Texas Pacific Land Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Business Segment Reporting

Business Segment Reporting

3 Months Ended

Mar. 31, 2018

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 890,000 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, land sales, and revenues from easements and leases.

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 revenues from royalties on water service-related activity as well as revenue generated from direct sales of water.

Segment financial results were as follows for the three months ended March 31, 2018 and 2017 (in thousands):



	Three Months Ended March 31,
	2018		2017
Revenues:
Land and resource management	$	42,753	$	25,579
Water service and operations	17,254		4,828
Total consolidated revenues	$	60,007	$	30,407

Net income:
Land and resource management	$	32,811	$	14,445
Water service and operations	10,980		4,814
Total consolidated net income	$	43,791	$	19,259

Capital expenditures
Land and resource management	$	1,252	$	174
Water service and operations	10,589		1,738
Total capital expenditures	$	11,841	$	1,912

Depreciation and amortization:
Land and resource management	$	70	$	5
Water service and operations	260		14
Total depreciation and amortization	$	330	$	19

The following table presents total assets and property, plant and equipment, net by segment as of March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018		December 31, 2017
Assets:
Land and resource management	$	92,676	$	97,549
Water service and operations	42,240		22,486
Total consolidated assets	$	134,916	$	120,035

Property, plant and equipment, net
Land and resource management	$	2,633	$	1,449
Water service and operations	28,396		18,067
Total consolidated property, plant and equipment, net	$	31,029	$	19,516