Texas Pacific Land Corp

Previous wording

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest landowners in the State of Texas with approximately 881,000 surface acres of land, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 33,000 additional net royalty acres (normalized to 1/8th) (“NRA”), for a collective total of approximately 224,000 NRA, principally concentrated in the Permian Basin.

Current wording

Texas Pacific Land Corporation (which, together with its subsidiaries as the context requires, may be referred to as “TPL”, the “Company”, “our”, “we” or “us”) is a Delaware corporation and one of the largest land and royalty owners in the State of Texas with approximately 894,000 surface acres of land, principally concentrated in the Permian Basin. Additionally, we own a 1/128th nonparticipating perpetual oil and gas royalty interest (“NPRI”) under approximately 85,000 acres of land, a 1/16th NPRI under approximately 371,000 acres of land, and approximately 33,000 additional net royalty acres (normalized to 1/8th) (“NRA”), for a collective total of approximately 224,000 NRA, principally concentrated in the Permian Basin.

Previous wording

Average West Texas Intermediate (“WTI”) oil prices for the three months ended March 31, 2026 increased slightly compared to average WTI oil prices during the same period last year. Oil prices are impacted by certain actions by OPEC+, geopolitics, and evolving global supply and demand trends, among other factors. In February 2026, an escalating military conflict in Iran led to attacks on energy infrastructure in the broader Middle East and caused major disruptions to the Strait of Hormuz, a critical shipping channel where a significant portion of global oil and liquefied natural gas supply transits through daily. As a result, global oil prices increased to over $90 per barrel during parts of March and April 2026. The impact to oil prices for the balance of 2026 and beyond are uncertain and, in part, dependent on the duration of the conflict in Iran, the extent of damage to energy infrastructure and the ramifications of a prolonged closure of the Strait of Hormuz. Average Henry Hub natural gas prices during 2026 increased approximately 14% compared to average prior year period natural gas prices. Global and domestic natural gas markets benefited in 2026 from improved supply-demand balances, including tailwinds from expanded liquefied natural gas capacity and improved industrial and power demand, among other factors. Since mid-2022, the Waha Hub located in Pecos County, Texas has at times experienced significant negative price differentials relative to Henry Hub, located in Erath, Louisiana, due in part to growing local Permian Basin natural gas production and limited natural gas pipeline takeaway capacity. Midstream infrastructure is currently being developed by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Changes in global and domestic macro-economic conditions could result in additional shifts in oil and gas supply and demand in future periods. Although our revenues are directly and indirectly impacted by oil and natural gas prices, we believe our royalty interests (which require no capital expenditures or operating expense burden from us for well development), strong balance sheet, and liquidity position will help us navigate through potential commodity price volatility.

Current wording

Average West Texas Intermediate (“WTI”) oil prices for the six months ended June 30, 2026 increased by approximately 24% compared to average WTI oil prices during the same period last year. Oil prices are impacted by certain actions by OPEC+, geopolitics, and evolving global supply and demand trends, among other factors. In February 2026, an escalating military conflict in Iran led to attacks on energy infrastructure in the broader Middle East and caused major disruptions to the Strait of Hormuz, a critical shipping channel where a significant portion of global oil and liquefied natural gas supply transits through daily. As a result, global oil prices this year increased to over $90 per barrel from March through early-June with continued volatility in July. The impact to oil prices for the balance of 2026 and beyond are uncertain and, in part, dependent on the duration of the conflict in Iran, the extent of damage to regional energy infrastructure, and the ramifications of a prolonged closure of the Strait of Hormuz. Average Henry Hub natural gas prices during 2026 increased approximately 4% compared to average prior year period natural gas prices. Global and domestic natural gas markets benefited in 2026 from improved supply-demand balances, including tailwinds from expanded liquefied natural gas capacity and improved industrial and power demand, among other factors. Since mid-2022, the Waha Hub located in Pecos County, Texas has at times experienced significant negative price differentials relative to Henry Hub, located in Erath, Louisiana, due in part to growing local Permian Basin natural gas production and limited natural gas pipeline takeaway capacity. Midstream infrastructure is currently being developed by operators to provide additional takeaway capacity, though the impact on future basis differentials will be dependent on future natural gas production and other factors. Changes in global and domestic macro-economic conditions could result in additional shifts in oil and gas supply and demand in future periods. Although our revenues are directly and indirectly impacted by oil and natural gas prices, we believe our royalty interests (which require no capital expenditures or operating expense burden from us for well development), strong balance sheet, and liquidity position will help us navigate through potential commodity price volatility.

Previous wording

Permian Basin produced water volumes have grown commensurately with overall Permian Basin oil production. Though some produced water is reused and recycled for completion activities, the majority of Permian Basin produced water is injected into subsurface pore space via saltwater disposal wells. Saltwater disposal availability varies throughout the Permian Basin depending on regulations, permitted injected rates, and the availability of pore space and infrastructure. Our extensive land holdings contain and are adjacent to extensive pore space, and, through various commercial agreements, we allow produced water operators to transport and dispose of produced water across our surface footprint. Furthermore, as discussed below, our desalination project could potentially provide an additional solution for produced water by reducing the amount of water required to be injected subsurface.

Current wording

Permian Basin produced water volumes have grown commensurately with overall Permian Basin oil production. Though some produced water is reused and recycled for completion activities, the majority of Permian Basin produced water is injected into subsurface pore space via saltwater disposal wells. Saltwater disposal availability varies throughout the Permian Basin depending on regulations, permitted injected rates, and the availability of pore space and infrastructure. Our extensive land holdings contain and are adjacent to extensive pore space, and, through various commercial agreements, we allow produced water operators to transport and dispose of produced water across our surface footprint. We do not operate any saltwater disposal wells. Furthermore, as discussed below, our desalination project could potentially provide an additional solution for produced water by reducing the amount of water required to be injected subsurface.

Previous wording

The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas production in the United States, covering approximately 86,000 square miles across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies operating in the Permian Basin continue to maintain robust drilling and development activity. Per the U.S. Energy Information Administration, Permian Basin production is currently in excess of 6.5 million barrels per day.

Current wording

The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas and currently accounts for a substantial portion of oil and gas production in the United States, covering approximately 86,000 square miles across southeastern New Mexico and western Texas. Exploration and production (“E&P”) companies operating in the Permian Basin continue to maintain robust drilling and development activity. Per the U.S. Energy Information Administration, Permian Basin production is currently in excess of 6.8 million barrels per day.

Previous wording

Due to our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin. The metrics below show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the three months ended March 31, 2026 and 2025:

Current wording

Due to our ownership concentration in the Permian Basin, our revenues are directly impacted by oil and gas pricing and drilling activity in the Permian Basin. The metrics below show selected domestic benchmark oil and natural gas prices and approximate activity levels in the Permian Basin for the three and six months ended June 30, 2026 and 2025:

Previous wording

Average WTI Cushing oil and Henry Hub natural gas prices for the three months ended March 31, 2026 increased compared to the same period in 2025. E&P companies broadly have continued to deploy capital towards drilling and development activities in the Permian Basin at a measured pace. Although average rig counts during the three months ended March 31, 2026 were lower compared to the same period in 2025, increased drilling and completion efficiencies have allowed operators, in aggregate, to grow Permian Basin production. As we are a significant landowner in the Permian Basin and not an oil and gas producer, our revenue is affected by the development decisions made by companies that operate in the areas where we own royalty interests and land. Accordingly, these decisions made by others affect, both directly and indirectly, our oil and gas royalties, produced water royalties, water sales, and other surface-related income.

Current wording

Average WTI Cushing oil and Henry Hub natural gas prices for the six months ended June 30, 2026 increased compared to the same period in 2025. E&P companies broadly have continued to deploy capital towards drilling and development activities in the Permian Basin at a measured pace. Although average rig counts during the six months ended June 30, 2026 were lower compared to the same period in 2025, increased drilling and completion efficiencies have allowed operators, in aggregate, to grow Permian Basin production. As we are a significant land and royalty owner in the Permian Basin and not an oil and gas producer, our revenue is affected by the development decisions made by companies that operate in the areas where we own royalty interests and land. Accordingly, these decisions made by others affect, both directly and indirectly, our oil and gas royalties, produced water royalties, water sales, and other surface-related income.

Previous wording

As we evaluate our current capital structure, capital allocation priorities, business fundamentals, and investment opportunities, we have set a target cash and cash equivalents balance of approximately $700 million. Above this target, we will seek to deploy the majority of our free cash flow towards returning capital to our stockholders in the form of special dividends and/or share repurchases. As of March 31, 2026, we had cash and cash equivalents of $247.6 million that we expect to utilize, along with cash flow from operations, to provide capital to support our business, to pay regular dividends, subject to the discretion of our board of directors (the “Board”), to, subject to market conditions, repurchase shares of our Common Stock, for potential acquisitions and for general corporate purposes. We believe that our cash from operations and our cash and cash equivalents balance, together with our revolving Credit Facility will be sufficient to meet ongoing capital expenditures, working capital requirements, and other cash needs and allow for opportunistic transactions for at least the next 12 months.

Current wording

As we evaluate our current capital structure, capital allocation priorities, business fundamentals, and investment opportunities, we have set a target cash and cash equivalents balance of approximately $700 million. Above this target, we will seek to deploy the majority of our free cash flow towards returning capital to our stockholders in the form of special dividends and/or share repurchases. As of June 30, 2026, we had cash and cash equivalents of $248.6 million that we expect to utilize, along with cash flow from operations, to provide capital to support our business, to pay regular dividends, subject to the discretion of our board of directors (the “Board”), to, subject to market conditions, repurchase shares of our Common Stock, for potential acquisitions and for general corporate purposes. We believe that our cash from operations and our cash and cash equivalents balance, together with our revolving Credit Facility will be sufficient to meet ongoing capital expenditures, working capital requirements, and other cash needs and allow for opportunistic transactions for at least the next 12 months.

Previous wording

During the three months ended March 31, 2026, we entered into an arrangement with a developer of a power generation plant to support data center operations. In conjunction with this arrangement, we sold land for aggregate consideration of $42.5 million. The consideration consisted of a nominal cash payment received at closing and annual payments due to us through 2046.

Current wording

During the six months ended June 30, 2026, we entered into an agreement with Chevron U.S.A. Inc., a subsidiary of Chevron Corporation (NYSE: CVX) (“Chevron”), to provide land and brackish water resources for Chevron’s recently announced development known as Project Kilby, involving a large-scale power generation facility Chevron is developing to support a customer data center in Reeves County, Texas. As part of the agreement, we sold land for aggregate consideration of $42.5 million and acquired the exclusive right to source aquifer-derived water for the power generation facility and other associated aspects of the project. The consideration consisted of a nominal cash payment received at closing and annual payments due to us through 2046.

Previous wording

We recognized land sale revenue of $20.9 million at closing and recorded a financing receivable for the deferred consideration. The financing receivable was recorded at its present value of $20.9 million, which represents the contractual payments of $42.4 million discounted at an effective interest rate of 7.5%.

Current wording

We recognized land sales revenue of $20.9 million at closing and recorded a financing receivable for the deferred consideration. The financing receivable was recorded at its present value of $20.9 million, which represents the contractual payments of $42.4 million discounted at an effective interest rate of 7.5%.

Previous wording

In 2024, we announced our progress towards developing a patented, energy-efficient, desalination and treatment process and associated equipment that can recycle produced water into fresh water with quality standards appropriate for surface discharge and beneficial reuse. With the Permian Basin generating over 20 million barrels of produced water per day, this technology provides an attractive and critical alternative to subsurface injection. Construction of our facility, which will have an initial capacity of 10,000 barrels of water per day, is underway with an estimated service date during the second quarter of 2026. Cumulatively through March 31, 2026, we have spent $48.3 million ($2.8 million during the three months ended March 31, 2026) on this new energy-efficient desalination and treatment process and equipment, of which $41.3 million has been capitalized as of March 31, 2026.

Current wording

In 2024, we announced our progress towards developing a patented, energy-efficient, desalination and treatment process and associated equipment that can recycle produced water into fresh water with quality standards appropriate for surface discharge and beneficial reuse. With the Permian Basin generating over 20 million barrels of produced water per day, this technology provides an attractive and critical alternative to subsurface injection. Construction of our facility, which will have an initial capacity of 10,000 barrels of water per day, is complete and commissioning has commenced. Cumulatively through June 30, 2026, we have spent $55.8 million ($10.2 million during the six months ended June 30, 2026) on this new energy-efficient desalination and treatment process and equipment, of which $48.1 million has been capitalized as of June 30, 2026.

Previous wording

Additionally, during the three months ended March 31, 2026, we invested approximately $4.2 million to enhance our water sourcing assets.

Current wording

Additionally, during the six months ended June 30, 2026, we invested approximately $18.2 million to enhance our water sourcing assets.

Previous wording

During the three months ended March 31, 2026, we paid $41.8 million in dividends to our stockholders. There were no repurchases of shares of our Common Stock during the three months ended March 31, 2026.

Current wording

During the six months ended June 30, 2026, we paid $83.2 million in dividends to our stockholders. There were no repurchases of shares of our Common Stock during the six months ended June 30, 2026.

Previous wording

Our cash flows provided by operating activities are primarily from oil, gas, produced water royalties, water and land sales, easements, and other surface-related income. Cash flows used in operations generally consist of operating expenses associated with our revenue streams, general and administrative expenses, and income taxes.

Current wording

Our cash flows provided by operating activities are primarily from oil, gas, produced water royalties, water and land sales, easements, and other surface-related income. Cash flows used in operations generally consist of operating expenses associated with our revenue streams, general and administrative expenses, and income taxes. Cash flows from operating activities are subject to fluctuations resulting from overall activity levels in the Permian Basin including development decisions made by our customers and commodity prices.

Previous wording

For the three months ended March 31, 2026 and 2025, cash provided by operating activities was $162.0 million and $156.7 million, respectively. The increase in cash flows provided by operating activities for the three months ended March 31, 2026 compared to the same period of 2025 was primarily driven by an increase in operating income and changes in working capital requirements during 2026 as compared to 2025.

Current wording

For the six months ended June 30, 2026 and 2025, cash provided by operating activities was $334.9 million and $277.6 million, respectively. The increase in cash flows provided by operating activities for the six months ended June 30, 2026 compared to the same period of 2025 was primarily driven by an increase in operating income and changes in working capital requirements during 2026 as compared to 2025.

Previous wording

For the three months ended March 31, 2026 and 2025, cash used in investing activities was $8.4 million and $12.5 million, respectively. For the three months ended March 31, 2026 and 2025, cash used for acquisitions totaled $1.0 million (including a deposit for an acquisition) and $3.6 million, respectively. Purchases of fixed assets for the three months ended March 31, 2026 and 2025 were $7.3 million and $9.0 million, respectively.

Current wording

For the six months ended June 30, 2026 and 2025, cash used in investing activities was $139.4 million and $16.5 million, respectively. For the six months ended June 30, 2026 and 2025, cash used for acquisitions totaled $110.2 million and $8.1 million, respectively. Purchases of fixed assets for the six months ended June 30, 2026 and 2025 were $29.2 million and $12.3 million, respectively.

Previous wording

For the three months ended March 31, 2026 and 2025, cash used in financing activities was $50.9 million and $51.8 million, respectively. During the three months ended March 31, 2026 and 2025, we paid total dividends of $41.8 million and $37.4 million, respectively. During the three months ended March 31, 2026 and 2025, employees surrendered $9.1 million and $14.3 million in shares, respectively, to the Company to settle tax withholdings related to stock vesting.

Current wording

For the six months ended June 30, 2026 and 2025, cash used in financing activities was $92.3 million and $88.6 million, respectively. During the six months ended June 30, 2026 and 2025, we paid total dividends of $83.2 million and $74.2 million, respectively. During the six months ended June 30, 2026 and 2025, employees surrendered $9.1 million and $14.3 million in shares, respectively, to the Company to settle tax withholdings related to stock vesting.

Previous wording

The following table shows our consolidated results of operations and our results of operations by reportable segment for Land and Resource Management (“LRM”) and Water Service and Operations (“WSO”) for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following tables show our consolidated results of operations and our results of operations by reportable segment for Land and Resource Management (“LRM”) and Water Services and Operations (“WSO”) for the three and six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

Total revenues were $236.8 million for the three months ended March 31, 2026 compared to $196.0 million for the three months ended March 31, 2025. Total operating expenses were $54.5 million for the three months ended March 31, 2026 compared to $45.9 million for the three months ended March 31, 2025. Net income was $142.9 million for the three months ended March 31, 2026 compared to $120.7 million for the three months ended March 31, 2025. Individual revenue and expense line items are discussed below under “Segment Results of Operations.”

Current wording

Total revenues were $246.1 million for the three months ended June 30, 2026 compared to $187.5 million for the three months ended June 30, 2025. Total operating expenses were $54.2 million for the three months ended June 30, 2026 compared to $43.8 million for the three months ended June 30, 2025. Net income was $153.9 million for the three months ended June 30, 2026 compared to $116.1 million for the three months ended June 30, 2025. Individual revenue and expense line items are discussed below under “Segment Results of Operations.”

Previous wording

Oil and gas royalties. Oil and gas royalty revenue was $118.2 million for the three months ended March 31, 2026 compared to $111.2 million for the three months ended March 31, 2025, an increase of 6.2%. Our share of production increased to 37.1 thousand barrels of oil equivalent (“Boe”) per day for the three months ended March 31, 2026 compared to 31.1 thousand Boe per day for the same period of 2025. The average realized price decreased 10.9% to $37.06 per Boe for the three months ended March 31, 2026 from $41.58 per Boe for the three months ended March 31, 2025.

Current wording

Oil and gas royalties. Oil and gas royalty revenue was $145.6 million for the three months ended June 30, 2026 compared to $95.0 million for the three months ended June 30, 2025, an increase of 53.2%. The average realized price increased 28.0% to $42.17 per barrel of oil equivalent (“Boe”) for the three months ended June 30, 2026 from $32.94 per Boe for the three months ended June 30, 2025. Our share of production increased to 39.7 thousand Boe per day for the three months ended June 30, 2026 compared to 33.2 thousand Boe per day for the same period of 2025.

Previous wording

General and administrative expenses. General and administrative expenses were $5.5 million for the three months ended March 31, 2026 compared to $3.3 million for the comparable period of 2025. The increase in general and administrative expenses was primarily due to an increase in legal and professional fees of $0.9 million and an increase in rent and office-related expenses of $0.6 million compared to the same period of 2025.

Current wording

General and administrative expenses. General and administrative expenses were $5.2 million for the three months ended June 30, 2026 compared to $3.6 million for the comparable period of 2025. The increase in general and administrative expenses was primarily due to an increase in rent and office-related expenses of $0.6 million compared to the same period of 2025.

Previous wording

Depreciation, depletion and amortization. Depreciation, depletion and amortization was $9.2 million for the three months ended March 31, 2026 compared to $7.7 million for the comparable period of 2025. The increase in depreciation, depletion and amortization was principally due to depletion expense associated with royalty interests acquired during the second half of 2025.

Current wording

Depreciation, depletion and amortization. Depreciation, depletion and amortization was $11.7 million for the three months ended June 30, 2026 compared to $9.1 million for the comparable period of 2025. The increase in depreciation, depletion and amortization was principally due to depletion expense associated with royalty interests acquired during the second half of 2025.

Previous wording

Other income, net. Other income, net was $1.6 million for the three months ended March 31, 2026 compared to $3.4 million for the same period of 2025. Lower cash balances and investment yields during the three months ended March 31, 2026 compared to the same period of 2025 resulted in a decrease in interest income.

Current wording

Other income, net. Other income, net was $2.1 million for the three months ended June 30, 2026 compared to $4.2 million for the same period of 2025. Lower cash balances and investment yields during the three months ended June 30, 2026 compared to the same period of 2025 resulted in a decrease in interest income.

Previous wording

Water sales. Water sales revenue increased $8.1 million to $46.9 million for the three months ended March 31, 2026, compared to $38.8 million for the same period of 2025. The increase in water sales was principally due to increases of 16.7% in pricing and 3.5% in volumes for the three months ended March 31, 2026, compared to the same period of 2025. Water sales volumes are dependent upon customer demand in the areas in which we provide water to customers and may fluctuate from period to period.

Current wording

Water sales. Water sales revenue increased $14.2 million to $39.7 million for the three months ended June 30, 2026, compared to $25.6 million for the same period of 2025. The increase in water sales was principally due to an increase of 37.5% in water sales volumes and 13.0% in average realized pricing for the three months ended June 30, 2026, compared to the same period of 2025. Water sales volumes are dependent upon customer demand in the areas in which we provide water to customers and may fluctuate from period to period.

Previous wording

Produced water royalties. Produced water royalties are received from the transfer or disposal of produced water on our land and are contractual and not paid as a matter of right. Produced water royalties are also fee based and not directly impacted by lower commodity prices. However, indirectly, volumes may vary from period to period depending upon development activity levels and operator decisions involving recycling versus disposal of produced water. We do not operate any saltwater disposal wells. Produced water royalties increased to $33.5 million for the three months ended March 31, 2026 compared to $27.7 million for the same period in 2025. This increase was principally due to a 23.5% increase in produced water volumes for the three months ended March 31, 2026 compared to the same period of 2025.

Current wording

Produced water royalties. Produced water royalties are received from the transfer or disposal of produced water on our land and are contractual and not paid as a matter of right. Produced water royalties are also fee based and not directly impacted by lower commodity prices. However, indirectly, volumes may vary from period to period depending upon development activity levels and operator decisions involving recycling versus disposal of produced water. We do not operate any saltwater disposal wells. Produced water royalties increased to $37.1 million for the three months ended June 30, 2026 compared to $30.7 million for the same period in 2025. This increase was principally due to a 14.7% increase in produced water volumes for the three months ended June 30, 2026 compared to the same period of 2025.

Previous wording

Water service-related expenses. Water service-related expenses increased $3.2 million to $14.3 million for the three months ended March 31, 2026 compared to the same period of 2025. Certain types of water-related expenses, including, but not limited to, treatment, transfer, water purchases, repairs and maintenance, equipment rental, and fuel costs, vary from period to period as our customers’ needs and requirements change. Right of way and other expenses also vary from period to period depending upon location of customer delivery. The increase in water service-related expenses for the three months ended March 31, 2026 compared to the same period of 2025 was principally related to a 3.5% increase in water sales volumes.

Current wording

Water service-related expenses. Water service-related expenses increased $3.1 million to $11.6 million for the three months ended June 30, 2026 compared to the same period of 2025. Certain types of water-related expenses, including, but not limited to, treatment, transfer, water purchases, repairs and maintenance, equipment rental, and fuel costs, vary from period to period as our customers’ needs and requirements change. Right of way and other expenses also vary from period to period depending upon location of customer delivery. The increase in water service-related expenses for the three months ended June 30, 2026 compared to the same period of 2025 was principally related to a 37.5% increase in water sales volumes.

Previous wording

Easements and other surface-related income. Easements and other surface-related income was $14.4 million for the three months ended March 31, 2026, compared to $15.3 million for the three months ended March 31, 2025. Easements and other surface-related income includes revenue related to the use and crossing of our land for oil and gas E&P, renewable energy, and agricultural operations. The decrease in easements and other surface-related income was principally related to decreases of $1.1 million in material sales and $0.9 million in damages revenue, partially offset by an increase in lease bonuses associated with acquired royalty interests for the three months ended March 31, 2026 compared to the same period of 2025. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” and “Permian Basin Activity” above for additional discussion of development activity in the Permian Basin during the three months ended March 31, 2026.

Current wording

Easements and other surface-related income. Easements and other surface-related income was $32.7 million for the six months ended June 30, 2026, a decrease of $16.1 million compared to $48.8 million for the six months ended June 30, 2025. Easements and other surface-related income includes revenue related to the use and crossing of our land for oil and gas E&P, renewable energy, and agricultural operations. The decrease in easements and other surface-related income was principally related to decreases of $14.7 million in pipeline easements and $2.0 million in material sales, partially offset by a $3.2 million increase in lease bonuses associated with acquired royalty interests, for the six months ended June 30, 2026 compared to the same period of 2025. The amount of income derived from pipeline easements is a function of the term of the easement, the size of the easement, and the number of easements entered into for any given period. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and is, therefore, unpredictable and may vary significantly from period to period. See “Market Conditions” and “Permian Basin Activity” above for additional discussion of development activity in the Permian Basin during the six months ended June 30, 2026.

Previous wording

Land Sale. Land sale revenue was $20.9 million during the three months ended March 31, 2026 relating to the sale of land as discussed in Note 4, “Real Estate Activity” in the notes to the condensed consolidated financial statements in this Quarterly Report. There was no land sale revenue for the comparable period of 2025.

Current wording

Land sales. Land sales revenue was $20.9 million during the six months ended June 30, 2026 relating to the sale of land as discussed in Note 4, “Real Estate Activity” in the notes to the condensed consolidated financial statements in this Quarterly Report. There was no land sales revenue for the comparable period of 2025.

Previous wording

Income tax expense. Income tax expense was $28.6 million for the three months ended March 31, 2026 compared to $23.9 million for the comparable period of 2025. The increase in income tax expense is directly attributable to the increase in operating income for the three months ended March 31, 2026 compared to the same period of 2025.

Current wording

Income tax expense. Income tax expense was $56.9 million for the six months ended June 30, 2026 compared to $48.3 million for the comparable period of 2025. The increase in income tax expense is directly attributable to the increase in operating income for the six months ended June 30, 2026 compared to the same period of 2025, and, to a lesser extent, was partially offset by a lower effective tax rate due to the tax benefit from transferable federal income tax credits purchased during the current period. See “Liquidity and Capital Resources” above for additional discussion.

Previous wording

Board to evaluate our performance in determining the short-term and long-term incentive compensation of our executive officers. To calculate free cash flow, net income is adjusted by adding back income tax expense, depreciation, depletion and amortization and employee share-based compensation, less the cash outflows of current income tax expenses, land sale with financing arrangement, purchases of fixed assets, and pension curtailment and settlement gain, as applicable to the periods presented.

Current wording

The purpose of presenting free cash flow is to provide investors a metric to measure the funds available for investing in future acquisitions and returning capital to our stockholders through dividends and share repurchases after current income tax expense and purchases of fixed assets. Additionally, free cash flow is a metric used by the compensation committee of our Board to evaluate our performance in determining the short-term and long-term incentive compensation of our executive officers. To calculate free cash flow, net income is adjusted by adding back income tax expense, depreciation, depletion and amortization and employee share-based compensation, less current income tax expenses, land sale with financing arrangement, purchases of fixed assets, and pension curtailment and settlement gain, as applicable to the periods presented.

Previous wording

The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

The following table presents a reconciliation of net income to free cash flow for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following table presents a reconciliation of net income to free cash flow for the three and six months ended June 30, 2026 and 2025 (in thousands):