share repurchases not settled at the end of the period) during the years ended December 31, 2023 and 2022, respectively. 25 Table of Contents Results of Operations - Consolidated The following table shows our consolidated results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands): Years Ended December 31, 2023 2022 2021 Revenues: Oil and gas royalties $ 357,394 $ 452,434 $ 286,468 Water sales 112,203 84,725 67,766 Produced water royalties 84,260 72,234 58,081 Easements and other surface-related income 70,932 48,057 37,616 Land sales and other operating revenue 6,806 9,972 1,027 Total revenues 631,595 667,422 450,958 Expenses: Salaries and related employee expenses 43,384 41,402 40,012 Water service-related expenses 33,566 17,463 13,233 General and administrative expenses 14,928 13,285 11,638 Legal and professional fees 31,522 8,735 7,281 Ad valorem and other taxes 7,385 8,854 144 Depreciation, depletion and amortization 14,757 15,376 16,257 Total operating expenses 145,542 105,115 88,565 Operating income 486,053 562,307 362,393 Other income, net 31,508 6,548 624 Income before income taxes 517,561 568,855 363,017 Income tax expense (benefit): Current 110,517 121,230 93,265 Deferred 1,399 1,263 (228) Total income tax expense 111,916 122,493 93,037 Net income $ 405,645 $ 446,362 $ 269,980 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Consolidated Revenues and Net Income: Total revenues decreased $35.8 million, or 5.4%, to $631.6 million for the year ended December 31, 2023 compared to $667.4 million for the year ended December 31, 2022.
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See Part I, Item 1, “Business — Recent Developments” for further discussion of our acquisition activity during 2024. Development of New Solutions for Produced Water and Capital Expenditures In May 2024, we announced our progress towards developing new solutions for produced water in the Permian Basin.
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Water sales, which increased 32.4% during 2023, were impacted not only by increased customer volumes, but also by higher demand within shorter time commitments and resulted in increased water purchase, treatment and transfer expenses.
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Over the last few years, we have been working with a leading industrial technology and manufacturing firm to develop an energy-efficient desalination and treatment process and associated equipment that can recycle produced water into fresh water with quality standards appropriate for surface discharge and beneficial reuse.
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Legal and professional fees were $31.5 million for the year ended December 31, 2023 compared to $8.7 million for the comparable period of 2022. The increase is principally related to legal expenses associated with stockholder matters. See further discussion in Part I - Item 3. Legal Proceedings. Ad valorem and other taxes .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company’s financial instruments consist of cash and cash equivalents (consisting of U.S. Treasury Bills and commercial paper), accounts payable and other liabilities and the carrying amounts of these instruments approximate fair value due to the short-term nature of these instruments.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The Company’s financial instruments consist of cash and cash equivalents (primarily consisting of U.S. Treasury Bills and commercial paper), accounts payable and other liabilities and the carrying amounts of these instruments approximate fair value due to the short-term nature of these instruments.

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