Texas Pacific Land (TPL)2022-02-23 21:30Company Overview - Texas Pacific Land Corporation owns approximately 880,000 surface acres of land in West Texas and various oil and gas royalty interests across approximately 456,000 acres[11][13]. - As of December 31, 2021, the company owned 880,581 acres of surface estate and additional royalty interests under 454,671 acres of land in West Texas[94]. - The company’s stock is traded on the NYSE under the ticker symbol "TPL," with 219 registered holders as of January 31, 2022[101]. Financial Performance - For the year ended December 31, 2021, total revenues were 302.56 million in 2020[18]. - Net income for 2021 was 176.05 million in 2020[18]. - Cash flows from operating activities increased to 207.0 million in 2020, primarily due to higher oil and gas prices and production volumes[119][120]. - Operating income for the year ended December 31, 2021, was 217.26 million in 2020, indicating improved operational efficiency[125][126]. - EBITDA for the year ended December 31, 2021, was 234.06 million in 2020[153]. - Adjusted EBITDA for 2021 was 239.11 million in 2020[153]. Revenue Breakdown - Oil and gas royalty revenue for the Land and Resource Management segment was 286.47 million in 2021, up from 130.57 million in 2021, up from 125.2 million, or 64.2%, to 195.14 million in 2020[139]. - Average realized prices for oil increased to 41.13 per barrel in 2020, while natural gas prices rose to 1.24 per Mcf[142]. Investments and Capital Allocation - The company invested approximately 6.4 million allocated to electrifying water sourcing infrastructure[32]. - The company has invested in electrifying its water sourcing infrastructure to reduce dependence on fuel and improve operational efficiency[110]. - Total cash and cash equivalents as of December 31, 2021, were 19.9 million of shares and paid $85.3 million in dividends during the year ended December 31, 2021[118][124]. Governance and Corporate Structure - The Company converted from a business trust to a Delaware corporation, enhancing governance for stockholders[42]. - The board of directors was established as part of the corporate reorganization, replacing the previous governance structure of trustees[180]. - The Company has instituted a governance framework for overseeing ESG strategies, with annual reviews to assess updates or improvements[41]. - The Board has adopted a Code of Business Conduct and Ethics applicable to all members, ensuring compliance and ethical standards[205]. Internal Controls and Compliance - A material weakness in internal controls over financial reporting was identified, particularly related to accounting for income taxes[64]. - The company identified a material weakness in internal control over financial reporting related to the evaluation of historical tax returns and tax positions, which could lead to material misstatements[163]. - Deloitte & Touche LLP concluded that the company did not maintain effective internal control over financial reporting as of December 31, 2021, due to the identified material weakness[167]. - Management has proposed remediation activities, including implementing controls to evaluate the technical merits of existing tax positions on a quarterly basis[165]. Market and Economic Conditions - The Company’s revenues from oil and gas royalties are dependent on market prices, which are subject to significant fluctuations due to various factors[51]. - The Company’s land sales are subject to substantial fluctuations influenced by national and local economic conditions and development rates[53]. - Oil and gas prices rebounded in 2021, positively impacting oil and gas royalty revenues after a decline in 2020[51]. - Development activity in the Permian Basin significantly improved in 2021 compared to 2020, although it remains below pre-pandemic levels[108]. Employee and Safety Policies - The Company had 92 full-time employees as of December 31, 2021, emphasizing the importance of attracting and retaining skilled professionals[43]. - The Company aims for zero occupational injuries and has implemented safety policies compliant with OSHA standards[46]. Risks and Challenges - The company may face adverse effects from global health threats, such as COVID-19, which could lead to increased operating costs and impact earnings, cash flow, and financial condition[66]. - The Corporate Reorganization may not achieve expected strategic and financial benefits, potentially impacting business operations[67]. - The company faces risks related to stockholder activism, which could hinder business strategy execution and impact trading value[79]. - The stock price may experience significant fluctuations due to various factors, including changes in operating results and market conditions[80].