(TPL) Texas Pacific Land Trust - Ratings and Ratios

Texas Pacific Land Corporation, or TPL, is a unique player in the natural resources space. They dont drill for oil or gas themselves, but instead own the rights to a significant portion of the revenue generated from extracting these resources on their land. Specifically, they hold a 1/128th nonparticipating perpetual oil and gas royalty interest (NPRI) on about 85,000 acres, and a larger 1/16th NPRI on nearly 371,000 acres. This adds up to roughly 195,000 net royalty acres in West Texas, placing them as a major landholder in the region.

Their Land and Resource Management segment handles the surface land and mineral rights, granting easements for pipelines, power lines, and utility infrastructure. They also lease land for infrastructure like processing facilities and roads, and sell materials such as caliche and sand. Additionally, they engage in land sales, monetizing their extensive real estate holdings. This diversified approach reduces reliance on any single revenue stream and provides multiple avenues for growth.

The Water Services and Operations segment is another critical part of their business, offering a range of water solutions in the Permian Basin. This includes sourcing, treating produced water, developing infrastructure, and managing disposal. They also hold royalties on produced water, adding another layer to their revenue model. As water management becomes increasingly important in energy production, this segment positions TPL as a key player in sustainable resource development.

Founded in 1888, TPL brings over a century of experience, operating from their headquarters in Dallas, Texas. Their long history underscores their resilience and adaptability in the ever-evolving energy landscape. Investors interested in exposure to the Permian Basins oil and gas activity without the direct operational risks may find TPL appealing due to their royalty-focused model.

From a financial standpoint, TPLs valuation metrics show a market cap exceeding $29 billion, with a price-to-earnings ratio of 66.66 and a forward P/E of 37.74. The price-to-book ratio is 28.33, and the price-to-sales ratio is 43.40, indicating a premium valuation. Investors should consider these metrics alongside industry trends, regulatory changes, and commodity price fluctuations when evaluating TPLs potential.