Texas Pacific Land (TPL) Q2 2024 earnings summary

Executive summary

• Achieved record performance in water services and operations, with Q2 2024 segment revenues of $68.3 million and net income of $34.5 million, and all major water metrics reaching new highs.

• Consolidated Q2 2024 revenues were $172.3 million, up 7.3% year-over-year, driven by higher oil and gas royalties, produced water royalties, and water sales.

• Net income for Q2 2024 was $114.6 million ($4.98 per diluted share), up 14.1% year-over-year, with royalty production averaging 24,900 BOE/day.

• Expanded line-of-sight inventory to 19.8 net wells, supporting sustained royalty production growth.

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

Financial highlights

• Q2 2024 revenues were $172.3 million; adjusted EBITDA reached $153.2 million (89% margin); free cash flow was $116.0 million.

• Diluted EPS was $4.98, up 14% year-over-year; operating margin was 77.3%.

• Cash and cash equivalents at quarter-end were $894.7 million; no debt or credit facilities outstanding.

• Paid a $10/share special dividend ($230 million total) in July 2024 and declared a $1.17/share quarterly dividend in August.

• $16.6 million in share repurchases and $53.8 million in dividends paid in the first half of 2024.

Outlook and guidance

• Expect continued strong development in water and produced water segments, though the second half of 2024 may be softer than the first.

• Near-term inventory and permit activity position the company for robust growth into 2025.

• Targeting a cash balance of ~$700 million, with excess allocated to share repurchases and dividends.

• Oil cut expected to remain in the mid-40% range; anticipate improved natural gas pricing with new pipeline infrastructure.

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