Texas Pacific Land Corporation · NYSE:TPL
Texas Pacific Land — Texas Pacific Land Trust — Proxy Contest (April 2019)
34 slides from Texas Pacific Land's proxy contest presentation, Apr 15, 2019
Slide 1: Investor Presentation April 2019
jaeaceccees,, Investor Presentation April 2019
Slide 2: Disclaimer
This presentation has been designed to provide general information about Texas Pacific Land Trust and its subsidiaries "TPL" or the “Trust’}. Any information contained or referenced herein is suitable only as an introduction to the Trust. The recipient is strongly encouraged to refer to and suppleme
Slide 3: Table of Contents
Table of Contents |. Texas Pacific Land Trust Overview Il. Land and Resource Management Overview Ill. Water Service and Operations Overview IV. Summary of Financials Vv. Appendix NYSE: TPL 3
Slide 4: I. Texas Pacific Land Trust Overview
I. Texas Pacific Land Trust Overview
Slide 5: Leadership Team
Texas Pacifie Land Trust Overview Leadership Team Management Tyler Glover, CEO, Secretary and General Agent ‘A Midland native, Mr. Glover has beon Chief Executive Officer, Co-General Agent and Secretary at Texas Pacific Land Trust since November 2016 and President and Chief Executive Oticor of Texas
Slide 6: Royalty and Surface Acreage Position
Texas Pacifie Land Trust Overview Royalty and Surface Acreage Position Pure Play Permian Basin Trust TPL is one of the largest landowners in the State of Texas with: ~900,000 surface acres and ~455,000 NPR acres"! concentrated in West Texas > TPL operates under two business segments: |. Land and Res
Slide 7: Royalty and Surface Assets Detail
Texas Pacifie Land Trust Overview Royalty and Surface Assets Detail feouny Surece NFRITZE PRICE coe : : st conete ant : : ome ae2i 2 8 Cheson Eee) . mists kets 907 2090 ie Epos teers : : Fitr a0 Garsceck ore 2.00 nan rows a om aia spn ‘am 2 ‘ove tons nase sar ance ond zee eas ‘i vert 3982 70 8 reece
Slide 8: TPL Has Outperformed the Market
Texas Pacifie Land Trust Overview TPL Has Outperformed the Market TPL has prioritized Capital discipline with an emphasis Ley _ . ‘ TPL has returned ~$200 million t. on returning capital to shareholders inthe form AS) Pete einel ‘$20 0 of annual dividends and share repurchases Total Shareholder Retu
Slide 9: History of the Trust
Texas Pacifie Land Trust Overview History of the Trust > In 1871, the Texas and Pacific Railway ("T&P") was created through a federal charter providing a mandate to build a transcontinental railroad from Texas to California - Texas, California and present-day Arizona and New Mexico each agreed to gr
Slide 10: Operational Segments
Texas Pacifie Land Trust Overview Operational Segments Land and Resource Management Water Service and Operations Encompasses the business of managing the Provides services including brackish water ~900,000 surface acres, ~455,000 sourcing and produced water gathering, recycling, treatment and dispos
Slide 11: Increased Permian Activity = Increased Revenues for TPL
Texas Pacifie Land Trust Overview Increased Permian Activity = Increased Revenues for TPL Permian Rig Count 600 500 | ~73% increase since the beginning of 2017 400 Sep-17 Mar-l8 Sep18 Mar-19 Sep-15 Mar-16 Sep-16 Mar-17 Permian Produced Water Volumes 12,000 10977 10,402'" 93,025 4,654 ans 2011 2012 2
Slide 12: II. Land and Resource Management Overview
Il. Land and Resource Management Overview
Slide 13: Land and Resource Management Overview
Land and Resource Management Overview Overview Summary > The Land and Resource Management segment focuses on managing the ~900,000 surface acres, ~455,000 NPRI acres, and related resources owned by the Trust Segment Revenue Growth > TPLis not an oil and gas producer, rather its oil and gas royalty r
Slide 14: Growth Underpinned by Blue Chip Operators
Land and Resource Management Overview Growth Underpinned by Blue Chip Operators Delaware Basin Overview - Key TPL Mineral Acreage # e Jeff Davis Midland Basin Overview - Key TPL Mineral Acreage Howard . Mitchell Midland ee a Upton Reagan Surface NPRI Active Rig Surface NPRI Active Rig Acreage Acreag
Slide 15: Exposure to Core Delaware
Land and Resource Management Overview Exposure to Core Delaware TPL’s surface and NPRI position has exposure to multiple tier 7 operators who are achieving best in class well results in the area ight was E0C’s highest P26 everatthe time it came. Loving BR se oavis Classification 1 Opielecteawernesun
Slide 16: Oil & Gas Mineral Interests — Public Company Comparison
Land and Resource Management Overview Oil & Gas Mineral Interests — Public Company Comparison cre Royalty Royalty Royalty ( y) Focused Focused Focused (G4) Company Company Company ann Tw A B organic Growth Potential Pure Play Basin Exposure No E&P Capex or LOE Substantial Undeveloped Holdings Divers
Slide 17: III. Water Service and Operations Overview
lll. Water Service and Operations Overview
Slide 18: Water Service and Operations Overview
Water Service and Operations Overview Overview Summary > The Water Service and Operations segment primarily consists of the Girect sale of water, royalties on sales of water, salt water disposal ('SWD"} royalties and toa lesser extent, easements and other income Segment Revenue Growth June 8, 2017 T
Slide 19: Texas Pacific Water Resources Key Milestones Achieved
Water Service and Operations Overview Texas Pacific Water Resources Key Milestones Achieved We believe TPWR is positioned to become the leading water service company in the Permian Basin Brackish Water Sourcing Systems Exclusive Sourcing Commitments Commercial Recycle > Current Development: = 4/-1,0
Slide 20: Permian Basin Water Landscape Highlights
Water Service and Operations Overview Permian Basin Water Landscape Highlights Permian Basin Water Sub-Markets > Increased focus on surface ownership by water-related companies = Tightening of market > More encompassing water contracts with operators = Contracts that encompass all aspects of upstrea
Slide 21: Exposure to the Core of the Midland Basin
Water Service and Operations Overview Exposure to the Core of the Midland Basin TPL is focused on becoming a market leader in water reuse and recycling across the Core of the Midland Basin > Substantial infrastructure development to advance the state-of-the-art in “full-cycle” water services Water s
Slide 22: Exposure to the Core of the Delaware Basin
Water Service and Operations Overview Exposure to the Core of the Delaware Basin “ Roose — Baty | Lam Our expansive and contiguous acreage footprint provides a significant Lincoin strategic advantage Cochran| Hockley = Chaves > TPL controls over 600,000 surface acres iE = across key counties in the
Slide 23: Commercial Recycling Drivers and Benefits
Water Service and Operations Overview Commercial Recycling Drivers and Benefits Historical Challenges TPWR Current Model > Lower demand > 10+ 2-20 year contracts in place (majority majors and large independents) and 25+ spot > Lack of suppliers purchase contracts that now provide > Smooths out suppl
Slide 24: Produced Water Supply
Water Service and Operations Overview Produced Water Supply ‘Doubletined w/Leak Detect {60 mil HDPE Liner w/ 10.02 Geotetile 60K BBL Influent AST HOPE ne DAF Clarifying Tanks — A apa lodiied Steel SOOBBL Frac Tank: —yay Slurry Waste Trucked to Disposal > Ee solids conglomeration Pump CR ee ecm —S —
Slide 25: TPWR Advantage
Water Service and Operations Overview TPWR Advantage yor TEXAS PACIFIC WATER RESOURCES / Placement of Ww / Faery \ Pa Environmental ss { vy i Legislation and Yq ‘ i Gathering 4 Reqgulato } and Water } \ System&SWD ‘ a eg ei f Ee Quality ra e o Sse, NYSE: TPL 25
Slide 26: IV. Summary of Financials
IV. Summary of Financials
Slide 27: Financial Summary
Summary of Financials Financial Summary Summary Statements TPL’s Financial Policy (S in millions) ‘As of Decmeber 31, 2018 Capitalization Leverage ‘Cashand cash equwalents™ TT > We are currently unlevered and intend to ($ in millions) Twelve Months Ended maintain a strong balance sheet Revenue Decem
Slide 28: V. Appendix
V. Appendix
Slide 29: Interest Classification Overview
Interest Classification Overview Summary of Mineral & Royalty Interest Categories Nonparticipating royalty interests Royalty interests that are carved out of a mineral estate Perpetual right to receive a fixed cost-free percentage of production revenue Do not participate in upfront payments (i.e., l
Slide 30: A Distinct Asset Class
A Distinct Asset Class Attractive Alternative to Traditional E&P Investment eo © @® © Avoids Operational Costs ‘Substantial Upside Sizeable Asset Base Attractive Cash Flow and Risks Potential Stream [ > Perpetual royalty | > TPL's position has > ~900,000 surface | > TPL has recognized a interest gen
Slide 31: Royalty Economics
Royalty Economics Mineral Interest Margin Mlustration Given the same revenue per barrel, ° ° a mineral interest barrel realizes: TPL offers h Ig her ma rg Ins > Significantly higher operating margin than conventional working interest > No direct operating or capital expenses production > No abandonm
Slide 32: Easement Revenue Summary
Easement Revenue Summary Mustrative Operators Contracted Service Easements Easements represent a “nonpossessory” property interest that allows the easement holder to use property that they do not possess. TPL leverages its ~200,000 surface acres to generate easement revenue from a diverse set of act
Slide 33: Water Sourcing Management
Water Sourcing Management Mustrative Produced Water Logistics C1) Groundwater Wellfield Development: > Local brackish aquifer identified and water wells drilled for source > Earthen impoundment pit built and lined for water storage > Water wells are pumped via poly piping to fill storage pits be Pit
Slide 34: Texas Pacific Land Trust
Texas Pacific Land Trust 1700 Pacific Avenue, Suite 2770 Dallas, Texas 75201
Texas Pacific Land Trust — Proxy Contest (April 2019) on 6ix