Texas Pacific Land Corporation announced its financial and operating results for the first quarter of 2022.
First Quarter 2022 Highlights
- Special dividend of $20 per share declared May 3, 2022, payable June 15, 2022, to stockholders of record as of June 8, 2022
- Quarterly cash dividend of $3.00 per share declared May 3, 2022, payable June 15, 2022, to stockholders of record as of June 8, 2022
- Net income of $97.9 million, or $12.65 per share (basic) and $12.64 per share (diluted)
- Revenues of $147.3 million
- Adjusted EBITDA(1) of $129.8 million
- Royalty production of 20.8 thousand barrels of oil equivalent per day
- Quarterly cash dividend of $3.00 per share paid on March 15, 2022
- At the end of the quarter, TPL's royalty acreage had an estimated 7.4 net well permits, 7.7 net drilled but uncompleted wells, 1.8 net completed wells, and 50.7 net producing wells.
“With tailwinds of favorable commodity prices, strong production, and a debt-free balance sheet, we’re pleased to announce a $20 per share special dividend as our shareholders reap the windfall of supportive underlying fundamentals,” said Tyler Glover, Chief Executive Officer of the Company. “This special dividend is incremental to the $100 million share repurchase program we announced in March, and we will look to continue returning capital back to shareholders given the strength of the business and continued high commodity prices. Although we are seeing operators broadly facing some obstacles with supply-chain and other constraints, activity on our acreage remains robust and the overall outlook for the Permian Basin is favorable as producers continue to dedicate significant capital towards development.”
Financial Results for the First Quarter of 2022
The Company reported net income of $97.9 million for the first quarter of 2022, an increase of 95.6% compared to net income of $50.1 million for the first quarter of 2021.
Our total revenues increased $63.2 million for the first quarter of 2022 compared to the same period of 2021, largely driven by the $54.6 million increase in oil and gas royalty revenue. Our share of production was approximately 20.8 thousand barrels of oil equivalent ("Boe") per day for the first quarter of 2022 compared to 16.4 thousand Boe per day for the same period of 2021. The average realized price was $58.31 per Boe for the first quarter of 2022, compared to $35.04 per Boe for the comparable period of 2021. Water sales increased $5.9 million for the first quarter of 2022 compared to the first quarter of 2021 principally due to increased average pricing returning to pre-pandemic levels. Our revenue streams are directly impacted by development and operating decisions in the Permian Basin made by our customers and by commodity prices, among other factors.
Our total operating expenses of $23.0 million for the first quarter of 2022 increased $0.9 million compared to the same period of 2021. The Company recorded an accrual of approximately $2.0 million for ad valorem taxes, which was partially offset by decreases in salaries and related employee benefits, water service-related expenses, and legal and professional fees.
New Director Appointments and Update on the Evaluation of the Board Declassification Process
On April 19, 2022, TPL announced the appointments of Rhys J. Best and Karl F. Kurz to the Board of Directors (the "Board"), increasing the size of the Board to ten directors. Each of Mr. Kurz, who will serve the remainder of the board term vacated by Dana McGinnis in March, and Mr. Best, who will stand for re-election at the 2022 annual meeting of stockholders, brings decades of corporate leadership and industry experience.
The Company also announced on April 19, 2022 that the Nominating and Corporate Governance Committee is in the process of evaluating the possible declassification of the Board and has retained Delaware counsel to assist in the evaluation. This process includes a detailed review of the procedures required to declassify the Board in accordance with rules and guidance from the Securities and Exchange Commission and Delaware law, as well as the Company’s governance documents and any contractual obligations. The Nominating and Corporate Governance Committee expects to make a recommendation to the full Board in time for a proposal, if any, to be included in proxy materials for the Company’s 2022 annual meeting of stockholders.
Quarterly and Special Dividends Declared
On May 3, 2022, the Board declared a quarterly cash dividend of $3.00 per share and a special dividend of $20.00 per share, both payable on June 15, 2022 to stockholders of record at the close of business on June 8, 2022.
Stock Repurchase Program
On March 11, 2022, our Board approved a stock repurchase program to purchase up to an aggregate of $100 million of shares of our outstanding Common Stock. In connection with the stock repurchase program, the Company entered into a Rule 10b5-1 trading plan (the “Trading Plan”) that generally permits the Company to repurchase shares at times when it might otherwise be prevented from doing so under securities laws. The Trading Plan was subject to a 30-day blackout period and is now active. The stock repurchase program expires on December 31, 2022.