TPL: Future Returns Will Reflect Higher Production And Moderating Profit Margins

Narrative Update

Analysts have trimmed their price target for Texas Pacific Land from approximately $921.93 to $842.50, reflecting expectations for faster top line growth, but lower long term margins and a more conservative valuation multiple.

What's in the News

• Texas Pacific Land completed a share repurchase tranche, buying back 9,000 shares, or 0.04 percent of outstanding stock, for 8.28 million dollars between July 1 and September 30, 2025. This brought total repurchases under the November 2, 2022 authorization to 67,051 shares, or 0.29 percent, for 79.83 million dollars (company filing).
• The company reported unaudited third quarter 2025 production of 1,284 thousand barrels of oil, 6,142 million cubic feet of natural gas, and 1,031 thousand barrels of NGLs (company production update).
• For the first nine months of 2025, oil production was 3,616 thousand barrels compared with 3,003 thousand barrels a year earlier. Natural gas output was 17,031 million cubic feet compared with 12,312 million cubic feet, and NGL volumes were 2,705 thousand barrels compared with 2,073 thousand barrels (company production update).

Valuation Changes

• Fair Value: Reduced from approximately $921.93 to $842.50, a modest decrease in the intrinsic value estimate.
• Discount Rate: Increased slightly from about 6.40 percent to 6.96 percent, implying a higher required return for the shares.
• Revenue Growth: Raised significantly from roughly 7.16 percent to 12.75 percent, reflecting higher expectations for top line expansion.
• Net Profit Margin: Lowered meaningfully from about 68.17 percent to 60.39 percent, indicating a more conservative view on long term profitability.
• Future P/E: Reduced from approximately 41.86 times to 33.92 times, signaling a lower valuation multiple applied to expected earnings.