1MoΒ·

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 (+1,14Β %)) shares, knowing that these would drop from $1800 to $917. πŸ“‰


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


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In general, I have to add that $TPL (+1,14Β %) 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 (+1,14Β %) to return 15-20% per year.


Reasons to Buy $TPL (+1,14Β %)
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. πŸ’Ž


Thanks for reading! ✌️

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