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Author: Claudia Diaz

Texas Pacific Land Trust Enters into Settlement Agreement with Investor Group (7/31/19 Press Release via Business Wire)

Written by Claudia Diaz on . Posted in Blog, Energy industry, In the News.

Texas Pacific Land Trust (NYSE: TPL) (the “Trust” or “TPL”) today announced that it has entered into a settlement agreement (the “Settlement Agreement”) with the investor group led by Horizon Kinetics LLC, SoftVest, L.P., and ART-FGT Family Partners (the “Investor Group”) with respect to the previous proxy contest and the pending litigation between the parties in the U.S. District Court for the Northern District of Texas in Dallas.

Pursuant to the Settlement Agreement, three additional members will join TPL’s Conversion Exploration Committee: Murray Stahl, Chairman of Horizon Kinetics; Eric L. Oliver, Founder and President of SoftVest Advisors; and Craig Hodges, Chief Executive Officer of Hodges Capital. They will join the existing four members of the Committee: John R. Norris III and David E. Barry, the incumbent Trustees of TPL; Four-Star General Donald G. Cook, USAF (Retired); and Dana McGinnis, Founder and Chief Investment Officer of Mission Advisors.

The Committee, which has been charged to make a recommendation as to whether the Trust should be converted into a C-corporation and regarding appropriate governance changes, has been meeting since June on a regular basis and will complete its work by December 31, 2019, unless the Committee decides otherwise. The Committee will be chaired by the incumbent Trustees of TPL.

In connection with the Settlement Agreement, the parties have dismissed their litigation in the U.S. District Court for the Northern District of Texas in Dallas. The parties have further agreed that TPL’s third trustee position will remain vacant at least until the Committee has completed its work.

“We are pleased to have come to an amicable resolution,” said Trustee John Norris. “It is now time for all of us to come together, put aside our differences, and determine the best way forward for the Trust and all of its shareholders.”

Pursuant to the Settlement Agreement, the Trust and the Investor Group have also agreed to certain other terms. To reflect the terms of the Settlement Agreement, the Trust adopted an amended and restated charter for the Committee (the “Amended Charter”). The complete Settlement Agreement and Amended Charter will be included as an exhibit to a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission.

Sidley Austin LLP is serving as legal advisor to the Trust. Gibson Dunn & Crutcher LLP is serving as legal advisor to the Investor Group.

About Texas Pacific Land Trust

Texas Pacific Land Trust is one of the largest landowners in the State of Texas with approximately 900,000 acres of land in West Texas. The Trust was organized under a Declaration of Trust to receive and hold title to extensive tracts of land in the State of Texas, previously the property of the Texas and Pacific Railway Company, and to issue transferable Certificates of Proprietary Interest pro rata to the holders of certain debt securities of the Texas and Pacific Railway Company. Texas Pacific Land Trust’s trustees are empowered under the Declaration of Trust to manage the lands with all the powers of an absolute owner.

Portfolio Manager’s Update – June 2019

Written by Claudia Diaz on . Posted in Blog, Portfolio Manager's updates.

The oil markets have taken on a more positive tone in the last month as inventories are experiencing large drawdowns, OPEC has decided to restrict production through the end of the year, and tensions continue to mount around the Strait of Hormuz.

We feel this bodes well for oil prices to remain around the $60 mark for WTI for an extended time. We have long used $60 oil as the basis of most of our estimates and projections, and for overall oil geopolitics. $60 prices provide ample profits for producers in the Permian Basin, and keep pressure on most other producers all over the world – including the Saudis.

We look forward to earnings season near month end, and hope you are enjoying a good summer.

Portfolio Manager’s Update – May 2019

Written by Claudia Diaz on . Posted in Blog, Portfolio Manager's updates.

Over the last month, many factors have affected the general markets and the energy markets. Among these are trade wars, immigration issues and worries about slower growth. They have put pressure on the markets and especially on the oil and gas market that is concerned about future demand and rising supplies. The energy sector has come down with the general market but has not recovered as well as the general market has.

We think that the trade issues will eventually be resolved, especially the most important trade issues with China. Other problems, such as the dispute with Iran might continue, as might the continued problems in Venezuela. In the long run, if the trade disputes with China reach some type of reasonable resolution, the markets will likely ignore other issues and begin to rise – oil markets included.

Press release: Mission Advisors Supports Proxy Firms’ Endorsements of TPL Shareholders’ Vote FOR General Don Cook. Texas Pacific Land Trust’s BLUE Card Recommended by ISS, Glass Lewis and Egan-Jones

Written by Claudia Diaz on . Posted in Blog, In the News.

SAN ANTONIO–(BUSINESS WIRE)–Mission Advisors, a long-term oriented investment firm and the second largest shareholder by voting control of Texas Pacific Land Trust (NYSE: TPL) (“TPL”), welcomes the unanimous support of TPL’s three proxy advisory firms FOR retired four-star General Donald “Don” G. Cook and urges TPL shareholders to complete and return the BLUE proxy card or vote online by following the instructions at TrustTPL.com in connection with the June 6, 2019 Special Meeting of Shareholders.

Dana McGinnis, Chief Investment Officer of Mission Advisors, commented:

“We believe shareholders should avoid dissension that could impair this wonderful asset, as the dissident nominee’s past suggestions offered to shareholders may be an indication of the possible disruptions he would bring to the future workings of the Trust. In our view, TPL survives and has prospered because it has been managed well, because it has been protected by the Trust. We are fully aligned with TPL management to elect Four-Star General Donald G. Cook as Trustee.”

The full text of Mission Advisors’ Second Communication to shareholders of Texas Pacific Land Trust can be read here.

 

Second Communication to shareholders of Texas Pacific Land Trust

Written by Claudia Diaz on . Posted in Blog, Industry Insights & Resources.

Dear Fellow Shareholders:

As the vote to elect a new trustee approaches on June 6 in Dallas I wanted to reach out to shareholders again to share some of my perspectives, not only as a fellow shareholder of the Trust, but as an investor who has invested all over the world the past forty years.  Much of my international experiences have been directed toward sovereign debt, infrastructure, and Energy.   For the past 20 years, all of my investing has been in the U.S. and in the past ten years, almost all of my focus has been in the Energy sector.  The most important issues have always been intrinsic value, governance, and leadership integrity.

We believe that TPL survives and has prospered because it has been managed well, because it has been protected by the Trust . . . we see no reason to deviate from a proven path . . . We are concerned that dissension in management may impair this wonderful asset. 

My first investment as a young man with Rotan, Mosle, (an energy investment bank from Houston), was in Burma Oil & Gas (US OTC), which at the time I bought it in 1977 sold for 77 cents/share.  All reports at the time indicated the company was headed for bankruptcy but my own research indicated that the problem was a dispute with the Indonesian government over LNG export fees and that a simple reconciliation would be in the best interest of all parties.  The dispute was, in fact, resolved and the stock recovered to $7 where I sold it. I was feeling very clever only to see a couple of years later that the price eventually reached $40. That was my first real lesson in being patient.

I first bought shares of Texas Pacific Land Trust in 1980 after learning about it and two other asset rich companies, Florida East Coast and Newhall Land and Farming from Mr. B. F. Pitman in Texas.  Mr. Pitman had been a real estate investor in the Florida boom in the 1920’s.  During that boom he told me his net worth had increased from $2 to $2 million. I was thereby hooked into wanting to be an investor.  He told me to buy TPL and in a few years, we would be the last two shareholders, sitting on some valuable real estate.

I did buy what I could, but I have to say that I did not hold it long enough.  It never seemed to move, or so I thought, and I gave up.  Again, I was impatient.  I did, however, learn some lessons about value, and discovered what I thought was a gem (no one I knew had heard of it).  It was called Berkshire Hathaway. I bought 6 shares at about $850/share, all I could afford. This one did move and I sold it after a year or so for more than a 1000 point gain. Again, I was feeling pretty smart.  Years later, I try not to think the missed profits because that stock now sells for $305,000/sh.  I thought I needed the money when I sold years ago.  But now I realize, I didn’t really need the money, I was just impatient.  It seems that much of investing is doing good research, buying something of value, and being patient.

We investors in Texas Pacific Land Trust own a unique asset. Based on what is happening in the international energy market and especially the Permian Basin (where all of TPLs assets are located), I anticipate that TPL will be one of the main beneficiaries.  Now is the time to keep your perspective about Texas Pacific Land Trust, and to be patient with the management and with the story.  We investors need to be very careful not to push TPL into a corner that might harm our prospects as shareholders.  In my estimation, and despite some slow dissemination of information, the management of TPL has been excellent for a very long time and has always shown the highest level of integrity.

In reading the voluminous material generated by this proxy contest, TPL management seems to be addressing each and every concern to the extent that the Trust allows. Even changing the trust to a corporation is now on the table through shareholder concerns.  That will be a long process and management has openly pledged to look at the possibility. It is not the first time the subject has come up among the trustees, by the way, and so it seems like all concerns are being addressed. It is also not something that we should want to rush into.  Shareholders would do well to keep in mind TPL’s stock performance over time.

Some of the rhetoric in the proxy fight claims that TPL was just lucky to have all this land. The dissent group’s glib innuendo is that management has done little other than show up. It is unclear to me why the dissidents choose this line of attack.  In my mind, nothing could be further from the truth. Nothing is more important than management – or more clearly – management integrity.

In the beginning, in 1881, the Trust started in bankruptcy.  The management before, even though they failed financially, earned the title to 3,500,000 acres of land, being organized to build a railroad.  Managers at the time were not dealt a royal flush because they were given a lot of land in West Texas. No, they had to manage the assets just as the managers today have to manage oil being discovered on the land. I believe TPL survives and has prospered because it has been managed well, because it has been protected by the Trust, and because we were lucky.

ISS, better known as Special Situations Reports, has studied both sides of this proxy contest and recommend we vote for TPL management’s nominee, Gen. Don Cook.  I think this is an important signal to shareholders that given the governance issues that are in need of discussion (and maybe modernized),  Gen. Cook seems far better qualified to carry out those duties than the dissidents’ nominee who has not previously served on a public company board of directors.  Even though that dissident nominee has the support of the largest holder Horizon Kinetics, I do not understand the rationale to advance their candidate.

The proxy material outlines the dissident nominee’s repeated suggestions to the Trustees that the Trust convert to an MPL or to a corporation. To answer his questions, the Trust apparently spent a lot of time and money.  All professional opinions the Trust sought seemed to go against the dissident’s suggestions. This seems to me to have been very responsive to shareholders, but raises concerns that the dissident nominee’s past suggestions may be an indication of the possible disruptions he would bring to the future workings of the Trust.

So, as a professional investor with forty years’ experience, I see no reason to deviate from a proven path the current management has put the Trust on.  It is especially important at a time when I anticipate rapid growth in earnings for the Trust will occur in the next 3-4 years. The management seems to understand that shareholders would like more information from the Trust, an annual shareholders meeting, dedicated investor relations personnel and a thorough airing of the governance issues.

We cannot afford dissension and distraction in managing this wonderful asset.

Dana McGinnis, CIO

Mission Advisors

***Certain statements in this letter constitute “forward-looking statements.”  These statements are made on the basis of the views of Dana McGinnis and assumptions regarding future events and performance as of the time the statements are made.  Actual results may differ materially from those expressed or implied in this letter.  Such differences may result from changes in investment theses or due to market forces outside the control of TPL.

Portfolio Manager’s Update – April 2019

Written by Claudia Diaz on . Posted in Blog, Portfolio Manager's updates.

The oil market scenario played out much as we anticipated in last month’s letter. As prices rose in the early part of the month, so did the market. The market decreased in the second half as supplies came on the market, largely from the Permian Basin.

OPEC will meet next month and decide whether or not to extend production cuts. It appears that the recent price decline will make it easier for OPEC to maintain cuts a little longer in order to keep prices higher. It is actually a good plan for OPEC. After all, Saudi Arabia is thought to require $80 oil (vs. $70 today) to balance their budget needs. So far, few areas outside the Permian Basin are actively seeking or producing new supplies. Worldwide demand continues to rise steadily so we continue to anticipate that prices will stay firm until large volumes come online later this year from the Permian. Thereafter, prices should moderate. We expect prices to be low enough in the Middle East to cause unease for the Saudis. Meanwhile, WTI (West Texas Intermediate) should be set high enough for Permian producers to supply almost all the marginal supply needed for many years.

Press release: Mission Advisors Issues Open Letter to Texas Pacific Land Trust Shareholders

Written by Claudia Diaz on . Posted in In the News.

Business Wire: 

Mission Advisors Issues Open Letter to Texas Pacific Land Trust Shareholders.  Urges Shareholders to Vote “FOR” Donald G. Cook, Using the BLUE Proxy Card

SAN ANTONIO–(BUSINESS WIRE)–Mission Advisors, a long-term oriented investment firm and the second largest shareholder of Texas Pacific Land Trust (NYSE: TPL) (“TPL”), today issued an open letter to TPL shareholders in connection with the company’s upcoming 2019 Special Meeting of Shareholders, scheduled for May 22, 2019.

In the letter, Mr. McGinnis:

  • Reminds shareholders why it is important to elect Donald G. Cook as trustee
  • Outlines why the dissident shareholder’s schemes will undermine the value of the company
  • Reinforces that the dissident’s nominee, Eric Oliver, is grossly unfit for the position and does not understand the business

Missions Advisors strongly recommends that shareholders vote to support TPL with a vote on the BLUE proxy card.

The full text of the letter to shareholders follows.

Open Letter from Dana McGinnis, CIO, Mission Advisors

Vote for General Cook, TPL Trustee

We urge you to elect Four-Star General Donald G. Cook, as Trustee to lead Texas Pacific Land Trust. Complete, sign and return the BLUE proxy card, or by voting online by following the instructions at www.TrustTPL.com. We must avoid the rogue activist nominee, Eric Oliver, of dissidents Horizon Kinetics/Softvest/ART-GFT et al. Mr. Oliver is naïve and reckless. His incompetent recommendations and schemes will undermine the value of everyone’s TPL holdings. Our investment is at grave risk.

Texas Pacific Land Trust has been very good to its shareholders. TPL’s Investor Presentation, April 2019 speaks for itself. We are the second largest shareholder, and an energy investor for over 40 years. As an investment, TPL is unparalleled. It continues to give us remarkable and valuable reasons to believe the future of TPL is bright indeed. Since its formation in 1888, and throughout the years under the leadership of Mr. Maurice Meyer, TPL continues to be a jewel in our portfolios, in the State of Texas and the energy business. We must elect Four-Star General Donald G. Cook as trustee to lead TPL. We encourage you to join TPL and General Cook, who will host a Video Q&A on Thursday April 25, during which he will provide his personal perspectives on the issues.

View TPL Trust’s April 22, 2019 press release with General Cook’s letter to shareholders here.

The dissident group, spearheaded by Horizon Kinetic/Softvest/ART-GFT Family Partners, seeks to force its way into the seat on the board, vacated by the death of Mr. Meyer. Their rogue nominee, Eric Oliver, has demonstrated to me with his offbeat suggestions and his pressuring of the trustees that he is not qualified for the position. Nonetheless he is presently on a self-promoting marketing campaign, attempting to convince us, the shareholders, to choose him as trustee. Eric Oliver is a big mistake.

As a long term holder of TPL shares, and the second largest shareholder (behind the activist group), I support Texas Pacific Land Trust’s management. I am an experienced MLP investor as well and know TPL was right to rebuff all of Mr. Oliver’s naïve recommendations concerning MLPs. We all want TPL to continue doing what they have been doing and to do so well into the future. This dissident consortium wants to interrupt the momentum. They want to change the proven, steady momentum that has made us outstanding returns. To what aim? Changing a long-proven successful business like TPL, without any clear reason – because there are none – is reckless. Worse yet, the dissidents and its nominee suggest they want to “fix” TPL and thereby add to its success. In our view, the dissident’s complaints are lacking perspective and reason. TPL is doing just fine.

Investors must vote with the management and General Don Cook.

The dissident group called me for advice.

Days ago I received a call from a senior analyst at Horizon Kinetics – the dissident group that is supporting their unsuitable nominee. He said his job was to research TPL as much as possible. He found my name and reports on TPL written a couple of years ago and concluded that I was one of the most knowledgeable people in the industry with regard to TPL. I can just say that my analyses are based on the public information, conversations with management and my 40 years expertise in energy investments. Two of those three things are available to any shareholder willing to call management and do a little work on his own. The dissidents who complain that management does not share information are completely wrong. Why are their analysts calling me for information? I have the same access to TPL as they do. In the end, Horizon Kinetics gives me no clear reason for wanting their dissident nominee on the board at all. Do they have another motivation?

The dissident’s grievances:

First, the dissidents want TPL trustees to stop taking credit for the success of the business over the past few years. That is a gross misrepresentation of what has actually happened. TPL’s market success is phenomenal and that success has not been limited to the last few years – it has been successful since the 1920s. TPL’s growth and development is no accident, as the dissidents claim. There have been many Trustees over decades that managed the business. Collectively, they have done a remarkable job. The management has made the shareholders a lot of money. They have positioned TPL so that will continue grow long into the future. The dissident’s opinion is baseless, pure grandstanding.

TPL deserves its due credit.

Incompetent nominee: A complete misrepresentation of himself and his goals.

There is at least one pandering video on the internet featuring the dissident’s rogue nominee, Eric Oliver. He claims the video is to disprove the public information circulating about him being a “bad guy.” He denies being a dissident. He also implies that people think he has horns and a pitchfork. He flatters himself. What follows on the video is a pandering walk around his home office where he proudly displays maps of Texas stuck on the walls, and his computers. Any dabbler in mineral properties has maps. What you definitely do not see in his marketing video is proof that he has any qualified judgement.

Mr. Oliver has contacted management on many previous occasions insisting that TPL management convert the Trust to an MLP. This is a prime example of his poor judgement – one we must all avoid. There are public documents available to shareholders where TPL management details conversations with Mr. Oliver and his incessant desire to convert TPL to an MLP. I suggest you read the transcripts. As for myself, for nearly ten years I have managed the best performing MLP and Energy fund on the street. Mr. Oliver obviously has NO IDEA about MLPs. He asks – persistently – why TPL does not convert to an MLP. When I sold all the MLPs in my investor’s portfolio, Mr. Oliver was insisting that TPL to become one of the casualties! As it turns out his charade is a rehash of his earlier private attempt to influence the decision. I have not bought MLPs back and my Fund continues to lead the energy market performance. It was obvious this rogue nominee is uninformed at best and refuses to admit he is constantly wrong about TPL and the business. Is he going to get smarter if elected? Definitely not. Mr. Oliver is a huge risk!

Mr. Oliver stubbornly insists on bad ideas.

TPL did take the time to discuss Mr. Oliver’s unfounded recommendation even after trying to dissuade him. They then took the further step of hiring, at some expense to all of us, an independent consulting firm that reached the same conclusion – a conversion to an MLP was a bad idea. Still Mr. Oliver insisted, recommending that TPL borrow $100 Million to pay to shareholders as part of the MLP conversion as an incentive to convince us, the shareholders. He insists to this day. I say enough is enough!

Mr. Oliver is not through with his schemes.

In the proxy statement he makes one of his old nonsensical ideas yet again. He wants to fully explore converting the Trust into a Delaware Corporation. He fails to outline even one reason why the corporation would make more sense than the current structure. Not one.

More reasons why Mr. Oliver would be unlikely to add anything to the advancement of TPL

Corporations, as they exist for public companies, have a lot more infrastructure and overhead requirements than the current Trust structure. The dissidents insist that a corporation offers more transparency for shareholders. This is not true. TPL is always ready to provide information to the extent of SEC limitations. We all want transparency, and TPL has provided it. All shareholders have to do is call them.

TPL discloses what management has been doing for all of us. As shareholders we must also remember, that to protect us, there are rules for disclosing nonpublic information. There are also competitive reasons to hold your tongue.

As for the corporate structure just for the structure, that is another of Oliver’s unnecessary and costly follies. The rogue nominee has had this discussion with TPL repeatedly in the past. So much so that now he even claims that it was his idea! Mr. Oliver has persisted with tired, worn-out and useless suggestions for which he has already been given studied denials, at shareholder expense. Does he have any good ideas? Does anyone in the dissident group have any good ideas? If so, let’s hear them.

I believe Gen. Donald Cook is by far the best candidate for Trustee. Vote for him.

We should not let Mr. Oliver anywhere near the Water Business!

Mr. Oliver claims he can help with the management of the water business. He cites all the risks of being in the business as if TPL were unaware of its own business. He suggests he would help TPL find better water managers and hire outside consultants to better evaluate and grow the business. The idea is absurd.

He does not understand the business and poses a huge risk to us.

TPL currently has a water team in place that is the envy of the industry. Mr. Oliver goes on in the proxy statement to suggest that TPL sell off the water royalty rights to a third party. This very statement demonstrates that he does not understand in the least that the land and water rights must work together. To suggest TPL separate them is naive and reckless. It is because TPL controls the land and the rights together that enables TPL to leverage the water business by teaming with neighboring owners. This is the backbone that allows TPL to create long term valuable contracts with the operators that need water now, and will need even more recycling and disposal of produced water in the future. It is irresponsible for any shareholder to make such an uninformed statement, especially one who says he can enlighten TPL management on the road ahead. Mr. Oliver cannot.

So, I ask again that shareholders read the investor presentation, call management or even me, if you like, to discuss any of the material at your disposal. It is in my best interest to capture all of the upside that shareholders are sure to experience if the past excellent management and strategy continues into the future. I want all shareholders to have the best returns possible. Eric Oliver is wrong for TPL.

Support Texas Pacific Land Trust.

Vote with Management. Vote for Four-Star General Donald G. Cook.

Please call me if you are undecided and want to talk. Please do not call to try to change my mind.

Dana McGinnis

Founder and Chief Investment Officer

Contacts

Investor Contact:
Mission Advisors
112 E. Pecan Street, Suite 1425
San Antonio, TX 78205
info@missionadv.com
210.323.2000
Media Contact:
Gagnier Communications
Dan Gagnier
646.569.5897

URGENT NOTE FROM DANA McGINNIS- Vote for General Cook, TPL Trustee

Written by Claudia Diaz on . Posted in Blog, Industry Insights & Resources.

We urge you to elect Four-Star General Donald G. Cook, as Trustee to lead Texas Pacific Land Trust. Complete, sign and return the BLUE proxy card, or by voting online by following the instructions at www.TrustTPL.com. We must avoid the rogue activist nominee, Eric Oliver, of dissidents Horizon Kinetics/Softvest/ART-GFT et al. Mr. Oliver is naïve and reckless. His incompetent recommendations and schemes will undermine the value of everyone’s TPL holdings. Our investment is at grave risk.

Texas Pacific Land Trust has been very good to its shareholders. TPL’s Investor Presentation, April 2019 speaks for itself. We are the second largest shareholder, and an energy investor for over 40 years. As an investment, TPL is unparalleled. It continues to give us remarkable and valuable reasons to believe the future of TPL is bright indeed. Since its formation in 1888, and throughout the years under the leadership of Mr. Maurice Meyer, TPL continues to be a jewel in our portfolios, in the State of Texas and the energy business. We must elect Four-Star General Donald G. Cook as trustee to lead TPL. We encourage you to join TPL and General Cook, who will host a Video Q&A on Thursday April 25, during which he will provide his personal perspectives on the issues.

View TPL Trust’s April 22, 2019  press release with General Cook’s letter to shareholders here.

The dissident group, spearheaded by Horizon Kinetic/Softvest/ART-GFT Family Partners, seeks to force its way into the seat on the board, vacated by the death of Mr. Meyer. Their rogue nominee, Eric Oliver, has demonstrated to me with his offbeat suggestions and his pressuring of the trustees that he is not qualified for the position.  Nonetheless he is presently on a self-promoting marketing campaign, attempting to convince us, the shareholders, to choose him as trustee. Eric Oliver is a big mistake.

As a long term holder of TPL shares, and the second largest shareholder (behind the activist group), I support Texas Pacific Land Trust’s management.  I am an experienced MLP investor as well and know TPL was right to rebuff all of Mr. Oliver’s naïve recommendations concerning MLPs. We all want TPL to continue doing what they have been doing and to do so well into the future. This dissident consortium wants to interrupt the momentum. They want to change the proven, steady momentum that has made us outstanding returns. To what aim? Changing a long-proven successful business like TPL, without any clear reason –  because there are none – is reckless. Worse yet, the dissidents and its nominee suggest they want to “fix” TPL and thereby add to its success. In our view, the dissident’s complaints are lacking perspective and reason. TPL is doing just fine.

Investors must vote with the management and General Don Cook. 

The dissident group called me for advice.

Days ago I received a call from a senior analyst at Horizon Kinetics – the dissident group that is supporting their unsuitable nominee. He said his job was to research TPL as much as possible. He found my name and reports on TPL written a couple of years ago and concluded that I was one of the most knowledgeable people in the industry with regard to TPL. I can just say that my analyses are based on the public information, conversations with management and my 40 years expertise in energy investments. Two of those three things are available to any shareholder willing to call management and do a little work on his own. The dissidents who complain that management does not share information are completely wrong. Why are their analysts calling me for information? I have the same access to TPL as they do. In the end, Horizon Kinetics gives me no clear reason for wanting their dissident nominee on the board at all.  Do they have another motivation? 

The dissident’s grievances:

First, the dissidents want TPL trustees to stop taking credit for the success of the business over the past few years. That is a gross misrepresentation of what has actually happened. TPL’s market success is phenomenal and that success has not been limited to the last few years – it has been successful since the 1920s. TPL’s growth and development is no accident, as the dissidents claim. There have been many Trustees over decades that managed the business. Collectively, they have done a remarkable job.  The management has made the shareholders a lot of money. They have positioned TPL so that will continue grow long into the future. The dissident’s opinion is baseless, pure grandstanding.

TPL deserves its due credit. 

Incompetent nominee: A complete misrepresentation of himself and his goals.

There is at least one pandering video on the internet featuring the dissident’s rogue nominee, Eric Oliver. He claims the video is to disprove the public information circulating about him being a “bad guy.” He denies being a dissident. He also implies that people think he has horns and a pitchfork. He flatters himself. What follows on the video is a pandering walk around his home office where he proudly displays maps of Texas stuck on the walls, and his computers. Any dabbler in mineral properties has maps.  What you definitely do not see in his marketing video is proof that he has any qualified judgement.

Mr. Oliver has contacted management on many previous occasions insisting that TPL management convert the Trust to an MLP. This is a prime example of his poor judgement – one we must all avoid. There are public documents available to shareholders where TPL management details conversations with Mr. Oliver and his incessant desire to convert TPL to an MLP. I suggest you read the transcripts. As for myself, for nearly ten years I have managed the best performing MLP and Energy fund on the street. Mr. Oliver obviously has NO IDEA about MLPs. He asks – persistently – why TPL does not convert to an MLP. When I sold all the MLPs in my investor’s portfolio, Mr. Oliver was insisting that TPL to become one of the casualties! As it turns out his charade is a rehash of his earlier private attempt to influence the decision. I have not bought MLPs back and my Fund continues to lead the energy market performance. It was obvious this rogue nominee is uninformed at best and refuses to admit he is constantly wrong about TPL and the business. Is he going to get smarter if elected? Definitely not. Mr. Oliver is a huge risk! 

Mr. Oliver stubbornly insists on bad ideas. 

TPL did take the time to discuss Mr. Oliver’s unfounded recommendation even after trying to dissuade him. They then took the further step of hiring, at some expense to all of us, an independent consulting firm that reached the same conclusion – a conversion to an MLP was a bad idea.  Still Mr. Oliver insisted, recommending that TPL borrow $100 Million to pay to shareholders as part of the MLP conversion as an incentive to convince us, the shareholders. He insists to this day. I say enough is enough! 

Mr. Oliver is not through with his schemes.

In the proxy statement he makes one of his old nonsensical ideas yet again. He wants to fully explore converting the Trust into a Delaware Corporation. He fails to outline even one reason why the corporation would make more sense than the current structure. Not one. 

More reasons why Mr. Oliver would be unlikely to add anything to the advancement of TPL

Corporations, as they exist for public companies, have a lot more infrastructure and overhead requirements than the current Trust structure. The dissidents insist that a corporation offers more transparency for shareholders. This is not true. TPL is always ready to provide information to the extent of SEC limitations. We all want transparency, and TPL has provided it. All shareholders have to do is call them.

TPL discloses what management has been doing for all of us. As shareholders we must also remember, that to protect us, there are rules for disclosing nonpublic information. There are also competitive reasons to hold your tongue.

As for the corporate structure just for the structure, that is another of Oliver’s unnecessary and costly follies. The rogue nominee has had this discussion with TPL repeatedly in the past. So much so that now he even claims that it was his idea! Mr. Oliver has persisted with tired, worn-out and useless suggestions for which he has already been given studied denials, at shareholder expense.  Does he have any good ideas?  Does anyone in the dissident group have any good ideas? If so, let’s hear them.

I believe Gen. Donald Cook is by far the best candidate for Trustee. Vote for him.

We should not let Mr. Oliver anywhere near the Water Business!

Mr. Oliver claims he can help with the management of the water business. He cites all the risks of being in the business as if TPL were unaware of its own business. He suggests he would help TPL find better water managers and hire outside consultants to better evaluate and grow the business. The idea is absurd.  

He does not understand the business and poses a huge risk to us.

TPL currently has a water team in place that is the envy of the industry. Mr. Oliver goes on in the proxy statement to suggest that TPL sell off the water royalty rights to a third party. This very statement demonstrates that he does not understand in the least that the land and water rights must work together. To suggest TPL separate them is naive and reckless. It is because TPL controls the land and the rights together that enables TPL to leverage the water business by teaming with neighboring owners. This is the backbone that allows TPL to create long term valuable contracts with the operators that need water now, and will need even more recycling and disposal of produced water in the future. It is irresponsible for any shareholder to make such an uninformed statement, especially one who says he can enlighten TPL management on the road ahead. Mr. Oliver cannot.

So, I ask again that shareholders read the investor presentation, call management or even me, if you like, to discuss any of the material at your disposal. It is in my best interest to capture all of the upside that shareholders are sure to experience if the past excellent management and strategy continues into the future. I want all shareholders to have the best returns possible.  Eric Oliver is wrong for TPL.

Support Texas Pacific Land Trust.

Vote with Management.  Vote for Four-Star General Donald G. Cook.

Please call me if you are undecided and want to talk. Please do not call to try to change my mind. 

Dana McGinnis,

Founder and Chief Investment Officer

Mission Advisors

112 East Pecan Street, Suite 1425

San Antonio, Texas 78205

Tel: 210.323.2000

www.missionadv.com

Portfolio Manager’s Update – March 2019

Written by Claudia Diaz on . Posted in Blog, Portfolio Manager's updates.

The oil markets continued to firm over the past month with WTI prices back above $60/bbl. We have regularly used $60 as a long term target for domestic oil prices and we believe that is the optimum price to balance world oil supply/demand, and to for the Permian Basin to remain the most important source of production.

The key issues driving oil prices have been the OPEC strategy to cut slightly the supply from member states and from Russia as a partner, sanctions on Iranian production, problems in Libya, and the economic disaster of socialist Venezuela.

We believe that over the next six months all these players will simply wait to see what develops. OPEC will wait until the second half of the year to decide whether or not to continue the cuts. Most other producers and operators will also probably wait and watch prices until new volumes begin to flow out of the Permian later this year. Should this scenario play out, it would mean that prices will continue to firm in the near term. Toward the end of the year when Permian volumes do appear, if prices stay at current prices or higher, producers or operators that have the capacity and the capital will begin again to source new crude. If prices soften as we expect with new Texas production, those plans for alternative regions will be put off again and the Permian will dominate the oil agenda for the next several years. The Fund is positioned to profit in this most likely case.

Texas Pacific Land Trust, is performing very well on its own profit news and despite the news of a looming proxy battle over the Trustee seat vacated by the death of longtime chairman Maurice Meyer. As one of the largest shareholders, we believe in what the management has done historically, and what they will do in the future. Concerning this current issue, we believe the management will continue to act in the best interest of the shareholders. We will follow up with more detailed communications to our investors throughout the process.