On November 1, 2023, Texas Pacific Land Corp (TPL, Financial) released its financial and operating results for the third quarter of 2023. The company reported a net income of $105.6 million, or $13.74 per share (diluted), a decrease from the $129.8 million net income reported in the third quarter of 2022. Total revenues for the third quarter of 2023 were $158.0 million, compared to $191.1 million for the same period in 2022.
Financial Performance
Oil and gas royalty revenue decreased by $43.2 million due to lower average commodity prices and lower production volumes in the third quarter of 2023 compared to the third quarter of 2022. The average realized price was $45.41 per barrel of oil equivalent (“Boe”) in the third quarter of 2023 versus $63.42 per Boe in the third quarter of 2022. The decrease in oil and gas royalty revenue was partially offset by an increase of $4.1 million in easements and other surface-related income and a combined increase of $3.7 million in water sales and produced water royalties.
Nine Months Ended September 30, 2023 Highlights
For the nine months ended September 30, 2023, the company reported a net income of $292.5 million, a decrease of 15.6% compared to net income of $346.6 million for the same period in 2022. Total revenues decreased by $49.8 million for the nine months ended September 30, 2023 compared to the same period of 2022.
Dividends and Stock Repurchases
The company also reported $5.9 million of common stock repurchases and a quarterly cash dividend of $3.25 per share paid on September 15, 2023. For the nine months ended September 30, 2023, TPL reported $32.2 million of common stock repurchases and $75.0 million of total cash dividends paid.
CEO Commentary
“With improving oil and gas prices and continued performance across our surface and water assets, third quarter 2023 represents another period of strong free cash flow generation,” said Tyler Glover, Chief Executive Officer of the Company. “Although recent oil and gas production volumes may have been impacted by reports of infrastructure challenges over the summer and turned-to-sales timing from greater co-completion developments, our outlook remains robust for Permian development. For this most recent quarter, new permit and new spud activity increased materially from the prior sequential quarter. With a strong well inventory backlog, over 50 rigs operating on TPL royalty acreage, and a supportive commodity price backdrop in the current environment, we continue to believe that underlying fundamentals reinforce a very positive trajectory for TPL’s business.”
Outlook
Despite the challenges faced in the third quarter, TPL remains optimistic about its future performance. The company's royalty acreage had an estimated 6.7 net well permits, 7.9 net drilled but uncompleted wells, 5.2 net completed wells, and 62.8 net producing wells as of September 30, 2023. This, coupled with improving oil and gas prices, positions TPL for potential growth in the coming quarters.
Explore the complete 8-K earnings release (here) from Texas Pacific Land Corp for further details.
