Texas Pacific Land Corporation: record profit and free cash flow, but shares decline amid valuation concerns

5 августа 2026 года Texas Pacific Land Corporation раскрыла результаты за второй квартал 2026 года. Выручка выросла на 31,2% год к году до 246,1 млн долл., чистая прибыль – на 32,5% до 153,9 млн долл., а свободный денежный поток достиг рекордных 155,5 млн долл. Несмотря на сильные показатели, акции снизились на 3,4% в день публикации и ещё на 5,4% к 9 сентября, что отражает опасения рынка относительно высокой оценки: P/E LTM составляет 47,6, а EV/EBITDA LTM – 34,5 против среднего за три года 45,1. При текущей цене акции выглядят скорее непривлекательно.

Key takeaways

— Revenue grew 31.2% thanks to record production and high oil prices

— EBITDA margin reached 84.7% – a record level amid improved operating efficiency

— Free cash flow amounted to $155.5 million, exceeding net income

— The company is expanding into data centers and water desalination, investing $110.2 million in land

— Dividend maintained at $0.60 per share, but yield remains low

— Valuation: EV/EBITDA of 34.5 versus 3-year average of 45.1 – shares trade below their history but still expensive

— The portal's model estimates share upside at -60% from the current price

Attractiveness

Key figures, USD bn

Revenue grew 31.2% thanks to record production and high oil prices

In Q2 2026, Texas Pacific Land Corporation's revenue reached $246.1 million, up 31.2% year-over-year. The main driver was growth in oil and gas royalty income: it increased by $27.4 million compared to Q1 2026, reaching $145.6 million, thanks to record production of 39.7 thousand barrels of oil equivalent per day and an average realized price of $42.17 per barrel versus $37.06 in the previous quarter.

The company does not hedge its positions, so it fully captured the benefit of rising oil prices. Additional contributions came from produced water royalties ($37.1 million) and surface-related income ($23.7 million). Revenue growth accelerated: in previous quarters, rates ranged from 8.8% to 20.8%, confirming stronger operational dynamics.

EBITDA margin reached 84.7% – a record level amid improved operating efficiency

EBITDA in Q2 2026 grew 32.4% year-over-year to $208.4 million, with EBITDA margin at 84.7% versus 84.0% a year earlier. Profitability remains high due to the business model: the company owns land and earns royalties without bearing production costs. Operating expenses were nearly flat compared to Q1 ($54.2 million versus $54.5 million), despite revenue increasing by $9.3 million.

Net income for the quarter reached $153.9 million, corresponding to a net margin of 62.6% (61.9% a year earlier). Return on equity stands at 38.1%, reflecting high efficiency in asset utilization.

Free cash flow amounted to $155.5 million, exceeding net income

Free cash flow in Q2 2026 reached a record $155.5 million, exceeding net income ($153.9 million). This was possible due to strong operating cash flow ($172.9 million) and moderate capital expenditures ($21.9 million), which the company directed toward construction of water supply and desalination facilities.

For the first half, free cash flow totaled $291.9 million, also exceeding net income for the half ($296.8 million – a slight shortfall due to capital expenditures). This level of cash generation provides the company with resources to fund expansion and pay dividends.

The company is expanding into data centers and water desalination, investing $110.2 million in land

Texas Pacific Land Corporation is actively developing new directions: the report mentions involvement in Project Kilby – construction of a large data center in Reeves County, for which the company provides land and water resources. Additionally, the company acquired land in Shackelford and Jones Counties for $110.2 million to expand its data center and power generation projects beyond the Permian Basin.

Construction has also been completed and commissioning begun on a desalination facility in Orla, Texas, with a capacity of 10,000 barrels per day. These investments aim to diversify revenue and create new growth sources, but they require significant capital expenditures, which is reflected in free cash flow.

Dividend maintained at $0.60 per share, but yield remains low

The board declared a quarterly dividend of $0.60 per share, payable on September 15, 2026. In the first half, the company paid $83.2 million in dividends, corresponding to an annual level of about $2.40 per share. The current dividend yield is only 0.62%, significantly below the key rate, making the shares unattractive for income-oriented investors.

Payments are fully covered by free cash flow: for the half, it amounted to $291.9 million versus dividends of $83.2 million. However, at the current share price, the yield remains low, and the main potential for shareholders lies in capital appreciation, not dividends.

Valuation: EV/EBITDA of 34.5 versus 3-year average of 45.1 – shares trade below their history but still expensive

Based on trailing twelve months (LTM) figures, EV/EBITDA stands at 34.5, below the three-year average of 45.1. This indicates that shares trade at a discount to their own history. However, the absolute level of the multiple remains high, implying significant growth expectations.

P/E LTM is 47.6, and market capitalization is $25,787 million. Net debt is negative (-$128.6 million), meaning a net cash position. Despite lower multiples relative to historical levels, the shares remain expensive, and the market has already priced in continued high growth rates.

The portal's model estimates share upside at -60% from the current price

According to the portal's model, the fair value of shares, calculated based on current commodity prices and target EV/EBITDA, implies a downside potential of -60% from the current market price. This means the market values the company significantly above fundamental indicators adjusted for the current environment.

The portal's model is not a market consensus and reflects the analysts' own calculation. Nevertheless, such a significant gap between market price and model valuation indicates a high risk of correction if growth rates slow or oil prices decline.

Valuation on the latest reported figures

Bottom line

Texas Pacific Land Corporation delivered strong results for Q2 2026: record revenue, net income, and free cash flow, supported by higher production and oil prices. EBITDA margin reached 84.7%, and the company continues to invest in new growth areas. However, at the current price, shares trade at multiples that, while below historical averages, remain high: EV/EBITDA of 34.5 and P/E of 47.6. The portal's model indicates a downside potential of 60%, making the shares rather unattractive for new investments. Investors should wait for a more attractive price or confirmation of sustained growth in subsequent reports.