TPL
🏜️ Texas Pacific Land Trust owns significant land in Texas, including the Permian Basin.
🛢️ The company benefits from royalties on oil, gas, and water extraction.
📈 Increasing oil production in the Permian Basin drives revenue growth.
🕰️ The company’s unique structure and long-term focus create shareholder value.
@emeritoquintana:
“This company simply has land in Texas. The company was created to build a railroad in 1880 to connect Texas Pacific. The company went bankrupt and was financed with bonds from the bondholders, and then this trust was created to return the money to the bondholders. Its mission was simply they had 3 million acres, an acre is like a bit, 3 million acres in Texas, and its mission was simply to sell land to return the money to the bondholders and buy back shares. So, it is a company that has been eating itself for more than 100 years. Now it has about 800,000 acres left, and that process of getting profits from land sales and buying back shares creates an effect for long-term shareholders that has been very beneficial. In fact, a certificate was lost for 72 years and was found in 1979 in some boxes at Wells Fargo bank in the US, and in those 72 years, those $350 in certificates were worth more than $5 million, a return of 15% annually, which no one has achieved for so long, simply because the certificate was lost and because of this effect. During one period, oil was found here until it was thought that there could be no more, and there was no technology to extract it until in recent years pulsar found here what is called the thermal basin, which is a deposit from that era of the Permian in which there is a lot of accumulated oil. What happens is that a new technique is needed, which is fracking, and in Texas, which is a desert, nothing happens for anyone. There are many debates about it, but it is advancing a lot in the techniques and in efficiency, and this is not Texas Pacific does not extract any oil, but it is simply the owner of the land and the royalties of the subsoil because in the US you own the surface of the subsoil, and you can also separate it. You can sell the surface and keep the royalties perfect on the oil, on the gas, and on the water. So, on the surface, there is practically nothing. There is practically pasture for livestock, which also has agreements between the neighbors. In some places, there are renewables. As you are the owner, if an oil company or any other company wants to put a road, they have to pay. If they want to put an oil pipeline, they want to put pipes, they want to put lighting, and in addition to everything that is taken, we take a percentage. So, everything we have earned is without extracting a single barrel of oil ourselves, simply for the royalties, and the royalties, as they are a thing for the future, are always valued a little, and that discount effect makes us have more and more acres per share and more and more profits. Also, this is a very boring company that until a few years ago had eight employees who simply dedicated themselves to this process of selling land to buy shares, and until recently with this revolution of fracking, they realized that with all the water they have, they can get profits because fracking is one of the bottlenecks, it is the water because it is needed to inject it, and also when the water returns, it has to be recycled, and the good thing about Texas is that there is a lot of water, but it has never been used for anything because it is alkaline, for nothing, but for this, it does serve. So, they have created a company, and they are starting to hire people who what they do is that to the fracking companies, they give them the service of getting them the water, recycling it, and putting all the equipment and so on. So, this is a new, emerging business that still does not appear practically in the accounts. All those acres without producing are very difficult to value. It is a company that is the civil accounting does not see anything. By normal valuation methods, you can not do almost anything.”
Watch the exact part of the video where Emerito talks about Texas Pacific Land Trust here:
View the video on YouTube.
Read more articles by the world’s top 100 analysts on Texas Pacific Land Trust (TPL) at the following link. TPL stock.
