Earnings Call to be held 7:30 am CT on
Thursday, February 23, 2023
Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or
"TPL") today announced its financial and operating results for the
fourth quarter and full year of 2022.
Fourth Quarter 2022 Highlights
- Net income of $99.7 million, or $12.95 per share (basic) and
$12.94 per share (diluted)
- Revenues of $152.7 million
- Adjusted EBITDA(1) of $133.9 million
- Royalty production of 21.3 thousand barrels of oil equivalent
per day
- $29.5 million of common stock repurchases
- Quarterly cash dividend of $3.00 per share paid on December 15,
2022
- As of December 31, 2022, TPL's royalty acreage had an estimated
5.0 net well permits, 7.4 net drilled but uncompleted wells, 2.3
net completed wells, and 57.7 net producing wells.
Full Year 2022 Highlights
- Net income of $446.4 million, or $57.80 per share (basic) and
$57.77 per share (diluted)
- Revenues of $667.4 million
- Adjusted EBITDA(1) of $591.8 million
- Royalty production of 21.3 thousand barrels of oil equivalent
per day
- $87.9 million of common stock repurchases
- $247.3 million of total cash dividends paid during 2022
(comprised of a $20.00 per share special dividend and $12.00 per
share in regular dividends)
- Published annual update of Environmental, Social and Governance
("ESG") disclosure including metrics for 2021
(1) Reconciliations of Non-GAAP measures are provided in the
tables below.
“For the full year 2022, TPL achieved record results across both
of our operating segments, record consolidated adjusted EBITDA, and
record earnings per share,” said Tyler Glover, Chief Executive
Officer of the Company. “The strong performance reflects the high
quality of our underlying assets, the benefits of our active
management approach, and the advantages of a vertically integrated
business model. We also continue to make progress towards
extracting value beyond our legacy revenue streams with
opportunities such as carbon capture, grid batteries, renewables,
and beneficial water reuse. Looking forward to 2023, although
recent commodity prices have experienced some volatility,
development activity in the Permian will remain robust. TPL is well
positioned to capture value and generate free cash flow, and we
look forward to sustaining our positive momentum into the new
year.”
Financial Results for the Fourth Quarter of 2022
The Company reported net income of $99.7 million for the fourth
quarter of 2022, an increase of 26.2% compared to net income of
$79.0 million for the fourth quarter of 2021.
Our total revenues increased $5.5 million for the fourth quarter
of 2022 compared to the same period of 2021, largely driven by a
$6.4 million land sale of 6,263 acres and a $4.6 million increase
in produced water royalties, principally related to increased
volumes. These increases were partially offset by a decrease of
$3.6 million in water sales, principally due to a 15.2% decrease in
the number of barrels of sourced and treated water sold, and a
decrease of $2.9 million in oil and gas royalties. Our share of
production was approximately 21.3 thousand barrels of oil
equivalent ("Boe") per day for the fourth quarter of 2022 compared
to 22.0 thousand Boe per day for the same period of 2021. The
average realized price was $51.57 per Boe for the fourth quarter of
2022, compared to $51.53 per Boe for the comparable period of 2021.
Our revenue streams are directly impacted by commodity prices and
development and operating decisions made by our customers and vary
as the pace of development and oil demand varies.
Our total operating expenses of $28.5 million for the fourth
quarter of 2022 increased $7.2 million compared to the same period
of 2021. The increase in operating expenses is principally related
to an increase in share-based compensation expense driven by the
graded-vesting accounting method and an increase in ad valorem
taxes during the fourth quarter of 2022 compared to the same period
of 2021.
Financial Results for the Year Ended December 31,
2022
The Company reported net income of $446.4 million for the year
ended December 31, 2022, an increase of 65.3% compared to net
income of $270.0 million for the year ended December 31, 2021.
Our total revenues increased $216.5 million for the year ended
December 31, 2022 compared to the same period of 2021, largely
driven by a $166.0 million increase in oil and gas royalties, a
$17.0 million increase in water sales, and a $14.2 million increase
in produced water royalties. Our share of production was
approximately 21.3 thousand Boe per day for the year ended December
31, 2022 compared to 18.6 thousand Boe per day for the same period
of 2021. The average realized price was $60.81 per Boe for the year
ended December 31, 2022 compared to $44.14 per Boe for the
comparable period of 2021. The increases in water sales and
produced water royalties are principally due to increased volumes.
Our revenue streams are directly impacted by commodity prices and
development and operating decisions made by our customers and vary
as the pace of development and oil demand varies.
Our total operating expenses of $105.1 million for the year
ended December 31, 2022 increased $16.6 million compared to the
same period of 2021. Operating expenses for 2022 increased
principally as a result of the Company recording an expense of $8.7
million for ad valorem taxes. Additionally, transfer and treatment
expenses have increased as water sales revenue has increased 25.0%
during the year ended December 31, 2022 compared to the same period
of 2021.
Quarterly Dividend Declared
On February 10, 2023, the Board declared a quarterly cash
dividend of $3.25 per share, payable on March 15, 2023 to
stockholders of record at the close of business on March 8,
2023.
Stock Repurchase Program
On November 1, 2022, our board of directors approved a stock
repurchase program to purchase up to an aggregate of $250 million
of our outstanding common stock beginning January 1, 2023.
The Company intends to purchase stock under the repurchase
program opportunistically with funds generated by cash from
operations. This repurchase program may be suspended from time to
time, modified, extended or discontinued by the board of directors
at any time. Purchases under the stock repurchase program may be
made through a combination of open market repurchases in compliance
with Rule 10b-18 promulgated under the Securities Exchange Act of
1934, as amended, privately negotiated transactions, and/or other
transactions at the Company’s discretion, including under a Rule
10b5-1 trading plan that may be implemented by the Company, and
will be subject to market conditions, applicable legal requirements
and other factors.
Conference Call and Webcast Information
The Company will hold a conference call on Thursday, February
23, 2023 at 7:30 a.m. Central Time to discuss fourth quarter and
year end 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# 13734727. The telephone replay will be available
starting shortly after the call through March 9, 2023.
About Texas Pacific Land Corporation
Texas Pacific Land Corporation is one of the largest landowners
in the State of Texas with approximately 874,000 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 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
(unaudited)
Three Months Ended
December 31,
Years Ended
December 31,
2022
2021
2022
2021
Our share of production volumes(1):
Oil (MBbls)
864
938
3,401
3,076
Natural gas (MMcf)
3,313
3,455
13,086
12,082
NGL (MBbls)
548
511
2,208
1,705
Equivalents (MBoe)
1,964
2,024
7,791
6,795
Equivalents per day (MBoe/d)
21.3
22.0
21.3
18.6
Oil and gas royalties (in thousands):
Oil royalties
$
68,585
$
66,803
$
307,606
$
195,710
Natural gas royalties
14,679
14,564
74,866
40,964
NGL royalties
13,432
18,266
69,962
49,794
Total oil and gas royalties
$
96,696
$
99,633
$
452,434
$
286,468
Realized prices:
Oil ($/Bbl)
$
83.16
$
74.60
$
94.69
$
66.62
Natural gas ($/Mcf)
$
4.79
$
4.56
$
6.19
$
3.67
NGL ($/Bbl)
$
26.51
$
38.64
$
34.25
$
31.56
Equivalents ($/Boe)
$
51.57
$
51.53
$
60.81
$
44.14
(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
December 31,
Years Ended
December 31,
2022
2021
2022
2021
Revenues:
Oil and gas royalties
$
96,696
$
99,633
$
452,434
$
286,468
Water sales
19,207
22,783
84,725
67,766
Produced water royalties
19,566
14,934
72,234
58,081
Easements and other surface-related
income
10,746
9,760
48,057
37,616
Land sales and other operating revenue
6,491
68
9,972
1,027
Total revenues
152,706
147,178
667,422
450,958
Expenses:
Salaries and related employee expenses
11,732
8,220
41,402
40,012
Water service-related expenses
4,418
2,734
17,463
13,233
General and administrative expenses
3,492
3,291
13,350
11,782
Legal and professional fees
3,747
2,377
8,735
7,281
Ad valorem taxes
1,878
—
8,734
—
Land sales expenses
55
—
55
—
Depreciation, depletion and
amortization
3,153
4,695
15,376
16,257
Total operating expenses
28,475
21,317
105,115
88,565
Operating income
124,231
125,861
562,307
362,393
Other income (expense), net
3,922
(300
)
6,548
624
Income before income taxes
128,153
125,561
568,855
363,017
Income tax expense
28,422
46,516
122,493
93,037
Net income
$
99,731
$
79,045
$
446,362
$
269,980
Net income per share of common stock
Basic
$
12.95
$
10.21
$
57.80
$
34.83
Diluted
$
12.94
$
10.21
$
57.77
$
34.83
Weighted average number of shares of
common stock outstanding
Basic
7,698,487
7,744,868
7,721,957
7,752,027
Diluted
7,705,116
7,744,977
7,726,809
7,752,054
SEGMENT OPERATING
RESULTS
(dollars in thousands)
(unaudited)
Three Months Ended December
31,
2022
2021
Revenues:
Land and resource management:
Oil and gas royalties
$
96,696
64
%
$
99,633
68
%
Easements and other surface-related
income
9,841
6
%
8,863
6
%
Land sales and other operating revenue
6,491
4
%
68
—
%
Total land and resource management
revenue
113,028
74
%
108,564
74
%
Water services and operations:
Water sales
19,207
13
%
22,783
15
%
Produced water royalties
19,566
13
%
14,934
10
%
Easements and other surface-related
income
905
—
%
897
1
%
Total water services and operations
revenue
39,678
26
%
38,614
26
%
Total consolidated revenues
$
152,706
100
%
$
147,178
100
%
Net income:
Land and resource management
$
79,623
80
%
$
58,649
74
%
Water services and operations
20,108
20
%
20,396
26
%
Total consolidated net income
$
99,731
100
%
$
79,045
100
%
Years Ended December
31,
2022
2021
Revenues:
Land and resource management:
Oil and gas royalties
$
452,434
68
%
$
286,468
64
%
Easements and other surface-related
income
44,569
7
%
32,892
7
%
Land sales and other operating revenue
9,972
1
%
1,027
—
%
Total land and resource management
revenue
506,975
76
%
320,387
71
%
Water services and operations:
Water sales
84,725
13
%
67,766
15
%
Produced water royalties
72,234
11
%
58,081
13
%
Easements and other surface-related
income
3,488
—
%
4,724
1
%
Total water services and operations
revenue
160,447
24
%
130,571
29
%
Total consolidated revenues
$
667,422
100
%
$
450,958
100
%
Net income:
Land and resource management
$
365,041
82
%
$
208,897
77
%
Water services and operations
81,321
18
%
61,083
23
%
Total consolidated net income
$
446,362
100
%
$
269,980
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 employee share-based compensation, conversion
costs related to our Corporate Reorganization, and severance costs.
Its purpose is to highlight earnings without non-cash activity such
as share-based compensation and/or other non-recurring or unusual
items such as conversion 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 and years ended
December 31, 2022 and 2021 (in thousands):
Three Months Ended
December 31,
Years Ended
December 31,
2022
2021
2022
2021
Net income
$
99,731
$
79,045
$
446,362
$
269,980
Add:
Income tax expense
28,422
46,516
122,493
93,037
Depreciation, depletion and
amortization
3,153
4,695
15,376
16,257
EBITDA
131,306
130,256
584,231
379,274
Add:
Employee share-based compensation
2,594
—
7,583
—
Conversion costs related to our corporate
reorganization
—
—
—
2,026
Severance costs
—
—
—
6,680
Adjusted EBITDA
$
133,900
$
130,256
$
591,814
$
387,980
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222005829/en/
Contact: Investor Relations IR@TexasPacific.com
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