Author Topic: TPL - Texas Pacific Land Trust  (Read 20704 times)

Foreign Tuffett

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Re: TPL - Texas Pacific Land Trust
« Reply #30 on: June 27, 2018, 07:45:02 AM »
I have to admit that I always liked the story of TPL... but I never see how it's cheap. Even at 250M-300M annual earnings in a few years time we are still talking about a P/E between 18 and 22. Maybe if that would be earnings into perpetuity that would be okay for a land company, but I don't know about that... you have to figure that there isn't a unlimited amount of oil and gas. Is it reasonable to expect they will still making this kind of money in 10 or 20 years time?

I think it's nearly impossible to answer that question with any degree of certainty. As we've all seen over the last decade, things can change extremely quickly in the US onshore E&P space. Right now the Permian is booming, ten years from now it may not be.

Shale oil wells have a rapid decline rate + a long tail of low BOE per day production. So you need drilling to continue at a certain level for production (and TPL's royalty revenues) to climb, or at least stay flat. How much future drilling will occur is largely dependent on the quality of TPL's acreage + how much quality acreage they have left + commodity prices + various idiosyncratic factors that may affect the Permian in general, and TPL's acreage in particular. Obviously no one can predict any of this precisely, but if you can just get the directionality right you can make a ton of $.

Contra Scott Hall, I don't think the idea of "normalized" margins in any part of the E&P space (which TPL has basically become a derivative of) is helpful. The only "normal" in commodity-based businesses is constant change.


Sharad

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Re: TPL - Texas Pacific Land Trust
« Reply #31 on: July 16, 2018, 09:29:10 AM »
Makes you wonder...very well written article...I think there are analogies to TPL here...

https://www.theatlantic.com/magazine/archive/2017/05/frank-and-stevens-excellent-corporate-raiding-adventure/521436/

This is a cult stock, which is impossible analyze; which is significantly overvalued...this is literally dirt...DIRT...there is no 'business' here...

Sincerely,
ValueMaven


The "dirt" is now worth billions:

https://www.nhregister.com/business/article/Worthless-just-two-years-ago-Texas-sand-now-13074856.php

Edwards runs a frack-sand mine. And those silos mark the presence of his rivals, who suddenly seem to be popping up everywhere. As he turns 360 degrees under the blistering midday sun, he calls out their names one by one: "Badger ... Atlas ... High Roller ... Alpine ... Black Mountain ... Covia."

Twelve months ago, none of them existed -- not even the mine owned by Edwards' employer, Hi-Crush Partners. It was the first of its kind here in West Texas. Day one was July 31, 2017. Ten others immediately followed. And another 10 or so are now hustling to get started.

Together, they will mine and ship some 22 million tons of sand this year to shale drillers all around them in the Permian Basin, the hottest oil patch on Earth. It is a staggering sum of sand, equal to almost a quarter of total U.S. supply. And within a couple years, industry experts say, the figure could climb to over 50 million tons.

David Cutbirth, the long-time mayor of the nearby town of Monahans, is dumbfounded by it all. Until the miners arrived, these dunes were a quasi-barren wasteland -- good only for weekend adventurers zipping around on buggies. And the price of sand was, well, zero. Today, it fetches $80 a ton, making this year's haul alone worth about $2 billion.




Correct me if I'm wrong, but TPL has never drilled the 1m acres of land it owns outright, 750k acres of which borders the N.M. counties in which XOM bought 250k acres for $6.6b from the Bass brothers (BOPCO).  With fracking, the sand, water, easements, and perpetual oil royalties all hold value (on the 450k acres it has "sold" in this fashion), let alone the oil on 1m virgin acres. While I understand everyone's hesitation, I'm unsure how everyone believes oil prices aren't now in their normal range ($65-85/barrel). The next few years will be very interesting, as the Delaware basin is only now being tapped in the same manner as the Midland basin within the overall Permian shale formation.

I'm long TPL. I believe there is still value to be had here.
"If we are not able to ask skeptical questions, to interrogate those who tell us that something is true, to be skeptical of those in authority, then we are up for grabs for the next charlatan - political or religious - who comes ambling along."
- Carl Sagan

thepupil

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Re: TPL - Texas Pacific Land Trust
« Reply #32 on: July 16, 2018, 09:31:42 AM »
Makes you wonder...very well written article...I think there are analogies to TPL here...

https://www.theatlantic.com/magazine/archive/2017/05/frank-and-stevens-excellent-corporate-raiding-adventure/521436/

This is a cult stock, which is impossible analyze; which is significantly overvalued...this is literally dirt...DIRT...there is no 'business' here...

Sincerely,
ValueMaven


The "dirt" is now worth billions:

https://www.nhregister.com/business/article/Worthless-just-two-years-ago-Texas-sand-now-13074856.php

Edwards runs a frack-sand mine. And those silos mark the presence of his rivals, who suddenly seem to be popping up everywhere. As he turns 360 degrees under the blistering midday sun, he calls out their names one by one: "Badger ... Atlas ... High Roller ... Alpine ... Black Mountain ... Covia."

Twelve months ago, none of them existed -- not even the mine owned by Edwards' employer, Hi-Crush Partners. It was the first of its kind here in West Texas. Day one was July 31, 2017. Ten others immediately followed. And another 10 or so are now hustling to get started.

Together, they will mine and ship some 22 million tons of sand this year to shale drillers all around them in the Permian Basin, the hottest oil patch on Earth. It is a staggering sum of sand, equal to almost a quarter of total U.S. supply. And within a couple years, industry experts say, the figure could climb to over 50 million tons.

David Cutbirth, the long-time mayor of the nearby town of Monahans, is dumbfounded by it all. Until the miners arrived, these dunes were a quasi-barren wasteland -- good only for weekend adventurers zipping around on buggies. And the price of sand was, well, zero. Today, it fetches $80 a ton, making this year's haul alone worth about $2 billion.




Correct me if I'm wrong, but TPL has never drilled the 1m acres of land it owns outright, 750k acres of which borders the N.M. counties in which XOM bought 250k acres for $6.6b from the Bass brothers (BOPCO).  With fracking, the sand, water, easements, and perpetual oil royalties all hold value (on the 450k acres it has "sold" in this fashion), let alone the oil on 1m virgin acres. While I understand everyone's hesitation, I'm unsure how everyone believes oil prices aren't now in their normal range ($65-85/barrel). The next few years will be very interesting, as the Delaware basin is only now being tapped in the same manner as the Midland basin within the overall Permian shale formation.

I'm long TPL. I believe there is still value to be had here.

I think he was talking about Tejon Ranch.

EDIT: though it's not clear
« Last Edit: July 16, 2018, 09:33:16 AM by thepupil »

Sharad

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Re: TPL - Texas Pacific Land Trust
« Reply #33 on: July 16, 2018, 09:48:37 AM »
I don't think Value Maven stated anything wrong when he called Tejon or TPL literally dirt. At the time, it appeared that's all they were. I wasn't smart enough to see value in TPL back then. But, with new fracking techniques and a few dozen hours of research, 10-K/10-Q reading, etc., I feel like I can see some more value in TPL, and I have seen more value than I first thought I'd see. And, due to the structure of the trust, all of the cashflow TPL has will be returned to shareholders in the form of buybacks and dividends. With Horizon owning 25% of the company and many other long-time shareholders not selling, I think the pool of shares to repurchase continues to shrink as well.

I've read a few comparisons of TPL to a tontine. It certainly feels like it, and the acreage/share continues to rise each year. In a few years time, a smaller pool of shares will own most of the same acreage TPL has currently, and most of the 1m "virgin" acres will remain flush with whatever oil they hold.
"If we are not able to ask skeptical questions, to interrogate those who tell us that something is true, to be skeptical of those in authority, then we are up for grabs for the next charlatan - political or religious - who comes ambling along."
- Carl Sagan

Sportgamma

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Re: TPL - Texas Pacific Land Trust
« Reply #34 on: March 26, 2019, 07:28:26 AM »
Quote
On March 15, 2019, Horizon Kinetics, SoftVest Advisors, LLC, a Delaware limited liability company, SoftVest, L.P., a Delaware limited partnership, Eric Oliver (collectively, “SoftVest Reporting Persons”), ART-FGT Family Partners Limited, a Wyoming limited partnership, Tessler Family Limited Partnership, a Wyoming limited partnership and Allan R. Tessler (collectively, “Tessler Reporting Persons”) entered into a Cooperation Agreement (as described in Item 6 of this Schedule 13D) (the “Cooperation Agreement”) with respect to Shares beneficially owned by them. No Shares were purchased by any Reporting Person at such time pursuant to the Cooperation Agreement, and thus no funds were then used for such purposes.

ITEM 4. PURPOSE OF TRANSACTION

Prior to March 15, 2019, Horizon Kinetics purchased Shares solely for investment purposes and without plans or proposals which would result in any of the matters described in Items 4(a)-(j) of the Instructions to Schedule 13D. However, as a result of the Cooperation Agreement described above, Horizon Kinetics will engage with the trustees and other representatives of TPL, investors and other industry participants to discuss various opportunities to maximize the value of TPL for the benefit of holders of Shares. Such discussions may include (1) the conversion of TPL into a Delaware corporation subject to modern governance principles, as permitted by TPL’s declaration of trust, (2) focusing on the establishment of an experienced team around TPL’s new water business, with clearly defined goals and objectives, or otherwise considering the separation or sale of such business to a third party with a retained royalty, and (3) the addition of Mr. Oliver as a trustee of TPL. Horizon Kinetics believes that the trustees of TPL should now fully explore these options, as well as any other opportunities available to maximize value for holders of Shares. In addition, Horizon Kinetics believes that the Trust should be more transparent and frequent on its updates to holders of Securities (e.g. drilling updates, drilled and uncompleted well updates, water production, water injection volumes, and engineering reports).

On March 4, 2019, the trustees of TPL announced that they will call a special meeting of holders of Shares on May 8, 2019 for the election of a new trustee of TPL to fill the vacancy created by the resignation of Maurice Meyer III (such meeting, together with any adjournments, postponements or continuations thereof, the “Special Meeting”).

6

SoftVest Reporting Persons currently intends to nominate Mr. Oliver for election as trustee at the Special Meeting and, in connection therewith, solicit proxies from beneficial owners of Shares to vote for the election of Mr. Oliver as a trustee of TPL.

On March 15, 2019, Horizon Kinetics, SoftVest Reporting Persons and Tessler Reporting Persons entered into the Cooperation Agreement to support the election of Mr. Oliver as a trustee of TPL at the Special Meeting. The description of the Cooperation Agreement under Item 6 below is incorporated herein by reference.

Horizon Kinetics may also take other steps to increase value for the holders of Shares as well as pursue other plans or proposals that relate to, or would result in, any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D (including those described in the second paragraph of this Item 4).

https://www.sec.gov/Archives/edgar/data/1519418/000151941819000008/sched13da.htm

ValueMaven

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Re: TPL - Texas Pacific Land Trust
« Reply #35 on: April 21, 2019, 04:56:19 AM »
wow - what a few months does ... there is now a huge Activist fight in this company ... there is 1 seat open for a trustee and management is fighting back with all they have ... could be very interesting if either side wins  ...

Sportgamma

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Re: TPL - Texas Pacific Land Trust
« Reply #36 on: April 21, 2019, 08:50:21 AM »
I wouldn't say it's "huge" but it is an interesting scenario. Because TPL is a trust and the trustees are practically hired for life, the "dissident" shareholders may have to wait for more than a decade for the next shareholder meeting...

Sharad

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Re: TPL - Texas Pacific Land Trust
« Reply #37 on: Today at 08:42:25 AM »
I wouldn't say it's "huge" but it is an interesting scenario. Because TPL is a trust and the trustees are practically hired for life, the "dissident" shareholders may have to wait for more than a decade for the next shareholder meeting...

It's not just the trustees, but the senior officers (CEO, CFO) that are hired for life. Here is an excerpt from the 10-K:

The Trustees hold office until their death, resignation or disqualification. In November 2016, the Trustees appointed Tyler Glover and Robert J. Packer as Co-General Agents of the Trust. The General Agent, Chief Executive Officer and Secretary and the General Agent and Chief Financial Officer hold office until their death, resignation, discharge or retirement. No Trustee or executive officer was selected to be an officer pursuant to any arrangement or understanding between him and any other person or persons other than the Trustees acting solely in their capacity as such.

Source: https://www.sec.gov/Archives/edgar/data/97517/000009751719000015/tpl12-31x201810k.htm  (emphasis mine)


IMHO, it's unconscionable that the trust has been willing to continue to modernize the compensation for the trustees and senior officers, but have not modernized the Trust's charter simultaneously. Also notable is the low number of subshares trustees and senior officers own of the entity. I'm not sure how anyone can trust they have shareholders' best interests in mind. You can probably guess which way I'm leaning with my votes.
"If we are not able to ask skeptical questions, to interrogate those who tell us that something is true, to be skeptical of those in authority, then we are up for grabs for the next charlatan - political or religious - who comes ambling along."
- Carl Sagan