KeyBanc Capital Markets sees a rosy outlook ahead for Texas Pacific Land . The bank initiated coverage of the Texas land and royalty interests owner at an overweight rating. Analyst Tim Rezvan also set a price target of $1,050, which implies upside of 23%. Texas Pacific Land generates its revenue primarily from oil, natural gas and water royalties, Rezvan wrote. He believes that the company’s significant footprint of over 882,000 acres and quality position it well for future market opportunities in the west Texas landscape. TPL YTD mountain TPL YTD chart “In a literal sense, TPL sits at the crossroads of traditional oil and gas activity and the imminent data center and power gen buildout occurring in West Texas and collects oil and gas, water or surface royalties from much of the activity occurring in the region,” he wrote. “TPL benefits from a variety of activities occurring in the area: oil and gas royalties from drilling; water sourcing, treatment and disposal; commodity gathering lines and pipelines; surface acreage needs for roads and materials; and, potentially, data centers and related power gen needs.” The analyst also applauded Texas Pacific Land for the “next gen opportunities” it is actively developing in the oil and gas and power industries, which includes some exposure to the ongoing AI boom. “It is using its large surface footprint to try to attract data centers, which would bring with it the need to build infrastructure for power and water needs,” he said. “In addition, TPL is investigating revenue opportunities for carbon capture, bitcoin mining, hydrogen, sand mines and other areas.” Texas Power Land is also currently building a water desalination facility in Orla, Texas that could serve as an “intriguing” catalyst in the next year. This facility could set a standard for water reclamation to serve environmental and industrial purposes in west Texas, which is often plagued by drought. Rezwan also pointed out that while the company’s CEO and CFO appear to be on the younger said, they seem to be playing the long game with measured growth initiatives. “We often catch a whiff of empire building from younger executives, but we see nothing of the sort at TPL. The Company maintains a net cash position and did not create a credit facility until October. It has been occasionally acquisitive and measured with capex, such as the $25M earmarked for the desalination facility,” he wrote. “We sense management is consciously evolving to be more of a traditional C-Corp, but doing so at a gradual pace to avoid surprising long-term holders.” Shares of Texas Pacific Land have slipped 23% this year.
