On the desk today · Texas Pacific Land
They don't drill. They don't pump. They just own the dirt — and collect on every barrel.
| NYSE · TPL |
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The Landlord of
The Permian Basin
In 1888, a railroad went bankrupt. The Texas and Pacific Railway had laid 972 miles of track in total. It had earned 3.5 million acres of land from the state for doing it. When the bondholders came to collect, there was no cash. Just dirt. Flat, dry, empty dirt — spread across 20 counties nobody cared about. The bondholders put the land into a trust and hoped someone might take a few parcels off their hands. That was 138 years ago. Nobody took much. And that turned out to be the best accident in American finance.
I drove through the Permian Basin a few years back. You can go an hour without seeing a building. But every few miles, you see a pumpjack nodding against the sky. Then a pipeline. Then a water truck. Then another pumpjack. Somewhere underneath all of it, someone owns the surface — the land those rigs sit on, the ground those pipelines cross, the water those wells need.
That someone is Texas Pacific Land.
Most people think TPL is an oil company. It is not. It does not drill. It does not pump. It does not refine. It owns the ground. Every operator working its 882,000 acres pays TPL to be there — in royalties, in easement fees, in water purchases. The company is a landlord. The Permian Basin is its tenant.
The trust was formed in 1888 to liquidate 3.5 million acres for the railroad's bondholders. Over the decades, some parcels sold. Most did not. What remained — concentrated in the Delaware Basin and Midland Basin — turned out to sit on top of the richest oil and gas reserves in the Western Hemisphere. In 2021, TPL converted from a trust into a corporation. But the asset underneath has not changed since the day the railroad collapsed.
Here is a number I want you to sit with. In 2025, TPL brought in $798.2 million in revenue. It kept $481.4 million as net income — a 60% margin. It did this with roughly 114 employees. That is about $7 million in revenue per person. The company ended the year with $145 million in cash and zero debt. Its balance sheet reads like a letter from another century — because it is.
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Think about what holds those numbers in place. The land does not expire. The acres do not depreciate. No competitor can build a rival set of 882,000 acres next door. If you want to drill on TPL's land, you pay a royalty on every barrel. If you want to run a pipeline across it, you pay an easement. If your rig needs water — and every rig in the Permian does — TPL supplies it. There is no substitute.
And the fees only go one direction. In 2025, easement and surface-related income rose $18.5 million over 2024. Oil and gas royalties rose $38.3 million. Produced water royalties climbed $20.1 million. Water sales added another $19 million. The operators absorbed every increase. They had no choice. The alternative to paying TPL is not drilling on TPL's land — and the Permian is where the oil is.
Murray Stahl understood this before almost anyone. Stahl ran Horizon Kinetics, a New York investment firm that became TPL's largest shareholder. In a 2020 letter to investors, he described TPL's position in the Delaware Trend as "crown jewel properties in the crown jewel of the U.S. energy reserves." He noted something I think about often: TPL requires no capital to maintain its business, because the land was granted to it over 130 years ago. It never had to acquire what it owns. Stahl passed away in April 2026. Horizon Kinetics still holds its stake. The land remains.
Here is what I find most striking. Oil royalties are not the fastest-growing line at TPL. Water is. In 2025, TPL's Water Services and Operations segment generated $307.5 million — nearly 39% of total revenue. Fracking a single well in the Permian can require millions of gallons of water. Once the well produces, it pushes out enormous volumes of produced water that must be collected and treated. TPL owns the surface rights to the water under its land. It provides sourced water. It collects royalties on produced water. And in June 2026, TPL signed an agreement with Chevron to provide land and brackish water for a large-scale power generation facility — supporting a data center — in Reeves County. Water is the second act.
WHY THIS WORKS
Irreplaceable asset — 882,000 acres in the most productive oil basin in the United States cannot be replicated, moved, or built by a competitor. The land is the moat.
Pure pass-through economics — TPL bears almost none of the capital cost or operating risk of drilling. Operators spend billions. TPL collects a percentage.
Multiple revenue streams from one acre — a single parcel can generate an oil royalty, a water royalty, an easement fee, and a surface-use payment simultaneously.
Zero debt, minimal overhead — 114 employees, no long-term debt, and $498 million in free cash flow in 2025. Sixty cents of every revenue dollar falls to the bottom line.
Here is what most people miss about Texas Pacific Land: the company joined the S&P 500 in November 2024 — yet nearly 39% of its revenue comes not from oil, but from water. Every barrel pulled from the Permian requires multiple barrels of water to extract. As the basin matures, that ratio climbs. TPL may have started as the landlord of a dead railroad. It is quietly becoming the water utility of West Texas.
