TPL Texas Pacific Land Corporation
A wonderful toll-booth on Permian oil, but the market is pricing in growth the finite land base likely can't sustain.
The business
TPL owns ~880,000 acres of land in the Permian Basin's Delaware sub-basin, generating income from oil and gas royalties on production it doesn't operate, plus water sales/produced-water royalties and easements to operators drilling on its land. It has no drilling costs or operating capex risk of its own — it's a landowner collecting a toll on other companies' activity.
Quality gate · 90/100
Moat & management
| Moat | wide moat |
| Source | scale |
| Trajectory | stable |
| Management | excellent |
Irreplicable, fixed-supply land position in the core of the best rock in the Permian gives royalty streams with near-zero marginal cost and no reinvestment risk; competitors cannot create more Delaware Basin acreage. Durability depends on continued Permian activity and long-run oil demand, capping it at stable rather than widening since the underlying reserve base is finite and depletes.
Debt-free balance sheet, consistent buybacks funded from royalty cash flow, and disciplined water-business bolt-on growth rather than empire-building acquisitions; capital returned to shareholders rather than chasing unrelated diversification.
Owner-earnings inputs
| Owner earnings (TTM) | 42.58M |
| Owner-earnings yield | 0.2% |
| Free-cash-flow yield | 0.2% |
| Growth used (normalized) | 8.0% |
| Market-implied growth (reverse DCF) | 25.0% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.0% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 40.92M | 8.0% | 37.54M |
| 2 | 44.05M | 7.6% | 37.08M |
| 3 | 47.26M | 7.3% | 36.49M |
| 4 | 50.53M | 6.9% | 35.80M |
| 5 | 53.86M | 6.6% | 35.00M |
| 6 | 57.20M | 6.2% | 34.11M |
| 7 | 60.55M | 5.9% | 33.12M |
| 8 | 63.88M | 5.5% | 32.06M |
| 9 | 67.17M | 5.1% | 30.93M |
| 10 | 70.38M | 4.8% | 29.73M |
| 11 | 73.50M | 4.4% | 28.48M |
| 12 | 76.49M | 4.1% | 27.20M |
| 13 | 79.33M | 3.7% | 25.88M |
| 14 | 82.00M | 3.4% | 24.54M |
| 15 | 84.46M | 3.0% | 23.19M |
Key risks
- Permian Basin production growth decelerates or peaks as core acreage matures, directly capping royalty volumes
- Long-term oil demand destruction from EV adoption/energy transition reduces drilling activity on TPL's land over a 10-20 year horizon
- Commodity price volatility flows almost directly to royalty income with no operational hedge
- Water business growth is more capital-intensive and lower-margin than legacy royalties, diluting blended returns over time
Catalysts
- Continued Permian rig/completion activity and well-productivity gains on TPL acreage
- Growth in produced-water recycling/sales as operators seek water solutions
- Further land/royalty bolt-on acquisitions funded by debt-free balance sheet
Recent news
score · 8 articles
- 2 Energy Stocks to Own for Decades and 1 That Underwhelm
- Texas Pacific Land’s Quarterly Earnings Preview: What You Need to Know
- 3 Market-Beating Stocks for Long-Term Investors
- Texas Pacific Land, Crescent Energy, and Noble Corporation Shares Skyrocket, What You Need To Know
- Why Texas Pacific Land Corporation Rallied Over 50% in the First Half of 2026
- How Investors Are Reacting To Texas Pacific Land (TPL) Chevron Power Deal And Earnings Beat
- Texas Pacific Land (TPL) Stock Looks Rich On Cash Flow And Earnings
- Texas Pacific Land (TPL) Could Be 11% Undervalued On Its Royalty Growth Narrative
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Net cash 0.1B credited to value (interest stripped from owner earnings to avoid double-counting). · Price pays for ~25%/yr owner-earnings growth over 15y (reverse DCF); model credits 8%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.