Texas Pacific Land Corporation

Good morning, and welcome to Texas Pacific Land Corporation's third quarter 2022 earnings conference call. This conference call is being recorded. I would now like to introduce your host for today's call, Sean Amini, Vice President, Finance and Investor Relations. Please go ahead. Good morning.

Good morning. Thank you for joining us today for Texas Pacific Land Corporation's third quarter 2022 earnings conference call. Yesterday afternoon, the company released its financial results and filed its form 10-Q with the Securities and Exchange Commission, which is available on the investor section of the company's website at www.texaspecific.com. As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will also be discussing certain non-GAAP financial measures. More information and reconciliations about these non-GAAP financial measures are contained in our earnings release and SEC filings. Please also note, we may at times refer to our company by its stock ticker, TPL. This morning's conference call is hosted by TPL's Chief Executive Officer, Ty Glover, and Chief Financial Officer, Chris Stedham. Management will make some prepared comments, after which we will open the call for questions. Now, I will turn the call over to Ty.

Thanks, Sean. Good morning, everyone, and thank you for joining us today. Third quarter 2022 represents another well-rounded performance across the TPL business. Consolidated revenues increased 8% and net income increased 9% sequential quarter over quarter, driven by growing oil and gas royalty production, outstanding source water and produce water performance, and continued strong slim activity. Royalty production for the third quarter of approximately 23,400 barrels of oil equivalent per day is a new corporate record. On the water side, during this most recent quarter, we sourced and treated over 40 million barrels of water. Since the water business inception, TPL has sourced or treated over 500 million barrels of water, which we estimate is responsible for over 1,000 new well completions in the Permian, with many of these on TPL royalty acreage. On the produce side, we generated contracted royalty volumes on approximately 190 million barrels of water. Recall, we don't own or operate any saltwater disposal infrastructure. Rather, we collect a contracted royalty fee on produce water that is injected in or crosses our surface. Over half our produce water volumes that we generated royalty on last quarter were actually injected into SWDs located off of TPL's surface. Last quarter, we saw a nice uptick in SLIM revenues, and that strong performance carried over into third quarter. Activity is up across the board in SLIM, with large year-over-year increases for wellbore easements, pipeline easements, and material sales. Just on the land side alone, this past quarter we papered up 233 new contracts, which is nearly double what we did during the same quarter last year. Recent highlights include two separate contracts for mobile mini-sand mines. These sand mines not only help support completion activities in the Permian, but because the sand is developed and sourced in-basin, it reduces the amount of heavy truck traffic in the region. And of course, TPL will generate a royalty for every ton extracted with zero capex or operating expenses required from us. Our land managers do an incredible job overseeing a vast acreage footprint and working every day with operators to stay in front of their needs and to help facilitate developments. In addition to our core active management activities on the land side, we've had a team tasked specifically to pursue alternative and next generation uses for our nearly 1 million acre surface asset. Investments in time and resources we've dedicated to this venture over the past few years are bearing results. Yesterday, we announced that TPL signed an agreement with Samsung Solar Energy 2 LLC to begin evaluating the siting of grid connected batteries located on TPL surface. Preliminary studies have begun to evaluate project viability throughout West Texas where an abundant amount of transmission infrastructure overlaps with TPL. These battery projects could help enhance grid reliability and encourage further renewables development across TPL's footprint. TPL is thrilled to have someone looking to develop these next-generation projects on our surface, and we look forward to collaborating together to hopefully bring these projects to fruition. We also continue to make good progress on the solar and wind front. This year, we've increased the amount of solar and wind projects contracted on our surface by 30% from what we had coming into the year. In summary, our surface asset is unique not only for its size, but also because it contains water rights and aquifers, exposure to excellent solar and wind resource, materials deposits, electrical grid access, connectivity to gas processing facilities, subsurface pore space, among many other desirable features. Our employees leverage their extensive relationships with Permian producers and across the energy industry to source and collaborate on new projects. The access to all these things at massive scale makes us an attractive partner for interesting opportunities. And we're having a lot of good conversations with developers, engineers, entrepreneurs, and companies on a wide array of new technologies and ideas. Changing gears, I'd like to remind everyone that our annual meeting is in two weeks. Proxy materials have been filed with the SEC and distributed to shareholders, and I would encourage everyone to carefully review the materials and vote. If any shareholders have any questions or issues, please do not hesitate to contact Investor Relations. And finally, I want to thank all the employees here at TPL. Our team does an amazing job of proactively serving our customers while also creating real value for our shareholders. Their tireless efforts and consistent performance are the engine of this company, and I'm proud to work with them every day. With that, I'll turn the call over to Chris to discuss our quarterly results.