Q vs Q : Running Thread

Using this space to highlight some of the notable changes from Q2 to Q3:

  • “There are a number of oil and gas wells that have been drilled but are not yet completed (“DUC”) where the Trust has a royalty interest. Currently, the Trust has identified 303 DUC wells subject to our royalty interest.”
    • This was 213 on 6/30.  DUCs up 42%
  • Cash on balance sheet up 29% (+$24MM) to $110MM
    • Total asset were up $43MM.
  • Cash on balance sheet represents $14.21 per share or 2.0% of the current market cap at $700/shr
  • Top line for Q2 and Q3 were nearly identical at $73.8MM and $73.2MM respectively.
    • As we know, we saw an un-lump Easement revenue period.  Additionally, I’ll speculate that O&G bottlenecks kept a lid on royalty top line.  Those are your drivers of lack-of-growth quarter on quarter.
  • Expenses were $24.1MM for the nine months ended 9/30/18.  The same period last year saw expenses of $6.1MM.
    • This is what you pay for $28MM in water top line growth ($47.4MM vs $19.6MM)
  • $40MM in CAPEX YTD thru third quarter.  Compare to $8MM during the same period last year.
    • #water
  •  Net income of $147MM for nine months ending 9/30/18.  NI of $73MM in the same period last year.  Taxes paid for both periods were $34MM and $31MM respectively.   Gotta love that.
  • 167k acres sold for $4.3MM or $26k/acre.  Extremely nice sale relative to past prints.
  • 7,786,692 in average outstanding shares for the quarter.  Compare to 7,803,162 the prior quarter.  Shares count down 16.5k or 0.21%.
  • 10,706 shares officially purchased at a weighted average print of $790.82
    • $8.5MM spent on shares.
    • Seems small relative to balance sheet cash build

 

 

 

 

 

 

 

The Q is Out

SEC / EDGAR link

Some color on Land and Resource Management Easements is below.  Just looks like a quarter where no/few new pipeline contracts were inked.

QUARTER Easements and sundry income. Easements and sundry income was $14.6 million for the three months ended September 30, 2018, a decrease of 32.9% compared to $21.7 million for the three months ended September 30, 2017. Easements and sundry income includes pipeline easement income, seismic and temporary permit income, lease rental income and income from material sales. The decrease in easements and sundry income is principally related to the decrease in pipeline easement income which decreased 42.5% to $9.1 million for the three months ended September 30, 2018 compared to the three months ended September 30, 2017. Easements and sundry income is unpredictable and may vary significantly from period to period. Effective January 1, 2018, the Trust adopted the new revenue recognition accounting standard using the full retrospective method, and no longer defers revenue on its term easements. See more discussion in Note 2, “Summary of Significant Accounting Policies — Recently Adopted Accounting Guidance” for further discussion and analysis of impact on our condensed consolidated financial statements.

NINE MONTHS Easements and sundry income. Easements and sundry income was $49.9 million for the nine months ended September 30, 2018, an increase of 1.1% compared to $49.4 million for the nine months ended September 30, 2017. Easements and sundry income includes pipeline easement income, seismic and temporary permit income, lease rental income and income from material sales. The increase in easements and sundry income is principally related to the increase in material sales which increased 29.6% to $4.9 million for the nine months ended September 30, 2018 from $3.7 million for the nine months ended September 30, 2017. Easements and sundry income is unpredictable and may vary significantly from period to period. Effective January 1, 2018, the Trust adopted the new revenue recognition accounting standard using the full retrospective method, and no longer defers revenue on its term easements. See more discussion in Note 2, “Summary of Significant Accounting Policies — Recently Adopted Accounting Guidance” for further discussion and analysis of impact on our condensed consolidated financial statements.

Vol and Vol

px and volume 11-1-18

Volume and volatility.  There won’t be much substance in this post.  It is meant to take stock of recent price action.  Maybe someday we’ll look back at today as “simpler times”.

Bloomberg and Yahoo both report today’s volume at 69k shares which is ~5x a normal day’s volume and ~3x of that of a heavy day.  If we approximate a VWAP of $700 today, it is estimated that $48MM in market value of shares traded today which represents just under 1% of the closing market cap.  For comparison, AMZN had 1.2% in turnover.  The takeaway is that it takes extremely heavy (relative) volume to come close to a “typical day” in a large cap stock.

What’s driving it all?  Your guess is as good as mine.  The 10-Q isn’t out yet.  That doc presumably contains material non-public information so there is a chance the Trust isn’t back to buying yet.

The upside to heavy sell off today is that someone or multiple someones all put their money with their mouth is and bought heavy size today.

It’s tempting to wonder if the name is being pushed around by a sophisticated trading desk taking advantage TPL’s typical gaps in the offer and bid stacks.  Wouldn’t be hard for them to take out many, many stop losses along the way.

Either that or HK is selling…   There, I said it.

 

Source: Nasdaq