Texas Pacific Land Corporation (TPL)

[Enterprising Investor]

Excellent question.

I am familiar with Sabine Royalty Trust, having worked in corporate trust operations at the successor to its original trustee InterFirst Bank from May 1989 to November 1990. My team was responsible for generating fee billing. Luckily, I moved on to a new role in trust operations well in advance of NationsBank deciding to exit the corporate trust business. The future Mrs. EI was also able to start what has become a long career in mortgage.

However, I have never followed SBR closely.

A quick review of financials for SBR details a big jump in oil and gas production but at lower prices in the month of August. As most of us know, lower prices can eventually lead to declining production down the road when drilling new wells or fracking old ones no longer makes economic sense.

Both TPL and SBR would face the same issues. However, the oil and gas deposits aren’t going anywhere.

President Trump favors lower oil prices. This is very good for consumers but bad for people who are employed or earn income from domestic oil and gas production.

I would think the administration would prefer more people working in the oil and gas fields in the United States rather than some other country or in warehouses operated by Amazon. Skilled labor pays more, generates higher tax revenue.

There are still a large number of marginal E&P companies facing bankruptcy if prices stay this low.

However, OPEC is probably only a couple of days away from cutting production.