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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.

How a ‘Monster’ Texas Oil Field Made the U.S. a Star in the World Market

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

Innovation, investment and inviting geology have given new life to an oil patch that once seemed spent. The oil field is now the world’s second most productive.

MIDLAND, Tex. — In a global collapse of oil prices five years ago, scores of American oil companies went bankrupt. But one field withstood the onslaught, and even thrived: the Permian Basin, straddling Texas and New Mexico.

A combination of technical innovation, aggressive investing and copious layers of oil-rich shale have transformed the Permian, once considered a worn-out patch, into the world’s second-most-productive oil field. (Read more – source: New York Times, By Clifford Krauss,

November 2018 Oil & Gas Sector Surprise and Prospects

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

By Dana McGinnis, Chief Investment Officer. Published 11/30/18 by Hedge Connection and reprinted with permission.

How should investors consider recent developments in the general energy (oil and gas) business?  The big surprise, beginning in early October 2018, was not only the swift decline in the price of oil, but the magnitude.  This development was caused by several reasons. First, the two-year-old strategy of the OPEC players and Russia to sop up excess supplies and raise prices worked. Prices had risen from around $30 per barrel to almost $80 for Brent over two years because supply and demand had become balanced.  There was even a threat of a shortage with looming sanctions on Iran’s ~3MM barrels a day.  Bear in mind that the price declines, which started going down in 2014 were caused by the extraordinary rise in oil production in the U.S. attributable to the implementation of new extraction technologies including fracking.

As oil prices approached $70 and $80 in the early summer of 2018, the Saudis and the Russians put more oil on the market.  The Saudis did so because they had spare capacity. The Russians, because they were able to lower their costs (lower Ruble values and lower taxes) also added to supply. Russia too, has sanctions on its economy. The Russian oil business, however, is now believed to be profitable.  In addition, the Saudis and the Russians — and despite pipeline shortages in the Permian Basin (unique petroleum region covering 70,000 square miles of Texas and New Mexico) — the U.S. also raised production.  Most everyone was ignoring increasing supplies until the U.S. administration issued waivers on about 1MM barrels of Iranian production. Then oil prices lost their support, so to speak, and prices started to decline.

The next thing that was a bit of a surprise was the pipeline shortage in the Permian which was intended to be resolved by mid-2020. Now the timeline has been moved up to late 2019. The market anticipated that there would be another glut unless something changed. The only solution was for OPEC to cut supplies in hopes of raising prices, at least for a time. I think this is what they will do and Russia will fall in line despite defiant talk. The Russians did agree to cut production as of November 29, 2018. I now believe that prices will rise somewhat, though not a lot, and the market will then just wait on news from the Permian.

There are many unknowable factors that will play out in the coming months. Will the waivers of Iranian sanctions (which are temporary, by the way) be eliminated in six months as advertised? If so, who will replace the oil to India, North Korea, Japan, China? The most important issue after OPEC cuts production in December, presumably, will be whether the new oil coming from the Permian will depress prices again, possibly to new lows.

I think the pressure will certainly be there from the Permian as production will continue to flow and rise for years. What happens in this case? One cannot guess the price, but in the Permian $50 oil or higher is fine with producers if they can sell all they want. Of course, they would rather have $60 oil, and they might get it. Relatively low prices will hurt almost all producers except the U.S. (and in the U.S., it is the Permian almost alone that will prosper.)  Russia, and some smaller Mideast producers will not be hurt by that price. Low prices will be a tailwind for the U.S. economy and most economies in the world, (those who allow low prices to be passed on the consumers). The U.S. will be in excellent position to apply maximum pressure from a foreign policy point of view on any so-called bad actor countries, except for Russia and possibly China.

The most likely scenario, as I see it, will be oil prices settling around $60 and staying there for quite some time. This is a perfect scenario for the U.S. and for the Permian. Most small players will suffer as will oil-dependent economies.  The Saudis and OPEC will struggle. It is not all a bed of roses, but it will be for the Permian Basin.