Texas Pacific Land Corporation · NYSE:TPL
Texas Pacific Land — Texas Pacific Land Trust — Proxy Contest (April 2019)
38 slides from Texas Pacific Land's proxy contest presentation, Apr 29, 2019
Slide 1: Trust General Cook to Keep TPL on Track
Trust General Cook to Keep TPL on Track April 26, 2019
Slide 2: Disclaimer
| 2 NYSE: TPL This presentation (the “Presentation”) has been designed to provide general information about Texas Pacific Land Trust (“TPL” or the “Trust”). Any information contained or referenced herein is suitable only as an introduction to the Trust. The recipient is strongly encouraged to refer
Slide 3: Table of Contents
| 3 NYSE: TPL I. Executive Summary II. Texas Pacific Land Trust Overview III. Track Record of Board Oversight and Stewardship IV. The Dissident Campaign and Conflicted Nominee Table of Contents
Slide 4: I. Executive Summary
I. Executive Summary
Slide 5: Executive Summary
| 5 NYSE: TPL Executive Summary > Extraordinary Track Record of Value Creation and Shareholder Returns: The Trust has been a prudent steward of shareholder assets for over a century, which has led to unparalleled growth and capital returns for our shareholders. Over the 5 - and 10 - year periods pre
Slide 6: II. Texas Pacific Land Trust Overview
II. Texas Pacific Land Trust Overview
Slide 7: A Pure Play Permian Basin Trust
| 7 NYSE: TPL A Pure Play Permian Basin Trust and in West Texas Royalty and Surface Acreage Position TPL is one of the largest landowners in the State of Texas with: ~900,000 Surface acres ~455,000 Non - Participating Royalty Interest (NPRI) acres (1) concentrated in West Texas (1) ~85,000 at 1/128
Slide 8: Operational Segments
| 8 NYSE: TPL I. Water Sales, Royalties, and Easements > TPL’s recently formed Texas Pacific Water Resources (“TPWR”) business focuses on providing a full service water offering to operators in the Permian Basin > Current water service revenue is primarily derived from TPWR selling brackish water di
Slide 9: Business Strategy
| 9 NYSE: TPL Business Strategy Key Achievements to Date: > Monetized non - core surface assets and redeployed proceeds to create 53,000 contiguous surface acres in the heart of the Delaware Basin > Developed ~1 million barrels per day of brackish water production capacity, ~16 million barrels of st
Slide 10: Well-Positioned for Growth
| 10 NYSE: TPL 0 100 200 300 400 500 600 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 4,654 5,038 5,310 5,894 6,174 6,070 6,739 8,226 9,025 10,402 10,977 – 2,000 4,000 6,000 8,000 10,000 12,000 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E Produced Water (mmbbls) Source: Baker
Slide 11: Land & Resource Management Business Summary
| 11 NYSE: TPL Land & Resource Management Business Summary Land and Resource Management Offering Oil and Gas Royalty Surface Sale of Royalty Interests Land Sales and Other Revenue Segmentation > Revenue derived from perpetual non - participating oil and gas royalties in which the Trust has an intere
Slide 12: Water Services and Operations Business
| 12 NYSE: TPL $3.7 $4.4 $11.8 $19.5 $38.7 $50.0 1H16 2H16 1H17 2H17 1H18 2H18 Water Services and Operations Business Water Service Offering > Our expansive surface position across the Permian Basin gives us a significant advantage to develop water infrastructure, eliminating right of way issues and
Slide 13: An Experienced Leadership Team
| 13 NYSE: TPL An Experienced Leadership Team Tyler Glover CEO, Secretary and General Agent > Chief Executive Officer, Co - General Agent and Secretary since November 2016 > President and Chief Executive Officer of Texas Pacific Water Resources since its formation in June 2017 > Previously, Mr. Glov
Slide 14: Extraordinary Total Shareholder Returns
| 14 NYSE: TPL (200%) (100%) 0% 100% 200% 300% 400% 500% 600% 700% Mar 2014 Mar 2015 Mar 2016 Mar 2017 Mar 2018 Mar 2019 Texas Pacific Land Trust S&P 500 S&P Exploration and Production Index WTI Oil TPL has generated extraordinary returns for shareholders. Over the 5 - year period preceding the diss
Slide 15: Capital Returns
| 15 NYSE: TPL Capital Returns > As a liquidating trust, TPL has not issued additional equity since its inception in 1888 and is not authorized to issue any new equity > The Trust has a disciplined history of returning capital to shareholders through dividends and stock buybacks, and has paid divide
Slide 16: The Trust Structure Protects Shareholders
| 16 NYSE: TPL The Trust Structure Protects Shareholders > The Trust was set up in 1888 to oversee its assets for the benefit of all shareholders. For over a century, our Trustees have diligently done so > The Trust cannot issue new equity, eliminating the risk of shareholder dilution from stock iss
Slide 17: III. Track Record of Board Oversight and Stewardship
III. Track Record of Board Oversight and Stewardship
Slide 18: Our Independent Trustees
| 18 NYSE: TPL Our Independent Trustees John R. Norris III David E. Barry > Trustee since June 2000 > Member of the law firm Norris & Weber, PLLC > Board certified in probate and estate law as a practicing attorney in Dallas, TX, focused on trust, probate and estate matters > Serves on the Audit Com
Slide 19: Prudent Stewardship of the Trust
| 19 NYSE: TPL > Expanded leadership team with deep industry experience > Established Health, Safety & Environment (HSE) program > Enhanced investor disclosure which includes comprehensive investor presentation > Engaged outside tax and legal experts to consider strategic alternatives such as conver
Slide 20: Compensation Practices
| 20 NYSE: TPL Compensation Practices > The Trust has designed a compensation program to be competitive and align with the interests of long - term shareholders > A study conducted by a nationally recognized independent compensation consultant benchmarked TPL Management’s total compensation at “sign
Slide 21: General Don Cook – Our Highly Qualified Candidate
| 21 NYSE: TPL General Don Cook – Our Highly Qualified Candidate The Trust has nominated retired Four - Star U.S. Air Force General Donald “Don” Cook to serve as Trustee. His extensive leadership and corporate board experience will be highly valuable for the oversight of the Trust > Decades of leade
Slide 22: General Don Cook – Our Highly Qualified Candidate
| 22 NYSE: TPL San Antonio Chapter Organization recognized as the leading authority on boardroom best practices > Chair Emeritus > Chair from 2013 - 2017 General Don Cook – Our Highly Qualified Candidate (1) From August 2, 2005 to April 18, 2019. Crane announced that its Board of Directors had elect
Slide 23: General Don Cook – Priorities as Trustee
| 23 NYSE: TPL General Don Cook – Priorities as Trustee Long - Term Growth Provide all of TPL’s businesses – including the water business – with the right foundations for long - term growth Optimal Governance Structure Evaluate the governance structure on a regular basis to ensure it is optimal for
Slide 24: IV. The Dissident Campaign and Conflicted Candidate
IV. The Dissident Campaign and Conflicted Candidate
Slide 25: History of Engagement with the Dissident Group
| 25 NYSE: TPL History of Engagement with the Dissident Group January 22 > Mr. Tessler sends an email to Mr. Barry regarding a potential transaction between the Trust and a different oil and gas company than the one discussed on November 28, 2018; Mr. Barry responded but did not hear anything furthe
Slide 26: Undisclosed Conflicts – Eric Oliver
| 26 NYSE: TPL Undisclosed Conflicts – Eric Oliver refused to disclose the business and personal interests required to determine whether he qualifies as “independent” under the standards of the NYSE listing rules > He has numerous oil and gas interests in the Permian Basin, so if Oliver were to beco
Slide 27: Undisclosed Conflicts & Potential Fraudulent Misrepresentations
| 27 NYSE: TPL Undisclosed Conflicts & Potential Fraudulent Misrepresentations > Significant potential for conflicts with Mr. Oliver’s other businesses, which he has refused to disclose – We believe he directly and indirectly owns a significant number of oil and gas royalty and working interests, at
Slide 28: Limited Public Company Experience and Disconcerting Governance Track Record
| 28 NYSE: TPL Limited Public Company Experience and Disconcerting Corporate Governance Track Record > Eric Oliver has extremely limited public company board experience – Based on what we can tell, he has served as a director of only one public company, AMEN Properties, Inc. (ticker: AMEN), a micro
Slide 29: Limited Public Company Experience and Governance Track Record (Cont'd)
| 29 NYSE: TPL > Self - dealing and related party transactions – For 17 years, Eric Oliver has served as the Chairman and CEO of AMEN Properties, Inc.; his brother, Kris Oliver, serves as AMEN’s CFO – Mr. Oliver used his investment firm SoftVest to provide AMEN a preferred promissory note that finan
Slide 30: Undisclosed Group with Santa Monica Partners
| 30 NYSE: TPL We Believe the Dissidents Formed an Undisclosed Group with Santa Monica Partners… What about that “Third - Party” Support for Mr. Oliver? > Why Did a 0.2% Shareholder, Santa Monica Partners, File a Schedule 13D in Support of Mr. Oliver? – Immediately after the Dissident Group launched
Slide 31: Universal Guaranty Life Insurance Company
| 31 NYSE: TPL … and Universal Guaranty Life Insurance Company > Why Did a Holder of 39,000 Shares feel the Need to issue a Press Release in Support of Mr. Oliver? – A few days ago, Universal Guaranty Life Insurance Company, issued a press release in “enthusiastic support” of Mr. Oliver – According
Slide 32: MLP Conversion Push and Trust Evaluation
| 32 NYSE: TPL > In 2016, a group led by Eric Oliver strongly advocated that the Trust convert to a Master Limited Partnership (MLP) structure . Although the Trust conveyed its multiple concerns with the proposal, the dissidents continued to push for a conversion, inclu din g a threatening letter fr
Slide 33: The Dissident Group's Need for a Liquidity Event
| 33 NYSE: TPL The Dissident Group’s Need for a Liquidity Event TPL represents $1.4bn of the $5.3bn managed by Horizon Kinetics, ~26% of its entire portfolio. (1) Horizon Kinetics is the largest shareholder of the dissident group 1 For example, 7 out of 8 Horizon Kinetics “Horizon Separate Accounts”
Slide 34: Setting the Record Straight
| 34 NYSE: TPL Setting the Record Straight > The position sold was a non - contiguous “checkerboard,” and neighboring surface owners had historically obstructed development of the area. This land generated an estimated $2.1 million in annual revenue over the last four years, and sold for $100 mill i
Slide 35: Setting the Record Straight: NOBO List Claim
| 35 NYSE: TPL Setting the Record Straight Dissident Claim #4: TPL refuses to provide the dissident shareholders with a NOBO list > We did not decline to provide the list – in fact, we explicitly stated twice in a public letter that “the Trust is willing to pr ovide such materials,” but the request
Slide 36: Setting the Record Straight
| 36 NYSE: TPL Setting the Record Straight > This proxy contest was initiated by the dissident shareholders; the majority of our shareholders are happy with our market - leadi ng performance, and General Cook is the best candidate to ensure we continue delivering that performance. > The Trust has a
Slide 37: Trust General Cook to Keep TPL on Track
| 37 NYSE: TPL Trust General Cook to Keep TPL on Track > Extraordinary Track Record of Value Creation and Shareholder Returns: Our performance and returns are a result of a long - term focus, strategic positioning, and prudent oversight of shareholder capital. Over the 5 - and 10 - year periods prec
Slide 38: Texas Pacific Land Trust
1700 Pacific Avenue, Suite 2770 Dallas, Texas 75201 Texas Pacific Land Trust
Texas Pacific Land Trust — Proxy Contest (April 2019) on 6ix