Texas Pacific Land Corporation · NYSE:TPL
Texas Pacific Land — Texas Pacific Land Trust — Investor Presentation (March 2020)
33 slides from Texas Pacific Land's investor presentation, Mar 2, 2020
Slide 1: Investor Presentation March 2020
Investor Presentation March 2020
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: Disclaimer
| 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) $230 Million 2019 Free Cash Flow (5)(6) +130% Production Growth since 2018 (2) Balance Sheet Strength (7) No Debt Cash Balance of $304 Million 8.5% of Shares Repurchased since Jan. 2014 (8) 17 Year
Slide 5: An Unmatched Oil and Gas Investment
| 5 NYSE: TPL An Unmatched Oil and Gas Investment Source: Company data and Bloomberg as of 12/31/19. (1) Market cap as of 12/31/19. (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 four
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 Business Flow Overv
Slide 7: Royalty Interest Overview
| 7 NYSE: TPL 38.5% 9.0% 21.7% 11.1% 19.6% Northern Delaware Southeast Delaware Southwest Delaware Midland Other 13.3% 19.2% 12.6% 11.2% 9.6% 8.8% 7.7% 5.9% 4.6% 3.1% 2.5% 1.6% Net Wells (3) : 46.0 Royalty Interest Overview Land and Resource Management Net Royalty Position and Rigs Running on Core T
Slide 8: Exposed to Diverse Client Base
| 8 NYSE: TPL $295.2 $233.5 $227.9 $126.7 $70.5 $48.7 $36.8 $25.1 $14.8 $10.9 $10.1 $9.6 $6.1 $5.7 $5.3 $5.3 $2.1 $2.1 $1.9 $1.6 $1.3 $1.3 $1.1 $0.7 $0.3 $0.0 $0.0 Exxon Shell Chevron BP ConocoPhillips EOG Occidental Pioneer Diamondback Marathon Devon Apache Ovintiv WPX Cimarex Parsley Matador Surge
Slide 9: Free Cash Flow and Net Production Growth
| 9 NYSE: TPL $40 $75 $125 $230 3.3 5.1 8.8 13.7 2016 2017 2018 2019 Free Cash Flow Net Production (mboe/d) 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 - rel
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: Significant Undeveloped Resource in Core Areas
| 12 NYSE: TPL Significant Undeveloped Resource in Core Areas Land and Resource Management TPL Inventory by Breakeven to Working Interest Operator TPL Inventory by IRR to Working Interest Operator (2) Source: Company data and RSEG. Note: RSEG assumes no differential for oil and NGL, a $0.70 differen
Slide 13: Summary of Highest-Visibility Inventory
| 13 NYSE: TPL 19.1% 17.9% 14.3% 13.0% 7.4% 6.0% 22.2% COMPs 17.5% 14.9% 13.8% 8.4% 7.5% 6.9% 5.5% 25.5% 15.5% 13.8% 9.1% 8.9% 7.1% 6.6% 1.5% 37.4% Summary of Highest - Visibility Inventory Land and Resource Management Source: Company data and RSEG. Note: Permian Basin horizontal locations only as o
Slide 14: Undeveloped Inventory Summary
| 14 NYSE: TPL Undeveloped Inventory Summary Land and Resource Management Source: Company data and RSEG. Note: Locations reflect additional undeveloped locations sorted by interval and oil estimated ultimate recovery (“EUR”). Permian Basin horizontal locations only. Inclusive of DUCs, Permits and ad
Slide 15: Comparison of Key Statistics
| 15 NYSE: TPL Comparison of Key Statistics Land and Resource Management Source: Company data, RSEG, public filings, Enverus as of 12/31/19. (1) TPL NRA is based on 4.4% average royalty interest per acre. VNOM NRA reported in February 2020 Investor Presentation. MNRL NRA is based on 18% average roya
Slide 16: Surface Leases, Easements and Material Sales
| 16 NYSE: TPL – 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000 3,250 3,500 3,750 – $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 4Q19 Cumulative Horizontal Well Count Since 2016 (3) Cumulative SL
Slide 17: Water Resources Asset Overview
| 17 NYSE: TPL Active – Current Revenue TPL Surface Acreage Salt Water Disposal Wells Permitted/Permits in Progress – Growth Opp. 665 mbbl/d 1,390 mbbl/d Non - TPL Land Permits (2) ▪ Active: ▪ Permitted: 835 mbbl/d 720 mbbl/d Water Resources Asset Overview Water Services and Operations Salt Water Di
Slide 18: Growth Strategy and Competitive Advantage
| 18 NYSE: TPL 17% 6% 9% 24% 27% 39% 59% 67% 52% $9.8 $24.4 $34.2 4Q17 4Q18 4Q19 Treated Water & Other Produced Water Sourced Water – 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2018 2019 2020 2021 2022 2023 2024 Water Volumes (mbbls / d) Existing Regional Water Production (Estimated) Foreca
Slide 19: Northern Delaware Water Capture
| 19 NYSE: TPL Source: Company data and RSEG as of 12/31/19. Note: Northern Delaware Region is defined as approximately 1,400,000 acres surrounding TPL’s Northern Delaware Surface position including ~900,000 acres in Texas and ~500,000 acres in Southern New Mexico. Capture rate defined as TPL volume
Slide 20: Summary of Financials
| 20 NYSE: TPL $1 $3 $2 $18 $45 $30 $1 $19 $48 $32 2016 2017 2018 2019 0.3 0.4 0.6 1.1 1.8 2015 2016 2017 2018 2019 Summary of Financials Source: Company data. Note: Revenue was restated retrospectively upon adoption of new revenue reconciliation guidance on 1/1/18. CAGR defined as the c ompounded a
Slide 21: Return of Capital to Shareholders
| 21 NYSE: TPL $2.0 $2.0 $4.3 $2.2 $2.4 $2.5 $10.7 $31.6 $46.6 $10.7 $16.0 $20.2 $25.2 $23.0 $28.8 $33.1 $34.2 $38.4 $4.3 $12.7 $18.0 $24.5 $25.2 $25.2 $31.2 $35.6 $44.9 $70.0 $50.9 $124.1 $79.53 $95.07 $94.21 $98.02 $92.90 $48.69 $43.35 $50.78 $65.08 $57.03 $55.14 2010 2011 2012 2013 2014 2015 2016
Slide 22: An Unmatched Oil and Gas Investment
| 22 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: 2,789 992 417 135 4 1 O
Slide 23: Appendix
Appendix
Slide 24: Texas Pacific Land Trust Team
| 24 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 25: TPL Revenue Streams Through the Life Cycle of a Well
| 25 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 26: Well Positioned Assets Attract Increasing Development Focus
| 26 NYSE: TPL 1.7 2.7 3.3 5.1 8.8 13.7 0 2 4 6 8 10 12 14 16 2014 2015 2016 2017 2018 2019 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 our
Slide 27: Summary of Full Inventory
| 27 NYSE: TPL Average Additional Total PDP + Total Gross Undeveloped PDP + Total Average Lat. Sub-region (1) NRI NRA DSUs PDP DUCs Permits Undeveloped Locations Locations Resource (Mmboe) Locations / DSU Length (ft.) Northern Delaware 2.3% 9,090 505 997 231 150 10,516 10,897 11,894 17,674 24 6,312
Slide 28: Significant Undeveloped Resource in Core Areas – Delaware
| 28 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 29: Significant Undeveloped Resource in Core Areas – Midland
| 29 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 30: Royalty Key Terms
| 30 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 31: Water Resources Overview
| 31 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 32: Historical Financial Summary
| 32 NYSE: TPL Historical Financial Summary Source: Company data. Year ended December 31, Three months ended, Year ended ($ in millions) 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 December 31, 2019 Total Acres 887,553 887,698 902,177 892,627 901,939 901,862 901,787 901,787 Revenues: Oil and gas royalties $2
Slide 33: Non-GAAP Reconciliations
| 33 NYSE: TPL Non - GAAP Reconciliations Source: Company data. Note: Numbers may not foot due to immaterial rounding. (1) Land swap of ~$22 million in 4Q19, Land sale in Upton County in 1Q15 of ~$20 million and sale to WPX in 1Q19 of ~$100 millio n. (2) Sale of nonparticipating perpetual oil and ga
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