Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document Entity Information [Abstract] | ||
Entity Registrant Name | TEXAS PACIFIC LAND TRUST | |
Entity Central Index Key | 0000097517 | |
Trading Symbol | tpl | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 7,756,156 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 113,261 | $ 119,647 |
Accrued receivables | 65,728 | 48,750 |
Tax like-kind exchange escrow | 61,463 | 3,799 |
Other assets | 3,397 | 3,884 |
Prepaid income taxes | 0 | 9,398 |
Property, plant and equipment, net of accumulated depreciation of $4,193 and $3,012 as of March 31, 2019 and December 31, 2018, respectively | 72,821 | 64,802 |
Real estate acquired | 57,682 | 10,492 |
Royalty interests acquired | 27,720 | 24,303 |
Operating lease right-of-use assets | 2,834 | |
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned: | ||
Total assets | 404,906 | 285,075 |
LIABILITIES AND CAPITAL | ||
Accounts payable and accrued expenses | 9,656 | 10,505 |
Income taxes payable | 6,760 | 1,607 |
Deferred taxes payable | 35,903 | 14,903 |
Unearned revenue | 15,825 | 13,369 |
Operating lease liabilities | 2,963 | |
Total liabilities | 71,107 | 40,384 |
Commitments and contingencies | 0 | 0 |
Capital: | ||
Certificates of Proprietary Interest, par value $100 each; none outstanding | 0 | 0 |
Sub-share Certificates in Certificates of Proprietary Interest, par value $.03 1/3 each; outstanding 7,756,156 and 7,762,414 Sub-share Certificates as of March 31, 2019 and December 31, 2018, respectively | 0 | 0 |
Accumulated other comprehensive loss | (1,069) | (1,078) |
Net proceeds from all sources | 334,868 | 245,769 |
Total capital | 333,799 | 244,691 |
Total liabilities and capital | 404,906 | 285,075 |
Land Surface Rights | ||
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned: | ||
Land (surface rights) | 0 | 0 |
1/16th Nonparticipating Perpetual Royalty Interest | ||
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned: | ||
1/16th nonparticipating perpetual royalty interest | 0 | 0 |
1/128th Nonparticipating Perpetual Royalty Interest | ||
Real estate and royalty interests assigned through the 1888 Declaration of Trust, no value assigned: | ||
1/128th nonparticipating perpetual royalty interest | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, plant and equipment, accumulated depreciation | $ 4,193 | $ 3,012 |
Certificates of proprietary interest, par value (in dollars per share) | $ 100 | $ 100 |
Certificates of proprietary interest, outstanding (in shares) | 0 | 0 |
Sub-share certificates of proprietary interest, par value (in dollars per share) | $ 0.0333 | $ 0.0333 |
Sub-share certificates of proprietary interest, outstanding (in shares) | 7,756,156 | 7,762,414 |
1/16th Nonparticipating Perpetual Royalty Interest | ||
Nonparticipating perpetual royalty interest rate | 6.25% | 6.25% |
1/128th Nonparticipating Perpetual Royalty Interest | ||
Nonparticipating perpetual royalty interest rate | 0.78125% | 0.78125% |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Total Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total revenues | $ 191,324 | $ 60,007 |
Expenses: | ||
Salaries and related employee expenses | 6,464 | 2,563 |
Water service-related expenses | 4,578 | 1,306 |
General and administrative expenses | 2,142 | 680 |
Legal and professional fees | 1,783 | 647 |
Depreciation and amortization | 1,204 | 330 |
Total operating expenses | 16,171 | 5,526 |
Operating income | 175,153 | 54,481 |
Other income | 393 | 130 |
Income before income taxes | 175,546 | 54,611 |
Income tax expense | ||
Current | 14,548 | 10,820 |
Deferred | 21,000 | 0 |
Total income tax expense | 35,548 | 10,820 |
Net income | 139,998 | 43,791 |
Other comprehensive income — periodic pension costs, net of income taxes of $2 and $3, respectively | 9 | 13 |
Total comprehensive income | $ 140,007 | $ 43,804 |
Weighted average number of Sub-share Certificates outstanding (in shares) | 7,759,808 | 7,818,168 |
Net income per Sub-share Certificate — basic and diluted (in dollars per share) | $ 18.04 | $ 5.60 |
Cash dividends per Sub-share Certificate (in dollars per share) | $ 6 | $ 4.05 |
Oil and gas royalties | ||
Revenues: | ||
Total revenues | $ 33,213 | $ 26,547 |
Easements and other surface-related income | ||
Revenues: | ||
Total revenues | 31,367 | 16,978 |
Water sales and royalties | ||
Revenues: | ||
Total revenues | 22,983 | 13,607 |
Land sales | ||
Revenues: | ||
Total revenues | 103,625 | 2,750 |
Other operating revenue | ||
Revenues: | ||
Total revenues | $ 136 | $ 125 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income and Total Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Other comprehensive income, tax | $ 2 | $ 3 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 139,998 | $ 43,791 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred taxes | 21,000 | 0 |
Depreciation and amortization | 1,204 | 330 |
Changes in operating assets and liabilities: | ||
Operating assets, excluding income taxes | (19,331) | (10,102) |
Prepaid income taxes | 9,398 | 1,202 |
Operating liabilities, excluding income taxes | 4,579 | (172) |
Income taxes payable | 5,153 | 9,622 |
Cash provided by operating activities | 162,001 | 44,671 |
Cash flows from investing activities: | ||
Proceeds from sale of fixed assets | 30 | 0 |
Acquisition of land | (47,189) | (751) |
Acquisition of royalty interests | (3,418) | 0 |
Purchase of fixed assets | (9,247) | (11,841) |
Cash used in investing activities | (59,824) | (12,592) |
Cash flows from financing activities: | ||
Purchase of Sub-share Certificates in Certificates of Proprietary Interest | (4,353) | (6,709) |
Dividends paid | (46,546) | (31,652) |
Cash used in financing activities | (50,899) | (38,361) |
Net increase in cash, cash equivalents, and restricted cash | 51,278 | (6,282) |
Cash, cash equivalents and restricted cash, beginning of period | 123,446 | 79,580 |
Cash, cash equivalents, and restricted cash, end of period | 174,724 | 73,298 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid | $ 0 | $ 0 |
Organization and Description of
Organization and Description of Business Segments | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business Segments | Organization and Description of Business Segments Texas Pacific Land Trust (which, together with its subsidiaries as the context requires, may be referred to as “Texas Pacific”, the “Trust”, “our”, “we” or “us”) is one of the largest landowners in the State of Texas with approximately 900,000 acres of land in West Texas. Texas Pacific was organized under a Declaration of Trust, dated February 1, 1888, 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, and to issue transferable Certificates of Proprietary Interest pro rata to the original holders of certain debt securities of the Texas and Pacific Railway Company. The Trust is organized to manage land, including royalty interests, for the benefit of its owners. The Trust’s income is derived primarily from oil, gas and water royalties, sales of water and land, easements and leases of the land. We operate our business in two segments: Land and Resource Management and Water Service 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 Trust and provide a framework for timely and rational allocation of resources within businesses. See Note 9, “Business Segment Reporting” for further information regarding our segments. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Interim Unaudited Financial Information The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial position of the Trust as of March 31, 2019 and the results of its operations for the three months ended March 31, 2019 and 2018 , respectively, and its cash flows for the three months ended March 31, 2019 and 2018 , respectively. Such adjustments are of a normal recurring nature. Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2018 , which was filed with the SEC on February 28, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain financial information on the condensed consolidated balance sheets as of December 31, 2018 and condensed consolidated statements of income for the three months ended March 31, 2018 has been revised to conform to the current year presentation. These revisions affected the classification of the tax like-kind exchange escrow from other assets to a separate balance sheet line item and certain expense items from one expense line item to another expense line item. Total assets and expenses were not affected by these reclassifications. Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): March 31, 2019 December 31, 2018 Cash and cash equivalents $ 113,261 $ 119,647 Tax like-kind exchange escrow 61,463 3,799 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 174,724 $ 123,446 Recently Adopted Accounting Guidance Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases (Topic 842) ” which amended the existing lease accounting guidance to require lessees to recognize a right of use asset and lease liability on the balance sheet for all leases with terms greater than twelve months. We adopted the new leasing standard and all related amendments on January 1, 2019. We elected the optional transition method provided by ASU No. 2018-11, “ Leases (Topic 842): Targeted Improvements ” and as a result, have not restated our condensed consolidated financial statements for prior periods presented. We also elected the practical expedients permitted under the transition guidance that retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. In addition, we have not reassessed the accounting treatment of contracts entered into prior to adoption of the new lease guidance. Upon adoption, we recorded a right-of-use asset for $3.0 million and a lease liability for $3.0 million related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. The lease agreements require monthly rent payments and expire in March 2025 and August 2022, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost for the three months ended March 31, 2019 was $0.1 million . Future minimum lease payments under these operating leases are as follows as of March 31, 2019 (in thousands): 2019 (excluding the three months ended March 31) $ 344 2020 597 2021 613 2022 597 2023 546 Thereafter 701 Total lease payments 3,398 Less: imputed interest (435 ) Total operating lease liabilities $ 2,963 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-14, “ Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to Disclosure Requirements for Defined Benefit Plans .” The ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Trust is currently evaluating the impact that ASU 2018-14 will have on our consolidated financial statements and disclosures. In August 2018, the FASB issued ASU 2018-15, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The ASU requires a customer in a cloud computing arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize as an asset. The ASU is effective for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted, and may be applied retrospectively or as of the beginning of the period of adoption. The Trust is currently evaluating the impact that ASU 2018-15 will have on our consolidated financial statements and disclosures. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment, net consisted of the following as of March 31, 2019 and December 31, 2018 (in thousands): March 31, 2019 December 31, 2018 Property, plant and equipment: Water service-related assets (1) $ 71,593 $ 62,919 Furniture, fixtures and equipment 4,823 4,297 Other 598 598 Property, plant and equipment at cost 77,014 67,814 Less: accumulated depreciation (4,193 ) (3,012 ) Property, plant and equipment, net $ 72,821 $ 64,802 (1) Water service-related assets reflect assets related to brackish water sourcing and water re-use projects. Depreciation expense was $1.2 million and $0.3 million for the three months ended March 31, 2019 and 2018 , respectively. |
Real Estate Activity
Real Estate Activity | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Real Estate Activity | Real Estate Activity As of March 31, 2019 and December 31, 2018 , the Trust owned the following land and real estate (in thousands, except number of acres): March 31, 2019 December 31, 2018 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) 856,211 $ — 877,462 $ — Real estate acquired 36,416 57,682 24,715 10,492 Total real estate situated in 19 counties in Texas 892,627 $ 57,682 902,177 $ 10,492 No valuation allowance was necessary at March 31, 2019 and December 31, 2018 . Land Sales For the three months ended March 31, 2019 , the Trust sold approximately 21,251 acres ( 13,180 acres in Loving County, 5,598 acres in Culberson County, 1,651 acres in Hudspeth County and 822 acres in Reeves County) of the Trust’s Assigned land in Texas for an aggregate sales price of approximately $103.6 million , with an average of approximately $4,876 per acre. For the three months ended March 31, 2018 , the Trust sold approximately 120 acres ( 80 acres in Culberson County and 40 acres in Loving County) of the Trust’s Assigned land in Texas for an aggregate sales price of approximately $2.8 million , with an average of approximately $22,917 per acre. Land Acquisitions For the three months ended March 31, 2019 , the Trust acquired approximately 11,702 acres (Culberson and Reeves Counties) of land in Texas for an aggregate purchase price of approximately $47.2 million , with an average of approximately $4,033 per acre. For the three months ended March 31, 2018 , the Trust acquired approximately 641 acres (all in Upton County) of land in Texas for an aggregate purchase price of approximately $0.8 million , with an average of approximately $1,171 per acre. |
Royalty Interests
Royalty Interests | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Royalty Interests | Royalty Interests As of March 31, 2019 and December 31, 2018 , the Trust owned the following oil and gas royalty interests (in thousands, except number of interests): Net Book Value March 31, 2019 December 31, 2018 1/16th nonparticipating perpetual royalty interests $ — $ — 1/128th nonparticipating perpetual royalty interests — — Royalty interests acquired 27,720 24,303 Total royalty interests $ 27,720 $ 24,303 No valuation allowance was necessary at March 31, 2019 and December 31, 2018 . For the three months ended March 31, 2019 , the Trust acquired oil and gas royalty interests in approximately 301 net royalty acres (normalized to 1/8th) for an aggregate purchase price of $3.2 million , an average price of approximately $10,500 per net royalty acre. There were no oil and gas royalty interest transactions for the three months ended March 31, 2018 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective January 1, 2018, the statutory Federal income tax rate for the Trust decreased from 35% to 21% . The Trust’s effective Federal income tax rate is less than the 21% statutory rate because taxable income is reduced by statutory percentage depletion allowed on mineral royalty income. The Trust structured the $100.0 million land sale in January 2019 as a §1031exchange for federal income tax purposes. As a result, the current federal income tax liability and current federal income tax expense were each reduced by approximately $21.0 million during the three months ended March 31, 2019 . |
Capital
Capital | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Capital | Capital The Sub-share Certificates (“Sub-shares”) and the Certificates of Proprietary Interest are freely interchangeable in the ratio of one Certificate of Proprietary Interest for 3,000 Sub-shares or 3,000 Sub-shares for one Certificate of Proprietary Interest. Dividends On March 15, 2019 , we paid $46.5 million in dividends representing a regular cash dividend of $1.75 per Sub-share and a special dividend of $4.25 per Sub-share for sub-shareholders of record at the close of business on March 8, 2019 . On March 16, 2018 , we paid $31.7 million in dividends representing a regular cash dividend of $1.05 per Sub-share and a special dividend of $3.00 per Sub-share for sub-shareholders of record at the close of business on March 9, 2018 . Repurchases of Sub-shares During the three months ended March 31, 2019 , we purchased and retired 6,258 Sub-shares. During the three months ended March 31, 2018 , we purchased and retired 13,146 Sub-shares. |
Business Segment Reporting
Business Segment Reporting | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Business Segment Reporting | Business Segment Reporting During the periods presented, we reported our financial performance based on the following segments: Land and Resource Management and Water Service 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 Trust and provide a framework for timely and rational allocation of resources within businesses. We eliminate any inter-segment revenues and expenses upon consolidation. The Land and Resource Management segment encompasses the business of managing approximately 900,000 acres of land and related resources in West Texas owned by the Trust. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and leases, and land sales. The Water Service and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin as well as managing agreements with energy companies and oilfield service businesses to allow such companies to explore for water, drill water wells, construct water-related infrastructure and purchase water sourced from land that we own. The revenue streams of this segment consist of revenue generated from direct sales of water as well as revenues from royalties on water service-related activity. Segment financial results were as follows for the three months ended March 31, 2019 and 2018 (in thousands): Three Months Ended 2019 2018 Revenues: Land and resource management $ 160,459 $ 42,753 Water service and operations 30,865 17,254 Total consolidated revenues $ 191,324 $ 60,007 Net income: Land and resource management $ 123,117 $ 32,811 Water service and operations 16,881 10,980 Total consolidated net income $ 139,998 $ 43,791 Capital expenditures Land and resource management $ 534 $ 1,252 Water service and operations 8,713 10,589 Total capital expenditures $ 9,247 $ 11,841 Depreciation and amortization: Land and resource management $ 177 $ 70 Water service and operations 1,027 260 Total depreciation and amortization $ 1,204 $ 330 The following table presents total assets and property, plant and equipment, net by segment as of March 31, 2019 and December 31, 2018 (in thousands): March 31, 2019 December 31, 2018 Assets: Land and resource management $ 297,450 $ 198,922 Water service and operations 107,456 86,153 Total consolidated assets $ 404,906 $ 285,075 Property, plant and equipment, net Land and resource management $ 4,052 $ 3,720 Water service and operations 68,769 61,082 Total consolidated property, plant and equipment, net $ 72,821 $ 64,802 |
Oil and Gas Producing Activitie
Oil and Gas Producing Activities | 3 Months Ended |
Mar. 31, 2019 | |
Extractive Industries [Abstract] | |
Oil and Gas Producing Activities | Oil and Gas Producing Activities There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where the Trust has a royalty interest. Currently, the Trust has identified 313 DUC wells subject to our royalty interest. The process of identifying these wells is ongoing and we anticipate updates going forward to be affected by a number of factors including, but not limited to, ongoing changes/updates to our identification process, changes/updates by Drilling Info (our main source of information in identifying these wells) in their identification process, the eventual completion of these DUC wells, and additional wells drilled but not completed by companies operating where we have a royalty interest. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We evaluate events that occur after the balance sheet date but before consolidated financial statements are, or are available to be, issued to determine if a material event requires our amending the consolidated financial statements or disclosing the event. We evaluated subsequent events through the filing date we issued these consolidated financial statements and identified the following subsequent event requiring disclosure. Land Transaction On April 22, 2019 , the Trust acquired approximately 3,400 acres of land in Loving County, Texas for an aggregate purchase price of $20.4 million . The Trust utilized proceeds from the land sale in January 2019 to fund the acquisition. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Principals of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include our accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2018 , which was filed with the SEC on February 28, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain financial information on the condensed consolidated balance sheets as of December 31, 2018 and condensed consolidated statements of income for the three months ended March 31, 2018 has been revised to conform to the current year presentation. These revisions affected the classification of the tax like-kind exchange escrow from other assets to a separate balance sheet line item and certain expense items from one expense line item to another expense line item. Total assets and expenses were not affected by these reclassifications. |
Recently Accounting Pronouncements | Recently Adopted Accounting Guidance Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “ Leases (Topic 842) ” which amended the existing lease accounting guidance to require lessees to recognize a right of use asset and lease liability on the balance sheet for all leases with terms greater than twelve months. We adopted the new leasing standard and all related amendments on January 1, 2019. We elected the optional transition method provided by ASU No. 2018-11, “ Leases (Topic 842): Targeted Improvements ” and as a result, have not restated our condensed consolidated financial statements for prior periods presented. We also elected the practical expedients permitted under the transition guidance that retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. In addition, we have not reassessed the accounting treatment of contracts entered into prior to adoption of the new lease guidance. Upon adoption, we recorded a right-of-use asset for $3.0 million and a lease liability for $3.0 million related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. The lease agreements require monthly rent payments and expire in March 2025 and August 2022, respectively. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease cost for the three months ended March 31, 2019 was $0.1 million . Future minimum lease payments under these operating leases are as follows as of March 31, 2019 (in thousands): 2019 (excluding the three months ended March 31) $ 344 2020 597 2021 613 2022 597 2023 546 Thereafter 701 Total lease payments 3,398 Less: imputed interest (435 ) Total operating lease liabilities $ 2,963 Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-14, “ Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to Disclosure Requirements for Defined Benefit Plans .” The ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other post-retirement plans. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Trust is currently evaluating the impact that ASU 2018-14 will have on our consolidated financial statements and disclosures. In August 2018, the FASB issued ASU 2018-15, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The ASU requires a customer in a cloud computing arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize as an asset. The ASU is effective for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted, and may be applied retrospectively or as of the beginning of the period of adoption. The Trust is currently evaluating the impact that ASU 2018-15 will have on our consolidated financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): March 31, 2019 December 31, 2018 Cash and cash equivalents $ 113,261 $ 119,647 Tax like-kind exchange escrow 61,463 3,799 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 174,724 $ 123,446 |
Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): March 31, 2019 December 31, 2018 Cash and cash equivalents $ 113,261 $ 119,647 Tax like-kind exchange escrow 61,463 3,799 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 174,724 $ 123,446 |
Future Minimum Lease Payments | Future minimum lease payments under these operating leases are as follows as of March 31, 2019 (in thousands): 2019 (excluding the three months ended March 31) $ 344 2020 597 2021 613 2022 597 2023 546 Thereafter 701 Total lease payments 3,398 Less: imputed interest (435 ) Total operating lease liabilities $ 2,963 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment, net consisted of the following as of March 31, 2019 and December 31, 2018 (in thousands): March 31, 2019 December 31, 2018 Property, plant and equipment: Water service-related assets (1) $ 71,593 $ 62,919 Furniture, fixtures and equipment 4,823 4,297 Other 598 598 Property, plant and equipment at cost 77,014 67,814 Less: accumulated depreciation (4,193 ) (3,012 ) Property, plant and equipment, net $ 72,821 $ 64,802 (1) Water service-related assets reflect assets related to brackish water sourcing and water re-use projects. |
Real Estate Activity (Tables)
Real Estate Activity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties | As of March 31, 2019 and December 31, 2018 , the Trust owned the following land and real estate (in thousands, except number of acres): March 31, 2019 December 31, 2018 Number of Acres Net Book Value Number of Acres Net Book Value Land (surface rights) 856,211 $ — 877,462 $ — Real estate acquired 36,416 57,682 24,715 10,492 Total real estate situated in 19 counties in Texas 892,627 $ 57,682 902,177 $ 10,492 |
Royalty Interests (Tables)
Royalty Interests (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Real Estate [Abstract] | |
Schedule of Royalty Interests | As of March 31, 2019 and December 31, 2018 , the Trust owned the following oil and gas royalty interests (in thousands, except number of interests): Net Book Value March 31, 2019 December 31, 2018 1/16th nonparticipating perpetual royalty interests $ — $ — 1/128th nonparticipating perpetual royalty interests — — Royalty interests acquired 27,720 24,303 Total royalty interests $ 27,720 $ 24,303 |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Financial Results | Segment financial results were as follows for the three months ended March 31, 2019 and 2018 (in thousands): Three Months Ended 2019 2018 Revenues: Land and resource management $ 160,459 $ 42,753 Water service and operations 30,865 17,254 Total consolidated revenues $ 191,324 $ 60,007 Net income: Land and resource management $ 123,117 $ 32,811 Water service and operations 16,881 10,980 Total consolidated net income $ 139,998 $ 43,791 Capital expenditures Land and resource management $ 534 $ 1,252 Water service and operations 8,713 10,589 Total capital expenditures $ 9,247 $ 11,841 Depreciation and amortization: Land and resource management $ 177 $ 70 Water service and operations 1,027 260 Total depreciation and amortization $ 1,204 $ 330 |
Schedule of Total Assets And Property, Plant, and Equipment | The following table presents total assets and property, plant and equipment, net by segment as of March 31, 2019 and December 31, 2018 (in thousands): March 31, 2019 December 31, 2018 Assets: Land and resource management $ 297,450 $ 198,922 Water service and operations 107,456 86,153 Total consolidated assets $ 404,906 $ 285,075 Property, plant and equipment, net Land and resource management $ 4,052 $ 3,720 Water service and operations 68,769 61,082 Total consolidated property, plant and equipment, net $ 72,821 $ 64,802 |
Organization and Description _2
Organization and Description of Business Segments (Details) | 3 Months Ended |
Mar. 31, 2019asegment | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Number of operating segments | segment | 2 |
West Texas | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Area of land (in acres) | a | 900,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 113,261 | $ 119,647 | ||
Tax like-kind exchange escrow | 61,463 | 3,799 | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 174,724 | $ 123,446 | $ 73,298 | $ 79,580 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 2,834 | |
Operating lease liabilities | 2,963 | |
Operating lease expense | $ 100 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use assets | $ 3,000 | |
Operating lease liabilities | $ 3,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Future Minimum Lease Payments (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Accounting Policies [Abstract] | |
2019 (excluding the three months ended March 31) | $ 344 |
2020 | 597 |
2021 | 613 |
2022 | 597 |
2023 | 546 |
Thereafter | 701 |
Total lease payments | 3,398 |
Less: imputed interest | (435) |
Total operating lease liabilities | $ 2,963 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment at cost | $ 77,014 | $ 67,814 | |
Less: accumulated depreciation | (4,193) | (3,012) | |
Property, plant and equipment, net | 72,821 | 64,802 | |
Depreciation | 1,200 | $ 300 | |
Water service-related assets | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment at cost | 71,593 | 62,919 | |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment at cost | 4,823 | 4,297 | |
Other | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment at cost | $ 598 | $ 598 |
Real Estate Activity - Schedule
Real Estate Activity - Schedule of Land and Real Estate Ownership (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($)acounty | Dec. 31, 2018USD ($)acounty | |
Number of Acres | ||
Land (surface rights) (acre) | a | 856,211 | 877,462 |
Real estate acquired (acre) | a | 36,416 | 24,715 |
Total real estate situated in 19 counties in Texas (acre) | a | 892,627 | 902,177 |
Net Book Value | ||
Land (surface rights) | $ | $ 0 | $ 0 |
Real estate acquired | $ | 57,682 | 10,492 |
Total real estate situated in 19 counties in Texas | $ | $ 57,682 | $ 10,492 |
Number of counties with real estate in Texas | county | 19 | 19 |
Real Estate Activity (Details)
Real Estate Activity (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2019USD ($) | Mar. 31, 2019USD ($)a$ / a | Mar. 31, 2018USD ($)a$ / a | |
Real Estate Properties [Line Items] | |||
Area of real estate property, sold (acre) | 21,251 | 120 | |
Proceeds from sale of real estate | $ | $ 100 | $ 103.6 | $ 2.8 |
Average sale price (in dollars per acre) | $ / a | 4,876 | 22,917 | |
Additions (acre) | 11,702 | ||
Additions | $ | $ 47.2 | $ 0.8 | |
Average purchase price (in dollars per acre) | $ / a | 4,033 | 1,171 | |
Loving county | |||
Real Estate Properties [Line Items] | |||
Area of real estate property, sold (acre) | 13,180 | 40 | |
Culberson county | |||
Real Estate Properties [Line Items] | |||
Area of real estate property, sold (acre) | 5,598 | 80 | |
Hudspeth county | |||
Real Estate Properties [Line Items] | |||
Area of real estate property, sold (acre) | 1,651 | ||
Reeves county | |||
Real Estate Properties [Line Items] | |||
Area of real estate property, sold (acre) | 822 | ||
Upton county | |||
Real Estate Properties [Line Items] | |||
Additions (acre) | 641 |
Royalty Interests (Details)
Royalty Interests (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)a$ / a | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Net Book Value | |||
Royalty interests acquired | $ 27,720 | $ 24,303 | $ 24,303 |
Total royalty interests | 27,720 | 24,303 | |
Acquisition of royalty interests | $ 3,418 | 0 | |
Royalty interest rate | 12.50% | ||
1/16th nonparticipating perpetual royalty interests | |||
Real Estate Properties [Line Items] | |||
Nonparticipating perpetual royalty interest rate | 6.25% | 6.25% | |
Net Book Value | |||
1/16th nonparticipating perpetual royalty interest | $ 0 | 0 | $ 0 |
1/128th nonparticipating perpetual royalty interests | |||
Real Estate Properties [Line Items] | |||
Nonparticipating perpetual royalty interest rate | 0.78125% | 0.78125% | |
Net Book Value | |||
1/128th nonparticipating perpetual royalty interest | $ 0 | $ 0 | $ 0 |
Additional real estate acquisitions | |||
Net Book Value | |||
Net royalty interests (acre) | a | 301 | ||
Acquisition of royalty interests | $ 3,200 | ||
Average price per net royalty acre acquired (in dollars per acre) | $ / a | 10,500 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Land sale | $ 100 | $ 103.6 | $ 2.8 |
Current federal income tax liability | 21 | ||
Current federal income tax expense | $ 21 |
Capital (Details)
Capital (Details) $ / shares in Units, $ in Millions | Mar. 15, 2019USD ($)$ / shares | Mar. 16, 2018USD ($)$ / shares | Mar. 31, 2019$ / sharesshares | Mar. 31, 2018$ / sharesshares |
Class of Stock [Line Items] | ||||
Payments of dividends | $ | $ 46.5 | $ 31.7 | ||
Dividend paid per sub-share (in dollars per share) | $ 6 | $ 4.05 | ||
Sub Shares | ||||
Class of Stock [Line Items] | ||||
Ratio of certificates to sub-shares | 0.0003333333333 | |||
Number of shares repurchased and retired (in shares) | shares | 6,258 | 13,146 | ||
Cash Dividend | Sub Shares | ||||
Class of Stock [Line Items] | ||||
Dividend paid per sub-share (in dollars per share) | $ 1.75 | $ 1.05 | ||
Special Dividend | Sub Shares | ||||
Class of Stock [Line Items] | ||||
Dividend paid per sub-share (in dollars per share) | $ 4.25 | $ 3 |
Business Segment Reporting (Det
Business Segment Reporting (Details) | Mar. 31, 2019a |
West Texas | |
Segment Reporting Information [Line Items] | |
Area of land (in acres) | 900,000 |
Business Segment Reporting - Fi
Business Segment Reporting - Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 191,324 | $ 60,007 |
Net income | 139,998 | 43,791 |
Capital expenditures | 9,247 | 11,841 |
Depreciation and amortization | 1,204 | 330 |
Land and resource management | ||
Segment Reporting Information [Line Items] | ||
Revenue | 160,459 | 42,753 |
Net income | 123,117 | 32,811 |
Capital expenditures | 534 | 1,252 |
Depreciation and amortization | 177 | 70 |
Water service and operations | ||
Segment Reporting Information [Line Items] | ||
Revenue | 30,865 | 17,254 |
Net income | 16,881 | 10,980 |
Capital expenditures | 8,713 | 10,589 |
Depreciation and amortization | $ 1,027 | $ 260 |
Business Segment Reporting - As
Business Segment Reporting - Assets and Property, Plant, and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | ||
Assets | $ 404,906 | $ 285,075 |
Property, plant and equipment, net | 72,821 | 64,802 |
Land and resource management | ||
Segment Reporting Information [Line Items] | ||
Assets | 297,450 | 198,922 |
Property, plant and equipment, net | 4,052 | 3,720 |
Water service and operations | ||
Segment Reporting Information [Line Items] | ||
Assets | 107,456 | 86,153 |
Property, plant and equipment, net | $ 68,769 | $ 61,082 |
Oil and Gas Producing Activit_2
Oil and Gas Producing Activities (Details) | Mar. 31, 2019well |
Extractive Industries [Abstract] | |
Number of DUC wells | 313 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Apr. 22, 2019USD ($)a | Mar. 31, 2019USD ($)a | Mar. 31, 2018USD ($) |
Subsequent Event [Line Items] | |||
Additions (acre) | a | 11,702 | ||
Land purchase price | $ | $ 47,189 | $ 751 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Additions (acre) | a | 3,400 | ||
Land purchase price | $ | $ 20,400 |