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 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.

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 896,000 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 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.

Current wording

Average West Texas Intermediate (“WTI”) oil prices for the nine months ended September 30, 2026 increased by approximately 27% 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 portions of 2026. The impact to oil prices for the balance of 2026 and beyond is uncertain and, in part, dependent on the duration of the conflict in Iran and the extent of damage to regional energy infrastructure. Average Henry Hub natural gas prices during 2026 have been roughly flat 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

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:

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 nine months ended September 30, 2026 and 2025:

Previous 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.

Current wording

Average WTI Cushing oil prices increased for the nine months ended September 30, 2026 compared to the same period in 2025, and average Henry Hub natural gas prices were roughly flat for the nine months ended September 30, 2026 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 nine months ended September 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

Our principal sources of liquidity are cash and cash flows generated from our operations and our $500 million revolving credit agreement (the “Credit Facility”). See further discussion of our Credit Facility in Note 7, “Credit Facility” in the notes to the condensed consolidated financial statements in this Quarterly Report. Our primary liquidity and capital requirements are for acquisitions, purchases of fixed assets related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital, and general business needs.

Current wording

Our principal sources of liquidity are cash and cash flows generated from our operations and our $500.0 million revolving credit agreement (the “Credit Facility”). See further discussion of our Credit Facility in Note 7, “Credit Facility” in the notes to the condensed consolidated financial statements in this Quarterly Report. Our primary liquidity and capital requirements are for acquisitions, purchases of fixed assets related to our Water Services and Operations segment (the extent and timing of which are under our control), working capital, and general business needs.

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 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.

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 $700.0 million. To the extent our cash and cash equivalents balance exceeds this target, we expect to 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 September 30, 2026, we had cash and cash equivalents of $369.6 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 to allow for opportunistic transactions for at least the next 12 months.

Previous wording

During the six months ended June 30, 2026, we acquired land for an aggregate purchase price of $110.2 million. The acquisitions included land in Shackelford and Jones Counties, Texas, in connection with our data center and power generation initiatives. Additionally, we acquired land in Winkler County, Texas.

Current wording

During the nine months ended September 30, 2026, we acquired land for an aggregate purchase price of $122.7 million. The acquisitions included land in Shackelford and Jones Counties, Texas, in connection with our data center and power generation initiative, as well as acquisitions in Winkler and Reeves Counties, Texas. In October 2026, we acquired additional land and oil and gas royalty interests in Midland and Glasscock Counties, Texas, for an aggregate purchase price of $145.0 million, excluding acquisition costs.

Previous 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.

Current wording

During the nine months ended September 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

During the six months ended June 30, 2026, we entered into an agreement to purchase up to $60.0 million of transferable federal tax credits from an eligible taxpayer for $55.8 million, resulting in an estimated tax benefit of $4.2 million. The purchased credits reduced federal income tax payments otherwise payable to the Internal Revenue Service and were reflected as a tax benefit in our effective tax rate during the period. The related cash payments to the seller are expected to occur during the remainder of 2026 as the underlying credits are generated and transferred.

Current wording

During the nine months ended September 30, 2026, we entered into an agreement to purchase up to $60.0 million of transferable federal tax credits from an eligible taxpayer for $55.8 million, resulting in an estimated tax benefit of $4.2 million. The purchased credits reduced federal income tax payments otherwise payable to the Internal Revenue Service and were reflected as a tax benefit in our effective tax rate during the period. As of September 30, 2026, we have paid $25.5 million for $27.5 million of transferable federal tax credits, with the remaining cash payments under the agreement expected to be made during the remainder of 2026 as the underlying credits are generated and transferred to us.

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 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.

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, we believe this technology provides an attractive and critical alternative to subsurface injection. Construction of our facility, which is designed to have an initial capacity of 10,000 barrels of water per day, is complete and commissioning has commenced. Cumulatively through September 30, 2026, we have spent $65.4 million ($19.9 million during the nine months ended September 30, 2026) on this new energy-efficient desalination and treatment process and equipment, of which $55.3 million has been capitalized as of September 30, 2026.

Previous wording

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

Current wording

Additionally, during the nine months ended September 30, 2026, we invested approximately $24.8 million to enhance our water sourcing assets.

Previous 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.

Current wording

During the nine months ended September 30, 2026, we paid $124.6 million in dividends to our stockholders. There were no repurchases of shares of our Common Stock during the nine months ended September 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. 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.

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, including 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 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.

Current wording

For the nine months ended September 30, 2026 and 2025, cash provided by operating activities was $527.3 million and $432.2 million, respectively. The increase in cash flows provided by operating activities for the nine months ended September 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 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.

Current wording

For the nine months ended September 30, 2026 and 2025, cash used in financing activities was $133.7 million and $134.2 million, respectively. During the nine months ended September 30, 2026 and 2025, we paid total dividends of $124.6 million and $111.0 million, respectively. During the nine months ended September 30, 2026 and 2025, employees surrendered $9.1 million and $14.8 million in shares of Common Stock, respectively, to the Company to settle tax withholdings related to stock vesting. There were no repurchases of shares of our Common Stock during the nine months ended September 30, 2026. During the nine months ended September 30, 2025, we repurchased $8.4 million of shares of our Common Stock.

Previous 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):

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 nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

Interest income by segment is included in other income, net in the table above.

Current wording

Interest income by segment is included in other income, net in the tables above.

Previous 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.”

Current wording

Total revenues were $273.4 million for the three months ended September 30, 2026 compared to $203.1 million for the three months ended September 30, 2025. Total operating expenses were $65.6 million for the three months ended September 30, 2026 compared to $54.0 million for the three months ended September 30, 2025. Net income was $167.4 million for the three months ended September 30, 2026 compared to $121.2 million for the three months ended September 30, 2025. Individual revenue and expense line items are discussed below under “Segment Results of Operations.”

Previous wording

Total revenues were $482.9 million for the six months ended June 30, 2026 compared to $383.5 million for the six months ended June 30, 2025. Total operating expenses were $108.7 million for the six months ended June 30, 2026 compared to $89.7 million for the six months ended June 30, 2025. Net income was $296.8 million for the six months ended June 30, 2026 compared to $236.8 million for the six months ended June 30, 2025. Individual revenue and expense line items are discussed below under “Segment Results of Operations.”

Current wording

Total revenues were $756.3 million for the nine months ended September 30, 2026 compared to $586.6 million for the nine months ended September 30, 2025. Total operating expenses were $174.3 million for the nine months ended September 30, 2026 compared to $143.7 million for the nine months ended September 30, 2025. Net income was $464.2 million for the nine months ended September 30, 2026 compared to $358.0 million for the nine months ended September 30, 2025. Individual revenue and expense line items are discussed below under “Segment Results of Operations.”

Previous wording

We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 14, “Business Segment Reporting” in the notes to the condensed consolidated financial statements in this Quarterly Report. We monitor our reporting segments based upon net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Current wording

We evaluate the performance of our operating segments separately to monitor the different factors affecting financial results. The reportable segments presented are consistent with our reportable segments discussed in Note 14, “Business Segment Reporting” in the notes to the condensed consolidated financial statements in this Quarterly Report. We monitor our reportable segments based upon net income calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Previous 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.

Current wording

Oil and gas royalties. Oil and gas royalty revenue was $167.3 million for the three months ended September 30, 2026, an increase of $58.6 million compared to the same period of 2025. The average realized price increased 31.9% to $44.97 per barrel of oil equivalent (“Boe”) for the three months ended September 30, 2026 from $34.10 per Boe for the three months ended September 30, 2025. Our share of production increased to 42.3 thousand Boe per day for the three months ended September 30, 2026 compared to 36.3 thousand Boe per day for the same period of 2025.

Previous wording

Easements and other surface-related income. Easements and other surface-related income was $18.3 million for the three months ended June 30, 2026, compared to $33.5 million for the three 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 a decrease of $15.0 million in pipeline easements for the three 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 three months ended June 30, 2026.

Current wording

Easements and other surface-related income. Easements and other surface-related income was $34.2 million for the three months ended September 30, 2026, compared to $12.7 million for the three months ended September 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 increase in easements and other surface-related income was principally related to increases in pipeline easements of $15.4 million, power line and utility easements of $3.2 million, and lease bonuses associated with acquired royalty interests of $1.8 million for the three months ended September 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 three months ended September 30, 2026.

Previous 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.

Current wording

General and administrative expenses. General and administrative expenses were $7.2 million for the three months ended September 30, 2026 compared to $3.4 million for the comparable period of 2025. The increase in general and administrative expenses was primarily due to increases in legal and professional fees of $1.6 million, land operating expenses of $0.9 million, and rent and office-related expenses of $0.3 million compared to the same period of 2025. Land operating expenses include costs associated with preparing aggregate materials for sale and the maintenance of our surface acreage. These expenses may fluctuate from period to period based on the nature and timing of such activities.

Previous 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.

Current wording

Depreciation, depletion and amortization. Depreciation, depletion and amortization was $17.6 million for the three months ended September 30, 2026 compared to $10.5 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 $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.

Current wording

Other income, net. Other income, net was $2.7 million for the three months ended September 30, 2026 compared to $4.8 million for the same period of 2025. Lower cash balances and investment yields during the three months ended September 30, 2026 compared to the same period of 2025 resulted in a decrease in interest income.

Previous wording

Income tax expense. Income tax expense was $28.2 million for the three months ended June 30, 2026 compared to $24.4 million for the comparable period of 2025. The increase in income tax expense is primarily attributable to the increase in operating income for the three 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.

Current wording

Income tax expense. Income tax expense was $34.5 million for the three months ended September 30, 2026 compared to $22.5 million for the comparable period of 2025. The increase in income tax expense is primarily attributable to the increase in operating income for the three months ended September 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. See “Liquidity and Capital Resources” above for additional discussion.

Previous 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.

Current wording

Water sales. Water sales revenue decreased $16.1 million to $28.4 million for the three months ended September 30, 2026, compared to $44.6 million for the same period of 2025. The decrease in water sales was principally due to decreases of 26.4% in average realized pricing and 13.4% in water sales volumes for the three months ended September 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 $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.

Current wording

Produced water royalties. Produced water royalties are received from the transfer or disposal of produced water on our land, are contractual and are 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 $41.4 million for the three months ended September 30, 2026 compared to $32.3 million for the same period in 2025. This increase was principally due to a 27.2% increase in produced water volumes for the three months ended September 30, 2026 compared to the same period of 2025.

Previous wording

Easements and other surface-related income. Easements and other surface-related income was $5.4 million for the three months ended June 30, 2026, an increase of $2.7 million compared to $2.7 million for the three months ended June 30, 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 may also be affected by volumes and commodity prices associated with royalties on certain hydrocarbons recovered in connection with produced water disposal activities. As a result, this income is unpredictable and may vary significantly from period to period.

Current wording

Easements and other surface-related income. Easements and other surface-related income was $2.0 million for the three months ended September 30, 2026, compared to $4.0 million for the three months ended September 30, 2025. The decrease in easements and other surface-related income was principally related to a decrease in temporary permits of $1.1 million. Easements and other surface-related income is dependent on development decisions made by companies that operate in the areas where we own land and may also be affected by volumes and commodity prices associated with royalties on certain hydrocarbons recovered in connection with produced water disposal activities. As a result, this income is unpredictable and may vary significantly from period to period.

Previous wording

Water service-related expenses. Water service-related expenses increased $6.3 million to $25.9 million for the six 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 six months ended June 30, 2026 compared to the same period of 2025 was principally related to a 16.4% increase in water sales volumes.

Current wording

Water service-related expenses. Water service-related expenses decreased $2.6 million to $13.8 million for the three months ended September 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 decrease in water service-related expenses for the three months ended September 30, 2026 compared to the same period of 2025 was principally related to a 13.4% decrease in water sales volumes.

Previous wording

Oil and gas royalties. Oil and gas royalty revenue was $263.8 million for the six months ended June 30, 2026 compared to $206.3 million for the six months ended June 30, 2025, an increase of $57.5 million. Our share of production increased to 38.4 thousand Boe per day for the six months ended June 30, 2026 compared to 32.2 thousand Boe per day for the same period of 2025. The average realized price increased 7.1% to $39.72 per Boe for the six months ended June 30, 2026 from $37.10 per Boe for the same period of 2025.

Current wording

Oil and gas royalties. Oil and gas royalty revenue was $431.0 million for the nine months ended September 30, 2026, an increase of $116.1 million compared to the same period of 2025. Our share of production increased to 39.7 thousand Boe per day for the nine months ended September 30, 2026 compared to 33.6 thousand Boe per day for the same period of 2025. The average realized price increased 15.5% to $41.60 per Boe for the nine months ended September 30, 2026 from $36.01 per Boe for the same period of 2025.

Previous wording

The financial and operational data by royalty stream is presented in the table below for the six months ended June 30, 2026 and 2025:

Current wording

The financial and operational data by royalty stream is presented in the table below for the nine months ended September 30, 2026 and 2025:

Previous 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.

Current wording

Easements and other surface-related income. Easements and other surface-related income was $66.9 million for the nine months ended September 30, 2026, an increase of $5.3 million compared to $61.6 million for the nine months ended September 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 increase in easements and other surface-related income was principally related to increases of $5.0 million in lease bonuses associated with acquired royalty interests and $2.5 million in power line and utility easements, partially offset by a decrease of $2.8 million in material sales, for the nine months ended September 30, 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 nine months ended September 30, 2026.

Previous 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.

Current wording

Land sales. Land sales revenue was $21.1 million during the nine months ended September 30, 2026 compared to $0.8 million for the comparable period of 2025. See Note 4, “Real Estate Activity” in the notes to the condensed consolidated financial statements in this Quarterly Report for further discussion of land sales.

Previous wording

Depreciation, depletion and amortization. Depreciation, depletion and amortization was $20.9 million for the six months ended June 30, 2026 compared to $16.8 million for the comparable period of 2025. The increase 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 $38.5 million for the nine months ended September 30, 2026 compared to $27.3 million for the comparable period of 2025. The increase was principally due to depletion expense associated with royalty interests acquired during the second half of 2025.

Previous wording

Interest expense. Interest expense was $0.8 million for the three months ended June 30, 2026 related to the Credit Facility entered into during the fourth quarter of 2025. There was no interest expense incurred during the three months ended June 30, 2025.

Current wording

Interest expense. Interest expense was $2.4 million for the nine months ended September 30, 2026 related to the Credit Facility entered into during the fourth quarter of 2025. There was no interest expense incurred during the nine months ended September 30, 2025.

Previous wording

Other income, net. Other income, net was $3.7 million for the six months ended June 30, 2026 compared to $7.6 million for the same period of 2025. Lower cash balances and investment yields during the six months ended June 30, 2026 compared to the same period of 2025 resulted in a decrease in interest income.

Current wording

Other income, net. Other income, net was $6.4 million for the nine months ended September 30, 2026 compared to $12.4 million for the same period of 2025. Lower cash balances and investment yields during the nine months ended September 30, 2026 compared to the same period of 2025 resulted in a decrease in interest income.

Previous 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.

Current wording

Income tax expense. Income tax expense was $91.3 million for the nine months ended September 30, 2026 compared to $70.8 million for the comparable period of 2025. The increase in income tax expense is directly attributable to the increase in operating income for the nine months ended September 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

Water sales. Water sales revenue increased $22.2 million to $86.6 million for the six months ended June 30, 2026 compared to the same period of 2025. The increase in water sales was principally due to increases of 16.4% in water sales volumes and 15.5% in average realized pricing for the six 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.

Current wording

Water sales. Water sales revenue increased $6.1 million to $115.0 million for the nine months ended September 30, 2026 compared to $109.0 million for the same period of 2025. The increase in water sales was principally due to an increase of 5.0% in water sales volumes for the nine months ended September 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 royalties 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 $70.6 million for the six months ended June 30, 2026 compared to $58.4 million for the comparable period of 2025. The increase in produced water royalties was principally due to the 18.8% increase in produced water volumes for the six months ended June 30, 2026 compared to the same period of 2025.

Current wording

Produced water royalties. Produced water royalties are royalties received from the transfer or disposal of produced water on our land, are contractual and are 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 $112.0 million for the nine months ended September 30, 2026 compared to $90.7 million for the comparable period of 2025. The increase in produced water royalties was principally due to the 21.8% increase in produced water volumes for the nine months ended September 30, 2026 compared to the same period of 2025.