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Quarterly report [Sections 13 or 15(d)]

Business Segment Reporting

v3.26.1
Business Segment Reporting
 6 Months Ended
Jun. 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 six months ended June30, 2026 and 2025.

The Land and Resource Management segment encompasses the business of managing our approximately 894,000 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 six months ended June30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
2026 2025
LRM WSO Consolidated LRM WSO Consolidated
Revenues:
Oil and gas royalties $ 145,589 $ — $ 145,589 $ 95,006 $ — $ 95,006
Water sales — 39,733 39,733 — 25,577 25,577
Produced water royalties — 37,075 37,075 — 30,737 30,737
Easements and other surface-related income 18,278 5,384 23,662 33,491 2,732 36,223
Land sales — — — — — —
Total revenues 163,867 82,192 246,059 128,497 59,046 187,543
Expenses:
Salaries and related employee expenses 8,347 7,215 15,562 7,025 7,047 14,072
Water service-related expenses — 11,570 11,570 — 8,451 8,451
General and administrative expenses 5,245 2,759 8,004 3,648 2,045 5,693
Depreciation, depletion and amortization 11,695 4,944 16,639 9,137 4,562 13,699
Ad valorem and other taxes 2,279 188 2,467 1,864 13 1,877
Total operating expenses 27,566 26,676 54,242 21,674 22,118 43,792
Operating income 136,301 55,516 191,817 106,823 36,928 143,751
Interest expense (779) (194) (973) — — —
Other income, net 2,140 714 2,854 4,156 1,084 5,240
Income before income taxes 137,662 56,036 193,698 110,979 38,012 148,991
Income tax expense 28,230 11,538 39,768 24,410 8,441 32,851
Net income $ 109,432 $ 44,498 $ 153,930 $ 86,569 $ 29,571 $ 116,140
Six Months Ended June 30,
2026 2025
LRM WSO Consolidated LRM WSO Consolidated
Revenues:
Oil and gas royalties $ 263,756 $ — $ 263,756 $ 206,251 $ — $ 206,251
Water sales — 86,596 86,596 — 64,390 64,390
Produced water royalties — 70,604 70,604 — 58,437 58,437
Easements and other surface-related income 32,727 8,250 40,977 48,827 5,621 54,448
Land sales 20,944 — 20,944 — — —
Total revenues 317,427 165,450 482,877 255,078 128,448 383,526
Expenses:
Salaries and related employee expenses 15,905 14,644 30,549 14,429 14,215 28,644
Water service-related expenses — 25,857 25,857 — 19,577 19,577
General and administrative expenses 10,740 5,895 16,635 6,961 4,804 11,765
Depreciation, depletion and amortization 20,889 9,793 30,682 16,826 8,814 25,640
Ad valorem and other taxes 4,809 200 5,009 4,053 23 4,076
Total operating expenses 52,343 56,389 108,732 42,269 47,433 89,702
Operating income 265,084 109,061 374,145 212,809 81,015 293,824
Interest expense (1,572) (393) (1,965) — — —
Other income, net 3,721 1,361 5,082 7,572 1,989 9,561
Income before income taxes 267,233 110,029 377,262 220,381 83,004 303,385
Income tax expense 56,878 23,552 80,430 48,268 18,325 66,593
Net income $ 210,355 $ 86,477 $ 296,832 $ 172,113 $ 64,679 $ 236,792

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
June 30,		 Six Months Ended
June 30,
2026 2025 2026 2025
Purchases of Fixed Assets:
Land and resource management $ 76 $ 161 $ 293 $ 164
Water services and operations 20,847 3,647 27,548 13,552
Total purchases of fixed assets $ 20,923 $ 3,808 $ 27,841 $ 13,716

June 30,
2026		 December 31,
2025
Assets:
Land and resource management $ 1,569,215 $ 1,332,180
Water services and operations 290,259 291,098
Total consolidated assets $ 1,859,474 $ 1,623,278
Property, plant and equipment, net:
Land and resource management $ 7,050 $ 7,336
Water services and operations 175,827 157,202
Total consolidated property, plant and equipment, net $ 182,877 $ 164,538