TPL was created in February 1888 in the wake of the Texas and Pacific Railway bankruptcy, as a means to dispose of the T&P's vast land holdings. TPL received over, and certain T&P bondholders were allowed to exchange their bonds for trust certificates. The certificates were later divided into "sub-share" certificates, and the sub-share certificates have been traded on the NYSE since January 1927. On March 23, 2020 the trust announced plans to convert the land trust to a C Corporation under Delaware law. The plan is to make the conversion by the end of the 2020 third quarter.
Current operations
Over 100 years later, even having sold 75 percent of its original landholdings, TPL is still among the largest private landowners in the State of Texas. As of December 31, 2008, TPL owned of land in 20 West Texas counties, of which around 70 percent is located in Culberson, Reeves, and Hudspeth counties. In addition, TPL owns a 1/128 nonparticipating perpetual royalty interest in 85,413.60 acres, and a 1/16 nonparticipating perpetual royalty interest in 386,987.70 acres. Trust income is derived from land sales, oil and gas royalties, grazing and sundry leases, interest on notes receivable, and interest on investments. The trust does not actively seek to sell its landholdings, and on rare occasions actually purchases land. In June of 2017, TPL established the formation of Texas Pacific Water Resources, LLC, a wholly owned subsidiary of the Trust. TPWR is a full service water business that offers brackish water sourcing, water disposal, water recycling, and other hydrocarbon extraction related water services.
TPL has a long-standing policy to repurchase sub-shares with excess cash. As noted in the 2015 annual report, "As provided in Article Seventh of the Declaration of Trust, dated February 1, 1888, establishing the Trust, it will continue to be the practice of the Trustees to purchase and cancel outstanding certificates and sub-shares. These purchases are generally made in the open market and there is no arrangement, contractual or otherwise, with any person for any such purchase." In 2015, the Trust purchased and retired 204,335 sub-shares at a cost of $28,771,073, representing an average cost of $140.80 per sub-share. The number of sub-shares purchased and retired in 2015 amounted to 2.5% of the total number of sub-shares outstanding as of December 31, 2014. The policy of buy backs has reduced the sub-share count by 26% between 2004 and 2015
