Texas Pacific Land Corporation Announces Fourth Quarter and Full Year 2023 Results
- Strong financial performance with net income of $113.1 million for Q4 and $405.6 million for the full year of 2023.
- Record revenues of $166.7 million for Q4 and $631.6 million for the full year.
- High royalty production levels of 26.3 thousand barrels of oil equivalent per day for Q4 and 23.5 thousand barrels of oil equivalent per day for the full year.
- Quarterly cash dividend of $3.25 per share paid on December 15, 2023, and a declared dividend of $3.50 per share for the upcoming quarter.
- Total operating expenses increased for both Q4 and the full year of 2023 due to higher water service-related expenses.
- Consideration of a stockholder proposal to grant stockholders the right to call a special meeting at the 2024 Annual Meeting.
- Decrease in net income by 9.1% for the full year of 2023 compared to the previous year.
- Decrease in total revenues for the full year of 2023 compared to the same period in 2022.
- Decrease in oil and gas royalty revenue excluding a recovery amount compared to the previous year.
- Increase in total operating expenses for the full year of 2023 compared to the same period in 2022.
Insights
The reported net income of $113.1 million for Q4 and $405.6 million for the full year represents a solid performance, particularly noting the highest quarterly royalty production in TPL history. The increased revenues, including from the water segment and surface-related income, suggest a diversified revenue stream that may appeal to investors seeking stability in the face of fluctuating commodity prices. The free cash flow of $116.3 million for Q4 and $415.5 million for the year indicates strong operational efficiency and the potential for further shareholder returns or reinvestment into the business. However, the year-over-year decrease in net income and total revenues warrants a closer look at cost management and the impact of commodity price volatility on the bottom line.
With a record production of 26.3 thousand barrels of oil equivalent per day in Q4, TPL's operational capacity is evident. The emphasis on water sales and produced water royalties growth by nearly 50% year-over-year could signal a strategic pivot or diversification within the company's business model. The Permian asset footprint is particularly noteworthy, as it is a highly sought-after region for oil and gas exploration and TPL's significant presence there could provide a competitive advantage. Additionally, the company's ability to offset lower commodity prices through its surface-related businesses may indicate resilience and adaptability in its operational strategy.
The O&G Settlement recovery of $8.7 million in unpaid oil and gas royalties highlights the importance of contractual compliance and the potential financial impact of such disputes. TPL's focus on increasing its share of production while managing the effects of lower average commodity prices showcases the challenges faced by companies in the sector. The increase in operating expenses, particularly in water service-related expenses, suggests investment in infrastructure to meet customer demand, which could lead to higher revenues in the long term. The operational decision to incur higher expenses for increased water service capacity reflects strategic thinking aimed at capitalizing on market demand.
Earnings
Fourth Quarter 2023 Highlights
-
Net income of
$113.1 million $14.73
-
Revenues of
$166.7 million
-
Adjusted EBITDA(1) of
$150.9 million
-
Free cash flow (1) of
$116.3 million
- Royalty production of 26.3 thousand barrels of oil equivalent per day, the highest quarterly royalty production level in TPL history
-
$10.2 million
-
Quarterly cash dividend of
$3.25
- As of December 31, 2023, TPL’s royalty acreage had an estimated 4.5 net well permits, 9.7 net drilled but uncompleted wells, 2.8 net completed wells, and 67.2 net producing wells.
Full Year 2023 Highlights
-
Net income of
$405.6 million $52.77
-
Revenues of
$631.6 million
-
Adjusted EBITDA(1) of
$541.4 million
-
Free cash flow(1) of
$415.5 million
- Royalty production of 23.5 thousand barrels of oil equivalent per day
-
$42.4 million
-
$100.0 million $13.00
(1) Reconciliations of Non-GAAP measures are provided in the tables below.
“Fourth quarter 2023 capped off a strong year for TPL,” said Tyler Glover, Chief Executive Officer of the Company. “Driven by robust oil and gas royalty production and continued growth of our water and surface businesses, total consolidated revenues and free cash flow for this most recent quarter were the highest of any quarter in 2023. For the full year 2023, TPL generated record revenues from our Water segment, while revenues from our easements and other surface-related income grew nearly
Financial Results for the Fourth Quarter of 2023
The Company reported net income of
Total revenues for the fourth quarter of 2023 were
Total operating expenses of
Financial Results for the Year Ended December 31, 2023
The Company reported net income of
Total revenues decreased
Total operating expenses of
Quarterly Dividend Declared
On February 13, 2024, the Board declared a quarterly cash dividend of
Update on Consideration of Stockholder Proposal from the 2023 Annual Meeting
The Company also announced that on February 12, 2024, the Nominating and Corporate Governance Committee recommended to the full Board that the Board consider including in the 2024 proxy materials a proposal granting stockholders the right to call a special meeting for approval at the Company’s 2024 Annual Meeting. Pursuant to the recommendation of the Nominating and Corporate Governance Committee, the Company is currently evaluating the appropriate parameters for such right, with the intent to make a final recommendation to the full Board prior to the release of the proxy materials for the Company’s 2024 Annual Meeting of Stockholders.
Conference
The Company will hold a conference call on Thursday, February 22, 2024 at 7:30 a.m. Central Time to discuss fourth quarter and year end results. A live webcast of the conference call will be available on the Investors section of the Company’s website at http://www.TexasPacific.com. To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software.
The conference call can also be accessed by dialing 1-877-407-4018 or 1-201-689-8471. The telephone replay can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing the conference ID# 13742748. The telephone replay will be available starting shortly after the call through March 7, 2024.
About Texas Pacific Land Corporation
Texas Pacific Land Corporation is one of the largest landowners in the
Visit TPL at http://www.TexasPacific.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on TPL’s beliefs, as well as assumptions made by, and information currently available to, TPL, and therefore involve risks and uncertainties that are difficult to predict. Generally, future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” and the words “believe,” “anticipate,” “continue,” “intend,” “expect” and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, references to strategies, plans, objectives, expectations, intentions, assumptions, future operations and prospects and other statements that are not historical facts. You should not place undue reliance on forward-looking statements. Although TPL believes that plans, intentions and expectations reflected in or suggested by any forward-looking statements made herein are reasonable, TPL may be unable to achieve such plans, intentions or expectations and actual results, and performance or achievements may vary materially and adversely from those envisaged in this news release due to a number of factors including, but not limited to: the initiation or outcome of potential litigation; and any changes in general economic and/or industry specific conditions. These risks, as well as other risks associated with TPL are also more fully discussed in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. You can access TPL’s filings with the SEC through the SEC website at http://www.sec.gov and TPL strongly encourages you to do so. Except as required by applicable law, TPL undertakes no obligation to update any forward-looking statements or other statements herein for revisions or changes after this communication is made.
FINANCIAL AND OPERATIONAL RESULTS |
||||||||||||
(unaudited) |
||||||||||||
|
|
Three Months Ended December 31, |
|
Years Ended December 31, |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Company’s share of production volumes(1) (2): |
|
|
|
|
|
|
|
|
||||
Oil (MBbls) |
|
|
1,059 |
|
|
864 |
|
|
3,701 |
|
|
3,401 |
Natural gas (MMcf) |
|
|
4,124 |
|
|
3,313 |
|
|
14,528 |
|
|
13,086 |
NGL (MBbls) |
|
|
669 |
|
|
548 |
|
|
2,453 |
|
|
2,208 |
Equivalents (MBoe) |
|
|
2,416 |
|
|
1,964 |
|
|
8,575 |
|
|
7,791 |
Equivalents per day (MBoe/d) |
|
|
26.3 |
|
|
21.3 |
|
|
23.5 |
|
|
21.3 |
|
|
|
|
|
|
|
|
|
||||
Oil and gas royalty revenue (in thousands) (2): |
|
|
|
|
|
|
|
|
||||
Oil royalties |
|
$ |
79,335 |
|
$ |
68,585 |
|
$ |
273,304 |
|
$ |
307,606 |
Natural gas royalties |
|
|
6,705 |
|
|
14,679 |
|
|
29,915 |
|
|
74,866 |
NGL royalties |
|
|
12,710 |
|
|
13,432 |
|
|
45,510 |
|
|
69,962 |
Total oil and gas royalties |
|
$ |
98,750 |
|
$ |
96,696 |
|
$ |
348,729 |
|
$ |
452,434 |
|
|
|
|
|
|
|
|
|
||||
Realized prices (1) (2): |
|
|
|
|
|
|
|
|
||||
Oil ($/Bbl) |
|
$ |
78.46 |
|
$ |
83.16 |
|
$ |
77.33 |
|
$ |
94.69 |
Natural gas ($/Mcf) |
|
$ |
1.76 |
|
$ |
4.79 |
|
$ |
2.23 |
|
$ |
6.19 |
NGL ($/Bbl) |
|
$ |
20.53 |
|
$ |
26.51 |
|
$ |
20.05 |
|
$ |
34.25 |
Equivalents ($/Boe) |
|
$ |
42.81 |
|
$ |
51.57 |
|
$ |
42.58 |
|
$ |
60.81 |
(1) |
Term |
|
Definition |
|
|
Bbl |
|
One stock tank barrel of 42 U.S. gallons liquid volume used herein in reference to crude oil, condensate or NGLs. |
|
|
MBbls |
|
One thousand barrels of crude oil, condensate or NGLs. |
|
|
MBoe |
|
One thousand Boe. |
|
|
MBoe/d |
|
One thousand Boe per day. |
|
|
Mcf |
|
One thousand cubic feet of natural gas. |
|
|
MMcf |
|
One million cubic feet of natural gas. |
|
|
NGL |
|
Natural gas liquids. Hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline. |
|
|
|
|
|
|
(2) |
The metrics provided exclude the impact of the |
|||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
(in thousands, except share and per share amounts) (unaudited) |
||||||||||||
|
|
Three Months Ended December 31, |
|
Years Ended December 31, |
||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||
Revenues: |
|
|
|
|
|
|
|
|
||||
Oil and gas royalties |
|
$ |
98,750 |
|
$ |
96,696 |
|
$ |
357,394 |
|
$ |
452,434 |
Water sales |
|
|
26,404 |
|
|
19,207 |
|
|
112,203 |
|
|
84,725 |
Produced water royalties |
|
|
22,436 |
|
|
19,566 |
|
|
84,260 |
|
|
72,234 |
Easements and other surface-related income |
|
|
19,067 |
|
|
10,746 |
|
|
70,932 |
|
|
48,057 |
Land sales and other operating revenue |
|
|
— |
|
|
6,491 |
|
|
6,806 |
|
|
9,972 |
Total revenues |
|
|
166,657 |
|
|
152,706 |
|
|
631,595 |
|
|
667,422 |
|
|
|
|
|
|
|
|
|
||||
Expenses: |
|
|
|
|
|
|
|
|
||||
Salaries and related employee expenses |
|
|
10,696 |
|
|
11,732 |
|
|
43,384 |
|
|
41,402 |
Water service-related expenses |
|
|
9,070 |
|
|
4,418 |
|
|
33,566 |
|
|
17,463 |
General and administrative expenses |
|
|
4,141 |
|
|
3,524 |
|
|
14,928 |
|
|
13,285 |
Legal and professional fees |
|
|
3,051 |
|
|
3,747 |
|
|
31,522 |
|
|
8,735 |
Ad valorem and other taxes |
|
|
1,960 |
|
|
1,901 |
|
|
7,385 |
|
|
8,854 |
Depreciation, depletion and amortization |
|
|
3,876 |
|
|
3,153 |
|
|
14,757 |
|
|
15,376 |
Total operating expenses |
|
|
32,794 |
|
|
28,475 |
|
|
145,542 |
|
|
105,115 |
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
133,863 |
|
|
124,231 |
|
|
486,053 |
|
|
562,307 |
|
|
|
|
|
|
|
|
|
||||
Other income, net |
|
|
11,269 |
|
|
3,922 |
|
|
31,508 |
|
|
6,548 |
Income before income taxes |
|
|
145,132 |
|
|
128,153 |
|
|
517,561 |
|
|
568,855 |
Income tax expense |
|
|
32,022 |
|
|
28,422 |
|
|
111,916 |
|
|
122,493 |
Net income |
|
$ |
113,110 |
|
$ |
99,731 |
|
$ |
405,645 |
|
$ |
446,362 |
|
|
|
|
|
|
|
|
|
||||
Net income per share of common stock |
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
14.74 |
|
$ |
12.95 |
|
$ |
52.81 |
|
$ |
57.80 |
Diluted |
|
$ |
14.73 |
|
$ |
12.94 |
|
$ |
52.77 |
|
$ |
57.77 |
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares of common stock outstanding |
|
|
|
|
|
|
|
|
||||
Basic |
|
|
7,671,773 |
|
|
7,698,487 |
|
|
7,681,435 |
|
|
7,721,957 |
Diluted |
|
|
7,678,182 |
|
|
7,705,116 |
|
|
7,686,615 |
|
|
7,726,809 |
SEGMENT OPERATING RESULTS |
||||||||||||
(dollars in thousands) (unaudited) |
||||||||||||
|
|
Three Months Ended December 31, |
||||||||||
|
|
2023 |
|
2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||
Land and resource management: |
|
|
|
|
|
|
|
|
||||
Oil and gas royalties |
|
$ |
98,750 |
|
59 |
% |
|
$ |
96,696 |
|
64 |
% |
Easements and other surface-related income |
|
|
18,079 |
|
11 |
% |
|
|
9,841 |
|
6 |
% |
Land sales and other operating revenue |
|
|
— |
|
— |
% |
|
|
6,491 |
|
4 |
% |
Total land and resource management revenue |
|
|
116,829 |
|
70 |
% |
|
|
113,028 |
|
74 |
% |
|
|
|
|
|
|
|
|
|
||||
Water services and operations: |
|
|
|
|
|
|
|
|
||||
Water sales |
|
|
26,404 |
|
16 |
% |
|
|
19,207 |
|
13 |
% |
Produced water royalties |
|
|
22,436 |
|
13 |
% |
|
|
19,566 |
|
13 |
% |
Easements and other surface-related income |
|
|
988 |
|
1 |
% |
|
|
905 |
|
— |
% |
Total water services and operations revenue |
|
|
49,828 |
|
30 |
% |
|
|
39,678 |
|
26 |
% |
Total consolidated revenues |
|
$ |
166,657 |
|
100 |
% |
|
$ |
152,706 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
||||
Net income: |
|
|
|
|
|
|
|
|
||||
Land and resource management |
|
$ |
88,846 |
|
79 |
% |
|
$ |
79,623 |
|
80 |
% |
Water services and operations |
|
|
24,264 |
|
21 |
% |
|
|
20,108 |
|
20 |
% |
Total consolidated net income |
|
$ |
113,110 |
|
100 |
% |
|
$ |
99,731 |
|
100 |
% |
|
|
Years Ended December 31, |
||||||||||
|
|
2023 |
|
2022 |
||||||||
Revenues: |
|
|
|
|
|
|
|
|
||||
Land and resource management: |
|
|
|
|
|
|
|
|
||||
Oil and gas royalties |
|
$ |
357,394 |
|
57 |
% |
|
$ |
452,434 |
|
68 |
% |
Easements and other surface-related income |
|
|
67,905 |
|
11 |
% |
|
|
44,569 |
|
7 |
% |
Land sales and other operating revenue |
|
|
6,806 |
|
1 |
% |
|
|
9,972 |
|
1 |
% |
Total land and resource management revenue |
|
|
432,105 |
|
69 |
% |
|
|
506,975 |
|
76 |
% |
|
|
|
|
|
|
|
|
|
||||
Water services and operations: |
|
|
|
|
|
|
|
|
||||
Water sales |
|
|
112,203 |
|
18 |
% |
|
|
84,725 |
|
13 |
% |
Produced water royalties |
|
|
84,260 |
|
13 |
% |
|
|
72,234 |
|
11 |
% |
Easements and other surface-related income |
|
|
3,027 |
|
— |
% |
|
|
3,488 |
|
— |
% |
Total water services and operations revenue |
|
|
199,490 |
|
31 |
% |
|
|
160,447 |
|
24 |
% |
Total consolidated revenues |
|
$ |
631,595 |
|
100 |
% |
|
$ |
667,422 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
||||
Net income: |
|
|
|
|
|
|
|
|
||||
Land and resource management |
|
$ |
306,706 |
|
76 |
% |
|
$ |
365,041 |
|
82 |
% |
Water services and operations |
|
|
98,939 |
|
24 |
% |
|
|
81,321 |
|
18 |
% |
Total consolidated net income |
|
$ |
405,645 |
|
100 |
% |
|
$ |
446,362 |
|
100 |
% |
NON-GAAP PERFORMANCE MEASURES AND DEFINITIONS
In addition to amounts presented in accordance with generally accepted accounting principles in
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. 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 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. Our definitions of Adjusted EBITDA and Free Cash Flow may differ from computations of similarly titled measures of other companies.
The following table presents a reconciliation of net income to EBITDA, Adjusted EBITDA and Free Cash Flow for the three months and years ended December 31, 2023 and 2022 (in thousands):
|
|
Three Months Ended December 31, |
|
Years Ended December 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net income |
|
$ |
113,110 |
|
|
$ |
99,731 |
|
|
$ |
405,645 |
|
|
$ |
446,362 |
|
Add: |
|
|
|
|
|
|
|
|
||||||||
Income tax expense |
|
|
32,022 |
|
|
|
28,422 |
|
|
|
111,916 |
|
|
|
122,493 |
|
Depreciation, depletion and amortization |
|
|
3,876 |
|
|
|
3,153 |
|
|
|
14,757 |
|
|
|
15,376 |
|
EBITDA |
|
|
149,008 |
|
|
|
131,306 |
|
|
|
532,318 |
|
|
|
584,231 |
|
Add: |
|
|
|
|
|
|
|
|
||||||||
Employee share-based compensation |
|
|
1,907 |
|
|
|
2,594 |
|
|
|
9,124 |
|
|
|
7,583 |
|
Adjusted EBITDA |
|
|
150,915 |
|
|
|
133,900 |
|
|
|
541,442 |
|
|
|
591,814 |
|
Less: |
|
|
|
|
|
|
|
|
||||||||
Current income tax expense |
|
|
(29,589 |
) |
|
|
(26,319 |
) |
|
|
(110,517 |
) |
|
|
(121,230 |
) |
Capital expenditures |
|
|
(5,044 |
) |
|
|
(6,812 |
) |
|
|
(15,431 |
) |
|
|
(18,967 |
) |
Free Cash Flow |
|
$ |
116,282 |
|
|
$ |
100,769 |
|
|
$ |
415,494 |
|
|
$ |
451,617 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221094108/en/
Investor Relations
IR@TexasPacific.com
Source: Texas Pacific Land Corporation
FAQ
What was Texas Pacific Land Corporation's net income for the fourth quarter of 2023?
How much was the quarterly cash dividend paid by Texas Pacific Land Corporation on December 15, 2023?
What was the royalty production level for Texas Pacific Land Corporation in the fourth quarter of 2023?
What was the total revenues reported by Texas Pacific Land Corporation for the full year of 2023?
How much was the declared quarterly cash dividend for Texas Pacific Land Corporation for the upcoming quarter?
