Texas Pacific Land Q2 2026 Earnings Report

Texas Pacific Land EPS Results

• Actual EPS: $2.23
• Consensus EPS: $2.18
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Texas Pacific Land Revenue Results

• Actual Revenue: $246.10 million
• Expected Revenue: $249.50 million
• Beat/Miss: Missed by -$3.40 million
• YoY Revenue Growth: N/A

Texas Pacific Land Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 10:30AM ET

Texas Pacific Land (NYSE:TPL) (NYSE: TPL) is a Texas-based land management company that derives revenue from the ownership and stewardship of large tracts of land and associated mineral rights in West Texas. The company’s origins trace to 19th century land grants associated with the Texas and Pacific Railway; over time those grant holdings have been retained and managed as a standalone corporate asset base. Texas Pacific Land is publicly listed and operates as a landowner and resource manager rather than as a traditional oil and gas producer.

The company’s primary activities include management of surface rights and leasing of land for energy and other commercial uses, administration of mineral royalty interests, and provision of water and related services to industrial customers. Additional revenue streams come from grazing and agricultural leases, conservation and recreational agreements, and selective real estate dispositions and easements. A central focus of the business is protecting and enhancing the long-term value of its land and mineral estate through permitting, lease administration and land stewardship.

Texas Pacific Land’s operations are concentrated in West Texas, notably in areas of significant oil and gas activity such as the Permian Basin, where it serves energy companies, agricultural tenants and other commercial users of surface and subsurface resources. The company is run by a corporate management team and governed by a board of directors and publishes periodic reports as a publicly traded entity; further details on executive leadership and governance are available in its regulatory filings and investor materials.

Texas Pacific Land Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record second-quarter results included $246 million of revenue, $216 million of adjusted EBITDA, and $156 million of free cash flow, with revenue up 31% year over year. Oil and gas royalty production rose 20% year over year to approximately 39,700 barrels of oil equivalent per day.
• Negative Sentiment: Water sales volumes declined 19% sequentially because weak in-basin natural gas prices led operators to shift some development away from the Delaware Basin. Management expects improved gas pipeline capacity and pricing differentials to support a future shift back toward Delaware activity.
• Positive Sentiment: TPL expanded its data center and power-generation strategy by acquiring more than 10,000 acres in Shackelford and Jones counties for approximately $100 million. Management said it is in advanced discussions with hyperscalers, AI labs, and power generators involving roughly 25 gigawatts of projects and expects one or more definitive agreements in the near term.
• Positive Sentiment: The company completed construction and began commissioning its Orla Phase 2B produced-water desalination facility, which is designed to process up to 10,000 barrels per day. TPL is evaluating applications including data-center chip cooling, waste-heat recovery, freshwater sales, and potential mineral extraction from concentrated brine.
• Neutral Sentiment: TPL reaffirmed its 2026 capital expenditure guidance of $65 million to $75 million and said it is currently prioritizing cash accumulation for acquisitions and strategic investments over share repurchases, while retaining buybacks as a future option.

Presentation

[Operator]

Greetings, welcome to the Texas Pacific Land Corporation Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Shawn Amini, Vice President of Finance and Investor Relations. Please go ahead.

[Shawn Amini, VP of Finance and Investor Relations at Texas Pacific Land]

Thank you for joining us today for Texas Pacific Land Corporation second quarter 2026 earnings conference call. Yesterday afternoon, the company released its financial results and filed its Form 10-Q with the Securities and Exchange Commission, which is available on the investor section of the company's website at www.texaspacific.com. As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our recent SEC filings. During this call, we'll also be discussing certain non-GAAP financial measures.

[Shawn Amini, VP of Finance and Investor Relations at Texas Pacific Land]

More information and reconciliations about these non-GAAP financial measures are contained in our earnings release and SEC filings. Please also note, we may at times refer to our company by its stock ticker, TPL. This morning's conference call is hosted by TPL's Chief Executive Officer, Ty Glover; TPL's Chief Financial Officer, Chris Steddum; and Executive Vice President of Texas Pacific Water Resources, Robert Crain. Management will make some prepared comments, after which we'll open the call for questions. I will turn the call over to Ty.

[Ty Glover, President and CEO at Texas Pacific Land]

Good morning, everyone. Thank you for joining us today. This quarter, we delivered exceptional results across major financial and operating metrics and achieved significant milestones towards key growth initiatives. TPL generated record quarterly total revenue, net income, and free cash flow. These results were supported by record oil and gas royalty production and produced water royalty volumes. Oil and gas royalty production averaged approximately 39,700 barrels of oil equivalent per day, up 7% sequentially and 20% year-over-year. In addition, our unhedged royalty position allowed us to benefit fully from the strong oil price environment. Produced water royalty volumes were 4.9 million barrels per day during the quarter, which represents growth of 6% sequentially and 15% year-over-year, driven by strong demand for TPL's in-basin and out-of-basin pore space.

[Ty Glover, President and CEO at Texas Pacific Land]

Water sales volumes of 663,000 barrels per day represent a 19% decline sequentially and a 38% increase year-over-year. Second quarter water sales volumes have been impacted by weak in-basin natural gas prices as operators have shifted some development away from the Delaware Basin. Substantial new gas pipeline capacity enters service over the next few quarters, and we would expect some mix shift towards the Delaware as local in-basin gas price differentials improve. For SLEM, revenues of $24 million, which represents a 37% sequential increase, were driven by strong performance for pipeline and wellbore easements. With respect to our data center and power generation efforts, we disclosed that a previously announced land sale and water supply agreement was related to Project Kilby, which is a large-scale power generation facility Chevron is developing to support a customer data center in Reeves County, Texas.

[Ty Glover, President and CEO at Texas Pacific Land]

This multi-gigawatt power and data center development represents a substantial commitment by some of the largest energy and technology companies in the world; this validates the Permian as an attractive data center infrastructure hub capable of accommodating hyperscale facilities. In addition, during the quarter, we acquired over 10,000 acres of land in Shackelford and Jones County, Texas, for approximately $100 million. This region is amongst the fastest-growing data center regions in the country; this acquisition further expands our strategic data center and power generation efforts beyond the immediate Permian Basin. This land was attractive due to its contiguousness, land and water resources, access to natural gas and grid infrastructure, established fiber, and proximity to a mid-size city. We are also progressing on a number of projects with various high-quality hyperscalers and AI labs, which also includes our joint effort alongside Bolt Data and Energy.

[Ty Glover, President and CEO at Texas Pacific Land]

Deal execution requires extensive work involving many counterparties and thorough, wide-ranging diligence; our conversations revolve around multiple verticals such as land, water, aggregates, and other aspects. West Texas is rapidly becoming a dominant global hub for power and compute; it's apparent that developers and customers remain keenly motivated to expand their power and compute footholds in the regions. We will be able to provide more specific details as our commercial efforts turn into executed agreements. Turning to our produced water desalination efforts, we have completed construction and commenced commissioning on our desalination facility located in Orla, Texas, which we refer to as Phase 2B. Eventually ramping the facility to its 10,000-barrel-a-day capacity will allow us to demonstrate that produced water desalination can work at scale.

[Ty Glover, President and CEO at Texas Pacific Land]

Our desalination effort leverages our patented freeze desalination process, where we also have equipment exclusivity for oil and gas applications with one of the country's leading providers of industrial-scale process cooling solutions. In addition, this year, we will be implementing various desalination co-location studies. Our freeze desalination process will generate large volumes of ice and chilled water, which then could potentially be used by data centers for chip cooling. We are also investigating the utilization of waste heat recovery equipment to enhance our desalination process and reduce our energy consumption. There's also additional optionality to monetize both the high-spec freshwater and concentrated brine output streams from the facility.

[Ty Glover, President and CEO at Texas Pacific Land]

Desalinated produced water represents an interesting opportunity, as it is not part of the hydrologic cycle, and thus, high-spec desalinated fresh water could meet standards for irrigation, industrial cooling, rangeland rehabilitation, stream flow augmentation, and data center cooling, thereby reducing demands on existing local water resources. The concentrated brine may also enhance the economics of produced water valorization by extracting valuable minerals such as lithium. We are excited to finally have completed construction on our Phase 2 facility, as produced water desalination at scale could help significantly reduce traditional injection demands. In addition, energy supermajors and large independents, hyperscalers, and AI labs have shown strong interest related to the commercial and operational opportunities related to co-location and output water streams.

[Ty Glover, President and CEO at Texas Pacific Land]

Our Orla Phase 2 facility will provide interested parties with a tangible real-world exhibit of how we can turn an oil field waste product into something with highly positive commercial and environmental attributes. We look forward to providing more updates in the coming quarters as we operate the facility and as business discussions advance. With that, I will hand the call over to Chris.

[Chris Steddum, CFO at Texas Pacific Land]

Thanks, Ty. Consolidated revenues during the second quarter 2026 were approximately $246 million. This represents a quarterly all-time high, as well as a 4% sequential increase and a 31% increase year-over-year. Consolidated adjusted EBITDA was $216 million, which was up 19% sequentially and 30% year-over-year. Our adjusted EBITDA margin for the quarter was 88%. Free cash flow was $156 million, which was up 14% sequentially and up 20% year-over-year. Moving to our well inventory, as of quarter end, TPL had 5.6 net permitted wells, 9.5 net drilled but uncompleted wells, or commonly referred to as DUCs, and 3.4 net completed but not producing wells. That amounts to 18.4 net line of sight wells. Year-to-date, capital expenditures were $29 million.

[Chris Steddum, CFO at Texas Pacific Land]

As Ty discussed, in the second half of this year, we will be spending capital to investigate co-location cooling and waste heat capture opportunities at our Orla Phase 2B desalination facility. This spend was embedded in our original CapEx guidance at the beginning of the year, and we reaffirm the fiscal year guide of $65 million-$75 million. With that operator, we will now take questions.

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. First question comes from Derrick Whitfield with Texas Capital. Please go ahead.

[Derrick Whitfield, Analyst at Texas Capital]

Thanks. Good morning, all, and thanks for your time.

[Ty Glover, President and CEO at Texas Pacific Land]

Morning, Derrick.

[Derrick Whitfield, Analyst at Texas Capital]

My first question: I wanted to start with the surface acquisitions you made in Shackelford and Jones Counties. While a bit of a step out, it is clear to us that it was bought on more than a hunch. How would you guys frame the opportunity with this kind of build-out and this project potential and the amount of revenue streams it could involve?

[Ty Glover, President and CEO at Texas Pacific Land]

Yeah, that's a good question, Derrick. It is a little bit of a step out; we think the power and compute opportunity in West Texas is enormous and broader than just the Permian and our legacy footprint. We've been doing diligence on that property for over a year now to make sure that it specs out. That area was interesting to a compute user that we've been working with for a while now. I think we've demonstrated to the tech community that our team has the expertise to locate land, water, and gas resources, even if it's outside of our legacy footprint. I think it just adds some flexibility to the value proposition of TPL. We're excited about it. We think we can replicate it.

[Ty Glover, President and CEO at Texas Pacific Land]

I think the question about the value chain is very similar to our other properties and how we look at the oil and gas business. We want to be as involved in the project as we can while still being really capital-light. Land use, water, aggregates, just clipping coupons through the kind of the entire life cycle of that project so that we capture as much of the value chain as we possibly can.

[Derrick Whitfield, Analyst at Texas Capital]

Great. As my follow-up, I wanted to focus on the water desal, specifically water desal for chip cooling. How would you frame the depth of interest you're seeing in your conversations with hyperscalers and AI labs, given the fact that it is water additive to the hydrologic cycle? I think it's a huge selling point that you guys have in your process.

[Robert Crain, EVP at Texas Pacific Water Resources]

The interest in produced water in data center use is huge. I think it's not just one stream. When you look at it, let's start with just the consumptive piece. There still is some evaporative cooling and adiabatic assist that is water consumptive that goes into the data center, not just chip cooling but building cooling.

[Robert Crain, EVP at Texas Pacific Water Resources]

Obviously, that's your first one that everybody hits on, because it is water that's not in the hydrologic cycle. You move into something that's more specific to our technology, that we're in a lot of discussions with a couple hyperscalers and AI labs on, and that's using our freeze technology for direct chip cooling. If you look at the heat transfer that a hyperscaler uses for direct chip, it's a fraction of the heat transfer that we look at when we're getting this water down to sub 15 degrees Fahrenheit to be able to remove the salts from the water. That's another fit. All of it goes toward a water positivity or water neutrality goal. A couple other aspects that we're chasing, just to reduce that consumption on any municipal or type of traditional water sourcing that they typically use today.

[Derrick Whitfield, Analyst at Texas Capital]

Perfect. Great update, guys. Thanks.

[Operator]

Next question, Tim Rezvan with KeyBanc Capital Markets. Please go ahead.

[Tim Rezvan, Analyst at KeyBanc Capital Markets]

Thanks, folks, for taking our questions. Derrick touched on the topics of interest to me; I thought I'd follow up a little more on this acreage acquisition. I think a little bit of surprise is that you all have almost a million surface acres already. I know the opportunity set is vast on how we compute—should we be expecting potential sizable acquisitions like this in the future? I guess the idea is how much of the opportunity can you leverage off your existing footprint versus needing to buy more?

[Ty Glover, President and CEO at Texas Pacific Land]

Look, we're looking at it the same way we did when we started the water business, right? The primary objective is to develop the existing resource that we already have, but we're simultaneously looking for other opportunities. Like I mentioned, I think the opportunity set here is beyond our legacy footprint. Why let someone else capture that value? Very similar to how we've built the water business, like I said, we are looking at both options simultaneously, and I would just say, we're in advanced conversations with multiple hyperscalers, AI labs, and power generators on 25GW of projects right now. I would be disappointed if we don't announce at least one or more major definitive agreements in the near term.

[Ty Glover, President and CEO at Texas Pacific Land]

With an opportunity set like that that's growing by the week, we feel like we owe it to our shareholders to look outside of our existing footprint.

[Tim Rezvan, Analyst at KeyBanc Capital Markets]

Okay. That's good context, especially on the scale. 25GW is a big number. If I could switch gears a little bit. Produced water royalty volumes—you touched on it. It was a record in the second quarter. Looking at the sort of revenue per barrel, it was at the high end, about a little over $0.8 a barrel. Should we be modeling that to continue to kind of ramp? I mean, we know the broader trends in the business, just kind of curious how you see that trending over the next year or two.

[Ty Glover, President and CEO at Texas Pacific Land]

Well, we've got price escalators built in our existing contracts; I think pore space will become more valuable over time. I would say the one caveat is transportation royalties are typically a little less than an actual pore space injection royalty. As that mix changes, you should see that royalty kind of stay steady to increasing over time.

[Tim Rezvan, Analyst at KeyBanc Capital Markets]

Okay. Appreciate that. If I could, I would just ask one more question about your minerals business. It's the biggest revenue component but probably the least discussed segment. We saw oil tick down about 5% in the second quarter, which is a little contrary to some of the comments from large operators about pulling volumes forward into higher oil prices. Can you comment on kind of maybe what happened and maybe how you see oil volumes trending amid the rig ramp in the Permian? Thanks.

[Chris Steddum, CFO at Texas Pacific Land]

Yeah. Tim, I think there are a couple factors. One, I think I would just start by saying, I don't think the lower oil percentage is a near-term trend for us. I think this quarter and even last quarter, to some extent, was a bit unique. There's probably some accounting noise as some of our new acquisitions come online. We also just had a lot of heavy development that was occurring late last year, really throughout 2025, in areas that are pretty gas rich, including one of our other acquisitions. A couple of our acquisitions were some really high-interest wells in Culberson County that were drilled over a pretty short timeframe. I think our expectation is we were kind of mid-30% oil cuts. I do think that's going to trend back up.

[Chris Steddum, CFO at Texas Pacific Land]

If you look at it as a more normalized long-term, it should get back up +40% over time. Really more kind of something unique to TPL. The reality is, even as diversified as our royalty interests are, the way that people operate, they can park a rig and a completion crew in an area and can affect some of the mix with drilling a whole bunch of three- and four-mile laterals. The production that comes online can be significant. There are a lot of different factors that I think led to what we might see as a pretty high gas cut. I do think we will see both that oil trend back up and become a more meaningful part of the production mix on a go-forward basis.

[Tim Rezvan, Analyst at KeyBanc Capital Markets]

Okay. Appreciate the comments. Thank you.

[Chris Steddum, CFO at Texas Pacific Land]

Thanks, Tim.

[Operator]

Next question, Oliver Huang with Tudor, Pickering. Please go ahead.

[Oliver Huang, Analyst at Tudor, Pickering]

Good morning, Ty team. Thanks for taking the questions.

[Ty Glover, President and CEO at Texas Pacific Land]

Morning.

[Oliver Huang, Analyst at Tudor, Pickering]

Just wanted to hit on, I guess, thoughts around the buyback. I know there have been some royalty bolt-ons over the past 12-18 months in addition to the land acquisition here. It's been several quarters since there's been anything meaningful on the buyback front. Just trying to get a better understanding, how does this reflect your current view of where the equity sits from a valuation perspective? Is this something that's being purposefully done just to build capital for bigger near-term asks across, whether it be royalty, M&A, land, power, and desal investments?

[Chris Steddum, CFO at Texas Pacific Land]

Yeah. Right now, there's a lot of really good opportunity set, as we've seen. The Shackelford acquisition is one of those. I think one of our big thoughts when it comes to capital allocation is kind of turning those dollars toward best and highest use. We just continue to see a lot of great opportunities out there where we feel like we want to be kind of in that cash build mode for now. That's not to say that in the future, we retain the right to go out and do buybacks if that, at the time, becomes what we would view as a very attractive use of capital. It is always on our mind. We are always considering that as a way to deploy our capital.

[Chris Steddum, CFO at Texas Pacific Land]

As we sit here today in the environment that we're in right now, building cash seems like and deploying it for some of these other opportunities is kind of where we want to focus. Buybacks are always on the table and something we're constantly looking at.

[Oliver Huang, Analyst at Tudor, Pickering]

Okay, perfect. Maybe just a follow-up on desal. Apologies if I missed it earlier, but just any sort of color in terms of just initial takeaways. How has what you all seen early on just kind of changed your conviction level in terms of what next steps might be, and what should we kind of be watchful for on that front?

[Robert Crain, EVP at Texas Pacific Water Resources]

If anything, over the time, our belief that beneficial reuse and produced water desal will take hold as part of that mix only grows stronger. I think if you look at total water production, it continues to climb. It will continue to climb as you get into some of these tier two zones that just have a higher water cut. We were some of the first early adopters; that's why we are where we are and ahead of the industry as far as this facility is because we knew it was going to be part of that takeaway mix. That belief only gets stronger. What helps even strengthen that further is the interest we're seeing from the hyperscalers and the AI labs for eventually implementing this into a sourcing mix as we see the compute build out in West Texas. To note, we're done in build.

[Robert Crain, EVP at Texas Pacific Water Resources]

We're commissioning. Actually, on Monday, we will be hosting our grand opening and ribbon cutting at the facility. The interest we're seeing, not just from the operators who will be attending, legislators, regulators, but also multiple hyperscalers that will be on site with us on Monday as we commission the facility.

[Oliver Huang, Analyst at Tudor, Pickering]

Awesome. Maybe one more follow-up if I could squeeze it in. Just kind of on your earlier comments with working with the compute user in the Shackelford, Jones County area. Any sort of color as to how quickly you can recycle the opportunity set into actual revenue dollars that start to come through the financial statements?

[Ty Glover, President and CEO at Texas Pacific Land]

Repeat the last part of that question. Sorry.

[Oliver Huang, Analyst at Tudor, Pickering]

Just how quickly could we start seeing actual revenue dollars start to come through the financial statements given that specific opportunity set?

[Ty Glover, President and CEO at Texas Pacific Land]

Like I said, that's one that we've been working on for a while. We're a year into diligence. We're working with Bolt to develop that project. We've already started working with the local communities there on tax abatements and other things that are kind of like the tail end of the diligence process. That's one that I would be very disappointed if we don't have a definitive agreement to announce in the very near term. Real quick follow-up on what we see as this opportunity and how we're preparing for it. When we look at the near-term sourcing mixes that we're looking for these data centers and what we need to do to prepare for it, the water sourcing is varied. The eventual goal is to get produced water into data center usage.

[Robert Crain, EVP at Texas Pacific Water Resources]

Near term, we know we have to build out a team and build out systems for the non-potable construction water usage, the potable water that goes into the man camps, and even as far as the demand water that's used in the closed loop system. When we look at that, we know we've got to build a new division, a new team around that. Bring in folks that are the chemists of the world and these direct chip design guys, cooling design, and closed-loop systems. It's moving fast. It's moving rapidly, as Ty said. It kind of is growing by the week right now as we see the interest in West Texas compute.

[Oliver Huang, Analyst at Tudor, Pickering]

Makes sense. Thanks for the time, guys.

[Robert Crain, EVP at Texas Pacific Water Resources]

Thank you.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.

Participants

Executives

• Shawn Amini, VP of Finance and Investor Relations
• Ty Glover, President and CEO
• Chris Steddum, CFO

Analysts

• Derrick Whitfield, Analyst at Texas Capital
• Robert Crain, EVP at Texas Pacific Water Resources
• Tim Rezvan, Analyst at KeyBanc Capital Markets
• Oliver Huang, Analyst at Tudor, Pickering