Texas Pacific Land Corp (TPL) Q3 2025 Earnings Summary

Executive Summary

Record quarter across multiple KPIs: total revenue hit $203.1M, the first time TPL topped $200M; diluted EPS was $5.27; Water Services & Operations (WS&O) revenue reached an all-time high of $80.8M; oil & gas royalty production rose to 36.3 Mboe/d .
Sequential drivers: revenue +8% q/q on higher water sales (+$19.0M) and higher oil & gas royalties (+$13.7M) offset by lower SLEM (-$19.5M); operating expenses rose $11.2M q/q mainly on higher water service-related expenses (+$8.0M) .
Strategic catalysts: closed a $500M undrawn revolver (SOFR + 225–250 bps), announced a 3-for-1 stock split targeted for December, and completed a 17,306 net royalty acre acquisition (1/8th basis) on Nov 3 (adjacent to existing DSUs; >3,700 Boe/d; expected double‑digit pre‑tax cash yield at ~$60/$2 deck) .
Estimate context: EPS of $5.27 missed a thin consensus of $5.77 (1 estimate), while revenue estimates were not available; water strength and volume growth were partially offset by lower SLEM and higher operating costs in the quarter . Values marked with * in Estimates Context retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Record water results and royalty production: WS&O revenue hit $80.8M; water sales $44.6M; produced water royalties $32.3M; royalty production reached 36.3 Mboe/d, all quarterly records .
Strategic balance sheet and M&A execution: $500M revolver secured (undrawn) and $505M of acquisitions (royalties closed Nov 3 for ~$474.1M, plus ~8,147 surface acres) funded with cash; ~70% of acquired royalties overlay current interests; ~61% operated by XOM/FANG/OXY .
Management tone/confidence: “first quarter in TPL’s history where we recorded over $200 million of revenue” and continued progress on desalination R&D at 10k bbl/d scale with commissioning expected by year end .

What Went Wrong

Sequential SLEM step-down: Easements & other surface-related income fell $19.5M q/q to $16.7M after a record Q2, reducing consolidated revenue mix diversity in the quarter .
Higher operating costs: Total operating expenses increased to $54.0M from $43.8M, largely from an $8.0M increase in water service-related expenses; this dampened margin leverage despite revenue growth .
Thin consensus miss: EPS of $5.27 came in below a one-analyst consensus of $5.77*, implying a modest headline miss even as revenue reached a record; limited sell-side coverage reduces the signaling value of the miss . Values retrieved from S&P Global.

Financial Results

Consolidated P&L (USD Millions, except per-share and margins)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenues	195.983	187.543	203.085
Net Income	120.652	116.140	121.238
Diluted EPS ($)	5.24	5.05	5.27
Adjusted EBITDA	169.418	166.175	173.635
Adjusted EBITDA Margin %	86%	89%	85%
Net Income Margin %	61.56%*	61.93%*	59.70%*

Values marked with * retrieved from S&P Global.

YoY reference points (Q3 2024 → Q3 2025):

Revenue: $173.563M → $203.085M (+17.0% YoY) .
Diluted EPS: $4.63 → $5.27 (+13.8% YoY) .

Segment Results

Segment	Metric	Q1 2025	Q2 2025	Q3 2025
Land & Resource Mgmt	Revenue ($M)	126.581	128.497	122.265
	Net Income ($M)	85.544	86.569	80.760
Water Services & Operations	Revenue ($M)	69.402	59.046	80.820
	Net Income ($M)	35.108	29.571	40.478

KPIs and Drivers

KPI	Q1 2025	Q2 2025	Q3 2025
Royalty production (MBoe/d)	31.1	33.2	36.3
Realized prices – Oil ($/Bbl)	71.05	63.99	65.14
Realized prices – Gas ($/Mcf)	3.63	0.87	2.01
Realized prices – NGL ($/Bbl)	23.46	20.60	18.25
Realized prices – Boe ($/Boe)	41.58	32.94	34.10
Water sales revenue ($M)	38.813	25.577	44.578
Produced water royalties ($M)	27.700	30.737	32.268
SLEM revenue ($M)	18.225	36.223	16.715

Guidance Changes

Metric/Item	Period	Previous Guidance	Current Update	Change
Desalination Phase 2B (10k bbl/d) commissioning	2025 year-end	Begin taking produced water by year-end 2025	“Begin commissioning by the end of the year”; permits progressing (additional land application permit; working toward TCEQ discharge)	Maintained timeline; regulatory progress
Desalination CapEx	2025	CapEx estimates unchanged	CapEx estimates unchanged	Maintained
Dividend	Q4 2025	$1.60/quarter (Q3 paid Sep 16)	$1.60/quarter declared, payable Dec 15 (record Dec 1)	Maintained
Stock split	Dec 2025 (expected)	N/A	3-for-1 split approved; expected completion in Dec 2025, subject to finalization	New corporate action
Liquidity	2025	N/A	New $500M revolver (SOFR + 2.25–2.50%); undrawn; $250M accordion; matures 2029	New facility

TPL does not provide formal revenue/EPS/OpEx/tax rate guidance; updates focus on project timelines, capital returns, and financing capacity .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Produced water desalination & beneficial reuse	Phase 2B 10k bbl/d unit “by year end”; permits submitted; economics focus; use-cases include power/data center cooling	Commissioning by year-end; additional land application permit obtained; working toward TCEQ discharge; exploring waste heat capture and colocation	Advancing on schedule; regulatory progress
Out-of-basin disposal / pore space	Led push for out-of-basin pore space; royalties on >4MM bbl/d produced water; expect continued growth	Strong demand for in‑basin and out‑of‑basin pore space; volumes up ~19% YoY	Expanding volumes/capture
Macro/Permian runway	Detailed “peak Permian” rebuttal; decades of inventory and efficiency gains	Long‑term oil price skew to right tail; confident in Permian growth runway	Consistently constructive
Water sales volatility/run-rate	Q2 water sales softer on deferred activity and spatial variation; expected stronger Q3	Q3 rebound to record; mix of recycled vs source managed dynamically with operator demand	Volatility but strengthening
M&A pipeline	Friendly environment; backlog of opportunities	~$474M Midland Basin royalty deal closed Nov 3; ~$505M total acquisitions including surface	Executing larger deals
Power/data center opportunities	Transmission approvals, active developer dialogues	“Pretty close on a couple of opportunities” in West Texas; strong interest	Momentum building

Management Commentary

CEO (release): “Record quarterly revenues and net income for our Water Services and Operations segment… Oil and gas royalty production also reached a quarterly record… we are opportunistically… to consolidate high-quality Permian royalties, surface, and water assets.”
CEO (call): “This was the first quarter in TPL’s history where we recorded over $200 million of revenue.”
CEO (call on macro): “Over the long term there is a very favorable skew towards right‑tail high oil price cycles.”
CFO (call on desal): “We expect to begin commissioning the [10k bbl/d Orla] facility by the end of the year… our previous CapEx estimates remain unchanged.”
CFO (call on liquidity): “Board approved a three‑for‑one stock split… credit facility with $500 million of lender commitments… undrawn today.”

Q&A Highlights

Water sales run-rate and mix: Management aims to minimize quarter-to-quarter volatility; recycled vs source mix is optimized with operators based on availability and frac demand; Q3 benefited from activity concentration and TPL’s footprint .
Desal commercialization path: Focus on proving economics at scale, waste heat capture, and integration with power/data center cooling; multiple permits in draft or obtained (land application), with TCEQ discharge under pursuit .
M&A landscape: Despite lower prices and bid-ask frictions, TPL continues to source deals via relationships; opportunities across Midland/Delaware and next-gen projects (power, data centers) are attractive .
Power/data center: TPL sees strong positioning with land, water, and infrastructure attributes; “pretty close” on a couple opportunities, supportive of multi‑gigawatt campus development trends in West Texas .

Estimates Context

Metric	Q3 2025 Actual	Q3 2025 Consensus	Surprise
Diluted EPS ($)	5.27	5.77* (1 estimate)	-0.50 (miss)
Revenue ($M)	203.1	N/A*	N/A

Coverage is thin (EPS estimates count = 1), limiting signal quality; revenue and EBITDA consensuses were not available for comparison in S&P Global for this quarter. Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Durable multi‑pronged growth: Record WS&O and royalty production highlight the model’s resilience; water royalty volumes continue to scale off structural produced‑water growth, adding high‑margin, capex‑light cash flow .
Sequencing matters: Q3 strength came from water sales and royalties while SLEM normalized from a record Q2; expect ongoing quarterly variability by line item based on operator activity phasing .
Optionality and firepower: An undrawn $500M revolver and net cash posture enable countercyclical M&A, with a large Midland royalty acquisition closed post‑quarter adding immediate production and inventory leverage .
Near‑term catalysts: 3‑for‑1 stock split targeted for December, ongoing announcements on power/data center site deals, and commissioning of the 10k bbl/d desal unit by year‑end .
Medium‑term thesis: TPL’s unique royalty/surface/water bundle in the Permian positions it to monetize the full well lifecycle and secular produced‑water volumes while retaining upside to future oil up‑cycles without capex burden .
Watch items: Operating expense trajectory within WS&O as volumes scale; cadence of SLEM renewals and new pipeline easements; progress on desal permits/economics; and magnitude/timing of additional M&A .

Notes:

All non‑GAAP figures (Adjusted EBITDA, margins, FCF) are reconciled in company materials .
Consensus values marked with * are retrieved from S&P Global.