Texas is big. Like, really big. But if you’re looking at Texas Pacific Land Corporation (NYSE: TPL), you aren't just looking at a company; you're looking at a literal kingdom of dirt and oil that's been around since the 1880s. People often call it a "land trust stock" because, for over a century, that’s exactly what it was. It was a leftover scrap of the Texas and Pacific Railway that went bust.
Today? It’s a cash-printing machine.
But here is the thing. Most people looking for a "Texas land trust stock" are actually looking for TPL, yet they don't realize the "Trust" part of the name officially died in 2021. It converted to a C-Corp. That change wasn't just some boring paperwork shuffle; it was a massive, years-long legal brawl between the old-school trustees and activist investors like Horizon Kinetics.
If you want to understand why this stock trades for thousands of dollars per share, you have to look at the dirt. TPL owns roughly 880,000 acres. Most of it is in the Permian Basin. They don't actually drill for oil themselves. They just sit there. They collect checks. When a driller wants to move a rig across their land? They pay TPL. Want to lay a pipe? Pay TPL. Want to suck water out of the ground to frack a well? You’re paying TPL for that water, too.
The Weird History of the Texas Land Trust Stock
Back in 1888, the Texas and Pacific Railway went bankrupt. To settle with bondholders, the court handed over 3.5 million acres of land. It was mostly scrub brush and cactus back then. The idea was simple: sell off the land bit by bit and give the money back to the people who held the old railroad bonds.
For decades, that’s what happened. The "trust" sold off millions of acres. But then, people found oil. Suddenly, selling the land seemed like a terrible idea. The strategy shifted to holding the land and leasing the mineral rights.
The structure was incredibly weird for a modern stock. It had no employees. It had "trustees" who basically had jobs for life. It didn't even have a formal board of directors in the way we think of Apple or Tesla having one. This "land trust" vibe is why the stock became a cult favorite among value investors like Murray Stahl. They loved the simplicity. It was a play on the ultimate finite resource: land in the heart of the most productive oil field in the United States.
Why the Permian Basin Changed Everything
You can't talk about TPL without talking about the Delaware Basin. It’s a sub-section of the Permian. This is where the "Tier 1" acreage lives.
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Because TPL owns the land in fee simple, they own it all—surface and minerals. This gives them a "stack" of revenue streams. Most oil companies have to pay a lot of money to extract oil. TPL just waits for the royalty check. Their margins are, quite frankly, disgusting. We are talking about EBITDA margins that often hover around 90%.
Think about that. For every dollar that comes in, ninety cents is basically profit.
They also have a massive water business. Fracking requires an ungodly amount of water. TPL sells the water. Then, after the water is used and comes back up as "produced water" (which is basically salty, oily sludge), TPL charges the drillers to dispose of it or treat it. It’s a circular economy where TPL owns every turn of the circle.
The Battle for the Boardroom
A few years ago, things got ugly. The conversion from a trust to a corporation was a mess.
There was a massive fight over who would control the new company. Some investors wanted the old "Trust" model because it forced the company to buy back shares and stay small. Others wanted a modern corporate structure to attract big institutional money.
The activists won, but the drama didn't stop. Even as a corporation, TPL has faced lawsuits and internal bickering over governance. If you're buying this stock, you aren't just buying oil royalties; you're buying into a corporate soap opera that occasionally spills over into SEC filings.
Is it Actually a "Land Trust" Anymore?
Technically, no. It’s a corporation. But the "Texas land trust stock" label sticks because the business model hasn't changed. They still own the land. They still collect the royalties.
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The main difference now is how they can use the cash. As a trust, their hands were somewhat tied. Now, they have more flexibility. They can buy more land, they can diversify, or they can continue the massive share buyback program that has been the hallmark of the company for a century.
TPL has retired millions of shares over the years. This is why the price is so high. When you have fewer and fewer shares representing the same amount of oil-rich land, the value of each remaining share goes through the roof. It’s basic math, but on a massive scale.
The Risks: What Could Go Wrong?
Oil prices, obviously. If oil goes to $30 and stays there, the drillers stop drilling. If they stop drilling, TPL’s royalty checks shrink.
But there’s also the regulatory risk. Texas is very pro-oil, but water disposal is becoming a hot-button issue. All that "produced water" being pumped back into the ground has been linked to earthquakes in West Texas. If the state clamps down on disposal wells, TPL’s water business takes a hit.
Then there's the ESG (Environmental, Social, and Governance) factor. A lot of big funds won't touch a company that is essentially a pure-play on fossil fuel extraction. TPL doesn't care—they keep printing money—but it can limit the number of people willing to buy the stock and push the price higher.
How to Value a Giant Pile of Dirt
Valuing TPL is a nightmare for traditional analysts. You can't just use a P/E ratio. You have to look at the "inventory" of wells.
How many locations are currently being drilled? How many have been permitted but not started (DUC - Drilled Uncompleted wells)? How much of their land is in the "sweet spot" where the breakeven price for oil is lowest?
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Most experts look at the Net Asset Value (NAV). If you sold every acre today, what would it be worth? Usually, the stock trades at a premium to that NAV because of the "optionality." You aren't just buying today's oil; you're buying whatever tech comes next that makes that land more valuable. Maybe it's carbon capture. Maybe it's massive solar farms. TPL already has some of those.
Real-World Examples of TPL's Power
Look at the deals they sign. They aren't just leasing to small-time operators. They deal with the giants: Chevron, ExxonMobil, Occidental.
When Occidental Petroleum bought Anadarko, it was a huge deal for TPL because a lot of that land was TPL-adjacent. Every time a major oil company doubles down on the Permian, the "land trust" gets a boost. They are essentially the landlord of the most important oil field in the Western Hemisphere.
The Forgotten Land: Surface Rights
Everyone talks about the oil, but the surface rights are becoming a huge deal.
Data centers are moving to Texas. Why? Cheap land and access to energy. TPL has both. They have thousands of acres that are basically worthless for farming but perfect for a massive server farm. They also have "easements." If a power line or a fiber optic cable needs to cross West Texas to get from a wind farm to a city, it probably has to cross TPL land.
They charge for that. Forever.
Actionable Steps for Potential Investors
If you’re looking at TPL or other Texas land plays, don't just look at the stock chart. It's volatile.
- Check the Oil Rig Count: Monitor the Baker Hughes rig count specifically for the Permian Basin. If rigs are leaving the Permian, TPL’s short-term growth slows down.
- Read the Proxy Statements: Because of the history of litigation, TPL's proxy statements are more interesting (and important) than most. Look at what the major shareholders—like Horizon Kinetics—are saying.
- Understand the Royalty Interest: TPL doesn't have "working interests." This means they don't pay for the costs of drilling. They take a percentage of the revenue off the top. This is a crucial distinction. In a high-inflation environment, TPL is protected because their costs are fixed (basically zero) while their revenue rises with the price of the commodity.
- Look Beyond Oil: Pay attention to their "Water Services and Operations" segment. It's often the fastest-growing part of the company and provides a buffer when oil prices are flat.
- Watch the Buybacks: The company has a long history of using excess cash to buy back shares. This reduces the float and increases the ownership stake of every remaining shareholder. If the buybacks stop, the investment thesis changes.
TPL is a weird, beautiful, complicated relic of the 19th century that somehow became a high-tech cash flow king of the 21st. It's not a "get rich quick" play. It's a "the earth isn't making any more land" play.
If you want to track the actual production on their land, you can look up the Texas Railroad Commission (RRC) data. They are the ones who regulate oil and gas in the state. By searching for "Texas Pacific Land" in the RRC databases, you can see exactly which operators are filing for new permits on TPL acreage before that information ever hits a quarterly earnings report. This is how the pros get an edge on the "land trust" stocks. It's all public record; you just have to be willing to dig through the digital dirt.