Texas Pacific Land (US:TPL)2024-02-21 21:23Financial Performance - Total revenues for 2023 were $631,595,000, a decrease of 5.4% from $667,422,000 in 2022[21] - Net income for 2023 was $405,645,000, down 9.1% from $446,362,000 in 2022[21] - The Land and Resource Management segment generated total revenue of $432,105,000 in 2023, accounting for 69% of consolidated revenue[28] - Water Services and Operations segment revenue for 2023 was $199,490,000, representing 31% of consolidated revenue, up from $160,447,000 (24%) in 2022 and $130,571,000 (29%) in 2021[35] - Adjusted EBITDA for 2023 was $541.4 million, down from $591.8 million in 2022, a decrease of 8.5%[176] - Free Cash Flow for 2023 was $415.5 million, compared to $451.6 million in 2022, reflecting a decline of 8.0%[176] Revenue Sources - Oil and gas royalties accounted for 57% of the Land and Resource Management segment revenue in 2023, totaling $357,394,000[28] - Revenue from easements and other surface-related income increased to $67,905,000 in 2023, representing 11% of total segment revenue[28] - Water sales increased by 21.8% in volume during 2023 compared to 2022, contributing to the revenue growth[36] - Oil and gas royalty revenue decreased by 21.0% to $357.4 million for the year ended December 31, 2023, with average realized prices declining 30.0% to $42.58 per Boe[162] - Water sales revenue increased by 32.4% to $112.2 million in 2023, driven by a 21.8% increase in water sales volumes[170] - Produced water royalties increased to $84.3 million in 2023 from $72.2 million in 2022, reflecting higher produced water volumes[171] Operational Highlights - The number of drilled but uncompleted (DUC) wells under the company's royalty interest increased to 675 in 2023 from 584 in 2022[30] - The average total equivalent price for oil and gas was $42.58 per barrel of oil equivalent (Boe) in 2023, a decrease of 30.0% from $60.81 per Boe in 2022[29] - The average WTI Cushing price per barrel in 2023 was $77.58, down from $94.90 in 2022, while the Henry Hub average price per mmbtu decreased from $6.45 to $2.53[133] - Oil production volumes increased to 3,701 MBbls in 2023 from 3,401 MBbls in 2022, representing an 8.8% increase[164] - The average monthly horizontal permits in the Permian Basin decreased to 499 in 2023 from 627 in 2022, and the average monthly horizontal wells drilled fell to 422 from 511[133] - The average weekly horizontal rig count in the Permian Basin was 323 in 2023, slightly up from 318 in 2022[133] Strategic Initiatives - The company is exploring new opportunities in renewable energy and technology, including carbon capture and bitcoin mining facilities[26] - The company has a long-term strategy focused on optimizing cash flow margins with low ongoing capital expenditure requirements[16] - The company invested $15.2 million in TPWR projects and acquired groundwater rights for $3.8 million to enhance water sourcing assets[37] - A saltwater disposal easement was acquired for $17.6 million, covering approximately 49,000 acres, providing future disposal opportunities[37] Risk Factors - The business is subject to fluctuations in oil and gas market prices, which can impact revenues from oil and gas royalties[56] - Future revenue may be negatively impacted by industry trends such as decarbonization and shifts towards renewable energy sources, affecting demand for oil and natural gas[62] - Cybersecurity threats pose a significant risk to the company's operations, as reliance on digital technologies increases vulnerability to attacks and data breaches[63] - Supply chain risks, including material shortages and price increases due to macroeconomic conditions, could adversely affect the company's revenues and operating costs[67] - The evolving regulatory and legal environment may impact the company's operations and financial performance, necessitating ongoing adjustments to compliance strategies[84] Corporate Governance - The company completed its Corporate Reorganization from a business trust to a corporation on January 11, 2021, changing its name from Texas Pacific Land Trust to Texas Pacific Land Corporation[200] - Rhys J. Best became the Chair of the Board on November 10, 2023, and no longer serves on any committees of the Board[202] - General Donald G. Cook has extensive governance experience and served on the board of Burlington Northern Santa Fe Railroad during its sale to Berkshire Hathaway in a transaction valued at $44 billion[203] - Barbara J. Duganier has been a member of the Board since January 11, 2021, and previously held various leadership positions at Accenture, including Global Chief Strategy Officer[207] - Donna E. Epps served as an attest Partner at Deloitte LLP from 1998 through 2003 and has over 30 years of experience in risk and financial advisory[209] - Karl F. Kurz has extensive private equity experience and previously served as Chief Operating Officer at Anadarko Petroleum Corporation[211] Environmental and Safety Measures - The company reported zero spills of produced water in 2023 and 2022, highlighting its focus on environmental safety[48] - The company has spent $15.8 million on electric infrastructure to reduce costs and emissions, reflecting its commitment to sustainability[48] - The company has established a comprehensive cybersecurity program aligned with the NIST Cybersecurity framework to manage material risks from cybersecurity threats[96] - The company conducts annual external penetration testing and disaster recovery testing to evaluate its cybersecurity risk program[99] - The company has implemented annual information security training for all employees to raise awareness of potential cybersecurity threats[106]