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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.

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.

 

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

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.

Meet the energy hedge funds that made money while oil plunged

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

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The plunge in oil prices has dragged down much of the energy sector with it. Yet, some energy-focused hedge funds managed to avoid the carnage entirely.

Lansdowne Partners – one of Europe’s largest hedge funds with $22-billion (U.S.) – gained 14.8 per cent last year in its long- short energy-focused equity fund, according to a person familiar with the matter. Some commodity trading advisers, or CTAs, posted gains of more than 25 per cent in 2015.

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Fall Haul: These San Antonio businesses raised $103 million from investors

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

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Between August and November, investors buying into nearly two dozen San Antonio companies and locally managed funds pooled together more than $103 million, according to records on file with the U.S. Securities and Exchange Commission.

Beyond hedge funds, industries that received the capital influx ranged from the local oil and gas sector to real estate and technology, records show.

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