LandBridge filed an S-1 on May 31st announcing its IPO. The filing has had a couple updates with the latest having taken place on Monday 6/17).

If you’re completely new to the story, this Reuters article provides a good start.

I’d recommend giving the S-1 a good skim at the very least if you are a TPL owner. Yes, they are trying to sell an IPO some consideration is needed BUT it does help illustrate the longevity and optionality inherent in West Texas surface acreage.

Equity IPO analysis isn’t my specialty but it looks like the sponsor is selling 20% of the company. 20% @ $320MM implies a market cap of $1.6B. The docs say proforma net income of $50MM which implies a P/E of 32x.

I’d love your thought on this. I’m on a plane and working though my phone. Not ideal. Missing a bunch, I’m sure.

I’ll leave you with this to ponder…

For the year ended December 31, 2022, we generated $33.5 million of non-oil and gas royalty revenue on our initial approximately 72,000 owned surface acres, or $465 in revenue per owned surface acre. As a result of our active management strategy, we have increased non-oil and gas royalty revenue on such 72,000 owned surface acres by 56% to $52.1 million for the year ended December 31, 2023, or $724 in revenue per owned surface acre. We measure our revenue divided by our total acreage as a performance metric, which we refer to as “surface use economic efficiency.” We believe that the Acquired Lands present an attractive opportunity to apply our active land management strategy in a similar fashion and generate attractive returns for our investors. 

https://www.texaspacific.com/investors/news-events/press-releases/detail/158/texas-pacific-land-corporation-announces-special-dividend

$10/share dividend and $700MM balance sheet cash target announced. Nice progress.

But I’ll still complain. The $230MM payout could have taken out 2% of the float earlier this year. Save me some taxes and boost my ownership of the assets please.

I also like the idea of a cash target but think it should be much lower. The 5% return on T-Bills is either flat or negative in real return when adjusted for inflation. A company with cash coming in hand over fist doesn’t really need a conventional industrial cap goods-style fortress balance. Low expenses (which TPL has) are the real fortress.

That all being said, it’s easy to pout but the good moves are compounding though maybe they aren’t the exact moves that I would make. Can’t ignore that.

Next move is to use the remaining 3 to 1 authorization for another split. Then we can pack our bags for the S&P500.

https://www.tipranks.com/news/the-fly/texas-pacific-land-warner-music-nextracker-altair-rb-global-to-join-sp-400

No backup links to substantiate but interesting nonetheless.