Permian Consolidation

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Occidental Petroleum: Playing The Long Game In The Permian

Good reading here.

There’s a lot of oil in the Permian

Estimates vary but the U.S.G.S. recently opined that the Permian might be expected to contain as much as 46.3 bn barrels of oil, mostly in the prolific Wolfcamp and Bone Spring reservoirs. This sometimes referred to as a “stacked play,” What this means is there are multiple reservoir horizons, stacked vertically that give oil companies multiple drilling targets. I’ve heard some estimates that go as high as 75 bn barrels, an estimate that comes from Scott Sheffield, the recently retired CEO of Pioneer Exploration, (PXD). The truth is, no one really knows, but it is generally a good sign when estimates are being raised. Nor do comparisons to Saudi Arabia hurt.

Source: USGS.gov

At present rates of extraction, about 4 mm BOEPD, that could mean that there are between 30-40 years of exploration and development remaining in the Permian. A figure that’s likely to be boosted as time goes on.

Houston Chronicle Covers

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Houston Chronicle: How a sleepy Texas trust turned into Permian oil proxy war

The trust also hired a public relations firm and proxy contest lawyers, paid for advertisements in support of Cook, and launched a website, TrustTPL.com, to state the case for keeping the trust intact.

Kai Liekefett, Texas Pacific Land Trust’s attorney, blamed the proxy fight on the rise of investor activists — the hedge funds and other large investors who take large stakes in companies and pressure management to take steps to boost share prices. The hedge funds, he said, are interested in selling the water business or even the entire trust to reap a short-term financial windfall.

“It makes perfect sense for them. It may not make sense for the other 75 percent of shareholders who enjoy the out-performance and ongoing appreciation,” said Liekefett, who recently represented financially struggling Luby’s in the Houston restaurant operator’s fight against a hedge fund. “This is not mere luck. This is the result of very seasoned and strategic leadership.”

 

 

67.5k acres for $450MM (updated)

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Permian Ranch Set to Fetch Almost Half a Billion Amid Water Rush

Full Bloomberg article linked above.

An obscure Texas company has bid $450 million to acquire the Hanging H Ranch in one of the state’s most desolate corners, aiming to make a big splash amid booming demand for water in the world’s busiest oil patch.

RRIG Water Solutions LLC has signed a letter of intent with the family that owns the 67,500-acre ranch located in West Texas, according to marketing materials from Jefferies Financial Group Inc., which is arranging financing for the deal. A representative for RRIG did not return messages seeking comment.

Drillers spent $11 billion on water management in the region last year and that’s set to grow to $18 billion in 2021, according to research firm Oilfield Water Connection LLC. RRIG already owns a 475-mile (764-kilometer) water pipeline in the Permian area that it acquired for an undisclosed sum in 2017.

The ranch is actually made up of a patchwork of parcels straddling three Texas counties: Reeves, Jeff Davis and Loving. Reeves and Loving counties alone produced about 600,000 barrels of crude a day last year, according to GlobalData Plc, more than OPEC member Ecuador.

One of the ranch’s most attractive assets is its location right up against the New Mexico border. Texas has less-stringent water-sale rules than its neighbor. In order to confirm that the ranch is rich in water, Lindsay said he had to drill wells.

Vote is In

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Investor Group Comments On Results Of Special Meeting Of Texas Pacific Land Trust

Out of the 7,756,156 shares outstanding on the record date, a total of 3,660,812 shares voted for the election of Eric Oliver(including shares voted through Broadridge).  We have been advised by Broadridge that a total of 1,994,267 shares were voted in favor of the election of General Donald Cook.  

Although TPL’s representatives present at the meeting noted that they did not recognize the validity of the special meeting, we hope and expect, in light of the overwhelming support in favor of the election of Eric Oliver, that David Barry and John Norris will welcome Eric Oliver as a fellow trustee and work with him collaboratively to create value for all shareholders.  It is time to move forward.

CNBC recap

5/22 Meeting Notes

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Trustees not present

Oliver opened

Sidley Austin lawyer interrupted. Her position is that the meeting isn’t lawful

Motion was made to not adjourn. DF King (proxy agent) seconded

Live ballots being voted now

Many folks/ lawyers/ arguing about validity of meeting whilst votes being collected

Official vote count not disclosed yet

Craig Hodges just came out strong for change

Lots of folks yelling over each other

Oliver reads statement that I couldn’t hear well

Vote to be announced this afternoon

Meeting adjourned

Q&A next

Oliver speaking about the value of our asset

Oliver states that he has no conflict of interest with TPL and maintains it will stay that way

Oliver wants more clarity on water. Where did the $35mm in capex go? Many options to take on water but can’t fully comment until he sees the detail

Oliver wonders why the Trust has stopped repurchasing shares

Q: How will you work w other Trustees? Oliver says he will insist on corporate governance. Says skin in the game is needed

Oliver: let’s ride this wave and buy units back. Let’s not screw it up

Oliver: path to a corporation is the quickest and easiest way to modernize governance. C Corp will buy back shares if that it is the best use of capital. Will not issue shares

51 minutes in. Still going. Personal opinion here: Oliver doing a great job in inspiring confidence. We’ll be in good hands if he becomes trustee.

Sidley lawyer says they don’t believe there is a quorum

Group asks why Oliver hasn’t filled out questionnaire. Oliver recounts timeline about PY getting the nod before a questionnaire was provided to Oliver. It’s pretty clear the Questionnaire was a gotcha.

Q&A adjourned

“Fully-informed decision”

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Texas Pacific Land Trust Releases Letter to Shareholders Regarding Recently-Filed Lawsuit against Eric Oliver

 

Let us be clear: although the Trust believes that Mr. Oliver is the wrong choice to become TPL’s next Trustee, in no way is it our goal to prevent shareholders from having their say. We simply believe that shareholders have the right to be fully and accurately informed before they vote – and that Mr. Oliver has misled you.

Unfortunately, the decision to file this lawsuit means that we must postpone our planned shareholder meeting, which had been scheduled to be convened today, May 22, 2019, and immediately adjourned until June 6, 2019. At this time, we do not know when the meeting will take place. Once this litigation is resolved – either in court or by Mr. Oliver providing the necessary disclosures – we will be able to reschedule the meeting.

We realize this news may be frustrating and we appreciate your continued patience. We have a responsibility to protect the interests of the Trust and all its shareholders and will continue to take the necessary steps to ensure you have all the information you need to make a fully-informed decision in this critical election about TPL’s future.

My sense is that there are a bunch of shareholders in Dallas that know exactly when the meeting we be.

Bloomberg coverage

With Your Own Eyes

tpltblogger5 Comments

File this under ‘better late than never’. If you are able to go on Wednesday, I think you should make the effort to do so. The stewards of our capital deserve your keen observation.

How will the Trustees react to and interact with shareholders who clearly aren’t on the same page as they are?