Ladies and gentlemen, greetings and welcome to the Texas Pacific Land Corporation First Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on the telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sean Amini, VP of Finance and Investor Relations. Please go ahead.

Thank you for joining us today for Texas Pacific Lane Corporation's first quarter 2026 earnings conference call. Yesterday afternoon, the company released its financial results and filed this form 10Q with the Securities and Exchange Commission, which is available on the investors section of the company's website at www.texaspcific.com. As a reminder, remarks made on today's conference call may include forelooking statements. Forelooking statements are subject to risk and uncertainties that may cause actual results of different material from those discussed today. We do not undertake any obligation to update our forelooking 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 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 TPL's Chief Financial Officer, Chris Studham, and Executive Vice President of Texas Pacific Water Resources, Robert Crane. The management will make some fair comments. which we will open the call for questions. Now, I will turn the call over to Ty.

Good morning, everyone, and thank you for joining us today. TPL's first quarter, 2026, marked a strong start to the year as TPL generated record quarterly total revenue, net income, and free cash flow. Oil and gas royalty production averaged approximately 37,100 barrels of oil equivalent per day, roughly flat sequentially, and up roughly 19% year over year. Our water segment, both water sales and produce water royalties, had the second best volume numbers in our history. And now, with crude oil prices spiking dramatically over the last few months, DPL is poised to benefit directly through our oil and gas royalties and indirectly through our diversified exposure across surface and water. Regarding the macro impact for the Permian Basin overall from our vantage point, We've only seen a marginal uptick in recent operator activity. Although oil prices at these current levels would generally stimulate a more robust producer response, there's still a lot of industry uncertainty around the duration of this oil supply shop. However, as this major supply disruption has persisted longer than initially anticipated, and given that global oil and product inventories are rapidly depleting, oil prices could very well remain elevated for quite some time, even if the supply disruption were to be resolved in the near term. If so, we would expect the industry to ramp rig and frack spread activity over the coming quarters. With an immense unmatched amount of undeveloped well locations, the Permian could readily support robust volume growth so long as the price signal persists. For TPL, we have always viewed a strong balance sheet as our hedge against low commodity prices. Despite declining old prices over the last three years, we maintained a strong net cash position throughout and did not need to hedge to protect the balance sheet liabilities. Today, with our unhedged commodity position, we are fully capturing the direct upside from elevated oil prices. In addition to the upward trending momentum in our legacy oil and gas business, we have also made tangible progress with our next-gen endeavors. Starting with power generation and data centers, during the quarter, we entered into an agreement to sell a small section of land for $43 million, which is structured into annual payments over a 20-year period. We have entered into a separate commercial agreement to supply water for this same development. Given the broader commercial details for the project are still being finalized, we are currently limited in providing additional details. We hope to provide additional information in the coming months. Speaking more broadly about our efforts on this front, our commercial activities continue to pick up speed. Virtually every major hyperscaler and AI lab are evaluating large-scale plans in Texas, and our sense is that urgency to lock up power and compute continues to rise. I would add that it is important to not over-extrapulate deal structure and terms from any one deal. Virtually all of our ongoing discussions and negotiations have substantially different makeups. Every developer needs something different, and depending Depending on where in the region a development is planned for, TPL has varying capabilities for capturing commercial opportunities. For some deals, the land piece will be the primary value driver. For other deals, it may be water or aggregates. Given our scale, our unique capabilities across surface, water, and energy, and our relationships across multiple industries, we have significant flexibility to solve problems for developers. These projects often represent tens of billions of dollars of capital, so naturally, alignment across parties and final investment decisions will take time to unfold. It is clear to me that Texas will become a dominant global hub for large-scale power and compute over the short, medium, and long term, and we're excited to get this first agreement. We hope to provide updates on other significant opportunities as we progress throughout the year. On TPL's produced water desalination efforts, our Phase IIb 10,000-barrel-per-day facility is nearly complete. A refrigeration inspection is planned for later this month, and we expect to begin flowing inlet water barrels in the coming weeks. This project represents a pathway toward the meaningful additional solution for permeates growing produced water volumes. This test facility will allow us to evaluate whether produced water desalination can work economically at scale, while also providing an opportunity to empirically demonstrate commercial potential for waste heat capture, cooling co-location, and utilization of outlet fresh water and concentrated brine streams. Turning to our upcoming shareholder office and field tour visit in Midland on May 18th, for those of you that have submitted an RSVP, you should have received an email a couple weeks ago with event details and a schedule. If you have not received that email, please reach out to Investor Relations. We look forward to hosting and seeing everyone in Midland. On a final note, I wanted to comment on Murray Stahl's passing. Most of you know Murray's firm, Horizon Kinetics, along with its predecessors, has been TPL's largest shareholder for many decades. Murray himself has been a tremendous long-time advocate for TPL. He believed in the company while it was still a thinly traded, little-known trust that owned royalties and surface in West Texas. Murray understood the virtues of real property combined with patience, and he was a rare combination of an independent thinker and dedicated practitioner. Over the years, as horizontal drilling and fracking began to unlock the latent value of West Texas land, and as our commercial efforts expanded, TPL grew to become one of the largest publicly traded energy companies in the world. Through it all, as TPL's share price began to reflect the immense value of our assets, Murray's and Horizon Kinetics' conviction and devotion to TPL remained unrivaled. While other shareholders would come and go as our share price rose and fell, Murray and Horizon steadfastly remained our largest owner and our biggest fan. Despite these recent tragic events, I'm confident that Murray's legacy will live on. Over the years, we have also gotten to know many of Murray's colleagues at Horizon Kinetics, We share his principles and investment philosophy. It is plainly obvious how much Murray is revered and respected by his colleagues. We continue to maintain a close relationship with Horizon Kinetics, and we believe that our combined ongoing stewardship will allow TPL to attain the full potential Murray envisioned. On behalf of TPL, I offer our condolences to Murray's colleagues, friends, and family.

that, I will hand over the call to Chris. Thanks, Ty. Consolidated revenues during the first quarter of 2026 were approximately $237 million. This represents a quarterly all-time high as well as a 12% sequential increase and a 21% increase over last year's first quarter. Consolidated adjusted EBITDA was $181 million, which was up 2% sequentially and 7% over the last year. Pre-cash flow was $136 million, which was up 15% sequentially and up 8% over last year. The continued strong performance of our royalties position was primarily driven by strong completion activity in the Delaware Basin by Occidental, BP, and Devon in Loving and Northern Reeves Counties, and in the Midland Basin by Exxon in Martin County. With the high volatility and uncertainty related to global oil prices, I would like to provide some color regarding our commodity price sensitivities. As Ty mentioned earlier, TPL remains fully unhedged. Using our royalty production volumes for fiscal year 2025, and as an illustrative guide, roughly 5 million barrels of annual oil production means that every $10 per barrel increase in oil realizations would equate to approximately $50 million. Our oil price realization last year averaged $65 per barrel. For natural gas liquids, we received production volumes of roughly 3.8 million barrels, which means every $5 per barrel increase to our NGL realization would equate to an additional $17 million of annual revenue. Moving to our well inventory, as of quarter in, TPL had 5.8 net permitted wells, 9.6 net drilled but uncompleted wells, or commonly referred to as ducts, and 5.2 net completed but not producing wells. That amounts to 20.7 net line-of-sight wells, which represents a 6% sequential increase. We continue to see operators push longer laterals, with our new permits and new spuds both having an average lateral length in excess of 13,000 feet. On a net normalized basis, after factoring in longer lateral lengths, our line-of-sight inventory is up 11% sequentially. We continue to see strong permitting and drilling activity across our Delaware and Midland positions. And with that operator, we will now take questions.

Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. We take the first question from the line of Derek Whitfield from Texas Capital. Please go ahead.

Good morning, all, and congrats on a really strong quarter across the board. And also, Ty, thanks for your comments on Murray and Horizon Kinetics, as I know many of your investors will appreciate that. good morning derek thanks for joining starting with uh i guess first the land and water agreement with a gas power generation project while i realize you may be limited in what you can say this morning but any color that you can paint around the counter counterparty and scale of this development it would seem to us it's safe to assume that it's not bolt given the timeline of the development. And I'd also love your thoughts on whether desalinated produced water

could be part of the equation for the data center. Yeah, thanks, Derek. Not a whole lot that we can say beyond what we put in the release and what I said in the transcript, but this project is not Bolt related. We've got several projects that we are working with Bolt on, but we also have several that are not both related um can't comment on the size or the counterparty um this is one that will likely be um brackish water to start but we are in talks around produce water and using desalinated water at some point on this project and others great

and maybe just shifting back to the 30 000 foot level it seems in your messaging that there's certainly a heightened urgency year-over-year among the hyperscalers. Could you kind of help frame how that opportunity has changed and what it can mean for TPL really above and beyond today's announcement?

Yeah, I mean, I think speed to power has been the key to these projects all along. I think, you know, substantially all of the grid power has been taken at this point, and I think a lot of these hyperscalers and developers are now – you know, focusing on behind-the-meter gas-fired generation, and so that makes a lot of our acreage more viable. And I think, you know, the water usage when you're talking about, you know, a gas-fired power plant located with a data center will be much higher. So, you know, we see that as a net benefit, not only from, like, a revenue standpoint,

but just unlocking additional acreage for TPL overall. Great update, guys. Thanks, Derek. Thank you.

We take the next question from the line of Tim Reswan from KeyBank Capital Markets. Please go ahead.

Good morning, folks, and thank you for taking our questions. There wasn't a lot of color on desalination and release. You know, I appreciate your comments at the start of the call here. I was hoping to get a bigger picture overview of sort of where you're going. You've given some parameters on OPEX and CAPEX around a theoretical 100,000-day facility. So kind of what exactly are you looking for as you start up this first facility to kind of assess the feasibility of moving forward? And then I know you need to take a first step before you take a second step, but how would you think about funding a project? Because I believe you talked about like $100 million CapEx per 100,000 barrel a day facility. Are there discussions going on about a potential partner to help defray those costs?

Yeah, sure. This is Robert. Thanks for the question. I mean, I'll start with what the goals of facility are, and I think we've said them for a while. We call this research development at scale. You know, we knew the industry had to move from pilot phasing to, you know, something that we would call commercial sizing at the smallest scale. And, you know, from the industry, that's usually 10,000 barrels a day. So, you know, strictly from a functional aspect before we getting to co-location, you know, we want to see how this operates, you know, 24-7, day in, day out, at scale. That is really going to prove the economic viability strictly from an upstream market. Now, when we look at co-location, you know, when you start combining these desal facilities with NatGasGen and waste heat capturing co-location, yes, there's great benefit for the hyperscalers, you know, from a sustainability standpoint, but also we have to look at the co-location piece of what everything we can do to lessen that upstream cost to the operator to make these commercial. You know, we believe in desal strictly from a need from the upstream perspective, minus, you know, what we see for co-location benefits. So, to be determined on what commercial looks like, there's a lot of structures that we're chasing and looking at, some that focus just on that upstream and then getting the benefit of co-location as well.

I guess we'll have to stay tuned throughout the year. And then as my follow-up, touching on sort of, I guess, called the legacy segments, you know, we saw a step down in revenues in SLIM and in the water segments from record high levels. And if you strip out that one-time land revenue, you know, it's almost slattish, kind of a quarter over quarter. So, you know, as we look at kind of the trends here, Would you say that fourth quarter of 2025 was sort of an upside aberration, or do you think the first quarter was a little bit low? And where I'm going with this, how do we think about sort of the revenue trend across these legacy segments throughout this year, given the volatility of the last couple quarters?

Robert, you want to touch on water, and then I'll touch on slim?

You know, when you look at Q4, you know, we'll start with the produce segment. You've got some accrual noise in there in Q4. But really, when you look at produced, how you have to look at it is more of a, let's call it a three-quarter trend look. When you start looking at that three-quarter trend look, we think that's much more reflective of the contractual and functional nature of what we've been doing to drive volumes. We are still very bullish on the produced water space. So you're going to see some noise and activity levels and movement of volumes. You're going to see some accrual noise. But, again, when you look at that kind of three-quarter trend, you know, that's where we see and we still see excitement in the produced water space.

And I would just add, you know, on the SLIM front, I wouldn't read too much into any single quarter. SLIM can get pretty lumpy. You know, we may have quite a few big infrastructure projects hit within a quarter, and I know it was, you know, pretty strong last year with some of the gas pipe buildout that we, you know, that we were seeing. So, again, just wouldn't read too much into any one quarter on the slim front.

Okay, sounds great. Appreciate the comments and look forward to seeing you all in a couple weeks. Yeah, thanks, Sam.

Thank you. We take the next question from the line of Oliver Wong from TPH and Company. Please go ahead.

Good morning, Ty and team, and thanks for taking our questions. For my first question, I was wondering if there was any sort of color on which direction the Bolt partnership is headed from a PowerGen source perspective. Would the initial phase be going down the path of a CCGT type of infrastructure, or are you all thinking about something that could be more modular based?

I think still a little early to tell. Looking at both options on a couple of different projects, kind of depending on end user design.

but I wouldn't rule either out. That makes sense. And maybe just for my second question, given all the conversations that you all are having, looking out over the next five or so years, what do you all think the total gigawatts deployed to data centers in the Permian might be? Or asked another way, where do you all see the TAM of the market of where it could potentially be headed and what type of market share could TPL grab of that given your land and water infrastructure

footprint? Hard to say on total Permian Outlook. I think for us, we feel like multiple multi-gig energy campuses on our acres are viable, and that's definitely the goal. Continue to be very pleased with our progress on that front and very excited about the opportunity set.

Okay, perfect. Thanks for the time. Thank you. Ladies and gentlemen, with that, we conclude

the question and answer session and also conclude today's conference call of Texas Pacific Land Corporation. Thank you for your participation. You may now disconnect your line.