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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.

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.

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.

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.