FISCAL YEAR 2024 ANNUAL REPORT
At the heart of UL’s success is the understanding that these lands are not ours, but a privilege entrusted to us by the State of Texas. However, we recognize that the best way to steward these lands responsibly is to treat them as if they were our own, ensuring they are preserved, enhanced, and passed on to future generations in better condition than we found them.
William R. “Billy” Murphy, Jr. Chief Executive Officer
CEO MESSAGE
In fiscal year 2024, University Lands (UL) marked a year of unparalleled accomplishments, delivering the highest production levels and the highest Available University Fund (AUF) revenue in our history, alongside the third-highest Permanent University Fund (PUF) revenue ever recorded. These milestones underscore the continued strength of the PUF Lands and the diligent efforts of our team to maximize their potential for the benefit of the University of Texas and Texas A&M Systems. The following report provides a detailed account of the key initiatives, accomplishments, and strategic advancements that have shaped this fiscal year, illustrating UL’s ongoing commitment to responsible stewardship and progress. This year, UL advanced its focus on emerging energy initiatives while strengthening traditional operations. Recognizing the vital role oil and gas play in our portfolio, the UL team continually strives to further diversify its activities across surface and mineral management. From exploring hydrogen and alternative energy sources to supporting resource opportunities of the Lands, such as data center development, our team remains committed to identifying opportunities that will shape the future of energy production and the surface landscape of the PUF Lands. In collaboration with the Bureau of Economic Geology, UL completed a critical project, resulting in the development of over 300 GIS layers allowing our team to better analyze current and potential energy sources on PUF Lands. This initiative equips us with significant insights and positions UL as a leader in advancement and resource planning. The 2024 Energy Forum exemplified UL’s commitment to fostering collaboration and knowledge-sharing within the industry. To learn more about the speakers, topics, and key discussions from this year’s forum, see page 17. With nearly 300 attendees, this event provided a platform for broad discussions on topics critical to the Permian Basin and beyond. Bringing together operators, industry leaders, and experts, the forum highlighted the collective expertise and shared vision needed to address challenges and seize opportunities in today’s dynamic energy landscape. ULs’ focus extended beyond operations to building a robust and talented workforce. This year, we strategically expanded our team, bringing in top talent across diverse disciplines. The diversity of expertise required to manage the PUF Lands underscores the unique nature of UL’s mission - from land professionals to engineers and geoscientists, IT specialists, lawyers, and range experts, UL now counts numerous advanced degree holders among its ranks, including master’s and law degrees, and PhD- level professionals, as well as multiple individuals with 20+ years of oil and gas experience, all dedicated to ensuring the highest and best use of this unparalleled resource.
At the heart of UL’s success is the understanding that these lands are not ours, but a privilege entrusted to us by the State of Texas. However, we recognize that the best way to steward these lands responsibly is to treat them as if they were our own, ensuring they are preserved, enhanced, and passed on to future generations in better condition than we found them. The PUF Lands, spanning 2.1 million acres across West Texas, represent a legacy and a responsibility to support education, research, and healthcare for generations to come. Our stewardship is guided by a deep commitment to maximizing their value while preserving their health and potential for future beneficiaries. Looking ahead, the UL team remains steadfast in our efforts to balance innovation with tradition. While UL continues to generate strong returns from oil and gas, we are equally focused on fostering growth in new energies and other surface activities. By understanding the markets UL operates in and directing resources strategically, we aim to create sustainable value across all facets of our operations. None of this would be possible without the dedication and expertise of our team. The people of UL are the driving force behind every achievement, decision, and vision for the future. It is their commitment, curiosity, and collaborative spirit that ensures our mission’s success. Together, we are building on a foundation of excellence, with a goal to be the leading land management organization in the country. With gratitude and pride, UL reflects on the achievements of fiscal year 2024, confident in our ability to meet the challenges and opportunities ahead. It is a privilege to serve this unique mission, stewarding a resource that enriches lives and shapes the future of 28 Texas education, healthcare and research institutions.
William R. “Billy” Murphy, Jr. Chief Executive Officer
3
ANNUAL REPORT 2024
4
Table of Contents
OIL & GAS MANAGEMENT
01
25
CEO MESSAGE
05
UL AT-A-GLANCE
WATER SUPPLY & LOGISTICS
33
07
FY24 HIGHLIGHTS
35
EMERGING ENERGY
FY24 NET PERFORMANCE
08
GRAZING & AGRICULTURE
37
09
GOVERNANCE
ENVIRONMENTAL STEWARDSHIP
41
LEADERSHIP TEAM
11
21
FINANCIALS
UNIVERSITY LANDS
5
PUF Lands At-A-Glance
University Lands
University Lands (UL) professionally manages the surface and mineral interests of 2.1 million acres of land across 19 counties in West Texas for the benefit of the Permanent University Fund (PUF).
The PUF
23.8K
The PUF is the largest public university endowment in the U.S. and benefits 14 educational and health institutions within The University of Texas System and 14 educational institutions and state agencies within The Texas A&M University System.
miles of pipelines & powerlines
11.5K producing oil & gas wells
2.1M acres of grazing lands
1.3M acres leased for mineral development
~23.6K oil & gas wells drilled
20.1K acres of surface leases
74.5 K acres of renewable energy leases
ANNUAL REPORT 2024
OUR FOCUS AREAS
Principle Business Lines
OIL & GAS
SURFACE LEASES & EASEMENTS
EMERGING ENERGY
GRAZING & AGRICULTURE
WATER
06 UNIVERSITY LANDS
7
Fiscal Year 2024 Highlights
RESERVES
REVENUE
Gross revenues totaled $1.98 billion with PUF revenue coming in at $1.85 billion and AUF revenue at $127 million. AUF income increased by 4% over FY2023.
The FY24 total value of risked proved reserves increased 3% year-over-year primarily due to strong activity in unconventional basins.
EXPENSES
PRODUCTION
Production rates averaged around 431,500 gross barrels of oil equivalent (BOE) per day. UL’s mineral royalty averaged 21.42% for oil, gas & NGLs equaling a cumulative net royalty volume of 33.7 million BOE.
Annual expenses were $28 million and represented 1.4% of gross revenue or $0.83 per barrel of equivalent production unit cost.
EMERGING ENERGY
ENVIRONMENT
UL performed 221 optical gas imaging (OGI) camera inspections (67 facility fugitive emission inspections and 154 flare inspections) and 1,540 oil & gas lease inspections. A total of 264 unproductive oil & gas wells were plugged with the surrounding areas remediated and returned to pastureland.
UL’s emerging energy portfolio consists of a total of 10 active agreements. Wind and solar are the primary sources of alternative energy on PUF Lands with several emerging energy projects under consideration.
ANNUAL REPORT 2024
8
FY24 HIGHLIGHTS & PERFORMANCE
Fiscal Year 2024 Net Performance
$1.98 Billion GROSS REVENUE
$1.85B PERMANENT UNIVERSITY FUND REVENUE (MINERALS) $127M AVAILABLE UNIVERSITY FUND REVENUE (SURFACE) 3.1 MM LATERAL FEET PUT-ON-PRODUCTION 291 WELLS PUT-ON-PRODUCTION 33.7 MMboe
1.67 BBOE NET TOTAL RESOURCE 375 MMBOE NET PROVED RESERVES $28M EXPENSES 1.4% OF GROSS REVENUE $0.83 EXPENSES/BOE
NET ROYALTY PRODUCTION
BBOE - billions of barrels of oil equivalent MMBOE - billions of barrels of oil equivalent
9
GOVERNANCE
Board for Lease Members
The University of Texas System Board of Regents manages the strategic direction, development activities and stewardship of the Permanent University Fund (PUF) Lands. UT System Board of Regents
Dawn Buckingham Chairwoman, Board for Lease Commissioner, Texas General Land Office
2 UT Regents 1 Texas A&M Regent Commissioner, Texas General Land Office Board for Lease of University Lands The University of Texas System Administration is responsible for operations at all UT educational and health institutions. University Lands is a part of the UT System Administration Business Affairs division. UT System Administration The Board for Lease, chaired by the Commissioner of the Texas General Land Office, provides statutory oversight and governance for agreements to develop oil and gas minerals on PUF Lands. 5 UT Representatives 3 Texas A&M Representatives Commissioner, Texas General Land Office UT System Business Affairs Executive Vice Chancellor The University Lands Advisory Board (ULAB) is charged with providing guidance to the University Lands leadership team to help determine strategy and recommendations to the UT System Board of Regents to ensure responsible stewardship of PUF Lands. University Lands Advisory Board
David Baggett Regent, Texas A&M University System
Christina Melton Crain Regent, The University of Texas System
Nolan Perez Regent, The University of Texas System
GOVERNANCE
ANNUAL REPORT 2024
10
GOVERNANCE
University Lands Advisory Board Members
James C. “Rad” Weaver CEO & Chairman, CW Interests Regent, The University of Texas System
Dee J. Kelly Law Partner, Kelly Hart & Hallman
John L. Zogg, Jr.
Stuart Stedman ULAB CHAIR President, Stedman West Interests, Inc. Regent, The University of Texas System
President, Goldenrod Companies Southwest Region
Jay C. Graham CEO, Spur Energy Partners
E. Joseph Wright Independent Partner, Geneses Capital Management, LLC
Janeen Judah Independent Director, Patterson-UTI and Aethon Energy
Gloria Moncrief President & Manager, Montex Drilling Company
Regent, Texas A&M University System
10 UNIVERSITY LANDS
Dawn Buckingham Commissioner, Texas General Land Office
Jonathan Pruitt Ex OFFICIO Executive Vice Chancellor for Business Affairs, The University of Texas System
11 ANNUAL REPORT 2024
12
UL LEADERSHIP TEAM
Executive Leadership Team
Sonya Csaszar Kirgan Vice President, Legal
Kate Champion Senior Vice President & Chief Legal Officer
Brian Owen Senior Vice President, Land
Richard Brantley Senior Vice President, Operations
Maryam Schellstede Chief Operating Officer
William R. “Billy” Murphy, Jr. Chief Executive Officer
Vice Presidents
Kevin Clegg Vice President, Emerging Energy
Jenna Gibbins
Mario Rojas
Daniel Schockling Vice President, Finance & Accounting
Phillip Yancer Vice President, Land
Vice President, Natural Resource Development
Vice President, Business Intelligence & IT Services
UNIVERSITY LANDS
ANNUAL REPORT 2024
UNIVERSITY LANDS
15
THE PUF AT WORK
Et parisciis aut faccusa
$57 MILLION
Currently under construction, the $109.5 million Texas Western Hall (TWH) at The University of Texas at El Paso (UTEP) will transform the campus by providing state-of-the-art, interactive spaces for engaged instruction. This 124,725-square-foot facility will feature a 5-story east wing, a 3-story west wing, and a 3-story central collaboration area, offering classrooms, computer labs, faculty offices, and shared spaces. Designed with flexible technology and furnishings, TWH supports diverse teaching methodologies and modern learning needs. The project also addresses critical campus infrastructure by demolishing older facilities, including the Academic Advising Center, Honors House, and eventually, the Liberal Arts Building, which will reduce deferred maintenance costs by $16.6 million. Slated for completion in late 2025, Texas Western Hall reflects UTEP’s commitment to innovation and excellence in education, aligning with the university’s mission to deliver cutting-edge resources to students and faculty. The University Of Texas At El Paso - Texas Western Hall FUNDED WITH $57M FROM THE PERMANENT UNIVERSITY FUND
ANNUAL REPORT 2024
16
THE PUF AT WORK
Texas A&M-Fort Worth Campus FUNDED WITH $150 MILLION FROM THE PERMANENT UNIVERSITY FUND
$150 MILLION
With a current project budget of $185 million, Texas A&M-Fort Worth is poised to become a cornerstone of Fort Worth’s envisioned downtown innovation district. This 3.5-acre campus will serve as a hub for cutting-edge research, education, and workforce development, with contributions from Texas A&M University, Tarleton State University, the Texas A&M School of Law, and programs across engineering, agriculture, emergency management, and health sciences. The campus will foster collaboration between public and private sectors, offering state-of-the-art classrooms, laboratories, event spaces, and flexible makerspaces to drive innovation and skill-building. At the heart of this initiative is the eight-story, 225,000-square-foot Law & Education Building, which will support multidisciplinary programs spanning law, medical technology, nursing, engineering, and more. Designed for connectivity and collaboration, the building features exterior terraces, a vertical atrium, and integrated academic resources. Set to open in 2026, Texas A&M-Fort Worth will anchor the city’s efforts to position itself as a magnet for economic growth and innovation, meeting the dynamic workforce needs of one of the nation’s fastest- growing cities.
st View
UNIVERSITY LANDS
17
ENERGY FORUM
8th Annual Energy Forum
The 8th Annual Energy Forum was a resounding success, drawing 209 attendees to the newly opened Marriott Hotel & Conference Center in Odessa. The change in venue provided an exciting new setting, accommodating a larger audience and offering state-of-the-art facilities to enhance the overall experience. This year’s forum once again brought together industry leaders, stakeholders, and academics to discuss pivotal developments and opportunities within the energy sector. A highlight of the event was the special appearance of Travis Stice, CEO and Board Chairman of Diamondback Energy. Stice participated in an engaging Q&A session with Billy, sharing insights on the future of the energy industry and Diamondback’s role in driving innovation and sustainability in the Permian Basin. Tracee Bentley, President & CEO of the Permian Strategic Partnership (PSP), delivered a compelling presentation highlighting PSP’s work and accomplishments over the past five years since its inception. Bentley’s address underscored the organization’s impact on community development, workforce enhancement, and infrastructure improvement in the region.
Dr. Sandra Woodley, President of UT Permian Basin, also made a notable contribution, engaging in a Q&A session with Richard. Their discussion focused on the university’s ongoing initiatives to support the energy industry through research, education, and strategic partnerships. The forum featured two dynamic panel discussions that delved into critical topics shaping the industry. ‘Powering the Permian’ explored energy generation and innovation with executives from ERCOT, NetPower, Vistra, and Baker Botts. ‘Expanding the Basins’ brought together leaders from Diamondback Energy, Riverbend, and Vital Energy to discuss strategies for sustainable growth and development in the region. University Lands is proud to host the Energy Forum each year as a platform for collaboration and dialogue among key players in the energy industry. The success of this year’s event reinforces our commitment to fostering innovation, sustainability, and community engagement in the Permian Basin and beyond.
ANNUAL REPORT 2024
18
18 UNIVERSITY LANDS
19
ANNUAL REPORT 2024
20
INTERNSHIP PROGRAM
UL Summer Internship Program
Fiscal year 2024 marked the second year of University Lands’ (UL) expanded internship program, designed to engage students across a diverse range of business areas. This year, seven talented interns joined the organization, gaining hands- on experience in the fields of data analytics, accounting (2), IT, engineering (2), and marketing & communications. ULs’ interns hailed from various universities, including Texas A&M University, which was represented by both of our engineering interns. ULs’ internship program remains a proud participant in the larger University of Texas System Internship (UTSI) program. This affiliation provides our interns with a comprehensive and robust experience, including mentorship from seasoned professionals, opportunities for professional development, networking with UT executives, and collaboration with peers from across the UT System. The program culminates in an intern summit, fostering connections and shared learning among participants.
A highlight of this year’s program was a field visit to Midland, where interns toured several operational sites hosted by Sequitur Energy, one of UL’s largest producers. This immersive experience included visits to drilling, completions, and production/gathering sites, offering an invaluable perspective on the oil and gas industry. The interns also explored the Petroleum Museum, visited UL’s Midland office, and attended an after-work social event, where they engaged with our Midland team members in a more informal setting. To conclude their internships, each participant delivered a formal presentation to the organization, showcasing the projects they worked on and the impact of their contributions. These presentations highlighted the interns’ hard work, creativity, and the meaningful role they played in advancing ULs’ mission.UL continues to prioritize fostering the next generation of industry leaders through immersive and impactful internship experiences.
UNIVERSITY LANDS
221
FINANCIALS
FY 2023
FY 2024
VARIANCE
$ millions, subject to rounding
Oil (MBBL)
17,879
19,962
12%
Gas (MMCF)
38,433
41,757
9%
NGLs (BBL)
6,219
6,832
10%
Million Barrels of Oil Equivalent (MBOE)
30,504
33,754
11%
West Texas Intermediate (WTI)
$81.45
$80.00
-2%
Avg. Oil Price Received ($/BBL)
$82.08
$80.45
-2%
Avg. Gas Price Received ($/MCF)
$3.64
$1.49
-59%
Avg. NGL Price Received ($/BBL)
$26.46
$21.84
-18%
Oil Revenue
$1,484
$1,582
7%
Gas Revenue
$139
$63
-55%
NGL Revenue
$163
$150
-8%
Bonuses, Unitization Payments
$79
$55
-31%
TOTAL
$1,865
$1,850
-1%
Water, Caliche, Damages
$36
$40
11%
Grazing
$5
$5
-4%
Easements, Renewables & Salt Water Disposal
$77
$79
3%
Interest, Penalty, Assignment Fees
$3
$2
-24%
TOTAL
$121
$127
4%
TOTAL REVENUE
$1,986
$1,977
-0.4%
General & Administrative + Operating Costs
22
28
27%
$/Barrel of Oil Equivalent Production
0.72
0.83
15%
NET REVENUE
$1,964
$1,949
-1%
ANNUAL REPORT 2024
FINANCIALS 202
GAS - 3.4%
LEASE BONUS - 3%
NGL - 8.1%
$1.85B FY24 PERMANENT UNIVERSITY FUND REVENUE
OIL - 85.5%
INTEREST & PENALTY - 1.6%
DAMAGES, WATER & CALICHE - 31.9%
$127M FY24 AVAILABLE UNIVERSITY FUND REVENUE
GRAZING - 3.8%
SURFACE LEASES & EASEMENTS - 62.7%
UNIVERSITY LANDS
ANNUAL REPORT 2024
UNIVERSITY LANDS
OIL & GAS MANAGEMENT
Proactive Development Strategies: Identifying and implementing proactive strategies such as the new “Area Contract for Development” that promote the strategic development of acreage.
25 ANNUAL REPORT 2024
26
Oil & Gas Management
Oil and gas minerals generate significant revenue from the Permanent University Fund (PUF) Lands. In fiscal year 2024, University Lands (UL) maintained its focus on strategic and sustainable development of these valuable resources. UL takes an innovative and collaborative approach to optimizing resource extraction and stewardship of the PUF Lands. The combined expertise of our land, legal, geoscience, engineering, and other expert teams allows UL to achieve our goals through the following approaches:
Adopting Best Practices: Implementing advanced development strategies, including optimization of completion designs, well spacing, stacking, and landing depths, to enhance efficiency and output. Facilitating Development Programs: Collaborating with operators to design and maintain consistent, well-paced development programs tailored to maximize long-term value. Technical and Subsurface Analysis: Conducting rigorous technical studies and subsurface analyses to uncover untapped recoverable resources and refine exploration strategies. Promoting Growth and Economic Efficiency: Assisting operators in testing new formations, piloting innovative well spacing designs, and adopting completion methods to improve economic outcomes. Advancing Data Analytics : Enhancing compliance protocols and data retrieval processes, supported by cutting-edge data analytics, to drive informed decision-making.
Maximizing Horizontal Development: Identifying opportunities to repatriate acreage and fostering collaboration among operators to align and optimize horizontal development initiatives. Strategic Contract Negotiations: Crafting and negotiating agreements to ensure maximum value extraction while safeguarding the interests of the PUF Lands. Proactive Development Strategies: Identifying and implementing proactive strategies such as the new “Area Contract for Development” that promote the strategic development of acreage. Enforcing Contractual and Statutory Rights: Ensuring all agreements adhere to established contracts and applicable state laws, protecting the integrity of operations on the Lands.
These concerted efforts are designed to help operators achieve greater success while ensuring that revenue generated from the PUF Lands continues to benefit the University of Texas and Texas A&M Systems for generations to come. UL remains committed to innovation and stewardship, ensuring that both current and future development activities align with our mission to responsibly manage this unparalleled resource.
UNIVERSITY LANDS
27
GAINES
DAWSON
HIGHLIGHTED UL DEVELOPERS
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Et parisciis aut faccusa
REEVES
SUTTON
TERRELL
Delaware Basin & Central Basin Platform
Southern Midland Basin, Pecos Basin & Val Verde Basin
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Key Oil & Gas Development Activity PECOS 0 30
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The PUF Lands span the Delaware Basin, Northern Midland Basin, Southern Midland Basin, and the Central Basin Platform with more than 200 companies operating ≈11,500 producing wells. New development in FY24 saw a total of 291 wells come online, of which 289 were horizontal wells with a cumulative ≈3.1 million lateral feet. Production from PUF Lands hit 431,500 barrels of oil equivalent per day, and UL’s cumulative net royalty production for the fiscal year was 33.7 million barrels of oil equivalent. To ensure continued development and value creation, UL negotiated eight development agreements on approximately 70,000 acres, adding approximately 2.6MM lateral feet obligation of drilling commitment over the next 6 years.
ANNUAL REPORT 2024
OIL & GAS MANAGEMENT
NORTHERN MIDLAND BASIN Wells Spud Wells Put-On-Production Producing Lateral Ft Average Lateral Length 23 80 ≈828,250 ≈10,350 UL FY24 Activity by Basin
Activity Summary • Eight oil and gas development agreements were executed, adding approximately 2.6MM lateral feet obligation (LFO) over the next 6 years • 289 horizontal wells began production and ≈3.1 million lateral fe et drilled put-on-production UL Development Percentages are based on metrics weighted for wells spud and wells put on-line. ≈36% in Delaware Basin
SOUTHERN MIDLAND BASIN Wells Spud Wells Put-On-Production Producing Lateral Ft Average Lateral Length 99 82 ≈997,500 ≈12,150
≈20% Northern Midland Basin ≈35% in Southern Midland Basin ≈9% Central Basin Platform
DELAWARE BASIN Wells Spud Wells Put-On-Production Producing Lateral Ft Average Lateral Length
79 106 ≈1,109,750 ≈10,470
CENTRAL BASIN PLATFORM Wells Spud Wells Put-On-Production Producing Lateral Ft Average Lateral Length 22 23 ≈193,000 ≈8,400
UNIVERSITY LANDS
29
FY24 TOP PRODUCERS
2024 Top Producers
University Lands’ top oil & gas operators represent ~90% of production volumes on PUF Lands.
Largest Producers ~50% of total volume produced
Substantial Producers ~40% of total volume produced
ANNUAL REPORT 2024
301
FY24 TOP PRODUCERS
UNIVERSITY LANDS
ANNUAL REPORT 2024
UNIVERSITY LANDS
29 33
WATER SUPPLY & LOGISTICS
Water is a critical resource on the PUF Lands, essential for oil and gas development, grazing, agriculture, and other surface activities. Recognizing its importance, University Lands (UL) is dedicated to safeguarding groundwater through comprehensive management strategies that encompass the entire water cycle. In fiscal year 2024, UL continued to implement its Groundwater Management Plan, which emphasizes the protection and conservation of aquifers beneath the PUF Lands. This plan balances commercial activities with sustainable water use, ensuring the long-term health of the Permian Basin’s water resources. Key initiatives include: Water Supply & Logistics
Promoting Water Recycling:
Research & Collaboration:
To ensure accurate accounting of water usage, UL requires mineral developers to meter and report water volumes extracted and transported. This data collection involves over 461 operator-owned water meters and nine water import meters, reported monthly. Monitoring & Reporting:
UL actively participates in research and works diligently with subject matter experts and environmental organizations to enhance water management practices. For instance, Richard Brantley, Senior Vice President of Operations, is a past chairman and active member of the Permian Basin Water in Energy Conference. The conference fosters industry collaboration on best practices and explores new opportunities, such as the beneficial reuse of produced water. It brings together water management companies, researchers, and regulators to conserve groundwater and minimize seismic risks.
UL encourages operators to recycle produced water for drilling and completion processes, reducing dependence on fresh groundwater. Recycling produced water can decrease fresh groundwater usage by approximately 60% per well. However, this practice requires additional infrastructure, such as recycling facilities and transfer systems.
Looking ahead, UL plans to enhance its water management strategies in 2025, focusing on the full water management cycle to further conserve and protect the PUF Lands’ water resources. This commitment reflects UL’s dedication to continuous improvement and environmental stewardship. By integrating these initiatives, UL strives to ensure the sustainable use of water resources, balancing the needs of commercial ventures with the imperative to protect and conserve groundwater for future generations.
barrels of produced water were used for oil and gas well completions in FY24, preserving a significant volume of groundwater across University Lands. 120 MILLION
ANNUAL REPORT 2024
WATER SUPPLY & LOGISTICS
34 Water is a critical resource on the PUF Lands, essential for oil and gas development, grazing, agriculture, and other surface activities. Recognizing its importance, University Lands (UL) is dedicated to safeguarding groundwater through comprehensive management strategies that encompass the entire water cycle.
UNIVERSITY LANDS
35 EMERGING ENERGY
With a strategic focus on market engagement and opportunity assessment in fiscal year 2024, the UL team made significant strides in positioning PUF Lands as a premier location for alternative energy solutions while complementing traditional resource management.
TECHNOLOGY
NUMBER OF PROJECTS (Active/In Construction)
TOTAL ACRES LEASED
MEGAWATT CAPACITY
5
7,400
~835
Solar
5
67,050
~560
Wind
4 Active / 10 In Construction
131
395
Battery Storage
ANNUAL REPORT 2024
367
Emerging Energy
University Lands (UL) continues to advance its commitment to diversify revenue streams and foster sustainable energy development through its Emerging Energy (EE) initiatives. With a strategic focus on market engagement and opportunity assessment in fiscal year 2024, the UL team made significant strides in positioning PUF Lands as a premier location for alternative energy solutions while complementing traditional resource management. Key accomplishments include:
Standardized Diligence Process The team established formal processes to evaluate and assess opportunities efficiently, ensuring clear pathways for engagement with potential partners. Expanded Project Pipeline Dozens of opportunities spanning over 10 unique project types (wind, solar, battery storage, carbon capture, etc.) were identified, reflecting the broad scope of interest and potential applications on PUF Lands. Market Intelligence and Strategic Focus By gathering critical commercial and legal insights and identifying high-demand regions, the EE team has sharpened its strategic focus to align with market trends and developer needs.
Organizational Enhancements Internal capacity was bolstered with the hiring of the Vice President of Emerging Energy, a new leadership position strengthening the team’s ability to evaluate and execute deals effectively. Bureau of Economic Geology Project Completion The Bureau of Economic Geology (BEG) research project concluded successfully, delivering foundational EE data and insights to guide future decision-making and energy planning on PUF Lands.
A VISION FOR THE FUTURE UL continues to lay the groundwork for long-term success in emerging energy markets. By fostering collaboration with industry leaders, refining processes, and remaining adaptive to new technologies, the EE team is setting a strong foundation for sustainable growth. The pipeline of projects reflects a diverse and innovative approach, underscoring the potential of PUF Lands to support a variety of energy solutions beyond oil and gas. This year’s accomplishments reflect a commitment to stewardship and a forward-looking vision to enhance the value of PUF Lands through strategic energy diversification. UL remains steadfast in its mission to harness the full potential of these resources for the benefit of Texas’ education and research institutions.
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Solar Facility
GAINES
DAWSON
Wind Farm
ANDREWS
MARTIN
Battery Energy Storage System (BESS)
Midland
Odessa
LOVING
ECTOR
WINKLER
Monahans
CULBERSON
WARD
Pecos
CRANE
UPTON
REAGAN
IRION
SCHLEICHER
PECOS
CROCKETT
Ozona
TERRELL
3 37
Grazing & Agriculture
For generations, ranchers, hunters, and farmers have relied on the PUF Lands for their livelihood. Today, University Lands (UL) remains committed to ensuring these activities can continue for future generations through careful range and wildlife management. This includes monitoring livestock stocking rates, to maintain range health and ecosystems, and overseeing wildlife populations. Quarterly aerial surveys using helicopters and drones improve monitoring and provide detailed insights into wildlife density, health, and harvest recommendations, further supporting UL’s sustainable land management efforts. UL also continues its commitment to infrastructure management, including fencing and water distribution systems, and works with the Natural Resource Conservation Service (NRCS) on strategic grazing infrastructure placement. These efforts support the implementation of rotational grazing and other conservation practices. As part of its ongoing sustainability and conservation efforts, UL is engaged in a multi-year soil carbon sequestration research project titled “BCarbon,” focusing on rangeland soils across the Midwest United States. This study, conducted in collaboration with Rice University’s Baker Institute and sponsored by ExxonMobil, aims to evaluate carbon storage in these soils. The findings, expected in spring 2025, will inform future conservation strategies. UL is committed to land stewardship, partnering daily with oil, gas, and pipeline operators to remove abandoned well pads, roads, and pipelines. Once equipment is removed and caliche is cleared, the land is reseeded with a grassland mix, including pollinator-friendly species tailored to each site. These efforts restore the land to native or improved conditions, enhancing grazing and wildlife habitats as further demonstration of UL’s dedication to sustainability.
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ANNUAL REPORT 2024
348
GRAZING & AGRICULTURE
(by University Lands, grazing lessees, United States Department of Agriculture - Natural Resources Conservation Service and Texas Parks and Wildlife Department) $4 . 6M INVESTED BACK INTO PUF LANDS 26 , 131 ACRES (41 SECTIONS) OF BRUSH CONTROL APPLIED 51 MILES OF FENCING INSTALLED 33
RANCH WATER IMPROVEMENTS 15 MILES OF WATER PIPELINE INSTALLED 5 RANCH WATER WELLS PLUGGED
UNIVERSITY LANDS
ANNUAL REPORT 2024
UNIVERSITY LANDS
431
ENVIRONMENTAL STEWARDSHIP
31 LOW OR NON-PRODUCING LEASES TERMINATED RETURNING 8.4K MINERAL LEASE ACRES TO INVENTORY 1,540 O&G LEASE INSPECTIONS 67 OGI EMISSION COMPLIANCE INSPECTIONS 154 OGI FLARE INSPECTIONS 400 COMMERCIAL LEASE & EASEMENT INSPECTIONS 79 O&G WATER WELLS PLUGGED 461 O&G WATER WELLS METERED DAILY
ANNUAL REPORT 2024
Environmental Stewardship
University Lands (UL) is committed to advancing responsible land management practices across the Permian Basin, focusing on sustainability, habitat restoration, and minimizing the environmental impacts of oil and gas operations. By implementing proactive strategies that balance resource development with ecological preservation, UL is setting the standard for environmental stewardship. In 2024, UL expanded its environmental initiatives, addressing challenges such as inactive and shut-in oil and gas wells while undertaking large-scale restoration projects. Key efforts included plugging and abandoning non-producing wells, reclaiming well pads, and restoring surface areas to their native state. Significant accomplishments included: • 61 lease restoration initiatives • 264 wells plugged and abandoned • 87 tank battery facilities and pumping units removed • 205 caliche well pads reclaimed • 55 miles of caliche roads restored • 110 miles of flowline removed • 60 miles of electric line removed • 79 O&G water wells plugged • 400 acres returned to native pastureland
UL’s ongoing restoration work reflects its commitment to reducing liabilities and emissions while enhancing land for wildlife and livestock. Over the past decade, UL has reclaimed thousands of acres, improving land health and fostering a better environment for future generations. These efforts strengthen public trust, regulatory confidence, and long-term sustainability. Looking ahead, UL remains steadfast in its mission to preserve Texas lands for the benefit of people, wildlife, and the environment.
42 UNIVERSITY LANDS
433
Caliche Pit Restoration Across PUF Lands
For over a century, caliche limestone has been mined across PUF Lands in West Texas. Oil and gas operators, the Texas Department of Transportation, and county governments have used this material for roads, highways, and pad sites, leaving behind excavations known as caliche pits. These abandoned pits pose safety hazards and environmental risks, prompting University Lands (UL) to take action. As part of its commitment to responsible land management, UL launched an innovative caliche pit restoration program aimed at transforming these non- productive sites into thriving habitats. Key steps include: • Contouring and Stabilizing: Reshaping and sloping pit shoulders using overburden or spoil material. • Rebuilding Ecosystems: Preparing seed beds and planting pollinator-friendly, region-specific seed mixes. • Supporting Growth: Watering newly seeded areas for a month to ensure healthy germination in the arid West Texas climate. This effort goes beyond aesthetics, rejuvenating the land by converting barren pits into water catchments and restores native habitats for livestock and wildlife. Additional benefits include: • Increased Carbon Storage: Vegetation captures carbon and enriches the soil. • Improved Water Infiltration : Reclaimed land enhances rainwater retention and aquifer recharge. • Reduced Soil Erosion: Stabilized surfaces prevent further degradation. UL’s caliche pit restoration program exemplifies its leadership in land stewardship and environmental best practices. By addressing long-standing landscape scars, UL restores the natural beauty and functionality of the land while safeguarding it for future generations. This initiative reflects UL’s unwavering dedication to sustainability and its role as a responsible steward of Texas lands.
Caliche Pit Restoration in Progress
Et parisciis aut faccusa
Reclaimed Caliche Pit
ANNUAL REPORT 2024
4
SURFACE INITIATIVES
CALICHE PIT RESTORATION PROGRAM UL transforms abandoned caliche pits into sustainable ecosystems by contouring and stabilizing sites, planting pollinator-friendly vegetation, and improving land for livestock and wildlife, furthering its commitment to land stewardship. COMPLIANCE WITH LAWS & BEST PRACTICES Operators on PUF Lands must comply with the law, as well as contractual obligations, ensuring environmentally sound practices. Routine inspections using optical gas imaging cameras identify leaks and emissions, with corrective actions promptly enforced. PLUGGING MARGINAL WELLS Regular inspections ensure non-productive wells are plugged, reducing environmental risks and emissions. ROYALTIES ON FLARED GAS Operators pay royalties on flared gas, incentivizing reduced flaring. COLLABORATION & KNOWLEDGE SHARING UL works with scientists, engineers, and industry experts to share insights and improve practices. EMISSION & FLARE MONITORING
PROMOTING TECHNOLOGY & INNOVATION UL encourages operators to adopt advanced control technologies and proactive inspection methods.
COMMITMENT TO RESEARCH UL supports collaborative projects with government, academia, and industry to advance environmental stewardship.
UNIVERSITY LANDS
45 SURFACE MANAGEMENT
ANNUAL REPORT 2024
Et parisciis aut faccusa
Surface Management
Managing the vast 2.1 million acres of University Lands (UL) is a complex endeavor that demands a resolute team to oversee daily operations. UL Surface Landmen serve as the primary point of contact for a diverse range of stakeholders, including oil and gas operators, ranchers, and commercial developers. Collectively, they often manage up to three hundred direct customer engagements daily, each presenting unique challenges and requiring prompt, informed decisions to facilitate operations while avoiding interference with other operations on the lands. The UL Surface Landmen approve new installations, coordinate maintenance, and address any issues that arise, to maintain an efficient use of the resources across the land. UL administers active contracts with over 400 different companies ranging from small to large. Maintaining more than 10,000 oil and gas wells occupying 4,000 plus leases and the supporting infrastructure results in these lands being a hub of round-the-clock activity. Economic studies report that over 7,400 company personnel work full-time on University Lands with thousands (20,000) of contractors spending part of their days working on PUF lands.
The extensive infrastructure additionally includes thousands of miles of roads, pipelines, powerlines, midstream gathering, water infrastructure and fencing, all of which require constant oversight and maintenance. Through their unwavering dedication and ability to manage a high volume of daily interactions, UL Surface Landmen ensure that University Lands remains a model of effective land management, benefiting Texas higher education for generations to come.
UNIVERSITY LANDS 46
ANNUAL REPORT 2024
UNIVERSITY LANDS
PUF LANDS MANAGER
2.1 million acres that produce two income streams: mineral income, which comes mainly from oil and gas bonuses, rentals and royalties, and surface income such as income from grazing leases, easements and wind power generation.
MINERAL INCOME
SURFACE INCOME
The constitution permits the UT System and Texas A&M University System to each sell a limited amount of bonds (a type of borrowing) to fund construction and other capital expenses at system institutions. The bonds are secured by the AUF, which gives the systems the lowest interest rates available, saving the state money. Bond proceeds may not be used for operational expenses.
PUF income and investment assets are managed by UTIMCO, a nonprofit corporation operating under the authority of the UT System Board of Regents.
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UNDERSTANDING THE PUF
UNDERSTANDING
Established in the Texas Constitution of 1876 through the appropriation of land.
CONSTITUTION STATE OF TEXAS
PERMANENT UNIVERSITY FUND
UTSYSTEM.EDU/PUF
A constitutional permanent endowment that supports excellence in the The University of Texas and Texas A&M University Systems.
KEY FACTS Constitution gives management to UT SYSTEM Board;
THE UNIVERSITY OF TEXAS SYSTEM CONSTITUTIONAL USES OF AUF:
Grows from oil and gas production and investment income;
Supports construction and capital expenses at institutions of UT and TAMU Systems;
Corpus is not spent except for expenses of managing the land and the investment assets;
Support and maintenance of UT System Administration
Support and maintenance of UT Austin
Payment of principal and interest on PUF bonds
Constitution allows UT Austin and UT System to benefit from AUF for operational expenses.
AUF
TEXAS A&M UNIVERSITY SYSTEM
The Available University Fund is PUF surface income plus an annual distribution from the total return on PUF investments, constitutionally allocated 2/3 to UT System and 1/3 to Texas A&M University System.
The Texas A&M University System has similar constitutional restrictions on use of AUF. Some Texas A&M institutions are not eligible for PUF bonds.
UNIVERSITY LANDS
FISCAL YEAR 2024 ANNUAL REPORT
MIDLAND 704 W. Dengar Ave. Midland, TX 79705 432.684,4404 HOUSTON 825 Town & Country Ln. Suite 1100 Houston, TX 77024 713.352.3808
www.universitylands.utsystem.edu
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