Open Letter to the Board

“The iron rule of nature is: you get what you reward for. If you want ants to come, you put sugar on the floor.” – Charlie Munger

In what seems to be a recurring occurrence, I’ve been asked by another large TPL investor to post a letter to the board. I have verified this individual to be an institutional investor with a material holding of TPL shares.

I happen to think this investor is 100% on point in regards to compensation. It is important for drivers of compensation to be aligned with the drivers of shareholder value. With TPL being a unique asset, traditional metrics don’t readily apply.

Lastly, I also agree that it is time for the board to take an interest in the shareholders. Hey Independents, what are you doing? Do you care? Are you along for the ride? In it for the paycheck? Do you care about your legacy as a steward of capital? Are you bound by something stronger than fiduciary duty? Do you ever want to get elected again? Do something!

If you agree, save this letter down and send it to the Board via IR with your comments.

Eyes on Fall 2022

In anticipation of the fall 2022 board meeting, I will be leaving this post pinned at the top. Dates, deadlines, etc will be updated as they are known. If you have any information pertaining to procedure, best practices, and the like, please share and I will update.

Board Nominees:

This year, the Class II members of the board will see their terms expire. Up for re-election will be Donald Cook, Donna Epps, and Eric Oliver. Will an alternate slate be proposed?

Shareholder Proposals:

Prior to the release of the proxy statement, shareholders can submit proposals in the hopes of ultimately getting them into the voting process. TPL loves to reject proposals, but we’ve seen success here.


We’re still watching and waiting. The delay buys the board an extra year. Maybe it gets to a real vote this fall and maybe that vote takes effect in 2023. Things move slow, but they move.

All governance documents


McGinnis Resigns

On March 28, 2022, the Board of Directors (the “Board”) of Texas Pacific Land Corporation (the “Company”) accepted the tendered resignation of Dana McGinnis, a member of the Company’s Board of Directors, effective immediately. Mr. McGinnis previously tendered his resignation, subject to Board acceptance, in response to having received less than a majority of the votes cast for his election at the 2021 Annual Meeting, in accordance with the Section 2.10 of the Company’s Amended and Restated Bylaws.

The Board’s Nominating and Corporate Governance Committee has recommended several highly qualified candidates to the Board and the Board is expected to make an appointment to fill the vacancy resulting from Mr. McGinnis’ resignation in the near future.

Five Counties

Bloomberg – Why the Global Oil Market Hinges on Five U.S. Counties

Stacked up against other producers, the Permian stands out. Unlike OPEC countries such as Kuwait and Iraq, drillers in the Permian aren’t beholden to alliances that restrict production. The region also doesn’t face the same political headwinds of places in Europe, which are quickly moving away from fossil fuels, and it doesn’t face the daunting financial obstacles of Venezuela. Costly infrastructure is mostly already in place, drillers have high rates of productivity and the basin features relatively low breakeven costs, which measure the minimum oil price needed for profitability.

But the biggest advantage of the Permian is its massive, untapped reserves that are buried in the layers of shale rock. The potential is so big that it outstrips even the Middle East’s famed fields.

“We’ll stop using oil long before we run out of Permian inventory,” said Artem Abramov, head of shale research at Rystad Energy.

The consultancy estimates the U.S. has more than 76 billion barrels of untapped reserves in oil fields that aren’t yet producing, most of which can be found in the Permian.

This is why concentrating the equity base and pumping ROIC is so much more important to TPL than anything else. Any other use of capital will almost assuredly have a lower rate of return.

Santa Monica Partners : Letter to the Board

Larry Goldstein of Santa Monica Partners submitted the letter below to the board recently. Larry asked me to share his letter with TPL blog readers.

While I don’t agree with all of Larry’s points (more buybacks, fewer dividends!), Larry’s perspective as a seasoned (and LARGE) investor is important.

I would urge the Board and the C-suite to consider why their key constituent base remains so aggrieved and vocal.

Narrative Shift

WSJ – U.S. Shale Oil and Gas Are the Key to a Renewable Future

The episode taught valuable lessons for the current crisis. The first and most immediate step is to prioritize North American oil production over imports from less desirable suppliers. Permian Basin shale oil can be brought online quickly to substitute for the absence of Russian oil on global markets. Alongside the obvious security and economic benefits to the West, the oil-and-gas industry has the opportunity to ensure the Permian is the cleanest hydrocarbon source in the world. To do this, producers should set aggressive emission-reduction targets and drive methane emissions as close to zero as possible with measuring and monitoring verified by third parties.

Further, shale oil and gas production represents arguably the most transition-aligned oil and gas production today. Because of the indeterminate demand for fossil fuels in the coming decades and beyond, it makes economic sense to encourage quick-turnaround, high-return oil-and-gas projects while actively discouraging long-duration, capital-intensive projects with uncertain futures. This is an opportunity for U.S. oil and gas companies to replenish their balance sheets while preparing their own unique strategies to drive value over the coming

Schwartz Urges Action on Declassification

PLYMOUTH, Mich.–(BUSINESS WIRE)–The Texas Pacific Land Corporation (TPL) Board of Directors has refused to act on an advisory ballot proposal approved by 55.9% of shareholders. Despite the majority vote held on December 29, 2021, to declassify the Board of Directors, the Board has not taken action to do so.

Schwartz Investment Counsel, Inc., on behalf of clients, owns over 74,000 shares of TPL (approximately 1% of the shares outstanding) with a market value more than $96,000,000. Having invested in TPL since 2015, Schwartz Investment Counsel, Inc. is one of TPL’s largest shareholders and believes TPL’s board has a fiduciary obligation to implement the owners’ wishes. Schwartz Investment Counsel, Inc. believes doing so would clearly be in the best interest of the company and all its shareholders.

TPL currently has three classes of board members. If declassified, all directors would be required to stand for re-election yearly. Currently, only one-third of the board members stand for re-election each year. Schwartz Investment Counsel, Inc. is against staggered boards and believes they only serve to entrench board members, which is not in the best interest of all shareholders.

On December 29, 2021, Schwartz Investment Counsel, Inc., along with the majority of shareholders, voted to declassify, which the TPL Board has refused to do. We recommend that other TPL shareholders also encourage the Board to implement the declassification for which we owners have voted.

George P. Schwartz, Chairman & CEO
Schwartz Investment Counsel, Inc.