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Quarterly report [Sections 13 or 15(d)]

Business Segment Reporting

v3.26.3
Business Segment Reporting
 9 Months Ended
Sep. 30, 2026
Segment Reporting [Abstract]
Business Segment Reporting Business Segment Reporting
During the periods presented, we reported our financial performance based on the following reportable segments: Land and Resource Management and Water Services and Operations. We eliminate inter-segment revenues and expenses, if any, upon consolidation. There were no inter-segment revenues for the three and nine months ended September30, 2026 and 2025.

The Land and Resource Management segment encompasses the business of managing our approximately 896,000 surface acres of land and our approximately 224,000 NRA of oil and gas royalty interests, principally concentrated in the Permian Basin. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases, and land and material sales.

The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment primarily consist of revenue generated from sales of sourced and treated water, as well as revenue from produced water royalties.
The following tables present segment financial results for Land and Resource Management (“LRM”) and Water Services and Operations (“WSO”) and the reconciliation to consolidated financial results for the three and nine months ended September30, 2026 and 2025 (in thousands):
Three Months Ended September 30,
2026 2025
LRM WSO Consolidated LRM WSO Consolidated
Revenues:
Oil and gas royalties $ 167,275 $ — $ 167,275 $ 108,705 $ — $ 108,705
Water sales — 28,437 28,437 — 44,578 44,578
Produced water royalties — 41,386 41,386 — 32,268 32,268
Easements and other surface-related income 34,182 1,999 36,181 12,741 3,974 16,715
Land sales 111 — 111 819 — 819
Total revenues 201,568 71,822 273,390 122,265 80,820 203,085
Expenses:
Salaries and related employee expenses 9,247 7,920 17,167 7,298 7,089 14,387
Water service-related expenses — 13,817 13,817 — 16,428 16,428
General and administrative expenses 7,247 3,353 10,600 3,431 2,160 5,591
Depreciation, depletion and amortization 17,647 5,186 22,833 10,453 4,510 14,963
Ad valorem and other taxes 1,149 41 1,190 2,614 11 2,625
Total operating expenses 35,290 30,317 65,607 23,796 30,198 53,994
Operating income 166,278 41,505 207,783 98,469 50,622 149,091
Interest expense (785) (196) (981) — — —
Other income, net 2,728 862 3,590 4,827 1,261 6,088
Income before income taxes 168,221 42,171 210,392 103,296 51,883 155,179
Income tax expense 34,456 8,568 43,024 22,536 11,405 33,941
Net income $ 133,765 $ 33,603 $ 167,368 $ 80,760 $ 40,478 $ 121,238
Nine Months Ended September 30,
2026 2025
LRM WSO Consolidated LRM WSO Consolidated
Revenues:
Oil and gas royalties $ 431,031 $ — $ 431,031 $ 314,956 $ — $ 314,956
Water sales — 115,033 115,033 — 108,968 108,968
Produced water royalties — 111,990 111,990 — 90,705 90,705
Easements and other surface-related income 66,909 10,249 77,158 61,568 9,595 71,163
Land sales 21,055 — 21,055 819 — 819
Total revenues 518,995 237,272 756,267 377,343 209,268 586,611
Expenses:
Salaries and related employee expenses 25,152 22,564 47,716 21,727 21,304 43,031
Water service-related expenses — 39,674 39,674 — 36,005 36,005
General and administrative expenses 17,987 9,248 27,235 10,392 6,964 17,356
Depreciation, depletion and amortization 38,536 14,979 53,515 27,279 13,324 40,603
Ad valorem and other taxes 5,958 241 6,199 6,667 34 6,701
Total operating expenses 87,633 86,706 174,339 66,065 77,631 143,696
Operating income 431,362 150,566 581,928 311,278 131,637 442,915
Interest expense (2,357) (589) (2,946) — — —
Other income, net 6,449 2,223 8,672 12,399 3,250 15,649
Income before income taxes 435,454 152,200 587,654 323,677 134,887 458,564
Income tax expense 91,334 32,120 123,454 70,804 29,730 100,534
Net income $ 344,120 $ 120,080 $ 464,200 $ 252,873 $ 105,157 $ 358,030

Interest income by segment is included in other income, net in the tables above.

The following tables present purchases of fixed assets, total assets and property, plant and equipment, net by segment for the periods presented (in thousands):
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2026 2025 2026 2025
Purchases of Fixed Assets:
Land and resource management $ 711 $ 10,050 $ 1,004 $ 10,214
Water services and operations 13,778 10,556 41,326 24,108
Total purchases of fixed assets $ 14,489 $ 20,606 $ 42,330 $ 34,322

September 30,
2026		 December 31,
2025
Assets:
Land and resource management $ 1,689,882 $ 1,332,180
Water services and operations 298,182 291,098
Total consolidated assets $ 1,988,064 $ 1,623,278
Property, plant and equipment, net:
Land and resource management $ 7,412 $ 7,336
Water services and operations 184,380 157,202
Total consolidated property, plant and equipment, net $ 191,792 $ 164,538