Texas Pacific Land Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Business Segment Reporting

Business Segment Reporting

12 Months Ended

Dec. 31, 2019

During the periods presented, we reported our financial performance based on the following 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 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 commercial leases and land and material sales.

The Water Services and Operations segment encompasses the business of providing full-service water offerings to operators in the Permian Basin. The revenue streams of this segment consist of revenue generated from sales of sourced and treated water as well as revenue from royalties on water service-related activity.

Segment financial results were as follows (in thousands):


	Years Ended December 31,
	2019		2018		2017
Revenues:
Land and resource management	$	363,328	$	211,476	$	123,340
Water services and operations	127,168		88,744		31,294
Total consolidated revenues	$	490,496	$	300,220	$	154,634

Net income:
Land and resource management	$	258,366	$	159,611	$	78,468
Water services and operations	60,362		50,125		18,763
Total consolidated net income	$	318,728	$	209,736	$	97,231

Capital Expenditures:
Land and resource management	$	1,603	$	2,790	$	920
Water services and operations	30,606		45,088		17,827
Total capital expenditures	$	32,209	$	47,878	$	18,747

Depreciation, depletion and amortization:
Land and resource management	$	1,201	$	506	$	136
Water services and operations	7,705		2,077		240
Total depreciation, depletion and amortization	$	8,906	$	2,583	$	376

The following table presents total assets and property, plant and equipment, net by segment (in thousands):


	December 31, 2019		December 31, 2018
Assets:
Land and resource management	$	467,758	$	198,922
Water services and operations	130,418		86,153
Total consolidated assets	$	598,176	$	285,075

Property, plant and equipment, net:
Land and resource management	$	4,359	$	3,720
Water services and operations	83,964		61,082
Total consolidated property, plant and equipment, net	$	88,323	$	64,802