Land Sale!


On November 21, 2018, Texas Pacific Land Trust (the “Trust”) entered into a Purchase and Sale Agreement (the “Sale Agreement”), pursuant to which the Trust agreed to sell approximately 14,000 surface acres of land in Loving and Reeves Counties, Texas for an aggregate purchase price of $100,000,000 (the “Sale”) as may be adjusted based on the terms and conditions of the agreement. The Sale excludes any mineral interest in the lands to be conveyed.
The Sale is subject to a number of closing conditions, including the buyer’s due diligence investigation and option to reduce the acreage to be conveyed by as much as 1,920 acres with a corresponding reduction of the purchase price. The Sale Agreement contains standard representations and warranties related to each party, and may be terminated prior to the closing under certain circumstances. The Trust anticipates that the closing of the Sale will occur during the first quarter of 2019.
The Trust intends to use proceeds of the Sale to acquire like kind properties.
The foregoing description of the Sale Agreement is qualified in its entirety by reference to such agreement, which will be filed in accordance with SEC regulations.
Sounds to me like a land swap.  Perhaps TPL is looking for acreage adjacent to other parcels of land it owns to make contiguous land for the purposes of a pipeline (oil/gas) or to support/grow the water business in some way (water pipeline, water disposal, etc).
My second hunch is that these proceeds plus the $110MM on the balance sheet will work in combination to achieve first hunch described immediately above.
Thinking out loud.  $100MM is 2.2% of the current market cap.  The 14k acres sold are 1.6% of the 890k acres owned by the Trust.  Of course the acres sold are likely not representative of the whole but the implications are positive.

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