TPL Intrinsic Value

TPL

Texas Pacific Land Corporation – Crude Petroleum and Natural Gas Extraction

texas pacific land trust was created in 1888 as a result of a reorganization of the texas and pacific railway company following receivership. holders of texas and pacific railway company bonds received 3.5 million acres of land in texas which had been earned by the railroad and pledged as security against bonds. the bondholders created the trust and converted bonds to shares of proprietary interest in the trust. the trust was created to manage and sell the land. today the trust is one of the largest landowners in texas with around 888,333 acres located in eighteen different counties. texas pacific land trust derives revenue from all avenues of managing the land, i.e. oil and gas royalties, grazing leases, easements, sundry and specialty leases, and land sales. the trust has a perpetual oil and gas royalty interest in some 459,200 acres.

Analysis Results

Intrinsic Value	$3,831.43
Latest Price	$1,859.43
Relative Value	51% undervalued

Share results:

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Cash Flow (Billions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 40.1%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.4%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 40.1%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (billion)	Present value (billion)
2023	0.643	0.593
2024	0.901	0.766
2025	1.26	0.99
2026	1.77	1.28
2027	2.48	1.65

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 39.2 billion. This corresponds to a present value of 24.1 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 5.28 billion. Adding in the terminal value gives a total present value of 29.4 billion.

There are presently 7.68 million outstanding shares, so the intrinsic value per share is 3831.43.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	633,401,000
Current Cash	510,834,000
Current Liabilities	39,595,000
Current Debt	0
Non-Cash Working Capital (NCWC)	82,972,000
Change in NCWC	35,601,000
EBIT	562,307,000
Tax Provision	122,493,000
Depreciation and Amortization	15,376,000
Capital Expenditure	-19,212,000
Unlevered Free Cash Flow	472,988,997

Current Assets	526,513,000
Current Cash	428,242,000
Current Liabilities	50,900,000
Current Debt	0
Non-Cash Working Capital (NCWC)	47,371,000
Change in NCWC	37,606,000
EBIT	362,393,000
Tax Provision	93,037,000
Depreciation and Amortization	16,257,000
Capital Expenditure	-15,548,000
Unlevered Free Cash Flow	307,830,923

Current Assets	335,713,000
Current Cash	281,046,000
Current Liabilities	44,902,000
Current Debt	0
Non-Cash Working Capital (NCWC)	9,765,000
Change in NCWC	-11,385,000
EBIT	217,251,000
Tax Provision	43,613,000
Depreciation and Amortization	14,395,000
Capital Expenditure	-5,086,000
Unlevered Free Cash Flow	172,040,694

Current Assets	366,640,000
Current Cash	303,645,000
Current Liabilities	41,845,000
Current Debt	0
Non-Cash Working Capital (NCWC)	21,150,000
Change in NCWC	-11,517,000
EBIT	399,573,000
Tax Provision	83,527,000
Depreciation and Amortization	8,906,000
Capital Expenditure	-32,209,000
Unlevered Free Cash Flow	281,782,908

Current Assets	177,795,000
Current Cash	119,647,000
Current Liabilities	25,481,000
Current Debt	0
Non-Cash Working Capital (NCWC)	32,667,000
Change in NCWC	61,527,000
EBIT	241,959,000
Tax Provision	52,014,000
Depreciation and Amortization	2,583,000
Capital Expenditure	-47,878,000
Unlevered Free Cash Flow	210,109,794

Current Assets	98,987,000
Current Cash	79,580,000
Current Liabilities	48,267,000
Current Debt	0
Non-Cash Working Capital (NCWC)	-28,860,000
Change in NCWC	-20,581,022
EBIT	119,776,000
Tax Provision	43,499,000
Depreciation and Amortization	376,000
Capital Expenditure	-18,747,000
Unlevered Free Cash Flow	37,355,462

Current Assets	55,968,318
Current Cash	49,417,889
Current Liabilities	14,829,407
Current Debt	0
Non-Cash Working Capital (NCWC)	-8,278,978
Change in NCWC	-7,816,098
EBIT	55,057,850
Tax Provision	17,847,370
Depreciation and Amortization	43,290
Capital Expenditure	-976,871
Unlevered Free Cash Flow	28,470,219

Current Assets	48,799,503
Current Cash	45,011,969
Current Liabilities	4,250,414
Current Debt	0
Non-Cash Working Capital (NCWC)	-462,880
Change in NCWC	836,434
EBIT	75,266,040
Tax Provision	25,244,515
Depreciation and Amortization	25,374
Capital Expenditure	-221,456
Unlevered Free Cash Flow	50,667,571

Current Assets	30,850,716
Current Cash	26,814,759
Current Liabilities	5,335,271
Current Debt	0
Non-Cash Working Capital (NCWC)	-1,299,314
Change in NCWC	-2,271,442
EBIT	51,417,031
Tax Provision	16,666,534
Depreciation and Amortization	19,730
Capital Expenditure	-53,788
Unlevered Free Cash Flow	32,449,703

Current Assets	16,964,746
Current Cash	13,239,211
Current Liabilities	2,753,407
Current Debt	0
Non-Cash Working Capital (NCWC)	972,128
Change in NCWC	297,043
EBIT	40,130,573
Tax Provision	12,924,070
Depreciation and Amortization	16,286
Capital Expenditure	-54,610
Unlevered Free Cash Flow	27,469,087

Current Assets	11,542,644
Current Cash	8,424,907
Current Liabilities	2,442,652
Current Debt	0
Non-Cash Working Capital (NCWC)	675,085
Change in NCWC	1,273,146
EBIT	29,303,451
Tax Provision	9,675,068
Depreciation and Amortization	16,504
Capital Expenditure	-50,405
Unlevered Free Cash Flow	20,874,040

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