Texas Pacific Land (TPL) Q2 2024 earnings summary

Executive summary

• Achieved record performance in water services and operations, with Q2 2024 water segment revenues of $68.3 million and net income of $34.5 million, driven by robust demand and expanded infrastructure.

• Q2 2024 consolidated revenues were $172.3 million, up 7.3% year-over-year, with net income rising 14.1% to $114.6 million and diluted EPS of $4.98.

• Oil and gas royalty production averaged 24,900 BOE/day in Q2 2024, with royalty revenues comprising 52% of total consolidated revenues.

• Expanded near-term inventory to 19.8 net wells, supported by strong permitting activity, especially in key Permian sub-regions.

• Celebrated 136 years on the NYSE, recent inclusion in the S&P 400, and completed a three-for-one stock split in March 2024.

Financial highlights

• Q2 2024 consolidated revenues were $172.3 million, with adjusted EBITDA of $153.2 million and an 89% margin.

• Q2 2024 net income was $114.6 million; free cash flow was $116.0 million.

• Diluted EPS was $4.98, up 14% year-over-year; six-month EPS was $9.95.

• Cash and cash equivalents at quarter-end were $895 million, with no debt or credit facilities outstanding.

• A $10/share special dividend ($230 million) was paid in July 2024.

Outlook and guidance

• Management targets a $700 million cash balance, with excess allocated to share repurchases and dividends.

• Continued strong development is expected in water and produced water segments, though H2 2024 may be slightly softer.

• Near-term inventory and permitting activity support a positive outlook for royalty production into 2025.

• Oil cut expected to remain in the mid-40% range in the near term.

• Cash from operations and liquidity are expected to cover ongoing capital needs.