The shale boom transformed the Permian from an overlooked backwater into the world’s hottest drilling region. But many producers there have delivered little in the way of returns for investors as companies put all their revenue back into new wells to boost output. Texas Pacific has bucked that trend.
“We believe TPL is the best single ETF to own for Permian exposure,” Stifel said.
The downside of buying now is that others have already noticed Texas Pacific’s attributes. The stock has soared 569% in the past four years, far outpacing oil prices.
Stifel has initated coverage with a price target of $937. Rated “new buy”.
Diversifying the revenue base. Does TPL get a royalty on the power produced?
RWE has started commercial operations at its 100MW West of the Pecos solar farm in Texas.
The project is located on 283 hectares of land in Reeves County leased from Texas Pacific Land Trust and Texas General Land Office.
It comprises nearly 350,000 solar modules and is RWE’s first photovoltaic project in Texas.
West of the Pecos has a long-term power purchase agreement with SK E&S LNG for 50MW of the output.
Located 75miles (120.7km) southwest of Midland-Odessa, the solar plant is spread across on more than 700 acres of land leased from Texas Pacific Land Trust and Texas General Land Office within the county and is powered by nearly 350,000 solar modules.
RWE Renewables CEO Anja-Isabel Dotzenrath said: “The completion of our largest solar project in the U.S. is another good example of RWE’s continued success in the U.S. market and our effort to diversify our portfolio across technologies. With a development pipeline of more than 10 GW our strategy for renewables in the U.S. is geared for growth.
“A very big thank you to all involved employees and partners, who made an excellent job in the smooth execution of this project. West of the Pecos underscores our commitment to being the partner of choice for the transition to a lower-carbon future.”
Nice find here from John, a reader of the blog. Good one for the archives.
Mr. Buffett argues that it not realistic to value real estate holding companies at the grossed up price of their last fractional/marginal sale. Hard to disagree. What we are seeing now, in my opinion, is the market paying attention to the top and bottom lines of the income statement.
What’s the max?
We believe that many of the core positions in the Fund are actually both true growth and value investments. As an example, Texas Pacific Land Trust has grown sales and net income at a 50% compound annual rate over the trailing five years. A statistical review might conclude that this is a “reasonably priced” growth stock, trading at approximately 16.5x trailing earnings over the past twelve months. However, this earnings figure includes a sizeable one‐time land sale and is not directly relevant to the run‐rate cash flow of the business. That being said, a bottom‐up valuation of the company’s land portfolio and related oil and gas, easement and water businesses suggests a substantial discount to net asset value, given that less than 10% of the company’s core assets have been exploited to date.
Thanks to Gary for this link!