Texas Pacific Land TPL · USD

Business Segment Reporting During the periods presented, we reported our financial performance based on the following reportable segments: Land and Resource Management and Water Services and Operations. We eliminate inter-segment revenues and expenses, if any, upon consolidation. There were no inter-segment revenues for the years ended December 31, 2025, 2024, and 2023.The Land and Resource Management segment encompasses the business of managing our approximately 882,000 surface acres of land and our approximately 224,000 NRA of oil and gas royalty interests, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases, and land and material sales.The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment primarily consist of revenue generated from sales of sourced and treated water as well as revenue from produced water royalties.

Commitments and ContingenciesLitigationManagement is not aware of any legal, environmental or other commitments or contingencies that would have a material effect on the Company’s financial condition, results of operations or liquidity as of December 31, 2025, other than as described below.Prior to January 1, 2022, ad valorem taxes with respect to our historical royalty interests were paid directly by third parties pursuant to an existing arrangement. After the completion of our Corporate Reorganization, we received notice from a third party that it no longer intended to pay the ad valorem taxes related to such historical royalty interests. In order to protect the historical royalty interests from any potential tax liens for non-payment of ad valorem taxes, we have accrued and/or paid such ad valorem taxes since January 1, 2022. While we intend to seek reimbursement from the third party for such taxes, we are unable to estimate the amount and/or likelihood of such reimbursement, and accordingly, no loss recovery receivable has been recorded as of December 31, 2025.Lease CommitmentsAs of December 31, 2025 and 2024, we have recorded right-of-use assets of $13.7 million and $1.2 million, respectively, and lease liabilities of $17.8 million and $1.3 million, respectively, primarily related to operating leases in connection with our administrative offices located in Dallas and Midland, Texas. During the year ended December 31, 2025, the Company entered into a new office lease, expiring in May 2036, for the relocation of its headquarters in Dallas, Texas. The office lease agreement for our Midland, Texas, office expires in July 2027. The office lease agreements require monthly rent payments, and the operating lease expense is recognized on a straight-line basis over the lease term. Operating lease costs were $1.4 million and $0.9 million for the years ended December 31, 2025 and 2024, respectively.While certain of our lease agreements contain covenants governing the use of the leased assets or require us to maintain certain levels of insurance, none of our lease agreements include material financial covenants or limitations. There are no residual value guarantees in our lease commitments. The weighted-average lease term for our operating lease liabilities is approximately 10.2 years. The weighted average discount rate of our operating leases is 6.6%.

Income TaxesThe income tax provision charged to operations for the years ended December 31, 2025, 2024, and 2023 was as follows (in thousands):Years Ended December 31, 202520242023Current:U.S. federal$118,700 $116,323 $106,721 State and local3,698 3,934 3,796 Current income tax expense122,398 120,257 110,517 Deferred expense:U.S. federal6,546 4,530 964 State and local9 74 435 Deferred income tax expense6,555 4,604 1,399 Total income tax expense$128,953 $124,861 $111,916 Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 21% for the years ended December 31, 2025, 2024, and 2023 to income before federal income taxes as a result of the following (in thousands, except percentages):Years Ended December 31, 202520242023Computed tax expense at the statutory rate of 21%$128,169 21.0 %$121,552 21.0 %$108,688 21.0 %Reduction in income taxes resulting from:State and local income taxes, net of federal benefit (1)2,930 0.5 %3,182 0.5 %3,439 0.7 %Tax credits(1,857)(0.3)%(850)(0.1)%— — %Nondeductible and nontaxable items(289)(0.1)%977 0.2 %(211)(0.1)%Total income tax expense$128,953 21.1 %$124,861 21.6 %$111,916 21.6 %(1)Primarily related to income taxes imposed by the State of Texas.Nondeductible and nontaxable items primarily consist of statutory depletion, prior-year tax adjustments, penalties and interest, and other permanent differences. The Company had no material changes in valuation allowances, unrecognized tax benefits, foreign tax effects, cross-border tax laws, or enacted tax law changes impacting the effective tax rate during the periods presented. Total income taxes paid (net of refunds received) for the year ended December 31, 2025, 2024, and 2023 were as follows (in thousands):Years Ended December 31, 202520242023U.S. federal$123,000 $117,000 $100,538 State and local3,955 3,669 3,541 Total income taxes paid (net of refunds received)$126,955 $120,669 $104,079 Income taxes paid (net of refunds received) were principally attributable to U.S. federal income taxes. No individual state jurisdiction accounted for 5% or more of the total income taxes paid in the periods presented.

Share-Based CompensationThe Company grants share-based compensation to employees under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”) and to its non-employee directors under the 2021 Non-Employee Director Stock and Deferred Compensation Plan (the “2021 Directors Plan” and, together with the 2021 Plan, the “Plans”). As of December 31, 2025, share-based compensation granted under the Plans included restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”). RSUs granted under the 2021 Plan vest in one-third annual increments over three years, and PSUs granted under the 2021 Plan cliff vest at the end of three years if the applicable performance metrics are achieved (as discussed further below). RSAs granted under the 2021 Directors Plan vest in full on the date of grant.Incentive Plan for EmployeesThe maximum aggregate number of shares of Common Stock that may be issued under the 2021 Plan is 675,000 shares, which may consist, in whole or in part, of authorized and unissued shares (if any), treasury shares, or shares reacquired by the Company in any manner. As of December 31, 2025, 366,381 shares of Common Stock remained available under the 2021 Plan for future grants.The following table summarizes activity related to RSUs under the 2021 Plan for the years ended December 31, 2025 and 2024:Years Ended December 31,20252024Restricted Stock Units (1)Restricted Stock Units (1)Number of RSUsWeighted-Average Grant-Date Fair Value per ShareNumber of RSUsWeighted-Average Grant-Date Fair Value per ShareNonvested at beginning of period69,636 $170 56,025 $176 Granted19,512 457 37,965 160 Vested (2)(36,177)166 (23,436)169 Cancelled and forfeited(267)457 (918)176 Nonvested at end of period52,704 $277 69,636 $170 (1)RSUs vest in one-third increments over a three-year period.(2)Of the 36,177 RSUs that vested during the year ended December 31, 2025, 14,262 RSUs were surrendered by employees to the Company upon vesting to settle tax withholdings. Of the 23,436 RSUs that vested during the year ended December 31, 2024, 8,844 RSUs were surrendered by employees to the Company upon vesting to settle tax withholding obligations.

Cyber Risk Management and StrategyOverviewWe employ a risk-based approach to cybersecurity which aligns with our corporate strategy, risk management and governance, and adaptable information technology (“IT”) infrastructure. Our cybersecurity program consists of policies, procedures, systems, controls and technology designed to help prevent, identify, detect and mitigate cybersecurity risk and is based on the National Institute of Standards and Technology (“NIST”) Cybersecurity framework. CollaborationWe have integrated cybersecurity risk management into our overall risk management framework by (i) maintaining disaster recovery, business continuity and security incident recovery plans, (ii) conducting annual enterprise and IT risk assessments, (iii) implementing periodic key risk indicator tracking, and (iv) holding regular cross-departmental meetings to address cybersecurity risks.Risk AssessmentOur risk management activities and cybersecurity strategy include IT policies, standards, procedures and systems to address and mitigate risks for critical system availability, network integrity, information protection, and operational continuity.We perform vulnerability and threat monitoring mitigation activities on a regular basis and perform a cybersecurity risk assessment at least annually. Our cybersecurity risk assessment program includes the following assessments and activities:•ensure program alignment with the NIST Cybersecurity framework;•prioritize, remediate, and ensure effectiveness of critical applications, infrastructure, and information; and•continually evaluate emerging threats and improved mitigation methods, including but not limited to, generative and agentic artificial intelligence and machine learning.We regularly collaborate with the Company’s internal audit department and third parties with security and infrastructure expertise for review and evaluation of the Company’s cybersecurity risk program and the associated IT control environment. We engage third-party service providers to perform annual external and internal penetration testing, disaster recovery testing, and security incident simulations.Infrastructure: Network and Physical SecurityOur IT infrastructure is secured and continually monitored using a number of tools to effect physical and logical security. We strictly regulate and limit access to servers and networks. Network access is controlled by the network firewall and restricted by stringent access control lists.

EquityIncreases in Authorized Shares of Common StockAs of December 31, 2025, the Company had authorized shares consisting of 1,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”) and 139,610,808 shares of Common Stock. On December 2, 2025, the Company filed an amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) with the Secretary of State of the State of Delaware, pursuant to which the Certificate of Incorporation was amended to provide that the total number of authorized shares of capital stock of the Company be increased to 140,610,808 share of capital stock, consisting of 1,000,000 shares of Preferred Stock and 139,610,808 shares of Common Stock.As of December 31, 2024, the Company had authorized shares consisting of 1,000,000 shares of Preferred Stock, and 46,536,936 shares of Common Stock. On March 1, 2024, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware, pursuant to which the Certificate of Incorporation was amended to provide that the total number of authorized shares of capital stock of the Company be increased to 47,536,936 shares of capital stock, consisting of 1,000,000 shares of Preferred Stock and 46,536,936 shares of Common Stock.Common Stock SplitOn December 22, 2025, we effected a three-for-one forward stock split of our Common Stock. The record date for the stock split was December 12, 2025. The shares of Common Stock retained a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock.”On March 26, 2024, we effected a three-for-one stock split in the form of a stock dividend of two additional shares of Common Stock outstanding to stockholders of record as of March 18, 2024. The shares of Common Stock retained a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common Stock.”All share, RSA, RSU, PSU and per share information has been retroactively adjusted to reflect both the December 22, 2025 and March 26, 2024 stock splits.DividendsFor the year ended December 31, 2025, we paid total regular cash dividends of $2.13 per share of Common Stock.

Credit FacilityOn October 23, 2025, the Company entered into a revolving credit agreement among the Company, as borrower, Wells Fargo Bank, National Association and certain other lenders, which provides for a senior unsecured revolving credit facility (the “Credit Facility”) with aggregate commitments of $500.0 million, with the ability, subject to lender approval, to increase total commitments by up to $250.0 million in minimum increments of $50.0 million. The Credit Facility matures on October 23, 2029.Borrowings under the Credit Facility bear interest, at the Company’s option, at either (i) term SOFR plus an applicable margin ranging from 2.25% to 2.50%, or (ii) a base rate plus an applicable margin ranging from 1.25% to 1.50%, in each case depending on the Company’s consolidated total leverage ratio. The base rate is the greatest of (a) the federal funds rate plus 0.50%, (b) the administrative agent’s prime rate, and (c) one-month term SOFR plus 1.00%. The Company also pays commitment fees on the unused portion of the Credit Facility and customary letter of credit fees.The Credit Facility is unsecured; however, it becomes subject to a springing security interest on substantially all equity securities of the Company’s subsidiaries if the Company’s consolidated total leverage ratio exceeds 2.50 to 1.0. The Credit Agreement contains customary affirmative, negative and financial covenants and customary events of default, including payment defaults, covenant defaults, cross-defaults to certain other indebtedness, bankruptcy and insolvency events and change-in-control provisions. As of December 31, 2025, the Company was in compliance with all covenants. In connection with entering into the Credit Facility, the Company incurred $5.1 million of debt issuance costs. These costs are recorded in other assets on the consolidated balance sheet and are amortized on a straight-line basis over the term of the Credit Facility. As of December 31, 2025, unamortized debt issuance costs related to the Credit Facility were $4.9 million.Interest expense on the Credit Facility includes amortization of debt issuance costs, commitment fees on the unused portion of the facility and, if applicable, interest on outstanding borrowings. For the year ended December 31, 2025, interest expense related to the Credit Facility was $0.7 million, including $0.2 million of amortization of debt issuance costs. The facility was undrawn during the period.

Intangible AssetsIntangible assets, net consisted of the following as of December 31, 2025 and 2024 (in thousands): December 31,2025December 31,2024Intangible assets, at cost: Saltwater disposal easement$17,557 $17,557 Contracts acquired in a business combination(1)15,700 15,700 Groundwater rights acquired3,846 3,846 Total intangible assets, at cost (2)37,103 37,103 Less: accumulated amortization(4,257)(1,915)Intangible assets, net$32,846 $35,188 (1)For further information, see Note 3, “Assets Acquired in a Business Combination.”(2)The remaining weighted average amortization period for total intangible assets was 9.8 years as of December 31, 2025.Amortization of intangible assets was $2.3 million, $1.5 million, and $0.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.