Texas Pacific Land Corporation · NYSE:TPL
Texas Pacific Land — Q4 2024 Earnings Presentation
47 slides from Texas Pacific Land's earnings presentation, Feb 19, 2025
Slide 1: Investor Presentation – February 2025
Investor Presentation – February 2025 NYSE: TPL Texas Pacific Land Corporation Exhibit 99.2
Slide 2: Disclaimers
Disclaimers This presentation has been designed to provide general information about Texas Pacific Land Corporation and its subsidiaries (“TPL” or the “Company”). Any information contained or referenced herein is suitable only as an introduction to the Company. The recipient is strongly encouraged t
Slide 3: 4Q 2024 Summary Financial and Operating Update
4Q 2023 1Q 2024 2Q 2024 3Q 2024 4Q 2024 Selected consolidated financials ($MM): Oil and gas royalties 98.8$ 92.1$ 89.8$ 94.4$ 97.0$ Water sales 26.4 37.1 40.7 36.2 36.7 Produced water royalties 22.4 23.0 25.3 27.7 28.1 Easements and other surface income 19.1 20.6 16.6 14.3 21.8 Land sales and other
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Slide 5: Value Creation Culture and Proven Performance
(1%) 4% 15% 18% 37% -15% -5% 5% 15% 25% 35% WTI SPY Nasdaq TPL fsfsdfsfs 5 $37 $78 $160 $258 $128 $209 $365 $307 $315 2016 2017 2018 2019 2020 2021 2022 2023 2024 $5 $19 $50 $60 $48 $61 $81 $99 $139 2016 2017 2018 2019 2020 2021 2022 2023 2024 Value Creation Culture and Proven Performance Land & Res
Slide 6: Unique Permian Basin Pure-Play
Unique Permian Basin Pure-Play $ $ Positioned to capture upside $611 Million 2024 Adjusted EBITDA Balance Sheet Strength No Debt Cash Balance of $370 Million ~25,800 Core Permian Net Royalty Acres ~873,000 Surface Acres Diversified Revenue Streams: Royalties, Water, and Surface 100% Permian Exposure
Slide 7: TPL by the Numbers
Texas Pacific Land Corporation (NYSE: TPL) TPL by the Numbers1 Market Value ($MM) $29,294 Cash & Equivalents ($MM) $370 Debt ($MM) $0 Net Royalty Acres (100% net basis) ~25,800 Normalized to 1/8th ~207,000 Surface Acres ~873,000 2024 Adj. EBITDA Margin 87% 2024 FCF Margin 65% Average daily trading v
Slide 8: TPL History and Evolution
TPL History and Evolution Bankrupt Railroad to Liquidating Trust (1871-2009) Modern Enterprise Texas & Pacific Railway bankruptcy leads to the formation of Texas Pacific Land Trust, where land grant assets were placed. Trust certificates are listed on NYSE 1888 Texas and Pacific Abrams #1 becomes th
Slide 9: Unmatched Permian Footprint Combined With Premier Operators
Unmatched Permian Footprint Combined With Premier Operators Royalty Acreage Combined Royalty & Surface Surface and Easement Acreage 38% 36% 26% Revenue Contribution1 (FY 2024) Super- majors Large-cap independents Other (1) Permian supermajors include Chevron, Exxon, ConocoPhillips, BP and their resp
Slide 10: Permian Basin is a World-Class Resource
~60,000 ~42,000 ~20,000 ~8,000 ~7,000 ~4,000 Permian Motney Eagle Ford Bakken DJ SCOOP | Stack Permian Basin is a World-Class Resource Source: US EIA, OPEC, Baker Hughes, Enverus and Company data. Production figures represent 4Q 2024 averages. Estimated Remaining Well Locations with <$55/bbl Breakev
Slide 11: Capital Allocation Framework Focused on Maximizing Shareholder Value
$13 $18 $24 $25 $25 $31 $36 $45 $70 $51 $202 $105 $335 $143 $376 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Dividends Share repurchases Capital Allocation Framework Focused on Maximizing Shareholder Value RETURN CAPITAL Return substantial amounts of capital through di
Slide 12: Focused on Allocating Capital Towards Highest Returns
Focused on Allocating Capital Towards Highest Returns Growing Free Cash Flow per Share is the Key to Generating Value Growing free cash flow per share would further expand TPL’s capacity to return more capital to shareholders via buybacks and dividends 16% 71% 6% 6% Other Dividends Share Repurchases
Slide 13: TPL's Combined Surface and Royalties Is Unique
52% 44% 78% (19%) (66%) SLEM Produced Water Water Sales WTI Oil Henry Hub Natural Gas TPL’s Combined Surface and Royalties Is Unique SURFACE WATER ROYALTIES Performance – FY 2024 versus FY 2022 TPL Revenue Spot Prices 13 ― ― ― ― ― ― ― ― ― ― ― Comparison of Significant Revenue Generation by Asset Typ
Slide 14: TPL Maintains Top Tier Profitability Margins
TPL Maintains Top Tier Profitability Margins 11% 20% 17% 15% 52% 64% Oilfield Services (OIH) Midstream (ENFR) S&P O&G (XOP) S&P 500 TPL Water Services & Operations TPL consolidated Net Income Margin Comparison Source: Bloomberg and Company data. Note: OIH, ENFR, XOP, and S&P 500 data reflects last-t
Slide 15: Permian Activity Overview
Permian Activity Overview 15 2,989 272 289 3,007 234 338 3,053 186 526 ≤ 1 year 1 year < x ≤ 2 years 2 year < x ≤ 4 years 2024 2023 2022 - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 1,400 1,318 1,548 1,390 1,475 1,552 1,457 1,566 1,527 1,667 1,570 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q
Slide 16: Investment Highlights
Investment Highlights 16 Permian Basin is a world class resource – Midland and Delaware Basins each possess tens of thousands of future undrilled well inventory Unique combination of surface and royalty ownership generates revenue throughout the entire lifecycle of a well Disciplined, value-creation
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Slide 18: Jay Gould Founder - Texas and Pacific Railway
18 Jay Gould Founder - Texas and Pacific Railway
Slide 19: Historical survey photos
19 Orla Field Camp for survey team (June 1930) Survey team (June 1930) El Capitan peak – Culberson County Survey marker (northwest corner of Section 39, Block 62, Township 2) Survey team in sand dunes near Guadalupe Mountains “Old Red” Camp Delaware
Slide 20: TPL Currently Has Four Primary Revenue Streams
TPL Currently Has Four Primary Revenue Streams O&G Royalties Revenue Primarily own Non-Participating Royalty Interests (NPRI), which represents a real property right and is entitled to a fixed percentage of oil and gas production on a property Royalties are not burdened by capital expenditures (
Slide 21: Oil and Gas Royalties Overview and Management
Oil and Gas Royalties Overview and Management 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 Producing Horizontal Wells (Gross) on TPL Oil and Gas Royalty Acreage Revenue Mechanics and Management By interfacing directly with operators across SLEM and Water, TPL i
Slide 22: TPL Royalty Production and Inventory Detail
38.2 39.2 41.6 43.7 45.0 47.1 47.8 50.1 52.4 54.5 59.3 62.3 11.6 12.0 12.5 13.0 13.4 14.5 14.0 16.2 16.8 17.7 18.8 23.4 50.7 52.1 55.0 57.7 59.4 62.6 62.8 67.2 70.2 73.3 79.2 86.8 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q
Slide 23: TPL source water infrastructure
23 TPL source water infrastructure
Slide 24: TPL source water pond
24 TPL source water pond
Slide 25: Raw Land Does Not Monetize Itself
RAW LAND DOES NOT MONETIZE ITSELF (i) Operational and legal expertise of surface estate ownership within the oil and gas industry and (ii) proactive execution are requisite towards extracting substantial cash flow from raw land Surface Estate Ownership Leveraging Ownership of Raw Surface into Cash F
Slide 26: Surface, Leases, Easements and Materials (SLEM) Overview and Management
36% 6% 22% 11% 25% $100,000 $115,000 $132,250 Year 0 Year 10 Year 20 Surface, Leases, Easements and Materials (SLEM) Overview and Management $73MM Pipeline easements Caliche / materials Commercial leases Wellbore easements Other Provide operators/customers access-to or use- of TPL surface for infras
Slide 27: Water Sales Overview and Management
TPL has developed the largest source water infrastructure network in the northern Delaware Basin TPL deploys professional hydrologists, advanced sensors, and monitoring systems to ensure aquifers are managed sustainably Sales team competes actively throughout the basin to leverage TPL water capabili
Slide 28: Water Sales Asset Map
Water Sales Asset Map storage capacity 800+ mbbl/d 34.2 mmbbl source water pipelines445 miles 332 357 393 411 424 455 486 490 2017 2018 2019 2020 2021 2022 2023 2024 Average Fluid Used per Delaware Well Completion Average O&G well in the Delaware requires an increasing volume of water (~500k bbl wat
Slide 29: Produced Water Royalties Overview and Management
Intentionally commercialized to generate high- quality, high-margin cash flow stream Facilitating produced water solutions allows operators to execute on upstream O&G development plans TPL undertakes conservative approach to siting produced water infrastructure on TPL land; focus on sustainable mana
Slide 30: Delaware Upstream Activity and High Water-Cuts Drive Produced Water Growth
~650 ~1,140 ~180 ~310 First 12 months production First 36 months production 5.6 9.2 12.4 12.8 13.6 16.1 17.9 18.7 2017 2018 2019 2020 2021 2022 2023 2024 Produced Water Royalties Delaware Upstream Activity + High Water-Cuts to Drive Produced Water Volume Growth Water vs Oil Production – Average Well
Slide 31: TPL Captures Revenue Over the Well Lifecycle
TPL Captures Revenue Over the Well Lifecycle 31 Permit Development Production E&P/upstream operators procure regulatory permits; prepare future well site and develop infrastructure ■ Fixed fees for use of TPL’s surface for the construction and operation of infrastructure (e.g., well sites, wellbores
Slide 32: Permian's Massive Resource Potential
Permian’s Massive Resource Potential Enormous Acreage Extent and Stacked Pay Potential 32 ~26,000 square miles ~17,000,000 acres 10+ geologic formations for each Midland and Delaware Enormous Acreage Extent Stacked Pay Reserves Midland and Delaware Basins Greater Permian Basin Extent Combined Midlan
Slide 33: TPL Innovation | Produced Water Desalination and Beneficial Reuse
TPL Innovation | Produced Water Desalination and Beneficial Reuse 33 Oil and gas development activity in the Permian Basin requires increasing demand for produced water solutions Due to its quality, produced water has limited uses outside of the oil and gas industry Produced water is typically
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Slide 35: Appendix
Appendix
Slide 36: Summary of Highest-Visibility Inventory
Summary of Highest-Visibility Inventory Notes: Per Company data. Permian Basin horizontal locations as of 12/31/24. Permitted well conversion rate based on wells permitted from 1/1/23 through 12/31/23 and then drilled through 12/31/24. DUC well conversion rate based on wells drilled from 1/1/23 thro
Slide 37: The Basics of Royalties Ownership
The Basics of Royalties Ownership 100% Lease Operator (i.e., E&P) Mineral/Royalties Capital Costs and Most Operating Expenses Revenue / Production Illustrative Economic Model – Minerals/Royalties vs Lease Interest 37 Key Terms and Comparison: Royalties/Minerals vs Lease Interest PARTICIPANTS NOMENCL
Slide 38: Water Sales – Operated vs Royalty/Non-Operated Business Model
Why doesn’t TPL have a non- operated Water Sales commercial model where it extracts a royalty from allowing 3rd parties access to TPL’s water aquifers? Why does TPL need to spend capital and employ personnel? Water Sales – Operated vs Royalty/Non-Operated Business Model Sustainable Extraction Econom
Slide 39: Compensation Incentives Aligned With Shareholder Value Creation
Compensation Incentives Aligned With Shareholder Value Creation 39 Mix (% of Total)1 Intent Key Performance Dimensions Base Salary Deliver competitive fixed cash compensation for day-to-day job performance Based on individual role, level of experience and performance Annual Incentive Plan Ince
Slide 40: Sustainability is Embedded in Our Strategy
Sustainability is Embedded in Our Strategy 40 Key Opportunities Carbon Management Government policies incentivize sustainable energy projects (e.g., carbon capture, utilization and storage) and TPL can reposition its business to take advantage of the opportunities created by these policies Water M
Slide 41: Our Environmental Management Initiatives
Our Environmental Management Initiatives 41 Incidents and Spill Prevention Control Implementation of Spill Prevention, Control, and Countermeasure plan and protocol for water assets, which are equipped with tech / containment protections Thorough tracking and monitoring of all spills; informatio
Slide 42: ESG Update
ESG Update Category 2020 2021 2022 2023 2024 Emissions Scope 1 CO2 Emissions 18,987 16,159 10,590 13,819 Scope 2 CO2 Emissions 5,110 6,596 11,492 10,572 Total Scope 1 + Scope 2 24,097 22,755 22,082 24,391 Methane Emissions 0 0 0 0 $303 $451 $667 $632 24.1 22.8 22.1 24.4 0 10 20 30 40 50 60 70 80 $0
Slide 43: Royalty Key Terms
Royalty Key Terms 43 Gross Royalty Acres Net Royalty Acres (Normalized to 1/8) Net Royalty Acres Drilling Spacing Units (“DSUs”) Implied Average Net Revenue Interest per Well ■ An undivided ownership of the oil, gas, and minerals underneath one acre of land ■ Total Texas Pacific Land Corporation acr
Slide 44: Non-GAAP Reconciliation – Adjusted EBITDA
($ in millions) 2018 2019 2020 2021 2022 2023 2024 4Q23 1Q24 2Q24 3Q24 4Q24 Net income $ 209.7 $ 318.7 $ 176.1 $ 270.0 $ 446.4 $ 405.6 $ 454.0 $ 113.1 $ 114.4 $ 114.6 $ 106.6 $ 118.4 Income tax expense 52.0 83.6 43.6 93.0 122.5 111.9 124.9 32.0 31.6 31.9 28.8 32.6 Depreciation, depletion and amortiz
Slide 45: Non-GAAP Reconciliation – Segment EBITDA
($ in millions) 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 4Q23 1Q24 2Q24 3Q24 4Q24 2023 2024 Net income $ 88.8 $ 81.0 $ 80.1 $ 71.9 $ 81.9 $ 306.7 $ 314.9 $ 24.3 $ 33.4 $ 34.5 $ 34.7 $ 36.4 $ 98.9 $ 139.1 Income tax expense 25.0 22.3 22.2 19.4 22.5 84.3 86.4 7.0 9.3 9.7 9.5 10.1 27.6 38.5 Depreciation, dep
Slide 46: Historical Financial Summary
Historical Financial Summary 46 ($ in millions) 2022 2023 2024 December 31, 2023 December 31, 2024 Total Acres 874,366 868,446 873,136 868,446 873,136 Revenues: Oil and gas royalties $452.4 $357.4 $373.3 $98.8 $97.0 Water sales 84.7 112.2 150.7 26.4 36.7 Produced water royalties 72.2 84.3 104.1 22.4
Slide 47: Texas Pacific Land Corporation
1700 Pacific Avenue, Suite 2900 Dallas, Texas 75201 Texas Pacific Land Corporation