Episode Details

Texas Pacific Land Corporation (TPL) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $246.1M, +31.2% y/y but below the $249.5M estimate. GAAP diluted EPS $2.23 vs a $2.18 bar (TPL publishes no non-GAAP EPS). Record net income $153.9M, record free cash flow $155.5M. Realised oil $97.55/Bbl vs $70.57 in Q1 - but oil volumes fell 4.8%, gas realised $0.40/Mcf, water sales fell 18%, and produced water royalties hit a record $37.1M. The 8-K landed 4:16pm ET Aug 5; the stock closed -6.87% at $355.64. Texas Pacific Land printed record net income of $153.9 million, record free cash flow of $155.5 million, revenue up 31.2% to $246.1 million, and a small earnings beat at $2.23 against a $2.18 bar - and the stock fell 6.87% to $355.64. We checked the basis first: TPL publishes no non-GAAP EPS, and Q1's $2.07 plus this quarter's $2.23 sum to exactly the $4.30 six-month figure in the release, so bar and print are both GAAP. The record itself is one variable. Realised oil was $97.55 a barrel against $70.57 in the March quarter, while oil VOLUMES actually FELL 4.8% sequentially and natural gas realised forty cents. WTI averaged $95.65 in Q2 and is averaging $80.52 quarter-to-date - 15.8% lower - and TPL is completely unhedged. Water sales fell 18% on volume. And the record free cash flow is gross of $110.2 million of land the company bought in the same quarter, which sits outside the FCF reconciliation entirely (we tied that off the balance sheet: cash +$103.8M over the half). The genuinely new item is Project Kilby - a signed agreement with a Chevron subsidiary to supply land and brackish water for a power plant serving a data centre in Reeves County. We carry Kilby, the data-centre land and the Orla desalination plant at $1.5 billion, about $22 a share. Normalising the oil line to the strip we can see and discounting at 8.5%, our fair value is about $210 against $355.64 - 41% below. Our BULL case is $357. The stock closed at $355.64. THE CALL: AVOID (4/5, A GREAT ASSET AT A PRICE THAT NEEDS $95 OIL FOREVER - OUR BULL CASE IS THE TAPE) — base-case value ~$210.0 vs ~$355.64 today. KEY METRICS: - CALL: AVOID 4/5, fair value ~$210 vs the $355.64 reaction close (-41%). Street: only TWO analysts, HOLD, $443.50 avg, last updated June 4. - Revenue $246.1M +31.2% (missed $249.5M). EPS $2.23 vs $2.18. Record NI $153.9M, record FCF $155.5M. Realised oil $97.55 vs $70.57; oil volumes -4.8%; gas $0.40/Mcf. - WTI: $95.65 Q2 avg vs $80.52 Q3-to-date, -15.8%. 45.4x trailing EPS, 41.6x FCF, 2.4% FCF yield. Our bull case is $357; the stock is $355.64. What to watch: UP: a disclosed revenue or contract value for Project Kilby; produced-water royalties compounding above 20% for two more quarters; WTI re-rating back above $95 and holding; or a large buyback, which TPL has never run. BEAR: a Q3 realised oil price near $80 with royalty revenue falling toward $120M; water sales volumes dropping again from 663 MBbl/d; net well inventory shrinking from 18.4; or more land bought outside the Permian with no disclosed return. Next print: early November. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.