Texas Pacific Land Trust: Largest Land Owner in Permian Basin

Todd Sullivan of Rand Strategic Partners presented his in-depth thesis on Texas Pacific Land Trust (US: TPL) at Wide-Moat Investing Summit 2019.

Thesis Summary:

Texas Pacific Land Trust owns ~900,000 acres in the Permian Basin in Texas. Investing in the company is a way to profit from the growth of oil and gas drilling in the region. The company leases land to oil and gas companies, but it retains all mineral rights. Simply put, the company gets a royalty on all the oil and gas that comes out of the ground. With the growth of drilling in the region, companies like KMI and WMB are rushing to supply the region with pipeline capacity. When pipelines cross the 900,000 acres of land moving oil and gas, the company collects easement income. In addition, fracking is water intensive. The company has a water business as it owns all the water rights in the region; it sells water to oil and gas companies and also offers water services. It also leases land to farmers in the region. Finally, the company collects money on the sale of acreage (relatively small contributor). As a result, the shares offer top-to-bottom exposure to activity in the Permian. The company has been a regular repurchaser of stock. The share price has climbed 2,000% since 2010. Todd believes is has additional room for increase, unless drilling in the Permian grinds to a halt. Todd views the latter scenario as unlikely.

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About the instructor:

Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and CBNC. His commentary on Starbucks during 2008 was quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”, the idea, Audiovoxx, was the top performing name over the following year. In 2015 he presented before the same conference. Todd also invests in start-up projects and is an angel investor in Estimize and Agua Brands, and is a backer of “Follow Friday the Film” and “Money for Nothing: Inside the Federal Reserve”. Todd is also author of the ValuePlays blog.