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 September 30, 20222023
or
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.:
Delaware75-0279735

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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock
(par value $.01 per share)
TPLNew 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 October 31, 2022,30, 2023, the Registrant had 7,704,4967,674,867 shares of Common Stock, $0.01 par value, outstanding.




TEXAS PACIFIC LAND CORPORATION
Form 10-Q
For the Quarter Ended September 30, 20222023
Table of Contents
Page No.
Condensed Consolidated Balance Sheets as of September 30, 20222023 and December 31, 20212022
Condensed Consolidated Statements of Income and Total Comprehensive Income for the Three and Nine Months ended September 30, 20222023 and 20212022
Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 20222023 and 20212022


Table of Contents
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)
September 30,
2022
December 31,
2021
September 30,
2023
December 31,
2022
ASSETSASSETS  ASSETS  
Cash and cash equivalentsCash and cash equivalents$446,588 $428,242 Cash and cash equivalents$654,158 $510,834 
Accounts receivable and accrued receivables, netAccounts receivable and accrued receivables, net139,656 95,217 Accounts receivable and accrued receivables, net126,215 103,983 
Prepaid expenses and other current assetsPrepaid expenses and other current assets2,943 3,054 Prepaid expenses and other current assets5,105 7,427 
Tax like-kind exchange escrowTax like-kind exchange escrow5,380 6,348 
Prepaid income taxesPrepaid income taxes— 4,809 
Total current assetsTotal current assets589,187 526,513 Total current assets790,858 633,401 
Real estate acquiredReal estate acquired109,083 109,071 Real estate acquired130,024 109,704 
Property, plant and equipment, netProperty, plant and equipment, net81,556 79,722 Property, plant and equipment, net86,600 85,478 
Royalty interests acquired, netRoyalty interests acquired, net45,331 44,390 Royalty interests acquired, net47,213 45,025 
Other assets3,817 4,368 
Intangible assets, netIntangible assets, net21,308 — 
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 interest1/16th nonparticipating perpetual royalty interest— — 1/16th nonparticipating perpetual royalty interest— — 
1/128th nonparticipating perpetual royalty interest1/128th nonparticipating perpetual royalty interest— — 1/128th nonparticipating perpetual royalty interest— — 
Other assetsOther assets3,315 3,819 
Total assetsTotal assets$828,974 $764,064 Total assets$1,079,318 $877,427 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY  LIABILITIES AND EQUITY  
Accounts payable and accrued expensesAccounts payable and accrued expenses$30,726 $18,008 Accounts payable and accrued expenses$29,027 $23,443 
Ad valorem and other taxes payableAd valorem and other taxes payable7,960 8,497 
Income taxes payableIncome taxes payable8,262 29,083 Income taxes payable4,281 3,167 
Unearned revenueUnearned revenue4,611 3,809 Unearned revenue6,102 4,488 
Total current liabilitiesTotal current liabilities43,599 50,900 Total current liabilities47,370 39,595 
Deferred taxes payableDeferred taxes payable38,108 38,948 Deferred taxes payable40,117 41,151 
Unearned revenue - noncurrentUnearned revenue - noncurrent21,434 20,449 Unearned revenue - noncurrent25,664 21,708 
Accrued liabilities4,663 2,056 
Accrued liabilities - noncurrentAccrued liabilities - noncurrent1,609 2,086 
Total liabilitiesTotal liabilities107,804 112,353 Total liabilities114,760 104,540 
Commitments and contingenciesCommitments and contingencies— — Commitments and contingencies— — 
Equity:Equity:  Equity:  
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of September 30, 2022 and December 31, 2021— — 
Common stock, $0.01 par value; 7,756,156 shares authorized and 7,708,845 and 7,744,695 outstanding as of September 30, 2022 and December 31, 2021, respectively78 78 
Treasury stock, at cost; 47,311 and 11,461 shares as of September 30, 2022 and December 31, 2021, respectively(72,926)(15,417)
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of September 30, 2023 and December 31, 2022Preferred stock, $0.01 par value; 1,000,000 shares authorized, none outstanding as of September 30, 2023 and December 31, 2022— — 
Common stock, $0.01 par value; 7,756,156 shares authorized and 7,675,994 and 7,695,679 outstanding as of September 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.01 par value; 7,756,156 shares authorized and 7,675,994 and 7,695,679 outstanding as of September 30, 2023 and December 31, 2022, respectively78 78 
Treasury stock, at cost; 80,162 and 60,477 shares as of September 30, 2023 and December 31, 2022, respectivelyTreasury stock, at cost; 80,162 and 60,477 shares as of September 30, 2023 and December 31, 2022, respectively(133,852)(104,139)
Additional paid-in capitalAdditional paid-in capital5,477 28 Additional paid-in capital12,382 8,293 
Accumulated other comprehensive loss(983)(1,007)
Accumulated other comprehensive incomeAccumulated other comprehensive income2,439 2,516 
Retained earningsRetained earnings789,524 668,029 Retained earnings1,083,511 866,139 
Total equityTotal equity721,170 651,711 Total equity964,558 772,887 
Total liabilities and equityTotal liabilities and equity$828,974 $764,064 Total liabilities and equity$1,079,318 $877,427 

See accompanying notes to condensed consolidated financial statements.
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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
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021 2023202220232022
Revenues:Revenues:   Revenues:   
Oil and gas royaltiesOil and gas royalties$130,298 $79,098 $355,738 $186,835 Oil and gas royalties$87,102 $130,298 $258,644 $355,738 
Water salesWater sales24,426 19,554 65,518 44,983 Water sales26,422 24,426 85,799 65,518 
Produced water royaltiesProduced water royalties19,129 15,140 52,668 43,147 Produced water royalties20,849 19,129 61,824 52,668 
Easements and other surface-related incomeEasements and other surface-related income14,129 9,832 37,311 27,856 Easements and other surface-related income18,188 14,129 51,865 37,311 
Land sales and other operating revenueLand sales and other operating revenue3,129 69 3,481 959 Land sales and other operating revenue5,406 3,129 6,806 3,481 
Total revenuesTotal revenues191,111 123,693 514,716 303,780 Total revenues157,967 191,111 464,938 514,716 
Expenses:Expenses:  Expenses:  
Salaries and related employee expensesSalaries and related employee expenses10,697 8,542 29,670 31,792 Salaries and related employee expenses11,499 10,697 32,688 29,670 
Water service-related expensesWater service-related expenses6,348 3,650 13,045 10,499 Water service-related expenses8,553 6,348 24,496 13,045 
General and administrative expensesGeneral and administrative expenses3,153 2,844 9,858 8,491 General and administrative expenses3,903 3,120 10,787 9,761 
Legal and professional feesLegal and professional fees2,106 1,551 4,988 4,904 Legal and professional fees1,689 2,106 28,471 4,988 
Ad valorem taxes2,835 — 6,856 — 
Ad valorem and other taxesAd valorem and other taxes1,781 2,868 5,425 6,953 
Depreciation, depletion and amortizationDepreciation, depletion and amortization3,917 3,866 12,223 11,562 Depreciation, depletion and amortization3,584 3,917 10,881 12,223 
Total operating expensesTotal operating expenses29,056 20,453 76,640 67,248 Total operating expenses31,009 29,056 112,748 76,640 
Operating incomeOperating income162,055 103,240 438,076 236,532 Operating income126,958 162,055 352,190 438,076 
Other income, netOther income, net1,920 513 2,626 924 Other income, net7,979 1,920 20,239 2,626 
Income before income taxesIncome before income taxes163,975 103,753 440,702 237,456 Income before income taxes134,937 163,975 372,429 440,702 
Income tax expenseIncome tax expense34,138 19,916 94,071 46,521 Income tax expense29,363 34,138 79,894 94,071 
Net incomeNet income$129,837 $83,837 $346,631 $190,935 Net income$105,574 $129,837 $292,535 $346,631 
Other comprehensive income — periodic pension costs, net of income taxes for the three and nine months ended September 30, 2022 and 2021 of $3, $8, $8, and $23, respectively29 24 86 
Other comprehensive (loss) income — periodic pension costs, net of income taxes for the three and nine months ended September 30, 2023 and 2022 of $7, $3, $21, and $8, respectivelyOther comprehensive (loss) income — periodic pension costs, net of income taxes for the three and nine months ended September 30, 2023 and 2022 of $7, $3, $21, and $8, respectively(26)(77)24 
Total comprehensive incomeTotal comprehensive income$129,845 $83,866 $346,655 $191,021 Total comprehensive income$105,548 $129,845 $292,458 $346,655 
Net income per share of common stockNet income per share of common stockNet income per share of common stock
BasicBasic$16.83 $10.82 $44.84 $24.62 Basic$13.75 $16.83 $38.07 $44.84 
DilutedDiluted$16.82 $10.82 $44.82 $24.62 Diluted$13.74 $16.82 $38.04 $44.82 
Weighted average number of shares of common stock outstandingWeighted average number of shares of common stock outstandingWeighted average number of shares of common stock outstanding
BasicBasic7,714,796 7,751,329 7,729,866 7,754,439 Basic7,675,521 7,714,796 7,684,691 7,729,866 
DilutedDiluted7,720,221 7,751,329 7,733,505 7,754,439 Diluted7,681,774 7,720,221 7,690,985 7,733,505 
Cash dividends per share of common stockCash dividends per share of common stock$3.00 $2.75 $29.00 $8.25 Cash dividends per share of common stock$3.25 $3.00 $9.75 $29.00 

See accompanying notes to condensed consolidated financial statements.
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Table of Contents
TEXAS PACIFIC LAND CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
(Unaudited)
Nine Months Ended
September 30,
Nine Months Ended
September 30,
20222021 20232022
Cash flows from operating activities:Cash flows from operating activities:  Cash flows from operating activities:  
Net incomeNet income$346,631 $190,935 Net income$292,535 $346,631 
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 taxesDeferred taxes(840)(632)Deferred taxes(1,034)(840)
Depreciation, depletion and amortizationDepreciation, depletion and amortization12,223 11,562 Depreciation, depletion and amortization10,881 12,223 
Share-based compensationShare-based compensation5,616 — Share-based compensation8,112 5,616 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:  Changes in operating assets and liabilities:  
Operating assets, excluding income taxesOperating assets, excluding income taxes(45,065)(35,377)Operating assets, excluding income taxes(19,554)(45,065)
Operating liabilities, excluding income taxesOperating liabilities, excluding income taxes16,901 4,961 Operating liabilities, excluding income taxes9,995 16,901 
Income taxes payableIncome taxes payable(20,821)3,063 Income taxes payable1,114 (20,821)
Prepaid income taxesPrepaid income taxes4,809 — 
Cash provided by operating activitiesCash provided by operating activities314,645 174,512 Cash provided by operating activities306,858 314,645 
Cash flows from investing activities:Cash flows from investing activities:  Cash flows from investing activities:  
Proceeds from sale of fixed assets106 1,079 
Acquisition of intangible assetsAcquisition of intangible assets(21,403)— 
Acquisition of real estateAcquisition of real estate(12)(10)Acquisition of real estate(20,320)(12)
Acquisition of royalty interestsAcquisition of royalty interests(1,662)— Acquisition of royalty interests(3,566)(1,662)
Purchase of fixed assetsPurchase of fixed assets(13,023)(11,058)Purchase of fixed assets(10,630)(13,023)
Proceeds from sale of fixed assetsProceeds from sale of fixed assets106 
Cash used in investing activitiesCash used in investing activities(14,591)(9,989)Cash used in investing activities(55,914)(14,591)
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Dividends paidDividends paid(74,979)(224,130)
Repurchases of common stockRepurchases of common stock(57,578)(10,816)Repurchases of common stock(32,325)(57,578)
Dividends paid(224,130)(63,970)
Shares exchanged for tax withholdingsShares exchanged for tax withholdings(1,284)— 
Cash used in financing activitiesCash used in financing activities(281,708)(74,786)Cash used in financing activities(108,588)(281,708)
Net increase in cash, cash equivalents and restricted cashNet increase in cash, cash equivalents and restricted cash18,346 89,737 Net increase in cash, cash equivalents and restricted cash142,356 18,346 
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period428,242 283,024 Cash, cash equivalents and restricted cash, beginning of period517,182 428,242 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$446,588 $372,761 Cash, cash equivalents and restricted cash, end of period$659,538 $446,588 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:  Supplemental disclosure of cash flow information:  
Income taxes paidIncome taxes paid$115,609 $44,113 Income taxes paid$74,984 $115,609 
Supplemental non-cash investing and financing information:Supplemental non-cash investing and financing information:Supplemental non-cash investing and financing information:
Nonmonetary exchange of assetsNonmonetary exchange of assets$4,174 $— Nonmonetary exchange of assets$— $4,174 
(Decrease) increase in accounts payable related to capital expenditures$(868)$441 
Share repurchases not yet settled$1,090 $377 
Issuance of common stock$— $78 
Increase in accounts payable related to capital expendituresIncrease in accounts payable related to capital expenditures$(243)$(868)
Share repurchases and associated excise taxes not settled at the end of the periodShare repurchases and associated excise taxes not settled at the end of the period$481 $1,090 
Operating lease right-of-use assetsOperating lease right-of-use assets$1,364 $— Operating lease right-of-use assets$— $1,364 

See accompanying notes to condensed consolidated financial statements.
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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 880,000868,000 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 Company’s 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 September 30, 20222023 and the results of its operations for the three and nine months ended September 30, 20222023 and 2021,2022, respectively, and its cash flows for the nine months ended September 30, 20222023 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 two 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 11,12, “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.

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Share-Based CompensationThe 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 September 30, 2023 and December 31, 2022 (in thousands):
September 30,
2023
December 31,
2022
Cash and cash equivalents$654,158 $510,834 
Tax like-kind exchange escrow5,380 6,348 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows$659,538 $517,182 

TheIntangible Assets, Net

Intangible assets include a saltwater disposal easement and acquired groundwater rights. When the Company utilizesacquires intangible assets that are attached to real estate and/or other tangible assets, an allocation of the closing stocktotal purchase price, onincluding any direct costs of the acquisition, is made at the date of grantacquisition based on the estimated relative fair values of the assets acquired.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with remaining useful lives from 15 to determine20 years. Intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In such event, 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 valueasset is determined using an advanced option-pricing model. Unvested awards are entitled to dividends or dividend equivalents which are accrued and distributed to award recipientsundiscounted cash flow analysis of the asset at the time such awards vest. Dividends are forfeitable iflowest level for which identifiable cash flows exist. If an impairment has occurred, a loss for the related award is forfeited. For RSAs, RSUsdifference between the carrying value 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 ifestimated fair value of the award recipient does not render the required service during the measurement period.

Share-based compensation expense for RSUs and RSAsintangible asset is recognized in the statement of income.

Reclassifications

Certain financial statements over the awards’ vesting periods using the graded-vesting method. Share-based 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. Share-based 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 statementsbalance sheet as of December 31, 2022 and condensed consolidated statement of income and total comprehensive income asfor the three and nine months ended September 30, 2022 has been revised to conform to the current year presentation. These revisions include a componentbalance sheet reclassification of salaries$454,000 of other taxes payable previously included in accounts payable and related employeeaccrued expenses for employee awardsto ad valorem and other taxes payable and an income statement reclassification of $33,000 and $97,000 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,nine months ended September 30, 2022, had no impact on our condensed consolidated financial statements and disclosures.respectively.

3.    Real Estate Activity

As of September 30, 20222023 and December 31, 2021,2022, TPL owned the following land and real estate (in thousands, except number of acres):
September 30,
2022
December 31,
2021
September 30,
2023
December 31,
2022
Number of AcresNet Book ValueNumber of AcresNet Book ValueNumber of AcresNet Book ValueNumber of AcresNet Book Value
Land (surface rights) (1)
Land (surface rights) (1)
823,323 $— 823,452 $— 
Land (surface rights) (1)
798,999 $— 817,060 $— 
Real estate acquiredReal estate acquired57,146 109,083 57,129 109,071 Real estate acquired69,447 130,024 57,306 109,704 
Total real estate situated in TexasTotal real estate situated in Texas880,469 $109,083 880,581 $109,071 Total real estate situated in Texas868,446 $130,024 874,366 $109,704 
(1)Real estate assigned through the Declaration of Trust.

Land Sales

For the nine months ended September 30, 2023, we sold 18,061 acres of land in Texas for an aggregate sales price of $6.8 million. For the nine months ended September 30, 2022, we sold 129 acres of land in Texas for an aggregate sales price of $3.3 million, an average of approximately $25,300 per acre. million. There was no carrying value in the land associated with these sales.

Land Acquisitions

For the nine months ended September 30, 2021,2023, we sold 30acquired 12,141 acres of land in Texas for an aggregate salespurchase price of $0.7 million, an average of approximately $25,000 per acre. There was no land basis associated with these sales.$20.0 million. There were no significant land acquisitions for the nine months ended September 30, 2022.

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4.    Property, Plant and Equipment
 
Property, plant and equipment, net consisted of the following as of September 30, 20222023 and December 31, 20212022 (in thousands):
September 30,
2022
December 31,
2021
September 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 assetsWater service-related assets$119,277 $108,732 Water service-related assets$135,293 $125,166 
Furniture, fixtures and equipmentFurniture, fixtures and equipment9,633 9,071 Furniture, fixtures and equipment9,907 9,718 
OtherOther598 598 Other598 598 
Total property, plant and equipment, at costTotal property, plant and equipment, at cost129,508 118,401 Total property, plant and equipment, at cost145,798 135,482 
Less: accumulated depreciationLess: accumulated depreciation(47,952)(38,679)Less: accumulated depreciation(59,198)(50,004)
Property, plant and equipment, netProperty, plant and equipment, net$81,556 $79,722 Property, plant and equipment, net$86,600 $85,478 

Depreciation expense was $3.6$3.0 million and $3.7$3.6 million for the three months ended September 30, 20222023 and 2021,2022, respectively. Depreciation expense was $11.4$9.3 million and $10.9$11.4 million for the nine months ended September 30, 20222023 and 2021,2022, respectively.

5.    Oil and Gas Royalty Interests

As of September 30, 20222023 and December 31, 2021,2022, we owned the following oil and gas royalty interests (in thousands):
September 30,
2023
December 31,
2022
Oil and gas royalty interests:
1/16th nonparticipating perpetual royalty interests (1)
$— $— 
1/128th nonparticipating perpetual royalty interests (1)
— — 
Royalty interests acquired, at cost51,494 47,928 
Total royalty interests51,494 47,928 
Less: accumulated depletion(4,281)(2,903)
Royalty interests, net$47,213 $45,025 
(1)
Net Book Value
September 30,
2022
December 31,
2021
1/16th nonparticipating perpetual royalty interests$— $— 
1/128th nonparticipating perpetual royalty interests— — 
Royalty interests acquired47,928 46,266 
Total royalty interests, gross47,928 46,266 
Less: accumulated depletion(2,597)(1,876)
Total royalty interests, net$45,331 $44,390 
Royalty interests assigned through the Declaration of Trust.

AcquisitionAcquisitions

For the nine months ended September 30, 2023, we acquired oil and gas royalty interests in 119 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $3.6 million. For the nine months ended September 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 nine months ended September 30, 2021.

Depletion expense was $0.3$0.5 million and $0.1$0.3 million for the three months ended September 30, 20222023 and 2021,2022, respectively. Depletion expense was $0.7$1.4 million and $0.5$0.7 million for the nine months ended September 30, 20222023 and 2021,2022, respectively.

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6.    Intangible Assets

Intangible assets, net consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

September 30,
2023
December 31,
2022
Intangible assets, at cost:
Saltwater disposal easement$17,557 $— 
Groundwater rights acquired3,846 — 
Total intangible assets, at cost (1)
21,403 — 
Less: accumulated amortization(95)— 
Intangible assets, net$21,308 $— 
(1)The remaining weighted average amortization period for total intangible assets was 19.0 years as of September 30, 2023.

Acquisitions

For the nine months ended September 30, 2023, we acquired a saltwater disposal easement and groundwater rights in separate transactions for an aggregate cost of approximately $21.4 million. We had no intangible assets as of December 31, 2022.

Amortization of intangible assets was $0.1 million for the three and nine months ended September 30, 2023. The estimated future annual amortization expense of intangible assets is $0.4 million for the remainder of 2023, $1.1 million for 2024, $1.1 million for 2025, $1.1 million for 2026, $1.1 million for 2027, $1.1 million for 2028 and $15.4 million thereafter.

7.    Share-Based Compensation

Incentive Plan for Employees

As of September 30, 2022, theThe Company has issued RSAs, RSUs and PSUsgrants 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 issuedits directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan is 75,000 shares and, as of September 30, 2022, 63,664 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 PSUsawards granted under the 2021 Planplans 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. RSUs granted under the 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 first anniversary of the award.

On October 31, 2023,the 2021 Plan was amended to revise the definitions of Cause, Change in Control, and Good Reason to align these definitions with the definitions provided in an employee’s employment agreement and any severance plan maintained by the Company. In addition, the related forms of Restricted Stock Unit Award Agreement, RTSR performance Unit Award Agreement and FCF/Share Performance Unit Award Agreement were adjusted.

On October 31, 2023, the 2021 Directors Plan was amended to (i) eliminate the one year vesting provision for annual grants and (ii) provide that certain plan administrative functions will be responsibility of the Compensation Committee of the Company’s board of directors, including determining grant recipients, establishing grant terms and conditions, and adopting certain amendments to the plan.

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

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forfeited. The Company utilizes the closing stock price on the date 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.

The following table summarizes activity related to RSAs and RSUs under the 2021 Plan for the nine months ended September 30, 2023 and 2022:
Restricted Stock AwardsRestricted Stock Units
Number of RSAsGrant-Date Fair Value per ShareNumber of RSUsGrant-Date Fair Value per Share
Outstanding at December 31, 2021 (1)
3,330 $1,252 — $— 
Granted (2)
— — 5,612 1,323 
Vested— — — — 
Cancelled and forfeited— — — — 
Outstanding at September 30, 20223,330 $1,252 5,612 $1,323 
Nine Months Ended September 30,
20232022
Restricted Stock AwardsRestricted Stock UnitsRestricted Stock AwardsRestricted Stock Units
Number of RSAsWeighted-Average Grant-Date Fair Value per ShareNumber of RSUsWeighted-Average Grant-Date Fair Value per ShareNumber of RSAsWeighted-Average Grant-Date Fair Value per ShareNumber of RSUsWeighted-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 — — 5,612 1,323 
Vested (3)
— — (1,864)1,324 — — — — 
Cancelled and forfeited— — — — — — — — 
Nonvested at end of period1,337 $1,252 6,596 $1,583 3,330 $1,252 5,612 $1,323 
(1)RSAs were granted on December 29, 2021 with2021: 1,993 shares vestingvested on December 29, 2022 and 1,337 shares vestingwill vest on December 29, 2023.
(2)On February 11, 2022, 3,824 RSUs were granted to certain employees with a grant date fair value per share of $1,105. On September 1, 2022, 1,788 RSUs were granted to certain employees with a grant date fair value per share of $1,790 per share. The RSUs vest in one-third increments over a three-year period.
(3)Of the 1,864 shares that vested during the nine months ended September 30, 2023, 669 shares were surrendered upon vesting by employees to the Company to settle tax withholdings.

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

Performance Stock Units
Number of PSUsWeighted-Average Grant-Date Fair Value per Share
Outstanding at December 31, 2021— $— 
Granted (1)
2,394 1,355 
Vested— — 
Cancelled and forfeited— — 
Outstanding at September 30, 20222,394 $1,355 
Nine Months Ended September 30,
20232022
Number of Target PSUsWeighted-Average Grant-Date Fair Value per ShareNumber of Target PSUsWeighted-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 period4,246 $1,786 2,394 $1,355 
(1)IncludesThe 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 one 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”) forover 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 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.
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Equity Plan for Non-Employee Directors

As of September 30, 2022, the Company had granted 699 RSAs to non-employee 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 September 30, 2022, 9,3012023, 8,815 shares 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
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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.

The following table summarizes activity related to the RSAs under the 2021 Directors Plan for the nine months ended September 30, 2023 and 2022:
Restricted Stock Awards
Number of RSAsGrant-Date Fair Value per Share
Outstanding at December 31, 2021— $— 
Granted784 1,277 
Vested— — 
Cancelled and forfeited(85)1,249 
Outstanding at September 30, 2022 (1)
699 $1,281 
Nine Months Ended September 30,
20232022
Number of RSAsWeighted-Average Grant-Date Fair Value per ShareNumber of RSAsWeighted-Average Grant-Date Fair Value per Share
Nonvested at beginning of period699 $1,281 — $— 
Granted (1)
486 2,344 784 1,277 
Vested(699)1,281 — — 
Cancelled and forfeited— — (85)1,249 
Nonvested at end of period486 $2,344 699 $1,281 
(1)On January 1, 2022, the Company granted 680 shares of restricted stock to directors. During the nine months ended September 30, 2022, 85 shares were forfeited resulting from the departure of a director in March 2022, and an additional 104 shares of restricted stock were granted to new directors on April 15, 2022. The shares willRSAs vest on the first anniversary of the award.grant date.

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
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021202220212023202220232022
Salaries and related employee expenses (employee awards)Salaries and related employee expenses (employee awards)$1,910 $— $4,989 $— Salaries and related employee expenses (employee awards)$2,502 $1,910 $7,217 $4,989 
General and administrative expenses (director awards)General and administrative expenses (director awards)211 — 627 — General and administrative expenses (director awards)287 211 895 627 
Total share-based compensation expense (1)
Total share-based compensation expense (1)
$2,121 $— $5,616 $— 
Total share-based compensation expense (1)
$2,789 $2,121 $8,112 $5,616 
(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 September 30, 2023 and 2022, respectively. The Company recognized a tax benefit of $1.7 million and $1.2 million related to share-based compensation for the three and nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2022,2023, there was $10.1$11.4 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 1.41.3 years.

7.8.    Income Taxes

The calculation of our effective tax rate is as follows for the three and nine months ended September 30, 20222023 and 20212022 (in thousands, except percentages):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021202220212023202220232022
Income before income taxesIncome before income taxes$163,975 $103,753 $440,702 $237,456 Income before income taxes$134,937 $163,975 $372,429 $440,702 
Income tax expenseIncome tax expense$34,138 $19,916 $94,071 $46,521 Income tax expense$29,363 $34,138 $79,894 $94,071 
Effective tax rateEffective tax rate20.8 %19.2 %21.3 %19.6 %Effective tax rate21.8 %20.8 %21.5 %21.3 %
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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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The Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law and includes a number of tax-related provisions, including (i) a 15-percent book minimum tax (“corporate AMT”) on adjusted financial statement income once the three year average of adjusted financial statement income is greater than $1.0 billion, (ii) certain clean energy tax incentives in the form of tax credits, and (iii) a one-percent excise tax on certain corporate stock buybacks (effective beginning January 1, 2023). The Company is evaluating the IRA and does not currently anticipate that the IRA will have a significant impact on the Company’s financial position or results of operations.

8.9.    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 nine months ended September 30, 20222023 and 20212022 (in thousands, except number of shares and per share data):
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2022202120222021
Net income$129,837 $83,837 $346,631 $190,935 
Basic EPS:
Weighted average shares outstanding for basic EPS7,714,796 7,751,329 7,729,866 7,754,439 
Basic EPS$16.83 $10.82 $44.84 $24.62 
Diluted EPS:
Weighted average shares outstanding for basic EPS7,714,796 7,751,329 7,729,866 7,754,439 
Effect of dilutive securities:
Incentive and equity compensation plans5,425 — 3,639 — 
Weighted average shares outstanding for diluted EPS7,720,221 7,751,329 7,733,505 7,754,439 
Diluted EPS$16.82 $10.82 $44.82 $24.62 
Three Months Ended
September 30,
Nine Months Ended
September 30,
 2023202220232022
Net income$105,574 $129,837 $292,535 $346,631 
Basic earnings per share:
Weighted average shares outstanding for basic earnings per share7,675,521 7,714,796 7,684,691 7,729,866 
Basic earnings per share$13.75 $16.83 $38.07 $44.84 
Diluted earnings per share:
Weighted average shares outstanding for basic earnings per share7,675,521 7,714,796 7,684,691 7,729,866 
Effect of dilutive securities:
Incentive and equity compensation plans6,253 5,425 6,294 3,639 
Weighted average shares outstanding for diluted earnings per share7,681,774 7,720,221 7,690,985 7,733,505 
Diluted earnings per share$13.74 $16.82 $38.04 $44.82 

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. Certain stock awards granted are not included in the dilutive securities in the table above as they are anti-dilutive for the three and nine months ended September 30, 2023.

9.10.    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 September 30, 2022.2023.

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 sucha third party 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 September 30, 2022, the Company has recorded an accrual of approximately $6.9 million for ad valorem taxes, and intends to paywe 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 offor such taxes, we are unable to determineestimate the amount and/or likelihood of such reimbursement, and accordingly, no loss recovery receivable has been recorded as of September 30, 2022.2023.

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Ongoing Arbitration with an Operator
10.
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 nine months ended September 30, 2023.

11.    Changes in Equity

The following tables present changes in our equity for the nine months ended September 30, 20222023 and 20212022 (in thousands, except shares and per share amounts):
Common StockTreasury StockAdditional Paid-in CapitalAccum.
Other
Comp.
Inc/(Loss)
Retained EarningsTotal
Equity
SharesAmountSharesAmount
For the nine months ended September 30, 2022:
Balances as of December 31, 20217,744,695 $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 forfeitures595 — (595)800 1,477 — (796)1,481 
Periodic pension costs, net of income taxes of $2— — — — — — 
Balances as of March 31, 20227,745,290 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 forfeitures104 — (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— — — — — — 
Balances as of June 30, 20227,727,916 $78 28,240 $(40,011)$3,356 $(991)$682,849 $645,281 
Net income— — — — — — 129,837 129,837 
Dividends paid — $3.00 per share of common stock— — — — — — (23,132)(23,132)
Share-based compensation, net of forfeitures— — — — 2,121 — (30)2,091 
Repurchases of common stock(19,071)— 19,071 (32,915)— — — (32,915)
Periodic pension costs, net of income taxes of $3— — — — — — 
Balances as of September 30, 20227,708,845 $78 47,311 $(72,926)$5,477 $(983)$789,524 $721,170 
Sub-share CertificatesCommon StockTreasury StockAccum.
Other
Comp.
Inc/(Loss)
Retained EarningsNet Proceeds
From All
Sources
Total
Equity
SharesSharesAmountSharesAmount
For the nine months ended September 30, 2021:
Balances as of December 31, 20207,756,156 — $— $— $— $(2,693)$— $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 
Net income— — — — — — 83,837 — 83,837 
Dividends paid — $2.75 per share of common stock— — — — — — (21,312)— (21,312)
Repurchases of common stock— (6,179)— 6,179 (8,689)— — — (8,689)
Periodic pension costs, net of income taxes of $8— — — — — 29 — — 29 
Balances as of September 30, 2021— 7,748,344 $78 7,812 $(11,193)$(2,607)$614,764 $— $601,042 



Common StockTreasury StockAdditional Paid-in CapitalAccum.
Other
Comp.
Income (Loss)
Retained EarningsTotal
Equity
SharesAmountSharesAmount
For the nine months ended September 30, 2023:
Balances as of December 31, 20227,695,679 $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 forfeitures1,756 — (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, 20237,693,320 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, 20237,679,145 78 77,011 (128,502)10,582 2,465 1,002,927 887,550 
Net income— — — — — — 105,574 105,574 
Dividends paid — $3.25 per share of common stock— — — — — — (24,952)(24,952)
Share-based compensation, net of forfeitures594 — (594)990 1,800 — (38)2,752 
Repurchases of common stock, including excise taxes of $50(3,564)— 3,564 (5,995)— — — (5,995)
Shares exchanged for tax withholdings(181)— 181 (345)— — — (345)
Periodic pension costs, net of income taxes of $7— — — — — (26)— (26)
Balances as of September 30, 20237,675,994 $78 80,162 $(133,852)$12,382 $2,439 $1,083,511 $964,558 
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Corporate Reorganization
Common StockTreasury StockAdditional Paid-in CapitalAccum.
Other
Comp.
Income (Loss)
Retained EarningsTotal
Equity
SharesAmountSharesAmount
For the nine months ended September 30, 2022:
Balances as of December 31, 20217,744,695 $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 forfeitures595 — (595)800 1,477 — (796)1,481 
Periodic pension costs, net of income taxes of $2— — — — — — 
Balances as of March 31, 20227,745,290 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 forfeitures104 — (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— — — — — — 
Balances as of June 30, 20227,727,916 78 28,240 (40,011)3,356 (991)682,849 645,281 
Net income— — — — — — 129,837 129,837 
Dividends paid — $3.00 per share of common stock— — — — — — (23,132)(23,132)
Share-based compensation, net of forfeitures— — — — 2,121 — (30)2,091 
Repurchases of common stock(19,071)— 19,071 (32,915)— — — (32,915)
Periodic pension costs, net of income taxes of $3— — — — — — 
Balances as of September 30, 20227,708,845 $78 47,311 $(72,926)$5,477 $(983)$789,524 $721,170 

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.

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 connectionStock.

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 intoSecurities 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 permitsimplemented 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 nine months ended September 30, 2022, we repurchased $58.4 million (including share repurchases not yet settled).market conditions, applicable legal requirements and other factors.

11.12.    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 880,000868,000 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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SegmentThe following table presents segment financial results were as follows for the three and nine months ended September 30, 20222023 and 20212022 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021202220212023202220232022
Revenues:Revenues:Revenues:
Land and resource managementLand and resource management$147,215 $86,792 $393,947 $211,823 Land and resource management$109,933 $147,215 $315,276 $393,947 
Water services and operationsWater services and operations43,896 36,901 120,769 91,957 Water services and operations48,034 43,896 149,662 120,769 
Total consolidated revenuesTotal consolidated revenues$191,111 $123,693 $514,716 $303,780 Total consolidated revenues$157,967 $191,111 $464,938 $514,716 
Net income:Net income:Net income:
Land and resource managementLand and resource management$108,188 $65,292 $285,418 $150,248 Land and resource management$82,884 $108,188 $217,860 $285,418 
Water services and operationsWater services and operations21,649 18,545 61,213 40,687 Water services and operations22,690 21,649 74,675 61,213 
Total consolidated net incomeTotal consolidated net income$129,837 $83,837 $346,631 $190,935 Total consolidated net income$105,574 $129,837 $292,535 $346,631 
Capital expenditures:Capital expenditures:Capital expenditures:
Land and resource managementLand and resource management$114 $4,528 $339 $4,541 Land and resource management$47 $114 $191 $339 
Water services and operationsWater services and operations1,694 2,059 11,816 6,958 Water services and operations5,196 1,694 10,196 11,816 
Total capital expendituresTotal capital expenditures$1,808 $6,587 $12,155 $11,499 Total capital expenditures$5,243 $1,808 $10,387 $12,155 
Depreciation, depletion and amortization:Depreciation, depletion and amortization:Depreciation, depletion and amortization:
Land and resource managementLand and resource management$567 $363 $1,632 $1,299 Land and resource management$703 $567 $2,233 $1,632 
Water services and operationsWater services and operations3,350 3,503 10,591 10,263 Water services and operations2,881 3,350 8,648 10,591 
Total depreciation, depletion and amortizationTotal depreciation, depletion and amortization$3,917 $3,866 $12,223 $11,562 Total depreciation, depletion and amortization$3,584 $3,917 $10,881 $12,223 

The following table presents total assets and property, plant and equipment, net by segment as of September 30, 20222023 and December 31, 20212022 (in thousands):
September 30,
2022
December 31,
2021
September 30,
2023
December 31,
2022
Assets:Assets:  Assets:  
Land and resource managementLand and resource management$676,205 $635,338 Land and resource management$900,508 $735,193 
Water services and operationsWater services and operations152,769 128,726 Water services and operations178,810 142,234 
Total consolidated assetsTotal consolidated assets$828,974 $764,064 Total consolidated assets$1,079,318 $877,427 
Property, plant and equipment, net:Property, plant and equipment, net:  Property, plant and equipment, net:  
Land and resource managementLand and resource management$6,197 $6,639 Land and resource management$5,464 $5,998 
Water services and operationsWater services and operations75,359 73,083 Water services and operations81,136 79,480 
Total consolidated property, plant and equipment, netTotal consolidated property, plant and equipment, net$81,556 $79,722 Total consolidated property, plant and equipment, net$86,600 $85,478 

12.
13.    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 September 30, 20222023 and 2021,2022, our share of oil and gas produced was approximately 23.421.8 and 19.523.4 thousand Boe per day, respectively. For the nine months ended September 30, 20222023 and September 30, 2021,2022, our share of oil and gas produced was approximately 21.322.6 and 17.521.3 thousand Boe per day, respectively. Reserves related to our royalty interests are not presented because the information is unavailable.

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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 awaiting completion. We have identified 548596 and 452584 DUC wells subject to our royalty interest as of September 30, 20222023 and December 31, 2021,2022, respectively.

13.14.    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 November 1, 2022,October 31, 2023, our board of directors declared a quarterly cash dividend of $3.00$3.25 per share, payable on December 15, 20222023 to stockholders of record at the close of business on December 8, 2022.

Stock Repurchase Program

On November 1, 2022, our board of directors approved a stock repurchase program to purchase up to an aggregate of $250 million of our outstanding common stock to be 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 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 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 may be implemented by the Company, and will be subject to market conditions, applicable legal requirements and other factors.



*****
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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, 20212022 filed with the SEC on February 23, 202222, 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 880,000868,000 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, Texas Pacific Land Trust, into Texas Pacific Land Corporation, a corporation formed and existing under the laws of the state of Delaware.

We completed our reorganization 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,not an oil and references to periods on or after that date are in reference to Texas Pacific Land Corporation or TPL Corporation. For further information on the Corporate Reorganization, see Note 10, “Changes in Equity” in the notes to the condensed consolidated financial statements.

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 and Natural Gas Market Impact in 2022

Average oil and gas prices during the third quarter of 2022 were meaningfully higher2023 have declined compared to quarterly average prices during most of the previous quarterly periods over the last decade. In 2021, oil2022. Oil prices were supportedcontinue to be impacted by oil supply cutscertain actions by OPEC+. Oil demand in 2021 broadly trended higher throughout the year, which also helped support strengthening oil prices. Beginning in March 2022, Russia’s incursion into Ukraine created volatility in, geopolitical factors, and evolving global supply of numerous commodities, including oil. In response, the US 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. In October 2022, OPEC+ pledged to further reduce their collective production quota by two million barrels per day. The confluence of these major events has contributed to fluctuations in oil prices during 2022.demand trends, among other factors. Global and domestic natural gas markets have also experienced volatility due to
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macroeconomic conditions, infrastructure and logistical constraints, weather, and geopolitical issues, among other factors. USIn 2023, domestic natural gas prices at Henry Hub, location in Erath, Louisiana, have strengthened in 2021 and 2022 duedeclined in part to liquified natural gas prices (“LNG”) exports and local demand for power, heating, and industrial activity. In 2022,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 gas and limited natural gas pipeline takeaway capacity. Inflation remainsMidstream 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 chains and labor supply remain constrained, which has contributed to elevated and continues to significantly impact current labor costs and supplies.inflation, among other factors. Changes in macro-economic conditions, including rising interest rates and lower global economic activity, could result in additional shifts in demandoil 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 oilcommodity 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 well-being 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 2023 and 2022 compared to recent prior year activity levels. Per the U.S. Energy Information Administration (“EIA”), Permian production is currently in excess of five5.8 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.

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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 nine months ended September 30, 20222023 and 2021:2022:

Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021202220212023202220232022
Oil and Gas Pricing Metrics:(1)
Oil and Gas Pricing Metrics:(1)
Oil and Gas Pricing Metrics:(1)
WTI Cushing average price per bblWTI Cushing average price per bbl$93.06 $70.58 $98.96 $65.05 WTI Cushing average price per bbl$82.25 $93.06 $77.27 $98.96 
Henry Hub average price per mmbtuHenry Hub average price per mmbtu$8.03 $4.35 $6.74 $3.61 Henry Hub average price per mmbtu$2.59 $8.03 $2.46 $6.74 
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 permitsAverage monthly horizontal permits634527627573Average monthly horizontal permits640634641627
Average monthly horizontal wells drilledAverage monthly horizontal wells drilled524405498376Average monthly horizontal wells drilled514524536498
Average weekly horizontal rig countAverage weekly horizontal rig count353235313215Average weekly horizontal rig count314353330313
DUCs as of September 30 for each applicable yearDUCs as of September 30 for each applicable year4,6514,5194,6514,519DUCs as of September 30 for each applicable year4,8574,6514,8574,651
Total Average US weekly horizontal rig count (2)
Total Average US weekly horizontal rig count (2)
692450643405
Total Average US weekly horizontal rig count (2)
578692642643
(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 nine months ended September 30, 20222023 and 2021.2022. Oil and gas prices in 2022 to-date2023 to date have significantly increaseddecreased compared to the comparablesame 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 2022 compared to the prior year.remained robust. 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 made by others affect not only our production and produced water disposal volumes but also directly impact our water sales and surface-related income and water sales.income.

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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 September 30, 2022.2023.
 
As of September 30, 2022,2023, we had cash and cash equivalents of $446.6$654.2 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 nine months ended September 30, 2022,2023, we paid $75.0 million in dividends to our stockholders and we repurchased $58.4$32.2 million of our Common Stock and(including share repurchases not settled at the end of the period).

During the nine months ended September 30, 2023, we paid $224.1invested approximately $10.2 million in dividendsTexas Pacific Water Resources LLC (“TPWR”) projects to maintain and/or enhance our stockholders. water sourcing assets. Additionally, we acquired intangible assets of $21.4 million during the nine months ended September 30, 2023, consisting of a saltwater disposal (“SWD”) easement and groundwater rights. The SWD easement covers approximately 49,000 acres and provides us future disposal opportunities to service injection customers seeking solutions for out-of-basin disposal. The groundwater rights provide us access to additional water volumes outside of our existing surface footprint to assist in managing fluctuations in customer demand.

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.

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During the nine months ended September 30, 2022, we invested approximately $11.8 million in Texas Pacific Water Resources LLC (“TPWR”) projects to maintain and/or enhance water sourcing assets, of which $6.4 million related to electrifying our water sourcing infrastructure.

Cash Flows from Operating Activities

For the nine months ended September 30, 20222023 and 2021,2022, net cash provided by operating activities was $314.6$306.9 million and $174.5$314.6 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 increasedecrease in cash flows provided by operating activities for the nine months ended September 30, 20222023 compared to the same period of 2021, was2022 primarily related to increased prices and volumes of oil and gas production andthe decrease in operating income which was partially offset by increased tax payments.changes in working capital requirements during 2023 as compared to 2022.
 
Cash Flows Used in Investing Activities

For the nine months ended September 30, 20222023 and 2021,2022, net cash used in investing activities was $14.6$55.9 million and $10.0$14.6 million, respectively. Our cash flows used in investing activities are primarily related to land acquisitions, intangible assets such as subsurface easements, and capital expenditures related to our water services and operations segment and acquisitions of royalty interests.segment.

Capital expendituresAcquisitions of intangible assets and land increased $2.0$21.4 million and $20.3 million, respectively, for the nine months ended September 30, 20222023 compared to the same period of 2021. Acquisitions2022 and were partially offset by a decrease of royalty interests increased approximately $1.7$2.4 million for the nine months ended September 30, 2022 compared toin capital expenditures during the same period 2021.time period.

Cash Flows Used in Financing Activities

For the nine months ended September 30, 20222023 and 2021,2022, net cash used in financing activities was $281.7$108.6 million and $74.8$281.7 million, respectively. Our cash flows used in financing activities primarily consist of activities which return capital to our stockholders such as payment of dividends and repurchases of our Common Stock.

During the nine months ended September 30, 2023, we paid total dividends of $75.0 million consisting of cumulative paid cash dividends of $9.75 per share. During the nine months ended September 30, 2022, we paid total dividends of $224.1
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million consisting of cumulative paid cash dividends of $9.00 per share and special dividends of $20.00 per share. During the nine months ended September 30, 2021,2023 and 2022, we paid total dividends of $64.0 million consisting of cumulative cash dividends of $8.25 per share. We repurchased $58.4$32.2 million and $11.2$58.4 million of our Common Stock, respectively (including share repurchases not yet settled) duringsettled at the nine months ended September 30, 2022 and 2021, respectively.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 nine months ended September 30, 20222023 and 20212022 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021 2023202220232022
Revenues:Revenues:   Revenues:   
Oil and gas royaltiesOil and gas royalties$130,298 $79,098 $355,738 $186,835 Oil and gas royalties$87,102 $130,298 $258,644 $355,738 
Water salesWater sales24,426 19,554 65,518 44,983 Water sales26,422 24,426 85,799 65,518 
Produced water royaltiesProduced water royalties19,129 15,140 52,668 43,147 Produced water royalties20,849 19,129 61,824 52,668 
Easements and other surface-related incomeEasements and other surface-related income14,129 9,832 37,311 27,856 Easements and other surface-related income18,188 14,129 51,865 37,311 
Land sales and other operating revenueLand sales and other operating revenue3,129 69 3,481 959 Land sales and other operating revenue5,406 3,129 6,806 3,481 
Total revenuesTotal revenues191,111 123,693 514,716 303,780 Total revenues157,967 191,111 464,938 514,716 
Expenses:Expenses:  Expenses:  
Salaries and related employee expensesSalaries and related employee expenses10,697 8,542 29,670 31,792 Salaries and related employee expenses11,499 10,697 32,688 29,670 
Water service-related expensesWater service-related expenses6,348 3,650 13,045 10,499 Water service-related expenses8,553 6,348 24,496 13,045 
General and administrative expensesGeneral and administrative expenses3,153 2,844 9,858 8,491 General and administrative expenses3,903 3,120 10,787 9,761 
Legal and professional feesLegal and professional fees2,106 1,551 4,988 4,904 Legal and professional fees1,689 2,106 28,471 4,988 
Ad valorem taxes2,835 — 6,856 — 
Ad valorem and other taxesAd valorem and other taxes1,781 2,868 5,425 6,953 
Depreciation, depletion and amortizationDepreciation, depletion and amortization3,917 3,866 12,223 11,562 Depreciation, depletion and amortization3,584 3,917 10,881 12,223 
Total operating expensesTotal operating expenses29,056 20,453 76,640 67,248 Total operating expenses31,009 29,056 112,748 76,640 
Operating incomeOperating income162,055 103,240 438,076 236,532 Operating income126,958 162,055 352,190 438,076 
Other income, netOther income, net1,920 513 2,626 924 Other income, net7,979 1,920 20,239 2,626 
Income before income taxesIncome before income taxes163,975 103,753 440,702 237,456 Income before income taxes134,937 163,975 372,429 440,702 
Income tax expenseIncome tax expense34,138 19,916 94,071 46,521 Income tax expense29,363 34,138 79,894 94,071 
Net incomeNet income$129,837 $83,837 $346,631 $190,935 Net income$105,574 $129,837 $292,535 $346,631 

For the Three Months Ended September 30, 20222023 as Compared to the Three Months Ended September 30, 20212022

Consolidated Revenues and Net Income:

Total revenues increased $67.4decreased $33.1 million, or 54.5%17.3%, to $158.0 million for the three months ended September 30, 2023 compared to $191.1 million for the three months ended September 30, 2022 compared to $123.7 million for the three months ended September 30, 2021.2022. This increasedecrease was principally due to the $51.2$43.2 million increasedecrease in oil and gas royalty revenue and was partially offset by the $4.1 million increase in easements and other surface-related income, and the combined increase of $8.9$3.7 million in water sales and produced water royalties over the same period. Net income of $129.8 million for the three months ended September 30, 2022 was 54.9% higher than the comparable period of 2021. The increase in net income was driven by the 57.0% increase in operating income resulting from the 54.5% increase in total revenues during the same time period. Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $105.6 million for the three months ended September 30, 2023 was 18.7% lower than the comparable period of 2022 principally as a result of the decrease in revenues discussed above.

Consolidated Expenses:

Salaries and related employee expenses. Salaries and related employee expenses were $10.7$11.5 million for the three months ended September 30, 20222023 compared to $8.5$10.7 million for the comparable period of 2021. Stock compensation expense for the three months ended September 30, 2022 was $1.9 million. As noted2022. The increase in Note 2, “Summary of Significant Accounting Policies — Share-Based Compensation,” the Company’s accounting method electionsalaries and related employee expenses is principally related to recognize share-based compensation expense using the graded-vesting method results in an acceleration of stock compensation expenseincrease in the grant year for awards with vesting periods in excessnumber of one year. Prior to December 2021, the Company did not have an equity incentive planemployees and did not paymarket compensation in equity.adjustments.

Water service-related expenses. Water service-related expenses were $6.3 million for the three months ended September 30, 2022 compared to $3.7 million for the same period of 2021. Certain types of water-related expenses, including,
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Water service-related expenses. Water service-related expenses increased $2.2 million to $8.6 million for the three months ended September 30, 2023 compared to the same period of 2022. Certain types of water-related expenses, including, but not limited to, transfer, treatment, electricity, etc.,and water purchases, will vary from period to period as our customers’ needs and requirements change. TransferWater purchase, transfer, and treatment costs for the three months ended September 30, 2023 increased primarily due to increased water sales compared to the same period of 2022. These increases were partially offset by a decrease in fuel expenses resulting from lower average fuel costs over the same time period.

General and administrative expenses. General and administrative expenses were $3.9 million for the three months ended September 30, 2023 compared to $3.1 million for the same period of 2022. The increase in general and administrative expenses during the three months ended September 30, 2023 compared to the same period of 2022 was principally related to increases in expenses for technology applications and managed IT services and corporate insurance expenses, resulting from increased coverages and insurance rates.

Ad valorem and other taxes. Ad valorem and other taxes were $1.8 million for the three months ended September 30, 2023, compared to $2.9 million for the three months ended September 30, 2022. Ad valorem taxes for the three months ended September 30, 2022 compared to the same period of 2021 principally as a result of heightened sales activity during the same period. Additionally, the Company’s ongoing initiative to electrify its water sourcing infrastructure resulted in increased electricity expenseincluded payments for the three months ended September 30, 2022 compared to the same period of 2021. Fuel expenses decreased as a result of lower utilization of fuel for the three months ended September 30, 2022 compared to the same period of 2021, but the reduction was temperedprior year ad valorem tax liabilities which had not been paid by the increase in the price of fuel over the same period.

Ad valorem taxes. For the three months ended September 30, 2022, the Company recorded an accrual of approximately $2.8 millionthird party responsible for those 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 sucha third partythat theyit no longer intendintends 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 accruinghave accrued and/or paid 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. While we intend to seek reimbursement from the third party following payment of such taxes, we are unable to determine the amount and/or likelihood of such reimbursement, and accordingly, have not recorded a loss recovery receivable as of September 30, 2022.

Other income, net. Other income, net was $1.9$8.0 million and $0.5$1.9 million for the three months ended September 30, 2023 and 2022, and 2021, respectively. InterestThe increase in other income, net is primarily related to increased interest income earned on our cash balances has increased asfor the three months ended September 30, 2023 compared to the same period of 2022. Higher cash balances and interest yields have risen during 2022.this period contributed to the increase in interest income.

Total income tax expense. Total income tax expense was $34.1$29.4 million and $19.9$34.1 million for the three months ended September 30, 20222023 and 2021,2022, respectively. The increasedecrease in income tax expense is primarily related to increaseddecreased operating income resulting from increased revenues fromdecreased oil and gas royalties and water sales.royalty revenue.

For the Nine Months Ended September 30, 20222023 as Compared to the Nine Months Ended September 30, 20212022

Consolidated Revenues and Net Income:

Total revenues increased $210.9decreased $49.8 million, or 69.4%9.7%, to $464.9 million for the nine months ended September 30, 2023 compared to $514.7 million for the nine months ended September 30, 2022 compared to $303.8 million for the nine months ended September 30, 2021.2022. This increasedecrease was principally due to the $168.9$97.1 million increasedecrease in oil and gas royalty revenue and was partially offset by the combined increase of $30.1$29.4 million in water sales and produced water royalties and the $14.6 million increase in easements and other surface-related income over the same period. Net income of $346.6 million for the nine months ended September 30, 2022 was 81.5% higher than the comparable period of 2021, principally due to the 85.2% increase in operating income. Individual revenue line items are discussed below under “Segment Results of Operations.” Net income of $292.5 million for the nine months ended September 30, 2023 was 15.6% 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 $29.7$32.7 million for the nine months ended September 30, 20222023 compared to $31.8$29.7 million for the comparable period of 2021. Salaries2022. 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 $5.0 million of stock compensation expense for the nine months ended September 30, 2022is primarily related to employee stock awards granted under the Company’s equity incentive plan. As noted in Note 2, “Summary of Significant Accounting Policies — Share-Based Compensation,” the Company’s accounting method election to recognize share-based compensation expense using the graded-vesting method results in an acceleration of stock compensation expenseincrease in the grant year for awards with vesting periods in excessnumber of one year. Prior to December 2021, the Company did not have an equity incentive planemployees and did not paymarket compensation in equity.adjustments.

Water service related expenses. Water service-related expenses were $13.0$24.5 million for the nine months ended September 30, 20222023 compared to $10.5$13.0 million for the same period of 2021.2022. Certain types of water-related expenses, including, but not limited to, transfer, treatment, electricity, etc.,and water purchases, will vary from period to period as our customers’ needs and requirements change. TransferWater purchase, transfer, and treatment expenses increased for the nine months ended September 30, 20222023 compared to the same period of 20212022 principally as a result of heightened sales activity during the same period.in 2023. Additionally, the Company’s ongoing initiative31.0%
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increase in water sales combined with higher demand for water within shorter time commitments and increases in cost due to electrify its water sourcing infrastructureinflation resulted in increased electricity expense for the nine months ended September 30, 2022 compared to the same period of 2021. Fuel andan increase in equipment rental expenses decreased as a result of lower utilization ofand fuel and rental of equipment for the nine months ended September 30, 2022 compared to the same period of 2021, but the reduction was tempered by the increase in the price of fuelexpenses over the same time period.

General and administrative expenses. General and administrative expenses increased $1.4 million10.5% to $9.9$10.8 million for the nine months ended September 30, 20222023 from $8.5$9.8 million for the same period of 2021.2022. The increase in general and
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administrative expenses during the nine months ended September 30, 20222023 compared to the same period of 20212022 was principally related to increased charitable contributions, travel expenses andfor technology applications, board of director fees and expenses, primarily resulting from our contribution of approximately $0.3 milliondue to the Permian Basin Area Foundation in support of the initiative to renovate Hogan Park in Midland, Texas, travel returning to pre-pandemic levels, and the expansion of our board to 10 directors in April 2022, and corporate insurance expenses, resulting from increased coverages and insurance rates.

Legal and professional fees. Legal and professional fees were $28.5 million for the Company’s boardnine months ended September 30, 2023 compared to $5.0 million for the comparable period of directors from nine members2022. The increase is principally related to ten members.legal expenses associated with stockholder matters. See further discussion in Part II, Other Information — Item 1. Legal Proceedings.

Ad valorem and other taxes. ForAd valorem and other taxes were $5.4 million for the nine months ended September 30, 2023, compared to $7.0 million for the nine months ended September 30, 2022. Ad valorem taxes for the nine months ended September 30, 2022 included payments for prior year ad valorem tax liabilities which had not been paid by the Company recorded an accrual of approximately $6.9 millionthird party responsible for those 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 sucha third partythat theyit no longer intendintends 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 accruinghave accrued and/or paid 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. While we intend to seek reimbursement from the third party following payment of such taxes, we are unable to determine the amount and/or likelihood of such reimbursement, and accordingly, have not recorded a loss recovery receivable as of September 30, 2022.

Depreciation, depletion and amortization. Depreciation, depletion and amortization was $10.9 million for the nine months ended September 30, 2023 compared to $12.2 million for the nine months ended September 30, 2022 compared to $11.6 million for the nine months ended September 30, 2021.2022. The increase in depreciation, depletion and amortizationdecrease is principally due to decreased depreciation expense related to our investment infully depreciated water service-related assets placed in service in 2022 and to a lesser extent,is partially offset by increased depletion related to our oil and gas royalty interests.

Other income, net. Other income, net was $2.6$20.2 million and $0.9$2.6 million for the nine months ended September 30, 2023 and 2022, and 2021, respectively. InterestThe increase in other income, net is primarily related to increased interest income earned on our cash balances has increased asduring 2023. Higher cash balances and interest yields have risen during 2022.this period contributed to the increase in interest income.

Total income tax expense. Total income tax expense was $94.1$79.9 million and $46.5$94.1 million for the nine months ended September 30, 20222023 and 2021,2022, respectively. The increasedecrease in income tax expense is primarily related to increaseddecreased operating income resulting from increased revenues fromdecreased 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.

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 11,12, “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 nine months ended September 30, 20222023 have benefited directly and indirectly from a rebound in oil and gas activity in the Permian Basin and increases inbeen impacted by lower average commodity prices compared to 2021. Our2022. 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 partially 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 September 30, 20222023 as Compared to the Three Months Ended September 30, 20212022

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

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Three Months Ended September 30,Three Months Ended September 30,
2022202120232022
Revenues:Revenues:Revenues:
Land and resource management:Land and resource management:Land and resource management:
Oil and gas royalty revenue$130,298 68 %$79,098 64 %
Oil and gas royaltiesOil and gas royalties$87,102 56 %$130,298 68 %
Easements and other surface-related incomeEasements and other surface-related income13,788 %7,625 %Easements and other surface-related income17,425 11 %13,788 %
Land sales and other operating revenueLand sales and other operating revenue3,129 %69 — %Land sales and other operating revenue5,406 %3,129 %
Total land and resource management revenueTotal land and resource management revenue147,215 77 %86,792 70 %Total land and resource management revenue109,933 70 %147,215 77 %
Water services and operations:Water services and operations:Water services and operations:
Water salesWater sales24,426 13 %19,554 16 %Water sales26,422 17 %24,426 13 %
Produced water royaltiesProduced water royalties19,129 10 %15,140 12 %Produced water royalties20,849 13 %19,129 10 %
Easements and other surface-related incomeEasements and other surface-related income341 — %2,207 %Easements and other surface-related income763 — %341 — %
Total water services and operations revenueTotal water services and operations revenue43,896 23 %36,901 30 %Total water services and operations revenue48,034 30 %43,896 23 %
Total consolidated revenuesTotal consolidated revenues$191,111 100 %$123,693 100 %Total consolidated revenues$157,967 100 %$191,111 100 %
Net income:Net income:Net income:
Land and resource managementLand and resource management$108,188 83 %$65,292 78 %Land and resource management$82,884 79 %$108,188 83 %
Water services and operationsWater services and operations21,649 17 %18,545 22 %Water services and operations22,690 21 %21,649 17 %
Total consolidated net incomeTotal consolidated net income$129,837 100 %$83,837 100 %Total consolidated net income$105,574 100 %$129,837 100 %

Land and Resource Management

Land and Resource Management segment revenues increased $60.4decreased $37.3 million, or 69.6%25.3%, to $147.2$109.9 million for the three months ended September 30, 20222023 as compared to the comparablesame period of 2021.2022. The increasedecrease in Land and Resource Management segment revenues is principally due to an increasea $43.2 million decrease in oil and gas royalty revenue as discussed further below.for three months ended September 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 $87.1 million for the three months ended September 30, 2023 compared to $130.3 million for the three months ended September 30, 2022, compareda decrease of 33.2%. Oil and gas royalties decreased $43.2 million due to $79.1 millionlower average commodity prices and lower production volume for the three months ended September 30, 2021, an increase2023 compared to the same period of 64.7%.

2022. The table below provides financial and operational data by royalty streamaverage realized price declined 28.4% to $45.41 per barrel of oil equivalent (“Boe”) for the three months ended September 30, 2022 and 2021:2023 from $63.42 per Boe for the three months ended September 30, 2022. Our share of production decreased to 21.8 thousand Boe per day for the three months ended September 30, 2023 compared to 23.4 thousand Boe per day for the same period of 2022.

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Three Months Ended
September 30,
20222021
Our share of production volumes(1):
Oil (MBbls)928 810 
Natural gas (MMcf)3,582 3,111 
NGL (MBbls)626 469 
Equivalents (MBoe)2,151 1,798 
Equivalents per day (MBoe/d)23.4 19.5 
Oil and gas royalty revenue (in thousands):
Oil royalties$83,374 $52,081 
Natural gas royalties26,362 11,528 
NGL royalties20,562 15,489 
Total oil and gas royalties$130,298 $79,098 
Realized prices:
Oil ($/Bbl)$94.03 $67.32 
Natural gas ($/Mcf)$7.96 $4.01 
NGL ($/Bbl)$35.51 $35.69 
Equivalents ($/Boe)$63.42 $46.07 
The financial and operational data by royalty stream is presented in the table below for the three months ended September 30, 2023 and 2022:
Three Months Ended
September 30,
20232022
Our share of production volumes (1):
Oil (MBbls)850 928 
Natural gas (MMcf)3,316 3,582 
NGL (MBbls)606 626 
Equivalents (MBoe)2,009 2,151 
Equivalents per day (MBoe/d)21.8 23.4 
Oil and gas royalty revenue (in thousands):
Oil royalties$66,892 $83,374 
Natural gas royalties8,479 26,362 
NGL royalties11,731 20,562 
Total oil and gas royalties$87,102 $130,298 
Realized prices:
Oil ($/Bbl)$82.45 $94.03 
Natural gas ($/Mcf)$2.76 $7.96 
NGL ($/Bbl)$20.91 $35.51 
Equivalents ($/Boe)$45.41 $63.42 
(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 gasEasements and NGL production volumesother surface-related income. Easements and other surface-related income was 23.4 thousand Boe per day$17.4 million for the three months ended September 30, 2022 compared to 19.5 thousand Boe per day for the same period of 2021. The average realized prices were $94.03 per barrel of oil, $7.96 per Mcf of natural gas, and $35.51 per barrel of NGL, for a total equivalent price of $63.42 per Boe for the three months ended September 30, 2022,2023, an increase of 37.7% per Boe26.4% compared to the total equivalent price of $46.07 per Boe for the same period of 2021.

Easements and other surface-related income. Easements and other surface-related income was $13.8 million for the three months ended September 30, 2022, an increase of 80.8% compared to $7.6 million for the three months ended September 30, 2021.2022. Easements and other surface-related income includes wellbore easements, pipeline easements, commercial leases, material sales, power linerevenue related to the use and utility easements,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 $2.2 million in wellbore easements, $1.3$3.3 million in pipeline easements $1.1and $1.0 million in material sales and $1.1 million in commercial leases for the three months ended September 30, 20222023 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 September 30, 2022.2023.

Land sales and other operating revenue. Land sales and other operating revenue includes revenue generated from land saleswas $5.4 million and grazing leases. Land sales were $3.1 million for the three months ended September 30, 2022.2023 and 2022, respectively. For the three months ended September 30, 2023, we sold 18,019 acres of land for an aggregate sales price of $5.4 million. For the three months ended September 30, 2022, we sold approximately 122 acres of land for an aggregate sales price of approximately $3.1 million, or $25,100 per acre. There were no land sales for the three months ended September 30, 2021.million.

Net incomeincome. . Net income for the Land and Resource Management segment was $82.9 million for the three months ended September 30, 2023 compared to $108.2 million for the three months ended September 30, 2022 compared to $65.32022. Segment operating income decreased $36.8 million for the three months ended September 30, 2021. As discussed above, segment revenues increased 69.6% for the three months ended September 30, 20222023 compared to the same period of 2021. Segment expenses, including2022, largely driven by the $43.2 million decrease in oil and gas royalty revenue. These changes were partially offset by a $5.5 million decrease in income tax expense were $39.0 million and $21.5 million forover the three months ended September 30, 2022 and 2021, respectively. The increase in segment expenses during 2022 was principally related to a $13.6 millionsame time periods. Expenses are discussed further above under “Results of Operations.”

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increase in income tax expense and a $2.8 million increase in ad valorem taxes for the three months ended September 30, 2022 compared to the same period of 2021. Expenses are discussed further above under “Results of Operations - Consolidated.”

Water Services and Operations
 
Water Services and Operations segment revenues increased 19.0%,9.4% to $43.9$48.0 million for the three months ended September 30, 20222023 as compared with revenues of $36.9$43.9 million for the comparablesame 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 $24.4increased $2.0 million to $26.4 million for the three months ended September 30, 2022, an increase2023, compared to the same period of 24.9% compared with the three months ended September 30, 2021 when water sales revenue was $19.6 million.2022. The increasegrowth in water sales is principally due to a 10.3%an increase in the number of barrels of sourced and treated water soldsales volumes, which was partially offset by a decrease in sourced water sales volumes, for the three months ended September 30, 2022,2023, compared to the same period of 2021.2022. The sales mix between sourced and treated water will vary period to period as customer demand changes.

Produced water royalties. Produced water royalties are royalties received from the 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 $19.1$20.8 million for the three months ended September 30, 20222023 compared to $15.1$19.1 million for the same period in 2021.2022. This increase is principally due to increased produced water volumes for the three months ended September 30, 20222023 compared to the same period of 2021.

Easements and other surface-related income. Easements and other surface-related income was $0.3 million for the three months ended September 30, 2022 compared to $2.2 million for the three months ended September 30, 2021. The decrease in easements and other surface-related income relates to a decrease in temporary permits for sourced water lines for the three months ended September 30, 2022 compared to the same period in 2021.2022.
 
Net income. Net income for the Water Services and Operations segment increased $3.1was $22.7 million for the three months ended September 30, 2023 compared to $21.6 million for the three months ended September 30, 2022 compared to $18.52022. Segment operating income increased $1.7 million for the three months ended September 30, 2021. As discussed above, segment revenues increased 19.0% for the three months ended September 30, 20222023 compared to the same period of 2021. Segment expenses, including income tax expense, were $22.32022. The increase is principally due to the $4.1 million for the three months ended September 30, 2022 as compared to $18.4 million for the three months ended September 30, 2021. The overall increase in segment expenses during 2022 is principally related to a $3.3revenues and was partially offset by the $2.2 million increase in operating expenses and a $0.6 million increase in income tax expense as a result of increased segment operating income during the same time period.water service-related expenses. Expenses are discussed further above under “Results of Operations - Consolidated.Operations.


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For the Nine Months Ended September 30, 20222023 as Compared to the Nine Months Ended September 30, 20212022

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

Nine Months Ended September 30,Nine Months Ended September 30,
2022202120232022
Revenues:Revenues:Revenues:
Land and resource management:Land and resource management:Land and resource management:
Oil and gas royalty revenue$355,738 69 %$186,835 62 %
Oil and gas royaltiesOil and gas royalties$258,644 56 %$355,738 69 %
Easements and other surface-related incomeEasements and other surface-related income34,728 %24,029 %Easements and other surface-related income49,826 11 %34,728 %
Land sales and other operating revenueLand sales and other operating revenue3,481 %959 — %Land sales and other operating revenue6,806 %3,481 %
Total land and resource management revenueTotal land and resource management revenue393,947 77 %211,823 70 %Total land and resource management revenue315,276 68 %393,947 77 %
Water services and operations:Water services and operations:Water services and operations:
Water salesWater sales65,518 13 %44,983 15 %Water sales85,799 19 %65,518 13 %
Produced water royaltiesProduced water royalties52,668 10 %43,147 14 %Produced water royalties61,824 13 %52,668 10 %
Easements and other surface-related incomeEasements and other surface-related income2,583 — %3,827 %Easements and other surface-related income2,039 — %2,583 — %
Total water services and operations revenueTotal water services and operations revenue120,769 23 %91,957 30 %Total water services and operations revenue149,662 32 %120,769 23 %
Total consolidated revenuesTotal consolidated revenues$514,716 100 %$303,780 100 %Total consolidated revenues$464,938 100 %$514,716 100 %
Net income:Net income:Net income:
Land and resource managementLand and resource management$285,418 82 %$150,248 79 %Land and resource management$217,860 74 %$285,418 82 %
Water services and operationsWater services and operations61,213 18 %40,687 21 %Water services and operations74,675 26 %61,213 18 %
Total consolidated net incomeTotal consolidated net income$346,631 100 %$190,935 100 %Total consolidated net income$292,535 100 %$346,631 100 %

Land and Resource Management

Land and Resource Management segment revenues increased 86.0%decreased 20.0% to $393.9$315.3 million for the nine months ended September 30, 20222023 as compared with $211.8$393.9 million for the comparable period of 2021.2022. The increasedecrease in Land and Resource Management segment revenues is principally due to increasesthe $97.1 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 $258.6 million for the nine months ended September 30, 2023 compared to $355.7 million for the nine months ended September 30, 2022, compared to $186.8 milliona decrease of $97.1 million. Oil and gas royalties for the nine months ended September 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 $105.8 million due to lower average commodity prices in the nine months ended September 30, 2023 compared to the same period of $168.9 million.2022. The average realized prices declined 33.5% to $42.49 per Boe for the nine months ended September 30, 2023 from $63.93 per Boe for the same period of 2022. Our share of crude oil, natural gas and NGL production volumes was 22.6 thousand Boe per day for the nine months ended September 30, 2023 compared to 21.3 thousand Boe per day 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 by the operator 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 nine months ended September 30, 2023.

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The table below provides financial and operational data by royalty stream for the nine months ended September 30, 2023 and 2022 and 2021:excludes the $8.7 Million Stipulation discussed above:
Nine Months Ended
September 30,
20232022
Our share of production volumes (1):
Oil (MBbls)2,642 2,538 
Natural gas (MMcf)10,405 9,773 
NGL (MBbls)1,784 1,660 
Equivalents (MBoe)6,160 5,827 
Equivalents per day (MBoe/d)22.6 21.3 
Oil and gas royalty revenue (in thousands)(1):
Oil royalties$193,969 $239,021 
Natural gas royalties23,210 60,187 
NGL royalties32,800 56,530 
Total oil and gas royalties$249,979 $355,738 
Realized prices(1):
Oil ($/Bbl)$76.88 $98.62 
Natural gas ($/Mcf)$2.41 $6.66 
NGL ($/Bbl)$19.88 $36.81 
Equivalents ($/Boe)$42.49 $63.93 

(1)
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TableThe metrics provided exclude the impact of Contents
Nine Months Ended
September 30,
20222021
Our share of production volumes:
Oil (MBbls)2,538 2,139 
Natural gas (MMcf)9,773 8,627 
NGL (MBbls)1,660 1,194 
Equivalents (MBoe)5,827 4,771 
Equivalents per day (MBoe/d)21.3 17.5 
Oil and gas royalty revenue (in thousands):
Oil royalties$239,021 $128,907 
Natural gas royalties60,187 26,400 
NGL royalties56,530 31,528 
Total oil and gas royalties$355,738 $186,835 
Realized prices:
Oil ($/Bbl)$98.62 $63.12 
Natural gas ($/Mcf)$6.66 $3.31 
NGL ($/Bbl)$36.81 $28.54 
Equivalents ($/Boe)$63.93 $41.01 

Our share of crude oil, natural gas and NGL production volumes was 21.3 thousand Boe per day for the nine months ended September 30, 2022 compared to 17.5 thousand Boe per day for the same period of 2021. The average realized prices were $98.62 per barrel of oil, $6.66 per Mcf of natural gas, and $36.81 per barrel of NGL, for a total equivalent price of $63.93 per Boe for the nine months ended September 30, 2022, an increase of 55.9% over a total equivalent price of $41.01 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 $49.8 million for the nine months ended September 30, 2023, an increase of 43.5% compared to $34.7 million for the nine months ended September 30, 2022, an increase of 44.5% compared to $24.0 million for the nine months ended September 30, 2021.2022. Easements and other surface-related income includes pipeline easements, wellbore easements, material sales, commercial leases, power linerevenue related to the use and utility easements,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 $4.4 million in wellbore easements, $4.0$7.4 million in pipeline easement income, and $2.1$5.0 million in material sales, and $1.2 million in commercial leases for the nine months ended September 30, 20222023 compared to the nine months ended September 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 nine months ended September 30, 20222023 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 $3.3was $6.8 million and $0.7$3.5 million for the nine months ended September 30, 2023 and 2022, and 2021, respectively. For the nine months ended September 30, 2023, we sold 18,061 acres of land for an aggregate sales price of approximately $6.8 million. For the nine months ended September 30, 2022, we sold 129 acres of land for an aggregate sales price of approximately $3.3 million, or $25,300 per acre. For the nine months ended September 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.million.

Net income. Net income for the Land and Resource Management segment increased 90.0%decreased 23.7% to $285.4$217.9 million for the nine months ended September 30, 20222023 compared to $150.2$285.4 million for the comparable period in 2021. The increase in net2022. Segment operating income is principally duedecreased $103.0 million for the nine months ended September 30, 2023 compared to the $182.1same period of 2022, largely driven by the $97.1 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 $168.9 million increasedecrease in oil and gas royalty revenue asand the $23.7 million increase in legal and professional fees. Expenses are discussed above. Total segment expenses were $108.5 million and $61.6 million for the ninefurther above under “Results of Operations — Consolidated.”

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months ended September 30, 2022 and 2021, respectively. The increase in segment expenses was principally related to a $42.1 million increase in income tax expense related to increased operating income and a $6.9 million increase in ad valorem taxes for the nine months ended September 30, 2022 compared to the same period of 2021. Expenses are discussed further above under “Results of Operations — Consolidated.”

Water Services and Operations

Water Services and Operations segment revenues increased 31.3%23.9% to $120.8$149.7 million for the nine months ended September 30, 20222023 as compared with $92.0$120.8 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 $20.5$20.3 million or 45.7% to $65.5$85.8 million for the nine months ended September 30, 20222023 compared to the same period of 2021.2022. The increasegrowth in water sales is principally due to an increase of approximately 20.2%22.9% in sourced and treated water sales volumes for the nine months ended September 30, 20222023 compared to the nine months ended September 30, 2021.2022.

Produced water royalties. Produced water royalties are royalties received from the 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 $52.7$61.8 million for the nine months ended September 30, 20222023 compared to $43.1$52.7 million compared to the same period in 2021.2022. This increase is principally due to increased produced water volumes for the nine months ended September 30, 20222023 compared to the same period of 2021.

Easements and other surface-related income. Easements and other surface-related income was $2.6 million for the nine months ended September 30, 2022, a decrease of $1.2 million compared to $3.8 million for the nine months ended September 30, 2021. The decrease in easements and other surface-related income relates to a decrease in temporary permits for sourced water lines for the nine months ended September 30, 2022 compared to the same period in 2021.2022.

Net income. Net income for the Water Services and Operations segment was $61.2$74.7 million for the nine months ended September 30, 20222023 compared to $40.7$61.2 million for the same period in 2021. As discussed above, segment revenues2022. Segment operating income increased 31.3% for the nine months ended September 30, 2022 compared to the same period of 2021. Total segment expenses, including income tax expense, were $59.6$17.1 million for the nine months ended September 30, 2022 as2023 compared to $51.3the same period of 2022. The increase is principally due to the $28.9 million for the nine months ended September 30, 2021. The overall increase in segment revenues and was partially offset by the $11.5 million increase in water service-related expenses during 2022 is principally related to a $5.4and the $3.8 million increase in income tax expense related to increased segment operating income during the same time period. Segment operating expenses increased $2.9 million during 2022 compared to 2021.expense. Expenses are discussed further above under “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 certainemployee 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 relateditems. 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 boththese 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 nine months ended September 30, 20222023 and 20212022 (in thousands):

Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20222021202220212023202220232022
Net income Net income$129,837 $83,837 $346,631 $190,935  Net income$105,574 $129,837 $292,535 $346,631 
Add: Add: Add:
Income tax expenseIncome tax expense34,138 19,916 94,071 46,521 Income tax expense29,363 34,138 79,894 94,071 
Depreciation, depletion and amortizationDepreciation, depletion and amortization3,917 3,866 12,223 11,562 Depreciation, depletion and amortization3,584 3,917 10,881 12,223 
EBITDA EBITDA167,892 107,619 452,925 249,018  EBITDA138,521 167,892 383,310 452,925 
Add: Add: Add:
Employee share-based compensationEmployee share-based compensation1,910 — 4,989 — Employee share-based compensation2,502 1,910 7,217 4,989 
Conversion costs related to corporate reorganization— — — 2,026 
Severance costs— — — 6,680 
Adjusted EBITDA$169,802 $107,619 $457,914 $257,724 
Adjusted EBITDAAdjusted EBITDA141,023 169,802 390,527 457,914 
Less:Less:
Current income tax expenseCurrent income tax expense(29,724)(34,024)(80,928)(94,911)
Capital expendituresCapital expenditures(5,243)(1,808)(10,387)(12,155)
Free Cash FlowFree Cash Flow$106,056 $133,970 $299,212 $350,848 

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 20212022 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 20212022 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 September 30, 2022.2023.
 
There have been no changes during the quarter ended September 30, 20222023 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.

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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, 20212022 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 September 30, 2022,2023, the Company repurchased shares as follows:

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 through July 31, 20225,545 $1,631 5,545 
August 1 through August 31, 20226,622 1,749 6,622 
September 1 through September 30, 20226,904 1,779 6,904 
Total(1)
19,071 $1,726 19,071 $41,551,105 
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal 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)
July 1 through July 31, 20231,389 $1,428 1,389 
August 1 through August 31, 20231,266 1,800 1,266 
September 1 through September 30, 2023909 1,852 909 
Total3,564 $1,668 3,564 $217,829,414 
(1)Repurchases were made pursuant to 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 million of shares of our outstanding Common Stock. In connection with the stock repurchase program, the Company entered into a Rule 10b5-1 trading plan that generally permits the Company 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.

Stock Repurchase Program

On November 1, 2022, our board of directorsBoard approved a stock repurchase program to purchase up to an aggregate of $250 million of our outstanding common stock to beCommon 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 of directorsBoard 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 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 may be implemented by the Company, and will be subject to market conditions, applicable legal requirements and other factors.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures.
 
Not applicable.

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Item 5.Other InformationInformation.
(c) Rule 10b5-1 Trading Arrangements

NoneOn September 14, 2023, Murray Stahl, a member of our Board of Directors, on behalf of himself and accounts managed by Horizon Kinetics Asset Management LLC over which Mr. Stahl has a controlling interest, adopted a “10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K that is intended to satisfy the affirmative defense of Rule 10b5-1(c) promulgated under the Exchange Act, for the purchase of up to 738 shares of Common Stock. This 10b5-1 trading arrangement is scheduled to expire on the earlier of (i) April 15, 2024 and (ii) the acquisition of 738 shares of Common Stock.

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Item 6. Exhibits and Financial Statement Schedules.

EXHIBIT INDEX



EXHIBIT
NUMBER
DESCRIPTION
101*The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 20222023 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.
104The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 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:November 2, 20221, 2023By:/s/ Tyler Glover
   Tyler Glover
President, Chief Executive Officer and Director
  
   
Date:November 2, 20221, 2023By:/s/ Chris Steddum
   Chris Steddum
Chief Financial Officer
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