Oil and Gas Royalty Interests |
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| Oil and Gas Royalty Interests | Oil and Gas Royalty Interests As of December 31, 2024 and 2023, we owned the following oil and gas royalty interests (in thousands):
(1) Nonparticipating perpetual royalty interests in 370,737 gross royalty acres as of December 31, 2024 and 2023.
(2) Nonparticipating perpetual royalty interests in 84,934 gross royalty acres as of December 31, 2024 and 2023.
(3) Royalty interest in 15,897 and 4,302 net royalty acres as of December 31, 2024 and 2023, respectively.
Royalty Interests Assigned Through the Declaration of Trust
The fair market value of the Trust’s Assigned royalty interests was not determined in 1888 when the Trust was formed, and accordingly, the Assigned royalty interests were recorded with no value. See Note 2, “Summary of Significant Accounting Policies — Real Estate and Royalty Interests Assigned Through the Declaration of Trust” for further information regarding the Assigned royalty interests. The Assigned royalty interests include 1/16th and 1/128th royalty interests.
Royalty Interest Transactions
For the year ended December 31, 2024, we completed two separate acquisitions of oil and gas royalty interests, acquiring a total of 11,596 NRA for an aggregate purchase price of approximately $395.5 million, net of post-closing adjustments, as further described below.
•In August 2024, we acquired oil and gas royalty interests in 4,106 NRA in Culberson County, Texas for a purchase price of approximately $120.3 million, net of post-closing adjustments, in an all-cash transaction. The acquisition was accounted for as an asset acquisition, and the allocation of the purchase price was $63.5 million to proved properties and $56.8 million to unproved properties. The acquisition was completed in conjunction with another entity that assigned a share of its interest in a purchase and sales agreement with an unaffiliated seller to the Company. Each party paid a pro-rata share of the purchase price and closing costs to the unaffiliated seller.
•In October 2024, we acquired oil and gas royalty interests in 7,490 NRA located primarily in the Midland Basin in Martin, Midland and other counties in Texas and New Mexico, with over 80% of the acquired interests adjacent to or overlapping existing TPL surface and royalty acreage for a purchase price of approximately $275.2 million, net of post-closing adjustments, in an all-cash transaction. The acquisition was accounted for as an asset acquisition, and the allocation of the purchase price was $57.4 million to proved properties and $217.8 million to unproved properties.
For the year ended December 31, 2023, we acquired oil and gas royalty interests in 119 net royalty acres (normalized to 1/8th) for an aggregate purchase price of approximately $3.6 million.
Depletion expense was $9.8 million, $2.0 million and $1.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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