Q4 2025 Texas Pacific Land Corp Earnings Call

February 19, 2026

Speaker #1: Greetings and welcome to the Texas Pacific Land Corporation . Fourth quarter 2020 Earnings Conference Call At this time , all participants are in a listen only mode A brief question and answer session will follow the formal presentation .

Operator: Greetings, and welcome to the Texas Pacific Land Corporation Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Shawn Amini, Vice President of Finance and Investor Relations. Thank you, sir. You may begin.

Speaker #1: If anyone should require operator assistance during the conference , please press Star Zero on your telephone keypad . As a reminder , this conference is being recorded It is now my pleasure to introduce your host , Shawn Amini Vice President of Finance and Investor Relations Thank you sir .

Speaker #1: You may begin .

Speaker #2: Thank you for joining us today for Texas Pacific Land Corp fourth quarter 2020 Earnings Conference call . Yesterday afternoon , the company released its financial results and filed its form 10-K with the Securities and Exchange Commission , which is available on the investor section of the company's website at As a reminder , remarks made on today's conference call may include forward looking statements .

Shawn Amini: Thank you for joining us today for Texas Pacific Land Corporation's Q4 2025 earnings conference call. Yesterday afternoon, the company released its financial results and filed its Form 10-K with the Securities and Exchange Commission, which is available on the investor section of the company's website at www.texaspacific.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 recent SEC filings. During this call, we'll also be discussing certain non-GAAP financial measures.

Speaker #2: 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 .

Shawn Amini: 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 recent SEC filings. During this call, we'll also be discussing certain non-GAAP financial measures.

Speaker #2: 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'll also be discussing certain non-GAAP financial measures.

Speaker #2: More information and reconciliations of 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 , DPL Conference call is hosted by TFLs Chief Executive Officer Tyler Glover .

Shawn Amini: 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, TPL's Chief Financial Officer, Chris Steddum, and Executive Vice President of Texas Pacific Water Resources, Robert Crain. Management will make some prepared comments, after which we will open the call for questions. Now I will turn the call over to Ty.

Speaker #2: TFLs Chief Financial Officer Chris Steddum and Executive vice president of Texas Pacific Water Resources Robert Crane Management will make some prepared comments , after which we will open the call for questions .

Speaker #2: Now , I will turn the call over to Ty .

Speaker #3: Good morning , everyone , and thank you for joining us today . Fourth quarter was an excellent finish to 2025 with quarterly records set for oil and gas royalty production , water sales volumes and produced water royalties excluding the contribution from our previously announced royalties acquisition from last November , our fourth quarter oil and gas royalty production grew 23% year over year Water sales volumes this quarter exceeded 1 million barrels per day .

Tyler Glover: Good morning, everyone, and thank you for joining us today. Q4 was an excellent finish to 2025, with quarterly records set for oil and gas royalty production, water sales volumes, and produced water royalties. Excluding the contribution from our previously announced royalties acquisition from last November, our Q4 oil and gas royalty production grew 23% year-over-year. Water sales volumes this quarter exceeded 1 million barrels per day for the first time in our history, growing 36% year-over-year, and produced water royalty volumes grew 22% year-over-year. For the full fiscal year 2025, we set annual records across our major operating milestones of oil and gas royalty production, water sales, produced water royalties, and SLIM revenue. We also delivered fiscal year records for consolidated metrics, including revenue, net income, and free cash flow.

Ty Glover: Good morning, everyone, and thank you for joining us today. Q4 was an excellent finish to 2025, with quarterly records set for oil and gas royalty production, water sales volumes, and produced water royalties. Excluding the contribution from our previously announced royalties acquisition from last November, our Q4 oil and gas royalty production grew 23% year-over-year.

Ty Glover: Water sales volumes this quarter exceeded 1 million barrels per day for the first time in our history, growing 36% year-over-year, and produced water royalty volumes grew 22% year-over-year. For the full fiscal year 2025, we set annual records across our major operating milestones of oil and gas royalty production, water sales, produced water royalties, and SLIM revenue. We also delivered fiscal year records for consolidated metrics, including revenue, net income, and free cash flow.

Speaker #3: For the first time in our history , growing 36% year over year and produced water royalty volumes grew 22% year over year For the full fiscal year 2025 , we set annual records across our major operating milestones of oil and gas , royalty production , water sales , produced water royalties and slim revenue .

Speaker #3: We also delivered fiscal year records for consolidated metrics , including revenue , net income and free cash flow . Despite oil prices declining from $95 per barrel in 2022 to $65 per barrel in 2025 .

Tyler Glover: Despite oil prices declining from $95 per barrel in 2022 to $65 per barrel in 2025, during the same span, TPL delivered 3-year compounded annual growth rate for oil and gas royalty production of 17%, water sales volumes of 18%, and produced water royalty volumes of 30%. We achieved this growth while maintaining a debt-free balance sheet and without any financing from new equity. We owe this countercyclical growth to our continued market capture, talented employees, commercial development focus, differentiated scale across royalties, land, and water, and self-funded acquisitions and investments. Beyond this excellent performance from our core business, we also made tangible progress with next-generation opportunities in data centers and produced water desalination. Starting with data centers, this past December, we announced a strategic investment into Bolt Data and Energy, a new AI infrastructure platform chaired by former Google CEO, Eric Schmidt.

Ty Glover: Despite oil prices declining from $95 per barrel in 2022 to $65 per barrel in 2025, during the same span, TPL delivered 3-year compounded annual growth rate for oil and gas royalty production of 17%, water sales volumes of 18%, and produced water royalty volumes of 30%. We achieved this growth while maintaining a debt-free balance sheet and without any financing from new equity.

Speaker #3: During this same span , TPL delivered three . Year compounded annual growth rate for oil and gas royalty production of 17% . Water sales volumes of 18% and produced water royalty volumes of 30% .

Speaker #3: We achieved this growth while maintaining a debt free balance sheet and without any financing from new equity . We owe this counter-cyclical growth to our continued market capture .

Ty Glover: We owe this countercyclical growth to our continued market capture, talented employees, commercial development focus, differentiated scale across royalties, land, and water, and self-funded acquisitions and investments. Beyond this excellent performance from our core business, we also made tangible progress with next-generation opportunities in data centers and produced water desalination. Starting with data centers, this past December, we announced a strategic investment into Bolt Data and Energy, a new AI infrastructure platform chaired by former Google CEO, Eric Schmidt.

Speaker #3: Talented employees , commercial development focus , differentiated scale across royalties , land and water and self-funded acquisitions and investments . Beyond this excellent performance from our core business , we also made tangible progress with next generation opportunities and data centers and produce water desalination Starting with data centers this past December , we announced a strategic investment into Bolt data and Energy , a new AI infrastructure platform chaired by former Google CEO Eric Schmidt Bolt seeks to develop large scale solutions across data centers and power generation .

Tyler Glover: Bolt seeks to develop large-scale solutions across data centers and power generation. We're excited to team up with Bolt. For TPL, we can provide unrivaled access to land, conventional and renewable energy, and water. We can offer this in a state that maintains arguably the most pro-growth and pro-infrastructure regulatory environment. Bolt is currently expanding its team and having productive conversations with potential customers, and our personnel have been evaluating future site selections across TPL land. As part of our agreement, TPL retains a right of first refusal to provide water to Bolt-affiliated projects. We believe Bolt can become a large-scale, fully integrated data center and power generation platform, and we look forward to working closely together as we seek to make West Texas one of the premier technology infrastructure hubs. In addition to Bolt, TPL continues to engage in productive conversations with potential developers and customers for various projects.

Ty Glover: Bolt seeks to develop large-scale solutions across data centers and power generation. We're excited to team up with Bolt. For TPL, we can provide unrivaled access to land, conventional and renewable energy, and water. We can offer this in a state that maintains arguably the most pro-growth and pro-infrastructure regulatory environment. Bolt is currently expanding its team and having productive conversations with potential customers, and our personnel have been evaluating future site selections across TPL land.

Speaker #3: We're excited to team up with bolt for TPL . We can provide unrivaled access to land conventional and renewable energy , and water .

Speaker #3: We can offer this in a state that maintains arguably the most pro growth and pro infrastructure regulatory environment . Bolt is currently expanding its team and .

Speaker #3: Having productive conversations with potential customers . And our personnel have been evaluating future site selections across TPL land as part of our agreement , TPL retains a right of first refusal to provide water to bolt affiliated projects , we believe bolt can become a large scale , fully integrated data center and power generation platform , and we look forward to working closely together as we seek to make West Texas one of the premier technology infrastructure hubs .

Ty Glover: As part of our agreement, TPL retains a right of first refusal to provide water to Bolt-affiliated projects. We believe Bolt can become a large-scale, fully integrated data center and power generation platform, and we look forward to working closely together as we seek to make West Texas one of the premier technology infrastructure hubs. In addition to Bolt, TPL continues to engage in productive conversations with potential developers and customers for various projects.

Speaker #3: In addition to Bolt, TPL continues to engage in productive conversations with potential developers and customers for various projects. The data center landscape in the region is rapidly evolving and highly dynamic.

Tyler Glover: The data center landscape in the region is rapidly evolving and highly dynamic. We're working on projects across the full extent of our acreage, both in basin and out of basin. Project timelines run the gamut as well, with developers viewing West Texas as a near-term priority for new developments, but also as a longer-term hub that can support large-scale expansions. Given the size of these developments, which can potentially represent $ tens of billions of total investment across GPUs and power generation, these projects require extensive due diligence and negotiations across numerous counterparties. Projects of this scale are always difficult, especially with West Texas as a relative data center newcomer. That said, versus even a few quarters ago, urgency from developers and customers has clearly increased. Some of these conversations have progressed beyond just conceptual ideas and are in advanced stages of planning.

Ty Glover: The data center landscape in the region is rapidly evolving and highly dynamic. We're working on projects across the full extent of our acreage, both in basin and out of basin. Project timelines run the gamut as well, with developers viewing West Texas as a near-term priority for new developments, but also as a longer-term hub that can support large-scale expansions.

Speaker #3: We're working on projects across the full extent of our acreage , both in basin and out of basin . Project timelines run the gamut as well , with developers viewing West Texas as a near-term priority for new developments , but also as a longer term hub that can support large scale expansions .

Speaker #3: Given the size of these developments , which can potentially represent tens of billions of dollars of total investment across GPUs and power generation , these projects require extensive due diligence and negotiations across numerous counterparties Projects of this scale are always difficult , especially with West Texas as a relative data center newcomer That said , versus even a few quarters ago , urgency from developers and customers has clearly increased .

Ty Glover: Given the size of these developments, which can potentially represent $ tens of billions of total investment across GPUs and power generation, these projects require extensive due diligence and negotiations across numerous counterparties. Projects of this scale are always difficult, especially with West Texas as a relative data center newcomer. That said, versus even a few quarters ago, urgency from developers and customers has clearly increased. Some of these conversations have progressed beyond just conceptual ideas and are in advanced stages of planning.

Speaker #3: Some of these conversations have progressed beyond just conceptual ideas are in advanced stages of planning . We are encouraged by the progress we've made thus far , and we are hopeful to have multiple new updates to share before the end of the year .

Tyler Glover: We are encouraged by the progress we've made thus far, and we are hopeful to have multiple new updates to share before the end of the year. Turning to our desalination project, our 10,000-barrel-per-day R&D desalination facility in Orla, Texas, which we refer to as Phase Two B, is nearing completion. We had originally expected this facility to commence operations by the end of 2025, and we now expect the facility to begin taking produced water in the coming months. During equipment testing and flowing through synthetic produced water, the engineering team experimented with an additional process beyond the original design. After successful testing of new equipment to assess efficacy, we implemented the new process into our freeze desalination design and will be installing the associated equipment into our Orla Phase Two facility.

Ty Glover: We are encouraged by the progress we've made thus far, and we are hopeful to have multiple new updates to share before the end of the year. Turning to our desalination project, our 10,000-barrel-per-day R&D desalination facility in Orla, Texas, which we refer to as Phase Two B, is nearing completion. We had originally expected this facility to commence operations by the end of 2025, and we now expect the facility to begin taking produced water in the coming months.

Speaker #3: Turning to our desalination project , our 10,000 barrels per day R&D desalination facility in all of Texas , which we refer to as phase two B , is nearing completion .

Speaker #3: We had originally expected this facility to commence operations by the end of 2025 , and we now expect the facility to begin taking produced water in the coming months During equipment testing and flowing through synthetic produced water .

Ty Glover: During equipment testing and flowing through synthetic produced water, the engineering team experimented with an additional process beyond the original design. After successful testing of new equipment to assess efficacy, we implemented the new process into our freeze desalination design and will be installing the associated equipment into our Orla Phase Two facility.

Speaker #3: The engineering team experimented with an additional process beyond the original design. After successful testing of new equipment to assess efficacy, we implemented the new process into our freeze desalination design and will be installing the associated equipment into our phase two facility.

Speaker #3: We believe this will substantially reduce the amount of time and cycles produced. Water needs to pass through the system, thereby providing substantial capital cost and operating expense savings for a commercial-scale facility.

Tyler Glover: We believe this will substantially reduce the amount of time and cycles produced water need to pass through the system, thereby providing substantial capital costs and operating expense savings for a commercial-scale facility. For TPL, desalination would provide another solution we can offer the industry in addition to our extensive in-basin and out-of-basin pore space. The Permian already generates nearly 25 million barrels of produced water a day, with volumes expected to grow through the end of the decade, even if oil production were to plateau. To accommodate longer-term produced water growth, the industry will likely need incremental solutions beyond traditional subsurface disposal, and desalination potentially provides a sustainable pathway to reduce the amount of water injected subsurface. In 2026, we look forward to commencing operations and ramping volumes on our Orla desalination facility, evaluating the potential to bring large-scale freeze desalination to the Permian.

Ty Glover: We believe this will substantially reduce the amount of time and cycles produced water need to pass through the system, thereby providing substantial capital costs and operating expense savings for a commercial-scale facility. For TPL, desalination would provide another solution we can offer the industry in addition to our extensive in-basin and out-of-basin pore space. The Permian already generates nearly 25 million barrels of produced water a day, with volumes expected to grow through the end of the decade, even if oil production were to plateau.

Speaker #3: For TPL, desalination would provide another solution we can offer the industry in addition to our extensive in-basin and out-of-basin for space.

Speaker #3: The Permian already generates nearly 25 million barrels of produced water a day , with volumes expected to grow through the end of the decade .

Speaker #3: Even if oil production were to plateau to accommodate longer-term produced water growth, the industry will likely need incremental solutions beyond traditional subsurface disposal and desalination. This potentially provides a sustainable pathway to reduce the amount of water injected subsurface.

Ty Glover: To accommodate longer-term produced water growth, the industry will likely need incremental solutions beyond traditional subsurface disposal, and desalination potentially provides a sustainable pathway to reduce the amount of water injected subsurface. In 2026, we look forward to commencing operations and ramping volumes on our Orla desalination facility, evaluating the potential to bring large-scale freeze desalination to the Permian.

Speaker #3: 2026 we look forward to commencing operations and ramping volumes on our desalination facility and evaluating the potential to bring large scale desalination to the Permian .

Speaker #3: In addition , we plan to invest approximately $20 million on installing co-location equipment at the oil facility to evaluate the feasibility of waste heat capture and data center cooling Waste heat capture could provide significant energy savings for our freeze process , while our outlet freshwater Stream , after having gone through a freezing process , could provide direct cooling benefits for data centers and power generation .

Tyler Glover: In addition, we plan to invest approximately $20 million on installing co-location equipment at the Orla facility to evaluate the feasibility of waste heat capture and data center cooling. Waste heat capture could provide significant energy savings for our freeze process, while our outlet freshwater stream, after having gone through a freezing process, could provide direct cooling benefits for data centers and power generation. In conclusion, as we look ahead to 2026, we're excited with the growth pipeline in front of us. We are focused on exploiting our strengths and leveraging our expertise as we look to benefit from the long-term structural tailwinds unfolding across our business. We believe we can continue to drive growth and extract incremental value, even as this relatively weak oil price environment persists. With our industry-leading margins, our fortress balance sheet, a $500 million undrawn credit facility....

Ty Glover: In addition, we plan to invest approximately $20 million on installing co-location equipment at the Orla facility to evaluate the feasibility of waste heat capture and data center cooling. Waste heat capture could provide significant energy savings for our freeze process, while our outlet freshwater stream, after having gone through a freezing process, could provide direct cooling benefits for data centers and power generation.

Speaker #3: In conclusion , as we look ahead to 2026 , we're excited with the growth pipeline in front of us . We are focused on exploiting our strengths and leveraging our expertise as we look to benefit from the long term structural tailwinds unfolding across our business We believe we can continue to drive growth and extract incremental value even as this relatively weak oil price environment persists with our industry leading margins , our fortress balance sheet , a $500 million undrawn credit facility .

Ty Glover: In conclusion, as we look ahead to 2026, we're excited with the growth pipeline in front of us. We are focused on exploiting our strengths and leveraging our expertise as we look to benefit from the long-term structural tailwinds unfolding across our business. We believe we can continue to drive growth and extract incremental value, even as this relatively weak oil price environment persists. With our industry-leading margins, our fortress balance sheet, a $500 million undrawn credit facility....

Speaker #3: Not only can we tolerate periods of low commodity prices, we have considerable capability to invest opportunistically as we look to consolidate high-quality assets and expand market capture.

Tyler Glover: Not only can we tolerate periods of low commodity prices, we have considerable capability to invest opportunistically as we look to consolidate high-quality assets and expand market capture. We remain steadfastly focused on maximizing long-term intrinsic value per share, and the opportunity set in front of us today across our legacy and next-gen businesses is as robust as ever. One additional housekeeping item I wanted to mention: Yesterday, we announced an event for TPL shareholders for an office and water field visit in Midland, Texas. That event will be held on Monday, 18 May. We welcome all shareholders to attend, and we ask that shareholders submit an RSVP by filling out a form on our website or emailing Investor Relations. Please visit the Events section of our website for more information. And with that, I'll hand the call over to Chris.

Ty Glover: Not only can we tolerate periods of low commodity prices, we have considerable capability to invest opportunistically as we look to consolidate high-quality assets and expand market capture. We remain steadfastly focused on maximizing long-term intrinsic value per share, and the opportunity set in front of us today across our legacy and next-gen businesses is as robust as ever.

Speaker #3: We remain steadfastly focused on maximizing long term intrinsic value per share and the opportunity set in front of us today across our legacy and next gen businesses is as robust as ever One additional housekeeping item I wanted to mention yesterday we announced an event for TPL shareholders for an office and water field visit in Midland , Texas That event will be held on Monday , May 18th .

Ty Glover: One additional housekeeping item I wanted to mention: Yesterday, we announced an event for TPL shareholders for an office and water field visit in Midland, Texas. That event will be held on Monday, 18 May. We welcome all shareholders to attend, and we ask that shareholders submit an RSVP by filling out a form on our website or emailing Investor Relations. Please visit the Events section of our website for more information. And with that, I'll hand the call over to Chris.

Speaker #3: We welcome all shareholders to attend, and we ask that shareholders submit an RSVP by filling out a form on our website or emailing Investor Relations.

Speaker #3: Please visit the events section of our website for more information. And with that, I'll hand the call over to Chris. Thanks, Ty. Consolidated revenues during the fourth quarter of 2025 were approximately $212 million.

Chris Steddum: Thanks, Ty. Consolidated revenues during the Q4 of 2025 were approximately $212 million. Consolidated Adjusted EBITDA was $178 million. Adjusted EBITDA margin was 84%, and Free Cash Flow was $119 million. For full year 2025, we generated record Free Cash Flow of approximately $498 million, which represents an 8% year-over-year increase. Full year performance benefited from higher daily oil and gas royalty production, which increased 29% year-over-year, higher water sales daily volumes, which increased 4%, and higher produced water royalty daily volumes, which increased 25%. Of the approximately 34,600 BOE per day for full year 2025 royalty production, the acquisition that closed last November contributed approximately 500 BOE per day.

Speaker #3: Consolidated adjusted EBITDA was $178 million . Adjusted EBITDA margin was 84% and free cash flow was $119 million . For full year 2025 , we generated record free cash flow of approximately $498 million , which represents an 8% year over year increase .

Speaker #3: Full year performance benefited from higher daily oil and gas royalty production , which increased 29% year over year . Higher water sales , daily volumes , which increased 4% and higher produced water royalty .

Chris Steddum: Full year performance benefited from higher daily oil and gas royalty production, which increased 29% year-over-year, higher water sales daily volumes, which increased 4%, and higher produced water royalty daily volumes, which increased 25%. Of the approximately 34,600 BOE per day for full year 2025 royalty production, the acquisition that closed last November contributed approximately 500 BOE per day.

Speaker #3: Daily volumes which increased 25% of the approximately 34,600 barrels of oil equivalent per day . For full year 2025 royalty production , the acquisition that closed last November contributed approximately 500 barrels of oil equivalent per day Consolidated results were partially offset by lower realized oil prices , which declined year over year by 15% .

Chris Steddum: Consolidated results were partially offset by lower realized oil prices, which declined year-over-year by 15%. Given the strong performance, yesterday, we announced a regular dividend of $0.60 per share, which represents a 12.5% increase versus the prior quarter dividend. Capital expenditures last year were $66 million, which is inclusive of $6 million of payables. This was at the low end of our original guidance. Moving to our well inventory, as of quarter end, TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells, or commonly referred to as DUCs, and 4.0 net completed but not producing wells. That amounts to 19.5 net line-of-sight wells, which also includes approximately 2 net wells from our recent royalty acquisition.

Speaker #3: Given the strong performance yesterday , we announced a regular dividend of $0.60 per share , which represents a 12.5% increase versus the prior quarter dividend Capital expenditures last year were $66 million , which is inclusive of $6 million of payables This was at the low end of our original guidance Moving to our well inventory .

Chris Steddum: This was at the low end of our original guidance. Moving to our well inventory, as of quarter end, TPL had 5.6 net permitted wells, 9.8 net drilled but uncompleted wells, or commonly referred to as DUCs, and 4.0 net completed but not producing wells. That amounts to 19.5 net line-of-sight wells, which also includes approximately 2 net wells from our recent royalty acquisition.

Speaker #3: As of quarter end , TPL had 5.6 net permitted wells , 9.8 . Net drilled but uncompleted wells were commonly referred to as ducks and 4.0 net completed , but not producing wells .

Speaker #3: That amounts to 19.5 net line-of-sight wells, which also includes approximately two net wells from our recent royalty acquisition across the Permian Basin.

Chris Steddum: Across the Permian Basin, sustained low oil and Waha natural gas prices during 2025 has generally led to a decline in rig activity, which, according to Baker Hughes, Permian horizontal rig count is down approximately 26%. However, despite less rigs, the basin has been able to sustain production growth through a sizable drawdown in DUCs. The decline in our line-of-sight wells, and this is true basin-wide, is primarily due to this DUC drawdown. From our vantage point, we believe the industry will remain in DUC drawdown mode this year. During 2025, we estimate that the industry drew down approximately 600 DUCs, with roughly 3,500 to 4,000 DUCs still remaining in the Permian today.

Speaker #3: Sustained low oil and Waha natural gas prices during 2025 has generally led to a decline in rig activity , which , according to Baker Hughes , Permian horizontal rig count is down approximately 26% .

Speaker #3: However , despite less rigs , the basin has been able to sustain production growth through a sizable drawdown in ducks The decline in our line of sight wells and this is true basin wide , is primarily due to this duct drawdown .

Chris Steddum: The decline in our line-of-sight wells, and this is true basin-wide, is primarily due to this DUC drawdown. From our vantage point, we believe the industry will remain in DUC drawdown mode this year. During 2025, we estimate that the industry drew down approximately 600 DUCs, with roughly 3,500 to 4,000 DUCs still remaining in the Permian today.

Speaker #3: From our vantage point , we believe the industry will remain in duck Drawdown mode . This year . During 2025 , we estimate that the industry drew down approximately 600 ducts , with roughly 3500 to 4000 ducts still remaining in the Permian .

Speaker #3: Today , with the current pacing of new completions , the industry will generally require around 2000 ducts to maintain a buffer in front of active frac fleets , leaving roughly 1500 to 2000 discretionary ducts Thus , we believe the Permian still has ample duct inventory to drive a completion .

Chris Steddum: With the current pacing of new completions, the industry will generally require around 2,000 DUCs to maintain a buffer in front of active frack fleets, leaving roughly 1,500 to 2,000 discretionary DUCs. Thus, we believe the Permian still has ample DUC inventory to drive a completion pacing to support production via continued discretionary DUC draws, with at least a year or more of runway before the industry would need to begin adding rigs to bring new spuds and new completions into balance while maintaining current completion pacing. Another mitigating factor to lower rig counts is that operator efficiencies continue to improve and well laterals continue to get longer. Wells completed on TPL royalty acreage were on average 8% longer than the prior year. We are seeing substantial increases in lateral lengths across the board.

Speaker #3: Pacing to support production via continued discretionary duct draws, with at least a year or more of runway for the industry, would need to begin adding rigs to bring new spuds and new completions into balance.

Speaker #3: While maintaining current completion pacing, another mitigating factor to lower rig counts is that operator efficiencies continue to improve and well laterals continue to get longer.

Chris Steddum: Another mitigating factor to lower rig counts is that operator efficiencies continue to improve and well laterals continue to get longer. Wells completed on TPL royalty acreage were on average 8% longer than the prior year. We are seeing substantial increases in lateral lengths across the board.

Speaker #3: Wells completed on TPL royalty acreage were on average 8% longer than the prior year . We are seeing substantial increases in lateral links across the board .

Speaker #3: This was the first quarter in which new permits spuds completions and new PDP wells all had average lateral lengths in excess of 11,000ft for new permitted wells this past quarter .

Chris Steddum: This was the first quarter in which new permits, spuds, completions, and new PDP wells all had average lateral lengths in excess of 11,000ft. For new permitted wells this past quarter, the average lateral length is 35% longer than the average permitted well in 2024. We also had over 100 new permitted wells with lateral lengths over 15,000ft and 34 wells over 20,000ft. Industry consolidation over the last few years is allowing operators to block up sections and create much larger DSUs. With this trend of longer laterals, greater operator efficiencies, and sizable DUC balance, we do not anticipate basin-wide production declines given the current oil strip. Turning to our capital allocation priorities for 2026, we exited the year with $145 million of cash on the balance sheet and zero debt.

Speaker #3: The average lateral length is 35% longer than the average permitted . Well , in 2024 . We also had over 100 new permitted wells with lateral lengths over 15,000ft and 34 wells over 20,000ft .

Speaker #3: Industry consolidation over the last few years is allowing operators to block up sections and create much larger dsus . With this trend of longer laterals , greater operator efficiencies and sizable duct balance , we do not anticipate basin wide production declines given the current oil strip .

Chris Steddum: Industry consolidation over the last few years is allowing operators to block up sections and create much larger DSUs. With this trend of longer laterals, greater operator efficiencies, and sizable DUC balance, we do not anticipate basin-wide production declines given the current oil strip. Turning to our capital allocation priorities for 2026, we exited the year with $145 million of cash on the balance sheet and zero debt.

Speaker #3: Turning to our capital allocation priorities for 2026 , we exited the year with a $145 million of cash on the balance sheet and zero debt .

Speaker #3: During the quarter , we closed on Tpls inaugural credit facility with $500 million of commitments . That facility remains fully undrawn today For fiscal year 2026 , we anticipate capital expenditures to be approximately 65 to $75 million , and as I mentioned , $20 million will be allocated towards investigating waste heat capture and data center and power generation co-location potential for our freeze desalination facility .

Chris Steddum: During the quarter, we closed on TPL's inaugural credit facility with $500 million of commitments. That facility remains fully undrawn today. For fiscal year 2026, we anticipate capital expenditures to be approximately $65 to 75 million, and as Ty mentioned, $20 million will be allocated towards investigating waste heat capture and data center and power generation co-location potential for our freeze desalination facility. The remaining balance will be dedicated to our water sales business for electrification, equipment, and supply improvement and maintenance. With modest capital needs, a business that continues to generate strong free cash flow and a balance sheet and a net cash position with a sizable undrawn facility,

Speaker #3: The remaining balance will be dedicated to our water sales business for electrification equipment and supply improvement, and maintenance, with modest capital needs.

Chris Steddum: The remaining balance will be dedicated to our water sales business for electrification, equipment, and supply improvement and maintenance. With modest capital needs, a business that continues to generate strong free cash flow and a balance sheet and a net cash position with a sizable undrawn facility,... TPL has the flexibility and liquidity to respond to evolving macro and sector volatility.

Speaker #3: A business that continues to generate strong free cash flow and a balance sheet , and a net cash position with a sizable undrawn facility .

Speaker #3: TPL has the flexibility and liquidity to respond to evolving macro and sector volatility. We retain the ability to simultaneously invest in the business, acquire high-quality assets, and expand shareholder return of capital.

Robert Crain: ... TPL has the flexibility and liquidity to respond to evolving macro and sector volatility. We retain the ability to simultaneously invest in the business, acquire high-quality assets, and expand shareholder return of capital, and we can flex up any or multiple aspects of those options should any opportunities or dislocations occur. We have a resilient business and a pristine balance sheet, and our focus remains on maximizing intrinsic value per share over the long term. With that, operator, we will now take questions.

Chris Steddum: We retain the ability to simultaneously invest in the business, acquire high-quality assets, and expand shareholder return of capital, and we can flex up any or multiple aspects of those options should any opportunities or dislocations occur. We have a resilient business and a pristine balance sheet, and our focus remains on maximizing intrinsic value per share over the long term. With that, operator, we will now take questions.

Speaker #3: And we can flex up any or multiple aspects of those options should any opportunities or dislocations occur . We have a resilient business and a pristine balance sheet , and our focus remains on maximizing intrinsic value per share over the long term .

Speaker #3: And with that operator , we will now take questions

Speaker #1: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. One moment please while we poll for questions. Thank you. Our first question comes from the line of Derek Whitfield with Texas Capital. Please proceed with your question.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please.

Speaker #1: While we pull for questions, thank you. Our first question comes from the line of Derrick Whitfield with Texas Capitol. Please proceed with your question.

Speaker #4: Good morning , guys , and congrats on a strong financial and operational update .

Derek Whitfield: Good morning, guys, and congrats on a strong financial and operational update.

Derrick Whitfield: Good morning, guys, and congrats on a strong financial and operational update.

Speaker #5: Thanks, Derrick. Good morning.

Tyler Glover: Thanks, Derek. Good morning.

Ty Glover: Thanks, Derek. Good morning.

Speaker #4: I'd like to start with AI macro. Based on the flurry of both power and AI announcements we've seen across West Texas over the last six months, I'd love to hear your thoughts on how the opportunity set for power and data center development has evolved for TPL, and if it extends beyond what you've highlighted with Bolt Energy to date.

Derek Whitfield: I'd like to start with, AI macro. Based on the flurry of both power and AI announcements we've seen across West Texas over the last six months, I'd love to hear your thoughts on how the opportunity set for power and data center development has evolved for TPL, and if it extends beyond what you've highlighted with Bolt Energy to date.

Derrick Whitfield: I'd like to start with, AI macro. Based on the flurry of both power and AI announcements we've seen across West Texas over the last six months, I'd love to hear your thoughts on how the opportunity set for power and data center development has evolved for TPL, and if it extends beyond what you've highlighted with Bolt Energy to date.

Speaker #5: Yeah , it definitely has . I think the further we dig into it , the bigger we think the opportunity is You know , we've got a few projects we're working on , some bolt related , some not But I think when you look at that business , you know , just like any other business , at the end of the day , scale is what really matters .

Tyler Glover: Yeah, it, it definitely has. I think the further we dig into it, the bigger we think the opportunity is. You know, we've got a few projects we're working on, some Bolt-related, some not. But I think when you look at that business, you know, just like any other business, at the end of the day, scale is what really matters. And, you know, there's, there's not really anyone in Texas that offers scale like TPL does, whether that's land, access to gas or water. And, you know, I think long term, we're, we're trying to build a real business here. We're not trying to hodgepodge, you know, 200 meg facilities over the acreage footprint. The long-term goal is to build, you know, multiple multi-gig energy campuses, and that takes a little time, but, you know, efforts have been very promising so far.

Ty Glover: Yeah, it, it definitely has. I think the further we dig into it, the bigger we think the opportunity is. You know, we've got a few projects we're working on, some Bolt-related, some not. But I think when you look at that business, you know, just like any other business, at the end of the day, scale is what really matters. And, you know, there's, there's not really anyone in Texas that offers scale like TPL does, whether that's land, access to gas or water.

Speaker #5: And , you know , there's there's not really anyone in Texas that offers scale like TPL does , whether that's land access to gas or water .

Speaker #5: And , you know , I think long term we're we're trying to build a real business here . We're not trying to hodgepodge , you know , 200 facilities over the acreage footprint , the long term goal is to build , you know , multiple multi-gig energy campuses .

Ty Glover: And, you know, I think long term, we're, we're trying to build a real business here. We're not trying to hodgepodge, you know, 200 meg facilities over the acreage footprint. The long-term goal is to build, you know, multiple multi-gig energy campuses, and that takes a little time, but, you know, efforts have been very promising so far. Like I said, we've got a few deals we're working on. Commercial negotiations are ongoing, so very excited about the opportunity set.

Speaker #5: And that takes a little time . But , you know , efforts have been very promising so far . And like I said , we've got a few deals we're working on commercial negotiations or or ongoing .

Tyler Glover: Like I said, we've got a few deals we're working on. Commercial negotiations are ongoing, so very excited about the opportunity set.

Speaker #5: So very excited about the opportunity set

Speaker #4: Perfect . And Ty , for my follow up , I really wanted to focus more firmly on bolt Energy and the potential of your strategic agreement is laid out by one of your prominent investors .

Derek Whitfield: Perfect. And Ty, for my follow-up, I really wanted to focus more firmly on Bolt Energy and the potential of your strategic agreement as laid out by one of your prominent investors. And maybe just for the benefit of level setting the discussion, the investor believes Bolt's ambition is to build a 10-gigawatt data center campus in West Texas, and that each gigawatt could be worth over $125 million in water revenue for TPL, with power generator requiring over 120,000 barrels of less conditioned water and data center cooling requiring over 200,000 barrels per day of more conditioned water.

Derrick Whitfield: Perfect. And Ty, for my follow-up, I really wanted to focus more firmly on Bolt Energy and the potential of your strategic agreement as laid out by one of your prominent investors. And maybe just for the benefit of level setting the discussion, the investor believes Bolt's ambition is to build a 10-gigawatt data center campus in West Texas, and that each gigawatt could be worth over $125 million in water revenue for TPL, with power generator requiring over 120,000 barrels of less conditioned water and data center cooling requiring over 200,000 barrels per day of more conditioned water.

Speaker #4: And maybe just for the benefit of level set in the discussion , the investor believes bolt ambition is to build a ten gigawatt data center campus in West Texas , and then each gigawatt could be worth over $125 million in water revenue for TPO with power generating requiring over 120,000 barrels of a less conditioned water and data center cooling , requiring over 200,000 barrels per day of more conditioned water .

Speaker #4: The interesting thing is that we're still kind of in the early stages of charting this out. I know Robert and the team have made a great deal of advances in understanding waste, heat capture, and cooling to improve PUE efficiencies for data centers.

Derek Whitfield: With the understanding that we're still kind of in the early stages of charting this out, I know Robert and team have made a great deal of advances in understanding waste heat capture, and cooling to improve PUE efficiencies for data centers. All that being said, are these reasonable numbers when kind of thinking about the scale and the potential value that we have in front of us?

Derrick Whitfield: With the understanding that we're still kind of in the early stages of charting this out, I know Robert and team have made a great deal of advances in understanding waste heat capture, and cooling to improve PUE efficiencies for data centers. All that being said, are these reasonable numbers when kind of thinking about the scale and the potential value that we have in front of us?

Speaker #4: All that being said , are these reasonable numbers when kind of thinking about the scale and the potential value that we have in front of us ?

Speaker #5: Well , what we've seen is it varies pretty greatly with the design of the facility , both on the power side and the data center side , but with certain designs .

Tyler Glover: Well, what we've seen is it varies pretty greatly with the design of the facility, both on the power side and the data center side. But with certain designs, yes, those numbers are very reasonable. And, you know, we've talked to some power generators that the water usage numbers seem substantially higher than that. So for us, I mean, you know, we're used to moving a lot of water. Q4, we moved over 1 million barrels of water a day, and we think that this could be pretty material to the water business over the long term. So again, I think the opportunity is pretty substantial. But the usage actually depends, you know, varies pretty widely depending on design of the facility. Robert, I don't know if you have anything to add to that.

Ty Glover: Well, what we've seen is it varies pretty greatly with the design of the facility, both on the power side and the data center side. But with certain designs, yes, those numbers are very reasonable. And, you know, we've talked to some power generators that the water usage numbers seem substantially higher than that.

Speaker #5: Yes , those numbers are very reasonable . And , you know , we've talked to some power generators that the water usage numbers seem substantially higher than that .

Ty Glover: So for us, I mean, you know, we're used to moving a lot of water. Q4, we moved over 1 million barrels of water a day, and we think that this could be pretty material to the water business over the long term. So again, I think the opportunity is pretty substantial. But the usage actually depends, you know, varies pretty widely depending on design of the facility. Robert, I don't know if you have anything to add to that.

Speaker #5: So for us , I mean , we're used to moving a lot of water . Fourth quarter . We moved over a million barrels of water a day .

Speaker #5: And we think that this could be pretty material to the water business over the long term. So again, I think the opportunity is pretty substantial.

Speaker #5: But the usage actually depends, you know, varies pretty widely depending on the design of the facility. Robert, I don't know if you have anything to add to that.

Robert Crain: Derek, you know our stance on it. It's variation in design. You know, our goal is to obviously work with the customer on how do we implement the right volume and quality of water in that design. But as things start to evolve, you know, I know it's specific for Bolt, but I think you have to look at, you know, just how that power plant is designed. Is it a single cycle? Is it a combined cycle? Is it using evaporative direct air cooling to offset those efficiency losses, you know, due to higher ambient air? You know, our goal is to work with the customer, facilitate their design from a water perspective. Again, we focus on the quality and the volume that's needed.

Speaker #5: Derrick . It's , you .

Speaker #6: Know , you know , our stance on it . It's variation in You know , our goal is , is to obviously work with the customer on how do we implement the right volume and quality of water in that design .

Speaker #6: But as things start to evolve , you know , I know it's specific for bolt , but I think you have to look at , you know , just how that power plan is designed .

Speaker #6: Is it a single cycle? Is it a combined cycle? Is it using, you know, evaporative direct air cooling to offset those efficiency losses due to higher ambient air?

Speaker #6: You know , our goal is to work with the customer , facilitate their design from a water perspective . Again , we focus on the quality and the volume that's needed .

Robert Crain: Again, we focus on the quality and the volume that's needed. You know, I think when we look at the amount of compute that's coming, I mean, you mentioned the 10-gigawatt goal from Bolt. You know, we're confident in the amount of compute and associated gen that's going to be coming to the Permian. That, you know, the effect on our water business is going to be significant.

Speaker #6: You know , I think when we look at the amount of compute that's coming . I mean , you mentioned the ten gigawatt goal from bolt .

Robert Crain: You know, I think when we look at the amount of compute that's coming, I mean, you mentioned the 10-gigawatt goal from Bolt. You know, we're confident in the amount of compute and associated gen that's going to be coming to the Permian. That, you know, the effect on our water business is going to be significant.

Speaker #6: You know, we're confident in the amount of compute and associated gen that's going to be coming to the Permian. You know, the effect on our water business is going to be significant.

Derek Whitfield: Perfect. And maybe just one quick follow-up, if I could, and shift it really more to your traditional water business. You guys saw record volumes for both disposal and source water, and really for that matter, really strong implied source water realization per barrel for this quarter. Given the broader contraction in activity that we're seeing across the basin, could you speak to some of the things that TPL is actively doing to drive this strength in the business and just your current outlook for each of these businesses. And the thing that we're kind of seeing occur right now with those is higher highs and higher lows. So any color you could provide would be helpful.

Derrick Whitfield: Perfect. And maybe just one quick follow-up, if I could, and shift it really more to your traditional water business. You guys saw record volumes for both disposal and source water, and really for that matter, really strong implied source water realization per barrel for this quarter.

Speaker #4: And maybe just one quick follow up . If I could , and shift in really more to your traditional water business . You guys saw record volumes for both disposal and source water and really , for that matter , really strong implied source water realization per barrel for this quarter .

Speaker #4: Given the broader contraction and activity that we're seeing across the basin , could you speak to some of the things that TPL is actively doing to drive this strength in the business ?

Derrick Whitfield: Given the broader contraction in activity that we're seeing across the basin, could you speak to some of the things that TPL is actively doing to drive this strength in the business and just your current outlook for each of these businesses. And the thing that we're kind of seeing occur right now with those is higher highs and higher lows. So any color you could provide would be helpful.

Speaker #4: And just your current outlook for each of these businesses? And the thing that we're kind of seeing occur right now with both is higher highs and higher lows.

Speaker #4: So, any color you could provide would be helpful.

Speaker #6: Sure . I'll start on the produced water side . I mean , if you look at our success in the growth of produced water volumes , I think it's twofold .

Robert Crain: Sure. I'll start on the produced water side. I mean, if you look at our success and the growth of produced water volume, I think it's twofold. One, you go back to our legacy contracts, you know, what we were able to really set up in the early days of, you know, ensuring, you know, the volumes, and, you know, how we direct those volumes and work with operators and midstream companies to do it. But the second is the strategy that we implemented, you know, four or five years ago. You know, looking at the constraints we knew that were going to come from produced water management and associated pore space was, you know, two things: out of basin pore space for short-term solutions and desal.

Speaker #6: One , you go back to our legacy contracts . You know what we were able to really set up in the early days of , you know , ensuring the volumes and , you know , how we direct those volumes and work with operators and midstream companies to do it .

Speaker #6: But the second is the strategy that we implemented , you know , 4 or 5 years ago , you know , looking at the constraints , we knew that were going to come from produced water management and associated pore space was , you know , two things out of basin pore space for short term solutions .

Robert Crain: But the second is the strategy that we implemented, you know, four or five years ago. You know, looking at the constraints we knew that were going to come from produced water management and associated pore space was, you know, two things: out of basin pore space for short-term solutions and desal.

Speaker #6: And desal . The result you're seeing in those higher numbers as a result of those legacy contracts and our strategy that we've implemented , you know , we look at the produced water management space of where the solutions provider , again , to the operators in midstream company .

Robert Crain: The result you're seeing in those higher numbers is a result of those legacy contracts and our strategy that we've implemented. You know, we look at the produced water management space of, you know, we're the solutions provider, again, to the operators and midstream company, and I think you're seeing the result in the numbers. When you look at our source water business, the scale and scope of our system that we continue to expand on every year, as we see, you know, water demands go up, you know, due to cube development and tri-mo fracs, we've always said the scale and scope of our business allows us to expand and capture more market.

Speaker #6: I think you're seeing the result in the numbers . When you look at our source water business , the scale and scope of our system that we continue to expand on every year as we see water demands go up .

Robert Crain: When you look at our source water business, the scale and scope of our system that we continue to expand on every year, as we see, you know, water demands go up, you know, due to cube development and tri-mo fracs, we've always said the scale and scope of our business allows us to expand and capture more market.You know, we can, we can bolt on and build onto that system to capture more, where even if we see, you know, a slight contraction in overall activity level, we're able to touch so much more, as we continue to expand.

Speaker #6: You know , due to cube development and try racks , we've we've always said the scale and scope of our business allows us to expand and capture more market .

Robert Crain: You know, we can, we can bolt on and build onto that system to capture more, where even if we see, you know, a slight contraction in overall activity level, we're able to touch so much more, as we continue to expand.

Speaker #6: You know , we are we can we can bolt on and build on to that system to capture more . We're even if we see a , you know , a strike contraction in overall activity level , we're able to touch so much more as we continue to expand

Speaker #4: Great update, guys. I'll turn it back to the operator.

Derek Whitfield: Great update, guys. I'll turn it back to the operator.

Derrick Whitfield: Great update, guys. I'll turn it back to the operator.

Speaker #5: Thanks , Derek .

Robert Crain: Thanks, Derek.

Speaker #1: Our next question comes from the line of Tim Raven with KeyBanc . Please proceed with your question .

Operator: Our next question comes from the line of Tim Rezefin with KeyBank. Please proceed with your question.

Speaker #7: I .

Speaker #8: Hey , good morning folks . Derek actually hit on some of my topics here , but I just wanted to kind of follow up again on the commentary on the data centers .

Tim Rezvan: Good morning, folks. Derek actually hit on some of my topics here, but just wanted to kind of follow up again on the commentary on the data centers. You know, your shareholder put out some, you know, pretty impressive comments. So, you know, do you anticipate putting something out yourself on that, on that opportunity set? Is there a time when you may feel comfortable doing that, or do you think that your shareholder's commentary is, is sufficient, as you know, it created quite a stir, and people are trying to kind of understand the, the opportunity set here?

Speaker #8: You know , your shareholder put out some pretty impressive comments . So , you know , do you anticipate putting something out yourself on that , on that opportunity set ?

Speaker #8: Is there a time when you may feel comfortable doing that , or do you think that your shareholders commentary is sufficient ? As you know , it created quite a stir and people are trying to kind of understand the opportunity set here

Speaker #5: I think eventually we'll put more information out . You know , we've got pretty strict confidentiality agreements in place with all of our counterparties and , you know , kind of like when we started the water business , keeping most of the commercial terms private , at least in the near term .

Robert Crain: I think eventually we'll put more information out. You know, we've got pretty strict confidentiality agreements in place with all of our counterparties, and, you know, kind of like when we started the water business, keeping most of the commercial terms private, at least in the near term, we think is a competitive advantage for us. But yeah, we, we do hope to put a stronger narrative out eventually with some additional information on the opportunity set.

Ty Glover: I think eventually we'll put more information out. You know, we've got pretty strict confidentiality agreements in place with all of our counterparties, and, you know, kind of like when we started the water business, keeping most of the commercial terms private, at least in the near term, we think is a competitive advantage for us. But yeah, we, we do hope to put a stronger narrative out eventually with some additional information on the opportunity set.

Speaker #5: We think this is a competitive advantage for us. But yeah, we do hope to put a stronger narrative out eventually, with some additional information on the opportunity set.

Speaker #8: Okay , okay . I guess we'll stay tuned on that . And then if I could pivot to the desalination update , you know , it sounds like there's sort of a change in process that you think creates more , more efficiencies .

Tim Rezvan: Okay. Okay, I guess we'll, we'll stay tuned on that. And then if I could pivot to the desalination update. You know, sounds like there's sort of a change in process that you think creates more efficiencies. So just to be clear on that, this Waste Heat Capture is the idea that it will sort of just improve the efficiency of the operation? And where I'm going with that is there's a debate in the marketplace about the power intensity to run that process. And in an area that's, you know, short electricity today, people are trying to understand and kind of how feasible it would be to scale that. So if you just kind of talk through the efficiencies you're trying to capture and overall power intensity of that business, that would be helpful.

Speaker #8: So just to be clear on that, this waste heat capture is the idea that it will sort of just improve the efficiency of the operation.

Tim Rezvan: And where I'm going with that is there's a debate in the marketplace about the power intensity to run that process. And in an area that's, you know, short electricity today, people are trying to understand and kind of how feasible it would be to scale that. So if you just kind of talk through the efficiencies you're trying to capture and overall power intensity of that business, that would be helpful.

Speaker #8: And where I'm going with that is, there's a debate in the marketplace about the power intensity to run that process. And in an area that's, you know, short on electricity today, people are trying to understand kind of how feasible it would be to scale that.

Speaker #8: So if you could just kind of talk through the efficiencies you're trying to capture, and overall power intensity of that business, that would be helpful.

Speaker #6: Sure . You know , the overall goal in water desal is to reduce energy consumption to overall reduce your price per barrel . You know , if you look at , you know , how desal metrics are , how desal metrics are measured , it's really in your kilowatt per hour per barrel of water treated .

Robert Crain: Sure. You know, the overall goal in water desal is to reduce energy consumption, to overall reduce your price per barrel. You know, if you look at how desal metrics are measured, you know, it's really in your kilowatt per hour per barrel of water treated. So, you know, I'll touch first on you know, our kind of adaptation of design. Again, that is, you know, trying to achieve that goal of, you know, process the water without having to put more energy consumption into it to bring that kilowatt per hour per barrel down. When you look at the power piece, you know, all thermal technologies, you're right, they do require power. So that's where we go when you look at waste heat capture.

Speaker #6: So , you know , I'll touch first on , you know , our kind of adaptation of design . Again that is , you know , trying to achieve that goal of , you know , process the water without having to put more energy consumption into it to bring that kilowatt per hour per barrel down .

Robert Crain: Again, that is, you know, trying to achieve that goal of, you know, process the water without having to put more energy consumption into it to bring that kilowatt per hour per barrel down. When you look at the power piece, you know, all thermal technologies, you're right, they do require power. So that's where we go when you look at waste heat capture.

Speaker #6: When you look at the power piece , all thermal technologies , you're right . They do require power . So that's where we go .

Speaker #6: When you look at waste heat capture again, anything we can do from the capture standpoint, you know, waste heat is almost free energy.

Robert Crain: Again, anything we can do from a waste heat capture standpoint, you know, waste heat is almost free energy. And so, you know, we look at, you know, one of the big benefits of desal combined with, you know, power generation, be it for compute or microgrids or whatever the, the use may be, again, it's just furthering bringing that, that kilowatt per hour per barrel treated down.

Speaker #6: And so , you know , we look at , you know , one of the big benefits of desal combined with power generation , be it for compute or microgrids or whatever the use may be , again , it's just furthering bringing that kilowatt per hour per barrel treated down

Speaker #8: Okay , okay . Well stay tuned for an update on that . Appreciate that . And then if I could sneak one more question in , you know , on the western part of your position , you have meaningful acreage in Hudspeth County .

Tim Rezvan: Okay. Okay, we'll still stay tuned for, for an update on that. Appreciate that. And then if I could sneak one more question in. You know, on the western part of your acreage position, you, you have meaningful acreage in Hudspeth County. There have been companies, you know, developing, exploring for Rarus out there. Could you discuss your exposure to that activity, maybe from any exploration or right of way occurring there? Any color there would be helpful. Thank you.

Speaker #8: There have been companies , you know , developing , exploring for rare earths out there . Could you discuss your exposure to that activity , maybe from any exploration or right of way occurring there , any color there would be helpful ?

Speaker #8: Thank you .

Speaker #5: Yeah, so we do have a couple of exploration projects going on currently out there on some properties that we've actually purchased or traded for in the last seven or eight years.

Robert Crain: Yeah. So we do have a couple of exploration projects going on currently out there on some properties that we've actually purchased or traded for in the last 7 or 8 years. Early stages, but findings seem promising so far. So, you know, we'll be glad to update you as we have additional information.

Ty Glover: Yeah. So we do have a couple of exploration projects going on currently out there on some properties that we've actually purchased or traded for in the last 7 or 8 years. Early stages, but findings seem promising so far. So, you know, we'll be glad to update you as we have additional information.

Speaker #5: Early stages, but findings seem promising so far. So, you know, we'll be glad to update you as we have additional information.

Speaker #8: Okay. Fair enough. Thank you, everybody.

Tim Rezvan: Okay, fair enough. Thank you, everybody.

Speaker #5: Thanks , Tim .

Robert Crain: Thanks, Tim.

Ty Glover: Thanks, Tim.

Speaker #1: Our next question comes from the line of Oliver Huang with Tudor Pickering Holt. Please proceed with your question.

Operator: Our next question comes from the line of Oliver Huang with Tudor, Pickering, Holt & Co. Please proceed with your question.

Speaker #9: Good morning, Time Team, and thanks for taking our questions. Just wanted to start out on the water side, as we think about the role for TPL to supply water for the previously announced Bolt partnership.

Oliver Huang: Good morning, Todd and team, and thanks for taking our questions. Just wanted to start out on the water side. As we think about the RO water to supply water for the previously announced Bolt partnership, just any sort of color on if this is expected to be done through your source water network, treated desal water or a tiered combination? Just really trying to get a better understanding how the latter measures up to spec requirements of counterparties for a CCGT and for a data center.

Speaker #9: Just any sort of color on if this is expected to be done through your source water network, treated desal water, or a tiered combination.

Speaker #9: Just really trying to get a better understanding of how the latter measures up to spec requirements of counterparties for CCGT and for data center.

Robert Crain: I would say both. You know, again, we go back to that variation in design, of, you know, what the water volume and quality is needed. I think when you look at Bolt and, you know, and again, some of the other deals we work on, you know, eventually it's gonna be a combination of both of the water sources. You know, we're-- You know, we love the produced water component, that could be used in power gen, and, you know, combining desal with power gen and data center usage. You know, there, there's some synergies there that are pretty amazing when you dig in, dig into them, from waste heat capture, freeze technology.

Speaker #6: I would say both . You know , again , we go back to that variation in design of , you know , what the water volume and quality is needed .

Ty Glover: I would say both. You know, again, we go back to that variation in design, of, you know, what the water volume and quality is needed. I think when you look at Bolt and, you know, and again, some of the other deals we work on, you know, eventually it's gonna be a combination of both of the water sources.

Speaker #6: I think when you look at Bolt and, you know, again, some of the other deals we worked on, eventually it's going to be a combination of both of the water sources.

Ty Glover: You know, we're-- You know, we love the produced water component, that could be used in power gen, and, you know, combining desal with power gen and data center usage. You know, there, there's some synergies there that are pretty amazing when you dig in, dig into them, from waste heat capture, freeze technology. You know, obviously the desal and, you know, that water is a little bit more complicated to treat, and that's what we've been working on the last couple of years to do.

Speaker #6: You know , we're you know , we love the produced water component that could be used in PowerGen . And , you know , combining desal with power gen and data center usage , you know , there's some synergies there that are pretty amazing when you dig into them from waste heat capture freeze technology , you know , obviously the desal and you know , that water is a little bit more complicated to treat .

Robert Crain: You know, obviously the desal and, you know, that water is a little bit more complicated to treat, and that's what we've been working on the last couple of years to do. But, you know, when you look at the water use and, you know, the, you know, produced water, you know, really not being in the hydrologic cycle and being able to implement a produced water stream into power gen, and compute water needs, you know, really unique to oil and gas operations, those conversations are, are progressing nicely. So again, I think it's gonna probably be eventually a combination of both water sources.

Speaker #6: And that's what we've been working on the last couple of years to do . But you know , when you look at the water , use and you know , the produced water , you know , really not being in the hydrologic cycle and being able to implement a produced water stream into power gen and compute water needs , you know , really unique to oil and gas operations .

Ty Glover: But, you know, when you look at the water use and, you know, the, you know, produced water, you know, really not being in the hydrologic cycle and being able to implement a produced water stream into power gen, and compute water needs, you know, really unique to oil and gas operations, those conversations are, are progressing nicely. So again, I think it's gonna probably be eventually a combination of both water sources.

Speaker #6: Those conversations are progressing nicely. So again, I think it's going to probably be, eventually, a combination of both water sources.

Speaker #9: Okay , perfect . That's helpful . And maybe as we're just kind of thinking about potential scaling up , whether it's a gig or multiple gigawatts , do you all have the capacity to ramp the treated water to the required volumes , or is there a point where you all would be capped out and just any sort of color in terms of how much capital it might take to build out , to call it an incremental 250,000 a day of capacity

Oliver Huang: Okay, perfect. That's helpful. And maybe as we're just kind of thinking about potential scaling up, whether it's a gig or multiple gigawatts, do you all have the capacity to ramp the treated water to the required volumes? Or is there a point where you all would be capped out? And just any sort of color in terms of how much capital it might take to build out, to call it an incremental 250,000 a day of capacity.

Robert Crain: You know, when you look at the ha- if we look at it just from a feedstock point, you know, Ty mentioned, you know, in the commentary, you know, 25 million barrels a day, you know, in the Permian, you know, in produced water aspect. We're never gonna have a feedstock shortage, of water usage, for power gen or compute. I think when you look at, you know, actual facilities to get up to the scale that's gonna feed it, you know, again, we're gonna have to look at what the eventual water needs are. You know, any capital offset that we can get for power gen and compute to help offset the capital needs of a desal, desal facility are gonna help bring it to market.

Speaker #6: You know , when you look at how if we look at it just from a feedstock point , you know , Tim mentioned , you know , in the commentary , you know , 25 million barrels a day , you know , in the Permian , you know , and produce water aspect .

Ty Glover: You know, when you look at the ha- if we look at it just from a feedstock point, you know, Ty mentioned, you know, in the commentary, you know, 25 million barrels a day, you know, in the Permian, you know, in produced water aspect.

Ty Glover: We're never gonna have a feedstock shortage, of water usage, for power gen or compute. I think when you look at, you know, actual facilities to get up to the scale that's gonna feed it, you know, again, we're gonna have to look at what the eventual water needs are. You know, any capital offset that we can get for power gen and compute to help offset the capital needs of a desal, desal facility are gonna help bring it to market.

Speaker #6: We're never going to have a feedstock shortage of water usage for power , generation . I think when you look at , you know , actual facilities to get up to the scale , that's going to feed it , you know , again , we're going to have to look at what the eventual water needs are .

Speaker #6: You know, any capital offsets that we can get for PowerGen and compute to help offset the capital needs of a desal facility are going to help bring it to market.

Speaker #6: I think it's too early to say , you know , are you going to have a , you know , a constraint to get there ?

Robert Crain: I think it's too early to say, you know, are you gonna have a constraint to get there? Again, we're gonna have to look at what the gen capacity is, what the water needs are, and then design around that and make sure, you know, there's an economic return for us to do it.

Ty Glover: I think it's too early to say, you know, are you gonna have a constraint to get there? Again, we're gonna have to look at what the gen capacity is, what the water needs are, and then design around that and make sure, you know, there's an economic return for us to do it.

Speaker #6: Again , we're going to have to look at what the what the capacity is , what the water needs are . And then design around that and make sure , you know , there's an economic return for us to do it .

Speaker #9: Okay . That makes sense . And if I could squeeze one more in just on the bolt agreement that you all have , I know it's still pretty early days , but any sort of updates you can provide with respect to just securing any sort of commercial partnerships and anchor customers to just get a better sense of facility size and also just how should we expect revenues to start flowing through for the first data center project ?

Oliver Huang: Okay, that makes sense. And if I could squeeze one more in, just on the Bolt agreement that you all have. I know it's still pretty early days, but any sort of updates you can provide with respect to just securing any sort of commercial partnerships and anchor customers to just get a better sense of facility size? And also just, how should we expect revenues to start flowing through for the first data center project? Any sort of color on timing?

Speaker #9: Any sort of color on timing

Speaker #5: Well , I think you can you can find some public comments that that Eric's made , you know , his goal is to get to one gig pretty swiftly with , you know , kind of a ten gig campus being the ultimate goal .

Robert Crain: Well, I think you can find some public comments that Eric's made. You know, his goal is to get to 1 gig pretty swiftly, with, you know, kind of a 10-gig campus being the ultimate goal. I would say, you know, the conversations that he's having and the pace that he's moving are pretty swift. So, you know, hopefully we're announcing some stuff, you know, at least this year, if not first half of the year. But that's the goal. I think for, you know, for us, there's a land use component. Obviously, we've got the right of first refusal on the water, which we think could be substantial. And then, you know, the equity return on Bolt could be very material for our business.

Ty Glover: Well, I think you can find some public comments that Eric's made. You know, his goal is to get to 1 gig pretty swiftly, with, you know, kind of a 10-gig campus being the ultimate goal. I would say, you know, the conversations that he's having and the pace that he's moving are pretty swift.

Speaker #5: I would say , you know , the conversations that he's having and the pace that he's moving are pretty swift . So , you know , hopefully we're we're announcing some stuff , you know , at least this year if not first half of the year .

Ty Glover: So, you know, hopefully we're announcing some stuff, you know, at least this year, if not first half of the year. But that's the goal. I think for, you know, for us, there's a land use component. Obviously, we've got the right of first refusal on the water, which we think could be substantial. And then, you know, the equity return on Bolt could be very material for our business. I would just say, you know, Eric continues to build out his team. They're moving swiftly and having a lot of really good conversations. I mean, the guy's got an unbelievable network of contacts in that space.

Speaker #5: But that's that's the goal , I think for , you know , for us there's a there's a land use component . Obviously we've got the right of first refusal on the water , which we think could be substantial .

Speaker #5: And then , you know , the equity return on bolt could be very material for our business . And so I would just say , you know , Eric's continues to build out his team .

Robert Crain: I would just say, you know, Eric continues to build out his team. They're moving swiftly and having a lot of really good conversations. I mean, the guy's got an unbelievable network of contacts in that space.

Speaker #5: They're moving swiftly and having a lot of really good conversations. I mean, the guy's got an unbelievable network of contacts in that space.

Speaker #9: Okay . Awesome . Thanks for the time

Oliver Huang: Okay, awesome. Thanks for the time.

Speaker #5: Thanks .

Robert Crain: Thanks.

Ty Glover: Thanks.

Speaker #1: Thank you. We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.

Operator: Thank you. We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.

Speaker #2: Thanks for joining everyone . Have a good day

Tim Rezvan: Thanks for joining, everyone. Have a good day.

Shawn Amini: Thanks for joining, everyone. Have a good day.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

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