Texas Pacific Land Corporation (TPL)

[couldbebetter]

I have not posted here for some time. The #1 variable that
I can't predict is the price of oil & natural gas. As some
posters have pointed out the number of DUC wells grew by 50%
in the last quarter. That will lead to greater production
when those wells are brought on stream...but there are a
great many more DUCs in the Permian. Shortages of workers
and pipelines may limit the growth until those issues are
resolved. Much of TPL's future earnings will depend on the
price of oil & gas received at the time of sale. Higher gas
prices will help if the recent increases hold.

My hope is that management will buy back stock more aggressively
should TPL ever trade at a PE of 20 or less. For this year I
now expect around $26 for 2018 EPS so a PE of 20 is $520. TPL
historically has a 20 PE as a low point...with a PE of 16 being
the lowest ever. Management has held onto a large amount of cash
which I think they will use for a large special dividend. I wish
they would use it for buybacks if the price were to fall low enough.

The major companies on TPL land all expect large production
increases going forward. Where the price of oil and gas goes
nobody knows. TPL will go forward, debt free, a reduced share
count, and perhaps a larger dividend for many years if not decades
to come. (If the price ever goes too low for too long I still
think some billionaire will try to capture a large position.)