Texas Pacific Land (TPL)2021-11-05 16:07Financial Data and Key Metrics Changes - Total consolidated revenues increased by 66% year-over-year, reaching 74.4 million in Q3 2020 [38] - Net income for Q3 2021 was 10.82 per share, up from 5.97 per share in the same quarter of the prior year [37] - Adjusted EBITDA for Q3 2021 was 62.3 million for the same period last year, reflecting an improved adjusted EBITDA margin of 87% [11][38] Business Line Data and Key Metrics Changes - Royalty daily production increased by 24%, reaching approximately 19.5 thousand barrels of oil equivalent per day in Q3 2021, up from 15.7 thousand barrels in Q3 2020 [38] - Water revenue was 24.5 million in the prior year, driven by increases in both source water sales volumes and produced water royalty volumes [40] Market Data and Key Metrics Changes - The company reported a significant increase in permitting activity, indicating a positive trend for Q4 2021 and into 2022, with strong permitting from major operators like Chevron [50] - The company has a market share of approximately 30% of Northern Delaware source water volumes, with the capability to deliver over 800,000 barrels of water per day [25] Company Strategy and Development Direction - The company emphasizes its vertically integrated business model, which has allowed it to create multiple high-quality cash flow streams from its legacy asset base [9][12] - The focus remains on acquiring high-quality integrated assets that include surface, minerals, and water components, with a cautious approach to potential acquisitions [62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business, highlighting the ability to fully benefit from rising commodity prices as the company remains unhedged [39] - The management team is optimistic about the future, citing strong relationships with operators and a positive outlook for activity in the Delaware Basin [55][56] Other Important Information - The company declared a cash dividend of 8.25 per share [43] - The company has completed 8.8 million remaining on the current repurchase authorization [43] Q&A Session Summary Question: Activity trends in Q4 and 2022 based on permit data - Management noted strong permitting activity in Q3, with a positive outlook for Q4 and 2022 based on the backlog of permits [50] Question: Current opportunities in the A&D market - Management indicated that while the bid-ask spread for high-quality deals has been wider, it is starting to narrow, leading to more opportunities in the market [51][52] Question: Return of capital strategy with strong cash position - Management emphasized the importance of maintaining a healthy cash balance and indicated that returning capital to shareholders could be considered if opportunities do not materialize [53] Question: Impact of changing dynamics in the Permian on negotiations - Management stated that consolidation among legacy operators has been positive for the company, enhancing relationships and prioritizing acreage [55] Question: Expectations for increasing Delaware Basin acreage in 2022 - Management confirmed strong permitting activity in the Delaware Basin and indicated expectations for increased activity going forward [56] Question: Strategic outlook for cash deployment - Management reiterated a focus on high-quality integrated assets and the importance of retaining cash for the right opportunities [62] Question: Potential for special dividends or expanded buyback - Management acknowledged that if the opportunity set does not materialize, both special dividends and increased buybacks could be considered [63] Question: Next-gen wind and solar opportunities - Management highlighted ongoing discussions regarding renewable energy opportunities, emphasizing the importance of relationships with operators [65]