Barron's (April 1, 2022): How Rising Oil Prices Turned This Texas Scrubland Into an Energy Stock Worth Fighting Over

https://www.barrons.com/articles/texas-pacific-land-stock-pick-51648685688

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Governance changes probably aren’t over. At TPL’s annual meeting in December, a Chicago shareholder named Gabi Gliksberg, who runs ATG Capital Management, proposed that the company declassify its board, so that all directors stand for election annually, instead of only a third under current staggered terms. Although management opposed the idea, Gliksberg’s nonbinding resolution passed with 56% of shareholder votes.

While TPL’s board studies its response, Gliksberg is keeping the heat on with a lawsuit in Delaware’s Chancery Court demanding to see corporate records. An unstaggered board would allow a corporate takeover at one annual meeting and make it easier to replace management.

Only a handful of analysts and bloggers follow TPL, but this group sees cash earnings per share rising from last year’s $36.60 to about $54 this year and $61 in 2023. The stock’s sharp rise has reduced TPL’s dividend yield below 1%. At its recent price, TPL trades at a premium to other energy stocks, some 27 times the $53.56 in cash flow per share projected for 2023 by Chris Baker, the analyst at Credit Suisse. He rates the shares at Underperform and thinks they’d be fairly priced at $980. But other investors think those projections are too conservative on oil prices and Permian production volumes. And they hope that a management shakeup will increase payouts and buybacks, justifying TPL’s premium valuation.

Despite the rancor, nearly everyone agrees that TPL’s assets are unmatched. “It’s a jewel,” says Gliksberg. “If you think the price of oil and gas are going to be much higher and the U.S. is going to have to be more self-reliant, it’s the exact directional bet you want to take.”