Cook Commits to Term Limit

Texas Pacific Land Trust Trustee Nominee General Don Cook Commits to Limited Term if Elected

“TPL’s founding document dictates that its trustees serve without a specified term, and that is one of multiple factors the Trustees need to consider in determining any future changes to TPL’s governance structure. If elected to serve as TPL’s next Trustee, I would serve as a change agent, bringing deep expertise in corporate governance to help in that process.

“If elected, I commit to resigning as a Trustee after no more than three years, at which point I would stand for reelection if I am renominated, creating the opportunity for shareholders to weigh in on my performance. Three years is enough time to carefully evaluate and begin to implement changes to TPL’s governance.”

Step in the right direction but I think we need to see the current Trustees make the same pledge before this has any teeth. Otherwise, if Cook is elected, we’re back in the same spot in 3 years.

This all brings more questions than answers:

  • Why would General Cook agree to this term concession while the current Trustees have made no such commitment?
  • Is all of this worth $300k to General Cook?  He’s got nothing better to do than to engage in low probability contest to become the foil to a large cohort of shareholders that just want fair representation?
  • Is 3 years a long enough term to effect change?  Would he be powerless if elected on other terms aren’t changed?


Investor Group Issues Statement

Investor Group Issues Statement Responding To Personal Attacks From Trustees Of Texas Pacific Land Trust

“We are deeply disappointed at the new lows that the incumbent Trustees have sunk in the past 48 hours, as they have escalated the callous personal attacks against Eric Oliver, his business record, and even his family in order to intimidate him from continuing to run for election as Trustee of TPL.  We are simply not going to dignify such unprofessional and unethical conduct with additional commentary. We hope the incumbent Trustees, management, and self-avowed governance expert General Cook realize the harm they are causing TPL and its shareholders.”

Capital Return Policy

Why was the decision made to return almost 50% of capital in the form of dividends last year? This is a big break from policy in prior years. Individual marginal tax rates were lowered a couple/few percent but could that have been the driver of such a large shift? Was further increasing the concentration (or the desire not to) of major holders a factor? Who’s call is that? What are their motivations? Was this fight anticipated? I’ve got so many questions.

cap returns


Global Budget Breakevens

Yes, Saudi Arabia (via Aramco) has lifting costs of $2.x/barrel.  They also have significant government budgetary expenses.  Here is a good Bloomberg article that features IMF breakeven data by country.

International Monetary Fund data released on Monday show the world’s biggest oil exporter needs prices at about $85 a barrel to balance its budget this year, up from a forecast of $73 in September.

The estimates highlight the tricky task facing Crown Prince Mohammed bin Salman as he tries to forge closer ties with Trump and, at the same time, finance a plan to revive economic growth and create jobs at home. The kingdom, which reiterated last week its commitment to balance its books by 2023, plans to increase spending by 7 percent this year.

We’ve seen material price deviations from these “desired” prices before.  Nonetheless they might be a good long term reference point.

$83MM of the $100MM

Looks like I was beat to the punch on this topic.  Here is the same question in the comments thread on the SA earnings release report.


For example, the Trust has redeployed approximately $83 million of the $100 million of the sale proceeds in a tax-free 1031 Exchange, creating 53,000 contiguous acres in the core of the Delaware Basin1, including highly strategic acreage on the Texas-New Mexico border. This position is leased by blue chip E&P operators with large capital development budgets and best-in-class safety and environmental implementation.

If $83MM has already been spent under 1031, does the reported gain get backed out of EPS next quarter?  If so, shouldn’t that have been reported in the press release?   There probably is a regulatory/accounting reason for reporting it in the manner that it was.  Can anyone help clear this up?



SEC Filing Roundup : 4/26

Mission Advisors 14a-6(g)

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.

General Cook Expanding Twitter’s Revenues for Q2

Your responsibility is to the corporation and not to outside interests.

When did TPL incorporate?  Did I miss a filing?

White Card 14A with Horizon Kinetics Update to Investors

Texas Pacific Land Trust, a major – sometimes the major – holding in a number of our strategies, is now the subject of a proxy contest between the two trustees who control its activities and an investment group. A shareholder voting period will end with the Special Meeting  that is scheduled to be held on May 22, 2019. The trustees have put forth a candidate to replace the late Maurice Meyer III, who retired in February due to ill health. The investment group has proposed a different person to be the third trustee. Both assert that their candidate would best serve the interests of the Trust.
Central to the proxy contest is that the Trust is as unique in its governance structure as it is in its asset inheritance. The assets are probably unmatched in the scope of their royalty interests, surface acreage and water rights in the oil and gas rich Permian basin of west Texas. The Permian Basin is unmatched in the U.S. for the extent of its reserves, now second in the world only to Saudi Arabia. It is no exaggeration to say that the Permian Basin has enhanced the global geo-political economic position of the U.S.
As to governance, there is probably no other SEC-registered, publicly traded company with trustees or directors who are tenured for life.  One can see why it is especially strongly felt by both parties that the choice of this third trustee is most important.
In almost all such cases, the contesting parties are referred to as an outside investor group, and I have here chosen to exclude that term. This is because this particular group holds over 25% of the shares, is TPL’s largest shareholder group by far, and has held the shares for many, many years. In this sense, they might be said to embody the ideal of a long-term equity stake holder, which is, in its essence, the counterpoint to an outsider. The trustees, in contrast, hold a negligible amount of shares.

Earnings Analysis; Q1-19 vs Q1-18

The rows below should be pretty self explanatory.  Ultimately I wanted to get to earnings adjusted for asset sales.  “Operating” after tax EPS is calculated to be $7.40 for Q1-19 vs $5.29 for Q1-18.  Implies 39.8% growth.

Lower than normal “operating” margins stay with us.  Looks like an 82.0% margin on “operating” earnings in Q1-19 vs 90.6% in Q1-18.  Expenses over the same time peried (implied from data provided in the release) are estimated to be up 192%.

I’m impressed by the figures quoted immediately below.  Production growth marches on!

Oil and gas royalty revenue was $33.2 million for the first quarter ended March 31, 2019, compared with $26.5 million for the first quarter ended March 31, 2018, an increase of 25.1%. Crude oil and gas production subject to the Trust’s royalty interests increased 58.5% and 119.6%, respectively, in the first quarter ended March 31, 2019 compared to the first quarter ended March 31, 2018. While crude oil and gas production increased in the first quarter ended March 31, 2019 compared to March 31, 2018, the prices received for crude oil and gas production decreased 16.7% and 46.7%, respectively, over the same time period.

q1 vs q1


The last column in the exhibit above should read 1Q19.

General Cook Video Posted link


Overall good showing from the General. Confidence inspiring from a “level head” perspective. Will make the vote harder for some.

One needs to remember that much of what Cook talks about would never have been discussed in a public forum absent the proxy challenge from the WHITE card.

If nothing else, this video will have future use as a sleep aid.

Is there a scenario where we get Oliver and the General? Probably puts 20% on the stock in the following weeks if so.

Cat and Mouse on NOBO List

Re:   Demand to Inspect Books and Records of Texas Pacific Land Trust

Another tone deaf move.

It’s common practice to share NOBO lists.

But noooooo….

While you failed to provide us with the legal authority we requested, your latest letter claimed that “there is no legal impediment in providing to Mr. Oliver a NOBO list.” Again, we respectfully request your legal analysis underlying the foregoing statement. Alternatively, we would be comfortable providing the NOBO list and related materials to you if, in addition to a customary confidentiality agreement, you provide the Trust and its shareholders with an indemnity against claims that the sharing of these materials with you was not legally permissible. If this is acceptable to you, we can work together with your counsel to prepare the documentation.

In closing, we note that you have excellent outside legal counsel, who should be fully able to provide the legal authority – if there is any – we have requested. Rather than do so, you have instead spent a full week preparing a press release regarding this issue, which you filed as “proxy solicitation materials” with the SEC. This suggests that you are more interested in manufacturing a controversy than working with us in good faith to identify a legally permissible manner to share the requested materials with you.

Please advise if you are willing to work constructively with us on this. We hope you can appreciate our primary goal of protecting the privacy and interests of all TPL shareholders.



The Empire Strikes Back (Press Release)

More transparency.  Progress.

‘Tis a shame we have to be a month into a proxy battle to get information like this.

Notably absent are responses to the Preston Young/Sidra, Manti Tarka, and Peterson/Water questions.

Texas Pacific Land Trust Addresses Numerous False and Misleading Statements by Dissident Nominee That Demonstrate Fundamental Misunderstanding of TPL’s Business Model

Business Wire

DALLAS — April 23, 2019

Texas Pacific Land Trust (NYSE:TPL) (the “Trust”) today responded to several false or misleading statements recently made by dissident trustee nominee Eric Oliver regarding some of the Trust’s key transactions.

The Trust observed that Mr. Oliver either fundamentally misunderstands the business or intentionally misrepresents information about the Trust in an attempt to mislead investors – either of which should disqualify him from a seat on TPL’s Board of Trustees. The decisions made by TPL’s management, with the Trustees’ oversight, have clearly created and will continue to create long-term shareholder value. Mr. Oliver’s shockingly uninformed statements make it clearer than ever that shareholders’ best choice for their new trustee is General Don Cook.

The Trust further noted that Mr. Oliver’s lack of understanding of TPL’s business model should be concerning to shareholders. TPL pursues land sales opportunistically and only when there is a clear benefit to shareholders. Our strategy has been to consolidate acreage, invest in higher-return investments, or drive further development and revenues where TPL maintains royalty interests. It is this thoughtful strategy of deploying capital where it will create new value that has allowed TPL to deliver spectacular returns to shareholders.

2018 NPRI Sales Yielded Superior Acquired Acreage and Maintained Exposure to Portion of Sold Acreage

Mr. Oliver claims that the Trust sold non-participating royalty interests (NPRI) to Chevron in 2018 and lost the opportunity to capitalize on prime property. The truth is that the Trust performed a three-way swap with Chevron and Double Eagle Energy that enabled the Trust to use the sale proceeds to purchase a royalty position over 1.8x larger than the one it sold. Mr. Oliver also insinuated that much of the acquired acreage was located outside core areas of the Midland Basin; however, well results throughout a majority of the asset position have been very strong.

By completing this swap, the Trust was able to:

  • Retain half of its NPRI under tracts of land that were part of the sale;
  • Diversify holdings through exposure to a more varied set of blue-chip operators; and
  • Achieve a net increase of 667 net royalty acres.

Much of the royalty acreage the Trust acquired in this swap was superior to the acreage sold, as the acquired acreage exhibits stronger recent well results and has significantly more producing wells and horizontal well permits. This is consistent with TPL’s core strategy of focusing on higher-return assets in strategically critical areas.

The Trust’s Surface Acreage Sale Yielded Tremendous Proceeds, Enabled Additional NPRI Revenues

Mr. Oliver also says that he would have voted against a sale of surface acreage to WPX Energy in January 2019. Once again, his position is dangerously uninformed. This transaction generated proceeds of approximately $100 million at an average price of $7,143 per acre in an area with high potential for drilling but with continued challenges from adjacent surface owners. The position sold was a non-contiguous “checkerboard,” and neighboring surface owners had historically obstructed development of the area. For these reasons, contrary to Mr. Oliver’s back-of-the-envelope calculation, the Trust was only receiving an estimated average of approximately $2.1 million in revenue over the last four years across the 14,000-acre position, which represents approximately $150 per acre.

Selling this acreage position allowed the Trust to monetize a non-core asset and re-deploy those proceeds into highly strategic surface acquisitions, which will enhance near-term opportunities for the water business. For example, the Trust has redeployed approximately $83 million of the $100 million of the sale proceeds in a tax-free 1031 Exchange, creating 53,000 contiguous acres in the core of the Delaware Basin1, including highly strategic acreage on the Texas-New Mexico border. This position is leased by blue chip E&P operators with large capital development budgets and best-in-class safety and environmental implementation.

In the long term, this transaction also protected the Trust’s competitive advantage by engaging with a counterparty that would not be adversarial to TPL’s interest in growing the water business.

In criticizing this transaction, Mr. Oliver apparently intended to represent his alleged expertise in oil and gas by describing pricing differentials for water in New Mexico and Texas, noting that prevailing water prices in New Mexico range from $2.00 to $2.50 per barrel. Mr. Oliver, however, has even these basic facts wrong.

Actual current water prices vary significantly in New Mexico. In eastern Eddy County, they are as low as approximately $0.50/barrel, rising to approximately $1.50/barrel in western Eddy County and northern Lea County. Although prices can reach the $2.00/barrel range under certain very specific circumstances (e.g., when an operator is bound to acquire water from a specific owner), these are not applicable to TPL.

Mr. Oliver falsely claims that the Trust’s sale of 14,000 acres created a “freeway” for other suppliers to transport water into New Mexico. That is simply not true. In fact, the Trust reserved strategic water rights in the sections adjacent to New Mexico. WPX acquired the land because it enhanced WPX’s ability to utilize its existing mineral rights below the adjacent landowner’s holdings, not for any reason related to the transportation of water.

Make Your Voice Heard

Mr. Oliver’s willingness to make misleading or entirely uninformed assertions like these should raise serious doubts about his knowledge of the Trust’s business, and his suitability for election as your next trustee.

The Trust urges shareholders to vote FOR four-star General Donald “Don” G. Cook using the BLUE proxy card. Shareholders can also read more information by visiting

Shareholders can view a video Q&A with General Cook on Thursday, April 25 by visiting at 11:00 a.m. CT. A replay will be available beginning on Friday, April 26 on the website for those who are not able to tune in on Thursday. Shareholders who desire more information about General Cook’s background and his vision for TPL are encouraged to submit questions via email at by Wednesday, April 24 at 5:00 p.m. CT.

If you have any questions or need assistance in voting your shares, please contact the Trust’s proxy solicitor:
MacKenzie Partners
1407 Broadway, 27th Floor
New York, New York 10018
(212) 929-5500 or call Toll-Free (800) 322-2885