Shares Texas Pacific Land Corporation (NYSE: TPL ) It rocketed 50.5% in February, according to data from S&P Global Market Intelligence.
Texas Pacific Land is usually viewed as a light oil and gas play, owning 882,000 surface acres and 224,000 NRA (net royalty acres) of oil and gas royalty interests in Texas, primarily near the Permian Basin.
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With oil and gas prices rising amid geopolitical tensions, it’s no surprise that TPL stock rose in sympathy. But TPL is fast becoming a data center play, given its significant AI development activity in the state. During its fourth quarter earnings report, released in the middle of the month, management had some additional exciting news to share on the AI front.
In a way, the land of Texas Pacific may be one of the best-placed reservoirs for the artificial intelligence revolution—outside of the tech sector, that is. Artificial intelligence data centers require lots of cheap land, as well as access to energy and water. Texas Pacific has it all in spades.
Since TPL owns not only oil and gas concessions but also large amounts of surface land, it can charge data center operator rent, and charge utilities for pipelines and power lines. TPL is also a major water producer in the state, with its own water treatment subsidiary. In fact, water sales accounted for 38% of the company’s revenue by 2025.
But it was the “conventional” oil and gas sector that likely drove shares higher earlier in the month. This is while the tension between Iran and the United States as a result of the latest war, which began on February 28, has led to an increase in oil prices.
TPL’s royalty revenue is based on a percentage of the total revenue that the lessees sell for barrels produced on land, so as oil and gas prices rise, so do TPL’s revenue and profits.
While rising oil and gas prices helped the month’s performance, management also held off on releasing the company’s fourth-quarter earnings during the month. Texas Pacific posted strong results, with earnings up 13.6%, slightly beating analyst estimates. Earnings per share of $1.79 came in line with expectations.
However, it was likely the additional commentary on the AI data center opportunity that really got investors excited. In December, TPL invested in an AI data center startup called Bolt, led by former Google CEO Eric Schmidt. At a February conference call with analysts, TPL management noted that Bolt is interested in building 10 gigawatts of data centers on TPL land over time — a huge amount of computing power. Under the agreement with Bolt, TPL has the right to receive additional Bolt shares in exchange for providing land for its future data centers, and TPL also has the right of first refusal to provide water to Bolt’s facilities and related power generation.
