Texas Pacific Land Trust 10-Q 5 Nov 20 2020 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Oct. 30, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-737
Entity Registrant Name	Texas Pacific Land Trust
Entity Tax Identification Number	75-0279735
Entity Address, Address Line One	1700 Pacific Avenue
Entity Address, Address Line Two	Suite 2900
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75201
City Area Code	(214)
Local Phone Number	969-5530
Title of 12(b) Security	Sub-shares in Certificates of Proprietary Interest (par value $0.03-1/3 per share)
Trading Symbol	TPL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,756,156
Entity Central Index Key	0000097517
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 315,759	$ 303,645
Accrued receivables, net	41,172	62,995
Other assets	3,874	3,980
Property, plant and equipment, net of accumulated depreciation of $21,619 and $11,313 as of September 30, 2020 and December 31, 2019, respectively	82,330	88,323
Real estate acquired	109,733	107,075
Royalty interests acquired, net of accumulated depletion of $582 and $260 as of September 30, 2020 and December 31, 2019, respectively	45,683	29,060
Operating lease right-of-use assets	2,630	3,098
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:
Total assets	601,181	598,176
LIABILITIES AND CAPITAL
Accounts payable and accrued expenses	15,846	19,193
Income taxes payable	2,716	5,271
Deferred taxes payable	40,741	40,827
Unearned revenue	19,669	17,381
Operating lease liabilities	2,982	3,367
Total liabilities	81,954	86,039
Commitments and contingencies	0	0
Capital:
Certificates of Proprietary Interest, par value $100 each; none outstanding	0	0
Sub-share Certificates in Certificates of Proprietary Interest, par value $0.0333 each; outstanding 7,756,156 Sub-share Certificates as of September 30, 2020 and December 31, 2019	0	0
Accumulated other comprehensive loss	(1,421)	(1,461)
Net proceeds from all sources	520,648	513,598
Total capital	519,227	512,137
Total liabilities and capital	601,181	598,176
Land (surface rights)
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:
Land (surface rights)	0	0
1/16th nonparticipating perpetual royalty interest
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:
1/16th nonparticipating perpetual royalty interest	0	0
1/128th nonparticipating perpetual royalty interest
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned:
1/128th nonparticipating perpetual royalty interest	$ 0	$ 0

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Property, plant and equipment, accumulated depreciation	$ 21,619	$ 11,313
Less: accumulated depletion	$ 582	$ 260
Certificates of proprietary interest, par value (in dollars per share)	$ 100	$ 100
Certificates of proprietary interest, outstanding (in shares)	0	0
Sub-share certificates of proprietary interest, par value (in dollars per share)	$ 0.0333	$ 0.0333
Sub-share certificates of proprietary interest, outstanding (in shares)	7,756,156	7,756,156
1/16th nonparticipating perpetual royalty interest
Nonparticipating perpetual royalty interest rate	6.25%	6.25%
1/128th nonparticipating perpetual royalty interest
Nonparticipating perpetual royalty interest rate	0.78125%	0.78125%

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income and Total Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 74,383	$ 98,530	$ 228,250	$ 377,164
Expenses:
Salaries and related employee expenses	7,678	8,537	27,235	22,742
Water service-related expenses	2,260	5,122	11,205	15,423
General and administrative expenses	1,883	2,864	7,290	6,877
Legal and professional fees	1,987	5,558	6,955	15,198
Land sales expenses	67	0	2,773	225
Depreciation, depletion and amortization	3,760	2,631	10,773	5,286
Total operating expenses	17,635	24,712	66,231	65,751
Operating income	56,748	73,818	162,019	311,413
Other income, net	1,287	941	2,306	1,771
Income before income taxes	58,035	74,759	164,325	313,184
Income tax expense (benefit):
Current	11,146	9,918	33,153	43,485
Deferred	614	4,819	(86)	20,093
Total income tax expense	11,760	14,737	33,067	63,578
Net income	46,275	60,022	131,258	249,606
Other comprehensive income — periodic pension costs, net of income taxes of $4, $2, $11 and $7, respectively	13	9	40	27
Total comprehensive income	$ 46,288	$ 60,031	$ 131,298	$ 249,633
Weighted average number of Sub-share Certificates outstanding (in shares)	7,756,156	7,756,156	7,756,156	7,756,643
Net income per Sub-share Certificate — basic and diluted (in dollars per share)	$ 5.97	$ 7.74	$ 16.92	$ 32.18
Cash dividends per Sub-share Certificate (in dollars per share)	$ 0	$ 0	$ 16	$ 6
Oil and gas royalties
Revenues:
Total revenues	$ 31,758	$ 38,259	$ 94,631	$ 111,113
Easements and other surface-related income
Revenues:
Total revenues	18,936	33,911	69,970	87,635
Water sales and royalties
Revenues:
Total revenues	12,139	21,654	47,525	65,067
Land sales
Revenues:
Total revenues	11,463	4,621	15,855	113,020
Other operating revenue
Revenues:
Total revenues	$ 87	$ 85	$ 269	$ 329

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Income and Total Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Other comprehensive income - periodic pension costs	$ 4	$ 2	$ 11	$ 7

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Net Proceeds From All Sources - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance			$ 512,137
Net income	$ 46,275	$ 60,022	131,258	$ 249,606
Ending balance	519,227	443,425	519,227	443,425
Net proceeds from all sources:
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	474,373	384,454	513,598	245,769
Net income	46,275	60,022	131,258	249,606
Dividends paid	0	0	(124,098)	(46,546)
Repurchase and retirement of Sub-share Certificates of Proprietary Interest	0	0	0	(4,353)
Ending balance	520,648	444,476	520,648	444,476
Net proceeds from all sources: | Cumulative Effect, Period of Adoption, Adjustment
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	0	0	(110)	0
Accumulated other comprehensive income (loss):
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(1,434)	(1,060)	(1,461)	(1,078)
Periodic pension costs, net of income taxes	13	9	40	27
Ending balance	$ (1,421)	$ (1,051)	$ (1,421)	$ (1,051)

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net income	$ 131,258	$ 249,606
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	(86)	20,093
Depreciation, depletion and amortization	10,773	5,286
Land sales revenue recognized on land exchanges	(1,415)	0
Changes in operating assets and liabilities:
Operating assets, excluding income taxes	24,878	(18,278)
Prepaid income taxes	0	9,398
Operating liabilities, excluding income taxes	(1,404)	15,361
Income taxes payable	(2,555)	2,757
Cash provided by operating activities	161,449	284,223
Cash flows from investing activities:
Proceeds from sale of fixed assets	0	117
Acquisition of land	(3,966)	(74,410)
Acquisition of royalty interests	(16,945)	(5,017)
Purchase of fixed assets	(4,326)	(27,579)
Cash used in investing activities	(25,237)	(106,889)
Cash flows from financing activities:
Purchase of Sub-share Certificates in Certificates of Proprietary Interest	0	(4,353)
Dividends paid	(124,098)	(46,546)
Cash used in financing activities	(124,098)	(50,899)
Net increase in cash, cash equivalents and restricted cash	12,114	126,435
Cash, cash equivalents and restricted cash, beginning of period	303,645	123,446
Cash, cash equivalents, and restricted cash, end of period	315,759	249,881
Supplemental disclosure of cash flow information:
Income taxes paid	35,719	31,337
Supplemental non-cash investing information:
Operating lease right-of-use assets	0	3,712
Land exchange	$ 1,415	$ 0

Organization and Description of

Organization and Description of Business Segments	9 Months Ended
	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business Segments	Organization and Description of Business Segments Texas Pacific Land Trust (which, together with its subsidiaries as the context requires, may be referred to as “Texas Pacific”, the “Trust”, “our”, “we” or “us”) is one of the largest landowners in the State of Texas with approximately 880,000 acres of land in West Texas. Texas Pacific was 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, and to issue transferable Certificates of Proprietary Interest pro rata to the original holders of certain debt securities of the Texas and Pacific Railway Company. The Trust is organized to manage land, including royalty interests, for the benefit of its owners. The Trust’s income is derived primarily from oil and gas royalties, sales of water and land, easements and commercial leases of the land. 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 the Trust and provide a framework for timely and rational allocation of resources within businesses. See Note 9. “Business Segment Reporting” for further information regarding our segments. Corporate Reorganization As previously announced on March 23, 2020, our Trustees approved a plan to reorganize the Trust from its current structure to a corporation formed under the laws of the State of Delaware. We continue to progress toward the conversion. On June 15, 2020, the Trust announced the new corporation will be named Texas Pacific Land Corporation (“TPL Corp”) and the prospective members of the Board of Directors of TPL Corp. Additionally, a draft registration statement on Form 10 has been submitted to the Securities and Exchange Commission (the “SEC”) for review, on a non-public basis. The Trust continues to make progress toward effecting its planned corporate reorganization into a Delaware corporation and currently anticipates to be in a position to move forward with the reorganization by the end of the fourth quarter of 2020. COVID-19 Pandemic and Market Conditions The uncertainty surrounding the severity and duration of the COVID-19 pandemic, as well as dramatic declines in crude oil prices due in part to the global spread of COVID-19, has caused volatility in the global financial markets including the oil and gas industry. The full impact of shut-in oil and gas wells, production curtailments and/or decreased investments in response to lower commodity prices and conservation of capital by the owners and operators of the oil and gas wells to which the Trust’s royalty interests relate, is unknown at this time. These events have negatively affected the Trust’s business and results of operations for the three and nine months ended September 30, 2020. During these uncertain times, we have continued to generate positive operating results and remain focused on meeting the operational needs of our customers while maintaining a safe and healthy work environment for our employees. Our existing information technology infrastructure has afforded us the opportunity to allow our corporate employees to work remotely. We have deployed additional safety and sanitization measures, including quarantine facilities for our field employees, if needed. In an effort to decrease ongoing operational costs, we have implemented certain cost reduction measures which include, but are not limited to, negotiated price reductions and discounts with certain vendors. We continue to monitor our customer base and outstanding accounts receivable balances as a means of minimizing any potential collection issues. As a royalty owner, we have no capital expenditure or operating expense burden for development of wells. Furthermore, our water operations currently have limited capital expenditure requirements, the amount and timing of which are entirely within our control. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The Trust continues to assess the provisions and potential impacts of this legislation; however, there have been no significant impacts to the Company's results of operations or financial position resulting from the CARES Act in the three and nine months ended September 30, 2020.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Interim Unaudited Financial Information The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial position of the Trust as of September 30, 2020 and the results of its operations for the three and nine months ended September 30, 2020 and 2019, respectively, and its cash flows for the nine months ended September 30, 2020 and 2019, respectively. Such adjustments are of a normal recurring nature. Principles of Consolidation and 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 include our consolidated accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 27, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset 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. Reclassifications Certain financial information on the condensed consolidated statements of income for the three and nine months ended September 30, 2019 have been revised to conform to the current year presentation. These revisions include a reclass of $0.2 million of land sales expenses for the nine months ended September 30, 2019 previously included in general and administrative expenses to a separate financial statement line item within operating expenses. Land sales expenses include cost basis and closing costs associated with land sales. Recently Adopted Accounting Guidance In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The Trust adopted the guidance effective January 1, 2020. Due to the short-term nature of our trade accounts receivable, the adoption of this guidance had a minimal impact on our consolidated financial statements.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2020
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-14, “ Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to Disclosure Requirements for Defined Benefit Plans .” The ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Trust is currently evaluating the impact that ASU 2018-14 will have on our consolidated financial statements and disclosures. In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740) — Simplifying the Accounting for Income Taxes.” The ASU simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted in interim or annual periods with any adjustments reflected as of the

Property, Plant and Equipment

Property, Plant and Equipment	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property, Plant and Equipment Property, plant and equipment, net consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Property, plant and equipment: Water service-related assets (1) $ 97,256 $ 93,097 Furniture, fixtures and equipment 6,095 5,941 Other 598 598 Property, plant and equipment at cost 103,949 99,636 Less: accumulated depreciation (21,619) (11,313) Property, plant and equipment, net $ 82,330 $ 88,323 (1) Water service-related assets reflect assets related to water sourcing and water treatment projects. Depreciation expense was $3.5 million and $2.6 million for the three months ended September 30, 2020 and 2019, respectively. Depreciation expense was $10.3 million and $5.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Real Estate Activity

Real Estate Activity	9 Months Ended
	Sep. 30, 2020
Real Estate [Abstract]
Real Estate Activity	Real Estate Activity As of September 30, 2020 and December 31, 2019, the Trust owned the following land and real estate (in thousands, except number of acres): September 30, 2020 December 31, 2019 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) 823,485 $ — 849,856 $ — Real estate acquired 57,850 109,733 51,931 107,075 Total real estate situated in 19 counties in Texas 881,335 $ 109,733 901,787 $ 107,075 No valuation allowance was necessary at September 30, 2020 and December 31, 2019. Land Sales For the nine months ended September 30, 2020, the Trust sold approximately 21,347 acres of land in Texas (Culberson, Hudspeth, Loving, Pecos and Reeves Counties) for an aggregate sales price of approximately $14.5 million, an average of approximately $676 per acre. Additionally, the Trust recognized land sales revenue of $1.4 million for the nine months ended September 30, 2020 related to land exchanges where the Trust had no cost basis in the land conveyed. For the nine months ended September 30, 2019, the Trust sold approximately 21,986 acres of land in Texas (Culberson, Glasscock, Hudspeth, Loving, Midland and Reeves Counties) for an aggregate sales price of approximately $113.0 million, an average of approximately $5,141 per acre. Land Acquisitions For the nine months ended September 30, 2020, the Trust acquired approximately 756 acres of land in Texas (Culberson and Reeves Counties) for an aggregate purchase price of approximately $3.9 million, an average of approximately $5,134 per acre (excludes land acquired through land exchanges discussed above). For the nine months ended September 30, 2019, the Trust acquired approximately 21,671 acres of land in Texas (Culberson, Glasscock, Loving and Reeves Counties) for an aggregate purchase price of approximately $74.4 million, an average of approximately $3,434 per acre.

Royalty Interests

Royalty Interests	9 Months Ended
	Sep. 30, 2020
Real Estate [Abstract]
Royalty Interests	Royalty Interests As of September 30, 2020 and December 31, 2019, the Trust owned the following oil and gas royalty interests (in thousands, except number of interests): Net Book Value September 30, 2020 December 31, 2019 1/16th nonparticipating perpetual royalty interests $ — $ — 1/128th nonparticipating perpetual royalty interests — — Royalty interests acquired 46,265 29,320 Total royalty interests, gross 46,265 29,320 Less: accumulated depletion (582) (260) Total royalty interests, net $ 45,683 $ 29,060 No valuation allowance was necessary at September 30, 2020 and December 31, 2019. For the nine months ended September 30, 2020, the Trust acquired oil and gas royalty interests in approximately 1,017 net royalty acres (normalized to 1/8th) for an aggregate purchase price of $16.9 million, an average price of approximately $16,668 per net royalty acre. For the nine months ended September 30, 2019, the Trust acquired oil and gas royalty interests in approximately 1,247 net royalty acres (normalized to 1/8th) for an aggregate purchase price of $4.7 million, an average price of approximately $3,800 per net royalty acre.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes For the nine months ended September 30, 2020 and 2019, income tax expense was $33.1 million and $63.6 million, respectively. The difference between the U.S. statutory tax rate of 21% and the current effective tax rate is primarily related to statutory depletion allowed on mineral royalty income. In response to the COVID-19 pandemic, many governments have enacted measures to provide aid and economic stimulus. These measures include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The CARES Act includes measures to assist companies, including temporary changes to income and non-income-based tax laws. For the nine months ended September 30, 2020, there were no material tax impacts to our condensed consolidated financial statements as it relates to COVID-19 measures. We continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.

Capital

Capital	9 Months Ended
	Sep. 30, 2020
Equity [Abstract]
Capital	CapitalThe Sub-share Certificates (“Sub-shares”) and the Certificates of Proprietary Interest are freely interchangeable in the ratio of one Certificate of Proprietary Interest for 3,000 Sub-shares or 3,000 Sub-shares for one Certificate of Proprietary Interest. Dividends On March 16, 2020, we paid $124.1 million in dividends representing a regular cash dividend of $10.00 per Sub-share and a special dividend of $6.00 per Sub-share for sub-shareholders of record at the close of business on March 9, 2020. On March 15, 2019, we paid $46.5 million in dividends representing a regular cash dividend of $1.75 per Sub-share and a special dividend of $4.25 per Sub-share for sub-shareholders of record at the close of business on March 8, 2019. Repurchases of Sub-shares For the nine months ended September 30, 2020, there were no Sub-shares repurchased. During the nine months ended September 30, 2019, we purchased and retired 6,258 Sub-shares.

Business Segment Reporting

Business Segment Reporting	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
Business Segment Reporting	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 strategies and objectives of the Trust 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 approximately 880,000 acres of land and related resources in West Texas owned by the Trust. 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 principally consist of revenue generated from sales of sourced and treated water as well as revenue from produced water royalties. Segment financial results were as follows for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Revenues: Land and resource management $ 49,896 $ 65,076 $ 142,140 $ 284,223 Water services and operations 24,487 33,454 86,110 92,941 Total consolidated revenues $ 74,383 $ 98,530 $ 228,250 $ 377,164 Net income: Land and resource management $ 34,359 $ 43,911 $ 92,197 $ 204,222 Water services and operations 11,916 16,111 39,061 45,384 Total consolidated net income $ 46,275 $ 60,022 $ 131,258 $ 249,606 Capital expenditures: Land and resource management $ — $ 29 $ 121 $ 1,445 Water services and operations 353 4,949 4,205 26,134 Total capital expenditures $ 353 $ 4,978 $ 4,326 $ 27,579 Depreciation, depletion and amortization: Land and resource management $ 505 $ 257 $ 1,192 $ 695 Water services and operations 3,255 2,374 9,581 4,591 Total depreciation, depletion and amortization $ 3,760 $ 2,631 $ 10,773 $ 5,286 The following table presents total assets and property, plant and equipment, net by segment as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Assets: Land and resource management $ 490,026 $ 467,758 Water services and operations 111,155 130,418 Total consolidated assets $ 601,181 $ 598,176 Property, plant and equipment, net: Land and resource management $ 3,736 $ 4,359 Water services and operations 78,594 83,964 Total consolidated property, plant and equipment, net $ 82,330 $ 88,323

Oil and Gas Producing Activitie

Oil and Gas Producing Activities	9 Months Ended
	Sep. 30, 2020
Extractive Industries [Abstract]
Oil and Gas Producing Activities	Oil and Gas Producing ActivitiesWe measure the Trust’s share of oil and gas produced in barrels of equivalency (“BOEs”). One BOE equals one barrel of crude oil, condensate, NGLs (natural gas liquids) or approximately 6,000 cubic feet of gas. As of September 30, 2020 and December 31, 2019, the Trust’s share of oil and gas produced was approximately 15.7 and 13.7 thousand BOEs per day, respectively. Reserves related to the Trust’s royalty interests are not presented because the information is unavailable.There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where the Trust has a royalty interest. The number of DUC wells is determined using uniform drilling spacing units with pooled interests for all wells awaiting completion. The Trust has identified 582 and 486 DUC wells subject to our royalty interest as of September 30, 2020 and December 31, 2019, respectively.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsWe evaluate events that occur after the balance sheet date but before consolidated financial statements are, or are available to be issued to determine if a material event requires our amending the consolidated financial statements or disclosing the event. We evaluated subsequent events through the filing date we issued these consolidated financial statements and did not identify any subsequent events requiring disclosure.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Principals of Consolidation and Basis of Presentation	Principles of Consolidation and 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 include our consolidated accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 27, 2020. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report.
Use of Estimates in the Preparation of Financial Statements	Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset 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.
Reclassifications	ReclassificationsCertain financial information on the condensed consolidated statements of income for the three and nine months ended September 30, 2019 have been revised to conform to the current year presentation.
Recently Accounting Pronouncements	Recently Adopted Accounting Guidance In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The Trust adopted the guidance effective January 1, 2020. Due to the short-term nature of our trade accounts receivable, the adoption of this guidance had a minimal impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, “ Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to Disclosure Requirements for Defined Benefit Plans .” The ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Trust is currently evaluating the impact that ASU 2018-14 will have on our consolidated financial statements and disclosures. In December 2019, the FASB issued ASU 2019-12, “ Income Taxes (Topic 740) — Simplifying the Accounting for Income Taxes.” The ASU simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted in interim or annual periods with any adjustments reflected as of the

Property, Plant and Equipment (

Property, Plant and Equipment (Tables)	9 Months Ended
	Sep. 30, 2020
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property, plant and equipment, net consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Property, plant and equipment: Water service-related assets (1) $ 97,256 $ 93,097 Furniture, fixtures and equipment 6,095 5,941 Other 598 598 Property, plant and equipment at cost 103,949 99,636 Less: accumulated depreciation (21,619) (11,313) Property, plant and equipment, net $ 82,330 $ 88,323 (1) Water service-related assets reflect assets related to water sourcing and water treatment projects.

Real Estate Activity (Tables)

Real Estate Activity (Tables)	9 Months Ended
	Sep. 30, 2020
Real Estate [Abstract]
Schedule of Real Estate Properties	As of September 30, 2020 and December 31, 2019, the Trust owned the following land and real estate (in thousands, except number of acres): September 30, 2020 December 31, 2019 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) 823,485 $ — 849,856 $ — Real estate acquired 57,850 109,733 51,931 107,075 Total real estate situated in 19 counties in Texas 881,335 $ 109,733 901,787 $ 107,075

Royalty Interests (Tables)

Royalty Interests (Tables)	9 Months Ended
	Sep. 30, 2020
Real Estate [Abstract]
Schedule of Royalty Interests	As of September 30, 2020 and December 31, 2019, the Trust owned the following oil and gas royalty interests (in thousands, except number of interests): Net Book Value September 30, 2020 December 31, 2019 1/16th nonparticipating perpetual royalty interests $ — $ — 1/128th nonparticipating perpetual royalty interests — — Royalty interests acquired 46,265 29,320 Total royalty interests, gross 46,265 29,320 Less: accumulated depletion (582) (260) Total royalty interests, net $ 45,683 $ 29,060

Business Segment Reporting (Tab

Business Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
Schedule of Segment Financial Results	Segment financial results were as follows for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Revenues: Land and resource management $ 49,896 $ 65,076 $ 142,140 $ 284,223 Water services and operations 24,487 33,454 86,110 92,941 Total consolidated revenues $ 74,383 $ 98,530 $ 228,250 $ 377,164 Net income: Land and resource management $ 34,359 $ 43,911 $ 92,197 $ 204,222 Water services and operations 11,916 16,111 39,061 45,384 Total consolidated net income $ 46,275 $ 60,022 $ 131,258 $ 249,606 Capital expenditures: Land and resource management $ — $ 29 $ 121 $ 1,445 Water services and operations 353 4,949 4,205 26,134 Total capital expenditures $ 353 $ 4,978 $ 4,326 $ 27,579 Depreciation, depletion and amortization: Land and resource management $ 505 $ 257 $ 1,192 $ 695 Water services and operations 3,255 2,374 9,581 4,591 Total depreciation, depletion and amortization $ 3,760 $ 2,631 $ 10,773 $ 5,286
Schedule of Total Assets And Property, Plant, and Equipment	The following table presents total assets and property, plant and equipment, net by segment as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Assets: Land and resource management $ 490,026 $ 467,758 Water services and operations 111,155 130,418 Total consolidated assets $ 601,181 $ 598,176 Property, plant and equipment, net: Land and resource management $ 3,736 $ 4,359 Water services and operations 78,594 83,964 Total consolidated property, plant and equipment, net $ 82,330 $ 88,323

Organization and Description _2

Organization and Description of Business Segments (Details) a in Thousands	9 Months Ended
	Sep. 30, 2020asegment
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Number of operating segments | segment	2
West Texas
Organization, Consolidation and Presentation of Financial Statements [Line Items]
Area of land (in acres) | a	880

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassification [Line Items]
Land sales expenses	$ 67	$ 0	$ 2,773	$ 225
Revision of Prior Period, Reclassification, Adjustment
Reclassification [Line Items]
Land sales expenses				$ 200

Property, Plant and Equipment_2

Property, Plant and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost	$ 103,949		$ 103,949		$ 99,636
Less: accumulated depreciation	(21,619)		(21,619)		(11,313)
Property, plant and equipment, net	82,330		82,330		88,323
Depreciation expense	3,500	$ 2,600	10,300	$ 5,200
Water service-related assets
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost	97,256		97,256		93,097
Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost	6,095		6,095		5,941
Other
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost	$ 598		$ 598		$ 598

Real Estate Activity - Schedule

Real Estate Activity - Schedule of Land and Real Estate Ownership (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020USD ($)acounty	Dec. 31, 2019USD ($)acounty
Number of Acres
Land (surface rights) (in acres) | a	823,485	849,856
Real estate acquired (in acres) | a	57,850	51,931
Total real estate situated in 19 counties in Texas (in acres) | a	881,335	901,787
Net Book Value
Land (surface rights) | $	$ 0	$ 0
Real estate acquired | $	109,733	107,075
Total real estate situated in 19 counties in Texas | $	$ 109,733	$ 107,075
Number of counties with real estate in Texas | county	19	19

Real Estate Activity (Details)

Real Estate Activity (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020USD ($)	Sep. 30, 2019USD ($)	Sep. 30, 2020USD ($)a$ / a	Sep. 30, 2019USD ($)a$ / a
Real Estate Properties [Line Items]
Revenues	$ 74,383	$ 98,530	$ 228,250	$ 377,164
Land sales
Real Estate Properties [Line Items]
Revenues	$ 11,463	$ 4,621	$ 15,855	$ 113,020
Culberson, Hudspeth, Loving, Pecos and Reeves Counties
Real Estate Properties [Line Items]
Area of real estate property, sold (acre) | a			21,347
Proceeds from sale of real estate			$ 14,500
Average sale price (in dollars per acre) | $ / a			676
Culberson, Hudspeth, Loving, Pecos and Reeves Counties | Land sales
Real Estate Properties [Line Items]
Revenues			$ 1,400
Culberson, Glasscock, Hudspeth, Loving, Midland and Reeves Counties
Real Estate Properties [Line Items]
Area of real estate property, sold (acre) | a				21,986
Proceeds from sale of real estate				$ 113,000
Average sale price (in dollars per acre) | $ / a				5,141
Culberson and Reeves counties
Real Estate Properties [Line Items]
Additions (acre) | a			756
Additions			$ 3,900
Average purchase price (in dollars per acre) | $ / a			5,134
Culberson, Glasscock, Loving and Reeves Counties
Real Estate Properties [Line Items]
Additions (acre) | a				21,671
Additions				$ 74,400
Average purchase price (in dollars per acre) | $ / a				3,434

Royalty Interests (Details)

Royalty Interests (Details) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2020USD ($)a$ / a	Sep. 30, 2019USD ($)a$ / a	Dec. 31, 2019USD ($)
Net Book Value
Royalty interests acquired, net of accumulated depletion of $582 and $260 as of September 30, 2020 and December 31, 2019, respectively	$ 46,265		$ 29,320
Total royalty interests, gross	46,265		29,320
Less: accumulated depletion	(582)		(260)
Total royalty interests, net	45,683		$ 29,060
Acquisition of royalty interests	$ 16,945	$ 5,017
Royalty interest rate	12.50%	12.50%
1/16th nonparticipating perpetual royalty interests
Real Estate Properties [Line Items]
Nonparticipating perpetual royalty interest rate	6.25%		6.25%
Net Book Value
1/16th nonparticipating perpetual royalty interest	$ 0		$ 0
1/128th nonparticipating perpetual royalty interests
Real Estate Properties [Line Items]
Nonparticipating perpetual royalty interest rate	0.78125%		0.78125%
Net Book Value
1/128th nonparticipating perpetual royalty interest	$ 0		$ 0
Additional real estate acquisitions
Net Book Value
Net royalty interests (acre) | a	1,017	1,247
Acquisition of royalty interests	$ 16,900	$ 4,700
Average price per net royalty acre acquired (in dollars per acre) | $ / a	16,668	3,800

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 11,760	$ 14,737	$ 33,067	$ 63,578

Capital (Details)

Capital (Details) $ / shares in Units, $ in Millions	Mar. 16, 2020USD ($)$ / shares	Mar. 15, 2019USD ($)$ / shares	Sep. 30, 2020$ / shares	Sep. 30, 2019$ / shares	Sep. 30, 2020$ / sharesshares	Sep. 30, 2019$ / sharesshares
Class of Stock [Line Items]
Payments of dividends | $	$ 124.1	$ 46.5
Dividend paid per sub-share (in dollars per share)			$ 0	$ 0	$ 16	$ 6
Sub Shares
Class of Stock [Line Items]
Ratio of certificates to sub-shares					0.0003333
Number of shares repurchased and retired (in shares) | shares					0	6,258
Cash Dividend | Sub Shares
Class of Stock [Line Items]
Dividend paid per sub-share (in dollars per share)	$ 10	$ 1.75
Special Dividend | Sub Shares
Class of Stock [Line Items]
Dividend paid per sub-share (in dollars per share)	$ 6	$ 4.25

Business Segment Reporting (Det

Business Segment Reporting (Details) a in Thousands	Sep. 30, 2020a
West Texas
Segment Reporting Information [Line Items]
Area of land (in acres)	880

Business Segment Reporting - Fi

Business Segment Reporting - Financial Results (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Revenues	$ 74,383	$ 98,530	$ 228,250	$ 377,164
Net income	46,275	60,022	131,258	249,606
Capital expenditures	353	4,978	4,326	27,579
Depreciation, depletion and amortization	3,760	2,631	10,773	5,286
Land and resource management
Segment Reporting Information [Line Items]
Revenues	49,896	65,076	142,140	284,223
Net income	34,359	43,911	92,197	204,222
Capital expenditures	0	29	121	1,445
Depreciation, depletion and amortization	505	257	1,192	695
Water services and operations
Segment Reporting Information [Line Items]
Revenues	24,487	33,454	86,110	92,941
Net income	11,916	16,111	39,061	45,384
Capital expenditures	353	4,949	4,205	26,134
Depreciation, depletion and amortization	$ 3,255	$ 2,374	$ 9,581	$ 4,591

Business Segment Reporting - As

Business Segment Reporting - Assets and Property, Plant, and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Segment Reporting Information [Line Items]
Assets	$ 601,181	$ 598,176
Property, plant and equipment, net	82,330	88,323
Land and resource management
Segment Reporting Information [Line Items]
Assets	490,026	467,758
Property, plant and equipment, net	3,736	4,359
Water services and operations
Segment Reporting Information [Line Items]
Assets	111,155	130,418
Property, plant and equipment, net	$ 78,594	$ 83,964

Oil and Gas Producing Activit_2

Oil and Gas Producing Activities (Details)	Sep. 30, 2020Boewell	Dec. 31, 2019Boewell
Extractive Industries [Abstract]
Share of oil and gas produced (in barrel) | Boe	15,700	13,700
Number of DUC wells (in wells) | well	582	486