UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 1-39804

Exact name of registrant as specified in its charter:

Texas Pacific Land Corporation


State or other jurisdiction of incorporation or organization:						IRS Employer Identification No.:
Delaware						75-0279735

Address of principal executive offices:

1700 Pacific Avenue, Suite 2900 Dallas, Texas 75201

Registrant’s telephone number, including area code:

(214) 969-5530

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock
(par value $.01 per share)

TPL

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of ~~July��29, 2022,~~July 31, 2023, the Registrant had ~~7,722,371~~7,677,756 shares of Common Stock, $0.01 par value, outstanding.

TEXAS PACIFIC LAND CORPORATION

Form 10-Q

For the Quarter Ended June 30, ~~2022~~2023

Table of Contents

Page No.

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022

Condensed Consolidated Statements of Income and Total Comprehensive Income for the Three and Six Months ended June 30, ~~2022~~2023 and ~~2021~~2022

Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, ~~2022~~2023 and ~~2021~~2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

1314

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except shares and per share amounts)

(Unaudited)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	389,794	$	428,242	Cash and cash equivalents	$	609,252	$	510,834
Accounts receivable and accrued receivables, net	Accounts receivable and accrued receivables, net	132,410		95,217		Accounts receivable and accrued receivables, net	120,771		103,983
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,732		3,054		Prepaid expenses and other current assets	5,312		7,427

Tax like-kind exchange escrow						Tax like-kind exchange escrow	2,195		6,348
Prepaid income taxes						Prepaid income taxes	—		4,809
Total current assets	Total current assets	523,936		526,513		Total current assets	737,530		633,401

Real estate acquired	Real estate acquired	109,083		109,071		Real estate acquired	130,024		109,704
Property, plant and equipment, net	Property, plant and equipment, net	83,444		79,722		Property, plant and equipment, net	84,324		85,478
Royalty interests acquired, net	Royalty interests acquired, net	45,583		44,390		Royalty interests acquired, net	45,920		45,025

Other assets	Other assets	2,662		4,368		Other assets	3,526		3,819
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:	Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:					Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:
Land (surface rights)	Land (surface rights)	—		—		Land (surface rights)	—		—
1/16th nonparticipating perpetual royalty interest	1/16th nonparticipating perpetual royalty interest	—		—		1/16th nonparticipating perpetual royalty interest	—		—
1/128th nonparticipating perpetual royalty interest	1/128th nonparticipating perpetual royalty interest	—		—		1/128th nonparticipating perpetual royalty interest	—		—
Total assets	Total assets	$	764,708	$	764,064	Total assets	$	1,001,324	$	877,427
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	29,284	$	18,008	Accounts payable and accrued expenses	$	27,156	$	23,443
Ad valorem and other taxes payable						Ad valorem and other taxes payable	6,355		8,497
Income taxes payable	Income taxes payable	22,650		29,083		Income taxes payable	5,151		3,167
Unearned revenue	Unearned revenue	5,139		3,809		Unearned revenue	6,222		4,488
Total current liabilities	Total current liabilities	57,073		50,900		Total current liabilities	44,884		39,595
Deferred taxes payable	Deferred taxes payable	37,995		38,948		Deferred taxes payable	40,478		41,151
Unearned revenue - noncurrent	Unearned revenue - noncurrent	21,196		20,449		Unearned revenue - noncurrent	26,638		21,708

Accrued liabilities		3,163		2,056
Accrued liabilities - noncurrent						Accrued liabilities - noncurrent	1,774		2,086
Total liabilities	Total liabilities	119,427		112,353		Total liabilities	113,774		104,540

Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies	—		—
Equity:	Equity:					Equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of June 30, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value; 7,756,156 shares authorized and 7,727,916 and 7,744,695 outstanding as of June 30, 2022 and December 31, 2021, respectively		78		78
Treasury stock, at cost; 28,240 and 11,461 shares as of June 30, 2022 and December 31, 2021, respectively		(40,011)		(15,417)
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of June 30, 2023 and December 31, 2022						Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of June 30, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value; 7,756,156 shares authorized and 7,679,145 and 7,695,679 outstanding as of June 30, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value; 7,756,156 shares authorized and 7,679,145 and 7,695,679 outstanding as of June 30, 2023 and December 31, 2022, respectively	78		78
Treasury stock, at cost; 77,011 and 60,477 shares as of June 30, 2023 and December 31, 2022, respectively						Treasury stock, at cost; 77,011 and 60,477 shares as of June 30, 2023 and December 31, 2022, respectively	(128,502)		(104,139)
Additional paid-in capital	Additional paid-in capital	3,356		28		Additional paid-in capital	10,582		8,293
Accumulated other comprehensive loss		(991)		(1,007)
Accumulated other comprehensive income						Accumulated other comprehensive income	2,465		2,516
Retained earnings	Retained earnings	682,849		668,029		Retained earnings	1,002,927		866,139
Total equity	Total equity	645,281		651,711		Total equity	887,550		772,887
Total liabilities and equity	Total liabilities and equity	$	764,708	$	764,064	Total liabilities and equity	$	1,001,324	$	877,427

See accompanying notes to condensed consolidated financial statements.

Table of Contents

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND TOTAL COMPREHENSIVE INCOME

(in thousands, except shares and per share amounts)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Oil and gas royalties	Oil and gas royalties	$	121,268	$	58,204	$	225,440	$	107,737	Oil and gas royalties	$	82,412	$	121,268	$	171,542	$	225,440
Water sales	Water sales	22,272		12,473		41,092		25,429		Water sales	37,648		22,272		59,377		41,092
Produced water royalties	Produced water royalties	18,669		15,458		33,539		28,007		Produced water royalties	20,841		18,669		40,975		33,539
Easements and other surface-related income	Easements and other surface-related income	13,990		8,977		23,182		18,024		Easements and other surface-related income	18,708		13,990		33,677		23,182
Land sales and other operating revenue	Land sales and other operating revenue	71		820		352		890		Land sales and other operating revenue	1,000		71		1,400		352
Total revenues	Total revenues	176,270		95,932		323,605		180,087		Total revenues	160,609		176,270		306,971		323,605

Expenses:	Expenses:									Expenses:
Salaries and related employee expenses	Salaries and related employee expenses	9,588		13,271		18,973		23,250		Salaries and related employee expenses	10,596		9,588		21,189		18,973
Water service-related expenses	Water service-related expenses	3,915		3,551		6,697		6,849		Water service-related expenses	10,287		3,915		15,943		6,697
General and administrative expenses	General and administrative expenses	3,705		2,841		6,705		5,647		General and administrative expenses	3,329		3,674		6,884		6,641
Legal and professional fees	Legal and professional fees	1,163		1,141		2,882		3,353		Legal and professional fees	10,154		1,163		26,782		2,882
Ad valorem taxes		2,011		—		4,021		—
Ad valorem and other taxes										Ad valorem and other taxes	2,070		2,042		3,644		4,085

Depreciation, depletion and amortization	Depreciation, depletion and amortization	4,180		3,858		8,306		7,696		Depreciation, depletion and amortization	3,893		4,180		7,297		8,306
Total operating expenses	Total operating expenses	24,562		24,662		47,584		46,795		Total operating expenses	40,329		24,562		81,739		47,584

Operating income	Operating income	151,708		71,270		276,021		133,292		Operating income	120,280		151,708		225,232		276,021

Other income, net	Other income, net	630		406		706		411		Other income, net	6,871		630		12,260		706
Income before income taxes	Income before income taxes	152,338		71,676		276,727		133,703		Income before income taxes	127,151		152,338		237,492		276,727

Income tax expense	Income tax expense	33,444		14,630		59,933		26,605		Income tax expense	26,758		33,444		50,531		59,933
Net income	Net income	$	118,894	$	57,046	$	216,794	$	107,098	Net income	$	100,393	$	118,894	$	186,961	$	216,794

Other comprehensive income — periodic pension costs, net of income taxes for the three and six months ended June 30, 2022 and 2021 of $2, $8, $4, and $15, respectively		8		29		16		57
Other comprehensive (loss) income — periodic pension costs, net of income taxes for the three and six months ended June 30, 2023 and 2022 of $8, $2, $14, and $4, respectively										Other comprehensive (loss) income — periodic pension costs, net of income taxes for the three and six months ended June 30, 2023 and 2022 of $8, $2, $14, and $4, respectively	(26)		8		(51)		16
Total comprehensive income	Total comprehensive income	$	118,902	$	57,075	$	216,810	$	107,155	Total comprehensive income	$	100,367	$	118,902	$	186,910	$	216,810

Net income per share of common stock	Net income per share of common stock									Net income per share of common stock
Basic	Basic	$	15.37	$	7.36	$	28.02	$	13.81	Basic	$	13.06	$	15.37	$	24.31	$	28.02
Diluted	Diluted	$	15.37	$	7.36	$	28.01	$	13.81	Diluted	$	13.05	$	15.37	$	24.30	$	28.01

Weighted average number of shares of common stock outstanding	Weighted average number of shares of common stock outstanding									Weighted average number of shares of common stock outstanding
Basic	Basic	7,733,730		7,755,886		7,737,527		7,756,020		Basic	7,685,662		7,733,730		7,689,352		7,737,527
Diluted	Diluted	7,737,112		7,755,886		7,739,859		7,756,020		Diluted	7,690,950		7,737,112		7,694,548		7,739,859

Cash dividends per share of common stock	Cash dividends per share of common stock	$	23.00	$	2.75	$	26.00	$	5.50	Cash dividends per share of common stock	$	3.25	$	23.00	$	6.50	$	26.00

See accompanying notes to condensed consolidated financial statements.

Table of Contents

TEXAS PACIFIC LAND CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	216,794	$	107,098	Net income	$	186,961	$	216,794
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	Deferred taxes	(953)		(382)		Deferred taxes	(673)		(953)
Depreciation, depletion and amortization	Depreciation, depletion and amortization	8,306		7,696		Depreciation, depletion and amortization	7,297		8,306
Share-based compensation	Share-based compensation	3,495		—		Share-based compensation	5,323		3,495

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Operating assets, excluding income taxes	Operating assets, excluding income taxes	(35,472)		(18,126)		Operating assets, excluding income taxes	(14,477)		(35,472)
Operating liabilities, excluding income taxes	Operating liabilities, excluding income taxes	9,668		814		Operating liabilities, excluding income taxes	8,040		9,668
Income taxes payable	Income taxes payable	(6,433)		(611)		Income taxes payable	1,984		(6,433)
Prepaid income taxes						Prepaid income taxes	4,809		—

Cash provided by operating activities	Cash provided by operating activities	195,405		96,489		Cash provided by operating activities	199,264		195,405

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from sale of fixed assets	Proceeds from sale of fixed assets	96		—		Proceeds from sale of fixed assets	5		96
Acquisition of real estate	Acquisition of real estate	(12)		(10)		Acquisition of real estate	(20,320)		(12)
Acquisition of royalty interests	Acquisition of royalty interests	(1,662)		—		Acquisition of royalty interests	(1,803)		(1,662)
Purchase of fixed assets	Purchase of fixed assets	(6,685)		(4,461)		Purchase of fixed assets	(5,536)		(6,685)
Cash used in investing activities	Cash used in investing activities	(8,263)		(4,471)		Cash used in investing activities	(27,654)		(8,263)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repurchases of common stock	Repurchases of common stock	(24,592)		(2,504)		Repurchases of common stock	(26,379)		(24,592)
Shares exchanged for tax withholdings						Shares exchanged for tax withholdings	(939)		—
Dividends paid	Dividends paid	(200,998)		(42,658)		Dividends paid	(50,027)		(200,998)
Cash used in financing activities	Cash used in financing activities	(225,590)		(45,162)		Cash used in financing activities	(77,345)		(225,590)

Net (decrease) increase in cash, cash equivalents and restricted cash		(38,448)		46,856
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	94,265		(38,448)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	428,242		283,024		Cash, cash equivalents and restricted cash, beginning of period	517,182		428,242
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	389,794	$	329,880	Cash, cash equivalents and restricted cash, end of period	$	611,447	$	389,794

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Income taxes paid	Income taxes paid	$	67,324	$	27,613	Income taxes paid	$	44,396	$	67,324
Supplemental non-cash investing and financing information:	Supplemental non-cash investing and financing information:					Supplemental non-cash investing and financing information:
Nonmonetary exchange of assets	Nonmonetary exchange of assets	$	4,174	$	—	Nonmonetary exchange of assets	$	—	$	4,174
Increase in accounts payable related to capital expenditures		$	3,662	$	451
Share repurchases not yet settled		$	1,161	$	—
Issuance of common stock		$	—	$	78
(Increase) decrease in accounts payable related to capital expenditures						(Increase) decrease in accounts payable related to capital expenditures	$	(392)	$	3,662
Share repurchases and associated excise taxes not settled at the end of the period						Share repurchases and associated excise taxes not settled at the end of the period	$	432	$	1,161

See accompanying notes to condensed consolidated financial statements.

Table of Contents

TEXAS PACIFIC LAND CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(UNAUDITED)~~(Unaudited)

1. Organization and Description of Business Segments

Organization

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest landowners in the State of Texas with approximately ~~880,000~~886,000 surface acres of land in West Texas, with the majority of our ownership concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 4,000 additional net royalty acres (normalized to 1/8th) in the western part of Texas.

TPL’s income is derived primarily from oil, gas and produced water royalties, sales of water and land, easements and commercial leases of the land.

On January 11, 2021, we completed our reorganization from a business trust, Texas Pacific Land Trust, organized under a Declaration of Trust dated February 1, 1888 (the “Declaration of Trust”), to a corporation (the “Corporate Reorganization”) and changed our name from Texas Pacific Land Trust (the “Trust”) to Texas Pacific Land Corporation. See further discussion of the Corporate Reorganization and its impact on our equity structure in Note 10, “Changes in Equity.” Any references in these condensed consolidated financial statements and notes to the Company, TPL, our, we, or us with respect to periods prior to January 11, 2021 are in reference to the Trust, and references to periods on or after that date are in reference tointo Texas Pacific Land Corporation, ~~or TPL Corporation.~~a corporation formed and existing under the laws of the state of Delaware (the “Corporate Reorganization”).

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. The condensed consolidated financial statements herein include all adjustments which are, in the opinion of management, necessary to fairly state the financial position of the Company as of June 30, ~~2022~~2023 and the results of its operations for the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and its cash flows for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Such adjustments are of a normal nature and all intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, and accordingly these interim financial statements and footnotes should be read in conjunction with the audited financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. The results for the interim periods shown in this report are not necessarily indicative of future financial results.

We operate our business in 2two segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of strategies and objectives of TPL and provide a framework for timely and rational allocation of resources within businesses. See Note 11, “Business Segment Reporting” for further information regarding our segments.

2. Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

Cash,CashEquivalents and Restricted Cash

We consider investments in bank deposits, money market funds, and other highly-liquid cash investments, such as U.S. Treasury bills and commercial paper, with original maturities of three months or less to be cash equivalents. Our cash equivalents are considered Level 1 assets in the fair value hierarchy.

Table of Contents

~~Compensation~~The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows as of June 30, 2023 and December 31, 2022 (in thousands):


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	609,252	$	510,834
Tax like-kind exchange escrow	2,195		6,348
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	611,447	$	517,182

The Company utilizes the closing stock price on the date of grant to determine the fair value of service-vesting awards, which for the Company includes restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”) with a performance condition. For PSUs with a market condition, grant date fair value is determined using an advanced option-pricing model. Unvested awards are entitled to dividends or dividend equivalents which are accrued and distributed to award recipients at the time such awards vest. Dividends are forfeitable if the related award is forfeited. For RSAs, RSUs and PSUs with performance conditions, forfeitures are recognized in the period in which they occur. For PSU awards with market conditions, forfeitures are only recognized if the award recipient does not render the required service during the measurement period.Reclassifications

~~Compensation expense for RSUs and RSAs is recognized in the~~Certain financial statements over the awards’ vesting periods using the graded-vesting method. Compensation expense for PSU awards with performance conditions is recognized ratably over the measurement period at such time as the awards are probable and estimable. Compensation expense for PSU awards with market conditions is recognized ratably over the measurement period whether the market condition is satisfied or not if the service for the award is rendered. Share-based compensation is reportedinformation on the condensed consolidated ~~statements~~balance sheet as of December 31, 2022 and condensed consolidated statement of income and total comprehensive income asfor the three and six months ended June 30, 2022 has been revised to conform to the current year presentation. These revisions include a ~~component~~balance sheet reclassification of ~~salaries~~$454,000 of other taxes payable previously included in accounts payable and ~~related employee~~accrued expenses ~~for employee awards~~to ad valorem and other taxes payable and an income statement reclassification of $31,000 and $64,000 of property taxes previously included in general and administrative expenses to ad valorem and other taxes for ~~director awards.~~

~~Recently Adopted Accounting Guidance~~

~~In July 2021,~~ the ~~Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2021-05, “Leases (Topic 842) Lessors – Certain Leases with Variable Lease Payments~~.” Under the ASU, a lessor classifies a lease with variable lease payments that do not depend on an index or rate as an operating lease at lease commencement if the lease would have been classified as a sales-type lease or direct financing lease under ASC 842 classification criteriathree and ~~the lessor would have otherwise recognized a day one loss. The adoption of this guidance effective January 1,~~six months ended June 30, 2022, ~~had no impact on our condensed consolidated financial statements and disclosures.~~respectively.

3. Real Estate Activity

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, TPL owned the following land and real estate (in thousands, except number of acres):


		June 30, 2022			December 31, 2021				June 30, 2023			December 31, 2022
		Number of Acres	Net Book Value		Number of Acres	Net Book Value			Number of Acres	Net Book Value		Number of Acres	Net Book Value
Land (surface rights) (1)	Land (surface rights) (1)	823,445	$	—	823,452	$	—	Land (surface rights) (1)	817,017	$	—	817,060	$	—
Real estate acquired	Real estate acquired	57,146	109,083		57,129	109,071		Real estate acquired	69,447	130,024		57,306	109,704
Total real estate situated in Texas	Total real estate situated in Texas	880,591	$	109,083	880,581	$	109,071	Total real estate situated in Texas	886,464	$	130,024	874,366	$	109,704

(1)Real estate assigned through the Declaration of Trust.

Land Sales

For the six months ended June 30, 2023, we sold 43 acres of land in Texas for an aggregate sales price of $1.4 million. There were no significant land sales orfor the six months ended June 30, 2022.

Land Acquisitions

For the six months ended June 30, 2023, we acquired 12,141 acres of land in Texas for an aggregate purchase price of $20.0 million. There were no significant land acquisitions for the six months ended June 30, 2022.

4. Property, Plant and Equipment

Property, plant and equipment, net consisted of the following as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

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		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Property, plant and equipment, at cost:	Property, plant and equipment, at cost:					Property, plant and equipment, at cost:
Water service-related assets	Water service-related assets	$	117,967	$	108,732	Water service-related assets	$	130,106	$	125,166
Furniture, fixtures and equipment	Furniture, fixtures and equipment	9,384		9,071		Furniture, fixtures and equipment	9,852		9,718
Other	Other	598		598		Other	598		598
Total property, plant and equipment, at cost	Total property, plant and equipment, at cost	127,949		118,401		Total property, plant and equipment, at cost	140,556		135,482
Less: accumulated depreciation	Less: accumulated depreciation	(44,505)		(38,679)		Less: accumulated depreciation	(56,232)		(50,004)
Property, plant and equipment, net	Property, plant and equipment, net	$	83,444	$	79,722	Property, plant and equipment, net	$	84,324	$	85,478

Depreciation expense was ~~$3.9~~$3.2 million and ~~$3.7~~$3.9 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Depreciation expense was ~~$7.7~~$6.3 million and ~~$7.2~~$7.7 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

5. Oil and Gas Royalty Interests

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we owned the following oil and gas royalty interests (in thousands):

Net Book Value
June 30,
2022 December 31,
2021
1/16th nonparticipating perpetual royalty interests $ — $ —
1/128th nonparticipating perpetual royalty interests — —
Royalty interests acquired 47,928 46,266
Total royalty interests, gross 47,928 46,266
Less: accumulated depletion (2,345) (1,876)
Total royalty interests, net $ 45,583 $ 44,390


	June 30, 2023		December 31, 2022
1/16th nonparticipating perpetual royalty interests	$	—	$	—
1/128th nonparticipating perpetual royalty interests	—		—
Royalty interests acquired	49,731		47,928
Total royalty interests, gross	49,731		47,928
Less: accumulated depletion	(3,811)		(2,903)
Total royalty interests, net	$	45,920	$	45,025

~~Acquisition~~Acquisitions

For the six months ended June 30, 2023, we acquired oil and gas royalty interests in 61 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $1.8 million. For the six months ended June 30, 2022, we acquired oil and gas royalty interests in 92 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $1.7 million. ~~There were no oil and gas royalty interest transactions for the six months ended June 30, 2021.~~

Depletion expense was ~~$0.2~~$0.6 million and $0.2 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively.

Depletion expense was ~~$0.5~~$0.9 million and ~~$0.4~~$0.5 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

6. Share-Based Compensation

~~Incentive Plan for Employees~~

~~As of June 30, 2022, the~~The Company ~~has issued RSAs, RSUs and PSUs~~grants share-based compensation to employees under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”) and to ~~certain employees. The maximum aggregate number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) that may be issued~~its directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan ~~is 75,000 shares and, as of June 30, 2022, 65,452 shares of Common Stock remained available~~(the “2021 Directors Plan”). Share-based compensation granted to date under the ~~2021 Plan for future grants.~~plans has included restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based units (“PSUs”). Currently, all ~~RSAs, RSUs, and PSUs~~awards granted under the ~~2021 Plan~~plans are entitled to receive dividends ~~(for RSAs and RSUs, which~~(which are accrued and distributed to award recipients upon vesting) or have dividend equivalent rights. Dividends and dividend equivalent rights are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited. ~~The Company utilizes~~RSUs granted under the ~~closing stock price~~2021 Plan vest in one-third increments and PSUs granted under the 2021 Plan cliff vest at the end of three years if the performance metrics are achieved (as discussed further below). RSAs granted under the 2021 Directors Plan vest on the ~~date~~first anniversary of ~~grant to determine~~ the ~~fair value of RSAs, RSUs and PSUs with a performance condition. For PSUs with a market condition, the Company utilizes a Monte Carlo simulation model to determine grant date fair value per share.~~

award.

Incentive Plan for Employees

The maximum aggregate number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) that may be issued under the 2021 Plan is 75,000 shares, which may consist, in whole or in part, of authorized and

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unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of June 30, 2023, 54,718 shares of Common Stock remained available under the 2021 Plan for future grants.

The following table summarizes activity related to RSAs and RSUs under the 2021 Plan for the six months ended June 30, 2023 and 2022:

Restricted Stock Awards Restricted Stock Units
Number of RSAs Grant-Date Fair Value per Share Number of RSUs Grant-Date Fair Value per Share
Outstanding at December 31, 2021 (1)
3,330 $ 1,252 — $ —
Granted (2)
— — 3,824 1,105
Vested — — — —
Cancelled and forfeited — — — —
Outstanding at June 30, 2022 3,330 $ 1,252 3,824 $ 1,105


	Six Months Ended June 30,
	2023						2022
	Restricted Stock Awards			Restricted Stock Units			Restricted Stock Awards			Restricted Stock Units
	Number of RSAs	Weighted-Average Grant-Date Fair Value per Share		Number of RSUs	Weighted-Average Grant-Date Fair Value per Share		Number of RSAs	Weighted-Average Grant-Date Fair Value per Share		Number of RSUs	Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period (1)	1,337	$	1,252	5,612	$	1,323	3,330	$	1,252	—	$	—
Granted (2)	—	—		2,848	1,924		—	—		3,824	1,105
Vested (3)	—	—		(1,270)	1,105		—	—		—	—
Cancelled and forfeited	—	—		—	—		—	—		—	—
Nonvested at end of period	1,337	$	1,252	7,190	$	1,600	3,330	$	1,252	3,824	$	1,105

(1)The RSAs were granted on December 29, ~~2021 with~~2021: 1,993 shares ~~vesting~~vested on December 29, 2022 and 1,337 shares ~~vesting~~will vest on December 29, 2023.

(2)~~These time-based awards~~The RSUs were granted on February ~~11, 2022, to certain employees~~10, 2023 and vest in one-third increments over a three-year period.

(3)Of the 1,270 shares that vested on February 11, 2023, 488 shares were surrendered by employees to the Company to settle tax withholdings.

The following table summarizes activity related to PSUs for the six months ended June 30, 2023 and 2022:

Performance Stock Units
Number of PSUs Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2021 — $ —
Granted (1)
2,394 1,355
Vested — —
Cancelled and forfeited — —
Outstanding at June 30, 2022 2,394 $ 1,355


	Six Months Ended June 30,
	2023			2022
	Number of Target PSUs	Weighted-Average Grant-Date Fair Value per Share		Number of Target PSUs	Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period (1)	2,394	$	1,355	—	$	—
Granted (2)	1,852	2,342		2,394	1,355
Vested	—	—		—	—
Cancelled and forfeited	—	—		—	—
Nonvested at end of period	4,246	$	1,786	2,394	$	1,355

(1)~~Includes~~The PSUs were granted on February 11, 2022 and include 1,197 RTSR (as defined below) PSUs (based on target) with a grant date fair value of $1,605 per share and 1,197 FCF (as defined below) PSUs (based on target) with a grant date fair value of $1,105 per share. If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 2,394 additional units would be issued).

(2)The PSUs were granted on February 10, 2023 and include 926 RTSR PSUs (based on target) with a grant date fair value of $2,761 per share and 926 FCF PSUs (based on target) with a grant date fair value of $1,924 per share. If the maximum performance potential metrics described in the PSU agreements are achieved, the actual number of units that will ultimately be awarded under the PSU agreements will exceed target units by 100% (i.e., a collective 1,852 additional units would be issued).

~~On February 11, 2022, the Company granted PSUs to certain employees.~~ Each PSU has a value equal to 1one share of Common Stock. The PSUs will vest three years after grant if certain performance metrics are met, as follows: 50% of the PSUs may be earned based on the Company’s relative total stockholder return (“RTSR”) ~~for~~over the applicable three-year measurement period ~~from January 2022 to January 2025~~ compared to the XOP Index, and 50% of the PSUs may be earned based on the cumulative free cash flow per share (“FCF”) over the three-year vesting period. As the RTSR PSU is a market-based award, its grant date fair value was determined using a Monte Carlo simulation model that uses the same input assumptions as the Black-Scholes model to determine the expected potential ranking of the Company against the XOP Index, i.e. the probability of satisfying the market condition defined in the award. Expected volatility in the model was estimated

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based on the volatility of historical stock prices over a period matching the expected term of the award. The risk-free interest rate was based on U.S. Treasury yield constant maturities for a term matching the expected term of the award.

Equity Plan for Non-Employee Directors

~~As of June 30, 2022, the Company had granted 699 RSAs to directors of the Company under the 2021 Non-Employee Director and Deferred Compensation Plan (the “2021 Directors Plan”).~~ The maximum aggregate number of shares of Common Stock that may be issued under the 2021 Directors Plan is 10,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of June 30, ~~2022, 9,301~~ 2023, 8,815shares of Common Stock remained available under the 2021 Directors Plan for future grants. Currently, all RSAs granted under the 2021 Directors Plan are entitled to receive dividends, which are accrued and distributed to award recipients upon vesting. Dividends are subject to the same vesting conditions as the awards to which they relate and are forfeitable if the related awards are forfeited. The Company utilizes the closing stock price on the date of grant to determine the fair value of the RSAs.

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The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the six months ended June 30, 2023 and 2022:

Restricted Stock Awards
Number of RSAs Grant-Date Fair Value per Share
Outstanding at December 31, 2021 — $ —
Granted 784 1,277
Vested — —
Cancelled and forfeited (85) 1,249
Outstanding at June 30, 2022 (1)
699 $ 1,281


	Six Months Ended June 30,
	2023			2022
	Number of RSAs	Weighted-Average Grant-Date Fair Value per Share		Number of RSAs	Weighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period	699	$	1,281	—	$	—
Granted (1)	486	2,344		784	1,277
Vested	(699)	1,281		—	—
Cancelled and forfeited	—	—		(85)	1,249
Nonvested at end of period	486	$	2,344	699	$	1,281

(1)OnThe RSAs were granted on January 1, ~~2022, the Company granted 680 shares of restricted stock to directors. During the six months ended June 30, 2022, 85 shares were forfeited resulting from the departure of a director in March 2022,~~2023 and ~~an additional 104 shares of restricted stock were granted to new directors on April 15, 2022. The shares~~ will vest on the first anniversary of the ~~award.~~grant.

Share-Based Compensation Expense

The following table summarizes our share-based compensation expense by line item in the condensed consolidated statements of income (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Salaries and related employee expenses (employee awards)	Salaries and related employee expenses (employee awards)	$	1,760	$	—	$	3,079	$	—	Salaries and related employee expenses (employee awards)	$	2,559	$	1,760	$	4,715	$	3,079
General and administrative expenses (director awards)	General and administrative expenses (director awards)	230		—		416		—		General and administrative expenses (director awards)	291		230		608		416
Total share-based compensation expense (1)	Total share-based compensation expense (1)	$	1,990	$	—	$	3,495	$	—	Total share-based compensation expense (1)	$	2,850	$	1,990	$	5,323	$	3,495

(1)The Company recognized a tax benefit of $0.6 million and $0.4 million related to share-based compensation for the three months ended June 30, 2023 and 2022, respectively. The Company recognized a tax benefit of $1.1 million and $0.7 million related to share-based compensation for the ~~three and~~ six months ended June 30, 2023 and 2022, respectively.

As of June 30, ~~2022,~~2023, there was ~~$9.0~~$14.2 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under existing share-based plans expected to be recognized over a weighted average period of 1.5 years.

7. Income Taxes

The calculation of our effective tax rate is as follows for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands, except percentages):

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Income before income taxes $ 152,338 $ 71,676 $ 276,727 $ 133,703
Income tax expense $ 33,444 $ 14,630 $ 59,933 $ 26,605
Effective tax rate 22.0 % 20.4 % 21.7 % 19.9 %

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	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Income before income taxes	$	127,151		$	152,338		$	237,492		$	276,727
Income tax expense	$	26,758		$	33,444		$	50,531		$	59,933
Effective tax rate	21.0		%	22.0		%	21.3		%	21.7		%

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items.

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8. Earnings Per Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares outstanding during the period. Diluted EPS is computed based upon the weighted average number of shares outstanding during the period plus unvested restricted stock and other unvested awards granted pursuant to our incentive and equity compensation plans. The computation of diluted EPS reflects the potential dilution that could occur if all outstanding awards under the incentive and equity compensation plans were converted into shares of Common Stock or resulted in the issuance of shares of Common Stock that would then share in the earnings of the Company. The number of dilutive securities is computed using the treasury stock method.

The following table sets forth the computation of EPS for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands, except number of shares and per share data):

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Net income $ 118,894 $ 57,046 $ 216,794 $ 107,098
Basic EPS:
Weighted average shares outstanding for basic EPS 7,733,730 7,755,886 7,737,527 7,756,020
Basic EPS $ 15.37 $ 7.36 $ 28.02 $ 13.81
Diluted EPS:
Weighted average shares outstanding for basic EPS 7,733,730 7,755,886 7,737,527 7,756,020
Effect of dilutive securities:
Incentive and equity compensation plans 3,382 — 2,333 —
Weighted average shares outstanding for diluted EPS 7,737,112 7,755,886 7,739,859 7,756,020
Diluted EPS $ 15.37 $ 7.36 $ 28.01 $ 13.81


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	100,393	$	118,894	$	186,961	$	216,794

Basic earnings per share:
Weighted average shares outstanding for basic earnings per share	7,685,662		7,733,730		7,689,352		7,737,527
Basic earnings per share	$	13.06	$	15.37	$	24.31	$	28.02

Diluted earnings per share:
Weighted average shares outstanding for basic earnings per share	7,685,662		7,733,730		7,689,352		7,737,527
Effect of dilutive securities:
Incentive and equity compensation plans	5,288		3,382		5,196		2,333
Weighted average shares outstanding for diluted earnings per share	7,690,950		7,737,112		7,694,548		7,739,859
Diluted earnings per share	$	13.05	$	15.37	$	24.30	$	28.01

Restricted stock is included in the number of shares of Common Stock issued and outstanding, but omitted from the basic EPS calculation until such time as the shares of restricted stock vest. ~~The RTSR PSUs~~Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the three and six months ended June 30, 2023 and June 30, 2022.

9. Commitments and Contingencies

Litigation

Management is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Company’s financial condition, results of operations or liquidity as of June 30, ~~2022.~~2023.

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Prior to January 1, 2022, ad valorem taxes with respect to our historical royalty interests were paid directly by ~~certain~~ third parties pursuant to an existing arrangement. Since the completion of our Corporate Reorganization, we have received notice from ~~one such~~certain third ~~party~~parties that they no longer intend to pay the ad valorem taxes related to such historical royalty interests. AsIn order to protect the historical royalty interests from any potential tax liens for non-payment of ~~June 30, 2022, the Company has recorded an accrual of approximately $4.0 million for~~ ad valorem taxes, ~~and intends to pay~~we have accrued and/or paid such ad valorem taxes ~~when they become due.~~since January 1, 2022. While we intend to seek reimbursement from the third ~~party following payment of~~parties for such taxes, we are unable to ~~determine~~estimate the amount and/or likelihood of such reimbursement, and accordingly, no loss recovery receivable has been recorded as of June 30, ~~2022.~~2023.

Ongoing Arbitration with an Operator.

As part of an ongoing arbitration between TPL and an operator with respect to underpayment of oil and gas royalties resulting from improper deductions of post-production costs for periods before and through April 2022, the operator has agreed to pay $8.7 million to TPL. This amount has been recorded as a receivable and included in oil and gas royalty revenue in the condensed consolidated income statement for the six months ended June 30, 2023.

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10. Changes in Equity

The following tables present changes in our equity for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands, except shares and per share amounts):

Common Stock Treasury Stock Additional Paid-in Capital Accum.
Other
Comp.
Inc/(Loss) Retained Earnings Total
Equity
Shares Amount Shares Amount
For the six months ended June 30, 2022:
Balances as of December 31, 2021 7,744,695 $ 78 11,461 $ (15,417) $ 28 $ (1,007) $ 668,029 $ 651,711
Net income — — — — — — 97,900 97,900
Dividends paid — $3.00 per share of common stock — — — — — — (23,224) (23,224)
Share-based compensation, net of forfeitures 595 — (595) 800 1,477 — (796) 1,481
Periodic pension costs, net of income taxes of $2 — — — — — 8 — 8
Balances as of March 31, 2022 7,745,290 78 10,866 (14,617) 1,505 (999) 741,909 727,876
Net income — — — — — — 118,894 118,894
Dividends paid — $3.00 per share of common stock — — — — — — (23,188) (23,188)
Special dividends paid — $20.00 per share of common stock — — — — — — (154,586) (154,586)
Share-based compensation, net of forfeitures 104 — (104) 140 1,851 — (180) 1,811
Repurchases of common stock (17,478) — 17,478 (25,534) — — — (25,534)
Periodic pension costs, net of income taxes of $2 — — — — — 8 — 8
Balances as of June 30, 2022 7,727,916 $ 78 28,240 $ (40,011) $ 3,356 $ (991) $ 682,849 $ 645,281

Sub-share Certificates Common Stock Treasury Stock Accum.
Other
Comp.
Inc/(Loss) Retained Earnings Net Proceeds
From All
Sources Total
Equity
Shares Shares Amount Shares Amount
For the six months ended June 30, 2021:
Balances as of December 31, 2020 7,756,156 — $ — $ — $ — $ (2,693) $ — $ 487,877 $ 485,184
Net income — — — — — — 50,052 — 50,052
Dividends paid — $2.75 per share of common stock — — — — — — (21,329) — (21,329)
Conversion of Sub-shares into shares of common stock (7,756,156) 7,756,156 78 — — — 487,799 (487,877) —
Periodic pension costs, net of income taxes of $8 — — — — — 28 — — 28
Balances as of March 31, 2021 — 7,756,156 78 — — (2,665) 516,522 — 513,935
Net income — — — — — — 57,046 — 57,046
Dividends paid — $2.75 per share of common stock — — — — — — (21,329) — (21,329)
Repurchases of common stock — (1,633) — 1,633 (2,504) — — — (2,504)
Periodic pension costs, net of income taxes of $8 — — — — — 29 — — 29
Balances as of June 30, 2021 — 7,754,523 $ 78 1,633 $ (2,504) $ (2,636) $ 552,239 $ — $ 547,177

~~Corporate Reorganization~~

On January 11, 2021, TPL completed its Corporate Reorganization, officially changing its name to Texas Pacific Land Corporation. To implement the Corporate Reorganization, the Trust and TPL Corporation entered into agreements and undertook and caused to be undertaken a series of transactions to effect the transfer to TPL Corporation of all of the Trust’s assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the Corporate Reorganization.

Prior to the market opening on January 11, 2021, the Trust distributed all of the shares of Common Stock of TPL Corporation to holders of sub-share certificates (“Sub-shares”) of the Trust, on a pro rata, one-for-one, basis in accordance with their interests in the Trust (the “Distribution”). As a result of the Distribution, TPL Corporation is now a corporation with its Common Stock listed under the symbol “TPL” on the New York Stock Exchange.


	Common Stock			Treasury Stock			Additional Paid-in Capital		Accum. Other Comp. Income (Loss)		Retained Earnings		Total Equity
	Shares	Amount		Shares	Amount
For the six months ended June 30, 2023:
Balances as of December 31, 2022	7,695,679	$	78	60,477	$	(104,139)	$	8,293	$	2,516	$	866,139	$	772,887
Net income	—	—		—	—		—		—		86,568		86,568
Dividends paid — $3.25 per share of common stock	—	—		—	—		—		—		(25,061)		(25,061)
Share-based compensation, net of forfeitures	1,756	—		(1,756)	3,033		(560)		—		(103)		2,370
Repurchases of common stock, including excise taxes of $67	(3,627)	—		3,627	(6,749)		—		—		—		(6,749)
Shares exchanged for tax withholdings	(488)	—		488	(939)		—		—		—		(939)
Periodic pension costs, net of income taxes of $6	—	—		—	—		—		(25)		—		(25)
Balances as of March 31, 2023	7,693,320	$	78	62,836	$	(108,794)	$	7,733	$	2,491	$	927,543	$	829,051
Net income	—	—		—	—		—		—		100,393		100,393
Dividends paid — $3.25 per share of common stock	—	—		—	—		—		—		(24,966)		(24,966)
Share-based compensation, net of forfeitures	—	—		—	—		2,849		—		(43)		2,806
Repurchases of common stock, including excise taxes of $165	(14,175)	—		14,175	(19,708)		—		—		—		(19,708)
Periodic pension costs, net of income taxes of $8	—	—		—	—		—		(26)		—		(26)
Balances as of June 30, 2023	7,679,145	$	78	77,011	$	(128,502)	$	10,582	$	2,465	$	1,002,927	$	887,550

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	Common Stock			Treasury Stock			Additional Paid-in Capital		Accum. Other Comp. Income (Loss)		Retained Earnings		Total Equity
	Shares	Amount		Shares	Amount
For the six months ended June 30, 2022:
Balances as of December 31, 2021	7,744,695	$	78	11,461	$	(15,417)	$	28	$	(1,007)	$	668,029	$	651,711
Net income	—	—		—	—		—		—		97,900		97,900
Dividends paid — $3.00 per share of common stock	—	—		—	—		—		—		(23,224)		(23,224)
Share-based compensation, net of forfeitures	595	—		(595)	800		1,477		—		(796)		1,481
Periodic pension costs, net of income taxes of $2	—	—		—	—		—		8		—		8
Balances as of March 31, 2022	7,745,290	$	78	10,866	$	(14,617)	$	1,505	$	(999)	$	741,909	$	727,876
Net income	—	—		—	—		—		—		118,894		118,894
Dividends paid — $3.00 per share of common stock	—	—		—	—		—		—		(23,188)		(23,188)
Special dividends paid — $20.00 per share of common stock	—	—		—	—		—		—		(154,586)		(154,586)
Share-based compensation, net of forfeitures	104	—		(104)	140		1,851		—		(180)		1,811
Repurchases of common stock	(17,478)	—		17,478	(25,534)		—		—		—		(25,534)
Periodic pension costs, net of income taxes of $2	—	—		—	—		—		8		—		8
Balances as of June 30, 2022	7,727,916	$	78	28,240	$	(40,011)	$	3,356	$	(991)	$	682,849	$	645,281

Stock Repurchase Program

On ~~March 11,~~November 1, 2022, our board of directors approved a stock repurchase program, which became effective January 1, 2023, to purchase up to an aggregate of ~~$100~~$250 million ~~of shares~~ of our outstanding Common ~~Stock during 2022. In connection~~Stock.

The Company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations. This repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. Purchases under the stock repurchase program may be made through a combination of open market repurchases in compliance with Rule 10b-18 promulgated under the ~~Company entered into~~Securities Exchange Act of 1934, as amended, privately negotiated transactions, and/or other transactions at the Company’s discretion, including under a Rule 10b5-1 trading plan ~~(the “Trading Plan”) that generally permits~~implemented by the Company, and will be subject to repurchase shares at times when it might otherwise be prevented from doing so under securities laws. Stock repurchases under the Trading Plan began April 18, 2022. The stock repurchase program expires on December 31, 2022. For the six months ended June 30, 2022, we repurchased 17,478 shares at an average per share amount of $1,461.market conditions, applicable legal requirements and other factors.

11. Business Segment Reporting

During the periods presented, we reported our financial performance based on the following segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of our strategies and objectives and provide a framework for timely and rational allocation of resources within businesses. We eliminate any inter-segment revenues and expenses upon consolidation.

The Land and Resource Management segment encompasses the business of managing our approximately ~~880,000~~886,000 surface acres of land and our oil and gas royalty interests in West Texas, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases and land and material sales.

The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment primarily consist of revenue generated from sales of sourced and treated water as well as revenue from produced water royalties.

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Segment financial results were as follows for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Land and resource management	Land and resource management	$	133,385	$	67,241	$	246,732	$	125,031	Land and resource management	$	101,320	$	133,385	$	205,343	$	246,732
Water services and operations	Water services and operations	42,885		28,691		76,873		55,056		Water services and operations	59,289		42,885		101,628		76,873
Total consolidated revenues	Total consolidated revenues	$	176,270	$	95,932	$	323,605	$	180,087	Total consolidated revenues	$	160,609	$	176,270	$	306,971	$	323,605

Net income:	Net income:									Net income:
Land and resource management	Land and resource management	$	96,074	$	45,443	$	177,230	$	84,956	Land and resource management	$	69,633	$	96,074	$	134,976	$	177,230
Water services and operations	Water services and operations	22,820		11,603		39,564		22,142		Water services and operations	30,760		22,820		51,985		39,564
Total consolidated net income	Total consolidated net income	$	118,894	$	57,046	$	216,794	$	107,098	Total consolidated net income	$	100,393	$	118,894	$	186,961	$	216,794

Capital expenditures:	Capital expenditures:									Capital expenditures:
Land and resource management	Land and resource management	$	103	$	13	$	225	$	13	Land and resource management	$	(31)	$	103	$	144	$	225
Water services and operations	Water services and operations	7,239		2,161		10,122		4,899		Water services and operations	1,402		7,239		5,000		10,122
Total capital expenditures	Total capital expenditures	$	7,342	$	2,174	$	10,347	$	4,912	Total capital expenditures	$	1,371	$	7,342	$	5,144	$	10,347

Depreciation, depletion and amortization:	Depreciation, depletion and amortization:									Depreciation, depletion and amortization:
Land and resource management	Land and resource management	$	529	$	442	$	1,065	$	936	Land and resource management	$	912	$	529	$	1,530	$	1,065
Water services and operations	Water services and operations	3,651		3,416		7,241		6,760		Water services and operations	2,981		3,651		5,767		7,241
Total depreciation, depletion and amortization	Total depreciation, depletion and amortization	$	4,180	$	3,858	$	8,306	$	7,696	Total depreciation, depletion and amortization	$	3,893	$	4,180	$	7,297	$	8,306

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The following table presents total assets and property, plant and equipment, net by segment as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets:	Assets:					Assets:
Land and resource management	Land and resource management	$	618,716	$	635,338	Land and resource management	$	845,847	$	735,193
Water services and operations	Water services and operations	145,992		128,726		Water services and operations	155,477		142,234
Total consolidated assets	Total consolidated assets	$	764,708	$	764,064	Total consolidated assets	$	1,001,324	$	877,427

Property, plant and equipment, net:	Property, plant and equipment, net:					Property, plant and equipment, net:
Land and resource management	Land and resource management	$	6,355	$	6,639	Land and resource management	$	5,607	$	5,998
Water services and operations	Water services and operations	77,089		73,083		Water services and operations	78,717		79,480
Total consolidated property, plant and equipment, net	Total consolidated property, plant and equipment, net	$	83,444	$	79,722	Total consolidated property, plant and equipment, net	$	84,324	$	85,478

12. Oil and Gas Producing Activities

We measure our share of oil and gas produced in barrels of oil equivalent (“Boe”). One Boe equals one barrel of crude oil, condensate, NGLs (natural gas liquids) or approximately 6,000 cubic feet of gas. For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, our share of oil and gas produced was approximately ~~19.8~~24.9 and ~~16.4~~19.8 thousand Boe per day, respectively. For the six months ended June 30, ~~2022~~2023 and ~~June 30, 2021,~~2022, our share of oil and gas produced was approximately ~~20.3~~22.9 and ~~16.4~~20.3 thousand Boe per day, respectively. Reserves related to our royalty interests are not presented because the information is unavailable.

There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where we have a royalty interest. The number of DUC wells is determined using uniform drilling spacing units with pooled interests for all wells

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awaiting completion. We have identified ~~574~~593 and ~~452~~584 DUC wells subject to our royalty interest as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

13. Subsequent Events

We evaluated events that occurred after the balance sheet date through the date these financial statements were issued, and the following events that met recognition or disclosure criteria were identified:

Dividends Declared

On August ~~2, 2022, the~~1, 2023, our board of directors declared a quarterly cash dividend of ~~$3.00~~$3.25 per share, payable on September 15, ~~2022~~2023 to stockholders of record at the close of business on September ~~8, 2022.~~1, 2023.

*****

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding management’s expectations, hopes, intentions or strategies regarding the future. Words or phrases such as “expects” and “believes”, or similar expressions, when used in this Quarterly Report on Form 10-Q or other filings with the Securities and Exchange Commission (the “SEC”), are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Company’s future operations and prospects, ~~the potential future impact of COVID-19,~~ the markets for real estate in the areas in which the Company owns real estate, applicable zoning regulations, the markets for oil and gas including actions of other oil and gas producers or consortiums worldwide such as the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (collectively referred to as “OPEC+”), expected competition, management’s intent, beliefs or current expectations with respect to the Company’s future financial performance and other matters. All forward-looking statements in this Report are based on information available to us as of the date this Report is filed with the SEC, and we assume no responsibility to update any such forward-looking statements, except as required by law. All forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the factors discussed in Item 1A. “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~23, 2022~~22, 2023 and the condensed consolidated financial statements and accompanying notes included, in Part I, Item 1 of this Quarterly Report on Form 10-Q. Period-to-period comparisons of financial data are not necessarily indicative, and therefore should not be relied upon as indicators, of the Company’s future performance.

Overview

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is one of the largest landowners in the State of Texas with approximately ~~880,000~~886,000 surface acres of land in West Texas, with the majority of our ownership concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land and a 1/16th NPRI under approximately 371,000 acres of land, as well as approximately 4,000 additional net royalty acres (normalized to 1/8th), all located in the western part of Texas. The Company was originally organized under a Declaration of Trust, dated February 1, 1888, to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company.

We completed our reorganization on January 11, 2021 from a business trust, ~~to a corporation (the “Corporate Reorganization”) on January 11, 2021, changing our name from~~ Texas Pacific Land Trust, (the “Trust”) to Texas Pacific Land Corporation. Any references in this Quarterly Report on Form 10-Q to the Company, TPL, our, we, or us with respect to periods prior to January 11, 2021 are in reference to the Trust, and references to periods on or after that date are in reference tointo Texas Pacific Land Corporation, ~~or TPL Corporation. For further information on~~a corporation formed and existing under the ~~Corporate Reorganization, see Note 10, “Changes in Equity” in~~laws of the ~~notes to the condensed consolidated financial statements.~~state of Delaware.

We are not an oil and gas producer. Our business activity is generated from surface and royalty interest ownership in West Texas, primarily in the Permian Basin. Our revenues are primarily derived from oil, gas and produced water royalties, sales of water and land, easements and commercial leases. Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue and net income are subject to substantial fluctuations from quarter to quarter and year to year. In addition to fluctuations in response to changes in the market price for oil and gas, our financial results are also subject to decisions by the owners and operators of not only the oil and gas wells to which our oil and gas royalty interests relate, but also to other owners and operators in the Permian Basin as it relates to our other revenue streams, principally water sales, produced water royalties, easements and other surface-related revenue.

For a further overview of our business and business segments, see Item 1. “Business — General” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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Market Conditions

~~Global Oil Market Impact in 2022~~

Average oil and gas prices during the second quarter of ~~2022 continued~~2023 have declined compared to ~~increase over the average oil and gas prices during the first quarter of 2022 and were meaningfully higher compared to~~quarterly average prices during ~~most~~2022. Oil prices have been impacted by certain actions by OPEC+, uneven global supply and demand trends, and

Table of the previous quarterly periods over the last decade. In 2021, oil prices were supported by oil supply cuts by OPEC+. Oil demand in 2021 broadly trended higher throughout the year, which also helped support strengthening oil prices. Beginning in March 2022, Contents

Russia’s incursion into Ukraine, ~~created~~among other factors. Global and domestic natural gas markets have experienced volatility due to macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitical issues, among other factors. In 2023, domestic natural gas prices have declined in ~~global~~part to growing supply. Since mid-2022, the Waha Hub located in Pecos County, Texas has at times experienced significant negative price differentials relative to Henry Hub, located in Erath, Louisiana, due in part to growing local Permian natural gas production and limited natural gas pipeline takeaway capacity. Midstream infrastructure is currently under construction by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Industry supply ~~of numerous commodities, including oil. In response, the US~~chains and labor supply remain constrained, which has implemented various measures to help mitigate potential supply shortfalls and high oil prices, most notably by releasing millions of barrels of crude oil from its Strategic Petroleum Reserve. The confluence of these major events have contributed to ~~increased fluctuations~~elevated inflation, among other factors. Changes in ~~oil prices during 2022. Inflation is at its highest level in decades and continues to significantly impact labor costs and supplies. The potential worsening of~~ macro-economic conditions, including rising interest rates and lower global economic activity, could result in additional shifts in ~~demand~~oil and gas supply and demand in future periods. Although our revenues are directly and indirectly impacted by changes in oil and natural gas prices, we believe our royalty interests (which require no capital expenditures or operating expense burden from us for well development), strong balance sheet, and liquidity position will help us navigate through potential ~~oil~~commodity price volatility.

~~COVID-19 Pandemic~~

We continue to monitor the COVID-19 pandemic. We are following local government mandates, where applicable, and will continue to revise and refine our on-site work to ensure business continuity and the safety and wellbeing of our employees. The full extent to which the pandemic impacts our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity, and new variants, of the virus.

Permian Basin Activity

The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas production in the United States, covering approximately 86,000 square miles in 52 counties across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies active in the Permian Basin have generally increased their drilling and development activity ~~to-date~~ in ~~2022~~2023 compared to recent prior year activity levels. Per the U.S. Energy Information Administration (“EIA”), Permian production is currently in excess of ~~five~~5.7 million barrels per day, which is higher than the average daily production of any year prior to 2022. Despite record Permian production volumes, E&P companies continue to experience challenges with labor and supply chains related to drilling and completion activities, which could negatively impact overall production.2023.

With our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin. Below are metrics for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Oil and Gas Pricing Metrics:(1)	Oil and Gas Pricing Metrics:(1)									Oil and Gas Pricing Metrics:(1)
WTI Cushing average price per bbl	WTI Cushing average price per bbl	$	108.83	$	66.19	$	102.01	$	62.21	WTI Cushing average price per bbl	$	73.54	$	108.83	$	74.73	$	102.01
Henry Hub average price per mmbtu	Henry Hub average price per mmbtu	$	7.53	$	2.95	$	6.08	$	3.22	Henry Hub average price per mmbtu	$	2.16	$	7.53	$	2.40	$	6.08

Activity Metrics specific to the Permian Basin:(1)(2)	Activity Metrics specific to the Permian Basin:(1)(2)									Activity Metrics specific to the Permian Basin:(1)(2)
Average monthly horizontal permits	Average monthly horizontal permits	621		665		606		558		Average monthly horizontal permits	576		621		633		606
Average monthly horizontal wells drilled	Average monthly horizontal wells drilled	504		386		483		365		Average monthly horizontal wells drilled	593		504		555		483
Average weekly horizontal rig count	Average weekly horizontal rig count	321		220		293		205		Average weekly horizontal rig count	338		321		338		293
DUCs as of June 30 for each applicable year	DUCs as of June 30 for each applicable year	4,380		5,080		4,380		5,080		DUCs as of June 30 for each applicable year	5,037		4,380		5,037		4,380

Total Average US weekly horizontal rig count (2)	Total Average US weekly horizontal rig count (2)	656		408		615		382		Total Average US weekly horizontal rig count (2)	650		656		674		615

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(1) Commonly used definitions in the oil and gas industry provided in the table above are defined as follows: WTI Cushing represents West Texas Intermediate. Bbl represents one barrel of 42 U.S. gallons of oil. Mmbtu represents one million British thermal units, a measurement used for natural gas. DUCs represent drilled but uncompleted wells.

(2) Permian Basin specific information per Enverus analytics. US weekly horizontal rig counts per Baker Hughes United States Rotary Rig Count for horizontal rigs. Statistics for similar data are also available from other sources. The comparability between these other sources and the sources used by the Company may differ.

The metrics above show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. Oil and gas prices in ~~the first half of 2022~~2023 to date have ~~significantly increased~~decreased compared to the ~~comparable~~same period in ~~2021.~~2022. Although E&P companies broadly continue to deploy capital at a measured pace, drilling and development activities across the Permian Basin have ~~generally improved in~~remained robust through the second quarter of ~~2022 compared to the prior year.~~2023. As we are a significant landowner in the Permian Basin and not an oil and gas producer, our revenue is affected by the development decisions made by companies that operate in the areas where we own royalty interests and land. Accordingly, these decisions

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made by others affect not only our production and produced water disposal volumes but also directly impact our surface-related income and water sales.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash and cash flows generated from our operations. Our primary liquidity and capital requirements are for capital expenditures related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital and general corporate needs.

We continuously review our liquidity and capital resources. If market conditions were to change and our revenues were to decline significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could seek alternative sources of funding. We have no debt or credit facilities, nor any off-balance sheet arrangements as of June 30, ~~2022.~~2023.

As of June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$389.8~~$609.3 million that we expect to utilize, along with cash flow from operations, to provide capital to support the growth of our business, to repurchase our common stock, par value $0.01 per share (the “Common Stock”) subject to market conditions, to pay dividends subject to the discretion of our board of directors (the “Board”) and for general corporate purposes. For the six months ended June 30, ~~2022,~~2023, we repurchased $26.2 million of our Common Stock (including share repurchases not settled at the end of the period), and we paid ~~$201.0~~$50.0 million in dividends to our stockholders. We believe that cash from operations, together with our cash and cash equivalents balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.

During the six months ended June 30, ~~2022,~~2023, we invested approximately ~~$10.1~~$5.0 million in Texas Pacific Water Resources LLC (“TPWR”) projects to maintain and/or enhance ~~water sourcing assets, of which $6.0 million related to electrifying~~ our water sourcing ~~infrastructure.~~assets.

Cash Flows from Operating Activities

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, net cash provided by operating activities was ~~$195.4~~$199.3 million and ~~$96.5~~$195.4 million, respectively. Our cash flow provided by operating activities is primarily from oil, gas and produced water royalties, water and land sales, and easements and other surface-related income. Cash flow used in operations generally consists of operating expenses associated with our revenue streams, general and administrative expenses and income taxes.

The increase in cash flows provided by operating activities for the six months ended June 30, ~~2022~~2023 compared to the same period of ~~2021, was~~2022 primarily related to ~~increased prices and volumes of oil and gas production and was partially offset by increased~~decreases in income tax payments and working capital ~~requirements.~~requirements during 2023 as compared to 2022.

Cash Flows Used in Investing Activities

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, net cash used in investing activities was ~~$8.3~~$27.7 million and ~~$4.5~~$8.3 million, respectively. Our cash flows used in investing activities are primarily related to land acquisitions and capital expenditures related to our water services and operations ~~segment and acquisitions of royalty interests.~~segment.

~~Capital expenditures~~Acquisitions of land increased ~~$2.2~~$20.3 million for the six months ended June 30, ~~2022~~2023 compared to the same period of ~~2021. Acquisitions~~2022 and were partially offset by a decrease of ~~royalty interests increased approximately $1.7~~$1.1 million ~~for the six months ended June 30, 2022 compared to~~in capital expenditures during the same ~~period 2021.~~

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time period.

Cash Flows Used in Financing Activities

For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, net cash used in financing activities was ~~$225.6~~$77.3 million and ~~$45.2~~$225.6 million, respectively. Our cash flows used in financing primarily consist of activities which return capital to our stockholders such as payment of dividends and repurchases of our Common Stock.

During the six months ended June 30, 2023, we paid total dividends of $50.0 million consisting of cumulative paid cash dividends of $6.50 per share. During the six months ended June 30, 2022, we paid total dividends of $201.0 million consisting of cumulative paid cash dividends of $6.00 per share and special dividends of $20.00 per share. During the six months ended June 30, ~~2021, we paid total dividends of $42.7 million consisting of cumulative cash dividends of $5.50 per share. During the six months ended June 30,~~2023 and 2022, ~~and 2021,~~ we repurchased ~~$25.5~~$26.2 million and ~~$2.5~~$25.5 million of our Common Stock, ~~respectively.~~respectively (including share repurchases not settled at the end of the period).

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Results of Operations - Consolidated

The following table shows our consolidated results of operations for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Oil and gas royalties	Oil and gas royalties	$	121,268	$	58,204	$	225,440	$	107,737	Oil and gas royalties	$	82,412	$	121,268	$	171,542	$	225,440
Water sales	Water sales	22,272		12,473		41,092		25,429		Water sales	37,648		22,272		59,377		41,092
Produced water royalties	Produced water royalties	18,669		15,458		33,539		28,007		Produced water royalties	20,841		18,669		40,975		33,539
Easements and other surface-related income	Easements and other surface-related income	13,990		8,977		23,182		18,024		Easements and other surface-related income	18,708		13,990		33,677		23,182
Land sales and other operating revenue	Land sales and other operating revenue	71		820		352		890		Land sales and other operating revenue	1,000		71		1,400		352
Total revenues	Total revenues	176,270		95,932		323,605		180,087		Total revenues	160,609		176,270		306,971		323,605

Expenses:	Expenses:									Expenses:
Salaries and related employee expenses	Salaries and related employee expenses	9,588		13,271		18,973		23,250		Salaries and related employee expenses	10,596		9,588		21,189		18,973
Water service-related expenses	Water service-related expenses	3,915		3,551		6,697		6,849		Water service-related expenses	10,287		3,915		15,943		6,697
General and administrative expenses	General and administrative expenses	3,705		2,841		6,705		5,647		General and administrative expenses	3,329		3,674		6,884		6,641
Legal and professional fees	Legal and professional fees	1,163		1,141		2,882		3,353		Legal and professional fees	10,154		1,163		26,782		2,882
Ad valorem taxes		2,011		—		4,021		—
Ad valorem and other taxes										Ad valorem and other taxes	2,070		2,042		3,644		4,085

Depreciation, depletion and amortization	Depreciation, depletion and amortization	4,180		3,858		8,306		7,696		Depreciation, depletion and amortization	3,893		4,180		7,297		8,306
Total operating expenses	Total operating expenses	24,562		24,662		47,584		46,795		Total operating expenses	40,329		24,562		81,739		47,584

Operating income	Operating income	151,708		71,270		276,021		133,292		Operating income	120,280		151,708		225,232		276,021

Other income, net	Other income, net	630		406		706		411		Other income, net	6,871		630		12,260		706
Income before income taxes	Income before income taxes	152,338		71,676		276,727		133,703		Income before income taxes	127,151		152,338		237,492		276,727

Income tax expense	Income tax expense	33,444		14,630		59,933		26,605		Income tax expense	26,758		33,444		50,531		59,933
Net income	Net income	$	118,894	$	57,046	$	216,794	$	107,098	Net income	$	100,393	$	118,894	$	186,961	$	216,794

For the Three Months Ended June 30, ~~2022~~2023 as Compared to the Three Months Ended June 30, ~~2021~~2022

Consolidated Revenues and Net Income:

Total revenues ~~and net income increased $80.3~~decreased $15.7 million, ~~and $61.8~~or 8.9%, to $160.6 million ~~respectively,~~ for the three months ended June 30, ~~2022~~2023 compared to $176.3 million for the three months ended June 30, ~~2021. These increases were~~2022. This decrease was principally due to the ~~$63.1~~$38.9 million ~~increase~~decrease in oil and gas royalty revenue and was partially offset by the ~~$13.0 million~~ combined increase of $17.5 million in water sales and produced water royalties over the same period. Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $100.4 million for the three months ended June 30, 2023 was 15.6% lower than the comparable period of 2022 as a result of both the decrease in revenues discussed above and the increase in operating expenses discussed further below under “Consolidated Expenses.”

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Consolidated Expenses:

Salaries and related employee expenses. Salaries and related employee expenses were ~~$9.6~~$10.6 million for the three months ended June 30, ~~2022~~2023 compared to ~~$13.3~~$9.6 million for the comparable period of ~~2021. Salaries~~2022. The increase in salaries and related employee expenses for the three months ended June 30, 2021 included severance costs of $4.7 million, while there were no severance costs during the same period of 2022. This decrease in expense for the three months ended June 30, 2022 was partially offset by increased compensation expense primarilyis principally related to ~~employee stock awards granted under the Company’s equity incentive plan. Prior to December 2021, the Company did not have~~ an ~~equity incentive plan.~~increase in number of employees and market compensation adjustments.

Water service-related expenses. Water service-related expenses increased $6.4 million to ~~$3.9~~$10.3 million for the three months ended June 30, ~~2022 from $3.6 million for~~2023 compared to the same period of ~~2021. Field logistical services, repairs,~~2022. Certain types of water-related expenses, including, but not limited to, transfer, treatment, and ~~maintenance expenses increased~~electricity, will vary from period to period as our customers’ needs and requirements change. Water purchase, transfer, and treatment costs for the three months ended June 30, ~~2022~~2023 increased primarily due to heightened

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sales activity compared to the same period of ~~2021 principally as a result of heightened sales activity during~~2022. Additionally, higher demand for water within shorter time commitments and increases in cost due to inflation resulted in an increase in equipment rental and fuel expenses over the same time period. Additionally, the Company’s ongoing initiative to electrify its water sourcing infrastructure resulted in increased electricity expense which was more than offset by decreased fuel and equipment rental expenses for the three months ended June 30, 2022 compared to the same period of 2021.

~~General~~Legal and ~~administrative expenses.~~ professional fees~~General~~. Legal and ~~administrative expenses increased $0.9 million to $3.7~~professional fees were $10.2 million for the three months ended June 30, ~~2022 from $2.8~~2023 compared to $1.2 million for the ~~same~~comparable period of ~~2021.~~2022. The increase is principally related to legal expenses associated with stockholder matters. See further discussion in Part II, Other Information — Item 1. Legal Proceedings.

Other income, net. Other income, net was $6.9 million and $0.6 million for the three months ended June 30, 2023 and 2022, respectively. The increase in ~~general and administrative expenses~~other income, net is primarily related to increased interest income earned on our cash balances as interest yields have risen during the three months ended June 30, ~~2022~~2023 compared to the same period of 2021 was principally related to board of director fees and expenses, increased charitable contributions, and travel expenses, primarily resulting from the expansion of the Company’s board of directors from nine members to ten members and our contribution of approximately $0.3 million to the Permian Basin Area Foundation in support of the initiative to renovate Hogan Park in Midland, Texas. Travel expenses increased as travel has generally returned to pre-pandemic levels.

~~Ad valorem taxes~~. For the three months ended June 30, 2022, the Company recorded an accrual of approximately $2.0 million for ad valorem taxes. Prior to January 1, 2022, the ad valorem taxes with respect to our historical royalty interests were paid directly by certain third parties pursuant to an existing arrangement. Since the completion of our Corporate Reorganization on January 11, 2021, we have received notice from one such third party that they no longer intend to pay the ad valorem taxes related to such historical royalty interests. While we continue to believe the obligation to pay these ad valorem taxes should belong to the third party, we are accruing an estimate of such taxes and intend to pay the taxes when they become due in order to protect the royalty interests from any potential tax liens for nonpayment of future ad valorem taxes.2022.

Total income tax expense. Total income tax expense was ~~$33.4~~$26.8 million and ~~$14.6~~$33.4 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~increase~~decrease in income tax expense is primarily related to ~~increased~~decreased operating income resulting from ~~increased revenues from~~decreased oil and gas ~~royalties~~royalty revenue and ~~water sales.~~increased operating expenses.

For the Six Months Ended June 30, ~~2022~~2023 as Compared to the Six Months Ended June 30, ~~2021~~2022

Consolidated Revenues and Net Income:

~~Revenues increased $143.5~~Total revenues decreased $16.6 million, or ~~79.7%~~5.1%, to $307.0 million for the six months ended June 30, 2023 compared to $323.6 million for the six months ended June 30, ~~2022 compared to $180.1 million for the six months ended June 30, 2021.~~2022. This ~~increase~~decrease was principally due to the ~~$117.7~~$53.9 million ~~increase~~decrease in oil and gas royalty revenue and was partially offset by the combined increase of ~~$21.2~~$25.7 million in water sales and produced water royalties over the same period. Net income of $216.8 million for the six months ended June 30, 2022 more than doubled net income for the comparable period of 2021. The increase in net income was driven by the 107.1% increase in operating income resulting from the 79.7% increase in total revenues while operating expenses were relatively flat during the same time period. Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $187.0 million for the six months ended June 30, 2023 was 13.8% lower than the comparable period of 2022, principally as a result of both the decrease in revenues discussed above and the increase in operating expenses discussed further below under “Consolidated Expenses.”

Consolidated Expenses:

Salaries and related employee expenses. Salaries and related employee expenses were ~~$19.0~~$21.2 million for the six months ended June 30, ~~2022~~2023 compared to ~~$23.3~~$19.0 million for the comparable period of ~~2021. Salaries~~2022. This increase in salaries and related employee expenses during 2021 included $6.7 million of severance costs, while there were no severance costs during the same period of 2022. This decrease in expense for 2022 was partially offset by increased compensation expenseis primarily related to ~~employee stock awards granted under the Company’s equity incentive plan. Prior to December 2021, the Company did not have~~ an ~~equity incentive plan.~~increase in number of employees and market compensation adjustments.

~~General and administrative expenses.~~ Water service related expenses~~General and administrative~~. Water service-related expenses ~~increased $1.1 million to $6.7~~were $15.9 million for the six months ended June 30, ~~2022 from $5.6~~2023 compared to $6.7 million for the same period of ~~2021. The increase in general~~2022. Certain types of water-related expenses, including, but not limited to, transfer, treatment, and ~~administrative~~

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electricity, will vary from period to period as our customers’ needs and requirements change. Water purchase, transfer, and treatment expenses ~~during~~increased for the six months ended June 30, ~~2022~~2023 compared to the same period of ~~2021 was~~2022 principally ~~related~~as a result of heightened sales activity in 2023. Additionally, higher demand for water within shorter time commitments and increases in cost due to ~~board of director fees~~inflation resulted in an increase in equipment rental and fuel expenses ~~increased charitable contributions, and travel expenses, primarily resulting from~~over the expansion of the Company’s board of directors from nine members to ten members and our contribution of approximately $0.3 million to the Permian Basin Area Foundation in support of the initiative to renovate Hogan Park in Midland, Texas. Travel expenses increased as travel has generally returned to pre-pandemic levels.same time period.

Legal and professional ~~expenses~~fees. Legal and professional fees were ~~$2.9~~$26.8 million for the six months ended June 30, ~~2022~~2023 compared to ~~$3.4~~$2.9 million for the comparable period of ~~2021. Legal and professional fees for the six months ended June 30, 2021 were~~2022. The increase is principally ~~higher due~~related to legal expenses associated with ~~our Corporate Reorganization which was completed on January 11, 2021.~~stockholder matters. See further discussion in Part II, Other Information — Item 1. Legal Proceedings.

~~Ad valorem taxes~~Other income, net. ~~For the six months ended June 30, 2022, the Company recorded an accrual of approximately $4.0~~Other income, net was $12.3 million for ad valorem taxes. Prior to January 1, 2022, the ad valorem taxes with respect to our historical royalty interests were paid directly by certain third parties pursuant to an existing arrangement. Since the completion of our Corporate Reorganization on January 11, 2021, we have received notice from one such third party that they no longer intend to pay the ad valorem taxes related to such historical royalty interests. While we continue to believe the obligation to pay these ad valorem taxes should belong to the third party, we are accruing an estimate of such taxes and ~~intend to pay the taxes when they become due in order to protect the royalty interests from any potential tax liens for nonpayment of future ad valorem taxes.~~

~~Depreciation, depletion and amortization. Depreciation, depletion and amortization was $8.3~~$0.7 million for the six months ended June 30, 2023 and 2022, ~~compared to $7.7 million for the six months ended June 30, 2021.~~respectively. The increase in ~~depreciation, depletion and amortization~~other income, net is ~~principally~~primarily related to increased interest income earned on our ~~investment in water service-related assets placed in service in 2022 and, to a lesser extent, increased depletion related to our oil and gas royalty interests.~~cash balances as interest yields have risen during 2023.

Total income tax expense. Total income tax expense was ~~$59.9~~$50.5 million and ~~$26.6~~$59.9 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~increase~~decrease in income tax expense is primarily related to ~~increased~~decreased operating income resulting from ~~increased revenues from~~decreased oil and gas ~~royalties, water sales,~~royalty revenue and ~~produced water royalties.~~increased operating expenses.

Segment Results of Operations

We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. We eliminate any inter-segment revenues and expenses upon consolidation.

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We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 11, “Business Segment Reporting” in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. We monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our oil and gas royalty revenue, and, in turn, our results of operations for the three and six months ended June 30, ~~2022~~2023 have ~~benefited directly and indirectly from a rebound in oil and gas activity in the Permian Basin and increases in~~been impacted by declining commodity prices compared to ~~2021. Our~~2022. The decline in oil and gas royalty revenues ~~have increased due to increased royalty production and higher commodity prices during this time period. Additionally,~~has been largely offset by increases in revenues derived from water sales, easements and other surface-related income, ~~water sales,~~ and produced water royalties which have ~~also generally~~ been positively impacted by ongoing development activity in the Permian Basin.

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For the Three Months Ended June 30, ~~2022~~2023 as Compared to the Three Months Ended June 30, ~~2021~~2022

The following is an analysis of our operating results for the comparable periods by reportable segment (in thousands):


		Three Months Ended June 30,									Three Months Ended June 30,
		2022				2021					2023				2022
Revenues:	Revenues:									Revenues:
Land and resource management:	Land and resource management:									Land and resource management:

Oil and gas royalty revenue		$	121,268	68	%	$	58,204	60	%
Oil and gas royalties										Oil and gas royalties	$	82,412	51	%	$	121,268	68	%
Easements and other surface-related income	Easements and other surface-related income	12,046		7	%	8,217		9	%	Easements and other surface-related income	17,908		11	%	12,046		7	%
Land sales and other operating revenue	Land sales and other operating revenue	71		—	%	820		1	%	Land sales and other operating revenue	1,000		1	%	71		—	%
Total land and resource management revenue	Total land and resource management revenue	133,385		75	%	67,241		70	%	Total land and resource management revenue	101,320		63	%	133,385		75	%

Water services and operations:	Water services and operations:									Water services and operations:
Water sales	Water sales	22,272		13	%	12,473		13	%	Water sales	37,648		24	%	22,272		13	%
Produced water royalties	Produced water royalties	18,669		11	%	15,458		16	%	Produced water royalties	20,841		13	%	18,669		11	%
Easements and other surface-related income	Easements and other surface-related income	1,944		1	%	760		1	%	Easements and other surface-related income	800		—	%	1,944		1	%
Total water services and operations revenue	Total water services and operations revenue	42,885		25	%	28,691		30	%	Total water services and operations revenue	59,289		37	%	42,885		25	%
Total consolidated revenues	Total consolidated revenues	$	176,270	100	%	$	95,932	100	%	Total consolidated revenues	$	160,609	100	%	$	176,270	100	%

Net income:	Net income:									Net income:
Land and resource management	Land and resource management	$	96,074	81	%	$	45,443	80	%	Land and resource management	$	69,633	69	%	$	96,074	81	%
Water services and operations	Water services and operations	22,820		19	%	11,603		20	%	Water services and operations	30,760		31	%	22,820		19	%
Total consolidated net income	Total consolidated net income	$	118,894	100	%	$	57,046	100	%	Total consolidated net income	$	100,393	100	%	$	118,894	100	%

Land and Resource Management

Land and Resource Management segment revenues ~~increased $66.1~~decreased $32.1 million, or ~~98.4%~~24.0%, to ~~$133.4~~$101.3 million for the three months ended June 30, ~~2022~~2023 as compared to the ~~comparable~~same period of ~~2021.~~2022. The ~~increase~~decrease in Land and Resource Management segment revenues is ~~principally~~ due to ~~an increase~~a $38.9 million decrease in oil and gas royalty revenue ~~as discussed further below.~~for three months ended June 30, 2023 compared to the same period of 2022. The decrease in oil and gas royalty revenue was partially offset by an increase in easements and other surface-related income over the same time period.

Oil and gas royalties. Oil and gas royalty revenue was $82.4 million for the three months ended June 30, 2023 compared to $121.3 million for the three months ended June 30, 2022, ~~compared~~a decrease of 32.0%. Oil and gas royalties decreased $38.9 million due to ~~$58.2 million~~lower average commodity prices for the three months ended June 30, ~~2021, an increase~~2023 compared to the same period of ~~108.3%.~~

2022. The ~~table below provides financial and operational data by royalty stream~~average realized price declined 45.9% to $38.04 per barrel of oil equivalent (“Boe”) for the three months ended June 30, ~~2022 and 2021:~~2023 from $70.36 per Boe for the three months ended June 30, 2022. The decrease in the average realized price per Boe was partially offset by an increase in production volumes. Our share of production increased to 24.9 thousand Boe per day for the three months ended June 30, 2023 compared to 19.8 thousand Boe per day for the same period of 2022.

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Three Months Ended
June 30,
2022 2021
Our share of production volumes(1):
Oil (MBbls) 813 683
Natural gas (MMcf) 2,912 2,807
NGL (MBbls) 507 342
Equivalents (MBoe) 1,805 1,493
Equivalents per day (MBoe/d) 19.8 16.4
Oil and gas royalty revenue (in thousands):
Oil royalties $ 83,966 $ 42,577
Natural gas royalties 17,650 7,512
NGL royalties 19,652 8,115
Total oil and gas royalties $ 121,268 $ 58,204
Realized prices:
Oil ($/Bbl) $ 108.16 $ 65.30
Natural gas ($/Mcf) $ 6.55 $ 2.89
NGL ($/Bbl) $ 41.93 $ 25.64
Equivalents ($/Boe) $ 70.36 $ 40.83
The financial and operational data by royalty stream is presented in the table below for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,
	2023		2022
Our share of production volumes (1):
Oil (MBbls)	1,000		813
Natural gas (MMcf)	3,782		2,912
NGL (MBbls)	638		507
Equivalents (MBoe)	2,269		1,805
Equivalents per day (MBoe/d)	24.9		19.8

Oil and gas royalty revenue (in thousands):
Oil royalties	$	70,183	$	83,966
Natural gas royalties	3,775		17,650
NGL royalties	8,454		19,652
Total oil and gas royalties	$	82,412	$	121,268

Realized prices:
Oil ($/Bbl)	$	73.46	$	108.16
Natural gas ($/Mcf)	$	1.08	$	6.55
NGL ($/Bbl)	$	14.33	$	41.93
Equivalents ($/Boe)	$	38.04	$	70.36

(1)Commonly used definitions in the oil and gas industry not previously defined: Boe represents barrels of oil equivalent. MBbls represents one thousand barrels of crude oil, condensate or NGLs. Mcf represents one thousand cubic feet of natural gas. MMcf represents one million cubic feet of natural gas. MBoe represents one thousand Boe. MBoe/d represents one thousand Boe per day.

~~Our share of crude oil, natural gas~~Easements and ~~NGL production volumes~~other surface-related income. Easements and other surface-related income was ~~19.8 thousand Boe per day~~$17.9 million for the three months ended June 30, 2022 compared to 16.4 thousand Boe per day for the same period of 2021. The average realized prices were $108.16 per barrel of oil, $6.55 per Mcf of natural gas, and $41.93 per barrel of NGL, for a total equivalent price of $70.36 per Boe for the three months ended June 30, 2022,2023, an increase of ~~$29.53 per Boe~~48.7% compared to ~~the total equivalent price of $40.83 per Boe for the same period of 2021.~~

~~Easements and other surface-related income.~~ ~~Easements and other surface-related income was~~ $12.0 million for the three months ended June 30, ~~2022, an increase of 46.6% compared to $8.2 million for the three months ended June 30, 2021.~~2022. Easements and other surface-related income includes ~~wellbore easements, pipeline easements, power line~~revenue related to the use and ~~utility easements, material sales, commercial leases,~~crossing of our land for oil and ~~temporary permits.~~gas exploration and production, renewable energy, and agricultural operations. The increase in easements and other surface-related income is principally related to increases of ~~$1.6 million in wellbore easements, $1.1~~$2.4 million in pipeline easements, $1.8 million in material sales, and $0.7 million in ~~power line and utility easements~~commercial leases for the three months ended June 30, ~~2022~~2023 compared to the same period of ~~2021.~~2022. The amount of income derived from pipeline easements is a function of the term of the easement, the size of the easement, and the number of easements entered into for any given period. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” above for additional discussion of development activity in the Permian Basin during the three months ended June 30, 2023.

Land sales and other operating revenue. Land sales and other operating revenue was $1.0 million and $0.1 million for the three months ended June 30, 2023 and 2022, respectively. For the three months ended June 30, 2023, we sold 34 acres of land for an aggregate sales price of $1.0 million. We did not sell any land during the three months ended June 30, 2022.

Net ~~income~~income. . Net income for the Land and Resource Management segment was $69.6 million for the three months ended June 30, 2023 compared to $96.1 million for the three months ended June 30, ~~2022 compared to $45.4~~2022. Segment operating income decreased $41.1 million for the three months ended June 30, ~~2021. As discussed above, segment revenues increased 98.4% for the three months ended June 30, 2022~~2023 compared to the same period of ~~2021. Segment expenses, including income tax expense, were $37.3~~2022, largely driven by the $38.9 million decrease in oil and ~~$21.8~~gas royalty revenue and the $9.0 million ~~for the three months ended June 30, 2022 and 2021, respectively. The~~ increase in ~~expenses during 2022 is principally related to a $15.6~~legal and professional fees. These changes were partially offset by an $8.5 million ~~increase~~decrease in income tax expense ~~for the three months ended June 30, 2022 compared to~~and a $6.2 million increase in other income, net over the same ~~period of 2021.~~time periods. Expenses are discussed further above under “Results of ~~Operations - Consolidated.~~Operations.”

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Water Services and Operations

Water Services and Operations segment revenues increased ~~49.5%,~~38.3% to ~~$42.9~~$59.3 million for the three months ended June 30, ~~2022~~2023 as compared with revenues of ~~$28.7~~$42.9 million for the ~~comparable~~same period of ~~2021.~~2022. The increase in Water Services and Operations segment revenues is due to increases in water sales revenue and produced water ~~royalty revenue.~~royalties, which are discussed below. As discussed in “Market Conditions” above, our segment revenues are directly influenced by development decisions made by our customers and the overall activity level in the Permian Basin. Accordingly, our segment revenues and sales volumes, as further discussed below, will fluctuate from period to period based upon those decisions and activity levels.

Water sales. Water sales revenue ~~was $22.3~~increased $15.4 million to $37.6 million for the three months ended June 30, ~~2022, an increase~~2023, compared to the same period of ~~$9.8 million or 78.6%, compared with the three months ended June 30, 2021 when water sales revenue was $12.5 million.~~2022. The ~~increase~~growth in water sales is principally due to ~~a 55.0%~~an increase of approximately 38.5% in ~~the number of barrels of sourced and treated~~ water ~~sold~~sales volumes for the three months ended June 30, ~~2022,~~2023, compared to the same period of ~~2021.~~2022. This increase in volumes is partially attributable to increased activity in contracted areas of mutual interests (“AMI”).

Produced water royalties. Produced water royalties are ~~royalties~~ received from the ~~transportation~~transfer or disposal of produced water on our land. Produced water royalties are contractual and not paid as a matter of right. We do not operate any saltwater disposal wells. Produced water royalties were ~~$18.7~~$20.8 million for the three months ended June 30, ~~2022~~2023 compared to ~~$15.5~~$18.7 million for the same period in ~~2021.~~2022. This increase is principally due to increased produced water volumes for the three months ended June 30, ~~2022~~2023 compared to the same period of ~~2021.~~2022.

Easements and other surface-related income. Easements and other surface-related income was ~~$1.9 million for the three months ended June 30, 2022 compared to~~ $0.8 million for the three months ended June 30, ~~2021.~~2023, a decrease of $1.1 million compared to the same period in 2022. The ~~increase~~decrease in easements and other surface-related income relates to ~~an increase~~a decrease in temporary permits for sourced water lines for the three months ended June 30, ~~2022~~2023, compared to the same period in ~~2021.~~2022.

Net income. Net income for the Water Services and Operations segment ~~increased $11.2~~was $30.8 million for the three months ended June 30, 2023 compared to $22.8 million for the three months ended June 30, ~~2022 compared to $11.6~~2022. Segment operating income increased $9.7 million for the three months ended June 30, ~~2021. As discussed above, segment revenues increased 49.5% for the three months ended June 30, 2022~~2023 compared to the same period of ~~2021. Segment expenses, including income tax expense, were $20.1~~2022. The increase is principally due to the $16.4 million ~~for the three months ended June 30, 2022 as compared to $17.1 million for the three months ended June 30, 2021. The overall~~ increase in segment revenues and was partially offset by the $6.4 million increase in water service-related expenses ~~during 2022 is principally related to a $3.2~~and the $1.8 million increase in income tax ~~expense as a result of increased segment operating income during the same time period. Operating expenses decreased $0.2 million during 2022 compared to 2021.~~expense. Expenses are discussed further above under “Results of ~~Operations - Consolidated.~~Operations.”

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For the Six Months Ended June 30, ~~2022~~2023 as Compared to the Six Months Ended June 30, ~~2021~~2022

The following is an analysis of our operating results for the comparable periods by reportable segment (in thousands):


		Six Months Ended June 30,									Six Months Ended June 30,
		2022				2021					2023				2022
Revenues:	Revenues:									Revenues:
Land and resource management:	Land and resource management:									Land and resource management:

Oil and gas royalty revenue	Oil and gas royalty revenue	$	225,440	70	%	$	107,737	60	%	Oil and gas royalty revenue	$	171,542	56	%	$	225,440	70	%
Easements and other surface-related income	Easements and other surface-related income	20,940		6	%	16,404		9	%	Easements and other surface-related income	32,401		11	%	20,940		6	%
Land sales and other operating revenue	Land sales and other operating revenue	352		—	%	890		—	%	Land sales and other operating revenue	1,400		—	%	352		—	%
Total land and resource management revenue	Total land and resource management revenue	246,732		76	%	125,031		69	%	Total land and resource management revenue	205,343		67	%	246,732		76	%

Water services and operations:	Water services and operations:									Water services and operations:
Water sales	Water sales	41,092		13	%	25,429		14	%	Water sales	59,377		20	%	41,092		13	%
Produced water royalties	Produced water royalties	33,539		10	%	28,007		16	%	Produced water royalties	40,975		13	%	33,539		10	%
Easements and other surface-related income	Easements and other surface-related income	2,242		1	%	1,620		1	%	Easements and other surface-related income	1,276		—	%	2,242		1	%
Total water services and operations revenue	Total water services and operations revenue	76,873		24	%	55,056		31	%	Total water services and operations revenue	101,628		33	%	76,873		24	%
Total consolidated revenues	Total consolidated revenues	$	323,605	100	%	$	180,087	100	%	Total consolidated revenues	$	306,971	100	%	$	323,605	100	%

Net income:	Net income:									Net income:
Land and resource management	Land and resource management	$	177,230	82	%	$	84,956	79	%	Land and resource management	$	134,976	72	%	$	177,230	82	%
Water services and operations	Water services and operations	39,564		18	%	22,142		21	%	Water services and operations	51,985		28	%	39,564		18	%
Total consolidated net income	Total consolidated net income	$	216,794	100	%	$	107,098	100	%	Total consolidated net income	$	186,961	100	%	$	216,794	100	%

Land and Resource Management

Land and Resource Management segment revenues ~~increased 97.3%~~decreased 16.8% to ~~$246.7~~$205.3 million for the six months ended June 30, ~~2022~~2023 as compared with ~~$125.0~~$246.7 million for the comparable period of ~~2021.~~2022. The ~~increase~~decrease in Land and Resource Management segment revenues is principally due to ~~increases~~the $53.9 million decrease in oil and gas royalty revenue, ~~and easements and other surface-related income,~~ as discussed further below.

Oil and gas royalties. Oil and gas royalty revenue was $171.5 million for the six months ended June 30, 2023 compared to $225.4 million for the six months ended June 30, 2022, ~~compared to $107.7 million~~a decrease of $53.9 million. Oil and gas royalties for the six months ended June 30, ~~2021,~~2023 included an ~~increase~~$8.7 million recovery, discussed further in the following paragraph. Excluding the $8.7 million recovery, oil and gas royalties decreased $62.6 million due to lower average commodity prices in the six months ended June 30, 2023 compared to the same period of ~~$117.7 million.~~2022. Our share of crude oil, natural gas and NGL production volumes was 22.9 thousand Boe per day for the six months ended June 30, 2023 compared to 20.3 thousand Boe per day for the same period of 2022. The average realized prices were $74.24 per barrel of oil, $2.25 per Mcf of natural gas, and $19.34 per barrel of NGL, for a total equivalent price of $41.08 per Boe for the six months ended June 30, 2023, a decrease of 36.0% over a total equivalent price of $64.22 per Boe for the same period of 2022.

As part of an ongoing arbitration between TPL and an operator with respect to underpayment of oil and gas royalties resulting from improper deductions of post-production costs for periods before and through April 2022, the operator has agreed to pay $8.7 million to TPL (the “$8.7 Million Stipulation”). This amount has been recorded as a receivable and included in oil and gas royalty revenue in the condensed consolidated income statement and in the table above for the six months ended June 30, 2023.

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The table below provides financial and operational data by royalty stream for the six months ended June 30, 2023 and 2022 and ~~2021:~~excludes the $8.7 Million Stipulation discussed above:

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		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Our share of production volumes:
Our share of production volumes (1):						Our share of production volumes (1):
Oil (MBbls)	Oil (MBbls)	1,609		1,328		Oil (MBbls)	1,792		1,609
Natural gas (MMcf)	Natural gas (MMcf)	6,191		5,516		Natural gas (MMcf)	7,088		6,191
NGL (MBbls)	NGL (MBbls)	1,035		725		NGL (MBbls)	1,177		1,035
Equivalents (MBoe)	Equivalents (MBoe)	3,676		2,973		Equivalents (MBoe)	4,151		3,676
Equivalents per day (MBoe/d)	Equivalents per day (MBoe/d)	20.3		16.4		Equivalents per day (MBoe/d)	22.9		20.3

Oil and gas royalty revenue (in thousands):
Oil and gas royalty revenue (in thousands)(1):						Oil and gas royalty revenue (in thousands)(1):
Oil royalties	Oil royalties	$	155,647	$	76,826	Oil royalties	$	127,077	$	155,647
Natural gas royalties	Natural gas royalties	33,825		14,872		Natural gas royalties	14,731		33,825
NGL royalties	NGL royalties	35,968		16,039		NGL royalties	21,069		35,968
Total oil and gas royalties	Total oil and gas royalties	$	225,440	$	107,737	Total oil and gas royalties	$	162,877	$	225,440

Realized prices:
Realized prices(1):						Realized prices(1):
Oil ($/Bbl)	Oil ($/Bbl)	$	101.27	$	60.55	Oil ($/Bbl)	$	74.24	$	101.27
Natural gas ($/Mcf)	Natural gas ($/Mcf)	$	5.91	$	2.91	Natural gas ($/Mcf)	$	2.25	$	5.91
NGL ($/Bbl)	NGL ($/Bbl)	$	37.59	$	23.91	NGL ($/Bbl)	$	19.34	$	37.59
Equivalents ($/Boe)	Equivalents ($/Boe)	$	64.22	$	37.94	Equivalents ($/Boe)	$	41.08	$	64.22

(1)

~~Our share~~The metrics provided exclude the impact of ~~crude oil, natural gas and NGL production volumes was 20.3 thousand Boe per day for~~ the six months ended June 30, 2022 compared to 16.4 thousand Boe per day for the same period of 2021. The average realized prices were $101.27 per barrel of oil, $5.91 per Mcf of natural gas, and $37.59 per barrel of NGL, for a total equivalent price of $64.22 per Boe for the six months ended June 30, 2022, an increase of 69.3% over a total equivalent price of $37.94 per Boe for the same period of 2021.$8.7 Million Stipulation discussed above.

Easements and other surface-related income. Easements and other surface-related income was $32.4 million for the six months ended June 30, 2023, an increase of 54.7% compared to $20.9 million for the six months ended June 30, ~~2022, an increase of 27.7% compared to $16.4 million for the six months ended June 30, 2021.~~2022. Easements and other surface-related income includes ~~wellbore easements, pipeline easements, power line~~revenue related to the use and ~~utility easements, material sales, commercial leases,~~crossing of our land for oil and ~~temporary permits.~~gas exploration and production, renewable energy, and agricultural operations. The increase in easements and other surface-related income is principally related to increases of ~~$2.6~~$4.1 million in pipeline easement income, ~~and $2.2~~$4.0 million in ~~wellbore easements~~material sales, and $1.0 million in commercial lease revenue for the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021.~~2022. The amount of income derived from pipeline easements is a function of the term of the easement, the size of the easement and the number of easements entered into for any given period. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” above for additional discussion of development activity in the Permian Basin during the six months ended June 30, ~~2022~~2023 relative to the same time period of ~~2021.~~2022.

Land sales and other operating revenue. Land sales and other operating revenue ~~includes revenue generated from land sales and grazing leases. Land sales were $0.2~~was $1.4 million and ~~$0.7~~$0.4 million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively. For the six months ended June 30, 2023, we sold 43 acres of land for an aggregate sales price of approximately $1.4 million. For the six months ended June 30, 2022, there were no significant land ~~sales or acquisitions. For the six months ended June 30, 2021, we sold approximately 30 acres of land for an aggregate sales price of approximately $0.7 million, or approximately $25,000 per acre.~~sales.

Net income. Net income for the Land and Resource Management segment ~~increased 108.6%~~decreased 23.8% to ~~$177.2~~$135.0 million for the six months ended June 30, ~~2022~~2023 compared to ~~$85.0~~$177.2 million for the comparable period in ~~2021. The increase in net~~2022. Segment operating income is principally due to the $121.7 million increase in segment revenues, partially offset by an increase in segment expenses, including income tax expense. The increase in segment revenues is principally due to the $117.7 million increase in oil and gas royalty revenue, as discussed above. Total segment expenses were $69.5 million and $40.1decreased $66.2 million for the six months ended June 30, 2023 compared to the same period of 2022, largely driven by the $53.9 million decrease in oil and ~~2021, respectively. The overall~~gas royalty revenue and the $23.7 million increase in ~~segment expenses was principally due to increased~~legal and professional fees. These changes were partially offset by a $12.5 million decrease in income tax expense and an $11.4 million increase in other income, net over the same time periods. Expenses are discussed further above under “Results of Operations — Consolidated.”

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~~expense related to increased operating income. Expenses are discussed further below under “Other Financial Data — Consolidated.”~~

Water Services and Operations

Water Services and Operations segment revenues increased ~~39.6%~~32.2% to ~~$76.9~~$101.6 million for the six months ended June 30, ~~2022~~2023 as compared with ~~$55.1~~$76.9 million for the comparable period of ~~2021.~~2022. The increase in Water Services and Operations segment revenues is principally due to increases in water sales revenue and produced water royalties, which are discussed below. As discussed in “Market Conditions” above, our segment revenues are directly influenced by development decisions made by our customers and the overall activity level in the Permian Basin. Accordingly, our segment revenues and sales volumes, as further discussed below, will fluctuate from period to period based upon those decisions and activity levels.

Water sales. Water sales revenue increased ~~$15.7~~$18.3 million ~~or 61.6%~~ to ~~$41.1~~$59.4 million for the six months ended June 30, ~~2022~~2023 compared to the same period of ~~2021.~~2022. The ~~increase~~growth in water sales is principally due to an increase of approximately ~~26.7%~~30.8% in ~~sourced and treated~~ water sales volumes for the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021. Average pricing~~2022. This increase in ~~2022 has generally returned~~volumes is partially attributable to ~~pre-pandemic levels, while pricing~~increased activity in ~~2021 continued to be impacted by the lows in 2020 brought on by COVID-19.~~contracted AMI.

Produced water royalties. Produced water royalties are royalties received from the ~~transportation~~transfer or disposal of produced water on our land. Produced water royalties are contractual and not paid as a matter of right. We do not operate any salt water disposal wells. Produced water royalties were ~~$33.5~~$41.0 million for the six months ended June 30, ~~2022~~2023 compared to ~~$28.0~~$33.5 million compared to the same period in ~~2021.~~2022. This increase is principally due to increased produced water volumes for the six months ended June 30, ~~2022~~2023 compared to the same period of ~~2021.~~2022.

Easements and other surface-related income. Easements and other surface-related income was $1.3 million and $2.2 million for the six months ended June 30, 2023 and 2022, ~~an increase of $0.6 million compared to $1.6 million for the six months ended June 30, 2021.~~respectively. The ~~increase~~decrease in easements and other surface-related income relates to ~~an increase~~a decrease in temporary permits for sourced water lines for the six months ended June 30, ~~2022~~2023 compared to the same period in ~~2021.~~2022.

Net income. Net income for the Water Services and Operations segment was ~~$39.6~~$52.0 million for the six months ended June 30, ~~2022~~2023 compared to ~~$22.1~~$39.6 million for the same period in ~~2021. As discussed above, segment revenues~~2022. Segment operating income increased ~~39.6% for the six months ended June 30, 2022 compared to the same period of 2021. Total segment expenses, including income tax expense, were $37.3~~$15.4 million for the six months ended June 30, ~~2022 as~~2023 compared to ~~$32.9~~the same period of 2022. The increase is principally due to the $24.8 million ~~for the six months ended June 30, 2021. The overall~~ increase in segment revenues and was partially offset by the $9.2 million increase in water service-related expenses ~~during 2022 is principally related to a $4.9~~and the $3.1 million increase in income tax ~~expense related to increased segment operating income during the same time period. Operating expenses decreased $0.4 million during 2022 compared to 2021.~~expense. Expenses are discussed further ~~below~~above under ~~“Other Financial Data~~“Results of Operations — Consolidated.”

Non-GAAP Performance Measures

In addition to amounts presented in accordance with ~~GAAP,~~generally accepted accounting principles in the United States of America (“GAAP”), we also present certain supplemental non-GAAP performance measurements. These measurements are not to be considered more relevant or accurate than the measurements presented in accordance with GAAP. In compliance with the requirements of the SEC, our non-GAAP measurements are reconciled to net income, the most directly comparable GAAP performance measure. For all non-GAAP measurements, neither the SEC nor any other regulatory body has passed judgment on these non-GAAP measurements.

EBITDA, ~~and~~ Adjusted EBITDA and Free Cash Flow

EBITDA is a non-GAAP financial measurement of earnings before interest, taxes, depreciation, depletion and amortization. Its purpose is to highlight earnings without finance, taxes, and depreciation, depletion and amortization expense, and its use is limited to specialized analysis. We calculate Adjusted EBITDA as EBITDA excluding ~~the impact of certain~~employee share-based compensation. Its purpose is to highlight earnings without non-cash activity such as share-based compensation and/or other non-recurring ~~and/~~or unusual ~~non-operating items, including, but not limited to: employee share-based compensation, conversion costs related~~items. We calculate Free Cash Flow as Adjusted EBITDA less current income tax expense and capital expenditures. Its purpose is to ~~our Corporate Reorganization, and severance costs.~~provide an additional measure of operating performance. We have presented EBITDA, ~~and~~ Adjusted EBITDA and Free Cash Flow because we believe that ~~both~~these metrics are useful supplements to net income in analyzing the Company's operating performance.

Our definitions of Adjusted EBITDA and Free Cash Flow may differ from computations of similarly titled measures of other companies.

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The following table presents a reconciliation of net income to EBITDA, ~~and~~ Adjusted EBITDA and Free Cash Flow for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income	Net income	$	118,894	$	57,046	$	216,794	$	107,098	Net income	$	100,393	$	118,894	$	186,961	$	216,794
Add:	Add:									Add:
Income tax expense	Income tax expense	33,444		14,630		59,933		26,605		Income tax expense	26,758		33,444		50,531		59,933
Depreciation, depletion and amortization	Depreciation, depletion and amortization	4,180		3,858		8,306		7,696		Depreciation, depletion and amortization	3,893		4,180		7,297		8,306
EBITDA	EBITDA	156,518		75,534		285,033		141,399		EBITDA	131,044		156,518		244,789		285,033
Add:	Add:									Add:
Employee share-based compensation	Employee share-based compensation	1,760		—		3,079		—		Employee share-based compensation	2,559		1,760		4,715		3,079
Conversion costs related to corporate reorganization		—		53		—		2,026
Severance costs		—		4,680		—		6,680

Adjusted EBITDA		$	158,278	$	80,267	$	288,112	$	150,105

Adjusted EBITDA										Adjusted EBITDA	133,603		158,278		249,504		288,112
Less:										Less:

Current income tax expense										Current income tax expense	(27,125)		(33,992)		(51,204)		(60,887)
Capital expenditures										Capital expenditures	(1,371)		(7,342)		(5,144)		(10,347)
Free Cash Flow										Free Cash Flow	$	105,107	$	116,944	$	193,156	$	216,878

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. For a full discussion of our accounting policies please refer to Note 2 to the Consolidated Financial Statements included in our ~~2021~~2022 Annual Report on Form 10-K filed with the SEC on February ~~23, 2022.~~22, 2023.

There have been no material changes to our critical accounting policies or in the estimates and assumptions underlying those policies, from those provided in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2021~~2022 Annual Report on Form 10-K.

New Accounting Pronouncements

For further information regarding recently issued accounting pronouncements, see Note 2, “Summary of Significant Accounting Policies” in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements” in this Quarterly Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the information related to market risk of the Company since December 31, ~~2021.~~2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of June 30, ~~2022.~~2023.

~~Remediation of Material Weakness~~

As previously disclosed in Item 9A. Controls and Procedures of our Annual Report on Form 10-K for the year ended December 31, 2021, management concluded there was a material weakness in internal control over financial reporting related to the incorrect tax treatment of depletion related to our oil and gas royalty interests in our filed income tax returns related to prior periods until the fourth quarter of 2021. The material weakness did not result in any restatements of our consolidated financial statements or disclosures for any prior period.

Since identifying the material weakness, management developed the following plan to remediate the material weakness in internal control over financial reporting related to our controls over income taxes, which consisted of:

•~~Implementation of a quarterly evaluation of tax positions taken by the Company by our personnel and third-party tax professional; and~~

•~~Implementation of enhanced monitoring activities related to changes in tax laws and regulations which may impact the Company’s assessment of tax positions.~~

These internal controls were implemented during the first quarter of 2022 and have operated for two consecutive quarters, the most recent quarter ending June 30, 2022. Management has been testing the Company’s enhanced controls to determine whether they have operated effectively over time. From this testing, management believes that the enhanced controls are operating effectively and the deficiencies that contributed to the material weakness have been remediated. Management will continue its evaluation of these controls through the end of the fiscal year, at which time our internal controls will be evaluated by Deloitte & Touche LLP in connection with its audit of the Company’s internal control over financial reporting.

~~Changes in Internal Controls During the Second Quarter of 2022~~

There have been no changes during the quarter ended June 30, ~~2022~~2023 in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial ~~reporting, except for the continued implementation of internal controls related to the remediation of the material weakness described above.~~

reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

TPL is not involved in any material pending legal ~~proceedings.~~proceedings other than the item disclosed below.

On November 23, 2022, TPL filed a complaint in Delaware Chancery Court (“the Court”) against Horizon Kinetics, LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors LLC, and SoftVest, L.P. (collectively, the “Stockholder Defendants”) under the caption Texas Pacific Land Corporation v. Horizon Kinetics LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors, LLC, and SoftVest L.P. (C.A. No. 2022-1066-JTL) (the “Action”). Horizon Kinetics LLC and Horizon Kinetics Asset Management LLC are affiliated with Murray Stahl, a member of the Board, and Softvest Advisors, LLC and SoftVest L.P. are affiliated with Eric Oliver, a member of the Board. TPL filed the Action to resolve a disagreement with the Stockholder Defendants over their voting commitments pursuant to the Stockholders’ Agreement with the Company. A trial was held on April 17, 2023, and post-trial oral arguments occurred on June 30, 2023. No ruling has been issued as of this date.

Item 1A. Risk Factors.

There have been no material changes in the risk factors previously disclosed in response to Part I, Item 1A. “Risk Factors” set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~23, 2022.~~22, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended June 30, ~~2022,~~2023, the Company repurchased shares as follows:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 through April 30, 2022 3,570 $ 1,403 3,570
May 1 through May 31, 2022 7,582 1,380 7,582
June 1 through June 30, 2022 6,326 1,591 6,326
Total(1)
17,478 $ 1,461 17,478 $ 74,465,815


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs(1)
April 1 through April 30, 2023	1,142	$	1,645	1,142
May 1 through May 31, 2023	8,043	1,349		8,043
June 1 through June 30, 2023	4,990	1,365		4,990
Total	14,175	$	1,379	14,175	$	223,775,340

(1)~~Repurchases were made pursuant to~~On November 1, 2022, our Board approved a stock repurchase program ~~approved by our board of directors on March 11, 2022 and announced on March 14, 2022,~~ to purchase up to an aggregate of ~~$100.0~~$250 million ~~of shares~~ of our outstanding Common ~~Stock. In connection~~Stock effective beginning January 1, 2023. The Company intends to purchase stock under the repurchase program opportunistically with funds generated by cash from operations. This repurchase program may be suspended from time to time, modified, extended or discontinued by the Board at any time. Purchases under the stock repurchase program may be made through a combination of open market repurchases in compliance with Rule 10b-18 promulgated under the ~~Company entered into~~Securities Exchange Act of 1934, as amended, privately negotiated transactions, and/or other transactions at the Company’s discretion, including under a Rule 10b5-1 trading plan ~~that generally permits~~implemented by the Company, and will be subject to repurchase shares at times when it might otherwise be prevented from doing so under securities laws. The stock repurchase program will expire on December 31, 2022 unless otherwise modified or earlier terminated by our board of directors at any time in its sole discretion.market conditions, applicable legal requirements and other factors.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5.Other ~~Information~~

Information.

~~None~~

None.

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Item 6. Exhibits and Financial Statement Schedules.

EXHIBIT INDEX


EXHIBIT NUMBER						DESCRIPTION

31.1*						Rule 13a-14(a) Certification of Chief Executive Officer.
31.2*						Rule 13a-14(a) Certification of Chief Financial Officer.
32.1*						Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*						The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022~~2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income and Total Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows and (iv) Notes to Condensed Consolidated Financial Statements.
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, formatted in iXBRL.

* Filed or furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		TEXAS PACIFIC LAND CORPORATION
		(Registrant)

Date:	August ~~3, 2022~~2, 2023	By:	/s/ Tyler Glover
			Tyler Glover President, Chief Executive Officer and Director




Date:	August ~~3, 2022~~2, 2023	By:	/s/ Chris Steddum
			Chris Steddum Chief Financial Officer


	Performance Stock Units
	Number of PSUs	Weighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2021	—	$	—
Granted (1)	2,394	1,355
Vested	—	—
Cancelled and forfeited	—	—
Outstanding at June 30, 2022	2,394	$	1,355


	Restricted Stock Awards
	Number of RSAs	Grant-Date Fair Value per Share
Outstanding at December 31, 2021	—	$	—
Granted	784	1,277
Vested	—	—
Cancelled and forfeited	(85)	1,249
Outstanding at June 30, 2022 (1)	699	$	1,281


	Sub-share Certificates	Common Stock				Treasury Stock					Accum. Other Comp. Inc/(Loss)		Retained Earnings		Net Proceeds From All Sources		Total Equity
	Shares	Shares	Amount		Shares			Amount
For the six months ended June 30, 2021:
Balances as of December 31, 2020	7,756,156	—	$	—		$	—		$	—	$	(2,693)	$	—	$	487,877	$	485,184
Net income	—	—	—			—			—		—		50,052		—		50,052
Dividends paid — $2.75 per share of common stock	—	—	—			—			—		—		(21,329)		—		(21,329)
Conversion of Sub-shares into shares of common stock	(7,756,156)	7,756,156	78			—			—		—		487,799		(487,877)		—
Periodic pension costs, net of income taxes of $8	—	—	—			—			—		28		—		—		28
Balances as of March 31, 2021	—	7,756,156	78			—			—		(2,665)		516,522		—		513,935
Net income	—	—	—			—			—		—		57,046		—		57,046
Dividends paid — $2.75 per share of common stock	—	—	—			—			—		—		(21,329)		—		(21,329)
Repurchases of common stock	—	(1,633)	—			1,633			(2,504)		—		—		—		(2,504)
Periodic pension costs, net of income taxes of $8	—	—	—			—			—		29		—		—		29
Balances as of June 30, 2021	—	7,754,523	$	78		1,633			$	(2,504)	$	(2,636)	$	552,239	$	—	$	547,177