Texas Pacific Land Profile
Texas Pacific Land Corporation (TPL) operates as a landowner in the state of Texas.
The company owns approximately 868,000 surface acres of land in West Texas, principally concentrated in the Permian Basin. Additionally, the company owns 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 all located in the western part of Texas.
The company’s surface and royalty ownership provide revenue opportunities throughout the oil and gas development value chain. While the company is not an oil and gas producer, the company benefits from various revenue sources throughout the life cycle of a well. During the initial development phase where infrastructure for oil and gas development is constructed, the company receives fixed fee payments for use of its land and revenue for sales of materials (caliche) used in the construction of the infrastructure. During the drilling and completion phase, the company generates revenue for providing sourced and/or treated produced water in addition to fixed fee payments for use of the company’s land. During the production phase, the company receives revenue from its oil and gas royalty interests and also revenues related to saltwater disposal on the company’s land. In addition, the company generates 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.
Beyond TPL’s businesses, the company continues to explore new opportunities related to renewable energy, environmental sustainability, and technology, among others, that can leverage the already existing legacy surface and royalty assets.
Business Segments
The company operates its business in two reportable segments: Land and Resource Management and Water Services and Operations. The company’s segments provide management with a comprehensive financial view of the company’s key businesses. The segments enable the alignment of strategies and objectives of the company and provide a framework for timely and rational allocation of resources within businesses.
Land and Resource Management
The company’s Land and Resource Management segment encompasses the business of managing the company’s approximately 868,000 surface acres of land and the company’s oil and gas royalty interests in West Texas, 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.
The company’s revenue from easements is primarily generated from pipelines transporting oil, gas and related hydrocarbons, power line and utility easements, and subsurface wellbore easements. Easements typically have a thirty-plus year term but subsequently renew every ten years with an additional payment. In addition to easements, the company receives revenues from other surface-related operations on the company’s 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 for completion operations.
In recent years, the company 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 grid-connected batteries, studies on carbon capture and sequestration, and development of bitcoin mining facilities, among other opportunities.
As a significant landowner, the company also generates revenue from land sales. From time to time, the company receives offers from third parties to acquire tracts of the company’s land.
Water Services and Operations
The company’s Water Services and Operations segment encompasses the business of providing full-service water offerings to operators in the Permian Basin through Texas Pacific Water Resources LLC (‘TPWR’), a single member Texas limited liability company owned by the company.
These full-service water offerings include, but are not limited to, water sourcing, produced-water treatment, infrastructure development, and disposal solutions. The company is committed to sustainable water development. The company’s significant surface ownership in the Permian Basin provides TPWR with a unique opportunity to provide multiple full-service water offerings to operators.
The revenue streams of this segment principally consist of revenue generated from sales of sourced and treated water, as well as revenue from produced water royalties. Energy businesses use water for their oil and gas projects while service businesses (i.e., water management service companies) operate water facilities to produce and sell water to energy businesses.
Major Customers
During 2023, the company received approximately 19% of its total revenues from Occidental Petroleum Corporation; approximately 13% of its total revenues from Chevron Corporation; and approximately 11% of its total revenues from ConocoPhillips.
History
Texas Pacific Land Corporation was founded in 1888 under a Declaration of Trust. The company was incorporated in 2020.
