Texas Pacific Land Corporation

Environmental

Encouraging Sustainable Operating Practices

Texas Pacific is unique when it comes to environmental sustainability, particularly as it applies to surface interactions with oil and gas exploration and production companies ("E&P"). Except for the Company’s water solutions business, we do not directly develop or operate the infrastructure on our lands and our legacy assets do not include mineral rights. As a result, TPL has limited influence over E&P operations on our lands. Nevertheless, we maintain close relationships with our lessees and operators to support and encourage sustainable operating practices that align with our ESG goals and targets.

Our extensive surface assets allow us to partner with E&P companies. These companies collaborate with TPL throughout the cycle of their operations, from initial infrastructure development to drilling and completions and finally, production. We enable and foster lasting partnerships throughout the lifecycle of resource development.

We Set High Expectations for Our Partners

TPL relies on and expects operators to conduct their business with sustainability best practices and accountability. Where applicable, all of our existing operators and new operators abide by contracts and guidelines established by TPL, and we have included ESG language in these documents to reflect our sustainability commitments.

Additionally, given our strategic partnerships with the E&P industry, we are developing new opportunities to work together and augment our collective ESG commitments and projects. The energy industry is a leader in ESG disclosure and reporting, and it is prudent for companies to partner together to align our ESG goals and drive beneficial sustainability synergies. Future partnerships may include biodiversity and conservation projects, greenhouse gas and emissions projects, growth in water management innovation, community engagement and strategic social investment opportunities.

We Responsibly Manage Water Sourcing and Water Disposal

We formed Texas Pacific Water Resources (“TPWR”) in 2017 to create additional value and support for E&P operators in their efforts to manage the sourcing of water and disposal of produced water. Notably, TPWR does not operate saltwater disposal wells (SWDs), but TPL requires SWDs drilled on our property by third parties to meet industry and regulatory standards. Within our water business, we facilitate development of infrastructure to provide water midstream services that enable the gathering, reuse, and recycling of produced water. Beyond water management, TPL also prioritizes critical environmental issues such as energy efficiency, emissions management, and ecological due diligence. These sustainability areas continue to remain a top priority for the Company in our forward-looking strategies and decision-making.

Environmental Management

At Texas Pacific, we understand that spill prevention and control are key to responsible land and water management. Protecting the environment and our surrounding communities is fundamental to our operations and long-term business strategy.

To ensure the continued integrity of our operations, we implemented a Spill Prevention, Control, and Countermeasure (“SPCC”) plan and protocol for our water assets. These assets are also equipped with advanced technology and secondary containment protections to prevent spills or leak risks. Our advanced operating equipment allows the operations team to automatically shut down equipped assets if an emergency scenario arises.

TPL strives for excellence; thus, we track and monitor all spills, regardless of size even if they are small enough to be outside regulatory reporting requirements. All spill information is entered into our centralized database where it can be easily tracked and managed, facilitating proactive preventative measures.

TPL has an excellent record of preventing spills. This is attributed to employee training and exceptional asset management and integrity protocols. That said, it is best to be prepared: TPL prioritizes the continued education and engagement of employees and contractors to ensure they are equipped to manage emergency scenarios. For example, the entire operations team participates in TPL’s Spill Champion Program, which provides on-site training to our employees that are most likely to encounter issues or emergencies that come from transporting liquids, including brackish water and liquids with hydrocarbons. If a spill does occur, TPL operators and field Health, Safety and Environment (“HSE”) coordinators have a defined process and protocol to survey the spill and confirm its extent. There is a process to notify the proper channels within TPL to ensure oversight, and a certified third-party partner is retained if remediation services are required. Additionally, a local accredited laboratory provides soil sample assessments before and after remediation.

Texas Pacific’s Environmental Management System, aligns with ISO14001 as a recognized environmental management standard. This guides our environmental impact assessment processes in Texas & New Mexico. Our EMS is overseen by the HSE Department who reports to SVP and General Council.

It is standard practice to conduct on-site Phase 1 Environmental Site Assessments to gauge the condition of property prior to the Company acquiring additional surface acreage. Similarly, when TPL obtains a Right-of-Way for infrastructure expansion, it performs soil testing to confirm no immediate environmental remediation is required. As part of its operational excellence due diligence, TPL also tests for chlorides.

To manage the integrity of existing pipeline assets, we schedule regular pipeline maintenance checkups, and the HSE team closely monitors assets for spills, leaks, or any other type of release.

TPL fosters partnerships with environmental experts, such as the New Mexico Bureau of Land Management, to obtain biodiversity impact guidance and vital insight into environmentally sensitive areas. Through these partnerships, TPL proactively manages and avoids environmentally sensitive areas or, when appropriate, proceeds with caution and applies environmental due diligence.

We contractually require our grazing tenants to use proper grazing and stockman standards as well as participate in conservation, range, and wildlife improvement programs when possible.

TPWR also works closely with O&G operators to follow their established biodiversity protocols.

Prior to the buildout of any new water midstream assets, we partner with our environmental consultants to obtain environmental and ecological information that could impact the development and / or expansion of water operations. These consultants utilize ArcGIS software to capture and report data that shows if TPL’s planned infrastructure intersects with environmentally sensitive areas. The current process allows the Company to proactively manage and mitigate construction on land with conservation status, high biodiversity value, endangered species habitat, and Unusually Sensitive Areas (as defined by SASB). Additionally, the Company employs land surveyors who act as on-the-ground resources to confirm the environmental intelligence obtained from the software. We believe these practices mitigate any unknown environmental risks or potential information gaps not captured by virtual assessment tools.

As part of our asset management protocol, TPL continues to drive environmental accountability by testing and performing water quality analytics and assessments. This provides the Company, surrounding communities, and landowners assurance that the integrity and safety of the surrounding areas are ecologically maintained.

It is also important to note that TPL encourages, and where applicable requires O&G and midstream operators to build their assets in specific, designated land corridors to avoid unnecessarily disturbing land and to minimize environmental footprints. TPL’s pipeline leases have stringent contractual obligations to ensure environmental due diligence and responsible land management.

Case Study: Carbon Capture and Sequestration (“CCS”)

TPL has been working with Milestone Carbon, LLC, a leading carbon capture company, to evaluate geological and geophysical characteristics of about 21,000 acres of TPL land in order to sequester captured CO2. Carbon Capture and Sequestration (“CCS”) is a type of technology that provides means to achieve a low-carbon future and fight climate change. If the evaluation is successful, TPL’s vast acreage and deep industry experience could be further developed in connection with a CCS infrastructure project in the Permian Basin.

“Carbon capture can be a key tool in the quest for net zero, and TPL’s expansive surface footprint could potentially serve as a key resource to permanently sequester carbon. We are constantly looking for ways to leverage the unique features of our surface assets, and carbon capture is an exciting opportunity that could serve a dual purpose of creating value for our shareholders while also benefitting the environment.” – Tyler Glover, CEO of TPL

TPL prioritizes consistent engagement and communication with operators and lessees on TPL’s land to ensure environmental due diligence is maintained. When an operator or lessee comes to the end of a lease or is leaving TPL’s land, TPL requires a reclamation process to verify that the land has been restored to the environmental condition stipulated by the contractual agreement. In cases where TPL finds misalignment with the level of expected remediation, TPL works with the operator and/or lessee to complete all remediation efforts necessary.

Waste and Chemical Management

TPL’s chemical management program abides by the stringent specifications provided by operators. TPL holds itself and its operators and lessees accountable to these procedures and stringent expectations.

Climate Change

Position on Climate Change

At TPL, we view climate change as a critical component of our long-term business strategy. We factor in climate-related risks and impacts into our environmental, economic, and social strategies to ensure we remain committed to responsible operations.

TPL is dedicated to reducing our GHG emissions through a series of electrification projects and capital expenditure commitments. For example, the Company is prioritizing the electrification of our water assets to reduce reliance on diesel and to manage our emissions profile. We expanded our Renewables Team, a segment created to solely focus on encouraging wind and solar development on our properties and exploring all available options to increase our existing renewable footprint. Finally, TPL allows for easements on our land to construct electricity infrastructure, supporting oil and gas operators’ access to electricity and thus avoiding the use of diesel to power their operations. This supports a tremendous amount of emissions reductions from operators across TPL’s land. Additionally, the Company’s water infrastructure—used to transport water—takes commercial trucks off the road. Each truck runs off of diesel, so for every truck that is removed due to TPL’s water infrastructure, the Company is supporting GHG reductions for its operators. Additionally, within our water business, TPL facilitates the development of infrastructure to provide water midstream services that enable the gathering, reuse, and recycling of produced water. Our water recycling capabilities help operators minimize the use of freshwater demand. This business offering is critical to support the risk of water availability that is associated with climate change.

Climate Risk Management—TCFD Reporting*

Texas Pacific Land Corporation (TPL) is unique when it comes to environmental sustainability, particularly as it applies to surface interactions with oil and gas exploration and production companies ("E&P"). Aside from the Company’s water solutions business, we do not directly develop or operate the infrastructure on our lands, and our assets do not include mineral rights. As a result, TPL has limited influence over E&P operations on our lands. Nevertheless, we maintain close relationships with our lessees and operators to support and encourage sustainable operating practices that align with our Environmental, Social, and Governance (“ESG”) goals and targets. We recognize the growing importance of the energy transition and the role that renewable energy resources play in shaping the future of global energy production. We feel that our land holding uniquely positions us to promote and inspire innovation towards cleaner and more responsible practices across the energy market.

Our approach to managing climate change risks and opportunities aligns with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

Governance

Board Oversight of Climate Risks

Our Board of Directors is responsible for overseeing the Company’s operations: including its strategy, risk management, and performance of management, to assure alignment with the interests of all stakeholders. They also work to ensure our strategic business operations are conducted in accordance with our ESG program standards, which include climate change risk management. 

The Board has three standing committees that meet quarterly and on an as-needed basis to help oversee the Company’s business: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each board committee member brings distinguished skills and capabilities enabling oversight of sustainability and ESG goals, however oversight of climate change risks and opportunities rests within our Nominating and Corporate Governance Committee. They ensure TPL’s ESG and climate programs are conducted with the highest levels of integrity and responsibility. This Committee’s charter stipulates that it will “review the Company’s policies and programs concerning corporate social responsibility, including environmental, social and governance (ESG) matters.” This Committee “provides guidance to the Board and management with respect to trends and developments regarding environmental, social, environmental and political matters that could significantly impact the Company." 

Management’s Role in Assessing and Managing Climate Risks and Opportunities

TPL’s ESG Leadership Committee provides critical oversight and direction regarding our ESG and climate-related business strategies. Our CEO, CFO and Senior Vice President & General Counsel are members of this Committee.

Our ESG Working Committee reports to the CEO and is led by our Vice President of Corporate Strategy. It is comprised of our management level, cross-functional subject matter experts, and offers division-specific knowledge and accountability as it relates to the ongoing development and evaluation of our ESG, and climate initiatives. One of the most frequent topics of discussion for this committee is our focus on energy transition and our renewable energy development strategy. ESG strategic risks are included in our overarching Enterprise Risk Management (“ERM”) program. TPL assigns an executive to manage and monitor the effectiveness of the processes and controls surrounding each strategic risk within the ERM program.


Strategy

Climate-Related Risks and Opportunities

Risks:

Our strategic approach to managing climate change represents a critical component of our broader, long-term business strategy at TPL. We are factoring in the risks and impacts of climate change to our economic, environmental, social, and governance decisions to ensure we remain committed to responsible operations.

As part of our ERM framework, TPL has identified the following examples of climate-related risks that could potentially impact our business:

Transition Risks

  • Legal and Regulatory Risks: The inability to anticipate and/or properly respond to changes in the regulatory environment could negatively impact TPL’s ability to create value for stakeholders. Changes to legislation or regulation related to a carbon tax on production volumes, GHG emissions, or other environmental elements could lead to increased operating costs and/or reduction in profits.
  • Reputational Risks: Regardless of the source of reputational risks, any reputational damage to TPL has the possibility to impact our business in many ways and impact our relationship with numerous stakeholders. The energy transition and related climate change challenges present reputational risks for every business, TPL included. Reputational risks have the ability to negatively impact our brand and thus our relationship with customers, which can impact revenue generation. Beyond this, it can hurt our relationship with our employees and communities, which can impact our ability to sustain normal operations and grow as a company. Changing investor and lender sentiment about our reputation further has the potential to impact our access to capital or ability to attract new investors.
  • Technology and Market Risks: Technological developments will be a key component of the transition to a world that meets a 2°C scenario. TPL recognizes that the evolution of global energy sources is partially affected by factors out of our control, such as the pace of technological developments and related cost considerations, the levels of economic growth in different markets around the world, and the adoption of climate change-related policies. The pace at which technology develops can impact TPL’s ability to operate more sustainably. Further, varying economic growth situations and climate policy evolutions can impact both the profitability and viability of our business in the long-term. TPL regularly monitors evolutions across these areas.

Physical Risks

  • Acute: Acute physical risks include possible changes in the severity and frequency of extreme weather events and natural disasters, both of which could disrupt TPL’s business. Extreme weather events have the possibility of impacting our service delivery, which could lead to lost revenue, missed opportunities, and strained client relationships. While this risk impacts our competitors as well, the specific geographic location of our land varies from competitors, which could mean facing different extreme weather situations.
  • Chronic: Chronic physical risks include changes in precipitation patterns and extreme variability in weather patterns, along with the gradual shifting in broader climate patterns. Chronic physical risks could lead to drought and aquifer decline within our business, therefore resulting in lost revenue and/or missed opportunities which would seriously disrupt our water business and impact revenues from the operators that rely on water resources to source oil and gas product. Additionally, other gradual but significant climate change topics can impact the attractiveness of our land and thus our ability to generate revenue and increase shareholder value.

Opportunities:

We will continue to identify opportunities created by the energy transition that improve our competitive advantage and increase our access to capital. One of the biggest opportunities for the company is related to reducing our GHG emissions through a series of electrification projects. As these have been implemented, our expenditure on electrification has more recently been attributed to maintenance costs of our electrified assets.

Carbon Management

Due to the geological characteristics and TPL’s ownership of pore space within the Permian Basin, TPL believes it is not only in an ideal position to continue taking advantage of oil and gas operations, but also to take advantage of the numerous government policies being enacted to incentivize sustainable energy projects such carbon capture, utilization, and storage (CCUS). As operators and consumers look to reduce the carbon intensity of fossil fuel products, carbon capture and sequestration projects will be necessary to produce and acquire these cleaner products. TPL views the energy transition as an economic and social opportunity to contribute to the protection of our land and environment.

Water Management

As demand for recycled water grows due to decreased water availability, TPL will work to meet these needs through our water business, Texas Pacific Water Resources (TPWR). TPWR was created to facilitate the development of infrastructure to provide water midstream services that enable the gathering, reuse, and recycling of produced water. Our water recycling capabilities allow operators to minimize the use of freshwater resources, which is becoming an increasingly critical business strategy in Texas. The Company has prioritized the electrification of our water assets to reduce reliance on diesel and to manage our emissions profile.

Environmental Management

Beyond water management, TPL also prioritizes critical environmental issues such as energy efficiency, emissions management, and ecological due diligence to minimize climate-related risks to our operations. These sustainability areas continue to remain a top priority for the Company in our forward-looking strategies and decision-making. We regularly look for more efficient technologies in our operations which enable us to not only reduce costs but also our impact on the environment. TPL also allows for easements on our land to construct electricity infrastructure, supporting oil and gas operators’ access to electricity and thus avoiding the use of diesel to power their operations. This supports a tremendous amount of emissions reductions from operators across TPL’s land.

Renewables and "Next-Gen" Development

Beyond these efforts, the Company has a newly-formed team dedicated to pursuing and facilitating wind and solar development, among other “next-gen” opportunities, on our properties.

Currently, we host around 120MW of wind power and our land holdings play a critical part in supporting infrastructure related to an additional 100MW of solar power. We partner with best-in-class developers who can create over 100 MW of commercial-grade projects by executing long-term purchase power agreements (PPA). We are also working with our current partners across the Permian Basin to implement micro-grid sized projects (typically 5-50MW) that will allow traditional O&G companies to reduce their own carbon footprint by supplementing grid power with cost-efficient and reliable green energy.

Our unique operating model allows us to pursue opportunities to increase our renewable portfolio. Energy produced by our renewable operations can be sold back to the grid or used to offset our own electricity consumption. In 2022, we increased contracted renewable energy capacity by 37%. In 2021, we executed an agreement with Texas A&M AgriLife Extension to begin assessing and eventually implementing soil carbon sequestration opportunities across a couple land plots spanning approximately 20,000 acres. Our objective with this project is to generate authenticated carbon credit we can then use to offset our own Scope 1 and Scope 2 emissions or also potentially monetize.

Risk Management

Our ERM framework includes an assessment of vulnerability to enterprise risks and lays out a Risk Mitigation Plan for each risk, including the examples of climate change related risks identified in the “Strategy” section. The executive management team member or delegate assigned to each risk mitigation plan is responsible for advancing key solutions, including those for climate-related risks. By incorporating climate-related risks to our ERM strategy, we are able to proactively track and monitor the various risks that can result in material, destructive impact to our operations, financials, and reputation.

We have processes and protocols in place to monitor the potential impacts of climate-related risks on our own operations, which are part of our broader risk management program. While the nature of climate-related risks, and risks in general, is complex, we use the following matrix of frequency and probability as a starting point to assess critical risks to our business.

Rating Annual Frequency Probability
Descriptor Definition Probability Definition
5 Very Likely Up to once in 2 years or more Almost Certain 90% or greater chance of certain occurence over life of asset, project or company.
4 Likely Once in 2 years up to once in 10 years Likely 65% up to 90% chance of occurrence over life of asset, project or company.
3 Possible Once in 10 years up to once in 25 years Possible 35% up to 65% chance of occurrence over life of asset, project or company.
2 Unlikely Once in 25 years up to once in 50 years Unlikely 10% up to 35% chance of occurrence over life of asset, project or company.
1 Rare Once in 50 years or less Rare <10% chance of occurrence over life of asset, project or company.

These identified risks are accompanied by critical information about root causes and potential impacts in order to facilitate discussions of applicable, actionable, and measurable mitigation plans. Throughout the year, TPL assesses and defines the potential material risks to our business and allocates risk ownership accordingly to an executive member or team, which updates the ERM document accordingly. Our ERM program is managed by the executive management team and overseen by the Audit Committee of the Board of Directors.

The following criteria is used in assessing risks identified by management, including climate-related risks:

Impact: Impact (or consequence) refers to the extent to which a risk event might affect the enterprise.

Likelihood: Likelihood represents the possibility that a given risk event will occur expressed using qualitative terms as frequency or percent probability. 

Velocity (Speed of Onset): Velocity or Speed of Onset refers to the time it takes for a risk event to manifest itself, or in other words, the time that elapses between the occurrence of an event and the point at which the company first feels its effects. 

Vulnerability: Vulnerability refers to the susceptibility of the entity to a risk event in terms of criteria related to the entity’s preparedness, agility, and adaptability. 

Beyond identified risks, our ERM Assessment also works to identify and mitigate emerging risks, as TPL is aware that risks can either gradually emerge over time or present themselves overnight. The ERM is embedded into every aspect of our business decision-making to deliver enhanced and predictive returns for our shareholders. This process includes assessing legal/compliance obligations, the energy transition, potential natural disasters, extreme weather events, and more.

Specifically,

  • TPL’s full Executive Leadership Team and Board regularly monitor and discuss the evolving political and regulatory environment around potential emerging risks from pending or changing legislation or regulations.
  • TPL navigates potential reputational risks by striving for continuous improvement within our operations, while also regularly engaging with various stakeholders to understand and internalize their perspectives and opinions. This drive for continuous environmental performance improvement is part of our efforts to protect our reputation as a responsible operator. Meanwhile, our commitment to stakeholder engagement enables us to monitor evolving expectations from employees, suppliers, customers, investors, landowners, and our communities. For example, some of our landowner relationships have existed more than 100 years, and their expectations from TPL have changed over time. We regularly engage with them, and other stakeholder groups, as part of our process to manage reputational risks.
  • TPL has a culture of continuous improvement across all of our teams, and this culture shows itself in our approach to innovative technology. One key component of this is that we regularly assess evolving technologies that have the capability to change an industry or help improve the environmental efficiency of our operations. We have implemented advanced technologies in our operations, such as the electrification of assets, and proactively work to remain informed of new technological opportunities.
  • Market trends present both a risk and opportunity for TPL, which we navigate in several ways. Our finance department regularly assesses economic trends to predict their impact on our business. Specific to climate change, our business is positioned to support companies who are part of the climate solution, both by encouraging the electrification of assets and, importantly, being able to lease our land to providers of renewable energy.
  • TPL also works diligently to monitor and mitigate physical risks. For acute risks, TPL works with our lessees to encourage and focus on the resilience of our operations and their operations, being able to withstand extreme weather conditions to the extent possible. Further, for chronic climate risks, TPL analyzes these trends both in the context of where our assets are located and the environmental responsibility of our lessees.

Metrics and Targets

Metrics Used to Assess Climate Risks and Opportunities

Quantitative data enables us to track and meaningfully manage climate change risks and opportunities. Our metrics and KPIs provide a foundation to guide the company’s current and future strategic business decision-making. We view the tracking and disclosing of environmental performance data as a first key step towards systematically approaching climate risk management. 2022 data is tracked and disclosed below. TPL remains dedicated to the continued aggregation and analysis of this data to monitor and trend our progress against our baseline. 

At TPL, we use Scope 1, Scope 2, total energy consumed (GJ), percentage of energy type and electrification to assess climate-related risks and opportunities in line with our strategy and risk management process.

Metrics:

Scope 1 and Scope 2 GHG Emissions (2022)

Scope 1 = 10,590 Metric Tonnes CO2e *from TPL and TPWR operations*

Scope 2 = 11,492 Metric Tonnes CO2e *from TPL and TPWR electricity consumption*

Total Scope 1 and 2 = 22,082 Metric Tonnes Co2e *calculation applies EPA’s 2023 Emissions Factors for Greenhouse Gas Inventories

Target:

Additionally, as mentioned earlier, TPL has committed to a major goal of increasing contracted renewables by 30% by 2023.*           

*Factors that could impact the goal include material costs, access to capital, and grid constraints. 

Forward-looking Statements*

This presentation contains certain forward-looking statements within the meaning of the U.S. federal securities laws that are based on TPL’s beliefs, as well as assumptions made by, and information currently available to, TPL, and therefore involve risks and uncertainties that are difficult to predict. These statements include, but are not limited to, statements about strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements that are not historical facts. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions are intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although we believe our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this presentation are reasonable, we may be unable to achieve these plans, intentions or expectations and actual results, performance or achievements may vary materially and adversely from those envisaged in this document. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see TPL’s annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC. The tables, graphs, charts and other analyses provided throughout this document are provided for illustrative purposes only and there is no guarantee that the trends, outcomes or market conditions depicted on them will continue in the future. There is no assurance or guarantee with respect to the prices at which the Company’s common stock will trade, and such securities may not trade at prices that may be implied herein.

TPL’s forecasts and expectations for future periods are dependent upon many assumptions, including the drilling and development plans of our customers, estimates of production and potential drilling locations, which may be affected by commodity price declines, the severity and duration of the COVID-19 pandemic and related economic repercussions or other factors that are beyond TPL’s control.

These materials are provided merely for general informational purposes and are not intended to be, nor should they be construed as 1) investment, financial, tax or legal advice, 2) a recommendation to buy or sell any security, or 3) an offer or solicitation to subscribe for or purchase any security. These materials do not consider the investment objective, financial situation, suitability or the particular need or circumstances of any specific individual who may receive or review this presentation, and may not be taken as advice on the merits of any investment decision. Although TPL believes the information herein to be reliable, the Company and persons acting on its behalf make no representation or warranty, express or implied, as to the accuracy or completeness of those statements or any other written or oral communication it makes, safe as provided for by law, and the Company expressly disclaims any liability relating to those statements or communications (or any inaccuracies or omissions therein). These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Water Management, Sourcing and Supply Resiliency

TPL’s operations include protections and processes that help address the risks of climate change. In alignment with the TCFD recommendations, TPL has identified water availability as a key business risk associated with climate change. TPL is actively addressing this concern by utilizing advanced technology where possible, and building operational processes that support responsible resource usage.

TPL conducts groundwater monitoring as well as precipitation tracking in order to evaluate level changes in producing aquifers. Combined with production data, this allows us to adapt production based on the level and overall health of the aquifer. For wells without devices, the Company monitors static and dynamic well levels, actively reducing energy use to align with the availability of water.

Utilizing Automation for Water Production and Treatment

Our automated volume-tracking infrastructure exists on all active water production and treatment assets.

  • Brackish Water: automated meters collect all water produced, stored, transferred, and eventually sold to customers.
  • Recycled Water: the same automated processes are installed on localized treatment systems.

Water wells are automated through Variable Frequency Drive (“VFD”) pumps—this enables control of the asset and provides the ability to shut off production when needed, allowing TPL to control water withdrawals and water movement. These motors correspondingly slow to minimize consumption and proactively prevent negative environmental impacts on the aquifer. Assets also have a Global Systems for Mobile (“GSM”) backup as a redundant option should there be a critical service outage.

Sourcing Brackish Water

Our monitoring and response capability is vital to supporting sustainable operations and managing the risks and impacts of climate change.

TPL understands the criticality of responsibly managing water as a natural resource. The Company focuses on the development of brackish, non-potable water with the majority of our water production occurring from these brackish aquifers. Freshwater development is limited only to cases where brackish water is not geologically feasible.

Energy Management and Efficiency

TPL is committed to electrifying our water assets in an effort to mitigate the overall emission profile by reducing reliance on diesel generators. TPL has processes in place to track energy consumption (electric and diesel) by location, covering approximately 80% of the energy used.

The 2021 Texas Freeze highlighted infrastructure vulnerabilities across the Permian Basin for both water management and O&G companies. Although electrification is the goal as a primary power source, TPL has diesel generators as backups for all assets to ensure operations continue to run in an emergency power-outage scenario.

TPL implemented a software solution to manage its assets and validate that they are efficiently working and receiving proper maintenance when needed. The platform allows the Company to avoid unnecessary expenditure of energy for assets that are not working properly.

TPL recognizes the growing importance of the energy transition and the role that renewable energy resources play in shaping the future of global energy production. We feel that our land holding uniquely positions us to promote and inspire innovation across the clean energy market.

In an effort to continually adapt to market opportunities and diversification strategies, TPL has a team that solely focuses on encouraging wind and solar development on our properties and exploring all available options to increase our existing renewable footprint. TPL currently hosts around 120MW of wind power and our land holdings play a critical part in supporting infrastructure related to an additional 100MW of solar power. The TPL team strategically prioritizes increasing its existing renewable portfolio through industry outreach and a thorough understanding of regulatory considerations and infrastructure requirements. TPL aims to help streamline land leasing procedures to provide a reliable and predictable foundation for future projects.

We are working to partner with best-in-class developers, who can create over 100 MW of commercial-grade projects, by executing long-term purchase power agreements (PPA). In addition, we are also working with our current partners across the Permian Basin to implement micro-grid sized projects (typically 5-50MW) that will allow traditional O&G companies to reduce their own carbon footprint by supplementing grid power with cost-efficient and reliable green energy. Holistically, the buildout of renewable energy drives an element of the Company’s business revenue.

Case Study: Carbon Capture and Sequestration (“CCS”)

Since 2021, TPL has been working with Milestone Carbon, LLC, a leading carbon capture company, to evaluate geological and geophysical characteristics of about 21,000 acres of TPL land in order to sequester captured CO2. Carbon Capture and Sequestration (“CCS”) is a type of technology which provides means to achieve a low-carbon future and fight climate change. If the evaluation is successful, TPL’s vast acreage and deep industry experience could be further developed in connection with a CCS infrastructure project in the Permian Basin.

"Carbon capture can be a key tool in the quest for net zero, and TPL’s expansive surface footprint could potentially serve as a key resource to permanently sequester carbon. We are constantly looking for ways to leverage the unique features of our surface assets, and carbon capture is an exciting opportunity that could serve a dual purpose of creating value for our shareholders while also benefitting the environment."
Tyler Glover, CEO of TPL