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, comprised of a number of separate tracts, located in 19
counties in West Texas. Additionally, we own a 1/128th nonparticipating
perpetual oil and gas royalty interest ("NPRI") under approximately 85,000 acres
of land and a 1/16th NPRI under approximately 371,000 acres of land in the
western part of Texas, as well as approximately 4,000 additional net royalty
acres (normalized to 1/8th). 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 revenues 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 fluctuating in
response to the market prices for oil and gas, our oil and gas royalty revenues
are also subject
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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.
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 six months ended June 30, 2020, the Trust invested approximately $3.8 million in TPWR projects to develop water sourcing and water re-use assets.

Corporate Reorganization



As previously announced on March 23, 2020, our Trustees approved a plan to
reorganize the Trust from its current structure to a corporation formed under
the laws of the State of Delaware. We continue to progress towards the
conversion. On June 15, 2020, the Trust announced the new corporation will be
named Texas Pacific Land Corporation ("TPL Corp") and the prospective members of
the Board of Directors of TPL Corp. Additionally, a draft registration statement
on Form 10 has been submitted to the SEC for review, on a non-public basis. It
is currently anticipated that the corporate reorganization will be effective by
the end of the third quarter of 2020, barring any unforeseen impacts of the
COVID-19 pandemic or other developments, which could potentially extend this
timeframe.

COVID-19 Pandemic and Market Conditions Update



The uncertainty surrounding the severity and duration of the COVID-19 pandemic,
as well as dramatic declines in crude oil prices due in part to the global
spread of COVID-19, continued to cause volatility in the global financial
markets during the second quarter of 2020. The full impact of shut-in oil and
gas wells, production curtailments and/or decreased investments in response to
lower commodity prices and conservation of capital by the owners and operators
of the oil and gas wells to which the Trust's royalty interests relate, is
unknown at this time. These events have negatively affected our business and
results of operations for the three and six months ended June 30, 2020, and may
continue to negatively affect, the Trust's business and results of operations in
future periods.

During these uncertain times, we have continued to generate positive operating
results and remain focused on meeting the operational needs of our customers
while maintaining a safe and healthy work environment for our employees. Our
existing information technology infrastructure has afforded us the opportunity
to allow our corporate employees to work remotely. We have deployed additional
safety and sanitization measures, including quarantine facilities for our field
employees, if needed.

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 continue to monitor 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 operations currently have limited capital expenditure
requirements, the amount and timing of which are entirely within our control.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted
on March 27, 2020. The Trust continues to assess the provisions and potential
impacts of this legislation; however, there have been no significant impacts to
the Company's results of operations or financial position resulting from the
CARES Act in the three and six months ended June 30, 2020.

Despite the uncertainty the record low oil prices and the COVID-19 pandemic have
had on both the global and U.S. oil and 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, a strong
cash position (cash and cash equivalents were $258.4 million as of June 30,
2020) and we continue to maintain our capital resource allocation discipline.
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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").

Due to the continued economic impacts related to the severe drop in oil prices
during the second quarter of 2020 and the COVID-19 pandemic, our results of
operations for the three and six months ended June 30, 2020 have been negatively
impacted. Given the uncertainty surrounding the duration of the COVID-19
pandemic, our results of operations may continue to be impacted in future
periods.

For the three months ended June 30, 2020 as compared to the three months ended June 30, 2019



Revenues. Revenues decreased $32.7 million, or 37.5%, to $54.6 million for the
three months ended June 30, 2020 compared to $87.3 million for the three months
ended June 30, 2019. Net income decreased $22.0 million, or 44.4%, to $27.6
million for the three months ended June 30, 2020 compared to $49.6 million for
the three months ended June 30, 2019.

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



                                                                            Three Months Ended June 30,
                                                                     2020                                               2019
Revenues:
Land and resource management:
Oil and gas royalties                                 $     20,513                 37  %       $ 39,641                  46  %
Easements and other surface-related income                  11,499                 21  %         14,165                  16  %
Land sales and other operating revenue                         869                  2  %          4,882                   6  %
                                                            32,881                 60  %         58,688                  68  %
Water services and operations:
Water sales and royalties                                    8,419                 16  %         20,430                  23  %
Easements and other surface-related income                  13,268                 24  %          8,192                   9  %
                                                            21,687                 40  %         28,622                  32  %
Total consolidated revenues                           $     54,568                100  %       $ 87,310                 100  %

Net income:
Land and resource management                          $     18,721                 68  %       $ 37,194                  75  %
Water services and operations                                8,862                 32  %         12,392                  25  %
Total consolidated net income                         $     27,583                100  %       $ 49,586                 100  %



Land and Resource Management

Land and Resource Management segment revenues decreased $25.8 million, or 44.0%,
to $32.9 million for the three months ended June 30, 2020 as compared with $58.7
million for the comparable period of 2019. The decrease in Land and Resource
Management segment revenues is due to decreases in oil and gas royalty revenue,
easements and other surface-related income and land sales and other operating
revenue, which are discussed below.

Oil and gas royalties. Oil and gas royalty revenue was $20.5 million for the
three months ended June 30, 2020 compared to $39.6 million for the three months
ended June 30, 2019. Oil royalty revenue was $16.8 million for the three months
ended June 30, 2020, a decrease of 49.3% compared to the three months ended June
30, 2019 when oil royalty revenue
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was $33.1 million. This decrease in oil royalty revenue is principally due to a
54.0% decrease in the average price per royalty barrel of crude oil received,
partially offset by a 10.6% increase in crude oil production subject to the
Trust's royalty interest during the three months ended June 30, 2020 compared to
the same period in 2019. Gas royalty revenue was $3.7 million for the three
months ended June 30, 2020, a decrease of 42.8% compared to the three months
ended June 30, 2019 when gas royalty revenue was $6.5 million. The decrease in
gas royalty revenue is principally due to a 53.7% decrease in the average price
received, partially offset by a 49.6% increase in gas production during the
three months ended June 30, 2020 compared to the same period in 2019.

Easements and other surface-related income. Easements and other surface-related
income was $11.5 million for the three months ended June 30, 2020, a decrease of
18.8% compared to $14.2 million for the three months ended June 30, 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 35.8% decrease in pipeline easement income to $6.3
million for the three months ended June 30, 2020 from $9.9 million for the three
months ended June 30, 2019. The amount of income derived from pipeline easements
is a function of the term of the easement, the size of the easement and the
number of easements entered into for any given period. The demand for pipeline
easements is determined by capital decisions made by companies that operate in
the areas where we own land. As such, 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. Land sales were
$0.8 million and $4.8 million for the three months ended June 30, 2020 and 2019,
respectively. For the three months ended June 30, 2020, we sold approximately
497 acres of land for an aggregate sales price of approximately $3.5 million, or
approximately $6,995 per acre. The aggregate sales price of $3.5 million for the
three months ended June 30, 2020 excludes a reduction of $2.7 million in land
basis. For the three months ended June 30, 2019, we sold approximately 658 acres
of land for an aggregate sales price of approximately $4.8 million, or
approximately $7,260 per acre. There was no land basis associated with land
sales for the three months ended June 30, 2019.

Net income. Net income for the Land and Resource Management segment was $18.7
million for the three months ended June 30, 2020 compared to $37.2 million for
the three months ended June 30, 2019. Expenses, including income tax expense,
for the Land and Resource Management segment were $14.2 million and $21.5
million for the three months ended June 30, 2020 and 2019, respectively. The
decrease in expenses was principally related to decreases in legal and
professional fees. Expenses are discussed further below under "Other Financial
Data - Consolidated."

Water Services and Operations



Water Services and Operations segment revenues decreased 24.2% to $21.7 million
for the three months ended June 30, 2020 as compared with $28.6 million for the
comparable period of 2019. The decrease in Water Services and Operations segment
revenues is due to changes in water sales and royalty revenue and easements and
other surface-related income, which are discussed below.

Water sales and royalties. Water sales and royalty revenue was $8.4 million for
the three months ended June 30, 2020, a decrease of $12.0 million or 58.8%,
compared with the three months ended June 30, 2019 when water sales and royalty
revenue was $20.4 million. This decrease was principally due to a 48.0% decrease
in the number of barrels of sourced and treated water sold and a $2.9 million
decrease in water royalties in the second quarter of 2020 compared to the same
period in 2019.

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 June 30, 2020, the combined income from these revenue streams
was $13.3 million, an increase of 62.0%, as compared to $8.2 million for the
three months ended June 30, 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 June 30, 2020 compared to the same period
of 2019.

Net income. Net income for the Water Services and Operations segment was $8.9
million for the three months ended June 30, 2020 compared to $12.4 million for
the three months ended June 30, 2019. As discussed above, revenues for the Water
Services and Operations segment decreased 24.2% for the three months ended June
30, 2020 compared to the same period of 2019. Expenses, including income tax
expense, for the Water Services and Operations segment were $12.8 million for
the three months ended June 30, 2020 as compared to $16.2 million for the three
months ended June 30, 2019. The decrease in expenses during 2020 is principally
related to decreased water service-related operating expenses, primarily fuel,
equipment
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rental and repairs and maintenance related to decreased sourcing and transfer of water. Expenses are discussed further below under "Other Financial Data - Consolidated."

Other Financial Data - Consolidated



Salaries and related employee expenses. Salaries and related employee expenses
were $8.9 million for the three months ended June 30, 2020 compared to $7.7
million for the comparable period of 2019. The increase in salaries and related
employee expenses is principally related to the increase in the number of
employees from 78 employees as of June 30, 2019 to 101 as of June 30, 2020.

Water service-related expenses. Water service-related expenses were $2.2 million
for the three months ended June 30, 2020 compared to $5.7 million for the
comparable period of 2019. The decrease in expenses during 2020 is principally
related to decreased fuel, equipment rental and repairs and maintenance related
to the 48.0% decrease in the number of barrels of sourced and treated water sold
as previously discussed.

General and administrative expenses. General and administrative expenses
increased $0.4 million to $2.4 million for the three months ended June 30, 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 computer-related software and services and additional liability insurance
during the three months ended June 30, 2020 compared to the same period of 2019.

Legal and professional expenses. Legal and professional fees were $2.6 million
for the three months ended June 30, 2020 compared to $7.9 million for the
comparable period of 2019. Legal and professional fees for the three months
ended June 30, 2020 principally related to our anticipated corporate
reorganization. See further information regarding the anticipated corporate
reorganization in   Item 2. "Management's Discussion and Analysis of Financial
Condition     and     Results of Operations - Corporate Reorganization"  . Legal
and professional fees for the three months ended June 30, 2019 principally
related to the proxy contest to elect a new Trustee.

Depreciation, depletion and amortization. Depreciation, depletion and
amortization was $3.7 million for the three months ended June 30, 2020 compared
to $1.5 million for the three months ended June 30, 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
and, to a lesser extent, additional depreciation expense related to the change
in estimated useful lives of certain water service-related assets during the
third quarter of 2019.

For the six months ended June 30, 2020 as compared to the six months ended June 30, 2019



Revenues. Revenues decreased $127.5 million, or 45.7%, to $151.2 million for the
six months ended June 30, 2020 compared to $278.6 million for the six months
ended June 30, 2019. Net income decreased $104.6 million, or 55.2%, to $85.0
million for the six months ended June 30, 2020 compared to $189.6 million for
the six months ended June 30, 2019. Revenues and net income for the six months
ended June 30, 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 six
months ended June 30, 2019 were $178.6 million and $110.6 million, respectively.

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



                                                              Six Months Ended June 30,
                                                           2020                                   2019
Revenues:
Land and resource management:
Oil and gas royalties                           $     62,873         42  %    $  72,854         25  %
Easements and other surface-related income            24,797         16  %       37,650         14  %
Land sales and other operating revenue                 1,869          1  %

108,643 39 %


                                                      89,539         59  %      219,147         78  %
Water services and operations:
Water sales and royalties                             35,386         24  %       43,413         16  %
Easements and other surface-related income            26,237         17  %       16,074          6  %
                                                      61,623         41  %       59,487         22  %
Total consolidated revenues                     $    151,162        100  %    $ 278,634        100  %

Net income:
Land and resource management                    $     57,839         68  %    $ 160,311         85  %
Water services and operations                         27,145         32  %       29,273         15  %
Total consolidated net income                   $     84,984        100  %    $ 189,584        100  %



Land and Resource Management

Land and Resource Management segment revenues decreased $129.6 million, or
59.1%, to $89.5 million for the six months ended June 30, 2020 as compared with
$219.1 million for the comparable period of 2019. Segment revenues for the six
months ended June 30, 2019 include a $100 million land sale. Excluding the $100
million land sale, segment revenues for the six months ended June 30, 2019 were
$119.1 million. The decrease in Land and Resource Management segment revenues is
due to decreases in oil and gas royalty revenue, easements and other
surface-related income and land sales and other operating revenue, which are
discussed below.

Oil and gas royalties. Oil and gas royalty revenue was $62.9 million for the six
months ended June 30, 2020 compared to $72.9 million for the six months ended
June 30, 2019. Oil royalty revenue was $52.7 million for the six months ended
June 30, 2020, a decrease of 11.5% compared to the six months ended June 30,
2019 when oil royalty revenue was $59.5 million. This decrease in oil royalty
revenue is principally due to a 19.9% decrease in the average price per royalty
barrel of crude oil received, partially offset by a 10.9% increase in crude oil
production subject to the Trust's royalty interest during the six months ended
June 30, 2020 compared to the same period in 2019. Gas royalty revenue was $10.2
million for the six months ended June 30, 2020, a decrease of 23.6% compared to
the six months ended June 30, 2019 when gas royalty revenue was $13.3 million.
The decrease in gas royalty revenue was principally due to a 34.2% decrease in
the average price received, partially offset by a 30.1% increase in gas
production during the six months ended June 30, 2020 compared to the same period
of 2019.

Easements and other surface-related income. Easements and other surface-related
income was $24.8 million for the six months ended June 30, 2020, a decrease of
34.1% compared to $37.7 million for the six months ended June 30, 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 53.1% decrease in pipeline easement income to $12.4
million for the six months ended June 30, 2020 from $26.4 million for the six
months ended June 30, 2019. The amount of income derived from pipeline easements
is a function of the term of the easement, the size of the easement and the
number of easements entered into for any given period. The demand for pipeline
easements is determined by capital decisions made by companies that operate in
the areas where we own land. As such, easements and other surface-related income
is unpredictable and may vary significantly from period to period.

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Land sales and other operating revenue. Land sales and other operating revenue
includes revenue generated from land sales and grazing leases. Land sales were
$1.7 million and $108.4 million for the six months ended June 30, 2020 and 2019,
respectively. For the six months ended June 30, 2020, we sold approximately 527
acres of land for an aggregate sales price of approximately $4.4 million, or
approximately $8,305 per acre. The aggregate sales price of $4.4 million for the
six months ended June 30, 2020 excludes a reduction of $2.7 million in land
basis. For the six months ended June 30, 2019, we sold approximately 21,909
acres of land for an aggregate sales price of approximately $108.4 million, or
approximately $4,948 per acre. There was no land basis associated with land
sales for the six months ended June 30, 2019.

Net income. Net income for the Land and Resource Management segment was $57.8
million for the six months ended June 30, 2020 compared to $160.3 million for
the six months ended June 30, 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 six months ended June 30, 2019 was $81.3 million. Expenses, including
income tax expense, for the Land and Resource Management segment were $31.7
million and $58.8 million, respectively. The decrease in expenses during 2020 is
principally related to the approximately $21.0 million in income tax expense
associated with the $100 million land sale that occurred during the six months
ended June 30, 2019 and no comparable sale of assets having occurred during the
same period of 2020. Expenses are discussed further below under "Other Financial
Data - Consolidated."

Water Services and Operations



Water Services and Operations segment revenues increased 3.6% to $61.6 million
for the six months ended June 30, 2020 as compared with $59.5 million for the
comparable period of 2019. The increase in Water Services and Operations segment
revenues is due to changes in water sales and royalty revenue and easements and
other surface-related income, which are discussed below.

Water sales and royalties. Water sales and royalty revenue was $35.4 million for
the six months ended June 30, 2020, a decrease of $8.0 million or 18.5%,
compared with the six months ended June 30, 2019 when water sales and royalty
revenue was $43.4 million. This decrease was principally due to a $5.1 million
decrease in water royalties for the six months ended June 30, 2020 compared to
the same period in 2019.

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
six months ended June 30, 2020, the combined income from these revenue streams
was $26.2 million, an increase of 63.2%, as compared to $16.1 million for the
six months ended June 30, 2019. The increase in easements and other
surface-related income was principally related to an increase in produced water
royalties for the six months ended June 30, 2020 compared to the same period of
2019.

Net income. Net income for the Water Services and Operations segment was $27.1
million for the six months ended June 30, 2020 compared to $29.3 million for the
six months ended June 30, 2019. As discussed above, revenues for the Water
Services and Operations segment increased 3.6% for the six months ended June 30,
2020 compared to the same period of 2019. Expenses, including income tax
expense, for the Water Services and Operations segment were $34.5 million for
the six months ended June 30, 2020 as compared to $30.2 million for the six
months ended June 30, 2019. The increase in expenses during 2020 is principally
related to the $4.1 million increase in depreciation expense resulting from the
Trust's investment in assets placed in service in 2020 and 2019. Expenses are
discussed further below under "Other Financial Data - Consolidated."

Other Financial Data - Consolidated



Salaries and related employee expenses. Salaries and related employee expenses
were $19.6 million for the six months ended June 30, 2020 compared to $14.2
million for the comparable period of 2019. The increase in salaries and related
employee expenses is principally related to the increase in the number of
employees from 78 employees as of June 30, 2019 to 101 as of June 30, 2020.

Water service-related expenses. Water service-related expenses were $8.9 million
for the six months ended June 30, 2020 compared to $10.3 million for the
comparable period of 2019. This decrease in expenses was principally the result
of a decrease in fuel and equipment rental to source and transfer water,
partially offset by increased repairs and maintenance expenses.

General and administrative expenses. General and administrative expenses
increased $1.2 million to $5.4 million for the six months ended June 30, 2020
from $4.2 million for the same period of 2019. The increase in general and
administrative expenses is primarily related to increased expenses associated
with computer-related software and services, additional liability
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insurance and our independent contractor service providers during the six months ended June 30, 2020 compared to the same period of 2019.



Legal and professional expenses. Legal and professional fees were $5.0 million
for the six months ended June 30, 2020 compared to $9.6 million for the
comparable period of 2019. Legal and professional fees for the six months ended
June 30, 2020 principally related to our anticipated corporate reorganization.
See further information regarding the anticipated corporate reorganization in

Item 2. "Management's Discussion and Analysis of Financial Condition and


  Results of Operations - Corporate Reorganization"  . Legal and professional
fees for the six months ended June 30, 2019 principally related to the proxy
contest to elect a new Trustee.

Depreciation, depletion and amortization. Depreciation, depletion and
amortization was $7.0 million for the six months ended June 30, 2020 compared to
$2.7 million for the six months ended June 30, 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
and to a lesser extent, additional depreciation expense related to the change in
estimated useful lives of certain water service-related assets during the third
quarter of 2019.

Cash Flow Analysis

For the six months ended June 30, 2020 as compared to the six months ended June 30, 2019



Cash flows provided by operating activities for the six months ended June 30,
2020 and 2019 were $100.8 million and $220.0 million, respectively. Cash flows
provided by operating activities for the six months ended June 30, 2019 included
proceeds from a $100 million land sale consummated in January 2019. Excluding
the impact of the 2019 land sale on cash flows in 2019, cash flows provided by
operating activities decreased for the six months ended June 30, 2020 as
compared to the same period of 2019. This decrease was primarily related to
decreased proceeds from oil and gas royalties and water sales and royalties
collected during the six months ended June 30, 2020.

Cash flows used in investing activities were $22.0 million compared to $102.0
million for the six months ended June 30, 2020 and 2019, respectively.
Acquisitions of land and purchases of fixed assets decreased a combined $89.1
million for the six months ended June 30, 2020 compared to the same period of
2019. This decrease was partially offset by the $11.9 million increase in the
acquisition of royalty interests compared to the same periods.

Cash flows used in financing activities were $124.1 million compared to $50.9
million for the six months ended June 30, 2020 and 2019, respectively. During
the six months ended June 30, 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
six months ended June 30, 2019, the Trust paid total dividends of $46.5 million
consisting of a regular cash dividend of $1.75 per Sub-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 and/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 June 30, 2020, we had cash and cash equivalents of $258.4 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.


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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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