AI has left a number of big winners in its wake. The best known are the chip companies, which aspire to become the infrastructure that sustains the new world. For their part, nuclear companies (particularly Vistra) are soaring on Wall Street due to the rise of data centersthe foundations of this revolution and that will need energy supplies. Following this last line, a strange and unexpected event for many investors has happened in the markets. A company born during the ‘wild west’ era and, it seemed, doomed to decline more than a century later has tripled its value and has officially entered the S&P 500.
Texas Pacific Land was created in 1888. At that time, in the midst of a fever to consolidate the ‘Wild West’, the United States had tried to unite both coasts with a railway from Texas to California. However, the route was not completed and resulted in a total bankruptcy of Pacific Railway Companythe signature in charge. The fall from grace of this project had left behind a trail of land without an owner. Huge tracts of land had to be managed by a new firm created for this purpose.
This is where the role in the history of TPL seemed to end, a small land manager that would live to liquidate the assets of a railway giant that, a priori, would not have much value. However, beneath the soil of these lands beat the blood that would move the new world, oil, and Texas would become the most important field of discovery in the entire country and one of the largest on the planet.
However, TPL I am not going to take advantage of this opportunity due to lack of ambition. The company did not consider itself to be a part of the industry and therefore got rid of them, selling them quickly and only keeping a few ‘royalties’. This is the reason why despite being blessed with 3,600 square kilometers in its portfolio, it barely has 100 workers and 632 million dollars in annual income.
Now the firm seems to have once again been blessed by destiny and in 2024 it is close to increases of more than 200%, achieving the milestone of entering the S&P 500 last Friday, replacing Marathon Oil and achieving a capitalization of $38.71 billion. Beyond crude oil, it has found its big business in Artificial Intelligence. To understand this phenomenon You have to know the business model of this company. Basically TPL makes money in two ways, firstly, thanks to water, which makes up a third of its income. The firm sells water to ‘fracking’ companies (which is necessary for this extraction process) and then leases its land for land.
For its part, two thirds of its turnover comes directly from crude oil.the business that allowed its first ‘boom’. The company was not specialized until 2026 in the raw material nor was it at the time of the great discoveries, which is why it has been transferring the rights to the land. However, it reserved the right to small royalties for its activity. This is your main source of business. In the last five years it has managed to improve its figures with direct leases to oil companies on a more general basis.
“Energy in Texas can be “six times lower than in California”
Now the data centers, the infrastructure on which AI will be built, have found in Texas one of the largest fishing grounds in the world. According to the latest CBRE report “Texas, particularly Austin, Dallas, Houston and San Antonio, have become one of the most sought after places in the world“. The reason is the large energy consumption that these assets require, something that has led, for example, Microsoft to invest in a plant known for being involved in one of the largest nuclear accidents in history, to supply itself.
In that sense, CBRE indicates that Texas offers in the first place “large resources with which to supply these data centers“, at the same time that it has “an energy and electrical deregulation” that encourages “large-scale innovation among the highest in the entire United States.” In that sense, according to the firm, the price of energy in Texas can reach being “six times shorter than in California” something that has boosted its appeal.
For TPL this is the great promise of opening a new business that boosts its prospects. The company itself explained in its latest results that it was debating extending the leases it has grown in oil to data centers. “HThere are many conversations going on within the industry and definitely within TPL” commented Tyler Glover, the firm’s CEO. “We believe we are as well positioned as anyone in West Texas to provide land and water solutions as those opportunities arise.”
This is the reason why the latest technology rally has reached a nineteenth-century company like this, but it was not the last. LandBridge, which has around 890 kilometers square in the Permian Basin, has tripled its stock value since its initial public offering in June. The company agreed to buy more land this month in a deal that would expand its acreage by 20%, citing the potential for “digital infrastructure and renewable energy projects.”
It remains to be seen if these firms manage to use AI to catapult themselves as real estate empires of a new era or if, on the contrary, the opportunity passes them by. In any case, for now this window has put them in the largest business focus in the world, the S&P 500. In record time lthe ‘landowners’ of the far west They have gone from being an unknown business to becoming one of the great promises for Wall Street analysts.
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