Texas Pacific Land Reports Record Q2 Revenue as Power Generation Deal Validates Permian Data Center Strategy
The royalty company posted all-time high quarterly revenue of $246 million while advancing agreements with hyperscalers and expanding its West Texas footprint for power and compute infrastructure.
Record Financial Performance Driven by Oil and Gas Royalties
Texas Pacific Land Corporation (TPL) delivered record quarterly results in the second quarter of 2026, with consolidated revenues reaching approximately $246 million, representing a 4% sequential increase and 31% year-over-year growth (earnings call, 2026-08-06). The company's adjusted EBITDA climbed to $216 million, up 19% sequentially and 30% year-over-year, while maintaining an 88% adjusted EBITDA margin.
The performance was underpinned by record oil and gas royalty production, which averaged approximately 39,700 barrels of oil equivalent per day during the quarter, up 7% sequentially and 20% year-over-year (earnings call, 2026-08-06). Chief Executive Officer Ty Glover noted that the company's "unhedged royalty position allowed us to benefit fully from the strong oil price environment" (earnings call, 2026-08-06).
Produced water royalty volumes reached 4.9 million barrels per day, representing 6% sequential growth and 15% year-over-year growth, driven by strong demand for TPL's in-basin and out-of-basin disposal space (earnings call, 2026-08-06).
Strategic Expansion Into Power and Data Center Infrastructure
TPL disclosed that a previously announced land sale and water supply agreement was related to Project Kilby, a large-scale power generation facility Chevron is developing to support a customer data center in Reeves County, Texas. Glover characterized this "multi-gigawatt power and data center development" as representing "a substantial commitment by some of the largest energy and technology companies in the world" that "validates the Permian as an attractive data center infrastructure hub capable of accommodating hyperscale facilities" (earnings call, 2026-08-06).
Expanding beyond its traditional Permian Basin footprint, TPL acquired over 10,000 acres in Shackelford and Jones Counties, Texas for approximately $100 million during the quarter (earnings call, 2026-08-06). Glover explained that this region is "amongst the fastest-growing data center regions in the country" and was selected for its "contiguousness land and water resources, access to natural gas and grid infrastructure, established fiber and proximity to a midsized city" (earnings call, 2026-08-06).
Glover revealed the company is "in advanced conversations with multiple hyperscalers AI labs and power generators on 25 gigawatts of projects right now," adding he would "be disappointed if we don't announce at least 1 or more major definitive agreements in the near term" (earnings call, 2026-08-06).
Desalination Facility Commissioning and Colocation Opportunities
TPL completed construction and commenced commissioning on its Phase Ib desalination facility in Orla, Texas, which will eventually ramp to 10,000 barrels per day capacity (earnings call, 2026-08-06). The facility leverages the company's patented freeze desalination process and features equipment exclusivity with a leading industrial-scale process cooling solutions provider.
Chief Financial Officer Chris Steddum highlighted multiple application streams for the technology, noting that "the interest in produced water in data center use is huge" and extends beyond consumptive cooling to include direct chip cooling using the freeze technology (earnings call, 2026-08-06). The company plans to implement various desalination colocation studies this year, exploring waste heat recovery and potential monetization of both desalinated freshwater and concentrated brine output streams.
TPL reaffirmed its fiscal year capital expenditure guidance of $65 million to $75 million, with second-half spending focused on investigating colocation, cooling, and waste heat capture opportunities at the Orla facility (earnings call, 2026-08-06).
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.