Month: May 2019

Disdain for Shareholders Abounds

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Matt Levine at Bloomberg: Carl Icahn Wants an Oxydarko Vote

Without Buffett’s money, Occidental would need to issue a lot of stock to buy Anadarko, triggering a shareholder vote under New York Stock Exchange rules; Buffett’s money, though, replaces some of the stock and allows Occidental to sneak in under the voting threshold. “This is … awkward,” I once wrote; structuring the deal to avoid a shareholder vote seemed to me like “a confession that (1) your shareholders don’t like the deal and (2) you don’t care.”

Texas Lawbook / Dallas Business Journal

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Texas Pacific Land Trust proxy litigation heats up with countersuit

But in the Oliver group’s countersuit, they claimed the postponement of the meeting was only done when it became apparent that Oliver would win the election. They made public announcements that they would hold a meeting anyway, claiming they reserved the right to move forward with voting.

The dissident group held a shareholder meeting anyway on May 22 in Dallas on a different floor of the building Sidley’s Dallas offices are located, where Oliver got elected.

The Oliver group argues in their countersuit that the law does not permit TPL nor its trustees to “adjourn, postpone, or otherwise delay a shareholder vote once the vote has been scheduled; only shareholders have that power.”

They also called TPL’s lawsuit, which was filed a day before the May 22 meeting, questionable, pointing out that the allegations TPL made in its lawsuit are hardly new.

Seat + Injunction + Damages

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Press Release:  Investor Group Files Counter-Claims Seeking To Recognize Election Of Eric Oliver As Trustee Of Texas Pacific Land Trust

The counter-claims seek a declaratory judgment that the vote conducted at the May 22 shareholder meeting was valid and effective, and that Mr. Eric Oliver has been overwhelmingly elected as TPL’s third trustee.  The Investor Group is also pursuing an injunction to prevent the incumbent trustees from taking action on behalf of TPL without the participation of the now duly elected third trustee, Mr. Oliver.

The Investor Group is also pursuing damages from the incumbent trustees for their wrongful acts as trustees, including the more than 5,000% raise in salary given to themselves and the recent undisclosed purchase of a private plane.  The Investor Group is also seeking restoration to TPL of the money spent by the incumbent trustees in their proxy campaign to prevent Mr. Oliver’s election, as it was outside the scope of their limited powers as trustees.  The Investor Group believes such amount may be in excess of $5 million (which includes costs of private investigators paid to intimidate Mr. Oliver, two law firms, investment bank, proxy solicitor, web designers, multiple rounds of mailings and social media ads).

The Investor Group notes that its litigation is against each of the incumbent trustees in their individual capacity because their actions in these regards are unauthorized under the TPL Declaration of Trust, in addition to being in breach of their fiduciary duties under the standards applicable in their capacities as trustees.

Oliver’s Answer to Plaintiffs’ First Amended Complaint and Counterclaims OF Eric L. Oliver

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Below are a few excerpts from today’s filing.  Will effort to get the whole doc linked.

From Statement of Facts section:

39. On information and belief, the incumbent trustees have caused TPL to spend upwards of $5 million of shareholder capital on this proxy contest to date. But nowhere in the Declaration of Trust are trustees vested with the authority to wage proxy contests against shareholders, or in any way utilize trust property to impose on shareholders the nominee of the incumbent trustees. The trustees do not enjoy the same broad set of powers and wide field of discretion as the directors of a modern corporation. Nothing gives the incumbent trustees the power to take actions outside of managing the trust’s property as strictly outlined in the trust documents. Because the incumbent trustees have exceeded their authority under the Declaration of Trust, they are personally liable to the trust for all the expenses they have incurred without proper authority.

50. On the morning of May 22, 2019, representatives of the incumbent trustees delivered intimidating correspondence to Mr. Oliver urging him not to attend the previously scheduled meeting. However, Mr. Oliver and dozens of shareholders arrived at the meeting location, and were properly routed by building security and personnel of TPL’s counsel to a conference facility on the fifth floor of the building. At 10:00 a.m., shareholders present in person or by proxy convened and conducted the meeting, and conducted a shareholder vote that resulted in Mr. Oliver being elected as TPL’s third trustee.17 The meeting was duly authorized and properly noticed, and the results of the shareholder vote taken at the meeting are binding and effective. As a result of the vote conducted during the May 22 shareholder meeting, Mr. Oliver has been elected as TPL’s third trustee.

Counterclaims: 

The SoftVest Plaintiffs respectfully ask the Court to enter judgment against the incumbent trustees and grant the SoftVest Plaintiffs the following relief:
1. a declaratory judgment declaring that the vote conducted at the May 22 shareholder meeting was valid and effective and that Mr. Oliver has been duly elected as TPL’s third trustee;
2. a temporary injunction and a permanent injunction—issued after notice to the incumbent trustees and a hearing—prohibiting the incumbent trustees from: (1) taking any action to fail to recognize, dispute, or interfere with the results of the May 22 shareholder vote that resulted in the election of Eric Oliver as a TPL trustee; and (2) holding any meeting, taking any other official act, or conducting any other official business on behalf of TPL without the participation of the now duly elected third trustee, Eric Oliver;
3. actual damages resulting from the incumbent trustees’ wrongful acts;
4. an order requiring the incumbent trustees to restore to TPL all sums they have caused TPL to expend wrongfully and without authority, including without limitation all sums expended in conducting the proxy contest and all sums expended on their salaries in excess of the amount authorized by the Declaration of Trust;
5. reasonable and necessary attorneys’ fees;
6. costs of suit; and
7. all other relief at law or in equity to which the SoftVest Plaintiffs may be justly entitled.

 

 

 

 

 

Counter-claims

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HK 13D

INVESTOR GROUP FILES COUNTER-CLAIMS SEEKING TO RECOGNIZE ELECTION OF ERIC OLIVER AS TRUSTEE OF TEXAS PACIFIC LAND TRUST

Lawsuit Pursues Order Requiring Incumbent Trustees to Be Held Personally Liable for Breach of TPL Declaration of Trust and Fiduciary Duties as Trustees

Pursues Damages for Unauthorized Proxy Campaign Expenses, 5,000% Salary Increase and Undisclosed Purchase of Plane

DALLAS, May 28, 2019 – SoftVest, L.P., Horizon Kinetics LLC and ART-FGT Family Partners (the “Investor Group”), which collectively beneficially own over 25% of the outstanding shares of Texas Pacific Land Trust (NYSE: TPL), announced that they have filed counter-claims against David E. Barry and John A. Norris, III, the incumbent trustees of TPL, in the United States District Court for the Northern District of Texas.

The counter-claims seek a declaratory judgment that the vote conducted at the May 22 shareholder meeting was valid and effective, and that Mr. Eric Oliver has been overwhelmingly elected as TPL’s third trustee.  The Investor Group is also pursuing an injunction to prevent the incumbent trustees from taking action on behalf of TPL without the participation of the now duly elected third trustee, Mr. Oliver.

The Investor Group is also pursuing damages from the incumbent trustees for their wrongful acts as trustees, including the more than 5,000% raise in salary given to themselves and the recent undisclosed purchase of a private plane.  The Investor Group is also seeking restoration to TPL of the money spent by the incumbent trustees in their proxy campaign to prevent Mr. Oliver’s election, as it was outside the scope of their limited powers as trustees.  The Investor Group believes such amount may be in excess of $5 million (which includes costs of private investigators paid to intimidate Mr. Oliver, two law firms, investment bank, proxy solicitor, web designers, multiple rounds of mailings and social media ads).

The Investor Group notes that its litigation is against each of the incumbent trustees in their individual capacity because their actions in these regards are unauthorized under the TPL Declaration of Trust, in addition to being in breach of their fiduciary duties under the standards applicable in their capacities as trustees.

The Investor Group again thanks all shareholders for their support.  It is unfortunate that additional shareholder resources will have to be spent by both sides to pursue this matter in lawyers and PR advisors, but the incumbent Trustees have once again demonstrated that they will use all measures and assets at their disposal to defend their incumbency and prior actions; if history is a guide, such behavior rarely stops of its own accord and, more often, escalates.

As the unnecessary spending on each side escalates, the Investor Group again calls on David Barry and John Norris to welcome Eric Oliver as a fellow trustee, to work with him collaboratively to create value for all shareholders and to finally move forward.

 

Permian Consolidation

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Occidental Petroleum: Playing The Long Game In The Permian

Good reading here.

There’s a lot of oil in the Permian

Estimates vary but the U.S.G.S. recently opined that the Permian might be expected to contain as much as 46.3 bn barrels of oil, mostly in the prolific Wolfcamp and Bone Spring reservoirs. This sometimes referred to as a “stacked play,” What this means is there are multiple reservoir horizons, stacked vertically that give oil companies multiple drilling targets. I’ve heard some estimates that go as high as 75 bn barrels, an estimate that comes from Scott Sheffield, the recently retired CEO of Pioneer Exploration, (PXD). The truth is, no one really knows, but it is generally a good sign when estimates are being raised. Nor do comparisons to Saudi Arabia hurt.

Source: USGS.gov

At present rates of extraction, about 4 mm BOEPD, that could mean that there are between 30-40 years of exploration and development remaining in the Permian. A figure that’s likely to be boosted as time goes on.

Houston Chronicle Covers

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Houston Chronicle: How a sleepy Texas trust turned into Permian oil proxy war

The trust also hired a public relations firm and proxy contest lawyers, paid for advertisements in support of Cook, and launched a website, TrustTPL.com, to state the case for keeping the trust intact.

Kai Liekefett, Texas Pacific Land Trust’s attorney, blamed the proxy fight on the rise of investor activists — the hedge funds and other large investors who take large stakes in companies and pressure management to take steps to boost share prices. The hedge funds, he said, are interested in selling the water business or even the entire trust to reap a short-term financial windfall.

“It makes perfect sense for them. It may not make sense for the other 75 percent of shareholders who enjoy the out-performance and ongoing appreciation,” said Liekefett, who recently represented financially struggling Luby’s in the Houston restaurant operator’s fight against a hedge fund. “This is not mere luck. This is the result of very seasoned and strategic leadership.”

 

 

67.5k acres for $450MM (updated)

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Permian Ranch Set to Fetch Almost Half a Billion Amid Water Rush

Full Bloomberg article linked above.

An obscure Texas company has bid $450 million to acquire the Hanging H Ranch in one of the state’s most desolate corners, aiming to make a big splash amid booming demand for water in the world’s busiest oil patch.

RRIG Water Solutions LLC has signed a letter of intent with the family that owns the 67,500-acre ranch located in West Texas, according to marketing materials from Jefferies Financial Group Inc., which is arranging financing for the deal. A representative for RRIG did not return messages seeking comment.

Drillers spent $11 billion on water management in the region last year and that’s set to grow to $18 billion in 2021, according to research firm Oilfield Water Connection LLC. RRIG already owns a 475-mile (764-kilometer) water pipeline in the Permian area that it acquired for an undisclosed sum in 2017.

The ranch is actually made up of a patchwork of parcels straddling three Texas counties: Reeves, Jeff Davis and Loving. Reeves and Loving counties alone produced about 600,000 barrels of crude a day last year, according to GlobalData Plc, more than OPEC member Ecuador.

One of the ranch’s most attractive assets is its location right up against the New Mexico border. Texas has less-stringent water-sale rules than its neighbor. In order to confirm that the ranch is rich in water, Lindsay said he had to drill wells.