UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the transition period from ______ to ______

Commission File Number: 1-39804

Exact name of registrant as specified in its charter:

Address of principal executive offices:

Registrant’s telephone number, including area code:

Securities registered pursuant to Section 12(g) of the Act:

None

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TEXAS PACIFIC LAND CORPORATION

TABLE OF CONTENTS

PART I

Statements in this Annual Report on Form 10-K that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding management’s expectations, hopes, intentions or strategies regarding the future. Words or phrases such as “expects” and “believes,” or similar expressions, when used in this Annual Report on Form 10-K or other filings with the Securities and Exchange Commission (the “SEC”), are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Company’s future operations and prospects, the markets for real estate in the areas in which the Company owns real estate, applicable zoning regulations, the markets for oil and gas production limits on proratedincluding actions of other oil and gas wells authorized byproducers or consortiums worldwide such as the Railroad CommissionOrganization of Texas,Petroleum Exporting Countries (“OPEC”) and Russia (collectively referred to as “OPEC+”), expected competition, management’s intent, beliefs or current expectations with respect to the Company’s future financial performance and other matters. All forward-looking statements in this Report are based on information available to us as of the date this Report is filed with the Securities and Exchange Commission (the “SEC”),SEC, and we assume no responsibility to update any such forward-looking statements, except as required by law. All forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, the factors discussed in Item 1A. “Risk Factors” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware Corporation and one of the largest landowners in the State of Texas with approximately 880,000868,000 surface acres of land in West Texas.Texas, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 4,000 additional net royalty acres (normalized to 1/8th) (“NRA”), for a collective total of approximately 195,000 NRA all located in the western part of Texas.

The Company was originally organized as Texas Pacific Land Trust (the “Trust”) under a Declaration of Trust, dated February 1, 1888 (the “Declaration of Trust”), to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company. The Declaration of Trust provided for the appointment of trustees (the “Trustees”) to manage the assets of the Trust with all of the powers of an absolute owner. On January 11, 2021, the Trust completed its reorganization from a business trust, Texas Pacific Land Trust, into Texas Pacific Land Corporation (the “Corporate Reorganization”(“TPL Corporation”), a corporation formed and existing under the laws of the State of Delaware. TPL Corporation is an independent public company and its common stock, par value of $0.01 per share (“Common Stock”) is listed under the symbol “TPL” on the New York Stock Exchange (the “NYSE”). See further discussion under “Corporate Reorganization” below. Any references in this Annual Report on Form 10-K to the Company, TPL, our, we or us with respect to periods prior to January 11, 2021, will be in reference to the Trust, and references to periods on that date and thereafter will be in reference to Texas Pacific Land Corporation or TPL Corporation.

Our surface and royalty ownership allow steadyprovide revenue generation throughopportunities throughout the entire value chain of oil and gas development.development value chain. While we are not an oil and gas producer, we benefit from various revenue sources throughout the life cycle of a well. During the initial development phase where infrastructure for oil and gas development is constructed, we receive fixed fee payments for use of our land and revenue for sales of materials (caliche) used in the construction of the infrastructure. During the drilling and completion phase, we generate revenue for providing sourced water and/or treated produced water in addition to fixed fee payments for use of our land. During the production phase, we receive revenue from our oil and gas royalty interests and also revenues related to saltwater disposal on our land. In addition, we generate revenue from pipeline, power line and utility easements, commercial leases material sales and seismic and temporary permits principally related to a variety of land uses, including, but not limited to, midstream infrastructure projects and processing facilities as hydrocarbons are processed and transported to market.

On January 21, 2020, the CE Committee recommended to the Trustees that the Trust approve11, 2021, TPL completed its reorganization from a plan of corporate reorganization, comprised of the steps, plan and proposed governance terms that had each been reviewed and approved by the CE Committee.trust into a corporation (the “Corporate Reorganization”).

The Trustees andAs part of the Investor Group amended the Settlement AgreementCorporate Reorganization, on March 6, 2020 and March 20, 2020, in each case for the purposeJanuary 11, 2021, shares of among other things, providingTPL Corporation’s Common Stock were distributed to holders of sub-share certificates of proprietary interest, par value $0.03-1/3 of the Trust with additional time to review and approve(“Sub-shares”) on the planbasis of corporate reorganization recommended by the CE Committee.one share of Common Stock for every Sub-share (the “Distribution”).

On March 23, 2020,Prior to the Trustees announced their approvalCorporate Reorganization, as a result of a plan to reorganize the Trust to a corporation.

A summarydispute arose relating to the voting by the Investor Group on a proposal at the 2022 annual meeting of stockholders. The dispute was eventually resolved by the Delaware Court of Chancery, which ruling is now being appealed, but prior to such resolution, on July 28, 2023, the Company and the Investor Group entered into a Cooperation Agreement (the “Cooperation Agreement”) pursuant to which (i) Mr. Stahl, Marguerite Woung-Chapman and Robert Roosa would be nominated by the Company for election at the 2023 annual meeting of stockholders, (ii) the pre-signed conditional resignation letters submitted by Messrs. Stahl and Oliver pursuant to the Stockholders’ Agreement were considered withdrawn and no longer effective, and (iii) the Investor Group agreed to vote or cause to be voted all of the material termsshares of Common Stock over which the Investor Group has direct or indirect voting control for the election of the Contributionthree nominees named above and against any director nominee not recommended by the Board, for proposals regarding approval of executive compensation and ratification of the Company’s independent registered public accounting firm, and in accordance with the recommendation of the majority of the Board in respect of any proposals submitted by stockholders. The Cooperation Agreement can be found inalso provided for mutual non-disparagement covenants and certain standstill obligations for the Investor Group as long as one of Mr. Stahl or Mr. Oliver remain on the Board. In addition, the termination date of the Stockholders’ Agreement was changed to occur following the completion of the 2023 annual meeting, which occurred on November 10, 2023.

The table below reflects our information statement, dated December 31, 2020, which was included as Exhibit 99.1 to our Current Report on Form 8-K filed on December 31, 2020 (the “Information Statement”), underhistorical operating results for the heading entitled “Certain Relationships and Related Person Transactions—Material Agreementslast five years (in thousands, except per share amounts):

We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of strategies and objectives of the Company and provide a framework for timely and rational allocation of resources within businesses. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 10,14, “Business Segment Reporting” in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.

Our Land and Resource Management segment encompasses the business of managing theour approximately 880,000868,000 surface acres of land and our oil and gas royalty interests in West Texas, owned by Texas Pacific Resources LLC, a single member Texas limited liability company, owned byprincipally concentrated in the Company.Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements, and commercial leases and renewables, and land and material sales.

 

We are not an oil and gas producer. Rather, our oil and gas revenue is derived from our oil and gas royalty interests. Thus, in addition to being subject to fluctuations in response to the market prices for oil and gas, our oil and gas royalty revenuesroyalties are also subject to decisions made by the owners and operators of the oil and gas wells to which our royalty interests relate as to investments in and production from those wells. Our oil and gas royalty interests require no capital expenditures or operating expense burden from us for well development.

 

Our revenue from easements is primarily generated from easement contracts covering activities such aspipelines transporting oil, gas and gas pipelinesrelated hydrocarbons, power line and utility easements, and subsurface wellbore easements. The majority of our easementsEasements typically have a thirty-plus year term but subsequently renew every ten years with an additional payment. WeIn addition to easements, we also enterreceive revenues from other surface-related operations on our land, including but not limited to, commercial leases, well development and material sales. Commercial lease revenue is derived primarily from processing, storage and compression facilities, and roads. Material sales include caliche, sand, and other material sales to operators. Caliche is used in the construction of oil and gas-related infrastructure, and sand is utilized for completion operations.

In recent years, we entered into agreements with operatorsthird parties related to renewables and mid-stream companiesvarious “next generation” opportunities that will potentially utilize TPL’s surface assets. These agreements include the evaluation of grid-connected batteries, studies on carbon capture and sequestration, and development of bitcoin mining facilities, among other opportunities. Generally, these projects are structured with multi-year terms that allow for feasibility and/or commercial suitability and revenue arrangements that provide royalty, fee, profit sharing, lease and/or rental payments, though contractual terms and timing for commercial operations will vary by project. We do not anticipate these agreements will have a significant impact on our revenues in the short-term but do have the potential to leasecontribute meaningfully to our revenues in the longer term.

As a significant landowner, we also generate revenue from land sales. From time to time, we receive offers from us, primarily for facilitiesthird parties to acquire tracts of our land. Sales demand and roads.

Revenues from the Land and Resource Management segment for the last three years were as follows (amounts(dollars presented in thousands):

LandOil and Gas Activity for the Year Ended December 31, 20202023

For the year ended December 31, 2020, we sold 22,160 acres2023, our share of landcrude oil, natural gas and natural gas liquid (“NGL”) production was 23.5 thousand barrels of oil equivalent (“Boe”) per day compared to 21.3 thousand Boe per day for an aggregate salesthe same period of 2022. The total equivalent price of approximately $16.0 million, an average price of approximately $721was $42.58 per acre. The sale excluded any mineral or royalty interest in the lands conveyed. Additionally, the Company recognized land sales revenue of $1.4 millionBoe for the year ended December 31, 2020 related2023, a decrease of 30.0% compared to land exchanges where the Company had no cost basis intotal equivalent price of $60.81 per Boe for the land conveyed.same period of 2022.

For the year ended December 31, 2020,2023, the Company acquired 756 acresnumber of land in Texasoil and gas wells that had been drilled but are not yet completed (“DUC”) subject to our royalty interest was 675 compared to 584 for an aggregate purchase pricethe same period of approximately $3.9 million, an average2022. The number of approximately $5,134 per acre (excludes land acquired through the land exchange as previously discussed).DUC wells is determined using uniform drilling spacing units with pooled interests for all wells awaiting completion.

Competition

Our Land and Resource Management segment does not have direct peers, as such, in that it sells, leases and generally manages land owned by the Company and, to that extent, any owner of property located in areas comparable to the Company is a potential competitor.

Our Water Services and Operations segment encompasses the business of providing full-service water offerings to operators in the Permian Basin through Texas Pacific Water Resources LLC (“TPWR”), a single member Texas limited liability company owned by the Company.

These full-service water offerings include, but are not limited to, water sourcing, produced-water treatment, infrastructure development, and disposal solutions. We are committed to sustainable water development. Our significant surface ownership in West Texasthe Permian Basin provides TPWR with a unique opportunity to provide multiple full-service water offerings to operators.

Operations

 

Revenues from our Water Services and Operations segment for the last three years were as follows (amounts(dollars presented in thousands):

DuringActivity for the year ended December 31, 2020,2023

The increase in water sales during 2023 compared to 2022 is principally due to a 21.8% increase in water sales volumes over the Companysame time period.

During 2023, we invested approximately $4.9$15.2 million in TPWR projects to develop andmaintain and/or enhance water sourcing assets and acquired groundwater rights for $3.8 million to provide us access to additional water treatment assets.volumes outside of our existing surface footprint to assist in managing fluctuations in customer demand. We also acquired a saltwater disposal (“SWD”) easement for $17.6 million. The SWD easement covers approximately 49,000 acres and provides us future disposal opportunities to service injection customers seeking disposal solutions located outside of core basins.

Competition

While there is competition in the water service business in the Permian Basin, we believe our position as a significant landowner of approximately 880,000868,000 surface acres in West Texas gives us a unique advantage over our competitors who must negotiate with existing landowners to source water and then for the right of way to deliver the water to the end user.

During 2020, we received $54.1 million, or approximately 18% ofThe chart below depicts our total revenues which included $30.2 millionand revenues from customers representing more than 10% of our 2023 consolidated revenues:

While approximately 43% of our 2023 revenue is derived from only three customers, two of these customers are in the top 10, and the remaining customer is in the top 35, energy companies in the world based on market capitalization, and we believe each of them is a strong and reliable operator. Given their major presence in the Permian Basin and our significant surface lands in the same area, the high concentration of business with these three customers is expected. Further, the choice of whom we do business with largely depends on location of mineral royalties and surface rights on or near our assets and consists of a limited universe of oil and gas royalties, $21.6 million of easements and other surface-related income and $2.3 million of water sales and royalties, from Occidental Petroleum Corporation and $31.6 million, or approximately 10% of our total revenues, which included $24.5 million of oil and gas royalties, $6.7 million of water sales and royalties and $0.4 million of easements and other surface-related income, from Chevron Corporation.companies who operate in the Permian Basin.

TheWhile the business of TPL is not seasonal in nature, as that term is generally understood, although duerevenues from oil and gas royalties may fluctuate from period to period based upon market prices for oil and gas and production decisions made by the natureoperators. Our other revenue streams, which include, but are not limited to, water sales and royalties, easements and other surface related income and sales of land, may also fluctuate from period to period. In addition, our results generally rely on the decisions and actions of third parties out of our ultimate control. As a consequence, the results of our operations our revenue may vary widely from year to year and quarter to quarter.for any particular period are not necessarily indicative of the results of operations for a full year.

We are subject to various federal, state and local laws. Management believes that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive effect on our method of operations than on other companies similar to TPL.

 

We cannot determine the extent to which new legislation, new regulations or changes in existing laws or regulations may affect our future operations.

Compliance with Federal, State and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, have had no material effect upon our business generally, including the capital expenditures, earnings and competitive position of the Company. To date, the Company has not been called upon to expend any funds for these purposes.

We strive to be a great place for our employees to work. Accordingly, we offer industry competitive wagespay and benefits, tuition reimbursement and continuing education classes and are committed to maintaining a workplace environment that promotes employee productivity and satisfaction.

Employee safety is also among our top priorities. Accordingly, we have developed and administer company-wide policies to ensure a safe and fair workplace free of discrimination or harassment for each team member and compliance with Occupational Safety and Health Administration (“OSHA”) standards, as further discussed in our Code of Business Conduct and Ethics. This commitment applies to recruiting, hiring, compensation, benefits, training, termination, promotions or any other terms and conditions of employment. Throughout the COVID-19 pandemic, we have maintainedWe maintain our strong focus on safety and have taken measures to protect our employees and maintain safe, reliable operations, without implementing furloughs or employee workforce reductions.operations.

Our existing information technology infrastructure gave us the ability to respond rapidly to the recommended measures of temporarily closing our corporate office and allowing our corporate employees to work remotely. We employed additional safety measures and personal protective equipment for our field employees, including quarantine facilities, if needed, and implementation of a medical hotline for access by all employees should they experience symptoms or seek additional medical information. We strive for a goal of zero occupational injuries, illnesses and incidents in our workplace. To ensure that we protect our safety culture, we have in place a dedicated HS&E team with substantial combined years of experience and have in-house authorized trainers for OSHA-required certified training, powered equipment training and PCE-safe land certificated training.

An investment in our securities involves a degree of risk. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also have a material adverse effect on us. If any of the following risks actually occur, our financial condition, results of operations, cash flows or business could be harmed. In that case, the market price of our securitiesstock could decline and you could lose part or all of your investment.investment in our stock.

The oil and gas royalties that we receive are dependent upon the market prices for oil and gas. When lower market prices for oil and gas occur, they will have an adverse effect on our oil and gas royalty revenues. In 2020, our oil and gas royalties were impacted by lower oil and gas prices and may continue to be affected in future periods.royalties. The market prices for oil and gas are subject to nationalUS and international economicglobal macroeconomic and politicalgeopolitical conditions and infrastructure and logistical constraints, amongst others, and, in the past, have been subject to significant price fluctuations. Price fluctuations for oil and gas have been particularly volatile in recent years and prices have recently experienced a severe decrease due to increased supply by member nations of theand demand fundamentals, Organization of the Petroleum Exporting Countries Plus (“OPEC+OPEC”) and Russia (collectively referred to as “OPEC+”) actions, the prolonged Ukraine/Russia conflict and general economic downturn. At the same time, COVID-19 has spread to many nations of the world and has resulted in the implementation of numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus.cycles, among other factors. These measures have at times resulted in a significant reduction inof global economic activity and extreme volatility in the global financial markets. The reduction of economic activity has significantly reduced the global demand for oil and gas. The scale and duration of the impact of these factors remain unknowable but could lead to an increase in our operating costs or a decrease in our revenues and have a material impact on our business segments and earnings, cash flow and financial condition.

We are not an oil and gas producer. Our oil and gas income is derived primarily from perpetual non-participating oil and gas royalty interests that we have retained. As oil and gas wells age, the costs oftheir production may increase and their capacity may decline absent additional investment. However, the owners and operators of the oil and gas wells make all decisions as to investments in, and production from, those wells and our royalties are dependent upon decisions made by those operators, among other factors. Accordingly, a significant portion of our revenues is reliant on the management and actions of third parties, over whom we have no control. There can be no assurance that such third parties will take actions or make decisions that will be beneficial to us, which could result in adverse effects on our financial results and performance.

LandOur land sales vary widely from year to year and quarter to quarter. The total dollar amount,price obtained, the average price per acre, and the number of acres sold in any one year or quarter should not be assumed to be indicative of future land sales. The demand for,Our desire to sell and the sale price of,demand and pricing for any particular tract of our land is influenced by many factors, including but not limited to: (i) access and location, (ii) the national and local economies, (iii) the rate of oil and gas well development by operators, (iv) the rate of residential and commercial development in nearby areas, (v) the livestock carrying capacity, and (vi) the condition of the local agricultural industry,industries, which itself is influenced by a range conditions and prices for livestock and agricultural products.of conditions. Our ability to sell land is,can be, therefore, largely dependent on the actions of adjoining landowners.

Demand for TPWR’s products and services depends substantially on demand and expenditures by our customers for the exploration, development and production of oil and natural gas reserves. These expenditures are generally dependent on our customers’ overall financial position, capital allocation priorities, and views of future oil and natural gas prices and are sensitive to our customers’ views of future economic growth and the resulting impact on demand for oil and natural gas.

We have encountered and may continue to encounter the challenges, uncertainties and difficulties frequently experienced in new and rapidly evolving markets with respect to the business of TPWR, including:

The impact of government regulation on TPWR could adversely affect our business.

The business of TPWR is subject to applicable state and federal laws and regulations, including laws and regulations on water use, environmental and safety matters. These laws and regulations may increase the costs and timing of planning, designing, drilling, installing, operating and abandoning water wells, source water and treatment facilities.facilities and impact our customers’ ability to transport, store and/or dispose of produced water in certain locations. Due to increased seismicity in the Delaware and Midland Basins, the Texas Railroad Commission recently began implementing Seismic Response Areas (“SRAs”) limiting the permitted capacity and use of certain Saltwater Disposal Wells (“SWDs”) for the injection of produced water. The implementation of SRAs could limit the volume of produced water disposed on the Company’s surface within the SRAs or, in certain cases, could direct additional volumes of produced water to SWDs on the Company’s surface outside of SRAs. These limitations and/or redirections may cause TPWR to adapt its business plans and could affect TPWR’s business could be affected by problems, slowdowns or other stoppagesfinancial performance. The Company continues to operationsactively engage with the Texas Railroad Commission and evaluate the potential effect of providingSRAs on the Company’s produced water treatment critical to the success of TPWR.royalties.

Our revenues depend on natural and environmental conditions with respect to operations that result in royalties to us, or that use our water services. Our business and financial results are therefore subject to disruption from natural or human causes beyond our control, including physical risks from severe storms, floods, droughts resulting in aquifer declines and other forms of severe weather, war, accidents, civil unrest, political events, fires, earthquakes, system failures, pipeline disruptions, environmental hazards such as oil and produced water spills, terrorist acts and epidemic or pandemic diseases, any of which could result in a material adverse effect on oil and natural gas production and/orand, therefore, our results of operations.

Much of the value of the land we own and upon which we receive royalties is based on the oil and natural gas reserves located there. Our revenues may be negatively affected by changes driven by trends such as decarbonization efforts. Such changes may relate to the types or sources of energy in demand, such as a shift to renewable sources of power generation (such as(for example, wind and solar), along with ongoing changes in government,regulatory, investor, customer and consumer policies and preferences. The evolution of global energy sources is affected by factors out of our control, such as the pace of technological developments and related cost considerations, the levels of economic growth in different markets around the world and the adoption of climate change-related policies. In addition, the possibility of taxes on energy sources, including oil and gas, may affect the demand for crude oil and natural gas and the operating costs for third party operators on our royalty properties.

The successful implementation of our strategies and handling of other issues integral to our future success will depend, in part, on our experienced management team, including with respect to the business of TPWR. The loss of key members of our management team could have an adverse effect on our business. If we cannot retain our experienced personnel or attract additional experienced personnel, our ability to compete could be harmed.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, includingsuch as the recent and continuing outbreak of COVID-19. A significant outbreak of contagious diseases in the human population and resulting widespread health crisis could adversely affect the economies and financial markets of many countries, resulting in an economic downturn, reduced demand for oil and gas and interruption to supply chains related to oil and gas. The reduction of economic activity and reduced global demand for oil and gas related to COVID-19such outbreaks and actions taken by governments to mitigate the spread of thea virus or other infectious agent could lead to an increase in our operating costs and have a material impact on our business segments and earnings, cash flow and financial condition.

For example, the obligation to pay ad valorem taxes with respect to certain of our royalty interests was assumed by a third party and is now the obligation of the successors in interest to such third party (the “obligors”), so long as such royalty interests are held by the Trustees or their successors in office under the Declaration of Trust. Based on a review of public records, we estimate that the payments made for these ad valorem taxes on behalf of the Trust for the year 2020 could be in the range of $4.3 to $7.2 million. The amount of such taxes depends on the valuations determined by various county taxing authorities with respect to our royalty interests and the tax rates used in assessing such ad valorem taxes. Consequently, the amount of ad valorem taxes that may be assessed against our royalty interests may vary from year to year, and we are unable to reliably predict the amount of any such increases or decreases in future years. If, as a result ofWe have received an indication from one such obligor that it does not intend to continue to make the Corporate Reorganization, the obligors cease paying these taxes on our behalf, then, pending the outcome of any legal proceeding to enforce our rights, TPL may have to begin paying such ad valorem tax payments that it has been making to date. We have accrued an estimate of such taxes annually, which wouldand are making payments on a current basis in order to protect the royalty interests from any potential tax liens for nonpayment of future ad valorem taxes. While we intend to seek reimbursement from the third party following payment of such taxes, there can be no assurance that we will be successful in getting reimbursed. Taking on the cost of such payments will have an adverse impact on our business and results of operations.

We have obtained an opinion from counsel that the Corporate Reorganization and the Distribution qualified as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. The opinion of counsel does not address any U.S. state or local or non-U.S. tax consequences of the Corporate Reorganization and the Distribution. The opinion assumed that the Corporate Reorganization and the Distribution was completed according to the terms of certain of the operative agreements and required regulatory filings, and relied on the facts as stated therein and in other ancillary agreements and documents. In addition, the opinion was based on certain representations as to factual matters from, and certain covenants by, us and the Trust. The opinion cannot be relied on if any of the assumptions, representations or covenants were incorrect, incomplete or inaccurate or were violated in any material respect.

The opinion of counsel is not binding on the IRS or the courts, and no assurance can be given that contrary positions will not be taken by the IRS or a court. We have not sought and will not seek a ruling from the IRS regarding the federal income tax consequences of the Corporate Reorganization and the Distribution.

If the Corporate Reorganization and the Distribution were to fail to qualify as a reorganization or for tax-free treatment either under Section 368(a)(1)(F) or any other provision of the Code, then U.S. Holders of Sub-shares would recognize gain or loss, as applicable, equal to the difference between (a) the sum of the fair market value of the shares of TPL Corporation Common Stock received by such holder and (b) its adjusted tax basis in the Sub-shares surrendered in exchange therefor. Further, the Trust would recognize taxable gain as if it sold all of its assets, subject to its liabilities, at fair market value. The consequences of the Corporate Reorganization and the Distribution to any holder will depend on that holder’s particular situation.

A public market for our Common Stock did not exist until the Corporate Reorganization was effected on January 11, 2021. We cannot guarantee that the active trading market that has developed will be sustained for our Common Stock, after the Distribution, nor can we predict the prices at which shares of our Common Stock may trade.

Until the market has fully evaluated our business as a corporation, the prices at which shares of our Common Stock trade may fluctuate more significantly than might otherwise be typical, even with other market conditions, including general

Investors in the Trust may have held Sub-shares because of a decision to invest in an organization with the Trust’s governance profile or operating track record. Now thatSince the Corporate Reorganization, has occurred, the shares of our Common Stock held by those investors will represent an investment in a company with a different governance profile, in particular a board of directors at TPL Corporation subject to changes from year to year at annual elections of directors serving staggered three-year terms.directors. More frequent changes in the leadership of the organization, particularly on the Board, could lead to changes in the operating policies of TPL Corporation over time. Such changes may not match some stockholders’ investment strategies, which could cause them to sell our Common Stock. These changes may also attract new investors who previously did not invest in the Trust because of its structure, governance profile or operating track record. As a result of such changes, our stock price may decline or experience volatility as our stockholder base changes. Additionally, new investors or leadership at TPL Corporation could advocate for business or corporate initiatives that would not be desired by or beneficial for all stockholders, such as an untimely sale of the business.

Our business could be negatively affected as a result of stockholder activism, which could cause us to approve an amendmentincur significant expense, hinder execution of our business strategy, and impact the trading value of our securities. In the past, the Company has been the subject of stockholder activism, and we are subject to the risks associated with any ongoing or future such activism. Stockholder activism, including potential proxy contests, requires significant time and attention by management and our Board, potentially interfering with our ability to execute our strategic plan. We may be required to incur significant legal fees and other expenses related to activist stockholder matters, and the attention of our management may be diverted by such activism. While we welcome our stockholders’ constructive input, there can be no assurance that stockholder actions would not result in negative impacts to the Company. Any of these impacts could materially and adversely affect our business and operating results, and the market price of our Common Stock could be subject to significant fluctuation or otherwise be adversely affected by stockholder activism.

In the future, if stockholders were to approve an amendment toIf our amended and restated certificate of incorporation allowingis amended to allow for the issuance of additional equity,Common Stock, holders of our Common Stock could be diluted because of equity issuances for proposed acquisitions or capital market transactions or equity awards proposed to be granted to our directors, officers and employees subject to any required vote of holders of our Common Stock under our amended and restated certificate of incorporation and amended and restated bylaws. We may issue stock-based awards, including annual awards, new hire awards and periodic retention awards, as applicable, to our directors, officers and other employees under any employee benefits plans we have adopted or may adopt.adopt, using newly issued shares rather than treasury shares as is currently our practice.

In addition, our amended and restated certificate of incorporation will authorizeauthorizes us to issue, without the approval of our stockholders, one or more series of preferred stock having such designations, powers, preferences, privileges and relative, participating, optional and special rights, and qualifications, limitations and restrictions as the Board may generally determine.determine in its sole discretion. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our Common

The timing, declaration, amount of, and payment of any cash dividends to our stockholders is within the discretion of our Board and will depend upon many factors, including our financial condition, earnings, capital requirements of our operating subsidiaries, covenants associated with any debt service obligations or other contractual obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by the Board. Moreover, should our Board determine to pay any dividend in the future, there can be no assurance that we will continue to pay such dividends or the amount of such dividends.

During the years ended December 31, 2019, 2018 and 2017, the Trust approved the purchase and subsequent cancellation of 6,258, 59,185 and 105,715 outstanding Sub-shares, respectively. The Trust did not purchase any outstanding Sub-shares during the year ended December 31, 2020.2023, the Company repurchased 27,619 outstanding shares of Common Stock which repurchased shares were placed in treasury. We expect that we will from time to time offer to repurchase a portion of our outstanding Common Stock. However, any repurchase will be within the discretion of our Board and will depend upon many factors, including market and business conditions, the trading price of our Common Stock, available cash and cash flow, capital requirements and the nature of other investment opportunities.

Our amended and restated certificate of incorporation and amended and restated bylaws will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. These provisions are expected to include, among others: (a) the ability of our remaining directors to fill vacancies on our Board (except in an instance where a director is removed by stockholders and the resulting vacancy is filled by stockholders); (b) the inability of stockholders to call a special meeting of stockholders; (c) rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and (d) the right of our Board to issue preferred stock without stockholder approval.

In addition, we are subject to Section 203 of the Delaware General Corporation Law (“DGCL”), which could have the effect of delaying or preventing a change of control that you may favor. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with persons that acquire, more than 15% of the outstanding voting stock of a Delaware corporation may not engage in a business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or any of its affiliates becomes the holder of more than 15% of the corporation’s outstanding voting stock.

We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make the Company immune from takeovers; however, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board determines is not in the best interests of the Company and its stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

Our amended and restated certificate of incorporation provides that unless the Company otherwise determines, the Court of Chancery of the State of Delaware (or, if such court does not have jurisdiction, the U.S. District Court for the District

To the fullest extent permitted by law, this exclusive forum provision will apply to state and federal law claims, including claims under the federal securities laws, including the Securities Act and the Exchange Act, although our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. The enforceability of similar exclusive forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could rule that one or more parts of the exclusive forum provision in our amended and restated certificate of incorporation is inapplicable or unenforceable.

This exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with the Company or our directors or officers, which may discourage such lawsuits against the Company and our directors and officers. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our business, results of operations and financial condition.

As of December 31, 2020,2023, TPL owned the surface estate in 880,523868,446 acres of land, comprised of numerous separate tracts, located in the western part of Texas. There were no material liens or encumbrances on the Company’s title to the surface estate in those tracts. Additionally, the Company also owns a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”)NPRI under 84,934 acres of land (5,308 NRA) and a 1/16th NPRI under 370,737 acres of land (185,369 NRA) in the western part of Texas. The following table shows our surface ownership and NPRI ownership by county as of December 31, 2020:2023:

(1)     Normalized to 1/8th.

The Company leases office space in Dallas, Texas for its corporate headquarters and in Midland, Texas for TPWR.

Not Applicable.applicable.

PART II

Prior to our Corporate Reorganization effective January 11, 2021, the Trust’s Sub-shares wereOur Common Stock is traded on the NYSE under the ticker symbol “TPL”. As discussed in Item 1. “Business — General — Corporate Reorganization”, on January 11, 2021, the Trust’s Sub-shares were converted one for one into shares“TPL.” The Company had 200 registered holders of TPL Corporation’s Common Stock. Effective January 11, 2021, ourits Common Stock began trading on the NYSE under our existing ticker symbol “TPL”.as of February 14, 2024.

For the NYSE for each quarterly period duringyear ended December 31, 2023 and 2022, the past two fiscal years was as follows:Company paid the following regular and special cash dividends per share:

The Company has paid a cash dividend each year for the preceding 6467 years. During 2020, the Company paid a cash dividend of $10.00 per Sub-share in March 2020 and special dividends of $16.00 per Sub-Share, consisting of $6.00 per Sub-share in March 2020 and $10.00 per Sub-share in December 2020. During March 2019, the Company paid a cash dividend of $1.75 per Sub-share and a special dividend of $4.25 per Sub-share.

The Company is not a party to any agreement that would limit its abilityBoard has determined to pay dividends on a quarterly basis in the future, although any future dividends areMarch, June, September and December of each year, subject to the discretion of the Board andBoard. Such dividends will depend upon the Company’s earnings, capital requirements and financial position, applicable requirements of law, general economic conditions and other factors considered relevant by ourthe Board.

During the fourth quarterthree months ended December 31, 2023, the Company repurchased shares of 2020.its Common Stock as follows:

The following data should be read in conjunction with Item 7. “Management’s Discussion and AnalysisReference Group consists of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes thereto incorporated by referencecompanies referenced in Item 8. “Financial Statements and Supplementary Data”11 “Executive Compensation” in this Annual Report on Form 10-K. The selected financial data presented below has been derived from our audited consolidated financial statements (in thousands, except shares and per share amounts):

The following Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Texas Pacific Land Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements included in Part II, Item 8 of this Form 10-K. This discussion and analysis should be read together with thecontains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, discussedincluding, but not limited to, those factors presented in Item 1A. “Risk Factors” and with theConsolidatedFinancial Statements, including the Notes thereto, and the other financial information appearing elsewhere in this Report. Period-to-period comparisonsAnnual Report on Form 10-K. This section generally discusses the results of financial data are not necessarily indicative, and therefore should not be relied upon as indicators,our operations for the year ended December 31, 2023 compared to the year ended December 31, 2022. For a discussion of the Company’s future performance. Words or phrases such as “does not believe”year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7. “Management’s Discussion and “believes,” or similar expressions, when usedAnalysis of Financial Condition and Results of Operations” in thisour Annual Report on Form 10-K or other filings withfor the SEC, are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.year ended December 31, 2022.

TPL was originally organized in 1888 as a business trust to hold title to extensive tracts of land in numerous counties in West Texas which were previously the property of the Texas and Pacific Railway Company. As discussed in Item 1. “Business — General — Corporate Reorganization,” on January 11, 2021, we completed our Corporate Reorganization from a business trust to a corporation changing our name from Texas Pacific Land Trust to Texas Pacific Land Corporation.

Our business activity is generated from our surface and royalty interest ownership in West Texas, primarily in the Permian Basin. Our revenues are primarily derived primarily from oil, gas and gasproduced water royalties, sales of water and land, easements, and commercial leases. Due to the nature of our operations and concentration of our ownership in one geographic location, our revenue isand net income are subject to substantial fluctuations from quarter to quarter and year to year. The demand for, and sale price of, particular tracts of land is influenced by many factors beyond our control, including general economic conditions, the rate of development in nearby areas and the suitability of the particular tract for commercial uses prevalent in western Texas.

The increased supplyPermian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas by member nationsproduction in the United States, covering approximately 86,000 square miles in 52 counties across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies active in the Permian have generally increased their drilling and development activity in 2023 compared to recent prior year activity levels. Per the U.S. Energy Information Administration (“EIA”), Permian production is approximately six million barrels per day, which is higher than the average daily production of OPEC+ and the uncertainty caused by the global spread of COVID 19 ledany year prior to declines in crude oil prices and a reduction in global demand for oil and gas in 2020. The full impact of these events, which resulted in production curtailments and/or conservation of capital by the owners and operators of the oil and gas wells to which the Company’s royalty interests relate, is unknown at this time. These events have negatively affected the Company’s business and results of operations for the year ended December 31, 2020.

(1)    Commonly used definitions in the uncertainty causedoil and gas industry provided in the table above are defined as follows: WTI Cushing represents West Texas Intermediate. Bbl represents one barrel of 42 U.S. gallons of oil. Mmbtu represents one million British thermal units, a measurement used for natural gas. DUCs represent drilled but uncompleted wells. DUC classification is based on well data and date stamps provided by Enverus. DUCs is based on wells that have a drilled/spud date stamp but do not have a completed or first production date stamp. Excludes wells that have been labeled plugged and abandoned or permit expired and wells drilled/spud more than five years ago.

(2)    Permian Basin specific information per Enverus analytics. US weekly horizontal rig counts per Baker Hughes United States Rotary Rig Count for horizontal rigs. Statistics for similar data are also available from other sources. The comparability between these other sources and the sources used by the COVID-19 pandemicCompany may differ.

The metrics above show selected domestic benchmark oil and the resulting record low oilnatural gas prices and reduced demand, we believe our longevityapproximate activity levels in the industry and strong financial position provide us with the tools necessary to navigate these unprecedented times. We have no debt, a strong cash position (cash and cash equivalents were $281.0 million

Our principal sources of liquidity are revenuescash and cash flows generated from oil and gas royalties, easements and other surface-related income, and water and land sales.our operations. Our primary liquidity and capital requirements are for capital expenditures related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital and general corporate needs.

We continuously review our liquidity and capital resources. If market conditions were to change for instance due to the uncertainty created by the COVID-19 pandemic and/or the recent significant decline in oil prices, and our revenue was reducedrevenues were to decline significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Should this occur, we could seek alternative sources of funding, including potential future borrowing under a credit facility or other financing options.funding. We have no debt or credit facilities, nor any off-balance sheet arrangements as of December 31, 2020 and have no immediate plans to enter in such arrangements.2023.

 

As of December 31, 2020,2023, we had cash and cash equivalents of $281.0$725.2 million that we expect to utilize, along with cash flow from operations, to provide capital to support the growth of our business, particularly the growth of TPWR, to repurchase our Common Stock subject to market conditions, to pay dividends subject to the discretion of theour Board, for potential acquisitions and for general corporate purposes. For the year ended December 31, 2023, we paid $100.0 million in dividends to our stockholders and repurchased $42.4 million of our Common Stock (including the share repurchases not settled at the end of the period).

We believe that cash from operations, together with our cash and cash equivalents balances, will be enoughsufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.

We operate our business in two reportable segments: Land and Resource Management and Water Services and Operations. We eliminate any inter-segment revenues and expenses upon consolidation.

 

We analyze financial results for eachevaluate the performance of our reportable segments.operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 10,14, “Business Segment Reporting” in Item 8. “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. We monitor our reporting segments based upon revenue and net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our oil and gas royalty revenue, and, in turn, our results of operations for the year ended December 31, 20202023 have been negatively impacted by lower average commodity prices compared to 2022. The decline in oil and gas royalty revenues has been partially offset by increases in revenues derived from water sales, easements and other surface-related income, and produced water royalties which have been positively impacted by ongoing development activity in the economic impacts related to the COVID-19 pandemic and the declines in pricing and demand for crude oil that occurred during 2020. Given the uncertainty surrounding the severity and durationPermian Basin.

Land and Resource Management segment revenues decreased $168.2$74.9 million, or 46.3%14.8%, to $195.1$432.1 million for the year ended December 31, 20202023 as compared with revenues of $363.3 million forto the comparablesame period of 2019. Segment revenues for the year ended December 31, 2019, include a $100 million land sale. Excluding the impact of the $100 million land sale, segment revenues for the year ended December 31, 2019 were $263.3 million.2022. The decrease in Land and Resource Management segment revenues is principally due to decreasesa $95.0 million decrease in land salesoil and other operatinggas royalties for the year ended December 31, 2023 compared to the same period of 2022. The decrease in oil and gas royalty revenue was partially offset by a $23.3 million increase in easements and other surface-related income and oil and gas royalties, all of which are discussed below.over the same time period.