From Eric Sprague
Texas Pacific Land holds Permian Basin acreage where oil and gas production is increasing.
New drilling technology continually adds value to the Company’s acreage. New discoveries like Apache’s Alpine High can be game changers.
Texas Pacific Land (NYSE:TPL) owns surface acreage, mineral interests and pipeline easements in West Texas. U.S. oil and gas production in recent years has been volatile as prices have fluctuated widely. The Company has interests in Texas counties with low break-evens such that the combination of oil and gas royalty revenue along with pipeline easement revenue has been growing steadily.
The Company has interests in oil and gas districts 7B, 7C and 8. The RRC Oil and Gas Division District Boundaries Map shows the counties in each district and we will focus on District 8 and part of District 7C. Within the Permian Basin, we’re looking extremely closely at three Delaware Basin counties and somewhat closely at two Midland Basin counties.
Evidence from the last few years shows that Reeves County and Loving County have been important to the Company for both royalty revenue and pipeline easement revenue. Culberson County is producing more gas every year and it will be significant for both royalties and easements in the coming years. The company has a tremendous amount of surface and royalty acreage in these three counties. These are some of the reasons why we are paying special attention to these three Delaware Basin counties throughout the article.
Midland County is second only to Karnes County in the entire state of Texas for oil production. Upton County comes in at number four in the state for oil. These two Midland Basin counties are consequential to the Company because of their high oil output and the considerable royalty acreage the Company has in them. Looking at the top 15 counties for Texas gas production, only five of them have higher production in September 2016 than September 2014 and they are the five in this paragraph.