Earnings Call to be held 7:30 am CT on
Thursday, May 4, 2023
Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or
"TPL") today announced its financial and operating results for the
first quarter of 2023.
First Quarter 2023 Highlights
- Net income of $86.6 million, or $11.25 per share (basic) and
$11.24 per share (diluted)
- Revenues of $146.4 million
- Adjusted EBITDA (1) of $115.9 million
- Free cash flow (1) of $88.0 million
- Royalty production of 20.9 thousand barrels of oil equivalent
per day
- $6.7 million of common stock repurchases
- Quarterly cash dividend of $3.25 per share paid on March 15,
2023
- As of March 31, 2023, TPL's royalty acreage had an estimated
5.0 net well permits, 7.8 net drilled but uncompleted wells, 3.3
net completed wells, and 59.4 net producing wells.
(1) Reconciliations of Non-GAAP measures are provided in the
tables below.
“While commodity price volatility has continued into 2023, TPL’s
high-margin cash flow profile and fortress balance sheet provide
the Company the ability to drive value for shareholders through any
cycle,” said Tyler Glover, Chief Executive Officer of the Company.
“The Company continues to generate meaningful free cash flow across
both of our operating segments. Although broader oil and gas
industry activity may be impacted by an evolving commodity price
and economic environment, our expansive position across
high-quality Permian acreage continues to see strong near-term
development while still retaining tremendous value for the
long-term.”
Financial Results for the First Quarter of 2023
The Company reported net income of $86.6 million for the first
quarter of 2023 compared to net income of $97.9 million for the
first quarter of 2022.
Total revenues for the first quarter of 2023 were $146.4 million
compared to $147.3 million for the first quarter of 2022. Oil and
gas royalties of $89.1 million for the first quarter of 2023
include approximately $8.7 million related to an ongoing
arbitration between TPL and an operator with respect to
underpayment of oil and gas royalties resulting from improper
deductions of post-production costs for periods before and through
April 2022 (the “$8.7 Million Stipulation”). Excluding the impact
of the $8.7 Million Stipulation, oil and gas royalties decreased
$23.7 million due to lower average commodity prices in the first
quarter of 2023 compared to the first quarter of 2022. The average
realized price declined 23.2% to $44.76 per barrel of oil
equivalent (“Boe”) in the first quarter of 2023 from $58.31 per Boe
in the first quarter of 2022. Our share of production remained
relatively consistent at 20.9 thousand Boe per day for the first
quarter of 2023 compared to 20.8 thousand Boe per day for the same
period of 2022. The decrease in oil and gas royalty revenue was
partially offset by an increase of $5.8 million in easements and
other surface-related income and a combined increase of $8.2
million in produced water royalties and water sales. Our revenue
streams are directly impacted by commodity prices and development
and operating decisions made by our customers and vary as the pace
of development and oil demand varies.
Our total operating expenses of $41.4 million for the first
quarter of 2023 increased $18.4 million compared to the same period
of 2022. The increase in operating expenses is principally related
to an increase in legal and professional fees during the first
quarter of 2023 compared to the same period of 2022.
Quarterly Dividend Declared
On May 2, 2023, the Board declared a quarterly cash dividend of
$3.25 per share, payable on June 15, 2023 to stockholders of record
at the close of business on June 8, 2023.
Conference Call and Webcast Information
The Company will hold a conference call on Thursday, May 4, 2023
at 7:30 a.m. Central Time to discuss first quarter results. A live
webcast of the conference call will be available on the Investors
section of the Company’s website at http://www.TexasPacific.com. To
listen to the live broadcast, go to the site at least 15 minutes
prior to the scheduled start time in order to register and install
any necessary audio software.
The conference call can also be accessed by dialing
1-877-407-4018 or 1-201-689-8471. The telephone replay can be
accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing
the conference ID# 13734728. The telephone replay will be available
starting shortly after the call through May 18, 2023.
About Texas Pacific Land Corporation
Texas Pacific Land Corporation is one of the largest landowners
in the State of Texas with approximately 874,000 acres of land in
West Texas, with the majority of its ownership concentrated in the
Permian Basin. The Company is not an oil and gas producer, but its
surface and royalty ownership provide revenue opportunities
throughout the life cycle of a well. These revenue opportunities
include fixed fee payments for use of our land, revenue for sales
of materials (caliche) used in the construction of infrastructure,
providing sourced water and/or treated produced water, revenue from
our oil and gas royalty interests, and revenues related to
saltwater disposal on our land. The Company also generates revenue
from pipeline, power line and utility easements, commercial leases
and temporary permits related to a variety of land uses including
midstream infrastructure projects and hydrocarbon processing
facilities.
Visit TPL at http://www.TexasPacific.com.
Cautionary Statement Regarding Forward-Looking
Statements
This news release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are based on TPL’s beliefs, as well as assumptions
made by, and information currently available to, TPL, and therefore
involve risks and uncertainties that are difficult to predict.
Generally, future or conditional verbs such as “will,” “would,”
“should,” “could,” or “may” and the words “believe,” “anticipate,”
“continue,” “intend,” “expect” and similar expressions identify
forward-looking statements. Forward-looking statements include, but
are not limited to, references to strategies, plans, objectives,
expectations, intentions, assumptions, future operations and
prospects and other statements that are not historical facts. You
should not place undue reliance on forward-looking statements.
Although TPL believes that plans, intentions and expectations
reflected in or suggested by any forward-looking statements made
herein are reasonable, TPL may be unable to achieve such plans,
intentions or expectations and actual results, and performance or
achievements may vary materially and adversely from those envisaged
in this news release due to a number of factors including, but not
limited to: the initiation or outcome of potential litigation; and
any changes in general economic and/or industry specific
conditions. These risks, as well as other risks associated with TPL
are also more fully discussed in our Annual Report on Form 10-K and
our Quarterly Reports on Form 10-Q. You can access TPL’s filings
with the SEC through the SEC website at http://www.sec.gov and TPL
strongly encourages you to do so. Except as required by applicable
law, TPL undertakes no obligation to update any forward-looking
statements or other statements herein for revisions or changes
after this communication is made.
FINANCIAL AND OPERATIONAL
RESULTS
(unaudited)
Three Months Ended
March 31,
2023
2022
Our share of production volumes(1)
(2):
Oil (MBbls)
792
796
Natural gas (MMcf)
3,306
3,279
NGL (MBbls)
539
528
Equivalents (MBoe)
1,882
1,871
Equivalents per day (MBoe/d)
20.9
20.8
Oil and gas royalties (in thousands)
(2):
Oil royalties
$
56,894
$
71,681
Natural gas royalties
10,956
16,175
NGL royalties
12,615
16,316
Total oil and gas royalties
$
80,465
$
104,172
Realized prices (2):
Oil ($/Bbl)
$
75.23
$
94.24
Natural gas ($/Mcf)
$
3.58
$
5.33
NGL ($/Bbl)
$
25.28
$
33.42
Equivalents ($/Boe)
$
44.76
$
58.31
(1)
Term
Definition
Bbl
One stock tank barrel of 42 U.S. gallons
liquid volume used herein in reference to crude oil, condensate or
NGLs.
MBbls
One thousand barrels of crude oil,
condensate or NGLs.
MBoe
One thousand Boe.
MBoe/d
One thousand Boe per day.
Mcf
One thousand cubic feet of natural
gas.
MMcf
One million cubic feet of natural gas.
NGL
Natural gas liquids. Hydrocarbons found in
natural gas that may be extracted as liquefied petroleum gas and
natural gasoline.
(2)
The metrics provided exclude the impact of
the $8.7 Million Stipulation discussed above.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share and
per share amounts) (unaudited)
Three Months Ended
March 31,
2023
2022
Revenues:
Oil and gas royalties
$
89,130
$
104,172
Water sales
21,729
18,820
Produced water royalties
20,134
14,870
Easements and other surface-related
income
14,969
9,192
Land sales and other operating revenue
400
281
Total revenues
146,362
147,335
Expenses:
Salaries and related employee expenses
10,593
9,385
Water service-related expenses
5,656
2,782
General and administrative expenses
3,552
2,967
Legal and professional fees
16,628
1,719
Ad valorem and other taxes
1,574
2,043
Land sales expenses
3
—
Depreciation, depletion and
amortization
3,404
4,126
Total operating expenses
41,410
23,022
Operating income
104,952
124,313
Other income, net
5,389
76
Income before income taxes
110,341
124,389
Income tax expense
23,773
26,489
Net income
$
86,568
$
97,900
Net income per share of common stock
Basic
$
11.25
$
12.65
Diluted
$
11.24
$
12.64
Weighted average number of shares of
common stock outstanding
Basic
7,693,084
7,741,365
Diluted
7,698,398
7,742,710
SEGMENT OPERATING
RESULTS
(in thousands) (unaudited)
Three Months Ended
March 31,
2023
2022
Revenues:
Land and resource management:
Oil and gas royalties
$
89,130
61
%
$
104,172
71
%
Easements and other surface-related
income
14,493
10
%
8,894
6
%
Land sales and other operating revenue
400
—
%
281
—
%
Total land and resource management
revenue
104,023
71
%
113,347
77
%
Water services and operations:
Water sales
21,729
15
%
18,820
13
%
Produced water royalties
20,134
14
%
14,870
10
%
Easements and other surface-related
income
476
—
%
298
—
%
Total water services and operations
revenue
42,339
29
%
33,988
23
%
Total consolidated revenues
$
146,362
100
%
$
147,335
100
%
Net income:
Land and resource management
$
65,343
75
%
$
81,156
83
%
Water services and operations
21,225
25
%
16,744
17
%
Total consolidated net income
$
86,568
100
%
$
97,900
100
%
NON-GAAP PERFORMANCE MEASURES AND
DEFINITIONS
In addition to amounts presented in accordance with generally
accepted accounting principles in the United States of America
(“GAAP”), we also present certain supplemental non-GAAP performance
measurements. These measurements are not to be considered more
relevant or accurate than the measurements presented in accordance
with GAAP. In compliance with the requirements of the SEC, our
non-GAAP measurements are reconciled to net income, the most
directly comparable GAAP performance measure. For all non-GAAP
measurements, neither the SEC nor any other regulatory body has
passed judgment on these non-GAAP measurements.
EBITDA, Adjusted EBITDA and Free Cash Flow
EBITDA is a non-GAAP financial measurement of earnings before
interest, taxes, depreciation, depletion and amortization. Its
purpose is to highlight earnings without finance, taxes, and
depreciation, depletion and amortization expense, and its use is
limited to specialized analysis. We calculate Adjusted EBITDA as
EBITDA excluding employee share-based compensation. Its purpose is
to highlight earnings without non-cash activity such as share-based
compensation and/or other non-recurring or unusual items. We
calculate Free Cash Flow as Adjusted EBITDA less current income tax
expense and capital expenditures. Its purpose is to provide an
additional measure of operating performance. We have presented
EBITDA, Adjusted EBITDA and Free Cash Flow because we believe that
these metrics are useful supplements to net income in analyzing the
Company's operating performance. Our definitions of Adjusted EBITDA
and Free Cash Flow may differ from computations of similarly titled
measures of other companies.
The following table presents a reconciliation of net income to
EBITDA, Adjusted EBITDA and Free Cash Flow for the three months
ended March 31, 2023 and 2022 (in thousands):
Three Months Ended
March 31,
2023
2022
Net income
$
86,568
$
97,900
Add:
Income tax expense
23,773
26,489
Depreciation, depletion and
amortization
3,404
4,126
EBITDA
113,745
128,515
Add:
Employee share-based compensation
2,156
1,319
Adjusted EBITDA
$
115,901
$
129,834
Less:
Current income tax expense
(24,079
)
(26,895
)
Capital expenditures
(3,773
)
(3,005
)
Free Cash Flow
$
88,049
$
99,934
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Investor Relations IR@TexasPacific.com
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