Earnings Call to be held 7:30 am CT on
Thursday, May 5, 2022
Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or
"TPL") today announced its financial and operating results for the
first quarter of 2022.
First Quarter 2022 Highlights
- Special dividend of $20 per share declared May 3, 2022, payable
June 15, 2022, to stockholders of record as of June 8, 2022
- Quarterly cash dividend of $3.00 per share declared May 3,
2022, payable June 15, 2022, to stockholders of record as of June
8, 2022
- Net income of $97.9 million, or $12.65 per share (basic) and
$12.64 per share (diluted)
- Revenues of $147.3 million
- Adjusted EBITDA(1) of $129.8 million
- Royalty production of 20.8 thousand barrels of oil equivalent
per day
- Quarterly cash dividend of $3.00 per share paid on March 15,
2022
- At the end of the quarter, TPL's royalty acreage had an
estimated 7.4 net well permits, 7.7 net drilled but uncompleted
wells, 1.8 net completed wells, and 50.7 net producing wells.
(1) Reconciliations of Non-GAAP measures are provided in the
tables below.
“With tailwinds of favorable commodity prices, strong
production, and a debt-free balance sheet, we’re pleased to
announce a $20 per share special dividend as our shareholders reap
the windfall of supportive underlying fundamentals,” said Tyler
Glover, Chief Executive Officer of the Company. “This special
dividend is incremental to the $100 million share repurchase
program we announced in March, and we will look to continue
returning capital back to shareholders given the strength of the
business and continued high commodity prices. Although we are
seeing operators broadly facing some obstacles with supply-chain
and other constraints, activity on our acreage remains robust and
the overall outlook for the Permian Basin is favorable as producers
continue to dedicate significant capital towards development.”
Financial Results for the First Quarter of 2022
The Company reported net income of $97.9 million for the first
quarter of 2022, an increase of 95.6% compared to net income of
$50.1 million for the first quarter of 2021.
Our total revenues increased $63.2 million for the first quarter
of 2022 compared to the same period of 2021, largely driven by the
$54.6 million increase in oil and gas royalty revenue. Our share of
production was approximately 20.8 thousand barrels of oil
equivalent ("Boe") per day for the first quarter of 2022 compared
to 16.4 thousand Boe per day for the same period of 2021. The
average realized price was $58.31 per Boe for the first quarter of
2022, compared to $35.04 per Boe for the comparable period of 2021.
Water sales increased $5.9 million for the first quarter of 2022
compared to the first quarter of 2021 principally due to increased
average pricing returning to pre-pandemic levels. Our revenue
streams are directly impacted by development and operating
decisions in the Permian Basin made by our customers and by
commodity prices, among other factors.
Our total operating expenses of $23.0 million for the first
quarter of 2022 increased $0.9 million compared to the same period
of 2021. The Company recorded an accrual of approximately $2.0
million for ad valorem taxes, which was partially offset by
decreases in salaries and related employee benefits, water
service-related expenses, and legal and professional fees.
New Director Appointments and Update on the Evaluation of the
Board Declassification Process
On April 19, 2022, TPL announced the appointments of Rhys J.
Best and Karl F. Kurz to the Board of Directors (the "Board"),
increasing the size of the Board to ten directors. Each of Mr.
Kurz, who will serve the remainder of the board term vacated by
Dana McGinnis in March, and Mr. Best, who will stand for
re-election at the 2022 annual meeting of stockholders, brings
decades of corporate leadership and industry experience.
The Company also announced on April 19, 2022 that the Nominating
and Corporate Governance Committee is in the process of evaluating
the possible declassification of the Board and has retained
Delaware counsel to assist in the evaluation. This process includes
a detailed review of the procedures required to declassify the
Board in accordance with rules and guidance from the Securities and
Exchange Commission and Delaware law, as well as the Company’s
governance documents and any contractual obligations. The
Nominating and Corporate Governance Committee expects to make a
recommendation to the full Board in time for a proposal, if any, to
be included in proxy materials for the Company’s 2022 annual
meeting of stockholders.
Quarterly and Special Dividends Declared
On May 3, 2022, the Board declared a quarterly cash dividend of
$3.00 per share and a special dividend of $20.00 per share, both
payable on June 15, 2022 to stockholders of record at the close of
business on June 8, 2022.
Stock Repurchase Program
On March 11, 2022, our Board approved a stock repurchase program
to purchase up to an aggregate of $100 million of shares of our
outstanding Common Stock. In connection with the stock repurchase
program, the Company entered into a Rule 10b5-1 trading plan (the
“Trading Plan”) that generally permits the Company to repurchase
shares at times when it might otherwise be prevented from doing so
under securities laws. The Trading Plan was subject to a 30-day
blackout period and is now active. The stock repurchase program
expires on December 31, 2022.
Conference Call and Webcast Information
The Company will hold a conference call on Thursday, May 5, 2022
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# 13729211. The telephone replay will be available
starting shortly after the call through May 19, 2022.
About Texas Pacific Land Corporation
Texas Pacific Land Corporation is one of the largest landowners
in the State of Texas with approximately 880,000 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 seismic 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 potential future impact of COVID-19 on the global
and U.S. economies as well as on TPL’s financial condition and
business operations; 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
(dollars in thousands)
(unaudited)
Three Months Ended March
31,
2022
2021
Our share of production volumes(1):
Oil (MBbls)
796
646
Natural gas (MMcf)
3,279
2,709
NGL (MBbls)
528
383
Equivalents (MBoe)
1,871
1,480
Equivalents per day (MBoe/d)
20.8
16.4
Oil and gas royalty revenue:
Oil royalties
$
71,681
$
34,249
Natural gas royalties
16,175
7,360
NGL royalties
16,316
7,924
Total oil and gas royalties
$
104,172
$
49,533
Realized prices:
Oil ($/Bbl)
$
94.24
$
55.53
Natural gas ($/Mcf)
$
5.33
$
2.94
NGL ($/Bbl)
$
33.42
$
22.36
Equivalents ($/Boe)
$
58.31
$
35.04
(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.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share and
per share amounts) (unaudited)
Three Months Ended March
31,
2022
2021
Revenues:
Oil and gas royalties
$
104,172
$
49,533
Water sales
18,820
12,956
Produced water royalties
14,870
12,549
Easements and other surface-related
income
9,192
9,047
Land sales and other operating revenue
281
70
Total revenues
147,335
84,155
Expenses:
Salaries and related employee expenses
9,385
9,979
Water service-related expenses
2,782
3,298
General and administrative expenses
3,000
2,806
Legal and professional fees
1,719
2,212
Ad valorem taxes
2,010
—
Depreciation, depletion and
amortization
4,126
3,838
Total operating expenses
23,022
22,133
Operating income
124,313
62,022
Other income, net
76
5
Income before income taxes
124,389
62,027
Income tax expense
26,489
11,975
Net income
$
97,900
$
50,052
Net income per share of common stock
Basic
$
12.65
$
6.45
Diluted
$
12.64
$
6.45
Weighted average number of shares of
common stock outstanding
Basic
7,741,365
7,756,156
Diluted
7,742,710
7,756,156
SEGMENT OPERATING
RESULTS
(in thousands) (unaudited)
Three Months Ended March
31,
2022
2021
Revenues:
Land and resource management:
Oil and gas royalty revenue
$
104,172
71
%
$
49,533
59
%
Easements and other surface-related
income
8,894
6
%
8,187
10
%
Land sales and other operating revenue
281
—
%
70
—
%
Total land and resource management
revenue
113,347
77
%
57,790
69
%
Water services and operations:
Water sales
18,820
13
%
12,956
15
%
Produced water royalties
14,870
10
%
12,549
15
%
Easements and other surface-related
income
298
—
%
860
1
%
Total water services and operations
revenue
33,988
23
%
26,365
31
%
Total consolidated revenues
$
147,335
100
%
$
84,155
100
%
Net income:
Land and resource management
$
81,156
83
%
$
39,513
79
%
Water services and operations
16,744
17
%
10,539
21
%
Total consolidated net income
$
97,900
100
%
$
50,052
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 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 and Adjusted 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 calculate Adjusted EBITDA as
EBITDA excluding the impact of certain non-cash, non-recurring
and/or unusual, non-operating items, including, but not limited to:
employee share-based compensation, conversion costs related to our
corporate reorganization in January 2021 and severance costs. We
have presented EBITDA and Adjusted EBITDA because we believe that
both are useful supplements to net income in analyzing operating
performance.
The following table presents a reconciliation of net income to
EBITDA and Adjusted EBITDA for the three months ended March 31,
2022 and 2021 (in thousands):
Three Months Ended March
31,
2022
2021
Net income
$
97,900
$
50,052
Add:
Income tax expense
26,489
11,975
Depreciation, depletion and
amortization
4,126
3,838
EBITDA
128,515
65,865
Add:
Employee share-based compensation
1,319
—
Conversion costs related to our corporate
reorganization
—
1,973
Severance costs
—
2,000
Adjusted EBITDA
$
129,834
$
69,838
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Investor Relations IR@TexasPacific.com
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