To get from sea to shining sea, the US government granted millions of acres of land to railroads in the 1800’s. One of the railroads, Texas Pacific, received more than 3 million acres. Unfortunately…
To get from sea to shining sea, the US government granted millions of acres of land to railroads in the 1800’s. One of the railroads, Texas Pacific, received more than 3 million acres. Unfortunately, the company went belly up leaving bondholders without a payer. A trust was formed which was cash poor and land rich. The original intent was to sell the land to repay the bond holders. For the Trust’s ultimate sake, it didn’t sell all of the land before some wildcatters found oil. The Trust still owns about 900,000 acres which reaps revenue from both mineral royalties and surfacing leasing.
Now, 130 years later, the scrub land owned by Texas Pacific Land Trust is a cash farm. Like University Lands, it makes money on mineral and surface rights. Unlike UL, it manages its water assets. Last June they formed a subsidiary called Texas Pacific Water Resources (TPWR). They have since grown from 2 employees to 52 and generated $25 million in 2017. Water revenue came in from selling brackish water (>1,000 mg/L TDS). They do not sell fresh water for fracking because they want to maintain an environmental and social conscience. They gather, treat, recycle and dispose of produced water. They track water, perform analytics and offer well testing services.
Increased oil drilling and this additional water revenue has boosted TPLT’s stock value. It has jumped 2,002% since 2010.