The S&P 500’s newest addition may be a relic of the Wild West, but it’s a byproduct of its soaring valuations. AI boom. Founded in 1888, Texas Pacific Land Corporation is a company with just 100 employees but a market capitalization of over $35 billion. For comparison, American AirlinesBased in Fort Worth, it employs more than 100,000 people and is worth about $10 billion.
It began as a Texas Pacific Land Corporation, or TPL land trust but soon after the discovery of oil in west Texas in the early 1900s he found himself sitting on “black gold.” More recently, the company has begun exploring other ways to monetize its 873,000 acres, an area larger than Yosemite National Park. The bet is from the region dirt cheap natural gas will be a draw for America’s tech giants, TPL is attracting renewable energy projects, bitcoin minesand utility-scale battery production.
Then there is the choice data centerswhich has almost tripled the TPL share price over the past year. It remains to be seen whether there will be centers or not Permian Basin like oil pumps, but it is not missing investor hype For companies that can take advantage of the energy boom needed to drive the AI revolution.
“TPL has a lot of positive attributes for data centers, and nobody has more land in West Texas than we do,” CEO Tyler Glover said on the company’s earnings call earlier this month.
The company declines to comment further a Bloomberg the report about its data ambitions, but Glover said on the earnings call that he believes TPL is well-positioned to fill the need for land and water services as artificial intelligence opportunities expand.
“If we need to buy more land to put in a data center, then we’ve proven that’s not difficult for us to do,” he said. “I think there are a lot of other parts of the country that are attractive for data centers as well, so we’re working hard to make TPL as attractive as possible.”
Why Big Tech Should Need West Texas Natural Gas
The bullish sentiment around TPL’s data ambitions is not surprising given how big Tech is CapEx train it doesn’t look like it’s slowing down anytime soon. according to the data from Bloomberg IntelligenceGoogle parent the alphabet, Microsoft, Amazonand Facebook parent Meta could spend more than $200 billion next year amid an AI arms race. This means that US data center energy demand could grow by about 160% by 2030. according to to Goldman Sachsit accounts for almost a tenth of the country’s energy use.
“This surge in power demand has not been seen in the US since the beginning of this century,” the bank’s report said.
This has encouraged a lot worries about carbon emissions, and investors have joined the tech giants in trying to think ahead. Starting to bid on Big Tech nuclear energyThis year there are providers like the top ten performers in the S&P 500 see (first), GE Vernova (fourth), and Constellation Energy (ninth), per Slickcharts.
the demand natural gasoften referred to as the world’s “cleanest fossil fuel”, it also looks set to rise. It’s cheapest in West Texas, where a oversupply The Waha Hub near the Permian Basin has caused prices to turn negative dozens of times this year.
Managing overproduction is not a problem for TPL, which has collected nearly $100 million in oil and gas rights. last quarter from the like Exxon Mobil, Chevronand ConocoPhillips without paying anything to operate real wells. Not surprisingly, investors have also flocked to West Texas landowner Landbridge, which has seen its stock more than triple since going public in June.
Landbridge’s footprint in the Permian Basin, however, is less than a third of TPL’s. The latter’s shares rose 14% on Friday after it announced it would replace TPL Marathon OilAcquired by ConocoPhillips, in the S&P 500. (TPL shares pared much of that gain earlier this week, sending shares down more than 10% to trade around $1,550).
On a broader level, TPL’s new data ambitions mark a significant evolution from a land-sale vehicle created to pay back bondholders after the failure of the Texas and Pacific Railway Co., which unsuccessfully tried to connect East Texas to San Diego. In time, the company would trade on the New York Stock Exchange in 1927 and, thanks to its nimble operations and stock buybacks, would become a youngster’s favorite. Warren Buffett.
Today, unlike the Oracle of Omaha’s value-first thesis, many TPL shareholders are looking for massive growth.
