Texas Pacific Land Trust (NYSE:TPL) today announced financial
and operating results for the fourth quarter and year ended
December 31, 2019.
Results for the fourth quarter of 2019:
- Net income of $71.3 million, or $9.20 per Sub-share
Certificate, for the fourth quarter ended December 31, 2019
compared with $62.7 million, or $8.06 per Sub-share Certificate,
for the fourth quarter ended December 31, 2018.
- Revenues of $113.3 million for the fourth quarter ended
December 31, 2019, compared with $93.2 million for the fourth
quarter ended December 31, 2018.
- Increases of 26.6% in easements and other surface-related
income, 22.0% in oil and gas royalty revenue and 20.6% in water
sales and royalty revenue for the fourth quarter ended December 31,
2019 compared with the fourth quarter ended December 31, 2018.
- EBITDA of $94.9 million for the fourth quarter ended December
31, 2019, compared with $79.3 million for the fourth quarter of
2018, an increase of 19.6%.
Results for the year ended December 31, 2019:
- Net income of $320.9 million, or $41.38 per Sub-share
Certificate, for the year ended December 31, 2019 compared with
$209.7 million, or $26.93 per Sub-share Certificate, for the year
ended December 31, 2018.
- Revenues of $490.5 million for the year ended December 31,
2019, compared with $300.2 million for the year ended December 31,
2018.
- Increases of 32.9% in water sales and royalty revenue, 30.0% in
easements and other surface-related income and 24.9% in oil and gas
royalty revenue for the year ended December 31, 2019 compared with
the year ended December 31, 2018.
- EBITDA of $413.4 million for the year ended December 31, 2019,
compared with $264.3 million for the year ended December 31, 2018,
an increase of 56.4%.
Further details for the fourth quarter of 2019:
The Trust reported net income of $71.3 million for the fourth
quarter ended December 31, 2019, an increase of 13.8% over net
income of $62.7 million for the fourth quarter ended December 31,
2018. The increase was principally related to increased oil and gas
royalties, easements and other surface-related income and water
sales.
Oil and gas royalty revenue was $43.6 million for the fourth
quarter ended December 31, 2019, compared with $35.8 million for
the fourth quarter ended December 31, 2018, an increase of 22.0%.
Crude oil and gas production subject to the Trust’s royalty
interests increased 45.6% and 33.4%, respectively, in the fourth
quarter ended December 31, 2019 compared to the fourth quarter
ended December 31, 2018. While crude oil and gas production
increased in the fourth quarter ended December 31, 2019 compared to
the same period of 2018, the prices received for crude oil and gas
production decreased 3.6% and 41.1%, respectively, over the same
time period.
Easements and other surface-related income was $27.7 million for
the fourth quarter ended December 31, 2019, an increase of 26.6%
compared with the fourth quarter ended December 31, 2018 when
easements and other surface-related income was $21.9 million. The
increase in easements and other surface-related income was largely
driven by increases of $3.1 million in commercial lease revenue
(largely due to an increase in saltwater disposal royalties) and
$2.0 million in pipeline easement income for the fourth quarter
ended December 31, 2019 compared to the same period of 2018.
Water sales and royalty revenue was $19.9 million for the fourth
quarter ended December 31, 2019, an increase of 20.6% compared with
the fourth quarter ended December 31, 2018 when water sales and
royalty revenue was $16.5 million. This increase was principally
due to a 50.4% increase in the number of barrels of sourced and
treated water sold in the fourth quarter of 2019 over the same
period in 2018, partially offset by decreased water royalties.
In an exchange transaction, the Trust conveyed approximately
5,620 acres of land in exchange for approximately 5,545 acres of
land, all in Culberson County. As the Trust had no cost basis in
the land conveyed, the Trust recognized land sales revenue of $22.0
million for the fourth quarter ended December 31, 2019.
Further details for the year ended December 31, 2019:
The Trust reported net income of $320.9 million for the year
ended December 31, 2019, an increase of 53.0% over net income of
$209.7 million for the year ended December 31, 2018. Net income for
the year ended December 31, 2019 included a $100 million land sale.
Excluding the impact of the land sale, net of income tax, for the
year ended December 31, 2019, net income was $241.9 million, a
15.3% increase over net income for the year ended December 31,
2018. The 15.3% increase was principally related to increased oil
and gas royalties, easements and other surface-related income and
water sales.
Oil and gas royalty revenue was $154.7 million for the year
ended December 31, 2019, compared with $123.8 million for the year
ended December 31, 2018, an increase of 24.9%. Crude oil and gas
production subject to the Trust’s royalty interests increased 48.3%
and 89.3%, respectively, in the year ended December 31, 2019
compared to the year ended December 31, 2018. While crude oil and
gas production increased in the year ended December 31, 2019
compared to December 31, 2018, the prices received for crude oil
and gas production decreased 8.0% and 49.3%, respectively, over the
same time period.
Easements and other surface-related income was $115.4 million
for the year ended December 31, 2019, an increase of 30.0% compared
with the year ended December 31, 2018 when easements and other
surface-related income was $88.7 million. The increase in easements
and other surface-related income was principally related to
increases of $19.0 million in pipeline easement income and $10.6
million in commercial lease revenue (largely due to an increase in
saltwater disposal royalties), for the year ended December 31, 2019
compared to the same period of 2018. These increases were partially
offset by a $3.7 million decrease in temporary permit income over
the same time period.
Water sales and royalty revenue was $84.9 million for the year
ended December 31, 2019, an increase of 32.9% compared with the
year ended December 31, 2018 when water sales and royalty revenue
was $63.9 million. This increase was principally due to a 44.0%
increase in the number of barrels of sourced and treated water sold
during the year ended December 31, 2019 over the same period in
2018, partially offset by decreased water royalties.
The Trust recognized land sales revenue of $135.0 million for
the year ended December 31, 2019 and $4.4 million for the
comparable period of 2018. The increase in land sales revenue is
principally related to a $100 million land sale in January 2019 and
land sales revenue of $22.0 million related to a land exchange
transaction in December 2019.
About Texas Pacific Land Trust
Texas Pacific Land Trust is one of the largest landowners in the
State of Texas with approximately 900,000 acres of land in West
Texas. The Trust was organized under a Declaration of Trust to
receive and hold title to extensive tracts of land in the State of
Texas, previously the property of the Texas and Pacific Railway
Company, and to issue transferable Certificates of Proprietary
Interest pro rata to the holders of certain debt securities of the
Texas and Pacific Railway Company. Texas Pacific Land Trust’s
trustees are empowered under the Declaration of Trust to manage the
lands with all the powers of an absolute owner. Texas Pacific Land
Trust is not a REIT.
Forward-Looking Statements
This news release may contain forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding the Trust’s
future operations and prospects, the markets for real estate in the
areas in which the Trust owns real estate, applicable zoning
regulations, the markets for oil and gas, production limits on
prorated oil and gas wells authorized by the Railroad Commission of
Texas, expected competitions, management’s intent, beliefs or
current expectations with respect to the Trust’s future financial
performance and other matters. We assume no responsibility to
update any such forward-looking statements.
REPORT OF OPERATIONS
(in thousands, except share and per share
amounts) (unaudited)
Three Months Ended December
31,
Years Ended December
31,
2019
2018
2019
2018
Revenues:
Oil and gas royalties
$
43,616
$
35,756
$
154,729
$
123,834
Easements and other surface-related
income
27,727
21,894
115,362
88,739
Water sales and royalties
19,882
16,485
84,949
63,913
Sale of oil and gas royalty interests
—
18,875
—
18,875
Land sales
22,000
74
135,020
4,367
Other operating revenue
107
117
436
492
Total revenues
113,332
93,201
490,496
300,220
Expenses:
Salaries and related employee expenses
10,099
7,984
32,841
18,433
Water service-related expenses
5,385
3,567
20,808
11,168
General and administrative expenses
2,663
1,822
9,765
4,704
Legal and professional fees
1,205
875
16,403
2,498
Depreciation, depletion and
amortization
3,620
1,064
8,906
2,583
Total operating expenses
22,972
15,312
88,723
39,386
Operating income
90,360
77,889
401,773
260,834
Other income
911
390
2,682
916
Income before income taxes
91,271
78,279
404,455
261,750
Income tax expense (benefit):
Current
14,007
15,599
57,492
37,200
Deferred
5,942
—
26,035
14,814
Total income tax expense
19,949
15,599
83,527
52,014
Net income
$
71,322
$
62,680
$
320,928
$
209,736
Net income per Sub-share Certificate -
basic and diluted
$
9.20
$
8.06
$
41.38
$
26.93
Weighted average number of Sub-share
Certificates outstanding
7,756,156
7,771,950
7,756,437
7,787,407
SEGMENT OPERATING RESULTS
(in thousands) (unaudited)
Three Months Ended
December 31,
2019
2018
Revenues:
Land and resource management:
Oil and gas royalties
$
43,616
38
%
$
35,756
39
%
Easements and other surface-related
income
13,382
12
%
14,012
15
%
Sale of oil and gas royalty interests
—
—
%
18,875
20
%
Land sales and other operating revenue
22,107
19
%
191
—
%
79,105
69
%
68,834
74
%
Water services and operations:
Water sales and royalties
19,882
18
%
16,485
18
%
Easements and other surface-related
income
14,345
13
%
7,882
8
%
34,227
31
%
24,367
26
%
Total consolidated revenues
$
113,332
100
%
$
93,201
100
%
Net income:
Land and resource management
$
56,344
79
%
$
49,911
80
%
Water services and operations
14,978
21
%
12,769
20
%
Total consolidated net income
$
71,322
100
%
$
62,680
100
%
Years Ended December
31,
2019
2018
Revenues:
Land and resource management:
Oil and gas royalties
$
154,729
31
%
$
123,834
41
%
Easements and other surface-related
income
73,143
15
%
63,908
21
%
Sale of oil and gas royalty interests
—
—
%
18,875
6
%
Land sales and other operating revenue
135,456
28
%
4,859
2
%
363,328
74
%
211,476
70
%
Water services and operations:
Water sales and royalties
84,949
17
%
63,913
21
%
Easements and other surface-related
income
42,219
9
%
24,831
9
%
127,168
26
%
88,744
30
%
Total consolidated revenues
$
490,496
100
%
$
300,220
100
%
Net income:
Land and resource management
$
260,566
81
%
$
159,611
76
%
Water services and operations
60,362
19
%
50,125
24
%
Total consolidated net income
$
320,928
100
%
$
209,736
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
measurements. These measurements are not to be considered more
relevant or accurate than the measurements presented in accordance
with GAAP. In compliance with requirements of the Securities and
Exchange Commission (“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
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 have presented EBITDA because
we believe that it is a useful supplement to net income as an
indicator of operating performance.
The following table presents a reconciliation of net income to
EBITDA for the three months and years ended December 31, 2019 and
2018 (in thousands):
Three Months Ended December
31,
Years Ended December
31,
2019
2018
2019
2018
Net income
$
71,322
$
62,680
$
320,928
$
209,736
Add:
Income tax expense
19,949
15,599
83,527
52,014
Depreciation, depletion and
amortization
3,620
1,064
8,906
2,583
EBITDA
$
94,891
$
79,343
$
413,361
$
264,333
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200130005545/en/
Robert Packer (214) 969-5530 Robert@tpltrust.com
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