Water is of critical importance in shale activities. TPL happens to be sitting on ~900k acres of land from which water can be readily extracted and to which used water can be readily disposed.
Though the article doesn’t mention TPL’s newly (2017) formed water subsidiary, Texas Pacific Water Resources, my research indicates it is/will continue to be a player in the Texas/New Mexico water arena.
Not hard to envision a $300MM++ top line from TPWR one day soon.
I remind the reader that the above is conjecture. Just personal estimates for me to get my thoughts together. DYOR!
“Overall, the region will pull up enough water this year alone to cover all of Rhode Island nearly a foot deep. Wall Street is well aware of the threats posed by the Permian Basin’s pipeline and labor shortages, key side effects from the region’s rapid buildup. But investors “aren’t as well apprised of some of the other risks and challenges that could be just as material, if not more so,” said Gabriel Collins, a fellow in energy and the environment at Rice University
“I’d put water right at the top of that list,” he said.
How material? Spending on water management in the Permian Basin is likely to nearly double to more than $22 billion in just five years, according to industry consultant IHS Markit. The reason is twofold. The rig count is rising, and many of the “workhorse” disposal formations used for decades are starting to fill up, said Laura Capper, an industry consultant. That means explorers have to move water further to find a home for it.”