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Texas Pacific Land 8-K Report, Financial Results (Feb 21, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 21, 2024
Period End
February 21, 2024
Security
TPL
In the record · 2020–202610-K610-Q188-K72

TPL filed 6 annual reports (10-K), 18 quarterly reports (10-Q) and 72 current reports (8-K) between 2020 and 2026.

  1. Change in control8-K · Jan ’21Jan ’21
  2. Leadership change8-K · Aug ’23Aug ’23
  3. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.

Texas Pacific Land Corporation (NYSE: TPL) reported fourth-quarter and full-year 2023 results in a press release furnished as Exhibit 99.1 to this Form 8-K.

For the fourth quarter, net income was $113.1 milliona, or $14.73 per diluted share, on revenues of $166.7 million, compared with net income of $99.7 million on revenues of $152.7 million in the fourth quarter of 2022. Royalty production of 26.3 thousand Boe per day was the highest quarterly level in the company's history. For full-year 2023, net income was $405.6 million, or $52.77 per diluted share, down 9.1% from $446.4 million in 2022, and revenues were $631.6 million, compared with $667.4 million in 2022.

Average realized oil and gas prices fell to $42.58b per Boe from $60.81 per Boe, and the company said growth in water and surface-related businesses helped offset lower commodity prices. The filing shows that water sales and produced water royalties rose $39.5 million for the year, and easements and other surface-related income rose $22.9 million. Full-year legal and professional fees increased to $31.5 million from $8.7 million, and total operating expenses rose $40.4 million.

The company also recovered $10.1 millionc from an operator under an arbitration over improper post-production cost deductions. The Board declared a quarterly cash dividend of $3.50 per share, payable March 15, 2024, up from the $3.25 paid in December 2023. The Nominating and Corporate Governance Committee is evaluating parameters for a stockholder right to call a special meeting, with a final recommendation to the Board planned before the 2024 proxy materials are released.

02—Key points

Key Highlights

  1. Q4 2023 net income of $113.1 million ($14.73 per diluted share) on revenues of $166.7 million, versus $99.7 million and $152.7 million in Q4 2022.
  2. Full-year 2023 net income of $405.6 million ($52.77 per diluted share), down 9.1% from $446.4 million, on revenues of $631.6 million versus $667.4 million.
  3. Record Q4 royalty production of 26.3 thousand Boe per day, versus 21.3 thousand in Q4 2022; full-year production averaged 23.5 thousand Boe per day.
  4. Average realized price fell to $42.58 per Boe for 2023 from $60.81 in 2022, reflecting lower commodity prices.
  5. Water sales rose to $112.2 million for 2023 from $84.7 million, and easements and other surface-related income rose to $70.9 million from $48.1 million.
  6. Adjusted EBITDA was $541.4 million and free cash flow was $415.5 million for 2023; Q4 free cash flow was $116.3 million.
  7. Board declared a quarterly dividend of $3.50 per share payable March 15, 2024, and the company repurchased $42.4 million of common stock in 2023.

03—Questions

Frequently Asked Questions

  1. Why did net income decline for the full year 2023 even though quarterly results were strong?

    Full-year net income was $405.6 million, down 9.1% from $446.4 million in 2022. The filing attributes the decline mainly to lower average realized prices, which fell to $42.58 per Boe from $60.81, and to operating expenses that rose $40.4 million, driven by legal and professional fees and water service-related expenses. Oil and gas royalty revenue, excluding an $8.7 million recovery, decreased $103.7 million. Growth in water and surface-related income partially offset these declines.

  2. What was the $10.1 million recovery mentioned in the filing?

    As part of an ongoing arbitration with an operator over underpayment of royalties from improper deductions of post-production costs for production through June 2023, the operator agreed to pay TPL $10.1 million. This comprised $8.7 million of unpaid oil and gas royalties, $0.9 million of interest and $0.5 million of damages. The $8.7 million royalty portion is included in 2023 oil and gas royalty revenue.

  3. What is the dividend outlook for investors?

    On February 13, 2024, the Board declared a quarterly cash dividend of $3.50 per share, payable March 15, 2024 to stockholders of record at the close of business on March 1, 2024. The company paid $3.25 per share in December 2023. Full-year 2023 dividends totaled $100.0 million, comprised of $13.00 per share in regular dividends.

  4. What is the company considering regarding stockholder rights?

    On February 12, 2024, the Nominating and Corporate Governance Committee recommended that the Board consider including in the 2024 proxy materials a proposal granting stockholders the right to call a special meeting. The company is evaluating the appropriate parameters for such a right and intends to make a final recommendation to the full Board before the 2024 proxy materials are released.

  5. Where is growth coming from beyond oil and gas royalties?

    Water sales rose to $112.2 million in 2023 from $84.7 million, produced water royalties rose to $84.3 million from $72.2 million, and easements and other surface-related income rose to $70.9 million from $48.1 million. The filing states that the company made a decision to incur higher water service-related expenses to meet increased customer demand for water on shorter time commitments, which drove higher water sales revenue and operating income in 2023.

04—Continue

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