Texas Pacific Land Corporation
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Item 1. Business.
General
Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL,” the “Company,” “our,” “we,” or “us”) is a Delaware Corporation and one of the largest landowners in the State of Texas with approximately 882,000 surface acres of land, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 33,000 additional net royalty acres (normalized to 1/8th) (“NRA”), for a collective total of approximately 224,000 NRA, principally concentrated in the Permian Basin.
The Company was originally organized as Texas Pacific Land Trust (the “Trust”) under a Declaration of Trust, dated February 1, 1888 (the “Declaration of Trust”), to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company. The Declaration of Trust provided for the appointment of trustees (the “Trustees”) to manage the assets of the Trust with all of the powers of an absolute owner. On January 11, 2021, the Trust completed its reorganization from a business trust, Texas Pacific Land Trust, into Texas Pacific Land Corporation, a corporation formed and existing under the laws of the State of Delaware (the “Corporate Reorganization”).
Our surface and royalty ownership provide revenue opportunities throughout the oil and gas development value chain. While we are not an oil and gas producer, we benefit from various revenue sources throughout the life cycle of a well. During the initial development phase whereby infrastructure for oil and gas development is constructed, we receive fixed fee payments for use of our land and revenue for sales of materials (caliche) used in the construction of the infrastructure. During the drilling and completion phase, we generate revenue by providing sourced water and/or treated produced water as well as fixed fee payments from the use of our land and revenue related to the sale of sand to operators. During the production phase, we receive revenue from our oil and gas royalty interests and revenue related to saltwater disposal on our land. In addition, we generate revenue from pipeline, power line and utility easements, commercial leases and temporary permits principally related to a variety of land uses, including, but not limited to, midstream infrastructure projects and processing facilities as hydrocarbons are processed and transported to market. Additionally, as a result of an acquisition in 2024, we receive commercial revenue related to land leased to a third party that operates a nonhazardous oilfield solids waste disposal site.
Our mission is to pursue a thoughtful, long-term approach towards optimizing and building upon the commercial and environmental virtues of our extensive lands and resources. We have a long history of responsible management of our legacy assets, and since 2016, we have expanded our business strategy to generate incremental revenue streams that take advantage of our vast surface and royalty footprint, such as our investments in the Water Services and Operations business segment. Beyond our core businesses, we continue to explore new opportunities related to renewable energy, environmental sustainability, and technology, among others, that can leverage our existing legacy surface and royalty assets. For example, in December 2025, we invested $50.0 million in a strategic agreement with a data and energy infrastructure company. See further discussion below
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under “Recent Developments.” Our business model emphasizes high cash flow margins and relatively low ongoing capital expenditure requirements, and we expect new opportunities to generally align with these priorities. We remain focused on optimizing long-term value creation and profitability, fostering responsible stewardship of our assets, providing quality customer service, and engaging with and advocating for employee and stakeholder interests.
Recent Developments
Revolving Credit Facility
On October 23, 2025, we entered into a credit agreement with Wells Fargo Bank, National Association and certain other lenders (collectively the “Lenders”), which provides for a revolving credit facility (the “Credit Facility”) in the aggregate principal amount of up to $500.0 million. The Credit Facility includes the ability to request potential increases in the commitments of the Lenders of up to an additional $250.0 million; provided that any such request for an increase must be in a minimum amount of $50.0 million or, if less, the remaining available capacity for such increases. The Credit Facility and all borrowings thereunder will mature on October 23, 2029. Borrowings under the Credit Facility will generally bear interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25% to 2.50% based on our consolidated total leverage ratio. The Credit Facility is initially unsecured, with a springing security interest in substantially all equity securities of our subsidiaries in the event our consolidated total leverage ratio exceeds 2.50 to 1.0. The Credit Facility also contains customary financial and other affirmative and negative covenants and events of default. No draws were made under the Credit Facility during 2025, and the Credit Facility remained undrawn as of the date of this Annual Report.
Common Stock Split
On December 22, 2025, we effected a three-for-one stock split of our common stock, par value $0.01 per share (“Common Stock”), and trading began on a stock split adjusted basis on December 23, 2025. Unless the context otherwise requires, all share and per share information (including information regarding treasury shares, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”)) has been retroactively adjusted to reflect the stock split. The par value of Common Stock was not affected by the stock split and remains at $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock” on our consolidated balance sheets.
Acquisition Activity During 2025
We completed the following asset acquisitions during 2025:
•In March 2025, we acquired 177 NRA located primarily in the Midland Basin for an aggregate purchase price of $3.5 million, net of post-closing adjustments, in an all-cash transaction.
•In May 2025, we acquired 787 acres of land in Reeves County, Texas for an aggregate purchase price, inclusive of closing costs, of $4.5 million in an all-cash transaction.
•In September 2025, we acquired 8,147 acres of land in Martin County, Texas for an aggregate purchase price, inclusive of closing costs, of $31.4 million in an all-cash transaction.
•In November 2025, we acquired 17,306 NRA located primarily in the Midland Basin in Martin, Howard, Midland, and other counties for an aggregate purchase price of $450.7 million, net of post-closing adjustments, in an all-cash transaction.
Investment Activity During 2025
In December 2025, we made a minority investment of $50.0 million in Bolt Data & Energy, Inc. (“Bolt”) pursuant to a strategic agreement to develop and enable large scale data center campuses and supporting infrastructure across our land. Bolt is a data energy infrastructure company co-founded by Eric Schmidt, former CEO and Chairman of Google, who also serves as Bolt’s Chairman. As part of the agreement, Bolt raised $150.0 million of capital inclusive of our $50.0 million investment. In connection with our investment, we received an equity interest, warrants, and a right of first refusal to supply water to Bolt-affiliated projects and related infrastructure. Additionally, the terms of the agreement provide an opportunity for the Company to contribute land to Bolt in exchange for additional Bolt equity subject to mutual agreement by both parties. Bolt is currently pursuing commercial partnerships and anchor customers to develop large-scale data centers on our land.
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Business Segments
We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. Our segments enable the alignment of strategies and objectives of the Company and provide a framework for timely and rational allocation of resources within businesses. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 16, “Business Segment Reporting” in the notes to our consolidated financial statements included under Part II, Item 8. “Financial Statements and Supplementary Data.”
Land and Resource Management
Our Land and Resource Management segment encompasses the business of managing our approximately 882,000 surface acres of land and approximately 224,000 NRA of oil and gas royalty interests, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements, commercial leases and renewables, and land and material sales.
We are not an oil and gas producer. Rather, our oil and gas revenue is derived from our oil and gas royalty interests. Thus, in addition to being subject to fluctuations in response to the market prices for oil and gas, our oil and gas royalties are also subject to decisions made by the owners and operators of the oil and gas wells to which our royalty interests relate as to investments in and production from those wells. Our oil and gas royalty interests require no capital expenditures or operating expense burden from us for well development.
Our revenue from easements is primarily generated from easements for pipelines transporting oil, gas and related hydrocarbons, power line and utility easements, and subsurface wellbore easements. Easements typically have a 30-plus year term but subsequently renew every 10 years with an additional payment that is subject to consumer price index escalators. Many of the renewals will reset over the next several years. In addition to easements, we also receive revenues from other surface-related operations on our land, including but not limited to, commercial leases, well development and material sales. Commercial lease revenue is derived primarily from processing, storage and compression facilities, and roads. Material sales include caliche, sand, and other material sales to operators. Caliche is used in the construction of oil and gas-related infrastructure, and sand is utilized during completion operations. Additionally, as a result of an acquisition in 2024, we receive commercial revenue related to land leased to a third party that operates a nonhazardous oilfield solids waste disposal site.
In recent years, we have entered into agreements with third parties related to renewables and various “next generation” opportunities that will potentially utilize TPL’s surface assets. These agreements include the evaluation of data centers, power generation, grid-connected batteries, and carbon capture and sequestration, among other opportunities. Generally, these projects are structured with multi-year terms that allow for feasibility and/or commercial suitability and revenue arrangements that provide royalty, fee, profit sharing, lease and/or rental payments, though contractual terms and timing for commercial operations will vary by project. Additionally, as discussed above under “Recent Developments,” we recently entered into a strategic agreement with Bolt to develop and enable large scale data center campuses and supporting infrastructure across our land.
As a significant landowner, we also generate revenue from land sales. From time to time, we receive offers from third parties to acquire tracts of our land. Sales demand and related sale prices of particular tracts of land are influenced by many factors, including general economic conditions, the rate of development in nearby areas and the suitability of the particular tract for commercial uses.
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Operations
Revenues from the Land and Resource Management segment for the last three years were as follows (dollars presented in thousands):
| Years Ended December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Segment Revenue | % of Total Consolidated Revenue | Segment Revenue | % of Total Consolidated Revenue | Segment Revenue | % of Total Consolidated Revenue | ||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 411,677 | 52 | % | $ | 373,331 | |||||||||||||||||||||||||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Regarding Forward-Looking Statements
Statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding management’s expectations, hopes, intentions or strategies regarding the future. Words or phrases such as “anticipates,” “believes,” “could,” “expects,” “intends,” “may,” “might,” “plan,” “potential,” “should,” “will,” and “would” or similar expressions or the negative of such terms, when used in this Quarterly Report or other filings with the Securities and Exchange Commission (the “SEC”), are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the Company’s future operations and prospects, the markets for real estate in the areas in which the Company owns real estate, applicable zoning regulations, the markets for oil and gas including actions of other oil and gas producers or consortiums worldwide such as the Organization of Petroleum Exporting Countries (“OPEC”) and Russia (collectively referred to as “OPEC+”), expected competition, management’s intent, beliefs or current expectations with respect to the Company’s future financial performance and other matters. All forward-looking statements in this Quarterly Report are based on information available to us, and speak only, as of the date this Quarterly Report is filed with the SEC, and we assume no responsibility to update any such forward-looking statements, except as required by law. All forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A. “Risk Factors” of this Quarterly Report.
The following discussion and analysis should be read in conjunction with our 2025 Annual Report filed with the SEC on February 18, 2026 and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report. Period-to-period comparisons of financial data are not necessarily indicative, and therefore, should not be relied upon as indicators, of the Company’s future performance.
Overview
Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest land and royalty owners in the State of Texas with approximately 894,000 surface acres of land, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 33,000 additional net royalty acres (normalized to 1/8th) (“NRA”), for a collective total of approximately 224,000 NRA, principally concentrated in the Permian Basin.
The Company was originally organized under a Declaration of Trust, dated February 1, 1888, to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company. We completed our reorganization on January 11, 2021 from a business trust, Texas Pacific Land Trust, into Texas Pacific Land Corporation.
We are not an oil and gas producer. Our business activity is generated from our surface and royalty interest ownership, primarily in the Permian Basin. Our revenues are derived from oil and gas royalties, water sales, produced water royalties, easements and other surface-related income and land sales. Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue and net income are subject to substantial fluctuations from quarter to quarter and year to year. In addition to fluctuations in response to changes in the market price for oil and gas, our financial results are 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.
For a detailed overview of our business and business segments, see Part I, Item 1. “Business — General” in our 2025 Annual Report.
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Common Stock Split
On December 22, 2025, we effected a three-for-one stock split of our common stock, par value $0.01 per share (“Common Stock”), and trading began on a stock split adjusted basis on December 23, 2025. Unless the context otherwise requires, all share and per share information (including information regarding treasury shares, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”)) has been retroactively adjusted to reflect the stock split. The par value of Common Stock was not affected by the stock split and remains at $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock” on our consolidated balance sheets.
Market Conditions
Average West Texas Intermediate (“WTI”) oil prices for the six months ended June 30, 2026 increased by approximately 24% compared to average WTI oil prices during the same period last year. Oil prices are impacted by certain actions by OPEC+, geopolitics, and evolving global supply and demand trends, among other factors. In February 2026, an escalating military conflict in Iran led to attacks on energy infrastructure in the broader Middle East and caused major disruptions to the Strait of Hormuz, a critical shipping channel where a significant portion of global oil and liquefied natural gas supply transits through daily. As a result, global oil prices this year increased to over $90 per barrel from March through early-June with continued volatility in July. The impact to oil prices for the balance of 2026 and beyond are uncertain and, in part, dependent on the duration of the conflict in Iran, the extent of damage to regional energy infrastructure, and the ramifications of a prolonged closure of the Strait of Hormuz. Average Henry Hub natural gas prices during 2026 increased approximately 4% compared to average prior year period natural gas prices. Global and domestic natural gas markets benefited in 2026 from improved supply-demand balances, including tailwinds from expanded liquefied natural gas capacity and improved industrial and power demand, among other factors. Since mid-2022, the Waha Hub located in Pecos County, Texas has at times experienced significant negative price differentials relative to Henry Hub, located in Erath, Louisiana, due in part to growing local Permian Basin natural gas production and limited natural gas pipeline takeaway capacity. 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. Although our revenues are directly and indirectly impacted by oil and natural gas prices, we believe our royalty interests (which require no capital expenditures or operating expense burden from us for well development), strong balance sheet, and liquidity position will help us navigate through potential commodity price volatility.
As the largest oil producing shale basin in the world, the Permian Basin depends on large-scale water solutions related to well development and produced water disposal. For oil and gas well development, hundreds of thousands of barrels of water are often required per well completion. To enhance productivity and drilling economics, oil and gas operators have generally expanded the amount of water per well completion and reduced the time to complete a well. These factors have led to intensifying demands for completion water delivery and assurance, which generally benefits completion water providers with larger size and scale. We believe we have a competitive advantage in this market with our significant surface footprint and a large network of owned and operated water wells, storage ponds, recycling assets, and pipelines that can source and deliver water to customers throughout the Permian Basin.
Permian Basin produced water volumes have grown commensurately with overall Permian Basin oil production. Though some produced water is reused and recycled for completion activities, the majority of Permian Basin produced water is injected into subsurface pore space via saltwater disposal wells. Saltwater disposal availability varies throughout the Permian Basin depending on regulations, permitted injected rates, and the availability of pore space and infrastructure. Our extensive land holdings contain and are adjacent to extensive pore space, and, through various commercial agreements, we allow produced water operators to transport and dispose of produced water across our surface footprint. We do not operate any saltwater disposal wells. Furthermore, as discussed below, our desalination project could potentially provide an additional solution for produced water by reducing the amount of water required to be injected subsurface.
Permian Basin Activity
The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas production in the United States, covering approximately 86,000 square miles across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies operating in the Permian Basin continue to maintain robust drilling and development activity. Per the U.S. Energy Information Administration, Permian Basin production is currently in excess of 6.8 million barrels per day.
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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. The metrics below show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the three and six months ended June 30, 2026 and 2025:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||
Oil and Gas Pricing Metrics (1): | ||||||||||||||||||||||||
| WTI Cushing oil average price per Bbl | $ | 95.65 | $ | 64.57 | $ | 84.29 | $ | 68.12 | ||||||||||||||||
| Henry Hub natural gas average price per mmbtu | $ | 2.95 | $ | 3.19 | $ | 3.81 | $ | 3.66 | ||||||||||||||||
| Waha Hub natural gas average price per mmbtu | $ | (2.92) | $ | 1.22 | $ | (2.03) | $ | 1.49 | ||||||||||||||||
Activity Metrics specific to the Permian Basin (1)(2): | ||||||||||||||||||||||||
| Average monthly horizontal permits | 612 | 594 | 606 | 606 | ||||||||||||||||||||
| Average monthly horizontal wells drilled | 462 | 495 | 439 | 494 | ||||||||||||||||||||
| Average weekly horizontal rig count | 224 | 273 | 223 | 281 | ||||||||||||||||||||
DUCs as of June 30 for each applicable year | 3,872 | 4,428 | 3,872 | 4,428 | ||||||||||||||||||||
Total Average U.S. weekly horizontal rig count (2) | 482 | 515 | 482 | 520 | ||||||||||||||||||||
(1) Commonly used definitions in the oil and gas industry: “WTI Cushing” represents West Texas Intermediate. “Bbl” represents one barrel of 42 U.S. gallons of crude oil, condensate or NGLs. “Mmbtu” represents one million British thermal units, a measurement used for natural gas. “DUCs” represent drilled but uncompleted wells. DUC classification is based on well data and date stamps provided by Enverus. DUCs is based on wells that have a drilled/spud date stamp but do not have a completed or first production date stamp. Excludes wells that have been labeled plugged and abandoned or permit expired and wells drilled/spud more than five years ago.
(2) Permian Basin specific information per Enverus analytics. U.S. weekly horizontal rig counts per Baker Hughes United States Rotary Rig Count for horizontal rigs. Statistics for similar data are also available from other sources. The comparability between these other sources and the sources used by the Company may differ.
Average WTI Cushing oil and Henry Hub natural gas prices for the six months ended June 30, 2026 increased compared to the same period in 2025. E&P companies broadly have continued to deploy capital towards drilling and development activities in the Permian Basin at a measured pace. Although average rig counts during the six months ended June 30, 2026 were lower compared to the same period in 2025, increased drilling and completion efficiencies have allowed operators, in aggregate, to grow Permian Basin production. As we are a significant land and royalty owner in the Permian Basin and not an oil and gas producer, our revenue is affected by the development decisions made by companies that operate in the areas where we own royalty interests and land. Accordingly, these decisions made by others affect, both directly and indirectly, our oil and gas royalties, produced water royalties, water sales, and other surface-related income.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash and cash flows generated from our operations and our $500 million revolving credit agreement (the “Credit Facility”). See further discussion of our Credit Facility in Note 7, “Credit Facility” in the notes to the condensed consolidated financial statements in this Quarterly Report. Our primary liquidity and capital requirements are for acquisitions, purchases of fixed assets related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital, and general business needs.
We continuously review our levels of liquidity and capital resources. If market conditions were to change and our revenues were to decline significantly or our operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could draw on our Credit Facility or seek alternative sources of funding. As of June 30, 2026, we had no off-balance sheet arrangements that require us to provide funding, guarantees, or other forms of financial support. The Credit Facility remains undrawn, and the Company is in compliance with all covenants under the Credit Facility as of June 30, 2026.
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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 returning capital to our stockholders in the form of special dividends and/or share repurchases. As of June 30, 2026, we had cash and cash equivalents of $248.6 million that we expect to utilize, along with cash flow from operations, to provide capital to support our business, to pay regular dividends, subject to the discretion of our board of directors (the “Board”), to, subject to market conditions, repurchase shares of our Common Stock, for potential acquisitions and for general corporate purposes. We believe that our cash from operations and our cash and cash equivalents balance, together with our revolving Credit Facility will be sufficient to meet ongoing capital expenditures, working capital requirements, and other cash needs and allow for opportunistic transactions for at least the next 12 months.
Land Acquisitions
During the six months ended June 30, 2026, we acquired land for an aggregate purchase price of $110.2 million. The acquisitions included land in Shackelford and Jones Counties, Texas, in connection with our data center and power generation initiatives. Additionally, we acquired land in Winkler County, Texas.
Land Sales
During the six months ended June 30, 2026, we entered into an agreement with Chevron U.S.A. Inc., a subsidiary of Chevron Corporation (NYSE: CVX) (“Chevron”), to provide land and brackish water resources for Chevron’s recently announced development known as Project Kilby, involving a large-scale power generation facility Chevron is developing to support a customer data center in Reeves County, Texas. As part of the agreement, we sold land for aggregate consideration of $42.5 million and acquired the exclusive right to source aquifer-derived water for the power generation facility and other associated aspects of the project. The consideration consisted of a nominal cash payment received at closing and annual payments due to us through 2046.
This arrangement also provides for a put option held by the developer and a call option held by us regarding our repurchase of the land if certain development milestones are not achieved. Additionally, we entered into a separate agreement to supply water to the project.
We recognized land sales revenue of $20.9 million at closing and recorded a financing receivable for the deferred consideration. The financing receivable was recorded at its present value of $20.9 million, which represents the contractual payments of $42.4 million discounted at an effective interest rate of 7.5%.
Purchase of Transferable Federal Income Tax Credits
During the six months ended June 30, 2026, we entered into an agreement to purchase up to $60.0 million of transferable federal tax credits from an eligible taxpayer for $55.8 million, resulting in an estimated tax benefit of $4.2 million. The purchased credits reduced federal income tax payments otherwise payable to the Internal Revenue Service and were reflected as a tax benefit in our effective tax rate during the period. The related cash payments to the seller are expected to occur during the remainder of 2026 as the underlying credits are generated and transferred.
Development of New Solutions for Produced Water and Capital Expenditures
In 2024, we announced our progress towards developing a patented, 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. With the Permian Basin generating over 20 million barrels of produced water per day, this technology provides an attractive and critical alternative to subsurface injection. Construction of our facility, which will have an initial capacity of 10,000 barrels of water per day, is complete and commissioning has commenced. Cumulatively through June 30, 2026, we have spent $55.8 million ($10.2 million during the six months ended June 30, 2026) on this new energy-efficient desalination and treatment process and equipment, of which $48.1 million has been capitalized as of June 30, 2026.
Additionally, during the six months ended June 30, 2026, we invested approximately $18.2 million to enhance our water sourcing assets.
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Return of Capital to Stockholders
During the six months ended June 30, 2026, we paid $83.2 million in dividends to our stockholders. There were no repurchases of shares of our Common Stock during the six months ended June 30, 2026.
Cash Flows from Operating Activities
Our cash flows provided by operating activities are primarily from oil, gas, produced water royalties, water and land sales, easements, and other surface-related income. Cash flows used in operations generally consist of operating expenses associated with our revenue streams, general and administrative expenses, and income taxes. Cash flows from operating activities are subject to fluctuations resulting from overall activity levels in the Permian Basin including development decisions made by our customers and commodity prices.
For the six months ended June 30, 2026 and 2025, cash provided by operating activities was $334.9 million and $277.6 million, respectively. The increase in cash flows provided by operating activities for the six months ended June 30, 2026 compared to the same period of 2025 was primarily driven by an increase in operating income and changes in working capital requirements during 2026 as compared to 2025.
Cash Flows Used in Investing Activities
Our cash flows used in investing activities are primarily related to acquisitions and purchases of fixed assets primarily related to our Water Services and Operations segment. Our acquisitions may include land, royalty interests, and other similar tangible and intangible assets. Purchases of fixed assets principally relate to enhancing our water sourcing assets and the development of desalination equipment discussed further above.
For the six months ended June 30, 2026 and 2025, cash used in investing activities was $139.4 million and $16.5 million, respectively. For the six months ended June 30, 2026 and 2025, cash used for acquisitions totaled $110.2 million and $8.1 million, respectively. Purchases of fixed assets for the six months ended June 30, 2026 and 2025 were $29.2 million and $12.3 million, respectively.
Cash Flows Used in Financing Activities
Our cash flows used in financing activities primarily consist of activities that return capital to our stockholders, such as payments of dividends and repurchases of our Common Stock.
For the six months ended June 30, 2026 and 2025, cash used in financing activities was $92.3 million and $88.6 million, respectively. During the six months ended June 30, 2026 and 2025, we paid total dividends of $83.2 million and $74.2 million, respectively. During the six months ended June 30, 2026 and 2025, employees surrendered $9.1 million and $14.3 million in shares, respectively, to the Company to settle tax withholdings related to stock vesting.
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Results of Operations
The following tables show our consolidated results of operations and our results of operations by reportable segment for Land and Resource Management (“LRM”) and Water Services and Operations (“WSO”) for the three and six months ended June 30, 2026 and 2025 (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | ||||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 145,589 | $ | — | $ | 145,589 | $ | 95,006 | $ | — | $ | 95,006 | |||||||||||||||||||||||||||||||||||
| Water sales | — | 39,733 | 39,733 | — | 25,577 | 25,577 | |||||||||||||||||||||||||||||||||||||||||
| Produced water royalties | — | 37,075 | 37,075 | — | 30,737 | 30,737 | |||||||||||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 18,278 | 5,384 | 23,662 | 33,491 | 2,732 | 36,223 | |||||||||||||||||||||||||||||||||||||||||
| Land sales | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Total revenues | 163,867 | 82,192 | 246,059 | 128,497 | 59,046 | 187,543 | |||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 8,347 | 7,215 | 15,562 | 7,025 | 7,047 | 14,072 | |||||||||||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 11,570 | 11,570 | — | 8,451 | 8,451 | |||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 5,245 | 2,759 | 8,004 | 3,648 | 2,045 | 5,693 | |||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 11,695 | 4,944 | 16,639 | 9,137 | 4,562 | 13,699 | |||||||||||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 2,279 | 188 | 2,467 | 1,864 | 13 | 1,877 | |||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 27,566 | 26,676 | 54,242 | 21,674 | 22,118 | 43,792 | |||||||||||||||||||||||||||||||||||||||||
| Operating income | 136,301 | 55,516 | 191,817 | 106,823 | 36,928 | 143,751 | |||||||||||||||||||||||||||||||||||||||||
| Interest expense | (779) | (194) | (973) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other income, net | 2,140 | 714 | 2,854 | 4,156 | 1,084 | 5,240 | |||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 137,662 | 56,036 | 193,698 | 110,979 | 38,012 | 148,991 | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 28,230 | 11,538 | 39,768 | 24,410 | 8,441 | 32,851 | |||||||||||||||||||||||||||||||||||||||||
| Net income | $ | 109,432 | $ | 44,498 | $ | 153,930 | $ | 86,569 | $ | 29,571 | $ | 116,140 | |||||||||||||||||||||||||||||||||||
22
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| LRM | WSO | Consolidated | LRM | WSO | Consolidated | ||||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Oil and gas royalties | $ | 263,756 | $ | — | $ | 263,756 | $ | 206,251 | $ | — | $ | 206,251 | |||||||||||||||||||||||||||||||||||
| Water sales | — | 86,596 | 86,596 | — | 64,390 | 64,390 | |||||||||||||||||||||||||||||||||||||||||
| Produced water royalties | — | 70,604 | 70,604 | — | 58,437 | 58,437 | |||||||||||||||||||||||||||||||||||||||||
| Easements and other surface-related income | 32,727 | 8,250 | 40,977 | 48,827 | 5,621 | 54,448 | |||||||||||||||||||||||||||||||||||||||||
| Land sales | 20,944 | — | 20,944 | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Total revenues | 317,427 | 165,450 | 482,877 | 255,078 | 128,448 | 383,526 | |||||||||||||||||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and related employee expenses | 15,905 | 14,644 | 30,549 | 14,429 | 14,215 | 28,644 | |||||||||||||||||||||||||||||||||||||||||
| Water service-related expenses | — | 25,857 | 25,857 | — | 19,577 | 19,577 | |||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 10,740 | 5,895 | 16,635 | 6,961 | 4,804 | 11,765 | |||||||||||||||||||||||||||||||||||||||||
| Depreciation, depletion and amortization | 20,889 | 9,793 | 30,682 | 16,826 | 8,814 | 25,640 | |||||||||||||||||||||||||||||||||||||||||
| Ad valorem and other taxes | 4,809 | 200 | 5,009 | 4,053 | 23 | 4,076 | |||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 52,343 | 56,389 | 108,732 | 42,269 | 47,433 | 89,702 | |||||||||||||||||||||||||||||||||||||||||
| Operating income | 265,084 | 109,061 | 374,145 | 212,809 | 81,015 | 293,824 | |||||||||||||||||||||||||||||||||||||||||
| Interest expense | (1,572) | (393) | (1,965) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other income, net | 3,721 | 1,361 | 5,082 | 7,572 | 1,989 | 9,561 | |||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 267,233 | 110,029 | 377,262 | 220,381 | 83,004 | 303,385 | |||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 56,878 | 23,552 | |||||||||||||||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-15 | DOYLE PETER | Director | Buy | +4 | $381.95 | $1,528 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-04 10-Q expected by 2026-11-08 (in 52 days)
- ~2027-02-17 10-K expected by 2027-02-28 (in 157 days)
- ~2027-05-05 10-Q expected by 2027-05-09 (in 234 days)
- ~2027-08-04 10-Q expected by 2027-08-08 (in 325 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-09-11 PRE 14A Preliminary Proxy Statement
- 2026-08-05 10-Q Quarterly Report
- 2026-08-05 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-06 10-Q Quarterly Report
- 2026-05-06 8-K Material Agreement Entered; Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-18 10-K Annual Report
- 2026-02-18 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-05 10-Q Quarterly Report
- 2025-11-05 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-27 8-K Material Agreement Entered; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-08-27 8-K Officer/Director Change
- 2025-08-06 10-Q Quarterly Report
- 2025-08-06 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-05-07 10-Q Quarterly Report
- 2025-05-07 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits