Pull up a land ownership map of West Texas, and you'll see a checkerboard filled with squares scattered across the Permian Basin. In the late 1800s, these plots were granted as payment to finance the expansion of a railroad stretching from Texas to California. But before it got there, the railroad ran into financial trouble, leaving its bondholders with millions of acres of West Texas land that was supposed to be sold off. More than a century later, much of it still remained, and its value had changed dramatically. This is the story of Texas Pacific Land Corporation.
To understand how Texas Pacific Land Corporation came to own these scattered plots, we need to go back to the U.S. railroad buildout of the nineteenth century. Across a country that vast, laying track over hundreds of miles required enormous amounts of capital. Stocks and bonds provided part of it, but governments also supplied another form of financing through land grants.
Beginning in the 1850s, wide stretches of public acreage were granted to railroad companies, which could sell the land or use it to raise money. In theory, the railroad would make remote land easier to reach and more attractive to settle, increasing the value of the surrounding acreage.
All over the country, railroad companies seeking public land dealt with Washington, but Texas was different. Before joining the U.S. in 1845, it had spent nine years as an independent republic. Under the terms of annexation, Texas retained ownership of its public land, meaning railroad companies looking to expand across the state had to deal with Austin rather than the federal government.
In the 1870s, most of those acres were worth little, as West Texas was largely dry and sparsely settled, with hundreds of miles often separating one town from the next. Ranching was one of the few established ways to make money from the land, with not much else to speak of. Texas wanted railroads built across the state, and land grants were simply a way of paying with something it had in abundance.
Over the following decades, Texas handed out that land generously to accelerate railroad construction. For larger projects, the grants could amount to twenty sections for every mile of completed track. Each section covered one square mile, or 640 acres, meaning a single completed mile could earn a railroad as much as 12,800 acres or around 5,200 hectares. By the time the grant system ended in 1882, railroads had received more than 30 million acres from the state, almost one-fifth of Texas.
Notably, the land was transferred in alternating sections, with railroad companies receiving one while the state retained the next and set it aside for Texas' public school fund. Since the grants were so large, these alternating sections stretched across broad areas on either side of the route, often far away from the track itself.
The result was the checkerboard pattern that still appears across West Texas ownership maps today. Similar patterns can be found across much of the American West, but Texas used its public lands on a far broader scale, extending well beyond railroad grants, which helps explain why the state owns so little of it today.
With that background explained, the story of what would eventually become today's Texas Pacific Land Corporation began in 1871, when Congress chartered the Texas & Pacific Railroad Company (T&P) to build out the railway. The founding ambition was to create a southern transcontinental route from Marshall, Texas, all the way to San Diego, California.
The first transcontinental railroad had been completed only two years earlier, linking Omaha, Nebraska, and Sacramento, California, connected up with the existing rail network in the east to finally link the two coasts. T&P was attempting a similar build-out farther south, where the warmer climate promised fewer winter disruptions. But just as construction was gaining momentum, the Panic of 1873 sent the U.S. into a severe financial crisis.
One of the failures that intensified the crisis was Jay Cooke & Company, one of the most prominent investment banks in the U.S. at the time and a major financier of railroad expansion. When the firm collapsed in September 1873, credit markets froze, and railroad construction stalled across the country.
For the next six years, the project barely moved. Private financing remained scarce, federal support never arrived, and T&P was still searching for a way west. Then, in 1879, a man named Jay Gould entered the picture, an industry veteran who had built a reputation for acquiring distressed railroads and had, over the years, amassed control of a large share of the American rail network. Gould organized a group of investors to acquire T&P, bringing the capital that allowed construction to resume.
While T&P had struggled to push farther west, another railroad was approaching from the opposite direction. Southern Pacific had been building east from California through Arizona and New Mexico, reaching El Paso, Texas, in 1881.
With T&P now advancing west across Texas, it was clear that the two routes would soon collide. A dispute erupted, and it eventually ended in an agreement: T&P would stop at Sierra Blanca in far West Texas, where the two railroads would connect, and from there reach the West Coast over Southern Pacific's network rather than complete its own line.
Between 1873 and 1881, T&P had laid a total of 972 miles of track. At twenty sections per mile, that should have entitled the company to more than 12 million acres of Texas land. However, much of the western portion had been completed after the deadline set by its charter, and the state refused to grant land for tracks west of Fort Worth. In the end, T&P received just over 5.1 million acres.
The railroad may have stopped well short of San Diego, but building nearly a thousand miles of track had still been enormously expensive, much of it financed through mortgage-backed bonds. T&P was expected to service that debt with freight and passenger revenue, supplemented by sales of the still sparsely populated land it had received in the process.
But during those first few years, that income proved insufficient to cover the debt burden and the railway's continuing capital needs to maintain the track. In 1885, T&P could no longer meet its interest payments and entered federal receivership.
With the company out of the picture, T&P's bondholders were faced with the question of what to do with roughly 3.5 million acres of West Texas land that had secured the debt. Dividing millions of acres of land parcel by parcel among creditors would have been extremely impractical. Instead, as part of the railroad's reorganization, the remaining land was separated and placed under a Declaration of Trust on February 1, 1888. And so the Texas Pacific Land Trust was born, referred to as TPL.
Texas law required railroads to sell granted land within a fixed period, but once the acreage was transferred to the Trust, the transfer itself satisfied that requirement and those provisions no longer applied. Even so, TPL's underlying strategy didn't change: gradually sell the land and return the proceeds to the bondholders in the form of dividends or certificate repurchases. In exchange for their claims, they received transferable Certificates of Proprietary Interest representing proportional ownership stakes in the Trust.
TPL was placed under the control of three trustees: Charles Canda, Simeon Drake, and William Strauss, all of whom had served on the committee representing the bondholders during the reorganization.
The Trust was created to be liquidated when all of the land had been sold off, and its governance reflected that purpose. Rather than holding annual elections, the three trustees remained in place until they resigned or died, and only then would certificate holders elect a replacement.
The declaration also prohibited TPL from issuing new certificates, meaning the number outstanding could only stay the same or decline as the Trust repurchased and canceled them. What seemed like a minor technical detail at the time would become far more important over the decades that followed. The certificates began trading on the NYSE only months after the Trust was formed, turning the remainder of a failed railroad company into a publicly traded land trust.
In the decades that followed, the Trust's task was to recover as much value as possible for its certificate holders. The problem was that few people wanted to buy the land. In its first year, it sold the land for an average of $2.36 an acre, and more than a decade later, in 1900, that hadn't changed.
Part of the reason was West Texas itself, still sparsely settled grazing country, with land priced accordingly. The Trust sold parcels and leased acreage to ranchers and settlers, while collecting small fees from those who crossed the land. Land closer to population centers was easier to sell, yet the total acreage shrank only gradually, and for decades, there was little reason to believe that would change.
The first hint that there might be more to the land came in February 1920. A drilling crew near Westbrook in Mitchell County struck oil at a well that would become known as W.H. Abrams No. 1, named after the Trust's general agent. It marked the first commercial oil discovery in what is today known as the Permian Basin.
While the discovery was consequential, it was hardly transformative at the time, as production amounted to only around ten barrels a day, and experts considered the region a “petroleum graveyard.” Not everyone shared that belief. In 1923, after nearly two years of drilling, an oil company struck oil again. The discovery drew more attention, and over the remainder of the decade, new fields were found across West Texas, gradually drawing more developers into the basin.
Just a few years later, the Great Depression slowed some of that development, though exploration continued through the 1930s. Despite the U.S. being involved in the Second World War, the 1940s brought renewed drilling activity, which accelerated further in the years that followed.
By the 1950s, oil- and gas-bearing land had become far more valuable, but developing it was a very different business from simply managing the land. In 1954, the Trust obtained court approval to form TXL Oil Corporation, transfer the mineral rights covering roughly two million acres to the new company, and distribute its shares to TPL's certificate holders. It is worth clarifying what exactly that meant: the mineral rights covered the right to extract what lay beneath the ground, while TPL still retained ownership of the surface above it.
Despite that separation, the Trust was not walking away from oil and gas entirely. On certain tracts, it kept perpetual royalty interests. We will return to the importance of those royalties later, but the development of the oil and gas was now in the hands of TXL Oil. Eight years later, those assets attracted Texaco, then one of America's major oil companies, which acquired TXL Oil Corporation in 1962.
TPL therefore continued to participate as production across the Permian Basin climbed, only now through its retained royalties rather than the mineral estate itself. At the peak of the oil boom in the early 1970s, the region was producing nearly two million barrels of oil and almost ten billion cubic feet of natural gas each day, equivalent to more than 20% of U.S. oil supply and 15% of natural gas production.
)
With operators responsible for drilling the wells, extracting the oil and gas, and bearing the operating costs, TPL could collect royalties while continuing to lease and gradually sell its land. By 1980, roughly 15,000 acres were being divested each year.
While almost two-thirds of the land had already been sold off, at that current pace, it would take around 85 years to sell all of it. Whatever the original expectation had been, the Trust was disappearing far more slowly than anyone could have imagined back in 1888. A century after its creation, it was the largest private landowner in Texas, still owning more than 1.2 million acres.
The 1986 oil-price collapse triggered a decline in Permian production that stretched over the next two decades, deepening through much of the 1990s as the basin looked increasingly mature and industry attention shifted elsewhere. By the mid-2000s, Permian oil production was nearly 60% below its early-1970s peak.
The exploration and exploitation of oil and gas had already changed the economics for TPL in a significant way. While selling an acre permanently reduced the land, collecting a royalty did not. Over time, that difference would matter more and more.
Repurchases had been part of TPL since the beginning, and by the end of 1994, the Trust had bought back shares in all but four years since its creation. Importantly, it could not issue new certificates, meaning every one it repurchased and canceled left the remaining holders with a slightly larger claim on the land and the royalties it generated. Dividends were paid as well, but buybacks remained central to how the Trust used its cash.
The organization was remarkably small, with little overhead and no debt, which together made the process increasingly powerful. Land was sold, royalties were collected, shares were retired, and the cycle repeated year after year. Between 1980 and 1995, the number of shares outstanding fell by 34%, while the Trust's land holdings declined by only 8%, from approximately 1.2 million to 1.1 million acres. The Trust was still shrinking, just nowhere near as fast as the share count.
By 1995, Horizon Asset Management, which would later become part of Horizon Kinetics, had noticed what was happening. That year, it published a report with the fitting title: How to Buy 1 Million Acres of Fine Texas Grazing Land for $20.00, arguing that the attraction was not simply the land itself, but also the effect of the continuous repurchases.
Horizon was not the first investor to take an interest in the Trust. At Berkshire Hathaway's 2022 annual shareholder meeting, Warren Buffett recalled investing in TPL as a teenager in the early 1940s. It was only the second share he had ever bought, and at the time he made some calculations:
“If I lived to be 100, I would own the whole place. Well, I haven't lived to be 100 yet, and I wouldn't have bought the whole place. Both calculations are so far imperfect.”
More than eighty years later, this was still what he remembered, which says something about just how unique the structure was.
It's been a remarkable company, just plain remarkable.— Warren Buffett
As TPL entered the 2000s, its strategy was largely unchanged, but the pace of liquidation was slower. Between 2000 and 2010, the Trust's surface holdings declined from just over 1 million acres to around 960,000, while its share of oil and gas production grew by less than 2% annually.
The problem wasn't a lack of oil and gas, but that much of what remained was simply trapped in rock that conventional vertical wells could not reach economically. During the same period, operators elsewhere in the U.S. began combining two technologies that would unlock those reservoirs.
Instead of drilling straight down through a formation, horizontal drilling bends the wellbore until it runs sideways, allowing it to travel for thousands of feet within the productive rock layer itself. Hydraulic fracturing then pumps mostly water and sand at high pressure through sections of the well, creating small fractures in the surrounding rock. The sand holds those fractures open, giving oil and gas a path into the well.
As the approach spread into the Permian Basin, wells became significantly more productive, with output rising as developers drilled more of them. The basin's geology made the combination particularly effective because several productive formations could lie at different depths beneath the same acreage, allowing operators to develop one layer after another.
The effect soon showed up in TPL's royalty interests, which, after barely moving during the previous decade, surged to unprecedented levels. Between 2010 and 2016, oil production grew at roughly 30% annually to nearly 570,000 barrels, while natural gas production increased at almost 32% annually to 2.6 billion cubic feet. The boom also created new opportunities above ground, as every new well brought additional demands across TPL's surface.
In 2011, Tyler Glover joined the Trust in a role known as a landman. The job involved negotiating leases and easements, researching ownership, and spending long afternoons in county records offices. By his own account, he was at least 15 years younger than anyone else at TPL, which hinted at the kind of unchanging organization it had been leading up to this point.
Glover moved quickly through the small organization, becoming Assistant General Agent by 2014, before moving on to Co-General Agent and CEO two years later. The timing of his promotion was notable. The shale boom was accelerating, and TPL was on the brink of entering a new operational chapter.
A fundamental part of that new chapter would be water. As shale development expanded across the Permian, water was becoming increasingly important both in developing wells and in handling what came back to the surface once production began.
Until this point in time, however, it had remained a relatively small part of TPL's business and largely followed the same passive model as oil and gas. Under a series of agreements, the Trust had allowed energy companies and oilfield service businesses to search for water across its acreage, build the necessary infrastructure, and purchase what they found – with TPL simply collecting royalties.
As that activity expanded, the passive arrangement began to make less sense. TPL increasingly had more to gain by building and operating parts of the water infrastructure itself rather than leaving it almost entirely in the hands of others. In 2017, only months after Glover took over, TPL formed Texas Pacific Water Resources (TPWR) and began developing its own water wells, storage facilities, pipelines, and treatment capacity. We will later return to the scale of those operations.
That decision also began to reshape the organization behind the Trust. Historically, TPL had operated with just around a dozen employees, but over the years that followed, the workforce grew to more than 100. Its change of strategy also required a more sophisticated way of running the business. When Glover first arrived, a typewriter was still sitting in the office. Before long, TPL was using increasingly advanced systems to monitor its expanding water network and the activity taking place across its land.
For a Trust that had spent more than a century collecting value from assets largely run by others, this was a truly meaningful change, one that would accelerate the company's growth. TPL was no longer just a passive landlord.
For more than a century, TPL operated under the same unusual governance structure. Conversion to a company had been considered before, but none of those efforts went anywhere, in part because there simply had not been that much to govern. By 2019, as the Trust had evolved into an operating business, that was beginning to change.
Under the 1888 Declaration of Trust, the three trustees served until death or resignation, meaning vacancies rarely arose. So when Maurice Meyer III, who had served as a trustee since 1991, resigned in February 2019 due to health issues, the resulting vacancy quickly created tension within the organization. The two remaining trustees eventually nominated retired Air Force General Donald G. Cook to replace him.
A group led by Horizon Kinetics, SoftVest Advisors, and ART-FGT Family Partners, which together owned more than 25% of TPL's shares at the time, had other plans. The consortium nominated Eric Oliver, founder and President of SoftVest Advisors, and began campaigning for shareholders to elect him instead.
What began as a disagreement over one trustee seat quickly became something much larger. The aforementioned investor group argued that TPL's governance had become outdated. It was easy to see where they were coming from: three trustees serving effectively for life, only a handful of shareholder meetings in decades, and a structure that gave investors little say in how the business was run. The trustees saw it differently and instead questioned Oliver's conduct, and accusations soon went back and forth.
A few months later, Eric Oliver and Horizon's Chairman Murray Stahl joined a committee to examine whether TPL should be converted into a corporation. In January 2020, the committee concluded that a conversion would favor the company, and soon thereafter the trustees approved the plan.
After 133 years, the governance structure created to sell off an insolvent railroad's land had come to an end, and in 2021, Texas Pacific Land Trust officially became Texas Pacific Land Corporation. The old three-trustee structure was replaced by a nine-member board, with both Oliver and Stahl among its directors. Tyler Glover, who had run the Trust as CEO since 2016, became President and CEO of the new company, a role he still holds today.
The Trust was gone, but much of the land remained, and that has continued to be the case up until this day. At the end of Q2 2026, TPL still owned around 894,000 surface acres (along with additional royalty acres) across the Permian Basin, despite over a century of land sales. Compared with its early history, the value it creates has changed dramatically.
In 2025, the company generated $798 million in revenue, equivalent to a roughly 20% CAGR since 2000. From 2016 onward, growth has been even higher, at around 33% CAGR, driven by rising oil and gas production as well as its expanding water business.
Profitability remained unusually high throughout that growth. As we've been over, much of the company's revenue is generated from land and royalties without funding the underlying development or carrying heavy operating costs. The water business has more of that operating burden, but still benefits from TPL owning the land and infrastructure itself.
Operating income reached $592 million in 2025, resulting in a margin of roughly 74%. Still, that was below the nearly 90% margins TPL generated before it began building out its water operations in 2017, but exceptional nonetheless. Growth continued into H1 2026, with revenue up 26% YoY to roughly $483 million and the operating margin at around 77%.
The result has been substantial cash generation, with free cash flow rising from just $12 million in 2010 to roughly $527 million on a trailing twelve-month basis as of Q2 2026.
)
Beginning in 2017, TPL has reported across two segments: Land and Resource Management (LRM), covering its oil and gas royalties and surface-related activities, and Water Services and Operations (WSO), holding its water sales and produced-water royalties. In 2025, LRM generated $491 million, making up 61% of total revenue, while WSO contributed the remaining $308 million, or 39%. Before breaking them down, it is worth going back to 2010, when the revenue mix still looked much closer to that of the old Trust.
Back then, as it entered the shale era, oil and gas royalties made up 61% of revenue, while easements and sundry revenue contributed 25% and land sales 14%. At the time, water-related royalty income was still small and included within the easements and sundry revenue stream rather than reported separately.
)
On a trailing twelve-month basis as of Q2 2026, oil and gas royalties remained the core of the business at 52%, but the rest of the revenue mix looked very different. Notably, land sales, once the Trust's entire purpose, had effectively disappeared from the mix.
TPL's largest revenue stream traces back to a decision made in 1954, when the Trust transferred its mineral estate to TXL Oil while retaining perpetual royalty interests across parts of the acreage. Across those hundreds of thousands of acres, though, the royalty rate differed, and understanding those differences is important when trying to get a better overview of TPL's royalty portfolio.
TPL retained a larger 1/16 royalty on acreage where existing leases were still within their initial term. On acreage where oil or gas was already being produced and had been extended beyond the first term, TPL retained a smaller 1/128 royalty.
Today, roughly 371,000 gross acres carry the former, while another 85,000 carry the latter. To highlight what that means in practical terms: a 1/16 royalty gives TPL 6.25% of the production attributable to that land, while a 1/128 royalty gives it roughly 0.78%.
Royalty revenue primarily depends on operator production volumes, TPL's ownership interest in each acre, and the prices received for that production. TPL reports oil, natural gas, and natural gas liquids (NGLs) volumes in barrels of oil equivalent (BOE), allowing the different hydrocarbons to be compared on a common basis. By volume, production was almost evenly split among oil, natural gas, and NGLs, accounting for 39%, 31%, and 30%, respectively, in 2025.
But in terms of revenue, the mix looked very different: oil alone generated roughly 74% of royalty revenue, compared with 17% from NGLs and just 9% from natural gas. Understandably, that difference comes down to the pricing of each hydrocarbon.
Realized prices can move sharply from one period to the next, leaving TPL exposed to swings in global commodity markets. In recent years alone, the energy crisis, disruptions around the Suez Canal, and tariffs have all contributed to volatility in oil and gas prices, which in turn flows through to TPL's royalty revenue. Over longer periods, prices can also affect operator activity itself. Persistently weaker economics can slow drilling and completions, while stronger conditions can encourage the opposite.
The short-term volatility has been on full display in TPL's own numbers. Average realized prices climbed from $24.29 per BOE in 2020 to a peak of $60.81 in 2022, before falling 44% over the following three years to $34.18 in 2025. Most recently, they rose again to $42.17 in Q2 2026 due to the uncertainty around the Strait of Hormuz.
Higher production has been much more consistent and has almost fully offset short-term drops in commodity prices. Volumes more than doubled from roughly 16,200 BOE per day in 2020 to 34,600 in 2025, and reached around 39,700 in Q2 2026.
Production has more than doubled since 2020, driven not only by more wells but also by operators becoming better at developing the acreage more efficiently. Horizontal laterals have stretched progressively farther underground, with new wells drilled across TPL's royalty acreage averaging around 2.6 miles in Q2 2026.
That trend makes the old checkerboard structure even more relevant. Owning every other square was hardly an ideal setup for development, particularly when a modern horizontal well can increasingly extend across several adjoining sections. Operators can combine neighboring leases into larger drilling units, while acreage trades and increased consolidation since the shale revolution have created more contiguous holdings over time. Where that is possible, previously fragmented acreage can support much longer wells.
More recently, operators have found another workaround in horseshoe wells, which drill a U-shaped lateral while staying within the operator's existing mineral rights. Glover described the design during the Q2 2025 earnings call (sourced through Quartr Pro):
“This royalty acreage could have otherwise been stranded single sections, but with the advancement of horseshoe wells, these sections are now economic for operators to develop. The old patch will always find a way.”
TPL benefits when operators find better ways to develop the acreage, but it does not decide when or where wells are drilled. Those decisions remain in the hands of the companies operating across its footprint.
Consolidation across the Permian has concentrated those decisions among fewer operators. Normally, that could be a drawback because it reduces diversification. In this case, however, many of those operators are larger, better capitalized, and work from multi-year development programs, which can make activity more durable through cycles. In 2025, TPL's three largest customers accounted for roughly 40% of total revenue.
TPL can get some visibility into future production by tracking wells as they move through the development pipeline. At the end of Q2 2026, it had an estimated 5.6 net permitted wells, 9.5 net drilled-but-uncompleted wells, and another 3.4 net wells that had been completed but were not yet producing. Together, those 18.4 net wells are moving toward production within a year.
The total number of net producing wells has steadily increased in recent years, reaching around 132 at the end of Q2 2026, compared with 73 in Q2 2024. Every single one of its wells also creates additional opportunities across the land, as we'll get into next.
While production across TPL's acreage has increased over the past few decades, and even more substantially in recent years, it naturally raises the question of how much oil is left. It is a number that has historically proved notoriously difficult to pin down, as new formations and better drilling methods have continued to expand what can be economically extracted.
Industry estimates still point to tens of thousands of viable drilling locations across the Permian. That number could grow as operators find even more efficient ways to extract those resources, something several of the aforementioned techniques and strategies allude to. So it's safe to say there are tremendous opportunities, and TPL's acreage is well positioned to capture some of that production and the surrounding demand that accompanies it.
Not long ago, water was barely noticeable in TPL's income statement. The shale boom changed that entirely, turning what had once been a minor part of the business into a major source of revenue on both sides of the drilling process.
The distinction between TPL's two water revenue streams comes down to how the company gets paid, rather than where the water comes from. TPL earns water-sales revenue when it sources and delivers water for oil and gas development, while produced-water royalties come from water that returns to the surface and is transported across or disposed of beneath its land. Put simply, one stream comes from water going into the well, while the other comes from water coming back out.
The first begins before a well ever produces. Completing a modern horizontal well (fracking, drilling, etc.) requires hundreds of thousands of barrels of water, far more than a conventional well, and that demand has only increased as laterals have grown longer and operators have fractured more of the surrounding rock. TPL supplies this by sourcing brackish groundwater from drilled water wells beneath its acreage, storing it in ponds, and moving it through pipelines to well sites, sometimes as far as 70 miles away.
Once production begins, water also comes back to the surface alongside the oil and gas. Most of that water was injected during completion, while some occurs naturally in the formation.
In the Delaware Basin, which accounts for most of TPL's produced-water volumes, roughly four barrels of water are generated for every barrel of oil on average. Because it contains high levels of salt and other potentially harmful substances, that water must then be disposed of underground, treated, or reused.
Most produced water is disposed of in so-called saltwater disposal wells, which TPL generally does not operate itself. Instead, operators and water-management companies move the water across its acreage or dispose of it beneath the land, with TPL collecting a volumetric royalty on the water handled.
The scale of that disposal has created another problem, as injecting enormous volumes underground has been linked to increased seismic activity across parts of West Texas and prompted regulators to restrict disposal in certain areas.
Another option is to reuse the water. For hydraulic fracturing, produced water does not need to be treated back to freshwater quality before it can be used again, allowing operators to reduce their reliance on newly sourced water. Since 2017, TPL has steadily expanded the infrastructure needed to support that cycle. In 2024, the company also began developing technology to desalinate produced water to a standard that could eventually allow it to be used beyond the oilfield.
The same checkerboard that can complicate horizontal drilling can work in TPL's favor when it comes to water. Because its surface acreage is scattered across a much larger footprint than it would cover in one continuous block, TPL can serve activity well beyond the wells sitting directly on its own land. In Q2 2024, Glover stated that more than 70% of the company's source-water sales go to wells outside TPL's acreage.
The volumes show how large the water operations have become. In 2025, TPL sold an average of 763,000 barrels of water per day, generating roughly $170 million in revenue, while produced-water royalties were tied to about 4.3 million barrels per day, adding another $124 million. TPL estimates that the Permian Basin generates more than 20 million barrels of produced water each day, putting the volumes tied to its royalty agreements at roughly one-fifth of that figure.
A modern well requires an entire network of infrastructure around it, with water only one part of what happens above ground. Much of the rest falls under Surface Leasing and Easement Management (SLEM). TPL can sell caliche extracted from its land and used to build roads and well pads, while granting easements for pipelines, power lines, and other infrastructure crossing its land. Glover put it simply in a recent company presentation:
“We exploit every revenue stream possible by owning the surface asset. When you have an oil and gas developer come to the surface, they are going to build a small town at the location of the well.”
TPL has a dedicated team to evaluate new ways of generating revenue from its acreage, potentially broadening the business beyond oil, gas, and water. Solar and wind projects are already up and running, while grid-connected batteries, carbon capture, hydrogen, and other uses remain under review or in early development. The time horizon stretches far beyond the next few years. Management has been explicit about looking decades ahead, asking where TPL's revenue might come from 30, 40, 50, or even 70 years from now.
Among those newer opportunities, data centers have quickly become the most ambitious. In late 2025, TPL invested $50 million in Bolt Data & Energy, a company co-founded by former Alphabet CEO Eric Schmidt, to build large-scale data center campuses across West Texas. Such infrastructure requires an enormous amount of specific resources, and as Glover stated on the Q4 2025 call: “There's not really anyone in Texas that offers scale like TPL does, whether that's land, access to gas, or water.” That combination makes TPL a natural partner for Bolt, which is trying to bring those pieces together in one place.
With AI driving continued demand for computing power, the investment in Bolt is a bet that this demand will keep growing. The widening range of potential uses for the surface, together with the economic value the acres already generate, has begun to change how TPL thinks about the land itself.
TPL began in 1888 with roughly 3.5 million acres and a mandate to gradually sell it off. For more than a century, that was broadly what followed, even if the pace varied widely from year to year. From 1997 through 2017, TPL was a net seller of surface acreage every year, averaging roughly 10,300 acres sold, all while retaining the oil and gas royalties beneath it.
In 2018, that selling pattern changed. TPL ended the year as a net buyer of surface acreage, purchasing large tracts of land while also beginning to acquire royalty interests. In the years that followed, that strategy continued, making it increasingly clear that its focus was no longer simply about selling the land. Glover described the shift more explicitly on the Q4 2023 earnings call:
“We have a huge surface and royalty footprint. We have a talented team of industry professionals. We have capabilities to monetize land like few others can, and we have the technology and systems to efficiently scale. It's for all of those reasons why we believe we're in a prime position to consolidate high-quality Permian surface and royalty assets.”
By then, the logic of owning the land had changed. An acre that once represented a one-time sale can now generate royalties from the oil and gas beneath it, fees from sourcing and delivering water across the land, rent from easements and leases, and potentially revenue from newer energy-related initiatives. If the location and economics make sense, TPL now has a reason to own more of it.
In 2024 and 2025, that is exactly what happened, with the company acquiring roughly 14,000 surface acres and about 29,000 net royalty acres (NRA), a measure that normalizes different royalty interests to a common 1/8 royalty basis. Much of what it bought complemented acreage and interests TPL already owned, increasing its exposure to both existing wells and future development.
The buying continued into 2026, with another 12,000 surface acres added on a net basis during the first half of the year. By the end of Q2, TPL held approximately 224,000 NRA alongside the 894,000 surface acres mentioned earlier.
In 1888, TPL sold land for $2.36 an acre, a price that belonged to a very different West Texas. Comparing that with today is difficult, given the separation of surface and mineral rights and more than a century of development across the region. Still, one recent surface acreage acquisition makes the contrast almost comical. In 2025, TPL paid $31.4 million for land in Martin County, translating to roughly $3,850 an acre. On a nominal basis, that is more than 1,600 times what the Trust received per acre in its early years.
The shift from seller to buyer reflected a broader change in how TPL uses its cash. The old playbook had been much more straightforward, with royalties generated by vertical oil and gas wells, together with income from grazing leases and land sales, used mostly to retire shares. What nobody could have predicted is just how valuable those acres would ultimately prove to be. Glover described that dynamic during the Q4 2023 earnings call:
“With the benefit of hindsight, those buybacks worked incredibly well because few knew or understood that one day modern horizontal drilling and hydraulic fracturing would unlock the ocean of oil that was locked in the shale lying underneath the trust's royalty acreage. [...] It was quite a deal.”
Today, the considerations are different as TPL has become far more operational, while the value of its Permian assets is no longer much of a secret. Glover continued:
“Buying back our stock today isn't the same steal that it was decades ago, not to say that it isn't a good deal today.”
That background helps explain the evolution in TPL's capital allocation, with buybacks no longer being the default use of excess cash. As the business has expanded, more capital has gone toward dividends and investments in water infrastructure, surface acreage, and royalty interests. When management believes those opportunities offer better returns than repurchasing shares, that is simply where the money goes.
)
It isn't only the land that has risen in value. Through oil discovery, water expansion, and a structure that evolved from trust to corporation, TPL's shareholder returns have been almost unmatched across public markets. Over the past 25 years, the trust-turned-stock has climbed more than 400x in value.
The railroad never reached San Diego. Instead, it left behind millions of acres in West Texas and a Trust with a simple mandate to sell the land until nothing remained. The process moved slowly enough that vast tracts of land survived both the first oil discoveries and, almost a century later, the shale revolution that made far more of the basin economical to develop. That made TPL remarkably profitable. And today, it almost seems as if every acre is worth a little more than it was the day before.
Explore our platforms
Leading companies and financial institutions worldwide rely on Quartr to make better decisions faster.
Desktop
API
)
)
)
)
)