How has the hyperscaler opportunity evolved, and what does it mean for TPL beyond the recent announcement?

The urgency among hyperscalers for speed and power has intensified, with most grid power already allocated. This has led to a focus on behind-the-meter gas-fired generation, making more of TPL's acreage viable and increasing the potential for higher water usage, which benefits the company. “I mean I think speed and power has been the key to these projects all along. I think substantially, all of the grid power has been taken at this point. And I think a lot of these hyperscalers and developers are now focusing on behind-the-meter gas-fired generation.”

What are the goals for the 10,000 bbl/day desal facility to assess feasibility, and how would TPL fund larger projects, potentially with partners?

The facility is considered 'research development at scale' to prove economic viability by operating 24/7 at commercial sizing. Co-location with natural gas generation and waste heat capture offers sustainability benefits for hyperscalers and reduces upstream costs. Various funding structures are being explored, some focusing on upstream benefits, others on co-location. “We knew the industry had to move from pilot phasing to something that we would call commercial sizing at the smallest scale, and from the industry, that's usually 10,000 barrels a day. So strictly from a functional aspect before we get into co-location, we want to see how this operates 24/7 day in, day out at scale.”

Given the step-down in SLEM and water segment revenues from Q4 FY25, was Q4 an aberration or Q1 low, and what are the revenue trends for these segments?

For produced water, Q4 had accrual noise, and a 3-quarter trend provides a more reflective view of contractual and functional drivers. The company remains bullish on produced water. SLEM revenues can be lumpy, with strong periods like last year's gas pipe build-out, so a single quarter's performance should not be over-interpreted. “When you look at Q4, we'll start with the produced segment. You've got some accrual noise in there in Q4. But really, when you look at produced, how you have to look at it is more of a, let's call it, a 3-quarter trend look.”

TPL

Texas Pacific Land (TPL) Q1 FY26 earnings call: the analyst Q&A

Earnings call· Mar 2026 (Q1 FY26)· Energy· May 7, 2026

Source: earnings call transcript

Executive summary

Texas Pacific Land Corporation Q1 FY26 – Record Financials & Next-Gen Progress

Texas Pacific Land Corporation delivered a strong Q1 FY26, achieving record quarterly revenue, net income, and free cash flow, primarily driven by robust oil and gas royalty production and strong water segment volumes. The company is actively pursuing next-gen opportunities in power generation and data centers, securing its first land and water supply agreement. While the Permian Basin has seen only a marginal uptick in activity despite high oil prices, TPL remains optimistic about future industry ramp-up and its unhedged commodity position.

Highlights

Generated record quarterly total revenue of approximately $237 million, up 21% year-over-year.
Achieved record quarterly net income and free cash flow of $136 million, up 8% year-over-year.
Oil and gas royalty production averaged 37,100 boe/d, up 19% year-over-year.
Water sales and produced water royalties recorded their second-best volume numbers in company history.
Entered an agreement to sell land for $43 million over 20 years and supply water for a power generation/data center project.

Concerns

Marginal uptick in operator activity in the Permian Basin despite elevated oil prices, due to industry uncertainty around the duration of the oil supply shock.
SLEM and water segment revenues saw a step-down from Q4 FY25 record levels, though management attributes this to accrual noise and segment lumpiness.

TPL operating KPIs by quarter

TPL operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Production Royalty	~29.1K boe/d Fourth quarter 2024 royalty production of approximately 29,100 barrels of oil equivalent per day represents an 11% increase compared to the same period last year and a 3% increase sequentially as activity remains robust in our Loving County, Central Midland Basin and Northern Reeves County subregions. Source: earnings call transcript	~31.1K boe/d Oil and gas royalty production averaged approximately 31,100 barrels of oil equivalent per day, representing 7% growth sequential quarter-over-quarter and 25% growth year-over-year. Source: earnings call transcript	33.2K boe/d Oil and gas royalty production of 33,200 barrels of oil equivalent per day also represents a company record. Source: earnings call transcript	~36.3K boe/d Oil and gas royalty production achieved a record of approximately 36,300 barrels of oil equivalent per day representing 9% sequential increase and a 28% increase year-over-year. Source: earnings call transcript	—	~37.1K boe/d Oil and gas royalty production averaged approximately 37,100 barrels of oil equivalent per day, roughly flat sequentially, and up roughly 19% year-over-year. Source: earnings call transcript	~39.7K boe/d Oil and gas royalty production averaged approximately 39,700 barrels of oil equivalent per day, up 7% sequentially and 20% year-over-year. Source: earnings call transcript	—
Produced water royalty volumes	~4M bbl/d Quarterly produced water royalty volumes grew 8% sequentially and 44% year-over-year to approximately 4 million barrels per day, benefiting from our new volumes into our out-of-basin pore space in Andrews County that we acquired in 2023. Source: earnings call transcript	—	—	—	—	—	4.9M bbl/d Produced water royalty volumes were 4.9 million barrels per day during the quarter, which represents growth of 6% sequentially and 15% year-over-year, driven by strong demand for TPL's in-basin and out-of-basin pore space. Source: earnings call transcript	—
Net permitted wells	6.4 As of quarter end, we had 6.4 net permitted wells, 13.2 net DUCs and 3.0 net completed but not producing wells. Source: earnings call transcript	—	6 As of quarter end, TPL had 6 net permitted wells, 11.1 net drilled but uncompleted wells and 5.1 net completed but not producing wells. Source: earnings call transcript	6.1 As of quarter end, TPL had 6.1 net permitted wells, 9.9 net drilled but uncompleted wells and 3.1 net completed but not producing wells. Source: earnings call transcript	5.6 As of quarter end, TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells, are commonly referred to as DUCs, and 4.0 net completed but not producing wells. Source: earnings call transcript	5.8 As of quarter end, TPL had 5.8 net permitted wells, 9.6 net drilled but uncompleted wells or commonly referred to as DUCs, and 5.2 net completed but not producing wells. Source: earnings call transcript	5.6 As of quarter end, TPL had 5.6 net permitted wells, 9.5 net drilled but uncompleted wells or commonly referred to as DUCs and 3.4 net completed but not producing wells. Source: earnings call transcript	-3.4%
Net DUCs	13.2 As of quarter end, we had 6.4 net permitted wells, 13.2 net DUCs and 3.0 net completed but not producing wells. Source: earnings call transcript	12.9 As of quarter end, we had 5.9 net permanent wells, 12.9 net drilled but uncompleted wells, otherwise known as DUCs, and 5.4 net completed but not producing wells, otherwise known as CUPs. Source: earnings call transcript	11.1 As of quarter end, TPL had 6 net permitted wells, 11.1 net drilled but uncompleted wells and 5.1 net completed but not producing wells. Source: earnings call transcript	9.9 As of quarter end, TPL had 6.1 net permitted wells, 9.9 net drilled but uncompleted wells and 3.1 net completed but not producing wells. Source: earnings call transcript	9.8 As of quarter end, TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells, are commonly referred to as DUCs, and 4.0 net completed but not producing wells. Source: earnings call transcript	9.6 As of quarter end, TPL had 5.8 net permitted wells, 9.6 net drilled but uncompleted wells or commonly referred to as DUCs, and 5.2 net completed but not producing wells. Source: earnings call transcript	9.5 As of quarter end, TPL had 5.6 net permitted wells, 9.5 net drilled but uncompleted wells or commonly referred to as DUCs and 3.4 net completed but not producing wells. Source: earnings call transcript	-1%
Net completed but not producing wells	3 As of quarter end, we had 6.4 net permitted wells, 13.2 net DUCs and 3.0 net completed but not producing wells. Source: earnings call transcript	5.4 As of quarter end, we had 5.9 net permanent wells, 12.9 net drilled but uncompleted wells, otherwise known as DUCs, and 5.4 net completed but not producing wells, otherwise known as CUPs. Source: earnings call transcript	5.1 As of quarter end, TPL had 6 net permitted wells, 11.1 net drilled but uncompleted wells and 5.1 net completed but not producing wells. Source: earnings call transcript	3.1 As of quarter end, TPL had 6.1 net permitted wells, 9.9 net drilled but uncompleted wells and 3.1 net completed but not producing wells. Source: earnings call transcript	4 As of quarter end, TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells, are commonly referred to as DUCs, and 4.0 net completed but not producing wells. Source: earnings call transcript	5.2 As of quarter end, TPL had 5.8 net permitted wells, 9.6 net drilled but uncompleted wells or commonly referred to as DUCs, and 5.2 net completed but not producing wells. Source: earnings call transcript	3.4 As of quarter end, TPL had 5.6 net permitted wells, 9.5 net drilled but uncompleted wells or commonly referred to as DUCs and 3.4 net completed but not producing wells. Source: earnings call transcript	-34.6%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Land sale agreement for power generation/data center $43M Q1 2026

Structured into annual payments over a 20-year period.

Deals & partnerships

Undisclosed Land sale and water supply agreement $43M 20 years

Agreement to sell a small section of land for power generation and data center development, structured into annual payments over a 20-year period, with a separate commercial agreement to supply water. Commercial details are still being finalized.

Capital programs

Produced Water Desalination Facility Phase 2b nearing completion

Spent to date: nearly complete

Benefit:10,000 barrel per day

This test facility will evaluate whether produced water desalination can work economically at scale and demonstrate commercial potential for waste heat capture, cooling co-location, and utilization of outlet freshwater and concentrated brine streams.

Risks & headwinds

Industry uncertainty regarding the duration of the oil supply shock

Marginal uptick in recent operator activity despite high oil prices.

Mitigation:TPL maintains a strong balance sheet and an unhedged commodity position to fully capture direct upside from elevated oil prices.

Volatility and lumpiness in SLEM and water segment revenues Q1 2026

Step-down in revenues from Q4 2025 record levels in SLEM and water segments.

Mitigation:Management attributes the fluctuations to accrual noise in water and the inherently lumpy nature of SLEM projects, suggesting it is not a fundamental issue.

Q&A highlights

Can you provide more color on the counterparty and scale of the land and water agreement? Is it related to Bolt? Could desalinated produced water be used for the data center?

The project is not Bolt-related, and the company cannot comment on the size or counterparty due to ongoing finalization of commercial details. While the initial water source will likely be brackish, discussions are underway regarding the potential use of desalinated produced water for this and other projects.

“This project is not Bolt related. We've got several projects that we are working with Bolt on, but we also have several that are not Bolt related.”

asked by Derrick Whitfield · answered by Tyler Glover

3 min read 6 chapters

Detailed narrative

Record Financial Performance

Texas Pacific Land Corporation achieved record quarterly total revenue of approximately $237 million, net income, and free cash flow of $136 million in Q1 2026. This performance was primarily driven by strong oil and gas royalty production, which averaged 37,100 barrels of oil equivalent per day, representing a 19% increase year-over-year.

The company's unhedged commodity position allowed it to fully capture the upside from elevated oil prices, contributing to a 12% sequential and 21% year-over-year increase in consolidated revenues.

Permian Macro and Operator Activity

Despite crude oil prices spiking dramatically, TPL observed only a marginal uptick in recent operator activity in the Permian Basin. Management noted industry uncertainty regarding the duration of the oil supply shock, which has tempered a more robust producer response.

However, given the persistence of the supply disruption and depleting global inventories, TPL anticipates a ramp-up in rig and frac spread activity over the coming quarters if price signals remain elevated, leveraging the Permian's immense undeveloped well locations.

Data Centers and Power Generation Initiatives

TPL made tangible progress in its next-gen endeavors, entering an agreement to sell a small section of land for $43 million, structured into annual payments over 20 years, and a separate commercial agreement to supply water for the same development.

The company highlighted heightened urgency among hyperscalers and AI labs to secure power and compute in Texas, with TPL's unique capabilities across surface, water, and energy positioning it to solve problems for developers. The shift towards behind-the-meter gas-fired generation makes more of TPL's acreage viable and increases water usage opportunities.

Produced Water Desalination Progress

The Phase 2b 10,000 barrel per day produced water desalination facility is nearing completion, with refrigeration inspection planned for later this month and inlet water flow expected in the coming weeks. This test facility aims to evaluate the economic viability of produced water desalination at scale.

It will also provide an opportunity to empirically demonstrate the commercial potential for waste heat capture, cooling co-location, and the utilization of outlet freshwater and concentrated brine streams, offering a meaningful solution for the Permian's growing produced water volumes.

Well Inventory and Drilling Efficiency

As of quarter-end, TPL's line-of-sight well inventory increased by 6% sequentially to 20.7 net wells, comprising 5.8 net permitted wells, 9.6 net drilled but uncompleted wells (DUCs), and 5.2 net completed but not producing wells. Operators continue to push for longer laterals, with new permits and spuds averaging in excess of 13,000 feet.

Factoring in these longer laterals, the net normalized line-of-sight inventory is up 11% sequentially, indicating strong permitting and drilling activity across TPL's Delaware and Midland positions.

Tribute to Murray Stahl

TPL acknowledged the passing of Murray Stahl, whose firm, Horizon Kinetics, has been the company's largest shareholder for many decades. Management praised Murray as a tremendous long-time advocate who understood the virtues of real property and patience, and whose conviction remained unrivaled as TPL grew.

The company expressed confidence that Murray's legacy will live on through his colleagues at Horizon Kinetics, with whom TPL maintains a close relationship, ensuring continued stewardship towards TPL's full potential.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.