Core Insights - The article discusses the recent earnings call for Henry Schein, Inc (NASDAQ: HSIC), a healthcare distribution company, highlighting the author's perspective on investment strategies and market conditions [1]. Company Overview - Henry Schein, Inc is positioned in the healthcare distribution sector, focusing on building financial assets for investors nearing retirement [1]. Investment Strategies - The author emphasizes the importance of having both long-term and short-term trading strategies, aiming for proper execution of trading plans and achieving absolute investing results [1]. Market Conditions - The article reflects an interest in utilizing inverse ETFs to capitalize on market declines, indicating a proactive approach to market volatility [1].

Financial Data and Key Metrics Changes - The company reported a significant increase in Marcellus upstream cash flows, which were up over 200% sequentially due to a 58% increase in production and a 70% increase in realized pricing [5] - Midstream cash flows also increased by 140% sequentially on higher throughput volumes [5] - The company plans to allocate total capital expenditures of $9 million to $12 million for 0.5 net wells in Texas and Alberta for the remainder of the year [5] Business Line Data and Key Metrics Changes - The Marcellus business demonstrated strong performance, with substantial cash flow increases attributed to both upstream and midstream operations [6][7] - The company has a remaining undeveloped inventory of approximately 500,000 completed lateral length feet gross, expected to be developed starting late next year or early in 2027 [7] - In Texas, the Barnett type curve is delivering above a 15% rate of return down to $55 WTI [8] Market Data and Key Metrics Changes - The company is approximately 45% hedged on forecasted PDP oil production for the remainder of the year at just over $71 WTI and approximately 30% hedged for gas at $3.33 NYMEX [8] Company Strategy and Development Direction - The company is focused on minimizing near-term activity in light of current oil price volatility while maintaining its dividend [5][6] - The strategy includes limiting capital spending in Texas to leasehold obligations, with plans for two gross wells over the remainder of the year [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong balance sheet and projected cash flows, positioning it well to capitalize on attractive opportunities [6] - The operator's stated plans for development are subject to change based on gas market conditions and other factors [7] Other Important Information - The first two horizontal Manville wells in Canada were completed in the first quarter, with production sales commencing in April [11] Q&A Session Summary Question: Details on the first two wells in Alberta - Management indicated that oil and gas started flowing to sales in early April, with ongoing efforts to install artificial lift and tie down facilities, expecting a more definitive update in the next quarterly report [15][16]

Financial Data and Key Metrics Changes - For Q1 2025, the company generated GAAP net investment income of $0.35 per share and core net investment income of $0.37 per share, which excludes estimated excise taxes [6] - Net asset value per share decreased by $0.21 during the quarter, primarily due to company-specific write-downs in the loan portfolio and a reduction of spillover income [6] - The company has paid $295 million in dividends since its IPO, representing $17.9 per share to an investor in the IPO [6] Business Line Data and Key Metrics Changes - The investment portfolio at fair value increased to $991.1 million across 110 portfolio companies, up from $953.5 million across 105 companies as of December 31, 2024 [7] - During Q1, the company invested $46.7 million in seven new portfolio companies and had $8.7 million in other investment activity at par [7] - 90% of the loans were secured, and 91% were priced at floating rates, with an average loan per company of $9.4 million [7][8] Market Data and Key Metrics Changes - The company noted that 52% of the portfolio is rated two or on or ahead of plan, while 21% is marked at an investment category of three or below [8] - Loans to five portfolio companies are on non-accrual, comprising 6.7% of the total cost and 4% of the fair value of the total loan portfolio, representing a decrease from the prior quarter [8] Company Strategy and Development Direction - The company plans to draw new leverage under the SBIC III license to continue funding qualifying portfolio company investments [9] - The company aims to grow the portfolio to over $1 billion, with potential for more than $10 million in equity gains by year-end [11] Management's Comments on Operating Environment and Future Outlook - Management expects new loan originations to be offset by loan repayments for the remainder of Q2 2025, indicating a flat portfolio [11] - The management expressed optimism about the return of M&A activity, which was temporarily disrupted due to tariff-related uncertainties [20][50] Other Important Information - The company issued $75 million in aggregate principal amount of 7.25% notes due April 1, 2030, to repay the bank facility [9] - The company has received a green light letter from the Small Business Administration for Stellus Capital SBIC III, which is a significant step in the licensing process [10] Q&A Session Summary Question: Impact of first quarter originations on interest income - Management indicated that the average portfolio in Q1 was higher than in Q4, which should lead to a pickup in yield for Q2 [15][16] Question: Pipeline status and lending opportunities - Management noted that the pipeline is slower compared to three months ago, but they expect interesting opportunities to close in the upcoming quarters [19][20] Question: Trajectory of net investment income (NII) to cover dividends - Management acknowledged that NII is currently less than the dividend but expects to be in a good position by the end of the year due to potential equity co-investments [23][24] Question: Trade education acquisition restructuring - Management confirmed that the business was restructured and recapitalized satisfactorily, expecting it to perform well moving forward [27][28] Question: Logic behind issuing fixed-rate debt - Management explained that the issuance was necessary to retire maturing bonds and to have some unsecured debt in the capital stack [34][35] Question: Future issuance of unsecured debt - Management indicated that more unsecured debt will be needed before the maturity of existing bonds, with the magnitude still being determined [54]

Financial Data and Key Metrics Changes - The company reduced net debt by $135 million, supported by higher than expected adjusted free cash flow and a non-core asset sale generating $20.5 million [6][10] - Lease operating expenses (LOE) decreased from $121 million in Q4 2024 to an anticipated $115 million per quarter for the remainder of 2025 [8] - General and administrative (G&A) expenses are projected to be below $22 million per quarter for 2025, down from slightly over $23 million in Q4 2024 [8] Business Line Data and Key Metrics Changes - First quarter production volumes were driven by 23 turn-in-line wells, with 21 located in the Southern Delaware [6] - The company achieved a 30% year-over-year improvement in capital efficiency in the Delaware Basin [12] Market Data and Key Metrics Changes - The company hedged 90% of its oil at $70.61 per barrel WTI for the remainder of the year, ensuring returns and reducing risk [13] - The company anticipates generating approximately $265 million in adjusted free cash flow for 2025 [13] Company Strategy and Development Direction - The company shifted focus from acquisitions to optimizing its asset base, successfully reducing costs and enhancing efficiencies [7][9] - Capital allocation is prioritized towards low breakeven packages, with a focus on maximizing cash flow and debt repayment [10][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full year outlook due to high returns expected from upcoming completions and recent cost reductions [9][11] - The company is prepared to adjust activity levels in response to market conditions, with no long-term rig or completion contracts extending beyond early 2026 [14][15] Other Important Information - The company has implemented advanced drilling techniques, such as simulfrac, to improve efficiency and reduce breakeven costs [12][14] - A non-cash impairment was noted, with expectations of a couple hundred million dollars in the next quarter if oil prices remain stable [40][41] Q&A Session Summary Question: Maintenance capital outlook with recent efficiencies - Management plans to maintain flat production year-over-year and aims to remain free cash flow positive, with potential savings of nearly $90 million from reduced service costs [21][22] Question: Cost initiatives and LOE self-help - LOE is expected to be in the range of $110 million to $115 million per quarter for 2025, driven by reduced failure rates and lower workover costs [23][25] Question: Hedging strategy for future years - The company plans to continue layering on hedges as market conditions allow, aiming to lock in free cash flow generation and debt reduction [30][31] Question: Production trajectory and CapEx for 2026 - The 2026 program is estimated to be flat year-over-year for both volume and capital, with flexibility to adapt based on market conditions [33][34] Question: Potential for future pricing weakness and rig upgrades - Management sees opportunities to capture cost efficiencies and improve performance as contracts cycle through [38][39] Question: Non-cash impairments and inventory impact - Non-cash impairments are expected to continue if oil prices remain stable, but this does not affect the underlying reserves [40][41] Question: Breakeven analysis and asset sales - Corporate breakeven is projected to decrease to around $53 per barrel, with ongoing evaluations for additional asset sales [44][48]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $90 million with a margin of 11% for the first quarter [9] - Adjusted operating earnings were $0.68 per share, with free cash flow expected to be lower than the previous quarter due to timing issues [10][9] - The company returned nearly $40 million in cash to shareholders, including an $18 million dividend and $20 million in share repurchases [8] Business Line Data and Key Metrics Changes - The company faced operational challenges in North America, impacting financial performance by approximately $10 million [11] - Planned maintenance outage costs increased by $9 million due to major outages at specific mills [13] - Volume decreased by 30 million, primarily due to seasonally weak demand in Latin America and operational challenges in North America [12] Market Data and Key Metrics Changes - In Europe, demand decreased by 7% year-over-year, while Latin America saw a 3% increase in demand, mainly driven by Brazil [17] - North American apparent demand was down about 1% year-over-year, influenced by higher imports [17] - The company anticipates real demand to decline by 3% to 4% for the year, with domestic industry supply reduced by 10% due to mill closures [18] Company Strategy and Development Direction - The company plans to leverage its global footprint to improve product mix and customer service in North America [19] - A focus on reducing costs and improving product mix is emphasized, particularly in the European market [23] - The company aims for a significantly better adjusted EBITDA performance in the second half of the year, driven by lower maintenance costs and improved operations [20] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about a global economic slowdown and potential inflation risks on raw materials and transportation [24] - The company is well-positioned to manage through tariff uncertainties, with over 90% of raw materials sourced locally [26] - Future capital allocation strategies will focus on maintaining a strong financial position while investing in business growth [28] Other Important Information - The company has reduced its debt significantly, with a leverage ratio now at 1.1 times, and has no major maturities until 2027 [14] - A seamless CEO and CFO succession plan is in place as the current CEO prepares for retirement [31] Q&A Session Summary Question: Can you provide more detail on the operational issues? - The operational issues were primarily reliability problems at the Ticonderoga and Eastover mills, with an intermittent issue expected to be resolved soon [37] Question: How do you expect to recover orders in the third quarter? - The company anticipates a benefit of less than $10 million from recovering orders that were pushed into the third quarter due to operational challenges [39] Question: What upgrades are being made at the Saia mill? - Investments in new capabilities at the Saia mill will allow entry into specialty roll segments, improving product mix [50] Question: How are you addressing wood cost increases at the Newmala mill? - Strategies include sourcing directly from landowners and importing lower-cost wood, targeting at least a 10% reduction in wood costs [53] Question: What is the outlook for capital spending for the year? - The company maintains its full-year capital spending guidance of $220 million to $240 million, with significant cash flow expected in the second half of the year [62][63]

Financial Data and Key Metrics Changes - The company reported total revenues of $197.1 million for Q1 2025, representing a year-over-year increase of 43% on an as-reported basis and 32% on an organic basis [8][28] - Adjusted non-GAAP EBITDA was $50.7 million, compared to $37.6 million in the prior year period, reflecting strong operational performance [32] - Adjusted non-GAAP EPS for the quarter was $1.7, up from $1.21 in the prior year period [32] Business Line Data and Key Metrics Changes - Revenues from the rare disease segment were $69 million, up 87% from the prior year, driven by strong performance of Cortrophin Gel, which generated $52.9 million in revenues, a 43% increase [29][30] - The generics segment reported revenues of $98.7 million, an increase of 41% year-over-year, attributed to new product launches and strong execution in the base business [14][30] - Revenues from the brands portfolio were $25.1 million, a slight decrease of 2% from the prior year [29] Market Data and Key Metrics Changes - The overall ACTH category grew 27% to approximately $684 million in 2024, indicating a favorable market environment for Cortrophin Gel [9] - The company expects Cortrophin Gel revenues to increase by 34% to 38% in 2025, projecting revenues of $265 million to $274 million [10][33] - The retina products, ILUVIEN and YUTIQ, generated revenues of $16.1 million in Q1, with performance impacted by market access challenges for Medicare patients [11][29] Company Strategy and Development Direction - The company is focused on expanding its rare disease business, particularly through Cortrophin Gel, and is investing in evidence generation and new product presentations to enhance market penetration [19][20] - A bespoke commercial approach is being implemented to address market access challenges, particularly for ILUVIEN and YUTIQ, with plans to enhance sales force capabilities [24][25] - The company is committed to maintaining a strong U.S. manufacturing footprint, with over 90% of revenues coming from domestically produced goods, positioning itself favorably in light of potential pharmaceutical tariffs [16][94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of Cortrophin Gel, citing a significant unmet medical need and a large addressable patient population [19][64] - The company anticipates a return to sequential revenue growth in the latter half of 2025, following a strong first quarter performance [34] - Management acknowledged challenges in the retina segment but highlighted positive trends in demand and a strengthened sales team as factors that will support future growth [13][53] Other Important Information - The company is preparing for an upcoming trial with CG Oncology regarding a royalty obligation dispute, with the jury trial set to commence on July 21, 2025 [36][38] - The company has a strong balance sheet with $149.8 million in unrestricted cash and a gross leverage ratio of 3.5 times [32] Q&A Session Summary Question: How much should the prefilled syringe help Cortrophin? - Management noted that early responses to the prefilled syringe have been positive, as it reduces one step in the administration process, and they expect to see traction as the year progresses [42][43] Question: What gives confidence in accelerating ILUVIEN and YUTIQ sales? - Confidence is based on several factors, including performance outside the U.S., improvements in sales force strength, and positive impacts from a bespoke commercial approach [51][52] Question: What are the payer dynamics for Cortrophin as the category returns to growth? - Management indicated that payers appreciate the competition brought to the category and that collaboration will continue to ensure patient access [82] Question: How is the acquisition of Alimera performing? - Management expressed confidence in the long-term opportunity for ILUVIEN and YUTIQ, highlighted by the recent buyout of a royalty obligation [84]

Financial Data and Key Metrics Changes - The company reported total revenues of $197.1 million for Q1 2025, representing a year-over-year increase of 43% on an as-reported basis and 32% on an organic basis [7][29] - Adjusted non-GAAP EBITDA was $50.7 million, compared to $37.6 million in the prior year period, reflecting strong operational performance [33] - Adjusted non-GAAP EPS for the quarter was $1.70, up from $1.21 in the prior year [33] Business Line Data and Key Metrics Changes - Revenues from the rare disease segment were $69 million, up 87% from the prior year, driven by strong performance of Cortrophin Gel, which generated $52.9 million in revenues, a 43% increase [30][33] - The generics segment reported revenues of $98.7 million, an increase of 41% year-over-year, attributed to new product launches and strong execution in the base business [14][31] - Revenues from the brands portfolio were $25.1 million, a decrease of 2% from the prior year, indicating a return to more normalized demand levels [30] Market Data and Key Metrics Changes - The overall ACTH category grew 27% to approximately $684 million in 2024, with Cortrophin Gel capturing a significant share of new prescribers [9][10] - The company expects Cortrophin Gel revenues to increase by 34% to 38% in 2025, reaching $265 million to $274 million [10][36] - The retina products, ILUVIEN and YUTIQ, generated revenues of $16.1 million in Q1, with expectations of $97 million to $103 million for the full year [10][36] Company Strategy and Development Direction - The company is focused on expanding its rare disease business, particularly through Cortrophin Gel, and is investing in new clinical trials to support its growth trajectory [20][28] - A strategic emphasis is placed on enhancing market access for ILUVIEN and YUTIQ through specialty pharmacies and Medicare Part D options [23][24] - The company is committed to maintaining a strong U.S. manufacturing footprint, with over 90% of revenues coming from domestically produced goods [16][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of Cortrophin Gel, citing a significant unmet medical need and a large addressable market [19][20] - The company anticipates a return to sequential revenue growth in the latter half of 2025, following a modest decline in Q2 [36] - Management acknowledged challenges in the retina segment due to market access issues but remains optimistic about recovery and growth in the second half of the year [11][56] Other Important Information - The company raised its 2025 guidance for total revenues and adjusted non-GAAP EBITDA based on strong Q1 performance and favorable demand trends [7][36] - The company has a strong balance sheet with $149.8 million in unrestricted cash and a gross leverage ratio of 3.5 times [33][34] - The company is preparing for an upcoming trial against CG Oncology regarding a royalty obligation dispute [38][39] Q&A Session Summary Question: How much should the prefilled syringe help Cortrophin? - Management noted that early responses to the prefilled syringe have been positive, as it reduces administration steps, and they expect to update on its progress soon [44] Question: What gives confidence in accelerating ILUVIEN and YUTIQ sales? - Confidence is based on performance outside the U.S., improvements in the sales force, and positive April results from a bespoke commercial approach [54][56] Question: Can you elaborate on the commercial challenges impacting ILUVIEN? - Challenges stemmed from a lack of funding for co-pay support for Medicare patients, affecting access to therapy [62] Question: What indications are driving growth for Cortrophin? - Growth is seen across all specialties, with significant contributions from nephrology, rheumatology, and ophthalmology [88] Question: How does the company view the acquisition of Alimera? - Management remains confident in the long-term opportunity for ILUVIEN and YUTIQ, as evidenced by the recent buyout of a royalty obligation [82]

Financial Data and Key Metrics Changes - The company reported income from continuing operations of $82.5 million or $0.40 per share for Q1 2025, a 10.4% increase compared to the same period last year [4] - First quarter earnings were $82 million or $0.40 per diluted share, compared to $100.9 million or $0.49 per diluted share in Q1 2024 [12] - The natural gas utility segment reported earnings of $44.7 million, an 11.5% increase from $40.1 million in Q1 2024 [14] Business Line Data and Key Metrics Changes - The electric utility segment reported earnings of $15 million, down from $17.9 million in the same period last year, despite a 25% increase in retail electric volumes [12][39] - The pipeline segment achieved record first quarter earnings of $17.2 million, up from $15.1 million in Q1 2024, driven by growth projects and increased demand for services [9][15] Market Data and Key Metrics Changes - The utility experienced a 1.4% combined retail customer growth compared to a year ago, aligning with the projected annual growth rate of 1% to 2% [5] - The company signed electric service agreements for 580 megawatts of data center load, with 180 megawatts currently online and an additional 100 megawatts expected to come online later this year [7] Company Strategy and Development Direction - The company is focused on a core strategy emphasizing customer and community engagement, operational excellence, and employee-driven initiatives, with a capital investment plan of $3.1 billion over the next five years [11] - The company anticipates a long-term EPS growth rate of 6% to 8% while targeting a 60% to 70% annual dividend payout ratio [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the Bakken region, highlighting the increasing gas-to-oil ratio and the need for takeaway capacity [22][24] - The company remains committed to wildfire prevention and has seen legislative support in three of its operating states, which will help limit liability and enhance mitigation efforts [6][58] Other Important Information - The company plans to reestablish an ATM program to meet future equity needs as part of its capital investment strategy [16] - The company is affirming its earnings per share guidance in the range of $0.88 to $0.98 for the full year [10] Q&A Session Summary Question: Are the tariffs from large customers not accretive for new resources? - Management indicated that the current capital-light strategy for data centers is beneficial, as it allows for shared costs with large customers, which in turn benefits retail customers [18][19] Question: How might disruptions in the Bakken affect North Dakota? - Management believes in the long-term viability of the Bakken, noting that while oil prices fluctuate, the increasing gas production will provide benefits for the pipeline business and utility customers [22][24] Question: How does the company view housing starts in relation to economic sensitivity? - Management noted that customer growth has remained stable within the 1% to 2% range, even during economic fluctuations, with Idaho being a particularly strong growth area [28][30] Question: What are the next steps for the Bakken East project? - Management stated that conversations with customers are ongoing, and they are encouraged by the feedback received, but further steps will depend on route design and customer needs [48][49] Question: How will recent wildfire legislation impact mitigation plans? - Management indicated that the legislation will help formalize existing mitigation plans and limit liability, while prevention remains the top priority [58][59] Question: What is the anticipated size of the ATM program? - Management has not yet determined the size of the ATM program but plans to size it appropriately to meet future needs [60] Question: What is the starting point for the long-term growth rate? - Management clarified that the long-term growth rate guidance is based on the adjusted 2024 number or the 2025 range provided earlier this year [63]

Financial Data and Key Metrics Changes - Consolidated earnings per share for Q1 2025 were $0.70, an increase from $0.62 in Q1 2024, attributed to favorable decisions from the CPUC regarding new water and electric rates [7][8] - Consolidated revenues for Q1 increased by $12.7 million compared to the same quarter last year [9] - Net cash provided by operating activities was $45.1 million for the quarter, slightly down from $45.8 million in the same quarter last year [13] Business Line Data and Key Metrics Changes - Water utility earnings increased to $0.52 per share from $0.48 per share, primarily due to new water rates [8] - Electric segment earnings rose to $0.07 per share from $0.05 per share, driven by new electric rates [9] - ASUS earnings remained stable at $0.13 per share, with increased management fee revenues offset by decreased construction activity [23] Market Data and Key Metrics Changes - Revenues for the water segment increased by $11.7 million due to new 2025 water rates [10] - Electric segment revenues increased by $2.8 million, also due to new rates [10] - Revenues from ASUS decreased by $1.8 million, primarily due to lower construction activities impacted by unfavorable weather [11] Company Strategy and Development Direction - The company plans to invest $170 million to $210 million in infrastructure in 2025, with a focus on capital projects approved by the CPUC [7][15] - Golden State Water is transitioning to a modified rate adjustment mechanism, which may introduce future revenue volatility [19][20] - The company anticipates sustained growth in its rate base due to recent regulatory approvals [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the regulatory environment, noting successful rate case outcomes and ongoing investments [17][22] - There is uncertainty regarding future military base privatizations, with expectations of potential opportunities in 2025 [33][34] - The company remains committed to maintaining a strong dividend growth rate, exceeding its long-term goals [25] Other Important Information - The company raised $25.8 million through its at-the-market offering program in Q1 2025 [15] - Credit facility terms were extended, and borrowing capacity increased from $165 million to $195 million [16] Q&A Session Summary Question: Equity raise expectations for 2025 - Management confirmed a target of raising approximately $60 million over the full year 2025, with reassessment based on credit facility capacity [28][29] Question: Update on military base privatization efforts - Management indicated no current fifty-year privatizations are available, but potential Army privatizations may arise later in the year [32][33] - The Navy is actively pursuing privatization opportunities, with ongoing efforts to secure contracts [34][35] Question: Nature of nontraditional contracts - Management noted that fifteen-year contracts may be easier for bases to manage compared to fifty-year contracts, with ongoing pursuits in this area [41][42]

Financial Data and Key Metrics Changes - For Q1 2025, consolidated revenues reached $196 million, with consolidated adjusted EBITDA at $169 million, resulting in an adjusted EBITDA margin of 86.4% [16] - Free cash flow was reported at $127 million, reflecting an 11% year-over-year increase [16] - Oil and gas royalty production averaged approximately 31,100 barrels of oil equivalent per day, marking a 25% increase year-over-year and a 7% growth sequentially [6][16] Business Line Data and Key Metrics Changes - Water segment revenues totaled $69 million, representing a 3% sequential growth and an 11% year-over-year increase [6] - The total of net permitted wells, net drilled but uncompleted wells (DUCs), and net completed but not producing wells (CUPs) reached 24.3, the highest recorded by the company, showing a 7% increase quarter-over-quarter and a 38% increase year-over-year [17] Market Data and Key Metrics Changes - The company noted that while oil prices have weakened, there has not yet been a widespread downturn in activity, although some operators have announced plans to reduce rigs and frac spreads [7] - The company expects overall Permian activity and production declines to be slower compared to other U.S. oil basins, with TPL's net production anticipated to outperform the basin overall [8] Company Strategy and Development Direction - The company aims to maximize shareholder value through potential acquisitions of high-quality royalties, surface, and water assets, as well as increasing buybacks [14] - TPL is positioned to withstand potential downturns in commodity prices due to its strong financial position, zero debt, and significant cash reserves [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to maintain positive free cash flow even in a depressed pricing environment, highlighting the resilience of its revenue streams [13] - The company anticipates that produced water volumes will continue to grow rapidly over the next decade, driven by operators moving to deeper formations [26] Other Important Information - The company is advancing its desalination and beneficial reuse initiatives, with expectations for a new desalination unit to come online by the end of the year [18] - TPL's surface leases and easements revenue model is expected to benefit from renewal payment escalators, projected to exceed $200 million over the next decade [12] Q&A Session Summary Question: Insights on water fundamentals in the Delaware Basin - Management noted that higher water cuts are expected as operators move to deeper formations, predicting rapid growth in produced water volumes over the next decade [26] Question: Impact of pipeline projects on TPL - Management indicated that new pipeline projects would benefit the basin and TPL, providing compensation for barrels moved through these projects [27] Question: M&A landscape in the basin - Management highlighted ongoing opportunities in the M&A space, with no significant pullback from sellers despite potential widening of bid-ask spreads if commodity prices decrease [31]