NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Description of Business Segments
Organization
Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest landowners in the State of Texas with approximately 874,000 surface acres of land in West Texas, with the majority of our ownership concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 4,000 additional net royalty acres (normalized to 1/8th) in the western part of Texas.
TPL’s income is derived primarily from oil, gas and produced water royalties, sales of water and land, easements and commercial leases of the land.
On January 11, 2021, we completed our reorganization from a business trust, Texas Pacific Land Trust (the “Trust”), organized under a Declaration of Trust dated February 1, 1888 (the “Declaration of Trust”), into Texas Pacific Land Corporation, a corporation formed and existing under the laws of the state of Delaware (the “Corporate Reorganization”).
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated financial statements herein include all adjustments which are, in the opinion of management, necessary to fairly state the financial position of the Company as of March 31, 2023 and the results of its operations and its cash flows for the three months ended March 31, 2023 and 2022, respectively. Such adjustments are of a normal nature and all intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, and accordingly these interim financial statements and footnotes should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2022. The results for the interim periods shown in this report are not necessarily indicative of future financial results.
We operate our business in two segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of strategies and objectives of TPL and provide a framework for timely and rational allocation of resources within businesses. See Note 11, “Business Segment Reporting” for further information regarding our segments.
2. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.
Cash, Cash Equivalents and Restricted Cash
We consider investments in bank deposits, money market funds, and other highly-liquid cash investments, such as U.S. Treasury bills and commercial paper, with original maturities of three months or less to be cash equivalents. Our cash equivalents are considered Level 1 assets in the fair value hierarchy.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows as of March 31, 2023 and December 31, 2022 (in thousands):
| | | | | | | | | | | | | | |
| | March 31, 2023 | | December 31, 2022 |
Cash and cash equivalents | | $ | 590,619 | | | $ | 510,834 | |
Tax like-kind exchange escrow | | 6,757 | | | 6,348 | |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | | $ | 597,376 | | | $ | 517,182 | |
Reclassifications
Certain financial information on the condensed consolidated balance sheet and condensed consolidated statement of income and total comprehensive income as of and for the three months ended March 31, 2022 has been revised to conform to the current year presentation. These revisions include a balance sheet reclassification of $454,000 of other taxes payable previously included in accounts payable and accrued expenses to ad valorem and other taxes payable and an income statement reclassification of $33,000 of property taxes previously included in general and administrative expenses to ad valorem and other taxes for the three months ended March 31, 2022.
3. Real Estate Activity
As of March 31, 2023 and December 31, 2022, TPL owned the following land and real estate (in thousands, except number of acres): | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2023 | | December 31, 2022 |
| | Number of Acres | | Net Book Value | | Number of Acres | | Net Book Value |
Land (surface rights) (1) | | 817,051 | | | $ | — | | | 817,060 | | | $ | — | |
Real estate acquired | | 57,306 | | | 109,704 | | | 57,306 | | | 109,704 | |
Total real estate situated in Texas | | 874,357 | | | $ | 109,704 | | | 874,366 | | | $ | 109,704 | |
(1)Real estate assigned through the Declaration of Trust.
There were no significant land sales or acquisitions for the three months ended March 31, 2023 or 2022.
4. Property, Plant and Equipment
Property, plant and equipment, net consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):
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| March 31, 2023 | | December 31, 2022 |
Property, plant and equipment, at cost: | | | |
Water service-related assets | $ | 128,675 | | | $ | 125,166 | |
Furniture, fixtures and equipment | 9,937 | | | 9,718 | |
Other | 598 | | | 598 | |
Total property, plant and equipment, at cost | 139,210 | | | 135,482 | |
Less: accumulated depreciation | (53,018) | | | (50,004) | |
Property, plant and equipment, net | $ | 86,192 | | | $ | 85,478 | |
Depreciation expense was $3.0 million and $3.8 million for the three months ended March 31, 2023 and 2022, respectively.
5. Oil and Gas Royalty Interests
As of March 31, 2023 and December 31, 2022, we owned the following oil and gas royalty interests (in thousands):
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| | March 31, 2023 | | December 31, 2022 |
1/16th nonparticipating perpetual royalty interests | | $ | — | | | $ | — | |
1/128th nonparticipating perpetual royalty interests | | — | | | — | |
Royalty interests acquired | | 47,928 | | | 47,928 | |
Total royalty interests, gross | | 47,928 | | | 47,928 | |
Less: accumulated depletion | | (3,208) | | | (2,903) | |
Total royalty interests, net | | $ | 44,720 | | | $ | 45,025 | |
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Acquisitions
There were no oil and gas royalty interest transactions during the three months ended March 31, 2023.
For the three months ended March 31, 2022, we acquired oil and gas royalty interests in 92 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $1.6 million, an average price of approximately $17,750 per net royalty acre.
Depletion expense was $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.
6. Share-Based Compensation
The Company grants share-based compensation to employees under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”) and to its directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan (the “2021 Directors Plan”). Share-based compensation granted to date under the plans has included restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based units “(PSUs”). Currently, all awards granted under the plans are entitled to receive dividends (which are accrued and distributed to award recipients upon vesting) or have dividend equivalent rights. Dividends and dividend equivalent rights are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited. RSUs granted under the 2021 Plan vest in one-third increments and PSUs granted under the 2021 Plan cliff vest at the end of three years if the performance metrics are achieved (as discussed further below). RSAs granted under the 2021 Directors Plan vest on the first anniversary of the award.
Incentive Plan for Employees
The maximum aggregate number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) that may be issued under the 2021 Plan is 75,000 shares, which may consist, in whole or in part, of authorized and unissued (if any), treasury shares, or shares reacquired by the Company in any manner. As of March 31, 2023, 54,718 shares of Common Stock remained available under the 2021 Plan for future grants.
The following table summarizes activity related to RSAs and RSUs under the 2021 Plan for the three months ended March 31, 2023 and 2022 (in thousands, except number of shares and units, and per share amounts):
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| | Three Months Ended March 31, |
| | 2023 | | 2022 |
| | Restricted Stock Awards | | Restricted Stock Units | | Restricted Stock Awards | | Restricted Stock Units |
| | Number of RSAs | | Weighted-Average Grant-Date Fair Value per Share | | Number of RSUs | | Weighted-Average Grant-Date Fair Value per Share | | Number of RSAs | | Weighted-Average Grant-Date Fair Value per Share | | Number of RSUs | | Weighted-Average Grant-Date Fair Value per Share |
Nonvested at beginning of period (1) | | 1,337 | | | $ | 1,252 | | | 5,612 | | | $ | 1,323 | | | 3,330 | | | $ | 1,252 | | | — | | | $ | — | |
Granted (2) | | — | | | — | | | 2,848 | | | 1,924 | | | — | | | — | | | 3,824 | | | 1,105 | |
Vested (3) | | — | | | — | | | (1,270) | | | 1,105 | | | — | | | — | | | — | | | — | |
Cancelled and forfeited | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Nonvested at end of period | | 1,337 | | | $ | 1,252 | | | 7,190 | | | $ | 1,600 | | | 3,330 | | | $ | 1,252 | | | 3,824 | | | $ | 1,105 | |
(1)The RSAs were granted on December 29, 2021: 1,993 shares vested on December 29, 2022 and 1,337 shares will vest on December 29, 2023.
(2)The RSUs were granted on February 10, 2023 and vest in one-third increments over a three-year period.
(3)Of the 1,270 shares that vested on February 11, 2023, 488 shares were surrendered by employees to the Company to settle tax withholdings.
The following table summarizes activity related to PSUs for the three months ended March 31, 2023 and 2022 (in thousands, except number of units and per share amounts):
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| | Performance Stock Units |
| | Three Months Ended March 31, |
| | 2023 | | 2022 |
| | Number of Target PSUs | | Weighted-Average Grant-Date Fair Value per Share | | Number of Target PSUs | | Weighted-Average Grant-Date Fair Value per Share |
Nonvested at beginning of period (1) | | 2,394 | | | $ | 1,355 | | | — | | | $ | — | |
Granted (2) | | 1,852 | | | 2,342 | | | 2,394 | | | 1,355 | |
Vested | | — | | | — | | | — | | | — | |
Cancelled and forfeited | | — | | | — | | | — | | | — | |
Nonvested at end of period | | 4,246 | | | $ | 1,786 | | | 2,394 | | | $ | 1,355 | |
(1)The PSUs were granted on February 11, 2022 and include 1,197 RTSR (as defined below) PSUs (based on target) with a grant date fair value of $1,605 per share and 1,197 FCF (as defined below) PSUs (based on target) with a grant date fair value of $1,105 per share. If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 2,394 additional units would be issued).
(2)The PSUs were granted on February 10, 2023 and include 926 RTSR PSUs (based on target) with a grant date fair value of $2,761 per share and 926 FCF PSUs (based on target) with a grant date fair value of $1,924 per share. If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 1,852 additional units would be issued).
Each PSU has a value equal to one share of Common Stock. The PSUs will vest three years after grant if certain performance metrics are met, as follows: 50% of the PSUs may be earned based on the Company’s relative total stockholder return (“RTSR”) over the applicable three-year measurement period compared to the XOP Index, and 50% of the PSUs may be earned based on the cumulative free cash flow per share (“FCF”) over the three-year vesting period. As the RTSR PSU is a market-based award, its grant date fair value was determined using a Monte Carlo simulation model that uses the same input assumptions as the Black-Scholes model to determine the expected potential ranking of the Company against the XOP Index, i.e. the probability of satisfying the market condition defined in the award. Expected volatility in the model was estimated
based on the volatility of historical stock prices over a period matching the expected term of the award. The risk-free interest rate was based on U.S. Treasury yield constant maturities for a term matching the expected term of the award.
Equity Plan for Non-Employee Directors
The maximum aggregate number of shares of Common Stock that may be issued under the 2021 Directors Plan is 10,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of March 31, 2023, 8,815 shares of Common Stock remained available under the 2021 Directors Plan for future grants.
The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the three months ended March 31, 2023 and 2022 (in thousands, except number of shares and per share amounts):
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| | Restricted Stock Awards |
| | Three Months Ended March 31, |
| | 2023 | | 2022 |
| | Number of RSAs | | Weighted-Average Grant-Date Fair Value per Share | | Number of RSAs | | Weighted-Average Grant-Date Fair Value per Share |
Nonvested at beginning of period | | 699 | | | $ | 1,281 | | | — | | | $ | — | |
Granted (1) | | 486 | | | 2,344 | | | 680 | | | 1,249 | |
Vested | | (595) | | | 1,249 | | | — | | | — | |
Cancelled and forfeited | | — | | | — | | | (85) | | | 1,249 | |
Nonvested at end of period | | 590 | | | $ | 2,189 | | | 595 | | | $ | 1,249 | |
(1)The RSAs were granted on January 1, 2023 and will vest on the first anniversary of the grant.
Share-Based Compensation Expense
The following table summarizes our share-based compensation expense by line item in the condensed consolidated statements of income (in thousands):
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| Three Months Ended March 31, | | |
| 2023 | | 2022 | | | | |
Salaries and related employee expenses (employee awards) | $ | 2,156 | | | $ | 1,319 | | | | | |
General and administrative expenses (director awards) | 317 | | | 186 | | | | | |
Total share-based compensation expense (1) | $ | 2,473 | | | $ | 1,505 | | | | | |
(1)The Company recognized a tax benefit of $0.5 million and $0.3 million related to share-based compensation for the three months ended March 31, 2023 and 2022, respectively.
As of March 31, 2023, there was $17.1 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under existing share-based plans expected to be recognized over a weighted average period of 1.7 years.
7. Income Taxes
The calculation of our effective tax rate is as follows for the three months ended March 31, 2023 and 2022 (in thousands, except percentages):
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| Three Months Ended March 31, | | |
| 2023 | | 2022 | | | | |
Income before income taxes | $ | 110,341 | | | $ | 124,389 | | | | | |
Income tax expense | $ | 23,773 | | | $ | 26,489 | | | | | |
Effective tax rate | 21.5 | % | | 21.3 | % | | | | |
For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items.
8. Earnings Per Share
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares outstanding during the period. Diluted EPS is computed based upon the weighted average number of shares outstanding during the period plus unvested restricted stock and other unvested awards granted pursuant to our incentive and equity compensation plans. The computation of diluted EPS reflects the potential dilution that could occur if all outstanding awards under the incentive and equity compensation plans were converted into shares of Common Stock or resulted in the issuance of shares of Common Stock that would then share in the earnings of the Company. The number of dilutive securities is computed using the treasury stock method.
The following table sets forth the computation of EPS for the three months ended March 31, 2023 and 2022 (in thousands, except number of shares and per share data):
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| Three Months Ended March 31, | | |
| 2023 | | 2022 | | | | |
Net income | $ | 86,568 | | | $ | 97,900 | | | | | |
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Basic earnings per share: | | | | | | | |
Weighted average shares outstanding for basic earnings per share | 7,693,084 | | | 7,741,365 | | | | | |
Basic earnings per share | $ | 11.25 | | | $ | 12.65 | | | | | |
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Diluted earnings per share: | | | | | | | |
Weighted average shares outstanding for basic earnings per share | 7,693,084 | | | 7,741,365 | | | | | |
Effect of dilutive securities: | | | | | | | |
Incentive and equity compensation plans | 5,314 | | | 1,345 | | | | | |
Weighted average shares outstanding for diluted earnings per share | 7,698,398 | | | 7,742,710 | | | | | |
Diluted earnings per share | $ | 11.24 | | | $ | 12.64 | | | | | |
Restricted stock is included in the number of shares of Common Stock issued and outstanding, but omitted from the basic EPS calculation until such time as the shares of restricted stock vest. Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the three months ended March 31, 2023 and March 31, 2022.
9. Commitments and Contingencies
Litigation
Management is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Company’s financial condition, results of operations or liquidity as of March 31, 2023.
Prior to January 1, 2022, ad valorem taxes with respect to our historical royalty interests were paid directly by third parties pursuant to an existing arrangement. Since the completion of our Corporate Reorganization, we have received notice
from certain third parties that they no longer intend to pay the ad valorem taxes related to such historical royalty interests. In order to protect the historical royalty interests from any potential tax liens for non-payment of ad valorem taxes, we have accrued and/or paid such ad valorem taxes since January 1, 2022. While we intend to seek reimbursement from the third parties for such taxes, we are unable to estimate the amount and/or likelihood of such reimbursement, and accordingly, no loss recovery receivable has been recorded as of March 31, 2023.
Ongoing Arbitration with an Operator.
As part of an ongoing arbitration between TPL and an operator with respect to underpayment of oil and gas royalties resulting from improper deductions of post-production costs for periods before and through April 2022, the operator has agreed to pay $8.7 million to TPL. This amount has been recorded as a receivable and included in oil and gas royalty revenue in the condensed consolidated income statement for the three months ended March 31, 2023.
10. Changes in Equity
The following tables present changes in our equity for the three months ended March 31, 2023 and 2022 (in thousands, except shares and per share amounts):
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| Common Stock | | Treasury Stock | | Additional Paid-in Capital | | Accum. Other Comp. Income (Loss) | | Retained Earnings | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | |
For the three months ended March 31, 2023: | | | | | | | | | | | | |
Balances as of December 31, 2022 | 7,695,679 | | | $ | 78 | | | 60,477 | | | $ | (104,139) | | | $ | 8,293 | | | $ | 2,516 | | | $ | 866,139 | | | $ | 772,887 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 86,568 | | | 86,568 | |
Dividends paid — $3.25 per share of common stock | — | | | — | | | — | | | — | | | — | | | — | | | (25,061) | | | (25,061) | |
Share-based compensation, net of forfeitures | 1,756 | | | — | | | (1,756) | | | 3,033 | | | (560) | | | — | | | (103) | | | 2,370 | |
Repurchases of common stock | (3,627) | | | — | | | 3,627 | | | (6,749) | | | — | | | — | | | — | | | (6,749) | |
Shares exchanged for tax withholdings | (488) | | | — | | | 488 | | | (939) | | | — | | | — | | | — | | | (939) | |
Periodic pension costs, net of income taxes of $6 | — | | | — | | | — | | | — | | | — | | | (25) | | | — | | | (25) | |
Balances as of March 31, 2023 | 7,693,320 | | | $ | 78 | | | 62,836 | | | $ | (108,794) | | | $ | 7,733 | | | $ | 2,491 | | | $ | 927,543 | | | 829,051 | |
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| Common Stock | | Treasury Stock | | Additional Paid-in Capital | | Accum. Other Comp. Income (Loss) | | Retained Earnings | | Total Equity |
| Shares | | Amount | | Shares | | Amount | | | | |
For the three months ended March 31, 2022: | | | | | | | | | | | | | | |
Balances as of December 31, 2021 | 7,744,695 | | | $ | 78 | | | 11,461 | | | $ | (15,417) | | | $ | 28 | | | $ | (1,007) | | | $ | 668,029 | | | $ | 651,711 | |
Net income | — | | | — | | | — | | | — | | | — | | | — | | | 97,900 | | | 97,900 | |
Dividends paid — $3.00 per share of common stock | — | | | — | | | — | | | — | | | — | | | — | | | (23,224) | | | (23,224) | |
Share-based compensation, net of forfeitures | 595 | | | — | | | (595) | | | 800 | | | 1,477 | | | — | | | (796) | | | 1,481 | |
Periodic pension costs, net of income taxes of $2 | — | | | — | | | — | | | — | | | — | | | 8 | | | — | | | 8 | |
Balances as of March 31, 2022 | 7,745,290 | | | $ | 78 | | | 10,866 | | | $ | (14,617) | | | $ | 1,505 | | | $ | (999) | | | $ | 741,909 | | | $ | 727,876 | |
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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 which became effective 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 implemented by the Company, and will be subject to market conditions, applicable legal requirements and other factors.
11. Business Segment Reporting
During the periods presented, we reported our financial performance based on the following segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of our strategies and objectives and provide a framework for timely and rational allocation of resources within businesses. We eliminate any inter-segment revenues and expenses upon consolidation.
The Land and Resource Management segment encompasses the business of managing our approximately 874,000 surface acres of land and our oil and gas royalty interests in West Texas, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases and land and material sales.
The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment primarily consist of revenue generated from sales of sourced and treated water as well as revenue from produced water royalties.
Segment financial results were as follows for the three months ended March 31, 2023 and 2022 (in thousands):
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| | Three Months Ended March 31, | | |
| | 2023 | | 2022 | | | | |
Revenues: | | | | | | | | |
Land and resource management | | $ | 104,023 | | | $ | 113,347 | | | | | |
Water services and operations | | 42,339 | | | 33,988 | | | | | |
Total consolidated revenues | | $ | 146,362 | | | $ | 147,335 | | | | | |
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Net income: | | | | | | | | |
Land and resource management | | $ | 65,343 | | | $ | 81,156 | | | | | |
Water services and operations | | 21,225 | | | 16,744 | | | | | |
Total consolidated net income | | $ | 86,568 | | | $ | 97,900 | | | | | |
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Capital expenditures: | | | | | | | | |
Land and resource management | | $ | 175 | | | $ | 122 | | | | | |
Water services and operations | | 3,598 | | | 2,883 | | | | | |
Total capital expenditures | | $ | 3,773 | | | $ | 3,005 | | | | | |
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Depreciation, depletion and amortization: | | | | | | | | |
Land and resource management | | $ | 618 | | | $ | 536 | | | | | |
Water services and operations | | 2,786 | | | 3,590 | | | | | |
Total depreciation, depletion and amortization | | $ | 3,404 | | | $ | 4,126 | | | | | |
The following table presents total assets and property, plant and equipment, net by segment as of March 31, 2023 and December 31, 2022 (in thousands):
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| March 31, 2023 | | December 31, 2022 |
Assets: | | | |
Land and resource management | $ | 814,927 | | | $ | 735,193 | |
Water services and operations | 140,324 | | | 142,234 | |
Total consolidated assets | $ | 955,251 | | | $ | 877,427 | |
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Property, plant and equipment, net: | | | |
Land and resource management | $ | 5,904 | | | $ | 5,998 | |
Water services and operations | 80,288 | | | 79,480 | |
Total consolidated property, plant and equipment, net | $ | 86,192 | | | $ | 85,478 | |
12. Oil and Gas Producing Activities
We measure our share of oil and gas produced in barrels of equivalency (“Boes”). One Boe equals one barrel of crude oil, condensate, NGLs (natural gas liquids) or approximately 6,000 cubic feet of gas. As of March 31, 2023 and 2022, our share of oil and gas produced was approximately 20.9 and 20.8 thousand Boes per day, respectively. Reserves related to our royalty interests are not presented because the information is unavailable.
There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where we have a royalty interest. The number of DUC wells is determined using uniform drilling spacing units with pooled interests for all wells awaiting completion. We have identified 565 and 584 DUC wells subject to our royalty interest as of March 31, 2023 and December 31, 2022, respectively.
13. Subsequent Events
We evaluated events that occurred after the balance sheet date through the date these financial statements were issued, and the following events that met recognition or disclosure criteria were identified:
Dividends Declared
On May 2, 2023, our board of directors declared a quarterly cash dividend of $3.25 per share, payable on June 15, 2023 to stockholders of record at the close of business on June 8, 2023.