Cautionary Statement Regarding Forward-Looking Statements



Statements in this Quarterly Report on Form 10-Q that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements regarding management's expectations, hopes, intentions or
strategies regarding the future. Forward-looking statements include statements
regarding the Trust's future operations and prospects, the severity and duration
of the COVID-19 pandemic and related economic repercussions, the markets for
real estate in the areas in which the Trust owns real estate, applicable zoning
regulations, the markets for oil and gas including actions of other oil and gas
producers or consortiums worldwide such as OPEC+, the proposed reorganization of
the Trust into a corporation, expected competition, management's intent, beliefs
or current expectations with respect to the Trust's future financial performance
and other matters. All forward-looking statements in this Report are based on
information available to us as of the date this Report is filed with the
Securities and Exchange Commission (the "SEC"), and we assume no responsibility
to update any such forward-looking statements, except as required by law. All
forward-looking statements are subject to a number of risks, uncertainties and
other factors that could cause our actual results, performance, prospects or
opportunities to differ materially from those expressed in, or implied by, these
forward-looking statements. These risks, uncertainties and other factors
include, but are not limited to, the factors discussed in Item 1A. "Risk
Factors" of Part I of our Annual Report on Form 10-K for the year ended December
31, 2019, and in Part I, Item 2. "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Part II, Item 1A. "Risk
Factors" of this Quarterly Report on Form 10-Q.

The following discussion and analysis should be read together with (i) the
factors discussed in Item 1A. "Risk Factors" of Part I of our Annual Report on
Form 10-K for the year ended December 31, 2019, (ii) the factors discussed in
Part II, Item 1A. "Risk Factors," if any, of this Quarterly Report on Form 10-Q
and (iii) the Financial Statements, including the Notes thereto, and the other
financial information appearing elsewhere in this Report. Period-to-period
comparisons of financial data are not necessarily indicative, and therefore
should not be relied upon as indicators, of the Trust's future performance.
Words or phrases such as "expects" and "believes", or similar expressions, when
used in this Form 10-Q or other filings with the SEC, are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.

Overview

Texas Pacific Land Trust (which together with its subsidiaries as the context
requires, may be referred to as "Texas Pacific", the "Trust", "our", "we" or
"us") is one of the largest landowners in the State of Texas with approximately
900,000 acres of land in West Texas. We were organized under a Declaration of
Trust, dated February 1, 1888, to receive and hold title to extensive tracts of
land in the State of Texas, previously the property of the Texas and Pacific
Railway Company. Our Trustees are empowered under the Declaration of Trust to
manage the lands with all the powers of an absolute owner.

Our surface and royalty ownership allow steady revenue generation through the
entire value chain of oil and gas development. While we are not an oil and gas
producer, we benefit from various revenue sources throughout the life cycle of a
well. During the initial development phase where infrastructure for oil and gas
development is constructed, we receive fixed fee payments for use of our land
and revenue for sales of materials (caliche) used in the construction of the
infrastructure. During the drilling and completion phase, we generate revenue
for providing sourced water and/or treated produced water in addition to fixed
fee payments for use of our land. During the production phase, we receive
revenue from our oil and gas royalty interests and also revenue related to
saltwater disposal on our land. In addition, we generate revenue from a variety
of land uses including midstream infrastructure projects and processing
facilities as hydrocarbons are processed and transported to market.

Our revenues are derived primarily from oil and gas royalties, sales of water
and land, easements and commercial leases. Due to the nature of our operations,
our revenue is subject to substantial fluctuations from quarter to quarter and
year to year. The demand for, and sale price of, particular tracts of land is
influenced by many factors beyond our control, including general economic
conditions, the rate of development in nearby areas and the suitability of the
particular tract for commercial uses prevalent in western Texas.

We are not an oil and gas producer. Rather, our oil and gas revenue is derived
from our oil and gas royalty interests. Thus, in addition to being subject to
fluctuations in response to the market prices for oil and gas, our oil and gas
royalty revenues are also subject to decisions made by the owners and operators
of the oil and gas wells to which our royalty interests relate as to investments
in and production from those wells. We monitor reports from the operators, the
Texas Railroad Commission, and other private data providers to assure that we
are being paid the appropriate royalties.
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Our revenue from easements is primarily generated from pipelines transporting
oil, gas and related hydrocarbons, power line and utility easements and
subsurface wellbore easements. The majority of our easements have a thirty-plus
year term but subsequently renew every ten years with an additional payment.
Commercial lease revenue is derived primarily from saltwater disposal royalties,
processing, storage and compression facilities and roads.

Texas Pacific Water Resources LLC ("TPWR"), a single member LLC and wholly owned
subsidiary of the Trust, provides full-service water offerings to operators in
the Permian Basin. These services include, but are not limited to, water
sourcing, produced-water gathering/treatment, infrastructure development,
disposal solutions, water tracking, analytics and well testing services. TPWR's
revenue streams principally consist of revenue generated from sales of sourced
and treated water as well as revenues from produced water royalties.

During the three months ended March 31, 2020, the Trust invested approximately $3.5 million in TPWR projects to develop water sourcing and water re-use assets.

Corporate Reorganization



On March 23, 2020, we announced that our Trustees approved a plan for
reorganizing the Trust from its current structure to a corporation formed under
the laws of the State of Delaware. The Trustees made their determination
following careful consideration of the recommendation of the Conversion
Exploration Committee of the Trust. The Trust presently intends that the
corporate reorganization will be effected by the end of the third quarter of
2020, but the Trust recognizes that unforeseen impacts of COVID-19 or other
developments could extend this timeframe despite the Trust's efforts. Barring
any unforeseen disruptions, further information regarding the corporate
reorganization will be included in a registration statement on Form 10 to be
filed with the SEC as well as in other communications and disclosures
anticipated to be made by the Trust and the corporation.

COVID-19 Pandemic and Market Conditions Update



The COVID-19 pandemic and related economic repercussions have created
significant volatility, uncertainty, and turmoil in the oil and gas industry.
Oil demand has significantly deteriorated as a result of the virus outbreak and
corresponding preventative measures taken around the world to mitigate the
spread of the virus. In the midst of the ongoing COVID-19 pandemic, the
Organization of Petroleum Exporting Countries and other oil producing nations
(OPEC+) were unable to reach an agreement on production levels for crude oil, at
which point Saudi Arabia and Russia initiated efforts to aggressively increase
their production. Although certain OPEC+ nations have reached a tentative
agreement on production cuts since such time, there is an excess supply of oil
on the market and constraints on storage capacity. The convergence of these
events is expected to result in the downward pressure on certain commodity
prices continuing for the foreseeable future.

These events have negatively affected, and are expected to continue to
negatively affect, the Trust's business and results of operations. Should oil
and gas wells be shut in, production curtailed or the owners and operators of
the oil and gas wells to which the Trust's royalty interests relate decrease
investment in response to lower commodity prices and conservation of capital, we
would expect the Trust's royalty income and demand for our water services to
decline.

Given the dynamic nature of these events, we cannot reasonably estimate the
period of time that the COVID-19 pandemic and related market conditions will
persist, or the extent of the impact they will have on the Trust's business or
results of operations and financial condition.

During these uncertain times, we have continued to meet the operational needs of
our customers while maintaining a safe and healthy work environment for our
employees. Our existing information technology infrastructure gave us the
ability to respond rapidly to the recommended measures of closing our corporate
offices and allowing our corporate employees to work remotely. We employed
additional safety measures and personal protective equipment for our field
employees, including quarantine facilities, if needed, and implementation of a
medical hotline for access by all employees should they experience symptoms or
seek additional medical information.

In an effort to decrease ongoing operational costs, we have implemented certain
cost reduction measures which include, but are not limited to, negotiated price
reductions and discounts with certain vendors. We are closely monitoring our
customer base and outstanding accounts receivable balances as a means of
minimizing any potential collection issues. As a royalty owner, we have no
capital expenditure or operating expense burden for development of wells.
Furthermore, our water
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operations currently have limited capital expenditure requirements, the amount and timing of which is entirely within our control.



Despite the uncertainty the record low oil prices and the COVID-19 pandemic have
had on both the global and U.S. oil & gas industry as a whole, we believe our
longevity in the industry and strong financial position provide us with the
tools necessary to navigate these unprecedented times. We have no debt and a
strong cash position. Our cash and cash equivalents balance as of March 31, 2020
was $223.7 million.

Results of Operations

We operate our business in two segments: Land and Resource Management and Water
Services and Operations. We eliminate any inter-segment revenues and expenses
upon consolidation.

We analyze financial results for each of our reportable segments. The reportable segments presented are consistent with our reportable segments discussed in


  Note 9. "Business Segment Reporting"   in   Item 1.     "    Financial
Statements    "   in this Quarterly Report on Form 10-Q. We monitor our
reporting segments based upon revenue and net income calculated in accordance
with accounting principles generally accepted in the United States of America
("GAAP").

For the three months ended March 31, 2020 as compared to the three months ended March 31, 2019



Revenues. Revenues decreased $94.7 million, or 49.5%, to $96.6 million for the
three months ended March 31, 2020 compared to $191.3 million for the three
months ended March 31, 2019. Net income decreased $82.6 million, or 59.0%, to
$57.4 million for the three months ended March 31, 2020 compared to $140.0
million for the three months ended March 31, 2019. Revenues and net income for
the three months ended March 31, 2019 included a $100 million land sale.
Excluding the impact of the 2019 land sale, revenues and net income (net of
income tax) for the three months ended March 31, 2019 were $91.3 million and
$61.0 million, respectively.

Due to the economic impacts related to the severe drop in oil prices in late
March 2020 and continuing into the second quarter of 2020 and the COVID-19
pandemic, we anticipate our future oil and gas royalties, future easements and
other surface-related income and future water sales will be impacted. The extent
of those impacts is unknown at this time.

The following is an analysis of our operating results for the comparable periods by reportable segment (in thousands):



                                                                            Three Months Ended March 31,
                                                                     2020                                                2019
Revenues:
Land and resource management:
Oil and gas royalties                                 $     42,360                 44  %       $  33,213                  18  %
Easements and other surface-related income                  13,298                 14  %          23,485                  12  %
Land sales and other operating revenue                       1,000                  1  %         103,761                  54  %
                                                            56,658                 59  %         160,459                  84  %
Water services and operations:
Water sales and royalties                                   26,967                 28  %          22,983                  12  %
Easements and other surface-related income                  12,969                 13  %           7,882                   4  %
                                                            39,936                 41  %          30,865                  16  %
Total consolidated revenues                           $     96,594                100  %       $ 191,324                 100  %

Net income:
Land and resource management                          $     39,118                 68  %       $ 123,117                  88  %
Water services and operations                               18,283                 32  %          16,881                  12  %
Total consolidated net income                         $     57,401                100  %       $ 139,998                 100  %



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Land and Resource Management



Land and Resource Management segment revenues decreased $103.8 million, or
64.7%, to $56.7 million for the three months ended March 31, 2020 as compared
with $160.5 million for the comparable period of 2019. Segment revenues for the
three months ended March 31, 2019 include a $100 million land sale. Excluding
the $100 million land sale, segment revenues for the three months ended March
31, 2019 were $60.5 million.

Oil and gas royalties. Oil and gas royalty revenue was $42.4 million for the
three months ended March 31, 2020 compared to $33.2 million for the three months
ended March 31, 2019. Oil royalty revenue was $35.9 million for the three months
ended March 31, 2020, an increase of 36.0% over the three months ended March 31,
2019 when oil royalty revenue was $26.4 million. This increase in oil royalty
revenue is principally due to the combined effect of a 11.9% increase in crude
oil production subject to the Trust's royalty interest and a 21.9% increase in
the average price per royalty barrel of crude oil received during the three
months ended March 31, 2020 compared to the same period in 2019. Gas royalty
revenue was $6.5 million for the three months ended March 31, 2020, a decrease
of 5.2% compared to the three months ended March 31, 2019 when gas royalty
revenue was $6.8 million. While gas production increased 31.4% in the three
months ended March 31, 2020 compared to March 31, 2019, the average price
received decreased 23.1% over the same period.

Easements and other surface-related income. Easements and other surface-related
income was $13.3 million for the three months ended March 31, 2020, a decrease
of 43.4% compared to $23.5 million for the three months ended March 31, 2019.
Easements and other surface-related income includes pipeline, power line and
utility easements, commercial leases, material sales, and seismic and temporary
permits. The decrease in easements and other surface-related income is
principally related to a 63.4% decrease in pipeline easement income to $6.1
million for the three months ended March 31, 2020 from $16.6 million for the
three months ended March 31, 2019. Easements and other surface-related income is
unpredictable and may vary significantly from period to period.

Land sales and other operating revenue. Land sales and other operating revenue
includes revenue generated from land sales and grazing leases. For the three
months ended March 31, 2020, we sold approximately 30 acres of land for total
consideration of approximately $0.9 million, or approximately $30,000 per acre.
For the three months ended March 31, 2019, we sold approximately 21,251 acres of
land for total consideration of approximately $103.6 million, or approximately
$4,876 per acre.

Net income. Net income for the Land and Resource Management segment was $39.1
million for the three months ended March 31, 2020 compared to $123.1 million for
the three months ended March 31, 2019. As discussed above, 2019 revenues for the
Land and Resource Management segment included a $100 million land sale.
Excluding the impact of the 2019 land sale (net of income tax), net income for
the first three months ended March 31, 2019 was $44.1 million. Expenses,
including income tax expense, for the Land and Resource Management segment were
$17.6 million and $37.4 million ($16.4 million excluding the income tax expense
associated with the $100 million land sale) for the three months ended March 31,
2020 and 2019, respectively. Expenses are discussed further below under "Other
Financial Data - Consolidated."

Water Services and Operations



Water Services and Operations segment revenues increased 29.4% to $39.9 million
for the three months ended March 31, 2020 as compared with $30.9 million for the
comparable period of 2019.

Water sales and royalties. Water sales and royalty revenue was $27.0 million for
the three months ended March 31, 2020, an increase of $4.0 million or 17.3%,
compared with the three months ended March 31, 2019 when water sales and royalty
revenue was $23.0 million. This increase was principally due to a 50.5% increase
in the number of barrels of sourced and treated water sold in the three months
ended March 31, 2020 as compared to the same period in 2019, partially offset by
decreased water royalties.

Easements and other surface-related income. Easements and other surface-related
income for the Water Services and Operations segment includes pipeline easement
royalties, commercial lease royalties and income from temporary permits. For the
three months ended March 31, 2020, the combined income from these revenue
streams was $13.0 million, an increase of 64.5%, as compared to $7.9 million for
the three months ended March 31, 2019. The increase in easements and other
surface-related income was principally related to an increase in produced water
royalties for the three months ended March 31, 2020 compared to the same period
of 2019.

Net income. Net income for the Water Services and Operations segment was $18.3
million for the three months ended March 31, 2020 compared to $16.9 million for
the three months ended March 31, 2019. As discussed above, revenues for the
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Water Services and Operations segment increased 29.4% for the three months ended
March 31, 2020 compared to the same period of 2019. Expenses, including income
tax expense, for the Water Services and Operations segment were $21.6 million
for the three months ended March 31, 2020 as compared to $14.0 million for the
three months ended March 31, 2019. The increase in expenses during 2020 is
principally related to increased water service-related operating expenses,
primarily repairs and maintenance, equipment rental and fuel related to
increased sourcing and transfer of water. The remaining increase was principally
related to increased salaries and related employee expenses and depreciation
expense as discussed further below under "Other Financial Data - Consolidated."

Other Financial Data - Consolidated



Salaries and related employee expenses. Salaries and related employee expenses
were $10.6 million for the three months ended March 31, 2020 compared to $6.5
million for the comparable period of 2019. The increase in salaries and related
employee expenses is directly related to the increase in the number of employees
from 75 employees as of March 31, 2019 to 102 as of March 31, 2020 and
additional contract labor expenses for the three months ended March 31, 2020
compared to the same period of 2019.

Water service-related expenses. Water service-related expenses were $6.8 million
for the three months ended March 31, 2020 compared to $4.6 million for the
comparable period of 2019. This increase in expenses was principally the result
of an increase in repairs and maintenance, equipment rental and fuel to source
and transfer water and is directly related to the 50.5% increase in the number
of barrels of sourced and treated water sold as previously discussed.

General and administrative expenses. General and administrative expenses
increased $0.8 million to $3.0 million for the three months ended March 31, 2020
from $2.1 million for the same period of 2019. The increase in general and
administrative expenses is primarily related to increased expenses associated
with our independent contractor service providers, computer-related software and
services and additional liability insurance during the three months ended March
31, 2020.

Legal and professional expenses. Legal and professional fees were $2.4 million
for the three months ended March 31, 2020 compared to $1.8 million for the
comparable period of 2019. The increase in legal and professional fees for the
three months ended March 31, 2020 compared to 2019 is principally due to
approximately $1.8 million of legal and professional fees related to our
anticipated corporate reorganization. See further information regarding the
anticipated corporate reorganization in   Item     2.     "    Man    agement's
Discussion and Analysis of     Finan    cial     Condition     -

R esult s of Operations - Corporate Reorganization " .



Depreciation, depletion and amortization. Depreciation, depletion and
amortization was $3.3 million for the three months ended March 31, 2020 compared
to $1.2 million for the three months ended March 31, 2019. The increase in
depreciation, depletion and amortization is principally related to the Trust's
investment in water service-related assets placed in service in 2020 and 2019.

Cash Flow Analysis

For the three months ended March 31, 2020 as compared to the three months ended March 31, 2019



Cash flows provided by operating activities for the three months ended March 31,
2020 and 2019 were $68.6 million and $162.0 million, respectively. Cash flows
provided by operating activities for the three months ended March 31, 2019
included proceeds from a $100 million land sale in January 2019. Excluding the
impact of the 2019 land sale on cash flows in 2019, cash flows provided by
operating activities for the three months ended March 31, 2020 were positively
impacted by increased proceeds from oil and gas royalties collected, and water
sales and royalties collected during the three months ended March 31, 2020.

Cash flows used in investing activities were $24.4 million compared to $59.8
million for the three months ended March 31, 2020 and 2019, respectively.
Acquisitions of land and purchases of fixed assets decreased $48.9 million for
the three months ended March 31, 2020 compared to the same period of 2019. This
decrease was partially offset by the $13.5 million increase in the acquisition
of royalty interests over the same periods.

Cash flows used in financing activities were $124.1 million compared to $50.9
million for the three months ended March 31, 2020 and 2019, respectively. During
the three months ended March 31, 2020, the Trust paid total dividends of $124.1
million consisting of a regular cash dividend of $10.00 per Sub-share
Certificate ("Sub-share") and a special dividend of $6.00 per Sub-share to each
sub-shareholder of record at the close of business on March 9, 2020. During the
three months ended March 31, 2019, the Trust paid total dividends of $46.5
million consisting of a regular cash dividend of $1.75 per Sub-
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share and a special dividend of $4.25 per Sub-share to each sub-shareholder of record at the close of business on March 8, 2019.

Liquidity and Capital Resources



We continuously review our liquidity and capital resources. The Trust's
principal sources of liquidity are its revenues from oil and gas royalties,
easements and other surface-related income, and water and land sales. Our
primary liquidity and capital requirements are for capital expenditures related
to our Water Services and Operations segment, working capital and general
corporate needs. If market conditions were to change, for instance due to the
uncertainty created by the COVID-19 pandemic or the significant decline in oil
prices, and our revenue was reduced significantly or operating costs were to
increase significantly, our cash flows and liquidity could be reduced. Should
this occur, we could seek alternative sources of funding, including potential
future borrowing under a credit facility or other financing options.

As of March 31, 2020, we had cash and cash equivalents of $223.7 million that we
expect to utilize, along with cash flow from operations, to provide capital to
support the operation of our business, particularly TPWR, to potentially
repurchase additional Sub-shares subject to market conditions, and for general
corporate purposes. We currently believe that cash from operations, together
with our cash and cash equivalents balances, will be enough to meet ongoing
capital expenditures, working capital requirements and other cash needs for the
foreseeable future.

Off-Balance Sheet Arrangements

The Trust has not engaged in any off-balance sheet arrangements.

Critical Accounting Policies and Estimates



This discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with GAAP. The preparation of these financial statements
requires us to make judgments, estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses and disclosures of
contingent assets and liabilities. For a full discussion of our accounting
policies please refer to Note 2 to the Consolidated Financial Statements
included in our 2019 Annual Report on Form 10-K filed with the SEC on February
27, 2020. Our most critical accounting policies and estimates include our
accrual of oil and gas royalties. We continually evaluate our judgments,
estimates and assumptions. We base our estimates on the terms of underlying
agreements, historical experience and other factors that we believe are
reasonable based on the circumstances, the results of which form our
management's basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates. There have been no material changes to our critical
accounting policies and estimates from the information provided in Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our 2019 Annual Report on Form 10-K.

New Accounting Pronouncements

For further information regarding recently issued accounting pronouncements, see


  Note 3, "Recent Accounting Pronouncements"   in the notes to the consolidated
financial statements included in   Item 1.     "    Financial Statements    "
in this Quarterly Report on Form 10-Q.

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