Texas Pacific Land (TPL)2022-02-24 17:33Financial Data and Key Metrics Changes - Texas Pacific Land Corporation (TPL) reported consolidated adjusted EBITDA of 147.2 million, a 98% year-over-year increase from 79 million or 44.8 million or 451 million, a 49% increase compared to the previous year, while total operating expenses only increased by 4% [15][34] Business Line Data and Key Metrics Changes - Oil and gas royalty production volumes were approximately 22,000 barrels of oil equivalent (Boe) per day in Q4 2021, up from 17,000 Boe per day in Q4 2020, reflecting a 15% growth in royalty production for the full year 2021 compared to 2020 [11][36] - Non-oil and gas royalty revenue streams saw significant growth, with source water royalties increasing by 24% and produced water royalties by 15% year-over-year [13] - The easements and surface-related income decreased modestly year-over-year due to producers focusing on existing infrastructure [14] Market Data and Key Metrics Changes - Commodity prices improved throughout 2021, with TPL's average commodity price realization over 80% higher than in 2020, benefiting from being completely unhedged [12] - The company noted strong development activity in the Permian Basin, particularly in its Loving, Northern Reeves, and Culberson acreage, with increased permitting and completion activities [16][17] Company Strategy and Development Direction - TPL aims to maintain momentum from 2021 into 2022, focusing on long-term value creation and attractive acquisition opportunities in the market [22][23] - The company is exploring next-generation opportunities, including soil carbon sequestration projects to generate carbon credits [21] - TPL's capital allocation strategy remains flexible, with the potential for stock buybacks and increased dividends depending on market conditions [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued strong development activity in the Permian, despite some concerns about the pace of growth compared to 2021 [52] - The company is actively addressing seismicity issues in the Permian, with a focus on sustainable solutions and maintaining communication with operators [54][25] - Management highlighted the importance of their contract structure, which allows TPL to generate fees regardless of produced water disposal challenges [30] Other Important Information - TPL's Board raised the base dividend by 3 per share, reflecting confidence in the company's financial health [38] - The company ended Q4 2021 with $428 million in cash and no debt, indicating a strong balance sheet [37] Q&A Session Summary Question: Insights on return of capital and growth balance - Management indicated flexibility in capital allocation, considering stock buybacks if the stock price remains dislocated, while also having raised the regular dividend [44] Question: Corporate governance and board evaluation process - The Nomination and Governance Committee is handling the evaluation of board changes, with a 90-day timeframe for recommendations [47] Question: Business outlook for the next 6-12 months - Management noted that while strong growth is expected, it may not reach robust double-digit levels due to a slowdown in completion activity [52] Question: Tax misstatement details - Management explained that a misstatement regarding depletion was identified and corrected, with plans to implement controls to prevent future occurrences [57] Question: Strategies for accessing currently unused land - TPL is focused on facilitating easier access for operators to develop their land rather than financing drilling programs [60] Question: Future stock buyback intentions - Management stated that while no new buyback program has been announced, it is under consideration depending on market conditions [61] Question: Growth drivers for oil and gas production - The significant growth in production was attributed to high completion activity in Q2 and Q3 of 2021, with a cautious outlook on organic growth moving forward [68]