4Q19 Earnings


Strong!  Some land swapping reported.

The Trust reported net income of $71.3 million for the fourth quarter ended December 31, 2019, an increase of 13.8% over net income of $62.7 million for the fourth quarter ended December 31, 2018. The increase was principally related to increased oil and gas royalties, easements and other surface-related income and water sales.

In an exchange transaction, the Trust conveyed approximately 5,620 acres of land in exchange for approximately 5,545 acres of land, all in Culberson County. As the Trust had no cost basis in the land conveyed, the Trust recognized land sales revenue of $22.0 million for the fourth quarter ended December 31, 2019.

Back of the envelope I see a 23% increase in non-sale earnings and a 50% increase in expenses.  Non-sale operating income is up 16%.


Looks to be about $40/share in cash on the balance sheet.  Cash on the balance sheet is equivalent to ~5.5% of the market cap @ $726.50/share.


18 thoughts on “4Q19 Earnings

  1. Am I reading things incorrectly, or is the rate that earnings are increasing YoY slowing considerably when looking at past years and now?

    Liked by 1 person

  2. Hopefully this will be the catalyst to finally push us over $900 and stay there! Great earnings as usual. It just keeps growing and growing and growing…

    Liked by 2 people

  3. 3rd quarter $2 Million increase Y/Y in salaries and water services expense of $2 million which matches the $2 million increase in water sales for the quarter drive me crazy when coupled with the legal fees. They don’t have enough employees to support that salary increase..

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  4. Overall very strong figures.
    Oil and gas royalty revenue was $155 million, up 25% from $124 million, even as oil and gas prices decreased 8% and 49%.

    The completion of those ~400 DUCs will really help with growth over next few years.

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  5. One of the things that you have to look forward to is the natural gas prices. They are currently flaring a bunch of natgas ( 750 million cbf a day ) in the permian basin and getting paid peanuts for the rest. Natgas pricing down 41% year over year because there are no markets. Delaware is gassier and if the they could get 2.00 or 3.00 per mcf for gas it would add dollars to earnings

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  6. Keeping the dividend (regular + special) at the same percentage of net income for 2018, would be a dividend of $9.20 for 2019. Since they are unfortunately not purchasing shares to retire, even with a $9 dividend would still leave north of $30 per share in cash.

    One has to ask why they would need so much cash? Its going to be very interesting to see what they declare as a dividend, and the next steps in the conversion process.

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  7. So you bring forward income taxes by selling something with zero tax basis and creating non cash income so you can swap into some equally garbage Culberson acreage? No thanks

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  8. Crude down a lot the last three weeks, all of the major US stock indexes down about 2% yesterday, and TPL is up 4% post-earnings? I hope the Annual report in about a month or so provides an informative update and timing trajectory of the C Corp. My takeaway from this quarter is that the assets carried on the book at $0.00 are a lot more valuable than $0.00. Good stuff.

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  9. The one point that no one seems to be focusing on as far as the conversion to C-corp is taxes. I believe the financial advisors would need to prove that the conversion would be financially beneficial to the company. With the tax law changes from 2 years ago for corporations, I assume the conversion would reduce taxes and thereby increase the income of the company. By how much, not sure, but guess we’ll find out when the final decision comes around with (hopefully) some details.

    Also, in the last press release related to the conversion:

    “The Committee’s deliberations focused particularly on tax, corporate, corporate governance, accounting and business implications of the proposed conversion.”

    Tax is the first thing on the list!


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