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Quarterly report [Sections 13 or 15(d)]

Business Segment Reporting

v3.26.1
Business Segment Reporting
 3 Months Ended
Mar. 31, 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 months ended March31, 2026 and 2025.

The Land and Resource Management segment encompasses the business of managing our approximately 881,000 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 table presents segment financial results for Land and Resource Management (“LRM”) and Water Service and Operations (“WSO”) and the reconciliation to consolidated financial results for the three months ended March31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
2026 2025
LRM WSO Consolidated LRM WSO Consolidated
Revenues:
Oil and gas royalties $ 118,167 $ — $ 118,167 $ 111,245 $ — $ 111,245
Water sales — 46,863 46,863 — 38,813 38,813
Produced water royalties — 33,529 33,529 — 27,700 27,700
Easements and other surface-related income 14,449 2,866 17,315 15,336 2,889 18,225
Land sale 20,944 — 20,944 — — —
Total revenues 153,560 83,258 236,818 126,581 69,402 195,983
Expenses:
Salaries and related employee expenses 7,558 7,429 14,987 7,404 7,168 14,572
Water service-related expenses — 14,287 14,287 — 11,126 11,126
General and administrative expenses 5,495 3,136 8,631 3,313 2,759 6,072
Depreciation, depletion and amortization 9,194 4,849 14,043 7,689 4,252 11,941
Ad valorem and other taxes 2,530 12 2,542 2,189 10 2,199
Total operating expenses 24,777 29,713 54,490 20,595 25,315 45,910
Operating income 128,783 53,545 182,328 105,986 44,087 150,073
Interest expense (793) (199) (992) — — —
Other income, net 1,581 647 2,228 3,416 905 4,321
Income before income taxes 129,571 53,993 183,564 109,402 44,992 154,394
Income tax expense 28,648 12,014 40,662 23,858 9,884 33,742
Net income $ 100,923 $ 41,979 $ 142,902 $ 85,544 $ 35,108 $ 120,652

Interest income by segment is included in other income, net in the table 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
March 31,
2026 2025
Purchases of Fixed Assets:
Land and resource management $ 217 $ 3
Water services and operations 6,701 9,905
Total purchases of fixed assets $ 6,918 $ 9,908

March 31,
2026		 December 31,
2025
Assets:
Land and resource management $ 1,456,377 $ 1,332,180
Water services and operations 295,076 291,098
Total consolidated assets $ 1,751,453 $ 1,623,278
Property, plant and equipment, net:
Land and resource management $ 7,263 $ 7,336
Water services and operations 159,488 157,202
Total consolidated property, plant and equipment, net $ 166,751 $ 164,538