I wonder what’s next? Thanks again to another eagle eyed reader.
Some interesting stats in this article including the mind bender below. Hat tip to a reader for sending this along.
The expected windfall from free cash flow this year is just one-tenth of the $300 billion in net negative cash flow the U.S. shale industry has lost in the 15 years since the first shale boom, per Deloitte estimates from last year.
Now with TPL!
Good read below (from last year) on 3K reconstitution.
Does it make the 1000 or the 2000? Looks like 1000 to me.
Last one is no surprise.
My favorite part:
At March 31, 2021, Texas Pacific at a robust inventory of 541 drill but uncompleted wells wells or DUCs and 488 permits providing clear visibility in the future royalty earnings. New DUCs grew from 91 in the fourth quarter to a 152 new ducks in the first quarter providing line of sight into future production. New permits grew from a 139 in the fourth quarter to a 176 in the first quarter. As of March 31, 17% of all Permian rigs were located on TPL drilling spacing units or DSU’s up from 11% of Permian rigs as of December 31. In terms of spuds, TPL DSU’s accounted for 18% of total spuds across the Permian during the first quarter. 14% of all permits approved by the Texas Railroad Commission in the first quarter intersect TPL DSU’s Importantly, most of our net royalty acres are concentrated within the Northern Delaware region and core of the – Basin. This diverse exposure represents a significant competitive advantage for TPL Overall, our oil and gas royalties are only 10% developed with the Delaware Basin being less developed than the Midland Basin. Within the Texas portion of the Delaware, TPL accounted for 49% of all spuds during the first quarter.We believe this gives us more runway to grow our royalties over time compared to our peers, as the Delaware should continue to support a high pace of growth in production. In addition to our oil and gas royalties, we also have surface ownership of our land. Over the past decade, technological advances in exploration and development have unlocked a tremendous amount of additional reserves contributing to a rapid build out of oil and gas infrastructure across the basin. These activities and others provide TPL enormous optionality to generate additional cash flows utilizing our surface assets.
I could have used more Q&A but overall I’d call this first call a win. Presenters were impressive and well prepared. Confidence building. I get the sense that cash is being kept on the balance sheet for opportunistic lifts. The little engine that was in the business of going out of business appears to be going the other way.
I was coaching first base when I heard my phone whistle its notifcation for the earnings press release. During a pitching change I quickly skimmed the document. When the batter stepped in I got so distracted thinking about the $20MM buyback number that I sent my runner to steal 2nd with a runner already on that bag. Thankfully the third base coach, who probably owns BSM, saw my folly and called his runner. Some bad thows later and it all ended up ok. But $20MM?
My expectations for the quarter were pretty light due to the tough winter conditions and pandemic hangover but I expected more from the buy back. Is this management telling us the price is too high?
The quarter ended with $310MM (~$40/share) in cash on the balance sheet. Do I get a dividend? M&A inbound?
Water was challenging. What’s the plan there?
I dig it.
VTSMX, NAESX, VEXMX, PRDSX, and FSMAX are all recent (as of 3/31) buyers of 30k+ shares (each) of TPL.
VTSMX alone bought 131,880 shares. That is 1.7% of total outstanding shares if you are keeping score at home.
Though not a recent buyer, PRPFX owns 70K. TPL is the second largest position in the portfolio.
VB, VTI, VDE, VXF, and INFL all hold greater than 10k shares
Some of the portfolios above are benchmarked to indicies maintained by CRSP, MSCI, S&P, Dow Jones, and Wilshire. Mostly extended market and complete market benchmarks.
Fun read here. Hope they are right. (So far so good).
Yes. You read that right.
Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or “TPL”) announced today that the Company will release first quarter 2021 financial results after the market closes on Thursday, May 6, 2021. A conference call will be held on Friday, May 7, 2021 at 8:30 a.m. Eastern Time.
Texas Pacific Land Corporation (NYSE: TPL) (the “Company” or “TPL”) today announced that, effective May 31, 2021, Chief Financial Officer Robert Packer will retire after a distinguished 10-year career with the Company. Chris Steddum, TPL’s current Vice President, Finance and Investor Relations, will succeed Mr. Packer as the Company’s Chief Financial Officer. The Company has also appointed Stephanie Buffington, TPL’s current Vice President, Accounting, to the newly created role of Chief Accounting Officer. Both appointments will become effective on June 1, 2021. Mr. Packer will serve as an advisor to the Company through the end of the year to ensure a smooth transition.
In addition to these leadership changes, TPL also announced that it has retained Deloitte & Touche LLP (“Deloitte”) to serve as its Independent Registered Public Accounting Firm for the calendar year ending in 2021. The Company’s long time auditors Lane Gorman Trubitt, LLC informed the Company that the firm would not stand for re-election. The Company’s Audit Committee conducted an extensive selection process which included evaluating factors such as: audit quality, technical competency, industry expertise, use of technology and methods of communication. The Audit Committee selected Deloitte from several other well qualified candidates.
Several readers have emailed me with wishes for a Big Four accounting firm. Here it is.
Congratulations Mr. Steddum! No debt or options, thanks!
SCHM, SCHV, SCHX, and SCHB have all taken positions in TPL as of late. SCHM, which has the largest position by shares, is focused on the Dow Jones US Mid-Cap Total Stock Market Index and appears to be passive.
In addition to Schwab, a couple of Manulife large and mid-cap ETFs have also positioned TPL.
427,236 shares traded on Friday @ $1675.45. Total volume for Friday was 610k shares. One for the books.
427,236 / 7,756,156 = 5.5% of shares outstanding.
Many have written to me to ask about index inclusion. I’m no expert, but here are some resources:
$11.8B / 7,756,156 shares (is it bad that I that number by heart?) = $1,521.37
To be eligible for S&P 500 index inclusion, a company should be a U.S. company, have a market capitalization of at least USD 9.8 billion, be highly liquid, have a public float of at least 10% of its shares outstanding, and its most recent quarter’s earnings and the sum of its trailing four consecutive quarters’ earnings must be positive.
The committee meets monthly. At each meeting, the Index Committee reviews pending corporate actions that may affect index constituents, statistics comparing the composition of the indices to the market, companies that are being considered as candidates for addition to an index, and any significant market events.
• S&P Composite 1500. Using composite pricing and volume, the ratio of annual dollar value traded (defined as average closing price multiplied by historical volume over the last 365 calendar days) to float-adjusted market capitalization should be at least 1.00, and the stock should trade a minimum of 250,000 shares in each of the six months leading up to the evaluation date.
With 252 trading days, the stock needs (1.00 / 252) = 0.4% of shares traded per day on average. See last post for more context on that.
Again, not an expert but it seems like TPL is on its way. Poke holes in the comments! Not trying to spike the football on the current run. As a long time investor, being back to $900 next week would not shock me. This stock jumps. But over the long run, will it get into the 500?
A rough approximation of daily $ traded value (closing price x volume) and, by extension, percentage of market cap traded shows (though its been hard to miss) that volume is up substantially post conversion. With volume at 70k shares at mid day and the price bouncing off ATH, today will be a another big one.