Business Segment Reporting

9 Months Ended

Sep. 30, 2019

During the periods presented, we reported our financial performance based on the following segments: Land and Resource Management and Water Services and Operations. Our segments provide management with a comprehensive financial view of our key businesses. The segments enable the alignment of strategies and objectives of the Trust and provide a framework for timely and rational allocation of resources within businesses. We eliminate any inter-segment revenues and expenses upon consolidation.

The Land and Resource Management segment encompasses the business of managing approximately 900,000 acres of land and related resources in West Texas owned by the Trust. The revenue streams of this segment consist primarily of royalties from oil and gas, revenues from easements and commercial leases, and land and material sales.

The Water Services and Operations segment encompasses the business of providing a full-service water offering to operators in the Permian Basin. The revenue streams of this segment consist of revenue generated from direct sales of sourced and treated water as well as revenues from royalties on water service-related activity.

Segment financial results were as follows for the three and nine months ended September 30, 2019 and 2018 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019		2018		2019		2018
Revenues:
Land and resource management	$	65,076	$	47,513	$	284,223	$	142,642
Water services and operations	33,454		25,655		92,941		64,377
Total consolidated revenues	$	98,530	$	73,168	$	377,164	$	207,019

Net income:
Land and resource management	$	43,911	$	36,385	$	204,222	$	109,700
Water services and operations	16,111		14,377		45,384		37,356
Total consolidated net income	$	60,022	$	50,762	$	249,606	$	147,056

Capital expenditures:
Land and resource management	$	29	$	909	$	1,445	$	2,464
Water services and operations	4,949		7,533		26,134		37,542
Total capital expenditures	$	4,978	$	8,442	$	27,579	$	40,006

Depreciation and amortization:
Land and resource management	$	257	$	160	$	695	$	330
Water services and operations	2,374		546		4,591		1,189
Total depreciation and amortization	$	2,631	$	706	$	5,286	$	1,519

The following table presents total assets and property, plant and equipment, net by segment as of September 30, 2019 and December 31, 2018 (in thousands):


	September 30, 2019		December 31, 2018
Assets:
Land and resource management	$	398,120	$	198,922
Water services and operations	123,874		86,153
Total consolidated assets	$	521,994	$	285,075

Property, plant and equipment, net:
Land and resource management	$	4,470	$	3,720
Water services and operations	82,602		61,082
Total consolidated property, plant and equipment, net	$	87,072	$	64,802