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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Texas Pacific Land Corp., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	389,641)	444,863)	267,856)	182,624)	348,876)
Cost of capital²	19.46%	19.46%	19.46%	19.46%	19.45%
Invested capital³	1,117,290)	840,706)	718,143)	555,694)	575,173)

Economic profit⁴	172,190)	281,245)	128,099)	74,488)	236,978)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 389,641 – 19.46% × 1,117,290 = 172,190

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Texas Pacific Land Corp. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Texas Pacific Land Corp., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	405,645)	446,362)	269,980)	176,049)	318,728)
Deferred income tax expense (benefit)¹	1,399)	1,263)	(228)	(2,389)	26,035)
Increase (decrease) in allowance for expected credit loss²	—)	100)	—)	100)	—)
Increase (decrease) in unearned revenue³	5,140)	1,938)	(1,910)	8,787)	4,012)
Increase (decrease) in equity equivalents⁴	6,539)	3,301)	(2,138)	6,498)	30,047)
Interest expense	—)	—)	—)	—)	—)
Interest expense, operating lease liability⁵	95)	131)	95)	98)	127)
Adjusted interest expense	95)	131)	95)	98)	127)
Tax benefit of interest expense⁶	(20)	(28)	(20)	(21)	(27)
Adjusted interest expense, after taxes⁷	75)	104)	75)	77)	101)
Interest earned on cash and cash equivalents, net	(28,630)	(6,207)	(78)	—)	—)
Investment income, before taxes	(28,630)	(6,207)	(78)	—)	—)
Tax expense (benefit) of investment income⁸	6,012)	1,303)	16)	—)	—)
Investment income, after taxes⁹	(22,618)	(4,904)	(62)	—)	—)
Net operating profit after taxes (NOPAT)	389,641)	444,863)	267,856)	182,624)	348,876)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for expected credit loss.

³ Addition of increase (decrease) in unearned revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,024 × 4.70% = 95

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 95 × 21.00% = 20

⁷ Addition of after taxes interest expense to net income.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 28,630 × 21.00% = 6,012

⁹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Texas Pacific Land Corp. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Texas Pacific Land Corp., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense	111,916)	122,493)	93,037)	43,613)	83,527)
Less: Deferred income tax expense (benefit)	1,399)	1,263)	(228)	(2,389)	26,035)
Add: Tax savings from interest expense	20)	28)	20)	21)	27)
Less: Tax imposed on investment income	6,012)	1,303)	16)	—)	—)
Cash operating taxes	104,525)	119,954)	93,269)	46,023)	57,519)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Texas Pacific Land Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Texas Pacific Land Corp., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Operating lease liability¹	2,024)	2,788)	2,119)	2,821)	3,367)
Total reported debt & leases	2,024)	2,788)	2,119)	2,821)	3,367)
Total equity	1,043,196)	772,887)	651,711)	485,184)	512,137)
Net deferred tax (assets) liabilities²	42,365)	41,151)	38,948)	38,728)	40,827)
Allowance for expected credit loss³	200)	200)	100)	100)	—)
Unearned revenue⁴	31,336)	26,196)	24,258)	26,168)	17,381)
Equity equivalents⁵	73,901)	67,547)	63,306)	64,996)	58,208)
Accumulated other comprehensive (income) loss, net of tax⁶	(1,831)	(2,516)	1,007)	2,693)	1,461)
Adjusted total equity	1,115,266)	837,918)	716,024)	552,873)	571,806)
Invested capital	1,117,290)	840,706)	718,143)	555,694)	575,173)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of unearned revenue.

⁵ Addition of equity equivalents to total equity.

⁶ Removal of accumulated other comprehensive income.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Texas Pacific Land Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Texas Pacific Land Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	11,674,252)	11,674,252)	÷	11,676,276)	=	1.00	1.00	×	19.47%	=	19.46%
Operating lease liability³	2,024)	2,024)	÷	11,676,276)	=	0.00	0.00	×	4.70% × (1 – 21.00%)	=	0.00%
Total:	11,676,276)					1.00					19.46%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	13,766,011)	13,766,011)	÷	13,768,799)	=	1.00	1.00	×	19.47%	=	19.46%
Operating lease liability³	2,788)	2,788)	÷	13,768,799)	=	0.00	0.00	×	4.70% × (1 – 21.00%)	=	0.00%
Total:	13,768,799)					1.00					19.46%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	7,839,171)	7,839,171)	÷	7,841,290)	=	1.00	1.00	×	19.47%	=	19.46%
Operating lease liability³	2,119)	2,119)	÷	7,841,290)	=	0.00	0.00	×	4.50% × (1 – 21.00%)	=	0.00%
Total:	7,841,290)					1.00					19.46%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,623,760)	8,623,760)	÷	8,626,581)	=	1.00	1.00	×	19.47%	=	19.46%
Operating lease liability³	2,821)	2,821)	÷	8,626,581)	=	0.00	0.00	×	3.47% × (1 – 21.00%)	=	0.00%
Total:	8,626,581)					1.00					19.46%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	5,260,303)	5,260,303)	÷	5,263,670)	=	1.00	1.00	×	19.47%	=	19.45%
Operating lease liability³	3,367)	3,367)	÷	5,263,670)	=	0.00	0.00	×	3.78% × (1 – 21.00%)	=	0.00%
Total:	5,263,670)					1.00					19.45%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Texas Pacific Land Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	172,190)	281,245)	128,099)	74,488)	236,978)
Invested capital²	1,117,290)	840,706)	718,143)	555,694)	575,173)
Performance Ratio
Economic spread ratio³	15.41%	33.45%	17.84%	13.40%	41.20%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	-4.90%	5.59%	-3.47%	-17.61%	-12.91%
ConocoPhillips	0.68%	13.29%	-0.65%	-19.28%	-0.64%
Exxon Mobil Corp.	-0.23%	8.50%	0.09%	-23.13%	-5.97%
Occidental Petroleum Corp.	-5.02%	7.39%	-4.69%	-33.68%	-10.77%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 172,190 ÷ 1,117,290 = 15.41%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Texas Pacific Land Corp. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Texas Pacific Land Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	172,190)	281,245)	128,099)	74,488)	236,978)

Revenues	631,595)	667,422)	450,958)	302,554)	490,496)
Add: Increase (decrease) in unearned revenue	5,140)	1,938)	(1,910)	8,787)	4,012)
Adjusted revenues	636,735)	669,360)	449,048)	311,341)	494,508)
Performance Ratio
Economic profit margin²	27.04%	42.02%	28.53%	23.92%	47.92%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	-5.29%	5.04%	-4.32%	-36.79%	-18.06%
ConocoPhillips	0.99%	12.79%	-1.08%	-52.22%	-1.13%
Exxon Mobil Corp.	-0.21%	6.33%	0.09%	-35.48%	-7.09%
Occidental Petroleum Corp.	-10.11%	11.36%	-10.48%	-119.67%	-44.46%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 172,190 ÷ 636,735 = 27.04%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Texas Pacific Land Corp. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Texas Pacific Land Corp. (NYSE:TPL)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin