2Semana·

Betting on drilling operations in the Permian

More than 8 months ago I shared a post where I wanted via polling to discuss the advantages of holding the Texas Pacific Land ($TPL (-0,4 %)) shares, knowing that these would drop from $1800 to $917. 📉


My dilemma was never to lose the money, but to sell them knowing that I would buy them again the following year. 📈


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In general, I have to add that $TPL (-0,4 %) have no comparable stock-listed comparison. There simply isn't any other company with surface, water, and mineral rights.


Moreover, the market expects elevated double-digit annual EPS growth. If we get a rebound in oil and gas prices, I expect these numbers to end up being much higher, potentially allowing $TPL (-0,4 %) to return 15-20% per year.


Reasons to Buy $TPL (-0,4 %)
and $LB
stocks:

https://seekingalpha.com/article/4802559-betting-the-ranch-my-2-largest-investments-just-got-even-better

(On mobile phone maybe not, but you can read the article in its entirety through a computer)


As Leo Nelissen explained in the article, that's due to three unstoppable tailwinds:

  • Data centers are desperate for power, and the Permian's dirt-cheap natural gas makes it the perfect solution.
  • Water is a booming business, as toxic produced water is becoming a costly bottleneck, and LB/TPL profit from every barrel.
  • Energy stocks are substantially undervalued, and these two are cash machines with 90% EBITDA margins.


Risks:

  • Long-term risks are a steeper-than-expected decline in Permian oil activity, a more rapid buildout of nuclear power, resolving water issues among hyperscalers, and a general decline in oil and gas prices.



PS: Texas Pacific is a energy company. Technically speaking. However, does not produce a single drop of oil. Texas Pacific generates revenues from oil, gas and water royalties.

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In the future, even if all the recent stock price drop is not just noise and the expected profit is not achieved, I will not be disappointed, because in every mistake there is a valuable lesson. 💎


Thanks for reading! ✌️

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2 Comentarios

Imagen de perfil
$VNOM is also a good play
Imagen de perfil
@doyoueventradebro Thanks!
$VNOM is a great company, with good health, past, value, dividend (not well covered), revenue and earnings. That stock price will rise by $57,30 (+50%).
But it simply exchanges the water rights for mineral rights. That's where the growth is. While Permian production is peaking, water volumes are accelerating, as drillers require more water to sustain production and the water-to-oil ratio increases.
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