Texas Pacific Land (NYSE:TPL) management highlighted record quarterly and full-year operating results in its fourth-quarter 2025 earnings call, pointing to continued growth in royalties and water-related businesses even as oil prices declined versus prior years. Executives also provided updates on two “next-generation” initiatives—data center development and produced water desalination—while emphasizing the company’s debt-free balance sheet and liquidity.
Record quarter and full-year milestones
Chief Executive Officer Tyler Glover said the fourth quarter marked “an excellent finish to 2025,” with quarterly records set for oil and gas royalty production, water sales volumes, and produced water royalties. He noted that excluding the contribution from a royalties acquisition completed in November, fourth-quarter oil and gas royalty production grew 23% year-over-year. Water sales volumes exceeded 1 million barrels per day for the first time, up 36% year-over-year, and produced water royalty volumes increased 22% year-over-year.
Financial results, cash flow, and dividend
Chief Financial Officer Chris Steddum reported consolidated fourth-quarter 2025 revenue of approximately $212 million and adjusted EBITDA of $178 million, with an adjusted EBITDA margin of 84%. Free cash flow was $119 million for the quarter.
For full-year 2025, Steddum said the company generated record free cash flow of about $498 million, an 8% year-over-year increase. He said full-year performance benefited from higher daily oil and gas royalty production (up 29% year-over-year), higher water sales daily volumes (up 4%), and higher produced water royalty daily volumes (up 25%). He added that the November royalties acquisition contributed roughly 500 barrels of oil equivalent per day to full-year royalty production of about 34,600 barrels of oil equivalent per day. Results were partially offset by lower realized oil prices, which declined 15% year-over-year.
Given the performance, management announced a regular dividend of $0.60 per share, which Steddum said was a 12.5% increase versus the prior quarter dividend. Capital expenditures for 2025 were $66 million, inclusive of $6 million of payables, which management said was at the low end of original guidance.
Permian activity, DUC drawdowns, and longer laterals
On development activity, Steddum said that as of quarter-end TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells (DUCs), and 4.0 net completed but not producing wells—19.5 net “line-of-sight” wells in total, including approximately 2 net wells from the recent royalty acquisition.
He said sustained low oil and Waha natural gas prices during 2025 contributed to lower rig activity, citing Baker Hughes data indicating the Permian horizontal rig count was down about 26%. However, he said the basin sustained production growth through a sizable drawdown in DUCs, and he expects the industry to remain in “DUC drawdown mode” in 2026. Steddum estimated the industry drew down roughly 600 DUCs in 2025, with around 3,500 to 4,000 DUCs still remaining in the Permian. He added that the industry generally needs around 2,000 DUCs to maintain a buffer in front of frac fleets, leaving 1,500 to 2,000 discretionary DUCs, which he said supports at least a year or more of runway before rigs would need to be added to balance spuds and completions at current completion pacing.
Steddum also said operator efficiencies continue to improve and lateral lengths are increasing. He noted wells completed on TPL royalty acreage averaged 8% longer than the prior year, and said the quarter marked the first time new permits, spuds, completions, and new producing wells all had average lateral lengths above 11,000 feet. New permitted wells during the quarter averaged lateral lengths 35% longer than the average permitted well in 2024, including more than 100 new permitted wells over 15,000 feet and 34 wells over 20,000 feet.
Data center initiative: Bolt investment and broader discussions
Glover said the company is pursuing growth opportunities tied to data centers and power generation in West Texas. He highlighted a strategic investment announced in December in Bolt Data & Energy, an AI infrastructure platform chaired by former Google CEO Eric Schmidt. According to management, Bolt is developing large-scale solutions spanning data centers and power generation, and TPL’s role includes providing land, energy access, and water. Glover said TPL retains a right of first refusal to provide water to Bolt-affiliated projects.
Management said the regional data center landscape is “rapidly evolving” and that TPL is engaged in conversations with multiple developers and customers for projects both in-basin and out-of-basin across its acreage. Glover described increased urgency from developers and customers compared with prior quarters and said some discussions have advanced beyond conceptual stages. While noting confidentiality constraints, he said the company hopes to have “multiple new updates” before year-end.
During Q&A, Glover said the opportunity set has expanded beyond Bolt and that TPL is focused on building “multiple multi-gig energy campuses” rather than smaller, scattered facilities. When asked about potential water usage assumptions referenced by an investor, Glover said water requirements vary widely by facility design, but that certain designs could support those levels and that some power generator discussions indicated potentially higher usage. Executive Vice President of Texas Pacific Water Resources Robert Crain added that water volume and quality needs depend on power plant design (including single-cycle versus combined-cycle considerations and cooling approaches) and said the company expects compute and associated generation coming to the Permian to have a significant effect on its water business.
Desalination update and 2026 capital plan
On produced water desalination, Glover said the company’s 10,000 barrel-per-day R&D freeze desalination facility in Orla, Texas (Phase 2B) is nearing completion. He said TPL originally expected operations to begin by the end of 2025, but now expects the facility to begin taking produced water “in the coming months.” Management said engineering work during testing led to an additional process being incorporated into the design, which the company believes will reduce the time and cycles required for produced water to pass through the system, potentially lowering capital and operating costs for commercial-scale facilities.
Glover framed desalination as an additional produced water management solution alongside in-basin and out-of-basin pore space, noting the Permian generates nearly 25 million barrels of produced water per day with volumes expected to grow through the end of the decade even if oil production plateaus. He said the industry may need incremental solutions beyond subsurface disposal and that desalination could reduce subsurface injection.
For 2026, management plans to commence operations and ramp volumes at the Orla facility and to invest about $20 million in co-location equipment to evaluate waste heat capture and data center cooling. Glover said waste heat could provide energy savings for the freeze process, while the outlet freshwater stream could offer cooling benefits for data centers and power generation. In Q&A, Crain said the company’s desalination work is aimed at reducing energy consumption and lowering the cost per barrel, including through potential waste heat capture, which he described as “almost free energy” when available from adjacent power generation.
Steddum said the company exited the year with $145 million of cash and no debt, and that during the quarter it closed its inaugural $500 million credit facility, which remains undrawn. For fiscal 2026, TPL expects capital expenditures of approximately $65 million to $75 million, including the $20 million allocation for co-location/waste heat capture work, with remaining capital directed to the water sales business for electrification, equipment, and supply improvement and maintenance. He said the company has flexibility to invest, pursue acquisitions, and return capital to shareholders.
Separately, management noted that TPL will hold a shareholder event for an office and water field visit in Midland, Texas, on Monday, May 18, with RSVP details available through the company.
About Texas Pacific Land (NYSE:TPL)
Texas Pacific Land Corporation (NYSE: TPL) is a Texas-based land management company that derives revenue from the ownership and stewardship of large tracts of land and associated mineral rights in West Texas. The company’s origins trace to 19th century land grants associated with the Texas and Pacific Railway; over time those grant holdings have been retained and managed as a standalone corporate asset base. Texas Pacific Land is publicly listed and operates as a landowner and resource manager rather than as a traditional oil and gas producer.
The company’s primary activities include management of surface rights and leasing of land for energy and other commercial uses, administration of mineral royalty interests, and provision of water and related services to industrial customers.
