Texas Pacific Land (TPL) 3 Nov 222022 Q3 Earnings call transcript

Good morning, and welcome to Texas Pacific Land Corporation's Third Quarter 2022 Earnings Conference Call. This conference call is being recorded.

I would now like to introduce your host for today's call, Shawn Amini, Vice President, Finance and Investor Relations. Please go ahead.

Good morning. us earnings Texas conference joining third Land for XXXX quarter call. you today Pacific for Corporation's Thank Yesterday afternoon, Exchange the the filed available its company the company's released its XX-Q on the financial website with at Securities section and Investors Commission, www.texapacific.com. is Form which of results and

may a As call remarks statements. on made forward-looking reminder, conference today's include

update discussed statements our future any to differ results are cause may actual undertake light in subject Forward-looking statements events. not from forward-looking to today. those of that obligation or do risks to and uncertainties information We materially new

the For that for a more recent SEC detailed discussion refer most earnings our affect of please company's release to filings. to our factors results, the and quarter this may

non-GAAP financial and about times company SEC may financial stock measures. During refer are we measures filings. we ticker, our TPL. this earnings call, More these Please reconciliations certain will release non-GAAP at in to discussing also our contained note, and its also information by be

This Chief Financial hosted morning's questions. and some Steddum. call will Management we open Ty Chris prepared the by Executive make Officer, will conference for TPL's after Officer, Glover; which, Chief call comments, is

Now call I the to over will Ty. turn

everyone, morning, you Good Shawn. us today. thank Thanks, joining for and

outstanding activity. represents strong well-rounded water sequential continued XXXX production, net income and and across quarter-over-quarter, oil and business. the increased produced performance SLEM driven TPL source revenues quarter Third another royalty gas X% increased performance water Consolidated X% and by growing

Royalty approximately corporate record. equivalent production barrels new for a third is per the quarter of day oil XX,XXX of

has estimate X,XXX with responsible million acreage. barrels many which Permian, water on Since royalty quarter, barrels over and during recent over the completions we business sourced new XX is water we XXX treated the side, in water, million the On these over water. or of of sourced for TPL well this inception, TPL most of treated

Over saltwater disposal is generated last generated half royalty we contracted that a collect SWDs water own infrastructure. surface. we on water crosses any contracted side, royalty quarter water. produced Recall, Rather, our located approximately injected fee produce don't barrels off or on million On surface. of our we produced were operate actually into volumes the volumes on injected we that in TPL XXX of or royalty

saw we with SLEM carried for Activity over strong quarter, increases a in pipeline nice Last and large board is that year-over-year SLEM, in easements third revenues, across uptick into the wellbore performance material up sales. and easements, quarter.

last new region. sourced Permian, separate land mines. a the and heavy we mobile completion generate zero which not the support or during of Just side up XXX the mines the operating CapEx activities we is expenses amount for did quarter, same papered year. because royalty on in quarter past but And alone, highlights in-basin, traffic sand sand contracts, the will mini in Recent from developed it only reduces include help double what of These truck this us. sand ton TPL two course, every for the is nearly contracts with required extracted,

footprint and acreage every their to land of in Our stay working help front development. to vast job and overseeing with incredible do day an facilitate a managers operators needs

we've management Investments years next-generation in had specifically are the venture asset. to and over surface a dedicated alternative results. past team we've the pursue this million-acre to side, X addition on core activities our few to nearly and In for land active tasked time our bearing resources uses

an overlaps West the LLC located transmission TPL's that amount Yesterday, Samsung grid-connected viability TPL Texas, abundant surface. siting with project begin to evaluate of studies Energy on batteries we in Solar evaluating with infrastructure Preliminary to agreement announced have an throughout signed where X, TPL. begun

to TPL to enhance together projects help is these to these develop across projects projects footprint. hopefully renewables next-generation forward further to we surface, look someone TPL's collaborating and looking and encourage battery development fruition. our bring on have reliability grid could thrilled These to

progress also from our of by good coming projects to We and continue what This contracted year, solar increased solar XX% we've surface on make wind we over the the and on front. had into the year. amount wind

desirable our summary, is resource, grid and its not to unique only because subsurface space, also processing In for access, features. asset pore deposits, it facilities, exposure excellent gas rights and solar many electrical to size, contains water among connectivity surface wind but aquifers, other materials

makes and with partner having source companies scale Our with developers, collaborate the Permian employees across wide and opportunities, entrepreneurs things of on industry lot energy an engineers, at a all relationships array on these of new and producers and interesting projects. attractive for a access to leverage their to we're good us ideas. new massive extensive The and technologies conversations

everyone vote. contact I'd and filed have been I like the shareholders our to have please to the gears, review Relations. that everyone two hesitate any remind issues, materials Changing with is and meeting in If encourage weeks. questions to not annual Investor distributed materials to carefully and Proxy shareholders, or any would do SEC

to all here And want employees I the thank finally, at TPL.

of an Our proud with creating work them of while company, proactively job our serving real customers value every efforts and Their consistent for I'm are the shareholders. also performance day. amazing team and this tireless to engine our does

our quarterly I'll the call turn results. to to that, discuss With Chris over

Thanks, Ty.

quarter-over-quarter, production, while respectively, realizations and to royalty XX%, by realizations sequentially on $XXX for across crude due the higher quarter-over-quarter basis. partially and gas XX% revenue which gas was prices. and our increased revenue Crude royalty streams quarter price was revenue by Oil of XX%. natural offset of all though NGL by third XXXX declined lower driven a X% primarily oil million, NGL was sequential major up and increases Total

oil operator increased activity, was royalty production royalty to approximately quarter Reeves Third County strong which day, Loving acreage. XX% in XX,XXX barrels of sequentially driven especially by our equivalent and per

our mentioned, busy working teams and upstream on with Ty land facilitating As water very remain operators development.

tracking are in well XXXX far levels. ahead so spuds of and XXXX permits New

well this year. per net about For are XX permits, and averaging we month gross X new

on about new over averaging longer continue are X.X and also net acreage now we well permitted the our get royalty spuds, every gross XX feet Lateral wells average month. lengths For long. with XX,XXX to

on which viewed the for X.X represented refers to statuses net to wells, permits the XXXX. static sequential be this likely I'll quarter not new on as X.X XX the in we confused wells completed permitted TPL This seen by wells. is a wells that producing Well stale well note strong lapse, throughout and X.X end decline or to and activity net about basis, we've that to be net permitted permits net X.X largely removing decline wells. net DUCs, net included acreage from was of status

buyback through and active $XX approximately program repurchased shares end quarter, the was year. the million for remain authorization active million. XX,XXX intend during $XXX buyback of to the Our We the we approximately for

existing yesterday, the that take announced our expiration will addition, of the which the effect has program In end Board authorized our a we authorization of year. after repurchase at $XXX new share buyback million

As TPL's many capital of important glad of new shareholders. history, you further for long we know, and our important it this of ability buybacks believe to put an place, have capital an share returns our remain to program aspect been part and optimize allocation enhances in buybacks TPL's toolbox. We're

flow with maximize and excellent, remain amount flows a value. TPL minimal to generated Fundamentals and the fortress needs to look debt-free cash capital tremendous a high-quality, as affords and by we generate of high-margin free we sheet the at balance business continue flexibility shareholder cash robust

With questions. that, operator, we will now take

Instructions] the Derrick go from Please of comes Whitfield first question [Operator Our from Stifel. line ahead.

morning, all. And congrats operational your strong Good on update.

Thanks, Derrick.

capital X-for-X the the share proposed broadly your focus strategic priorities question, wanted on meeting, With the split you of to my share the issuance regarding annual I Could to share first the your issuance repurchase? of share in importance light and authorization. approved speak and

it a course additional share financing means the tool affect mean, Thanks, the X:X just accretive, also allows to stock potentially us value-enhancing company authorization way. look, in Yes. to and us normal Derrick. you split. provides Like an grow I a gives mentioned,

I So execute that for just to tremendous to us flexibility just and a our in strategy this that's would shareholders. optionality it continue same value additional that is gives strategy, change not add created

best strong feel about. of It's shareholders We've capital it's performance something engaged that we've good and and on that We've stewardship. advice to it, long sought got experts practices something we a on. government really from history our institute

all company moving and forward. flexibility just adding the about optionality So for it's

That to Solar sense, over to Samsung arrangement capital-light a SLEM Energy is Ty. this that And the maybe similar arrangements? shifting assume agreement. makes Should other we

that very capital-light. with in a industry optionality surface relationships. example that a correct. we've past, can't similar done that's Yes, beyond a having deals and benefit the release, in say great these I'd be also the to team the of press of I say what's going this in of too ownership the also but network is of types structure to much a it's large just

got about excited lot so. scale up, pretty So it. potential Thing's of a to

for on Chris, us Perfect. regarding net permit Could true-up you permits, of into the QX comments And the perhaps play of versus comparing you that activity a QX? QX. in sense sequential increase for in give prepared your put

Yes. watermark activity numbers think, really would board. like of levels the which high I XXXX, say across always, is that at well we from what Thanks, have looked kind the Derrick. to these seen When compare kind activity, about XQ was we've like new we of I way the as think we

numbers. so line look wells, at normalized in net this been net year gross wells, wells, And both generally when you those has with

region was QX. activity standpoint, bit at year, kind little we've above like watermark the something all And that XXX so that from or permit of have a and the a seen, in new consistently been we high including

still, look the like on at XQ slightly it's a And on is But averages, so slightly front. in XQ, basis. permitting XQ below quarter you strong very permitting it's if -- context, the on gross historical a front,

a decrease think kind and little static this everything, them, point, we really, of to permits. during at pull permits we to a stale delay, so make in it's were so But unlikely COVID hesitant into and net a at number, are I of So to there the speak. that those bit out the queue, it going pause and look older when was

queue, they'll felt way of was. into out. I'm the but at point wells really kind we it next drilled. adjustment drilled in this what in some to It's to it back just prudent was it's the work of older not a get that reasonably Again, won't we or expect those be deem is sure two. their pull year well once those that's And the that queue, you ones

That makes final if one sense. question. I ask And could

about With you near-term netbacks of see we kind the guys, for as experiencing volatility that quarterly production provide you'd year-end? And into thinking we're how result the you of guidance, the the understanding should a trajectory don't think with Waha? likely

good numbers at the to look-back to as time, a of very think on far kind alluded of of that's through front, all activity be a do trend appears. kind I the production have last that's DUCs, we when the strong, the has completions. Yes, as And the again, continued be continued as through, I mean, actual question. the levels up it production we come summer, to

look at think And the through so strong as the continued end production when that's the the being activity I going we of fairly supportive of are, year. as levels outlook continued they strong

becomes far difficult. As little more that as netbacks, a

right of to kind that think the on if at expectations, you basis of is go-forward clear Waha I it's now, some expected constraints. a forward be of differential the weaker look with kind probably

always It in Having usually of Waha between realizations through comes we've operators, than on tended said that, NYMEX. Waha. better to gas and our get kind

that would so be differentials probably number. it But a those in as of granted, big very between that to good that, look does at we NYMEX, predict. difficult of expectation But you've late. And Waha become Waha with kind and jumps, volatile it's still seen our in when

has realizations been to held ones But there's similar to past, marks. through tend true between our be kind other what in in this is two where time, of the those

would suspect that so continue. And we will

makes That for update. your thanks And Great time. sense.

Derrick. Thanks

Derrick. Thanks

Thank you.

question go from next the ahead. Please Hamed from Khorsand line Our comes Financial. of BWS

morning. Good

around do have So the increase return your that them? mines are driven was And on that those? you by had I as that Was -- per this in you own you able customers need land? those question on the move other see or you primarily barrels to Or day. sand daily first mobile

own question. for not deposits strategic sand in them. increase thanks mines. with We've have the The working was Hamed, recently developed. to our just not there just contracted We're to a the Yes, partner sand related do those. mobile production We

so strictly And mines. a owner those will royalty on be we

the stock? other then your you think be share do question had Okay. index that the was, the in, proposing And improves that splits you'll I that you're for

allow the indices in sort, hope -- consultants would I eligibility strong metrics. share things increase that would liquidity it be by be of hope The trading say, Hamed, pretty an look, But we already would it split, improvements. the far the would some we've as to banks. of had and TPL's future for index and of have analyzed that stock some and for as our

an think our the attempt not so I on for -- included in And an It's be this index. to trading. us enhancement is more any just

generally we the I already and we'll way indices, new believe ones qualify for think on of we work most to future. in our the

some you And it why? if -- be Was Okay. land this does this Any the My buying particular last the was reason market? price? reason at sold you're you that essentially mean wouldn't question just moment in selling, quarter.

I robust look, it pricing, kind sales. those the but sales, reason those I we that yes, was land made specialty No. two mean, were of mean,

processing for a cryogenic was plant. So one

for was of other the an The existing substation. expansion

to those acre robust about land, areas. to that but get able right, so And and only the we two additional for development kind facilities, infrastructure those if think were also per a not price of you attracts

like is pipeline so instance, our for that to And draw a going surface. revenue easement cryo plant, to on plant additional

think $X.XX midstream I we just draw So our that revenue continues from area. kind to plant. future, operators easement associated had particular with of cryo the to that something, in that billion And in immediately development like

that And is which in for existing operator infrastructure development. expansion very then area, also future substation, expand good power allowing their of the the just that's the to

So the would reflects I that, market keep a from wouldn't us being that buyer. say out overall and there pricing

Great. Thank Okay. you.

to session, thank of Ladies participation. like and for has reached Texas gentlemen, Pacific concluded. take you now conference opportunity The you. day. the have wonderful of to your and the the Thank Land Have Corporation would a I we question-and-answer end