TPL - Earnings call transcript Q2 2022 | Texas Pacific Land Corporation

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Operator

[Call Starts Abruptly] Pacific Land Corporation's Second Quarter 2022 Earnings Conference Call. This conference call is being recorded. I would now like to introduce your host for today's call, Shawn Amini, Vice President, Finance and Investor Relations. Please go ahead.

Shawn Amini

Good morning. us Earnings Texas Conference joining Second Land for XXXX Quarter Call. you today Pacific for Corporation's Thank Yesterday afternoon, Exchange the company's filed on its company Investors website released its XX-Q the the financial at with www.texaspacific.com. Securities of and section Commission available Form that's the results and

As remarks today's made conference forward-looking may include a reminder, statements. on call

our today. cause forward-looking events. obligation differ materially to Forward-looking subject risks to results of any light statements in undertake and those statements actual We discussed new are to future not update uncertainties that may or do from information

a factors refer the For more for our may detailed earnings our SEC the discussion this please that results, recent and to of most company's release quarter affect to filings.

financial ticker, This measures Steddum. information non-GAAP hosted by Management refer company Chris filings. at this call after about call some these to Ty Chief contained will Officer, reconciliations are Executive which is TPL's make Please measures. may More by open prepared release TPL. will call, and also Financial certain for During we and the will Officer, comments, stock Glover; financial and times Chief we our our also morning's in earnings questions. be we SEC conference note, non-GAAP discussing

to turn will the I Now call Ty. over

Ty Glover

you, Thank us Shawn. today. for thank you everyone, and Good joining morning,

Second quarter XXXX results demonstrate at a a level. operating high business

high on reported lean growth corporate growing our a structure adjusted on new maintaining focus streams percentage margin our sequential the double-digit represents major generating EBITDA Adjusted cost XX% XX%. revenue EBITDA revenue of total and a demonstrates in basis, All consolidated of $XXX continued margins. TPL's record, of a quarter-over-quarter million

X the buybacks returned quarter alone, over balance of shareholders to million sheet debt, maintaining a and while share retaining this nearly with million dividends cash. our of $XXX $XXX During recent form back still we most in

benefits slightly of numerous from the revenue streams this a resiliency lower company production Although quarter the high-quality and royalties. oil in sequentially, gas is the and our royalty beyond came just great example

and water SLEM Source surface to and water easements were XX%. materials, reduced and this increased confidence XX% for continue revenues up up refer generally were water royalty development leases, providing revenues are on indicators we that were with activity to business XX%, particular, source sales, acreage. for good as SLEM, up the quarter, see royalty revenues production we'll royalty in strong leading which our

expect On to ponds, demand, high brokered volumes source brackish, to now increased full We're increases year tanks, is sequentially frac CapEx all Due so million and increased do sales water of side, and supply Midland accommodate XX% we chain Basin observing and County some strong. to easing new to with be particular, seem pumps. $XX the slightly. pipes water In the across from major still they the operator Reeves treatment. budget CapEx We approximately issues have the our channels, in $XX million. field, demand very

completion. However, timing to manage and related advance new of as and excess delays seeing and to DUC finishing spuds now plant balances close try operators some friction scheduling quick depleting, we're to in turnaround appear

overall increased tie-ins demand. side, by revenues water were produced driven volumes from new the increased On and largely higher injection

Now turning increase large particularly was in encouraging. to revenues this SLEM. quarter The percentage

concentrated years, operators couple existing been as performance that development business flat in of last the has generally infrastructure. For around

caliche. operators. and across strong from surface, SLEM easements subsurface midstream and meaningful wellbore SLEM second is both with activity both However, our and Delaware surface easement, position saw pipeline higher for strength quarter, in upstream demand in with the broad Midland we demand new

about our industry the oil continue said, promising, to of is outlook remains in All ongoing of this the commodity broadly That activity and also just and shareholders and Permian beyond The prices. at strong pacing development the by and afforded royalty future on development high excited flow continued oil the and benefit from our TPL, acreage. free gas. cash suggestive we're should around gas for

time and surface and next-generation Texas. dedicate finding in can to continue resources executing position We towards leverage meaningful West unique our on opportunities and expansive that

couple We we we've generate unique projects complete, Group for for on a TPL. facility and been stream the TPL bitcoin royalty Once During that a to Infrastructure quite venture a the develop some announced of JAI facility high-margin Mawson Energy working XX-megawatt quarter, surface. revealed the with mining on will time.

Permian. captured sequester acreage. best in an team TPL bringing We is opportunities potentially Milestone Carbon amongst we to industry, also wide the working potential to to as strive agreement advancing array value We with the the footprint. numerous of and announced evaluate look maximize expansive with opportunities. next-gen COX a to constructive to have in Milestone continues these them TPL's projects look more forward to TPL the capture to carbon the on of conversations we surface on forward

Scope hope front, we and and On by ESG Scope continued improve X the and XXXX on year-over-year, we our updated with we reduced X% have X data website efficiency electrification efforts, emissions with further. can posted that our

look progress company's pleased proxy and declassify on the to we will to ESG An visit make the the continue November. item, to the governance to on proposal be across more this our has see initiatives, which board, to our Annual Board update amend progress materials make for the encourage website ESG approved XXXX annual upcoming disclosures. to forward We meeting a for we portion this hosting everyone the company's We're included and multiple of side. our Meeting. charter in Board

talent, performance not from to the lot would Finally, all employees across business We results. our work they and had outstanding their rise that, consistently I call entire over turn With Chris Without the corporate to quarterly possible. ask employees thank I'll field and TPL. a be to want here our the to challenge. discuss we've the and at hard dedication, this

Chris Steddum

revenue Thanks, streams quarter-over-quarter XX% higher driven royalty Oil major XXXX was our on $XXX offset due was primarily by second prices basis. lower of double-digit by gas which revenue all sequential to production. royalty for revenue the across commodity increases quarter-over-quarter a but partially Ty. up Total of million, percentage quarter and was

Commodity per oil slightly was did gas quarter, per of higher oil, of equivalent benefited realizations barrels compared we oil as Second barrels day. and NGL slightly production quarter in as realizations each percentages excellent X,XXX last from fully continue natural day royalty production at still oil by though price approximately to of unhedged. quarter-over-quarter, come completely XX,XXX price we to double-digit increased be sequential which are lower

well strong half the average performance in a increase water To the bit of we a for through all spuds aligned of As look XXXX. data what over also is compared the SLEM are during averaged year June elaborate the points permits approximate gross encouraging gross the approximately XXX XX permits June, meaningful seen as per represents trajectory our gross new to XXX XX to Ty month the on through a consider approximately with of well compared positive year-to-date business. to and to the We year. alluded, which half uptick in more the well permits XXXX first of per spuds ahead gross we XX% data approximately an in be overall second for inventory outlook, We've month.

the the during completions the Our a compared data half slowdown during XXXX of suggests to second a quarter for first pacings of bit of XXXX. new

However, we wells those and to turn a expect sales are these but maintain in. once to inventory we wells, do higher-than-normal tied completed unproductive of

the active year. we We buyback of through for authorization buyback shares Our the was $XXX remain program the active repurchased million approximately for and during intend $XX XX,XXX the quarter, approximately to end million.

flow, a will large and to with look as evaluate priorities to questions. capital value. retain we continues amount that we business cash we free tremendous shareholder allocation take cash our of to continue robust maximize now operator, a that, We a and balance With flexibility generate

Operator

first the comes of Stifel. line [Operator question Our from Instructions] Annis of

John Annis

prepared Congrats on Can remarks, update. you strength for outlook? a has mentioned quarter? some can anything flat on on been in you a provide you that while. additional there business this As the strong Is detail share SLEM your

Ty Glover

easements, very we also segment. hits in across saw prepared the in say operators would business It we in line kind kind ramp sales. quarter when surface this SLEM, material over that revenue spread development those easements, a easements, additional -- Look, additional business areas. entire promising the of pipeline was see Yes. out wellbore say that I of that's electric would I that usually getting for just

of think more trend that's But the maybe really I news. busy just a good activity. spotty that a That's kind it's durable signals lately on to lot of has easement us been of projects. working than land

the some in strength to So of area we're that I to business. think continue see going

John Annis

things? it. Got for And any about? share you thoughts timing next-gen potential can opportunities, how revenue those the and initial came those on Then under

Ty Glover

Yes.

to dedicated So got team out a next-gen opportunities. -- BD is we've our part look, of just seeking team internally

for down reaching just out the trying And through. industries to us opportunities so kind track the team opportunities and to of came of use The those our surface. within different expand different

deal and would operational Mawson mining JAI, that bitcoin recently think in the by with facility with I release out of press that, QX put a be May back 'XX. So Mawson

promising. So that's very

good of On we We announced so we're deal, really having the intent some Milestone. conversations there. side, carbon with capture letter the signed

viable going our sequestration. to of if for So they're some do properties carbon some to see studies it's on

to continue business. think area the some I of regarding So see conversations promising we'll that

Operator

question the comes from next BWS of Khorsand Our Financial. of line

Hamed Khorsand

purely in First the because bumping onetime was increased up. Or Were want easement that there about revenue off, revenue just to ask this any activity? of I number?

Ty Glover

Yes.

was really it increased sales. I material like see sale just continue onetime material strong mean, what a to event, saw activity. So was we is but we obviously, a

most well a As lines far as the pipeline easement gathering easement connects, those lot in return of being put place. of itself,

perpetual a has long-haul like than easement most been rather in big So of revenue. recurrent like seen past, onetime this we've the

Hamed Khorsand

the as because to around over you that the CapEx year? clarity the support have Is as demand much next water commentary the far And in expecting business. how you're increase

Ty Glover

Yes.

like if $XX it that our to budget, million kind million in you range. look $XX So at of was original

contracts team of see the water of to The additional this has job a continue we done So fantastic business. signing a water demand lot year. in

And as to so well as additional support we're to spend to from going contracts of additional new some on infrastructure customers. capital those existing demand kind have

procure. some pumps frac that towards going used XX X pipe like months that additional some to in accommodate we're demand, just And issues to to seeing like chain to So XX also things to but kind taking XXXX demand X is tanks, that capital also additional take not for now are treatment of weeks preparation supply ponds, and demand. to just XXXX go

and that we're So ramp our the from we're of ahead sure to make support to development operators. those stay trying bottlenecks ready just

Hamed Khorsand

the time And was my estimates topic of chain. your out supply there when Is on kind for on or could and you any line these smooth bottlenecks land? that operators last question the of

Ty Glover

what as No, I ease looks like far looks a starting like. It don't answer that exactly what a bit. like, line line mean good it's time you time to that know have I are there. -- I But little seems don't for things as

Operator

[Operator Baker Instructions] Our next of Suisse. question of comes Credit line the from

Christopher Baker

in Congrats of to minerals on Great not as see pay services margin the consolidator the the question a a minerals was sale the water term, given in investments strong or Reuters just to report see off whether natural potentially pursuing recent electrification start profile. just around around of still those company? longer company My you results. bringing the

Ty Glover

to at continue Part value at we that only look acquisitions on but for acquisitions, to to well. say look as of would potential water surface our and evaluating shareholders. the potential strategy add mineral, not ways things is I

Christopher Baker

deal of sense. doing could leverage comfortable with terms the would there's obviously, guidelines -- no around you be a today, but any makes net scale debt It then And remind just sort for of larger company? debt you in us just Great.

Chris Steddum

Yes, that clear buying. that type for pretty you're we I in the of the lot leverage of think think But been appropriate past a is is very this of nature on depends mean, Chris, low X to I assets business. the that we've what

do likely so. expect And you should so that's we where what

Christopher Baker

to Okay. sub-Xx clarify sort Is just ballpark like And about by past, perhaps? in or the X.Xx? a low there of -- you like talked number that sorry,

Chris Steddum

it's I giving sure I'm end because sit Yes. on think always where there, what talking on I anyway, things, difficult. so. be today don't be you about which you're would exact comfortable we that lowest think not we've out the -- and but a But I'd specifically when guidance would number, is kind see talked of about we theoretical of

Christopher Baker

great CCS and if squeeze terms Obviously, in mining, sure. And cetera. bitcoin some Sure, more. in just I of could et study one announcements

what those alternative surface from share about goalposts, could -- guideposts terms guess, efforts I the think years? of you these you cash or over uses, flows could As aggregate any next in the few be

Chris Steddum

capture, even a the carbon evaluating they're we right that's Chris, say. mean, difficult I the mean viability to thing I now. said, as just on like

are stay studies working information on those of the think But we'll some give procure the project. bear going completed, available. until I very it as team and But so fruit. think surface, I tuned, difficult say And to to very becomes more to thing new streams look, that's would hard a they're we revenue is

Operator

in there That of today's as no you And well as conclude everyone. does rest That do queue. Have the are conclude the thank session call. for your further questions day, participation. great presentation. question-and-answer today's does a We today's

Texas Pacific Land (TPL) 4 Aug 222022 Q2 Earnings call transcript