Texas Pacific Land Sees Sales Increase Despite Low Oil Prices

Texas Pacific Land reported a 9% rise in sales and a 12% increase in free cash flow during its latest quarter. This growth happened even with average oil prices hitting lows that haven’t been seen since 2021.

Interestingly, operating customers postponed some of their activities in the second quarter. However, the CFO seems optimistic, suggesting that things should pick up later this year.

As the biggest landowner in the Permian Basin, Texas Pacific Land Co., Ltd. (NYSE: TPL) faced an 8% drop in share prices as of Thursday afternoon according to S&P Global Market Intelligence. The company’s sales swelled despite a significant 34% decline in water sales during the same period, which raised concerns in the market.

Texas Pacific holds about 900,000 acres in the Permian Basin. It derives revenue by leasing land and selling construction materials. The company also supplies water for hydraulic fracturing and disposes of produced water, accumulating royalties from oil and gas production.

This decrease in water sales caught many off guard, mainly stemming from reduced activity from various operator clients affected by declining oil prices. However, Chief Financial Officer Chris Steddum noted that most clients are returning to their regular activities, suggesting a recovery could be on the horizon.

As Texas Pacific Land continues to evolve, it is exploring innovative ideas like carbon capture and renewable energy sources such as solar and wind, along with desalination technologies.

For those considering investing in Texas Pacific Land, it’s wise to take a moment to assess the current landscape.