Texas Pacific Land Corporation (TPL): what the price requires
At today's price, Texas Pacific Land Corporation (TPL) is priced for today's economics sustained for ~6.4 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TPL
Headline
| Field | Value |
|---|---|
| Ticker | TPL |
| Company | Texas Pacific Land Corporation |
| Sector / Industry | Financial Services / Asset Management |
| Current price | $408.45/sh |
| Composition | Oil and gas royalties 52% / Water sales 21% / Produced water royalties 16% / Easements and other surface-related income 12% / Land sales 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 42.3% |
| Operating margin today | 75.9% |
| Margin compression implied | -33.6pp |
| Must persist for | 6.4y |
| Multiple paid | 45x operating income |
The operating-margin requirement is derived from the framework's value band at year 9, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 10.7% cost of capital; growth searched up to the 38.7% self-funding ceiling; each 1pp moves the implied horizon ~0.9 years.
Reconcile: at the x-ray's 9.3% required return this reads ~5.1 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.54σ |
| sustained it ~6.4 years at this level | 17% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.27x | 4 | expensive |
| Earnings | 4.76x | 3 | expensive |
| Relative | 11.20x | 2 | expensive |
| Growth | 1.76x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $231.95 | 1.76x | yes | FCF base $0.6B, growth 15% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $457.87 | 0.89x | yes | Exit EV/EBITDA: 38.7x / 40.7x / 42.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $36.47 | 11.20x | yes | P/S fallback (negative EPS): Sector P/S 3.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $78.90 | 5.18x | yes | BV/sh $22.55, ROE (TTM) 32.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $154.67 | 2.64x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $144.23 | 2.83x | yes | Rev $0.8B, growth 15% (input: historical growth; tapered), Terminal P/S: 9.8x / 12.0x / 14.2x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $67.18 | 6.08x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.53B × (1−22%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $121.65 | 3.36x | yes | BV $22.55 + 5yr PV of (ROE (TTM) 32.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | $88.36 | 4.62x | yes | FCF $551.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $85.89 | 4.76x | yes | SBC-adj FCF $0.54B (FCF $0.55B − SBC $0.02B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $24.51 | 16.66x | yes | BV $22.55 × (ROIC 10.0% / WACC 9.2%) |
| P/Sales Sector | Relative | $36.47 | 11.20x | yes | Revenue $0.84B × sector P/S 3.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $247.6m |
| Net debt / NOPAT (after-tax) | -0.51x (net cash) |
| Net debt / operating income (pre-tax) | -0.40x (net cash) |
| Share count CAGR (buyback) | -0.2% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Texas Pacific Land owns what its 10-K calls "approximately 882,000 surface acres" of the Permian Basin and collects tolls on nearly everything that happens above and below it, converting $0.84B of trailing revenue into $0.50B of net income, a 60% net margin with zero debt.
- The risk is entirely in the price: no family of valuation method reaches today's level, which embeds growth held near the company's maximum self-funded pace for about seven years, a run only about 14% of comparable fast-growers have sustained.
- Watch the buildout of the new power-and-water franchise: the June 23 agreement to supply land and brackish water to Chevron's Project Kilby power facility for a data center, and the 10,000 barrel-per-day produced-water desalination plant nearing startup.
Bull Case
The balance sheet is almost comically clean, and that is the tell for what kind of business this is. No net debt, a current ratio above 4, safe-zone solvency by a wide margin, and a 32.4% return on equity earned with almost no leverage (the equity multiplier is 1.13x). Texas Pacific Land does not drill wells, buy rigs, or fund completions; it owns the land, per its FY2025 10-K "approximately 882,000 surface acres" concentrated in the most economic oil basin in North America, and charges for access: oil and gas royalties, water sales, produced-water royalties, and easements (accession 0001811074-26-000018). The filing notes the position "has few direct peers". Operators spend the capital; TPL collects at a 60% net margin.
The recent quarters show the toll booth compounding on multiple lanes at once. First-quarter 2026 revenue set a record at $236.8 million, up 21% year over year, with record net income of $142.9 million; royalty production averaged roughly 37,100 barrels of oil equivalent per day, up about 19% year over year, and the visible pipeline held 20.7 net wells across permits, drilled-but-uncompleted, and completed-but-not-producing inventory. Water, the second engine, posted its second-best volume quarter ever with produced-water royalties up $5.8 million year over year. The royalty inventory means near-term production growth is already staged on the acreage regardless of what oil prices do next quarter.
The optionality layer is what changed in 2026. On June 23 the company agreed to provide land and exclusive brackish-water sourcing to Chevron for Project Kilby, a large-scale power generation facility supporting a data center in Reeves County, taking cash for surface acreage and locking in water rights for the plant. Management is pursuing multi-gigawatt energy campuses on its land, completed a $43 million land sale for power and data-center development in the first quarter, and is weeks from starting a 10,000 barrel-per-day produced-water desalination facility. Every acre sold or leased to the AI-power buildout is revenue the oil-royalty valuation never counted, on land carried at book values from another century. The dividend grows, the cash compounds, and the same asset keeps finding new payers.
Bear Case
The structural truth is that the multiple is pricing what has not happened yet, and pricing it as nearly certain. At 54.5x trailing earnings against a 12x sector median, today's valuation gets no support from any family of method: assets, earnings power, peer multiples, and even the forward-growth frames all sit below the price, the nearest of them at half of it. A 60% net margin and a debt-free balance sheet are extraordinary qualities, but they are already in the trailing numbers the methods capitalize; what the price adds on top is an assumption about growth, duration, and new businesses that exist mostly as announcements. The data-center and desalination initiatives are real agreements, but Project Kilby's revenue contribution is not yet quantified in any filing, and a $43 million land sale is a rounding error against a $27.45B market value.
Meanwhile the core engine answers to decisions made in other companies' boardrooms. The 10-K is explicit that results depend on "decisions by not only the owners and operators of oil and gas wells to which our oil and gas royalty interests relate, but also to other owners and operators in the Permian Basin" for water sales, produced-water royalties, and easements (accession 0001811074-26-000018). Royal Gold's filing states the royalty-model risk in one line that applies here fully: "Our revenue is subject to operational and other risks faced by operators of the properties in which we hold stream or royalty interests" (RGLD FY2025 10-K, accession 0000085535-26-000008). A sustained oil-price downturn slows Permian drilling, which cuts royalty volumes, water demand, and easement activity simultaneously; the three revenue streams are one exposure wearing three names. Competition for the new-economy revenue is also arriving: LandBridge, the nearest surface-land pure play, discloses that its five largest customers already produce 59% of its revenue (LB FY2025 10-K, accession 0001193125-26-072404), a reminder that Permian surface monetization is a concentrated-counterparty business on every side.
The growth math is the heart of it. The price requires operating growth held near the company's self-funding ceiling for about seven years, an assumption the framework flags as high; historically only about 14% of comparable fast-growers sustained that pace so long, and the multiple sits at the very top of the peer distribution. Royalty production was roughly flat sequentially in the first quarter, and a $0.84B revenue base capitalized at $27.45B leaves the free cash flow yield at 2.0%. Wonderful asset, heroic price; the bear case is simply that those are different things.
Valuation
At $397.72 (July 11, 2026), the market pays about 44 times company-wide operating income, which resolves to operating growth held near the business's self-funding ceiling for roughly seven years, a pace only about 14% of comparable fast-growers have sustained that long. Against its sector, the multiple sits at the very top of the peer range. The one undemanding element is margin: the price requires a long-run operating margin near 50%, well below the roughly 74% the business earns today, so the entire bet is volume growth and its duration, not profitability.
No valuation family reaches the price. The forward-growth methods come closest at about 2.0x their central estimate, peer multiples read 2.6x, earnings power 5.0x, and asset-based methods 5.6x. That full-spectrum gap is the signature of a franchise premium: the market is paying for qualities the standard frames structurally cannot credit, the irreplaceability of "approximately 882,000 surface acres" in the Permian's core (FY2025 10-K, accession 0001811074-26-000018), the zero-capital-cost royalty model, and the emerging power, data-center, and desalination revenue that trailing statements barely contain. The demonstrated base being extrapolated: $0.84B of trailing revenue at a 60.0% net margin, $551.2M of free cash flow converting 109% of net income, a record $236.8 million revenue quarter in Q1 2026, and a trailing P/E of 54.5x against the 12x sector median.
Solvency is not a consideration; the company holds net cash, and the dividend, an annualized $2.42 per share yielding 0.6%, is a small fraction of the cash the land throws off. What the buyer underwrites at this price is precise: that Permian operators keep drilling through the acreage for years, that water volumes keep compounding, and that the power-and-data-center land business scales from announcements into a revenue line large enough to justify a premium no standard method can presently see its way to.
Catalysts
The newest catalyst is the June 23, 2026 agreement with Chevron: TPL will provide land and exclusive brackish-water sourcing for Project Kilby, a large-scale power generation facility supporting a customer data center in Reeves County, with TPL receiving cash for surface acreage plus ongoing water rights. Any disclosure quantifying the revenue shape of this deal, or announcements of the multi-gigawatt energy campuses management says it is negotiating with technology and infrastructure partners, would give the market its first hard numbers for the non-oil growth story the price partly assumes.
The desalination franchise reaches a proof point imminently: the Phase 2B produced-water desalination facility, targeting 10,000 barrels per day, was near completion as of the first-quarter call, with management exploring colocation of desalination with power generation to use waste heat. Commercial performance there determines whether Permian water management becomes a third major segment or stays a science project.
The quarterly rhythm still runs on the royalty engine. First-quarter production averaged about 37,100 barrels of oil equivalent per day, up roughly 19% year over year but flat sequentially, with 20.7 net wells of visible inventory (5.8 net permits, 9.6 net drilled-but-uncompleted, 5.2 net completed-but-not-producing) as of March 31. Sequential production growth, water volumes after the second-best quarter on record, and further land sales like the first quarter's $43 million power-and-data-center parcel are the recurring markers. Oil prices and Permian rig activity remain the macro dial behind all of them, as the company's own risk disclosures emphasize.
Peer Cohorts (Per Segment, With Filing Citations)
Land and Resource Management (reported)
- DMLP (Dorchester Minerals, L.P.)
- (no filing in the citation store)
- KRP (Kimbell Royalty Partners, LP)
- (no filing in the citation store)
- NRP (NATURAL RESOURCE PARTNERS LP)
- (no filing in the citation store)
- RGLD (Royal Gold, Inc)
- (no filing in the citation store)
Water Services and Operations (reported)
- LB (LandBridge Company LLC)
- (no filing in the citation store)
- DMLP (Dorchester Minerals, L.P.)
- (no filing in the citation store)
- KRP (Kimbell Royalty Partners, LP)
- (no filing in the citation store)
- RGLD (Royal Gold, Inc)
- (no filing in the citation store)
- WTTR (SELECT WATER SOLUTIONS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company press release, June 23, 2026; Q1 2026 earnings call · Q1 2026 earnings release and call, May 2026 · company press release, June 23, 2026 · StockStory Q1 deep dive, May 2026 · Q1 2026 earnings release, May 2026 · company press release, June 23, 2026; TipRanks · StockStory Q1 deep dive; Simply Wall St, June 2026 · Q1 2026 earnings call, May 2026