Who Owns the Royalties
Oil royalty companies come in two broad forms: corporations that own mineral and royalty interests, and pass-through royalty trusts. Both collect a top-line share of oil and gas revenue without drilling, but they behave very differently.
The standout corporation is Texas Pacific Land, the company behind the “29% Account” promotion. It holds roughly 870,000 acres in the Permian Basin, collects royalties from thousands of wells, and, since converting to a corporation in 2021, can reinvest and develop water rights. The trusts, by contrast, are fixed vehicles. Permian Basin Royalty Trust (PBT) holds a net-profits interest, a weaker structure that pays only after the operator subtracts costs, while Sabine Royalty Trust (SBR) holds royalty interests and pays monthly.
The Structure Determines the Return
The single most important distinction is where in the revenue stack the interest sits. A true royalty is paid out of gross revenue, before the operator recoups costs. A net-profits interest is paid after costs, which makes it smaller and less predictable. That one difference explains a lot of the performance gap between the royalty names, and it is why the trust Lichtenfeld recommended before Texas Pacific Land was a weaker pick. We detail that in our PBT stock explainer.
The second distinction is corporate versus trust. A corporation can grow and diversify; a trust distributes nearly everything and slowly depletes. We contrast the two in our Sabine Royalty Trust piece.
How to Choose
For long-term growth and a hedge on Permian Basin energy and water, the corporate royalty model wins, and Texas Pacific Land is the flagship. For a high current payout from a passive, depleting structure, the trusts are the tool, but understand the decline. See our royalty stocks overview for the full category and our Texas Pacific Land breakdown for the flagship name.
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