Texas Pacific Land
A West Texas landlord that owns 894,000 acres and the oil royalties beneath many of them, and earns from every barrel, pipe and gallon of water that crosses its land.
The scores
Growth3/4 ↑
Revenue grew about 12% a year since 2023 and 21% over the latest year, much of it from oil prices and bought royalties.
Business quality4/4 →
A perpetual royalty and the land beneath rationed disposal space cannot be copied; even a rival landowner pays to cross it.
Financial position4/4 →
No debt, $248.6M of cash, an undrawn $500M credit line and no drilling costs to fund.
Execution record3/4 →
Built the water business and grew without debt, but water volumes fell 19% in Q2 and the promised data-centre deals remain unsigned.
Per share capture3/4 →
The share count is flat and pay rewards cash flow per share, but buybacks stopped in 2026 while cash builds toward $700M.
Potential2/4 →
Upside needs oil to hold up, drilling to return and data-centre talks to become contracts; the one signed deal booked $20.9M.
Risk profile3/4 →
One basin, one state and three customers at 40% of revenue, survivable because royalties stay with the land whoever drills it.
Valuation2/4 ↑
47 times free cash flow, a 2.1% yield under 5.24% Treasuries, needs decades of growth from $90 oil, not only today's plan.
Evidence quality3/4 →
Results, royalties, cash and the Chevron deal are filed and the moat is checked against a regulator; the data-centre pipeline is management's word.
If it works 0.9× · if it fails you keep about 84%.
The Verdict
We rate Texas Pacific Land Unattractive. The business is solid: it owns land and oil royalties in America's largest oilfield, drills nothing and has no debt, and waste-water firms have to cross its land. The price is full: about 47 times a year's free cash flow, a 2.1% yield, which needs cash flow to grow fast for decades, starting from a year when oil was near $90. As a bet on data centres it is defensive: the royalties and water are worth most of the price, so little is lost if the deals fail, but even several Kilby-sized deals would add little.
The long caseData centres need land, gas and water in one place, and few owners hold as much West Texas land with water beneath it as this one.
The evidence under this - 7 claims
- LandBridge owns over 315,000 acres in the same basin and competes for the same pipelines and disposal (C17).
- The royalty per barrel is only about 8 cents and management expects it to stay steady to rising, not jump (C14).
- Trailing earnings include oil at $97.55 in Q2 2026 (C03); at the 2025 oil price the multiple would be higher, not lower.
- A royalty needs almost no reinvestment, so free cash flow can grow with no capital, which a plain multiple understates.
- Revenue grew about 12% a year from 2023 to 2025 (C27), and produced-water royalties much faster (C14).
- Data-centre land and water could add income no oil forecast counts (C11).
Higher prices also make operators drill more, so lower prices cut volumes too; this holds volume fixed.
- Kilby is with Chevron, a binding sale and an exclusive water right, so the business is real, not imagined.
- Management says it is a year into diligence on the Shackelford site with a compute user (C12).
- The separate water-supply agreement's price is not disclosed, so the land payments understate what a project pays.
- A later deal could be a lease or a larger water contract rather than a sale on Kilby's terms.
The company
Texas Pacific Land began in 1888 as a trust holding a bankrupt railroad's land, and today owns about 894,000 acres in the Permian Basin, America's biggest oilfield, plus royalties on oil and gas under much of it.
Its buyers are the oil companies drilling there, and the pipeline, power and water firms that need to cross the land. Without it they would route around its acres, recycle their own waste water, or buy water elsewhere.
The evidence under this - 3 claims
How it makes money
About half of revenue is royalties: a share of every barrel of oil and gas pumped under its land, paid monthly, so income rises and falls with the oil price. The rest comes from selling water to drillers, a fee on each barrel of waste water piped across or injected beneath its land, and payments for pipelines and power lines. Since it drills nothing, about three quarters of sales becomes operating profit.
The evidence under this - 3 claims
Where the money comes from, stream by stream
| Stream | Share of sales (FY 2025) | How it earns it |
|---|---|---|
| Oil and gas royalties | 51.6% | A perpetual share of oil, gas and liquids pumped under its land and bought royalty acres, paid by operators monthly. |
| Water sales | 21.3% | Fresh and brackish water sold to drillers for fracking from its own wells, ponds and pipes. |
| Produced-water royalties | 15.6% | A fee per barrel of waste water piped across or injected beneath its land by disposal operators. |
| Easements and other land income | 11.5% | Payments for pipelines, power lines, roads, leases, caliche and sand on its land. |
| Land sales | 0.1% | Occasional sales of land; Kilby added $20.9M in 2026. |
Who runs it
Tyler Glover has run the company since 2016 and built its water business; Chris Steddum has been finance chief since 2021. Both contracts now run to 2029. Directors and officers own under 1% of the shares; Horizon Kinetics, the largest holder at 14.7%, lost its chief, director Murray Stahl, in April 2026.
The bonus pays on free cash flow per share and on earnings before interest, tax and depreciation, and half the long-term award rides on cash flow per share and shareholder returns.
The evidence under this - 3 claims
Why it wins, and who could beat it
Why customers come back
Its advantage is land nobody else can supply. Drilling brings up several barrels of salty waste water for each barrel of oil, and it has to go somewhere. Texas began rationing disposal wells in June 2025, capping pressure and volumes, so space under the ground is scarce.
Waste-water volumes paying it a fee rose from 2.5 million barrels a day in 2023 to 4.9 million in Q2 2026. Even LandBridge, a rival landowner, signed deals to cross its land and share royalties rather than go around it.
The evidence under this - 4 claims
- LandBridge owns over 315,000 acres in the same basin and competes for the same pipelines and disposal (C17).
- The royalty per barrel is only about 8 cents and management expects it to stay steady to rising, not jump (C14).
The threat
LandBridge owns over 315,000 acres nearby and competes for the same pipelines, disposal wells and data-centre sites; a developer tied to its owner has already paid for an option on land for data centres. Select Water is building 1.7 million barrels a day of capacity to recycle waste water, which replaces the fresh water Texas Pacific Land sells to drillers.
The evidence under this - 3 claims
The rivals: LB, LB, WTTR, VNOM, and 1 more that is private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| LB | LandBridgePriced against it: Yes | Land and Resource Management | On sale | Yes |
| PowerBridge, a LandBridge-related developer | Data-centre land and water | Announced | ||
| WTTR | Select Water SolutionsPriced against it: One segment only | Water Services and Operations | On sale | One segment only |
| In-house | Producers recycling their own waterPriced against it: In-house | Water Services and Operations | On sale | In-house |
| VNOM | Viper EnergyPriced against it: Yes | - | On sale | Yes |
How big it could get
How big this could get
The basin is huge. The government's energy agency expects the Permian to pump 6.8 million barrels of oil a day in 2026, worth about $208B a year at 2026 prices.
Texas Pacific Land's royalty output, 39.7 thousand barrels a day of oil and gas together, is at most about 0.6% of that, so its income grows with the basin and with the oil price rather than by winning share.
The evidence under this - 3 claims
Who has signed
Chevron bought land for $42.5M for a gas power plant serving a data centre, paid over twenty years, and gave it the sole right to supply the plant's water, though Chevron can hand the land back. Bolt Data & Energy gave it first refusal on water for its projects. Pipeline firms sign easements of 30 years or more.
The evidence under this - 3 claims
The results
The numbers
Sales grew 21% over the twelve months to Jun 2026, faster than the 13% in the year to Dec 2025.
Operating margin is 75%, down from 77% in the year to Dec 2023.
Yearly sales growth has ranged from −5.4% to +49% over the last 5 years, with sales falling in 1 of them.
Each dollar put into the business earns 36% a year after tax, down from 47% in the year to Dec 2021.
The business brought in $603M of cash from operations, 67% of sales, before capital spending, which the filer does not tag.
The share count barely moved in 2.5 years, and pay in shares costs 1.9% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-10. Fiscal years end in December.
| Dec 2021 | Dec 2022 | Dec 2023 | Dec 2024 | Dec 2025 | 12 mo to Jun 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $451M | $667M | $632M | $706M | $798M | $898M |
| Sales growth | +49% | +48% | −5.4% | +12% | +13% | +21% |
| Profit | ||||||
| Operating margin | 80% | 84% | 77% | 76% | 74% | 75% |
| Net margin | 60% | 67% | 64% | 64% | 60% | 60% |
| What growth costs, per sales dollar | ||||||
| General and admin | 2.6% | 3.3% | 7.4% | 4.9% | 3.0% | 3.2% |
| Pay in shares | 0.0% | 1.3% | 1.6% | 1.8% | 1.9% | 1.9% |
| Capital spending | 3.6% | 2.8% | - | - | - | - |
| Cash | ||||||
| Cash from operations | $265M | $447M | $418M | $491M | $546M | $603M |
| Free cash flow | $249M | $428M | - | - | - | - |
| Balance sheet | ||||||
| Cash and short-term investments | $428M | $511M | $725M | $370M | $145M | $249M |
| Returns and shares | ||||||
| Return on capital | 47% | 62% | 42% | 39% | 36% | 36% |
| Shares (diluted) | - | - | 69.2M | 69.1M | 69.0M | 69.0M |
What growth costs
Growth costs Texas Pacific Land almost nothing: royalties need no spending, so costs barely move as sales rise and the margin has stayed roughly level for five years. The real cost of growth is buying more royalties, which it paid cash for in 2025.
The evidence under this - 3 claims
The last report (5 Aug)
Quarter ended June 2026, filed figures.
On the surface Q2 2026 was another record: revenue up 31% to $246.1M and profit of $153.9M. The question was where it came from. Oil fetched $97.55 a barrel after war in Iran; at 2025's price the same barrels would have paid about $36.5M less in the quarter.
Water sales fell 19% from the first quarter as drillers moved away from gas-heavy areas. Management expects them to recover. The shares fell 6.9% the next day.
What it did to the thesisIt confirmed the business keeps growing and turns almost every extra dollar into profit, and that this year's records came mostly from war-driven oil prices. It left the data-centre case open: talk of large deals, no new contract.
The quarter in detail
Sales growth from the previous quarter, filed figures.
Earnings per share $2.23 against $2.18 expected; $2.23 as filed, with no adjustments.
The evidence under this - 4 claims
Higher prices also make operators drill more, so lower prices cut volumes too; this holds volume fixed.
Permian rigs fell 18% in a year to Q2 2026 (C21), so the drilling that drives water sales is shrinking.
What management did with the money
It paid $450.7M in cash for more royalty acres in November 2025, then stopped buying back shares in 2026 to build cash toward about $700M. The share count has barely moved in three years, and the company has no debt.
Insiders in 2026Q3: 64 purchases and 0 sales, from their Form 4 filings.
The evidence under this - 3 claims
The price, and where we disagree
In short. Full. The price pays for today's business, decades of strong growth and high oil holding, so little is left if any of it falls short.
The shares are 34% below February's high, when war lifted oil and data-centre hopes ran hot, even though sales per share kept rising. That fall makes it worth asking whether the price now fits the business.
Two tests are close. Third-quarter results arrive on 4 November 2026, and management has said it hopes to sign major data-centre agreements soon; none had been announced by 10 October.
The evidence under this - 5 claims
- No definitive data-centre agreement was filed or announced in the nine weeks to 10 October 2026 (C13).
- The one signed deal, Kilby, brought $20.9M of booked revenue paid over twenty years (C09).
How we read the multiple
The fact the verdict rests on: this year's cash flow was lifted by oil near $90.
- The shares are worth about $24.9B; the company has no debt.
- Free cash flow over the past year was $533.6M, so buyers pay about 47 times it.
- That is a 2.1% yearly cash return, against 5.24% on a 10-year US government bond.
- To earn 8% a year, cash flow must grow about 6% a year for decades.
- At 2025's oil price, Q2 would have earned $36.5M less.
Against its own history. Dearer than its own six-year normal on cash flow, though buyers have long paid a high price for this business, so the gap is modest rather than extreme.
The evidence under this - 4 claims
- Trailing earnings include oil at $97.55 in Q2 2026 (C03); at the 2025 oil price the multiple would be higher, not lower.
- A royalty needs almost no reinvestment, so free cash flow can grow with no capital, which a plain multiple understates.
- Revenue grew about 12% a year from 2023 to 2025 (C27), and produced-water royalties much faster (C14).
- Data-centre land and water could add income no oil forecast counts (C11).
Higher prices also make operators drill more, so lower prices cut volumes too; this holds volume fixed.
Priced against its rivals
The competitors its own annual report names, each confirmed against the rival's filing. Measured on price for each $1 of spare cash, cheapest first:
| Ticker | Company | price for each $1 of spare cash |
|---|---|---|
| LB | LandBridge Company LLC | 39.1× |
| TPL | Texas Pacific Land | 47.3× |
| VNOM | Viper Energy | 78.2× |
The middle of the other 2 is 58.7. Texas Pacific Land Corporation is 2nd cheapest of 3.
Rivals' figures come from a data provider, so read the spread of the group rather than any single pair.
Between its two listed rivals, so the whole small group of Permian landlords is priced for growth, not this company alone.
Private or foreign rivals that cannot be priced: Private ranches and family mineral owners in the Permian.
The bet: what it pays if it works
This bet is on the data-centre business only: land and water for power plants and data centres. The oil royalties and water business are counted separately, at what the cheaper listed rival fetches, and cover most of today's price.
So the price still pays a lot for data centres. Kilby, the one signed deal, pays little each year, so even several more like it would leave the shares worth less than today: an expensive bet. If no more deals sign, little more is lost.
| Data-centre land and water free cash flow in two to three years | Gigawatts of data-centre power signed on its land needed | Valued like its peers | Like the cheapest |
|---|---|---|---|
| $2.10M | about 3 at 100% kept | 0.8× | 0.8× |
| $8.00M (the big win) | about 10 at 100% kept | 0.9× | 0.9× |
| $20.00M | about 25 at 100% kept | 0.9× | 0.9× |
To pay 2× (a Fair bet) it would need about $739.97M of Data-centre land and water free cash flow (about 925 gigawatts of data-centre power signed on its land); to pay 5× (a Cheap bet), about $2.65B of Data-centre land and water free cash flow (about 3.3K gigawatts of data-centre power signed on its land), at the same multiple.
Each row is Data-centre land and water alone, plus the rest of the company (Land and Resource Management and Water Services) counted at about $20.86B.
The steps it has to take
- Done Kilby land sale and exclusive water-supply right signed with Chevron
- Done Bolt Data & Energy stake and water right of first refusal
- Done Over 10,000 acres bought in Shackelford and Jones counties for data centres
- In progress A definitive agreement from the 25 gigawatts of talks announced due 2026-12
- Not started Kilby's plant passes its development milestones, so the land is not put back due 2028-12
The detail behind the label
The evidence under this - 5 claims
- Trailing earnings include oil at $97.55 in Q2 2026 (C03); at the 2025 oil price the multiple would be higher, not lower.
- A royalty needs almost no reinvestment, so free cash flow can grow with no capital, which a plain multiple understates.
- The separate water-supply agreement's price is not disclosed, so the land payments understate what a project pays.
- A later deal could be a lease or a larger water contract rather than a sale on Kilby's terms.
- No definitive data-centre agreement was filed or announced in the nine weeks to 10 October 2026 (C13).
- The one signed deal, Kilby, brought $20.9M of booked revenue paid over twenty years (C09).
Where we disagree with the market
A one-of-a-kind Permian landlord whose land and water will also feed West Texas data centres.
A lasting moat, but cash flow rides high oil and data centres have one small signed deal.
Three of five analysts rate it a buy, and the shares jumped in February when oil, results and data-centre talk all rose together. We think the price counts the best of both at once.
The case against us is real: management says it is in advanced talks on 25 gigawatts of data-centre projects, and buyers have long paid a high price for a business like this. Signed contracts with large yearly payments would prove us wrong.
What analysts say, and the evidence
The evidence under this - 6 claims
- Trailing earnings include oil at $97.55 in Q2 2026 (C03); at the 2025 oil price the multiple would be higher, not lower.
- A royalty needs almost no reinvestment, so free cash flow can grow with no capital, which a plain multiple understates.
- Revenue grew about 12% a year from 2023 to 2025 (C27), and produced-water royalties much faster (C14).
- Data-centre land and water could add income no oil forecast counts (C11).
Higher prices also make operators drill more, so lower prices cut volumes too; this holds volume fixed.
- Kilby is with Chevron, a binding sale and an exclusive water right, so the business is real, not imagined.
- Management says it is a year into diligence on the Shackelford site with a compute user (C12).
- No definitive data-centre agreement was filed or announced in the nine weeks to 10 October 2026 (C13).
- The one signed deal, Kilby, brought $20.9M of booked revenue paid over twenty years (C09).
What could go wrong, and how we would know
The risks
- Oil falls back. Royalties follow the oil price; at 2025's price this year's record quarter would have earned much less.
- Drilling slows. Permian rigs fell from 273 to 224 in a year, and fewer new wells means slower royalty and water growth.
- Water recycling grows. Rivals recycling waste water could cut the fresh water drillers buy from Texas Pacific Land.
- Few big customers. Three large oil companies paid about 40% of 2025 revenue.
- Data centres disappoint. Only one small deal is signed; if talks stall, the hopes in the price fade.
- A shareholder changes course. The largest holder lost its founder in April 2026, and its plans for the stake are unknown.
The evidence under this - 6 claims
- Kilby is with Chevron, a binding sale and an exclusive water right, so the business is real, not imagined.
- Management says it is a year into diligence on the Shackelford site with a compute user (C12).
What we still do not know
- How much of the 25 gigawatts of data-centre talks would sit on its land, and on what terms.
- What an oil company pays in total to dispose of a barrel of waste water, against Texas Pacific Land's fee.
- How fast desalination and recycling will cut the waste water injected underground in the Permian.
The evidence under this - 3 claims
- No definitive data-centre agreement was filed or announced in the nine weeks to 10 October 2026 (C13).
- The one signed deal, Kilby, brought $20.9M of booked revenue paid over twenty years (C09).
What would change our view
- Unattractive→AttractiveA cheaper price on unchanged cash flow
It needs:
- ○The shares fall to 25 times a year's free cash flow, from about 47 today.about $190.79 today, 47% below the last close
- Unattractive→NeutralData centres become contracted income
It needs all of:
- ○Signed data-centre agreements disclose payments above $100M a year.watched as it happens
- ○Royalty output stays above 38 thousand barrels a day.checked at the next results, due by 4 Nov
We would also be wrong if
- Royalty output grows over 15% a year without purchases while oil stays below $70.
- Waste-water volumes crossing its land fall for a full year.
- Permian oil output falls for a full year.
What is coming
- 4 November 2026 Q3 2026 results: Royalty output and realised oil price after the summer fall in oil, and whether water sales recover.
Every dated event ahead
- 4 November 2026 Q3 2026 results: Royalty output and realised oil price after the summer fall in oil, and whether water sales recover.
- 5 November 2026 Vote on moving to Texas: Whether shareholders accept Texas law, and how Horizon Kinetics votes after Murray Stahl's death.
- 28 February 2027 A definitive data-centre agreement: Whether the 25 gigawatts of talks produce a contract with disclosed payments.
Since we wrote this
- 11 OctThesis reviewThe data-centre line gets its own betThe owner ruled that an early line's bet may not be declined as too small, after this thesis declined its data-centre bet on that ground.
- 10 OctThesis writtenUnattractive, medium convictionWritten four weeks before Q3 results, after the shares fell 34% from February's oil-and-AI high while earnings kept rising on $90 oil.
Sources 16
Sources - 16
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2026-02-18the land and royalty holdings, the two segments and their revenue by stream, production and water volumes, customers, competition classes, the Bolt investment, acquisitions, risk factors and executive officersbacksC01C02C04C05C07C08C10C14C16C19C22C26C27C28C31C39
- S02primarycompany release2026-02-182025 net income, adjusted EBITDA, free cash flow, buybacks and the dividend raisebacksC02C04C07C24
- S03primarycompany release2026-08-05Q2 2026 revenue, earnings, production, realised prices, water volumes, the well inventory, adjusted EBITDA and free cash flow for the quarter and half-yearbacksC03C04C07C14C22C24C26C39
- S04primarycompany filing2026-08-05the Chevron Project Kilby sale and its terms, land bought for data centres, cash, the cash target, buybacks, desalination spending, Permian activity and the oil price backgroundbacksC01C06C07C09C12C14C21C24C31C36C38
- S05primarytranscript2026-08-06Texas Pacific Land Q2 2026 earnings call transcript (FMP), held 6 August 2026the 25 gigawatts of talks, the near-term agreement remark, the oil cut, water volumes, the cash build and the desalination plant
we're in advanced conversations with multiple hyperscalers, AI labs and power generators on 25 gigawatts of projects right now
backsC11C12C31C37 - S08primaryvendor data2026-10-09Research pack for TPL (FMP market tier, FINRA short interest), fetched 10 October 2026the 9 October close, the 52-week range and returns, the price move split, analyst ratings, the valuation series, the filed cohort, short interest, insider trades and earnings historybacksC13C23C24C27C32C34C35C36
- S09primarygovernment data2026-09-10Permian oil output in 2026 and its growth, and the WTI average for 2025 and 2026 to August
We forecast Permian oil production will average 6.8 million b/d in 2026, 3% more than in 2025.
backsC20 - S10primaryregulator2025-05-16Railroad Commission of Texas, news release on new Permian disposal well permitting guidelines Railroad Commission of Texasthe June 2025 limits on Permian disposal wells: a wider review area, pressure limits and volume caps
Additionally, the RRC will place limits on the maximum volumes that SWDs can inject based on the pressure in the disposal reservoirs.
backsC15C16 - S11primarycompany filing2026-02-26a rival Permian landowner with more than 315,000 acres, competing with other landowners, and its crossing and produced-water agreements with Texas Pacific LandbacksC16C17
- S12primarycompany filing2026-08-06PowerBridge's $2.6 million option to lease about 3,400 Reeves County acres for data centres with power plantsbacksC18
- S13primarycompany filing2026-02-18a rival's 1.7 million barrels a day of produced-water recycling capacity, water that replaces fresh and brackish water in completionsbacksC19
- S14primarycompany filing2026-09-25ownership, the death of Murray Stahl and Peter Doyle's appointment, pay metrics, Horizon Kinetics' Bolt investment and the Texas redomestication votebacksC10C29C30C32
- S16primarycompany filing2026-09-25the extension of the three senior officers' employment agreements to 2029 and the 2027 meeting datebacksC13C28
- S17primaryvendor data2026-10-09WTI crude at $91.85 and the 10-year Treasury yield at 5.24% on 9 October 2026backsC40
- S18primarycompany filing2026-10-01each open-market trade and its Rule 10b5-1 flagbacksC35
- S19primarycompany filing2026-07-31Chevron's 20-year agreement to supply 2.67 gigawatts of on-site power to a Microsoft data centre in West Texas
During the quarter, Chevron signed a 20-year power purchase agreement with Microsoft to provide 2.67 gigawatts of behind-the-meter power for its data center in West Texas.
backsC41