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

6 Months Ended

Jun. 30, 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 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 sourced and treated water as well as revenues from royalties on water service-related activity.

Segment financial results were as follows for the three and six months ended June 30, 2019 and 2018 (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenues:
Land and resource management	$	58,688	$	52,376	$	219,147	$	95,129
Water services and operations	28,622		21,468		59,487		38,722
Total consolidated revenues	$	87,310	$	73,844	$	278,634	$	133,851

Net income:
Land and resource management	$	37,194	$	40,505	$	160,311	$	73,315
Water services and operations	12,392		11,998		29,273		22,979
Total consolidated net income	$	49,586	$	52,503	$	189,584	$	96,294

Capital expenditures:
Land and resource management	$	881	$	303	$	1,415	$	1,555
Water services and operations	12,472		19,420		21,185		30,009
Total capital expenditures	$	13,353	$	19,723	$	22,600	$	31,564

Depreciation and amortization:
Land and resource management	$	261	$	100	$	438	$	170
Water services and operations	1,190		383		2,217		643
Total depreciation and amortization	$	1,451	$	483	$	2,655	$	813

The following table presents total assets and property, plant and equipment, net by segment as of June 30, 2019 and December 31, 2018 (in thousands):



	June 30, 2019		December 31, 2018
Assets:
Land and resource management	$	337,941	$	198,922
Water services and operations	125,671		86,153
Total consolidated assets	$	463,612	$	285,075

Property, plant and equipment, net:
Land and resource management	$	4,739	$	3,720
Water services and operations	80,053		61,082
Total consolidated property, plant and equipment, net	$	84,792	$	64,802