SEC is “Unable to Concur”

tpltblogger6 Comments

https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/shareholder-proposal-no-action-responses.htm

The link above will take you to a list of “shareholder proposal no action responses” from the SEC.  The SEC issues these responses after a company has contacted the Commission with a request to validate their reasoning for excluding a shareholder proposal in its proximity materials.

TPL management appears to have contacted the SEC in regards to two seperate proposals

Proposal of Robert J. Zaccheo, Jr 

Proposal of Special Opportunities Fund, Inc 

In both instances, TPL management claims that the proposals were received late and aren’t eligible for inclusion.  In both instances, the SEC states that it is “unable to concur” that the grounds claimed for exclusion are legitimate.

Only a court can truly decide whether the exclusion of a proposal is legitimate so be sure scout the materials to see if the proposals above made the cut.

At the very least, this is a sneak peak into the things that shareholders care about, namely a contination of TPL’s historic legacy of share repurchases and high profit margins.

6 thoughts on “SEC is “Unable to Concur””

  4. Put this on the blog.

    Shareholders ought to join together and urge the Board of Directors to arrange for the prompt implication of the following steps:

    (1) cut excesss employee costs to restore margins to historic 95% from 73% in latest report,

    (2) replace unqualified excessively compensated CEO and CFO managing this decline,

    (3) purchase shares utilizing cash flow and cash hoard,

    (4) require board members and top management to purchase shares in line with the by-laws stated requirements

    The TPL we all bought into (one of the best investments of last 30 years) had operating expense/overhead between $3m and $4m. This enabled TPL to generate profit margins of nearly 95%. Simple, TPL made money from spending and operations of other energy companies and did so at an annual cost of just $4m.

    Despite expenses coming down a bit, as of the second quarter even when Back out the Q-2 $4.7m severance charge, TPL spent $11.4m on employee and G&A. Through 1st half of 2021 ex. severance costs this is over $24m. Thus TPL is running a fixed overhead minimum $44m annually. Additionally, water related expenses seem to run $14m annually. Consequently margins close to 95% dropped to 73%.

    In Q2 TPL generated $95m of revenues —royalties $58m O&G, $15.4m water, $12.4m water sales, $9m easement income. Question is how much of this revenue would have been generated regardless of any increase in opex? Where is the exact benefit of this additional $10m of quarterly fixed overhead?

    In 2016, quarterly production subject to TPL royalty approximated142k bbls oil and 650k mcf natural gas. In Q-2 that number hit 683k bbls oil, 2.87m nat gas. Would the majority of this production growth occur regardless of anything TPL did or was it the result of the additional $40m+ now spent annually on fixed overhead? Easement income has barely increased from 2016 so it can’t be there. It appears there is $100m of water net of expenses annually, is this where the $40m comes from; would TPL have been able to generate the majority of water royalties irrespective of such a ramp in overhead?

    The explanation for fixed costs increasing 10x over such a short period of time especially since this is supposed to be a passive operation, can only be management believing it’s running a big oil company complete with accoutrements — fancy expensive offices vs.modest office and and grand executive compensation, plus over 100 new employees and expensive consultants. Hence a 10-fold increase in TOTALLY unnecessary overhead built up WITH NO RETURN TO SHAREHOLDERS and a more than 23% decline in our profit margin.

    What is the newly appointed CEO’s experience and credentials for his position at multi millions pay?: General Agent, Assistant General Agent, Field Agent, Secretary. It is apparent our CFO has neither an accounting degree nor a CPA, license and so is unqualified to be Chief Financial Officer.

    The CFO, the management was previously hired as the Company’s Investor Relations person. Previously he was a career investment banker, with Stifel brokerage, the trustees advisor which fought hard and very expensively with shareholder funds in the multi-millions of dollars to prevent incorporation as a C corp (now an accomplished fact) and two shareholders who are the largest with over 20% of TPL shares and longterm — over 25 year holders. Trustees spent our millions like drunken sailors battling the Horizon Kinetics shareholder group headed by the brilliant Murray Stahl and represented by Eric Oliver a Permian Basin Oil expert and then gave up but managed to appoint the majority of our brand new board of directors. They also created by-laws with an illegal provision to prevent shareholder resolutions at the 2021 annual meeting which the SEC probably will rule the company may not enforce. The top management is clearly a self interested bunch and either tiny shareholders or not at all shareholders (our CEO and CFO have invested minimally in TPL stock, respectively owning 285 and zero shares) demonstrating minimal at best alliance with shareholders and proof of this is the grand compensation contracts they have instituted for themselves after Trustees had been satisfied with peanut sized pay for over 133 years. This bunch is not aligned with shareholder interests but against shareholder interests and should be sent notice we don’t need or want them and tell the never elected by shareholders board, we want a return to our 95% gross profit margins asap as in the days pre this managerial disaster bunch.

    One additional but very important point that needs to be directed to the board is that with a cash position soon to total $400 million And no need for capital expenditures our cash must be only for dividends and repurchasing stock. The puny and embarrassing stock buyback authorized at $20 million should be upped 15 fold this day and take advantage of the misunderstanding analyst report published by Credit Suisse this week. However, the report did highlight the dramatic decline in the gross profit margin which when restored by smarter and a shareholder friendly management cal an add $100 million overnight to pretax profits so we are not talking nonsense here.

    The above seems undisputed if only we get a management that recognizes TPL is a royalty operation and not a big oil company. Yes of course payroll will have to be reduced, consultants kissed good-bye, multi-million office, airplane, the newly created acquisition team of three people eliminated — we need acquisitions like we need proverbial holes in our heads — what we do need is spelled out and will restore our equity valuation, our stock price to the higher levels it should and could be worth.. WE URGE YOUR SUPPORT by writing a=and calling the board members who after all are installed to represent shareholders.

    Liked by 3 people

  5. Makes me very curious what will be up for a vote this year.

    Nothing keeps shareholders from putting together a proposal for a vote at the 2022 annual meeting. The themes of long run owners (meaningful share purchases, less corporate bloat) would get a considerable number of votes from TPL Blog readers. Depending on

    I also am disappointed with the new board, and plan to vote accordingly against anyone that is on the ballot for election who owns less shares than me. By my research, I still own more shares than the CEO, and most of the new board members…..combined.

    Liked by 3 people

  6. Director fees of $210k+ to start. $2mm annually right there. And with the board stacked full of rent-seeking bureaucrats I only see it getting worse.

    Liked by 3 people

Comments are closed.