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.