Texas Pacific Land Corporation (TPL) Earnings

Management highlights

• Texas Pacific Land Corporation's first quarter 2026 marked a strong start with record quarterly total revenue, net income, and free cash flow. Oil and gas royalty production averaged ~37,001 barrels of oil equivalent per day, flat sequentially and up 19% year over year. Water segment had second-best volume numbers for water sales and produced water royalties. • Crude oil prices spiking benefits the company directly through oil and gas royalties and indirectly through diversified exposure. • Macro impact on Permian Basin: marginal uptick in operator activity, oil prices could remain elevated, industry may ramp rig and frac spread activity if price signal persists. • Strong balance sheet has been a hedge against low commodity prices, and the company is fully unhedged. • Made progress with NextGen endeavors: entered into an agreement to sell a small section of land for $43 million with annual payments over 20 years and a commercial agreement to supply water for the same development; commercial activities for power generation and data centers continue to pick up speed with hyperscalers and AI labs evaluating plans in Texas. • Phase 2B 10,000-barrel-per-day produced water desalination facility nearly complete, refrigeration inspection planned for later this month, expect to begin flowing inlet water barrels in coming weeks. • Upcoming shareholder office and field tour visit in Midland on May 18, 2026. • Commented on Murray Stall's passing, noting his long-time advocacy for the company and the ongoing relationship with Horizon Kinetics.

Guidance

• With crude oil prices spiking, if the supply disruption resolves but global oil and product inventories are rapidly depleting, oil prices could remain elevated, and industry may ramp rig and frac spread activity over coming quarters. • Regarding NextGen endeavors, final investment decisions for projects representing tens of billions of dollars of capital will take time to unfold. • Commodity price sensitivities: using 2025 royalty production volumes, every $10 per barrel increase in oil realizations for ~5 million barrels of annual oil production equates to ~$50 million, and every $5 per barrel increase to NGL realization for ~3.8 million barrels of NGL production equates to an additional $17 million of annual revenue.

Segment performance

Consolidated revenues during the first quarter of 2026 were approximately $237 million, a quarterly all-time high, 12% sequential increase and 21% over last year's first quarter. Consolidated adjusted EBITDA was $181 million, up 2% sequentially and 7% over last year. Free cash flow was $136 million, up 15% sequentially and 8% over last year. Oil and gas royalty production averaged approximately 37,001 barrels of oil equivalent per day, roughly flat sequentially and up roughly 19% year over year. In the water segment, both water sales and produced water royalties are the second-best volume numbers in history. Oil and gas royalties benefit directly from spiking crude oil prices, and the company has a strong balance sheet as a hedge against low commodity prices. As of quarter end, had 5.8 net permitted wells, 9.6 net drilled but uncompleted wells, and 5.2 net completed but not producing wells, totaling 20.7 net line-of-sight wells, a 6% sequential increase. On a net normalized basis, after factoring in longer lateral lengths, line-of-sight inventory is up 11% sequentially. Royalties position strong due to strong completion activity in the Delaware and Midland Basins by various operators.

Analyst Q&A

• Q: Good morning, all, and congrats on a really strong quarter across the board. And also, Ty, thanks for your comments on Murray and Horizon, as I know many of your investors will appreciate that. Starting with, I guess, first, the land and water agreement with a gas power generation project. While I realize you may be limited in what you can say this morning, any color that you can paint around the kind of counterparty and scale of this development? It would seem to us it is safe to assume that it is not BOLT given the timeline of the development. And I would also love your thoughts on whether desalinated produced water could be part of the equation for the data center.

  A: Thanks, Derrick. Not a whole lot that we can say beyond what we put in the release and what I said in the prepared remarks. But this project is not BOLT-related. We have several projects that we are working with BOLT on, but we also have several that are not BOLT-related. I cannot comment on the size or the counterparty. This is one that will likely use brackish water to start, but we are in talks around produced water and using desalinated water at some point on this project and others.

• Q: Good morning, folks, and thank you for taking our questions. There was not a lot of color on the desalination release. I appreciate your comments at the start of the call here. I was hoping to get a bigger picture overview of where you are going. You have given some parameters on OpEx and CapEx around a theoretical 100,000-barrel-per-day facility. So what exactly are you looking for as you start up this first facility to assess the feasibility of moving forward? And then, I know you need to take a first step before you take a second step, but how would you think about funding projects? I believe you talked about like a $100 million CapEx per 100,000-barrel-per-day facility. Are there discussions going on about a potential partner to help defray those costs? Thanks.

  A: Yeah, sure. This is Robert. Thanks for the question. I will start with what the goals of the facility are, and I think we have said them for a while. We call this research and development at scale. We knew the industry had to move from pilot phasing to something that we would call commercial sizing at the smallest scale, and from the industry perspective, that is usually 10,000 barrels a day. So strictly from a functional aspect, before we get into colocation, we want to see how this operates 24/7, day in and day out, at scale. That is really going to prove the economic viability strictly from an upstream market. Now, when we look at colocation, when you start combining these desal facilities with natural gas generation and waste heat capture colocation, yes, there is great benefit for the hyperscalers from a sustainability standpoint. But also, we have to look at the colocation piece for everything we can do to lessen that upstream cost to the operator to make these commercial. We believe in desal strictly from a need from the upstream perspective, minus what we see for colocation benefit. To be determined on what commercial looks like—there are a lot of structures that we are evaluating. Some focus just on that upstream, and then the benefit of colocation as well.

• Q: Okay. I guess we will have to stay tuned throughout the year. And then, as my follow-up, touching on the legacy segments, we saw a step down in revenues in SLEM and in the Water segments from record high levels. If you strip out that one-time land revenue, it is almost flattish quarter over quarter. As we look at the trends here, would you say that 2025 was an upside aberration, or do you think the first quarter was a little bit low? And where I am going with this is, how should we think about the revenue trend across these legacy segments throughout this year, given the volatility in the last couple of quarters? Thanks.

  A: I can touch on SLEM, but Robert can start with water. On water, when you look at Q4, for the produced segment you have some accrual noise in there. But really, when you look at produced, you have to look at it more as a three-quarter trend. When you start looking at that three-quarter trend, we think that is much more reflective of the contractual and functional nature of what we have been doing to drive volumes. We are still very bullish on the produced water space. You are going to see some noise in activity levels and movement of volumes. You are going to see some accrual noise. Again, when you look at that kind of three-quarter trend, that is where we see it, and we still see excitement in the produced water space. And I would just add, on the SLEM front, I would not read too much into any single quarter. SLEM can get pretty lumpy. We may have a few big infrastructure projects hit within a quarter, and it was pretty strong last year with some of the gas pipe buildout that we were seeing. So again, I would not read too much into any one quarter on the SLEM front.

• Q: Good morning, Ty and team, and thanks for taking our questions. For my first question, I was wondering if there is any color on which direction the BOLT partnership is headed from a power generation source perspective. Would the initial phase be going down the path of a CCGT-type infrastructure, or are you thinking about something that could be more modular based? And for my second question, given all the conversations that you are having, looking out over the next five or so years, what do you think the total gigawatts deployed to data centers in the Permian might be, or asked another way, where do you see the TAM of the market potentially headed? And what type of market share could Texas Pacific Land Corporation grab given your land and water infrastructure footprint?

  A: It is still a little early to tell. We are looking at both options on a couple of different projects, depending on end-user design. I would not rule either out. On the broader outlook, it is hard to say on a total Permian basis. For us, we feel like multiple multi-gigawatt energy campuses on our acreage are viable, and that is definitely the goal. We continue to be very pleased with our progress on that front and very excited about the opportunities.