Texas Pacific Land Trust Announces Fourth Quarter and Full Year 2019 Results
DALLAS--(BUSINESS WIRE)-- Texas Pacific Land Trust (NYSE:TPL) today announced financial and operating results for the fourth quarter and year ended December 31, 2019.
Results for the fourth quarter of 2019:
- Net income of $71.3 million, or $9.20 per Sub-share Certificate, for the fourth quarter ended December 31, 2019 compared with $62.7 million, or $8.06 per Sub-share Certificate, for the fourth quarter ended December 31, 2018.
- Revenues of $113.3 million for the fourth quarter ended December 31, 2019, compared with $93.2 million for the fourth quarter ended December 31, 2018.
- Increases of 26.6% in easements and other surface-related income, 22.0% in oil and gas royalty revenue and 20.6% in water sales and royalty revenue for the fourth quarter ended December 31, 2019 compared with the fourth quarter ended December 31, 2018.
- EBITDA of $94.9 million for the fourth quarter ended December 31, 2019, compared with $79.3 million for the fourth quarter of 2018, an increase of 19.6%.
Results for the year ended December 31, 2019:
- Net income of $320.9 million, or $41.38 per Sub-share Certificate, for the year ended December 31, 2019 compared with $209.7 million, or $26.93 per Sub-share Certificate, for the year ended December 31, 2018.
- Revenues of $490.5 million for the year ended December 31, 2019, compared with $300.2 million for the year ended December 31, 2018.
- Increases of 32.9% in water sales and royalty revenue, 30.0% in easements and other surface-related income and 24.9% in oil and gas royalty revenue for the year ended December 31, 2019 compared with the year ended December 31, 2018.
- EBITDA of $413.4 million for the year ended December 31, 2019, compared with $264.3 million for the year ended December 31, 2018, an increase of 56.4%.
Further details for the fourth quarter of 2019:
The Trust reported net income of $71.3 million for the fourth quarter ended December 31, 2019, an increase of 13.8% over net income of $62.7 million for the fourth quarter ended December 31, 2018. The increase was principally related to increased oil and gas royalties, easements and other surface-related income and water sales.
Oil and gas royalty revenue was $43.6 million for the fourth quarter ended December 31, 2019, compared with $35.8 million for the fourth quarter ended December 31, 2018, an increase of 22.0%. Crude oil and gas production subject to the Trust’s royalty interests increased 45.6% and 33.4%, respectively, in the fourth quarter ended December 31, 2019 compared to the fourth quarter ended December 31, 2018. While crude oil and gas production increased in the fourth quarter ended December 31, 2019 compared to the same period of 2018, the prices received for crude oil and gas production decreased 3.6% and 41.1%, respectively, over the same time period.
Easements and other surface-related income was $27.7 million for the fourth quarter ended December 31, 2019, an increase of 26.6% compared with the fourth quarter ended December 31, 2018 when easements and other surface-related income was $21.9 million. The increase in easements and other surface-related income was largely driven by increases of $3.1 million in commercial lease revenue (largely due to an increase in saltwater disposal royalties) and $2.0 million in pipeline easement income for the fourth quarter ended December 31, 2019 compared to the same period of 2018.
Water sales and royalty revenue was $19.9 million for the fourth quarter ended December 31, 2019, an increase of 20.6% compared with the fourth quarter ended December 31, 2018 when water sales and royalty revenue was $16.5 million. This increase was principally due to a 50.4% increase in the number of barrels of sourced and treated water sold in the fourth quarter of 2019 over the same period in 2018, partially offset by decreased water royalties.
In an exchange transaction, the Trust conveyed approximately 5,620 acres of land in exchange for approximately 5,545 acres of land, all in Culberson County. As the Trust had no cost basis in the land conveyed, the Trust recognized land sales revenue of $22.0 million for the fourth quarter ended December 31, 2019.
Further details for the year ended December 31, 2019:
The Trust reported net income of $320.9 million for the year ended December 31, 2019, an increase of 53.0% over net income of $209.7 million for the year ended December 31, 2018. Net income for the year ended December 31, 2019 included a $100 million land sale. Excluding the impact of the land sale, net of income tax, for the year ended December 31, 2019, net income was $241.9 million, a 15.3% increase over net income for the year ended December 31, 2018. The 15.3% increase was principally related to increased oil and gas royalties, easements and other surface-related income and water sales.
Oil and gas royalty revenue was $154.7 million for the year ended December 31, 2019, compared with $123.8 million for the year ended December 31, 2018, an increase of 24.9%. Crude oil and gas production subject to the Trust’s royalty interests increased 48.3% and 89.3%, respectively, in the year ended December 31, 2019 compared to the year ended December 31, 2018. While crude oil and gas production increased in the year ended December 31, 2019 compared to December 31, 2018, the prices received for crude oil and gas production decreased 8.0% and 49.3%, respectively, over the same time period.
Easements and other surface-related income was $115.4 million for the year ended December 31, 2019, an increase of 30.0% compared with the year ended December 31, 2018 when easements and other surface-related income was $88.7 million. The increase in easements and other surface-related income was principally related to increases of $19.0 million in pipeline easement income and $10.6 million in commercial lease revenue (largely due to an increase in saltwater disposal royalties), for the year ended December 31, 2019 compared to the same period of 2018. These increases were partially offset by a $3.7 million decrease in temporary permit income over the same time period.
Water sales and royalty revenue was $84.9 million for the year ended December 31, 2019, an increase of 32.9% compared with the year ended December 31, 2018 when water sales and royalty revenue was $63.9 million. This increase was principally due to a 44.0% increase in the number of barrels of sourced and treated water sold during the year ended December 31, 2019 over the same period in 2018, partially offset by decreased water royalties.
The Trust recognized land sales revenue of $135.0 million for the year ended December 31, 2019 and $4.4 million for the comparable period of 2018. The increase in land sales revenue is principally related to a $100 million land sale in January 2019 and land sales revenue of $22.0 million related to a land exchange transaction in December 2019.
About Texas Pacific Land Trust
Texas Pacific Land Trust is one of the largest landowners in the State of Texas with approximately 900,000 acres of land in West Texas. The Trust was organized under a 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, and to issue transferable Certificates of Proprietary Interest pro rata to the holders of certain debt securities of the Texas and Pacific Railway Company. Texas Pacific Land Trust’s trustees are empowered under the Declaration of Trust to manage the lands with all the powers of an absolute owner. Texas Pacific Land Trust is not a REIT.
Forward-Looking Statements
This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Trust’s future operations and prospects, the markets for real estate in the areas in which the Trust owns real estate, applicable zoning regulations, the markets for oil and gas, production limits on prorated oil and gas wells authorized by the Railroad Commission of Texas, expected competitions, management’s intent, beliefs or current expectations with respect to the Trust’s future financial performance and other matters. We assume no responsibility to update any such forward-looking statements.
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REPORT OF OPERATIONS |
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(in thousands, except share and per share amounts) (unaudited) |
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|
|
Three Months Ended
|
|
Years Ended
|
||||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||||
|
Revenues: |
|
|
|
|
|
|
|
||||||||||
|
Oil and gas royalties |
$ |
43,616 |
|
|
$ |
35,756 |
|
|
$ |
154,729 |
|
|
$ |
123,834 |
|
||
|
Easements and other surface-related income |
27,727 |
|
|
21,894 |
|
|
115,362 |
|
|
88,739 |
|
||||||
|
Water sales and royalties |
19,882 |
|
|
16,485 |
|
|
84,949 |
|
|
63,913 |
|
||||||
|
Sale of oil and gas royalty interests |
— |
|
|
18,875 |
|
|
— |
|
|
18,875 |
|
||||||
|
Land sales |
22,000 |
|
|
74 |
|
|
135,020 |
|
|
4,367 |
|
||||||
|
Other operating revenue |
107 |
|
|
117 |
|
|
436 |
|
|
492 |
|
||||||
|
Total revenues |
113,332 |
|
|
93,201 |
|
|
490,496 |
|
|
300,220 |
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Expenses: |
|
|
|
|
|
|
|
||||||||||
|
Salaries and related employee expenses |
10,099 |
|
|
7,984 |
|
|
32,841 |
|
|
18,433 |
|
||||||
|
Water service-related expenses |
5,385 |
|
|
3,567 |
|
|
20,808 |
|
|
11,168 |
|
||||||
|
General and administrative expenses |
2,663 |
|
|
1,822 |
|
|
9,765 |
|
|
4,704 |
|
||||||
|
Legal and professional fees |
1,205 |
|
|
875 |
|
|
16,403 |
|
|
2,498 |
|
||||||
|
Depreciation, depletion and amortization |
3,620 |
|
|
1,064 |
|
|
8,906 |
|
|
2,583 |
|
||||||
|
Total operating expenses |
22,972 |
|
|
15,312 |
|
|
88,723 |
|
|
39,386 |
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating income |
90,360 |
|
|
77,889 |
|
|
401,773 |
|
|
260,834 |
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Other income |
911 |
|
|
390 |
|
|
2,682 |
|
|
916 |
|
||||||
|
Income before income taxes |
91,271 |
|
|
78,279 |
|
|
404,455 |
|
|
261,750 |
|
||||||
|
Income tax expense (benefit): |
|
|
|
|
|
|
|
||||||||||
|
Current |
14,007 |
|
|
15,599 |
|
|
57,492 |
|
|
37,200 |
|
||||||
|
Deferred |
5,942 |
|
|
— |
|
|
26,035 |
|
|
14,814 |
|
||||||
|
Total income tax expense |
19,949 |
|
|
15,599 |
|
|
83,527 |
|
|
52,014 |
|
||||||
|
Net income |
$ |
71,322 |
|
|
$ |
62,680 |
|
|
$ |
320,928 |
|
|
$ |
209,736 |
|
||
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income per Sub-share Certificate - basic and diluted |
$ |
9.20 |
|
|
$ |
8.06 |
|
|
$ |
41.38 |
|
|
$ |
26.93 |
|
||
|
|
|
|
|
|
|
|
|
||||||||||
|
Weighted average number of Sub-share Certificates outstanding |
7,756,156 |
|
|
7,771,950 |
|
|
7,756,437 |
|
|
7,787,407 |
|
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SEGMENT OPERATING RESULTS |
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|
(in thousands) (unaudited) |
||||||||||||||
|
|
|
Three Months Ended
|
||||||||||||
|
|
|
2019 |
|
2018 |
||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
||||||
|
Land and resource management: |
|
|
|
|
|
|
|
|
||||||
|
Oil and gas royalties |
|
$ |
43,616 |
|
|
38 |
% |
|
$ |
35,756 |
|
|
39 |
% |
|
Easements and other surface-related income |
|
13,382 |
|
|
12 |
% |
|
14,012 |
|
|
15 |
% |
||
|
Sale of oil and gas royalty interests |
|
— |
|
|
— |
% |
|
18,875 |
|
|
20 |
% |
||
|
Land sales and other operating revenue |
|
22,107 |
|
|
19 |
% |
|
191 |
|
|
— |
% |
||
|
|
|
79,105 |
|
|
69 |
% |
|
68,834 |
|
|
74 |
% |
||
|
Water services and operations: |
|
|
|
|
|
|
|
|
||||||
|
Water sales and royalties |
|
19,882 |
|
|
18 |
% |
|
16,485 |
|
|
18 |
% |
||
|
Easements and other surface-related income |
|
14,345 |
|
|
13 |
% |
|
7,882 |
|
|
8 |
% |
||
|
|
|
34,227 |
|
|
31 |
% |
|
24,367 |
|
|
26 |
% |
||
|
Total consolidated revenues |
|
$ |
113,332 |
|
|
100 |
% |
|
$ |
93,201 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income: |
|
|
|
|
|
|
|
|
||||||
|
Land and resource management |
|
$ |
56,344 |
|
|
79 |
% |
|
$ |
49,911 |
|
|
80 |
% |
|
Water services and operations |
|
14,978 |
|
|
21 |
% |
|
12,769 |
|
|
20 |
% |
||
|
Total consolidated net income |
|
$ |
71,322 |
|
|
100 |
% |
|
$ |
62,680 |
|
|
100 |
% |
|
|
|
Years Ended
|
||||||||||||
|
|
|
2019 |
|
2018 |
||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
||||||
|
Land and resource management: |
|
|
|
|
|
|
|
|
||||||
|
Oil and gas royalties |
|
$ |
154,729 |
|
|
31 |
% |
|
$ |
123,834 |
|
|
41 |
% |
|
Easements and other surface-related income |
|
73,143 |
|
|
15 |
% |
|
63,908 |
|
|
21 |
% |
||
|
Sale of oil and gas royalty interests |
|
— |
|
|
— |
% |
|
18,875 |
|
|
6 |
% |
||
|
Land sales and other operating revenue |
|
135,456 |
|
|
28 |
% |
|
4,859 |
|
|
2 |
% |
||
|
|
|
363,328 |
|
|
74 |
% |
|
211,476 |
|
|
70 |
% |
||
|
Water services and operations: |
|
|
|
|
|
|
|
|
||||||
|
Water sales and royalties |
|
84,949 |
|
|
17 |
% |
|
63,913 |
|
|
21 |
% |
||
|
Easements and other surface-related income |
|
42,219 |
|
|
9 |
% |
|
24,831 |
|
|
9 |
% |
||
|
|
|
127,168 |
|
|
26 |
% |
|
88,744 |
|
|
30 |
% |
||
|
Total consolidated revenues |
|
$ |
490,496 |
|
|
100 |
% |
|
$ |
300,220 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income: |
|
|
|
|
|
|
|
|
||||||
|
Land and resource management |
|
$ |
260,566 |
|
|
81 |
% |
|
$ |
159,611 |
|
|
76 |
% |
|
Water services and operations |
|
60,362 |
|
|
19 |
% |
|
50,125 |
|
|
24 |
% |
||
|
Total consolidated net income |
|
$ |
320,928 |
|
|
100 |
% |
|
$ |
209,736 |
|
|
100 |
% |
NON-GAAP PERFORMANCE MEASURES AND DEFINITIONS
In addition to amounts presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we also present certain supplemental non-GAAP measurements. These measurements are not to be considered more relevant or accurate than the measurements presented in accordance with GAAP. In compliance with requirements of the Securities and Exchange Commission (“SEC”), our non-GAAP measurements are reconciled to net income, the most directly comparable GAAP performance measure. For all non-GAAP measurements, neither the SEC nor any other regulatory body has passed judgment on these non-GAAP measurements.
EBITDA
EBITDA is a non-GAAP financial measurement of earnings before interest, taxes, depreciation, depletion and amortization. Its purpose is to highlight earnings without finance, taxes, and depreciation, depletion and amortization expense, and its use is limited to specialized analysis. We have presented EBITDA because we believe that it is a useful supplement to net income as an indicator of operating performance.
The following table presents a reconciliation of net income to EBITDA for the three months and years ended December 31, 2019 and 2018 (in thousands):
|
|
|
Three Months Ended
|
|
Years Ended
|
||||||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Net income |
|
$ |
71,322 |
|
|
$ |
62,680 |
|
|
$ |
320,928 |
|
|
$ |
209,736 |
|
|
Add: |
|
|
|
|
|
|
|
|
||||||||
|
Income tax expense |
|
19,949 |
|
|
15,599 |
|
|
83,527 |
|
|
52,014 |
|
||||
|
Depreciation, depletion and amortization |
|
3,620 |
|
|
1,064 |
|
|
8,906 |
|
|
2,583 |
|
||||
|
EBITDA |
|
$ |
94,891 |
|
|
$ |
79,343 |
|
|
$ |
413,361 |
|
|
$ |
264,333 |
|
|
|
|
|
|
|
|
|
|
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20200130005545/en/
Robert Packer
(214) 969-5530
Robert@tpltrust.com
Source: Texas Pacific Land Trust
Released January 30, 2020