Texas Pacific Land Corporation · NYSE:TPL
Texas Pacific Land — Texas Pacific Land Trust — Investor Presentation (November 2019)
36 slides from Texas Pacific Land's investor presentation, Nov 14, 2019
Slide 1: Investor Presentation November 2019
Investor Presentation November 2019
Slide 2: Management Team
| 2 NYSE: TPL Management Team Tyler Glover Chief Executive Officer Robert Packer Chief Financial Officer Sameer Parasnis Chief Commercial Officer Robert Crain Executive Vice President of TPWR Chris Steddum Vice President, Finance and Investor Relations
Slide 3: | This presentation has been designed to provide general information about Texas Pacific Land
| 3 NYSE: TPL 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
Slide 4: The Permian Basin "ETF"
| 4 NYSE: TPL The Permian Basin “ETF” NYSE: TPL $ $ $ ~19 Years Inventory Below $40/ bbl Breakeven (3) $236 Million 3Q’19 YTD Annualized Free Cash Flow (5)(6) +112% Production Growth since 2018 (2) Balance Sheet Strength (7) No Debt Cash Balance of $250 Million 8.5% of Shares Repurchased since Jan.
Slide 5: An Unmatched Oil and Gas Investment
| 5 NYSE: TPL An Unmatched Oil and Gas Investment Source: Company data and Bloomberg as of 11/12/19 . (1) Market cap as of 11/12/19. ( 2 ) EBITDA growth represents year over year growth based on last four reported quarters. (3) Debt as of last reported quarter. EBITDA represents LTM based on last fo
Slide 6: Unique Exposure to Full Permian Development Chain
| 6 NYSE: TPL Unique Exposure to Full Permian Development Chain Royalties Surface Water x x x x x x x Ownership of right of way x Ownership of groundwater and subsurface injection rights x High margins with no capital Surface Provides ease of access x x Public Vehicle Positioning Busin
Slide 7: Business Overview: Acreage Located in Most Active Sub-Regions in the Permian
| 7 NYSE: TPL Business Overview Acreage Located in Most Active Sub - Regions in the Permian Source: Company data, RSEG, and DrillingInfo rigs data as of 9/4/19 applied with a 0.25mi buffer. (1) Based on 753,324 combined surface and gross royalty acres and 438,912 gross royalty only acres. Royalty Ac
Slide 8: Exposed to Diverse Client Base
| 8 NYSE: TPL 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 OCCIDENTAL CONCHO EXXON PIONEER EOG DIAMONDBACK APACHE CHEVRON CIMAREX PARSLEY DEVON OVINTIV MEWBOURNE ENDEAVOR LAREDO WPX ENERGY CONOCOPHILLIPS SM ENERGY NOBLE SHELL CENTENNIAL SURGE CALLON CROWNQUEST SABLE MATADOR QEP FASKEN BTA S
Slide 9: | Source: Company data and RSEG. Note: Land and Resource Management values inclusive of
| 9 NYSE: TPL Source: Company data and RSEG. Note: Land and Resource Management values inclusive of land - related surface and easement income. Water Services and Operations v alues inclusive of water - related surface and easement income. Please see Appendix for reconciliations of non - GAAP financ
Slide 10: History of the Trust
| 10 NYSE: TPL History of the Trust Source: Company data. (1) A fixed 1/16 NPRI was reserved under all lands held by the primary term of an oil and gas lease and a fixed 1/128 NPRI under all lands held by production. (2) TPWR is a 100% wholly owned subsidiary of TPL. 1871 - 1888 1889 - 2010 2011 - P
Slide 11: Key Investment Highlights
| 11 NYSE: TPL Key Investment Highlights Sustained Profitability and Pristine Balance Sheet Focus on Return On and Of Capital ETF of the Permian Basin Near Term Visible FCF Growth ■ Largest royalty company with 100% of acreage located in Texas Permian Basin ■ Three high - margin businesses linked to
Slide 12: TPL Permian Activity Outpacing Total Permian Activity
| 12 NYSE: TPL 2014 2015 2016 2017 2018 2019 0% 500% 1000% 1500% 2000% 2500% 3000% 3500% TPL Permian Activity Outpacing Total Permian Activity Source: Company data and RSEG. (1) Only includes average daily horizontal well production in the Midland and Delaware Basins from 1/1/14 to 3/31/19. (2) TPL
Slide 13: Royalty Interest Overview
| 13 NYSE: TPL 17.5% 10.4% 9.4% 7.7% 6.8% 6.7% 4.0% 3.4% 2.7% 2.0% 1.8% 27.5% Net Wells (5) : 42.5 Royalty Interest Overview Land and Resource Management Net Royalty Position and Rigs Running on Core TPL Acreage Source: Company data, RSEG, and DrillingInfo rigs data as of 9/4/19 applied with a 0.25m
Slide 14: Significant Undeveloped Resource in Core Areas
| 14 NYSE: TPL 0% 20% 40% 60% 80% 100% 120% 140% 0 2,012 4,024 6,036 8,048 10,060 12,072 14,084 16,096 18,108 20,120 Wellhead BTax IRR $0 $10 $20 $30 $40 $50 $60 $70 0 2,012 4,024 6,036 8,048 10,060 12,072 14,084 16,096 18,108 20,120 Wellhead PV - 10 Breakeven ($/bbl) Significant Undeveloped Resourc
Slide 15: Summary of Highest-Visibility Inventory
| 15 NYSE: TPL Summary of Highest - Visibility Inventory Land and Resource Management Source: Company data and RSEG. Note: Permian Basin horizontal locations only as of 9/30/19. (1) Permitted well conversion rate based on wells permitted from 10/1/17 through 9/30/18 and then drilled through 9/30/19
Slide 16: Undeveloped Inventory Summary
| 16 NYSE: TPL 976 184 2,464 1,258 649 2,311 1,195 1,310 296 290 339 259 14 94 398 222 595 563 1,013 1,751 715 1,556 782 1,237 232 782 Wolfcamp XY 1st Bone Spring Wolfcamp A 3rd Bone Spring Avalon Upper Wolfcamp B 2nd Bone Spring Lower Wolfcamp B Wolfcamp C 3rd Bone Spring Wolfcamp A Upper Wolfcamp
Slide 17: Comparison of Key Statistics
| 17 NYSE: TPL Comparison of Key Statistics Land and Resource Management Source: Company data, RSEG, public filings, DrillingInfo as of 9/4/19. (1) TPL NRA is based on 4.4% average royalty interest per acre. VNOM NRA reported in 3Q’19 IP. MNRL NRA is based on 18% average royalty interest per acre as
Slide 18: Surface Leases, Easements and Material Sales
| 18 NYSE: TPL – 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 3,300 3,600 – $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Cumulative Horizontal Well Count Since 2016 (3) Cumulative SLEM Revenue Since 2016($
Slide 19: Water Resources Asset Overview
| 19 NYSE: TPL Culberson Water Oil Ratio (1) 4:1 Active – Current Revenue TPL Surface Acreage Salt Water Disposal Wells Permitted/Permits in Progress – Growth Opp. Asset Capacity TPL Land Permits ▪ Active: ▪ Permitted: 665 mbbl /d 1,390 mbbl /d Non - TPL Land Permits (2) ▪ Active: ▪ Permitted: 835 m
Slide 20: Water Services Growth Strategy and Competitive Advantage
| 20 NYSE: TPL 3% 9% 10% 15% 22% 32% 82% 69% 58% 3Q 2017 3Q 2018 3Q 2019 ($ in millions) Treated Water & Other Produced Water Sourced Water $9.6 $25.7 $33.5 YoY 290% YoY 90% Growth Strategy and Competitive Advantage Water Services and Operations Revenue Growth and Change in Mix (1) Significant Produ
Slide 21: Summary of Financials
| 21 NYSE: TPL 347 471 686 1,176 1,802 3Q'15 3Q'16 3Q'17 3Q'18 3Q'19 $51 $55 $63 $145 $245 $308 2014 2015 2016 2017 2018 3Q'19 YTD Annualized Summary of Financials Source: Company data. Note: Revenue was restated retrospectively upon adoption of new revenue reconciliation guidance on 1/1/18 . CAGR d
Slide 22: Return of Capital to Shareholders
| 22 NYSE: TPL Return of Capital to Shareholders Source: Company data. (1) Dividends for 2012 includes $2.2 million of dividends for 2013 which were paid in the fourth quarter of 2012. ( 2 ) 2019 dividend declared and paid in the first quarter of 2019; YTD share repurchases of $4.4 million as of 9/3
Slide 23: An Unmatched Oil and Gas Investment
| 23 NYSE: TPL An Unmatched Oil and Gas Investment Russell 2000 Index and Public North American Oil & Gas Companies Market Cap (1) $1.0bn or Greater EBITDA Growth (2) 10% or Greater Debt / EBITDA (3) 1.5x or Less ROIC (4) 40% or Greater > 80% EBITDA Margin (5) Total Companies: 2,455 943 414 148 4 1
Slide 24: Appendix
Appendix
Slide 25: Texas Pacific Land Trust Team
| 25 NYSE: TPL Texas Pacific Land Trust Team Track Record of Shareholder Value Creation Texas Pacific Land Trust Management Team Texas Pacific Water Resources Management Team Jeremy Smith VP, Business Development Tyler Glover CEO, Secretary and General Agent Robert J. Packer CFO and General Agent Sa
Slide 26: TPL Revenue Streams Through the Life Cycle of a Well
| 26 NYSE: TPL TPL Revenue Streams Through the Life Cycle of a Well Surface and Royalty Ownership Allow Steady Revenue Generation Through the Entire Life Cycle of Oil & Gas Development ■ Infrastructure for oil & gas development Initial Development Phase Drilling and Completion Phase Production Phase
Slide 27: Well Positioned Assets Attract Increasing Development Focus
| 27 NYSE: TPL 1.7 2.7 3.3 5.1 8.8 13.2 0 2 4 6 8 10 12 14 2014 2015 2016 2017 2018 Q3'19 YTD Average Historical Production (mboe/d) Well Positioned Assets Attract Increasing Development Focus Land and Resource Management Source: Company data and RSEG. Note: TPL production growth giving effect to ou
Slide 28: Summary of Full Inventory
| 28 NYSE: TPL Sub-region (1) Average NRI (2) NRA (3) DSUs PDP DUCs (4) Permits Additional Undeveloped Total Locations PDP + Total Locations Gross Undeveloped Resource (Mmboe) (5) PDP + Total Locations / DSU Average Lat. Length (ft.) Northern Delaware 2.3% 9,090 505 861 220 169 10,643 11,033 11,894
Slide 29: Significant Undeveloped Resource in Core Areas: Delaware
| 29 NYSE: TPL Southeast Delaware Southwest Delaware Northern Delaware 0% 20% 40% 60% 80% 100% 120% 140% 0 1,284 2,568 3,852 5,136 6,420 7,704 8,988 10,272 11,556 12,840 Wellhead BTax IRR $0 $10 $20 $30 $40 $50 $60 $70 0 1,284 2,568 3,852 5,136 6,420 7,704 8,988 10,272 11,556 12,840 Wellhead Breakev
Slide 30: Significant Undeveloped Resource in Core Areas: Midland
| 30 NYSE: TPL 0% 20% 40% 60% 80% 100% 120% 140% 0 728 1,456 2,184 2,912 3,640 4,368 5,096 5,824 6,552 7,280 Wellhead BTax IRR $0 $10 $20 $30 $40 $50 $60 $70 0 728 1,456 2,184 2,912 3,640 4,368 5,096 5,824 6,552 7,280 Wellhead Breakeven ($/bbl) Significant Undeveloped Resource in Core Areas Land and
Slide 31: Royalty Key Terms
| 31 NYSE: TPL Gross Royalty Acres Royalty Key Terms Land and Resource Management Net Royalty Acres (Normalized to 1/8) Net Royalty Acres Drilling Space Units (“DSUs”) Implied Average Net Revenue Interest per Well Description How’s It Calculated ■ The full, undivided ownership of the oil, gas, and m
Slide 32: Comparison of Peer Acreage
| 32 NYSE: TPL Comparison of Peer Acreage Land and Resource Management Delaware Basin Central Basin Platform Midland Basin Source: Company data and RSEG. Note: Other areas include Eastern Shelf, Western Delaware, and Central Basin Platform. Excluding acres which are considered to be outside of Basin
Slide 33: Water Resources Overview
| 33 NYSE: TPL Water Resources Overview Water Services and Operations Water Resources Provide “Royalty - Like” Injection Fees, while Promoting Operator Development on TPL Land Provides Critical Infrastructure for E&P Operators Full - Service Water Solutions for Permian Basin Oil & Gas Operations Pro
Slide 34: TPL Capture Rate of Water Volumes
| 34 NYSE: TPL 18 - month Weighted Average TPL Capture Rate = 26% TPL YTD 2019 Capture Rate = 32% 0% 10% 20% 30% 40% 50% 60% 70% 80% – 200 400 600 800 1,000 1,200 1,400 1,600 Jan-18 Apr-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 TPL Capture Rate Completions Volumes (mbbls / d) Northern Delaware Region Vo
Slide 35: Historical Financial Summary
| 35 NYSE: TPL Historical Financial Summary Source: Company data. Year ended December 31, Three months ended, YTD LTM ($ in millions) 2016 2017 2018 4Q18 1Q19 2Q19 3Q19 September 30, 2019 September 30, 2019 Total Acres 887,553 887,698 902,177 902,177 892,627 901,939 901,862 901,862 901,862 Revenues:
Slide 36: Non-GAAP Reconciliations
| 36 NYSE: TPL Non - GAAP Reconciliations Source: Company data. (1) Sale in Upton County in Jan. 2015 of ~$20 million and sale to WPX in Jan. 2019 of ~$100 million. (2) Sale of nonparticipating perpetual oil and gas royalty interest in approximately 812 net royalty acres (1/8 th interest) of ~$19 mi
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