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    TPL
    Earnings call· Jun 2026(Q2 FY26)

    Texas Pacific Land Q2 FY26 earnings call TPL

    Aug 6, 2026 Source

    Executive summary

    Texas Pacific Land Corporation Q2 FY26 — Record Revenue, Net Income, and Free Cash Flow Driven by Royalty Production and Data Center Expansion

    Texas Pacific Land Corporation achieved record financial results in Q2 FY26, driven by strong oil and gas and produced water royalty volumes. The company is actively expanding its strategic data center and power generation efforts beyond its traditional Permian footprint, including a significant land acquisition and progress on desalination for chip cooling. Management is focused on capital allocation towards high-return opportunities, including these new growth initiatives.

    Highlights

    5

    • Record quarterly total revenue of approximately $246 million, representing a 31% year-over-year increase.

    • Record quarterly free cash flow of $156 million, up 20% year-over-year.

    • Oil and gas royalty production averaged 39,700 boe/d, an increase of 20% year-over-year.

    • SLEM revenues grew 37% sequentially to $24 million, driven by strong easement performance.

    • Strategic acquisition of over 10,000 acres for $100 million to expand data center and power generation efforts.

    Concerns

    1

    • Water sales volumes declined 19% sequentially to 663,000 bbl/d, impacted by weak in-basin natural gas prices.

    Guidance & targets

    1
    CategoryTargetConfidence
    Capital expenditures
    $65 million to $75 million
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Oil and Gas Royalty
    Record production, benefiting from strong oil prices due to unhedged position.
    Production: 39,700 boe/d
    		—20%7%—
    Produced Water Royalty
    Driven by strong demand for TPL's in-basin and out-of-basin pore space.
    Volumes: 4.9 million bbl/d
    		—15%6%—
    Water Sales
    Impacted by weak in-basin natural gas prices, shifting development away from Delaware Basin. Expect improvement with new gas pipeline capacity.
    Volumes: 663,000 bbl/d
    		—38%-19%—
    SLEM
    Driven by strong performance for pipeline and wellbore easements.
    		$24 million—37%—

    Operational metrics

    9
    Total revenue
    $246 million4% sequential increase, 31% year-over-year increase
    Q2 FY26

    Consolidated revenues reached a quarterly all-time high.

    Adjusted EBITDA
    $216 million19% sequential increase, 30% year-over-year increase
    Q2 FY26
    Adjusted EBITDA margin
    88%
    Q2 FY26
    Net permitted wells
    5.6
    Q2 FY26

    As of quarter end.

    Net DUCs
    9.5
    Q2 FY26

    As of quarter end.

    Net completed but not producing wells
    3.4
    Q2 FY26

    As of quarter end.

    Total net line-of-sight wells
    18.4
    Q2 FY26

    Sum of permitted, DUCs, and completed but not producing wells.

    Capital expenditures
    $29 million
    YTD Q2 FY26

    Year-to-date spend.

    Oil cut in production mix
    Mid-30%Expected to trend back up to 40%+
    Q2 FY26

    Lower oil percentage in production mix, not expected to be a near-term trend. Expectation to trend back up to 40%+ over time from mid-30%.

    Industry KPIs

    2
    MetricValueDetails
    Basin level production volume39,700boe/d
    FCF shareholder distributions$156 millionUSD

    Deals & partnerships

    3
    ChevronLand sale and water supply agreement for a large-scale power generation facility to support a customer data center.

    Multi-gigawatt power and data center development (Project Kilby) in Reeves County, Texas, supporting a customer data center. Validates Permian as a data center infrastructure hub.

    nullAcquisition of over 10,000 acres of land in Shackelford and Jones County, Texas, for data center and power generation efforts.$100 million

    Land acquired in a fast-growing data center region, attractive due to contiguousness, land/water resources, access to natural gas and grid infrastructure, fiber, and proximity to a midsized city.

    Bolt Data & EnergyJoint effort to progress projects with various high-quality hyperscalers and AI labs.

    Working on developing projects, including one in the Shackelford, Jones County area, with advanced diligence and community engagement.

    Capital programs

    1
    Orla Phase 2b Desalination Facilitycommissioning

    Benefit: 10,000 barrel a day capacity

    Completed construction and commenced commissioning. Will demonstrate produced water desalination at scale. Grand opening and ribbon cutting scheduled for Monday.

    Risks & headwinds

    1
    Weak in-basin natural gas pricesQ2 FY26

    Impacted water sales volumes, causing a 19% sequential decline to 663,000 bbl/d.

    Mitigation: Expect improvement as substantial new gas pipeline capacity enters service over the next few quarters, leading to mix shift towards the Delaware Basin.

    What to watch in Q3 FY26

    3

    Data Center Definitive Agreements

    Near term
    CurrentAdvanced conversations on 25 gigawatts of projects
    TargetOne or more major definitive agreements announced

    Why it matters

    Signals concrete progress and monetization of the new data center strategy, impacting future revenue streams.

    we're in advanced conversations with multiple hyperscalers, AI labs and power generators on 25 gigawatts of projects right now. I would be disappointed if we don't announce at least one or more major definitive agreements in the near term.

    Q&A highlights

    6

    How does TPL frame the opportunity and potential revenue streams from the new land acquisition outside the Permian?

    TPL views the power and compute opportunity in West Texas as enormous and broader than just the Permian. The acquisition adds flexibility to TPL's value proposition, and the company aims to capture value across the entire project lifecycle (land use, water, aggregates) while remaining capital-light, similar to its oil and gas business model.

    “I mean it is a little bit of a step out, but I mean, we think the power and compute opportunity in West Texas is enormous and broader than just the Permian and our legacy footprint.”

    asked by Derrick Whitfield · answered by Tyler Glover

    2 min read5 chapters

    Detailed Narrative

    01

    Record Financial Performance

    TPL reported record quarterly total revenue of approximately $246 million, marking a 31% year-over-year increase, alongside record net income and free cash flow of $156 million, up 20% year-over-year. This strong performance was underpinned by record oil and gas royalty production of 39,700 boe/d, which grew 20% year-over-year, and produced water royalty volumes of 4.9 million bbl/d, up 15% year-over-year. The company's unhedged royalty position allowed it to fully benefit from the strong oil price environment.

    02

    Strategic Data Center Expansion

    The company disclosed a previously announced land sale and water supply agreement related to Project Kilby, a multi-gigawatt power generation facility by Chevron supporting a customer data center in Reeves County, Texas. This validates the Permian as a data center infrastructure hub. Additionally, TPL acquired over 10,000 acres in Shackelford and Jones County, Texas, for approximately $100 million. This acquisition expands its strategic data center and power generation efforts beyond the immediate Permian Basin, targeting a fast-growing data center region with favorable resources and infrastructure.

    03

    Produced Water Desalination Progress

    TPL has completed construction and commenced commissioning of its Phase 2b desalination facility in Orla, Texas, aiming to ramp up to a 10,000 bbl/d capacity. This facility utilizes patented freeze desalination technology, with equipment exclusivity for oil and gas applications. The company plans to implement colocation studies for chip cooling, investigate waste heat recovery, and explore monetization of high-spec freshwater and concentrated brine output streams, including potential lithium extraction. Energy supermajors, hyperscalers, and AI labs have shown strong interest in these commercial and operational opportunities.

    04

    Water Sales Volume Impact and Outlook

    Water sales volumes experienced a 19% sequential decline to 663,000 bbl/d in the second quarter. This was primarily attributed to weak in-basin natural gas prices, which led operators to shift some development away from the Delaware Basin. However, management anticipates an improvement in this trend as substantial new gas pipeline capacity is expected to enter service over the next few quarters, which should improve local in-basin gas price differentials and encourage a mix shift back towards the Delaware.

    05

    SLEM Revenue Growth and Hyperscaler Engagement

    Surface Lease and Easement (SLEM) revenues increased 37% sequentially to $24 million, driven by robust performance in pipeline and wellbore easements. TPL is also actively engaged in advanced conversations with multiple hyperscalers, AI labs, and power generators regarding 25 gigawatts of projects. The company expects to announce one or more major definitive agreements in the near term, aiming to capture value across the entire project lifecycle, including land use, water, and aggregates.

    AI-generated summary of the company’s earnings call. Not investment advice.