1
00:00:00,280 --> 00:00:07,200
Speaker 1: Bloomberg Audio Studios, podcasts, radio News.

2
00:00:07,960 --> 00:00:11,039
Speaker 2: In recent months, as the Trump administration has gone after

3
00:00:11,119 --> 00:00:14,480
Speaker 2: Harvard University, we've heard a lot about the size of

4
00:00:14,520 --> 00:00:17,799
Speaker 2: that school's endowment. Some lawmakers have said they want to

5
00:00:17,840 --> 00:00:21,479
Speaker 2: do away with its tax exempt status. Bloomberg puts the

6
00:00:21,560 --> 00:00:25,520
Speaker 2: value of Harvard's endowment at fifty three billion dollars, which

7
00:00:25,560 --> 00:00:29,280
Speaker 2: makes it the largest in the US, But the University

8
00:00:29,320 --> 00:00:33,960
Speaker 2: of Texas is not far behind. Everything, of course is

9
00:00:34,000 --> 00:00:38,120
Speaker 2: bigger in Texas. How big is the University of Texas's endowment.

10
00:00:37,840 --> 00:00:41,080
Speaker 1: Well, if you're going to round it, it's almost fifty

11
00:00:41,120 --> 00:00:44,320
Speaker 1: billion dollars, a little more exact, forty seven billion and

12
00:00:44,320 --> 00:00:44,760
Speaker 1: a half.

13
00:00:45,479 --> 00:00:48,000
Speaker 2: So this is now the number two endowment.

14
00:00:48,240 --> 00:00:51,840
Speaker 1: Yes, it surpassed Yale a couple of years ago.

15
00:00:52,040 --> 00:00:55,840
Speaker 2: Janet Lauren covers finance in higher Education for Bloomberg, and

16
00:00:55,880 --> 00:00:59,400
Speaker 2: she says that unlike Harvard's and Yale's endowments, which largely

17
00:00:59,400 --> 00:01:03,040
Speaker 2: come from donations and investment returns, the University of Texas

18
00:01:03,240 --> 00:01:04,920
Speaker 2: has a resource that sets.

19
00:01:04,640 --> 00:01:06,760
Speaker 1: It apart, oil and gas.

20
00:01:11,760 --> 00:01:13,560
Speaker 2: I'm David Gura, and this is the big take from

21
00:01:13,600 --> 00:01:16,520
Speaker 2: Bloomberg News today on the show, how the University of

22
00:01:16,560 --> 00:01:20,440
Speaker 2: Texas harnessed land and oil to power higher ed and

23
00:01:20,480 --> 00:01:27,040
Speaker 2: why it's now shifting to new kinds of energy. Lots

24
00:01:27,080 --> 00:01:31,000
Speaker 2: of universities have fossil fuel investments in their portfolios. In fact,

25
00:01:31,040 --> 00:01:34,080
Speaker 2: some have even divested from those industries in recent years.

26
00:01:34,520 --> 00:01:37,360
Speaker 2: But Bloomberg's Janet Lauren says the way the University of

27
00:01:37,400 --> 00:01:40,560
Speaker 2: Texas profits from oil and gas is very different.

28
00:01:40,920 --> 00:01:44,800
Speaker 1: Nobody has anything like this unless you're a handful of

29
00:01:44,840 --> 00:01:48,240
Speaker 1: schools in Texas and Oklahoma. You know, everybody in Texas

30
00:01:48,280 --> 00:01:51,520
Speaker 1: and Oklahoma knows don't ever sell your mineral rights. But

31
00:01:51,560 --> 00:01:54,760
Speaker 1: most schools don't have anything remotely like this.

32
00:01:55,240 --> 00:01:58,160
Speaker 2: Janet says the roots of UT's oil wealth date back

33
00:01:58,200 --> 00:02:00,000
Speaker 2: to the eighteen hundreds.

34
00:02:00,040 --> 00:02:03,960
Speaker 1: State of Texas set aside land to benefit higher education.

35
00:02:04,600 --> 00:02:07,920
Speaker 1: And the land is in West Texas. And in the

36
00:02:07,960 --> 00:02:13,119
Speaker 1: eighteen hundreds, West Texas was just this arid land, and

37
00:02:13,480 --> 00:02:15,840
Speaker 1: it was assumed that it probably wouldn't generate a ton

38
00:02:15,880 --> 00:02:18,360
Speaker 1: of money. You could get some money for things like

39
00:02:18,480 --> 00:02:21,960
Speaker 1: cattle grazing, and then the idea was at some point

40
00:02:22,000 --> 00:02:25,240
Speaker 1: it probably would have been sold. And then something happened

41
00:02:25,840 --> 00:02:28,160
Speaker 1: in nineteen twenty three, one hundred years ago.

42
00:02:28,600 --> 00:02:30,800
Speaker 2: It feels like out of the Beverly Hill Billies. But

43
00:02:30,840 --> 00:02:32,680
Speaker 2: the practically it is they struck.

44
00:02:33,120 --> 00:02:37,280
Speaker 1: They struck oil, and that changed not only higher education

45
00:02:37,440 --> 00:02:40,560
Speaker 1: financing forever, but it changed West Texas.

46
00:02:40,840 --> 00:02:44,960
Speaker 2: Could you just describe this tract? And I'm just curious

47
00:02:44,960 --> 00:02:46,440
Speaker 2: how big it is. Is there kind of a point of

48
00:02:46,480 --> 00:02:49,280
Speaker 2: comparison that would illustrate how much land the university is

49
00:02:49,320 --> 00:02:49,919
Speaker 2: drawing from.

50
00:02:49,960 --> 00:02:52,760
Speaker 1: So in our story we describe it as thirty three

51
00:02:52,840 --> 00:02:56,080
Speaker 1: hundred square miles. I love the number two point one

52
00:02:56,240 --> 00:02:59,440
Speaker 1: million acres because it just seems so big and vast.

53
00:03:00,080 --> 00:03:04,080
Speaker 1: It's about the size of Rhode Island and Delaware put together.

54
00:03:04,840 --> 00:03:08,080
Speaker 1: And when I went out to Midland and we drove around,

55
00:03:08,200 --> 00:03:09,560
Speaker 1: you know, it's quite arid.

56
00:03:09,880 --> 00:03:13,440
Speaker 2: So historically, what have they done with this land from

57
00:03:13,760 --> 00:03:16,720
Speaker 2: the nineteen twenties until a few years ago, what was

58
00:03:16,760 --> 00:03:18,120
Speaker 2: this land predominantly used for?

59
00:03:18,440 --> 00:03:21,680
Speaker 1: So oil and gas is the main driver of revenue.

60
00:03:22,800 --> 00:03:26,200
Speaker 2: Today, more than twenty thousand wells have been drilled across

61
00:03:26,320 --> 00:03:29,440
Speaker 2: lands belonging to the University of Texas, which are dotted

62
00:03:29,440 --> 00:03:33,760
Speaker 2: with drilling rigs, frack ponds, and pumpjacks. UT doesn't own

63
00:03:33,800 --> 00:03:37,160
Speaker 2: these operations, It just leases its land to private companies

64
00:03:37,200 --> 00:03:39,480
Speaker 2: and gets a cut of the oil and gas they produce.

65
00:03:40,240 --> 00:03:43,320
Speaker 2: The revenue gets divvied up between the UT system and

66
00:03:43,360 --> 00:03:44,760
Speaker 2: the Texas A and M system.

67
00:03:45,000 --> 00:03:48,240
Speaker 1: There's a formula. Two thirds goes to the UT system,

68
00:03:48,440 --> 00:03:51,320
Speaker 1: one third goes to Texas A and M systems, and

69
00:03:51,360 --> 00:03:53,680
Speaker 1: that benefits you know, something like three hundred and fifty

70
00:03:53,720 --> 00:03:57,120
Speaker 1: thousand students total, So it really helps a lot of people.

71
00:03:57,720 --> 00:04:00,920
Speaker 2: The state constitution restricts how that oil and gas money

72
00:04:01,000 --> 00:04:04,680
Speaker 2: can be spent. It can only be used on capital expenses.

73
00:04:05,200 --> 00:04:10,240
Speaker 1: So if hospitals need new buildings, a business school that

74
00:04:10,440 --> 00:04:13,800
Speaker 1: helps build buildings, it's not going for operating money.

75
00:04:13,960 --> 00:04:17,480
Speaker 2: Revenue from the land's surface, like leasing rights for roads,

76
00:04:17,640 --> 00:04:21,440
Speaker 2: power lines, pipelines, and cattle grazing has different rules.

77
00:04:21,600 --> 00:04:24,719
Speaker 1: That goes into a different front. It's valuable because it's

78
00:04:24,760 --> 00:04:26,080
Speaker 1: cash that could be spent.

79
00:04:25,920 --> 00:04:29,880
Speaker 2: Right away, and that surface income has historically been dwarfed

80
00:04:29,920 --> 00:04:33,000
Speaker 2: by all the oil and gas money. But Janet says,

81
00:04:33,000 --> 00:04:36,600
Speaker 2: the managers of the University of Texas's landholdings, no, they

82
00:04:36,680 --> 00:04:39,920
Speaker 2: can't count on oil and gas forever that one day

83
00:04:40,000 --> 00:04:42,640
Speaker 2: the resources of the Premium basin aren't going to be

84
00:04:42,680 --> 00:04:46,360
Speaker 2: as plentiful may not be as valuable as they are now,

85
00:04:46,960 --> 00:05:00,919
Speaker 2: so the university is expanding into renewables. That's next. The

86
00:05:01,000 --> 00:05:03,640
Speaker 2: University of Texas has managed to make a lot of

87
00:05:03,680 --> 00:05:06,440
Speaker 2: money from land that seemed to have little value back

88
00:05:06,480 --> 00:05:09,120
Speaker 2: in the nineteenth century. For much of the last one

89
00:05:09,160 --> 00:05:11,839
Speaker 2: hundred years, the value has come from the oil and

90
00:05:11,920 --> 00:05:16,760
Speaker 2: gas deep underground. Bloomberg's Janet Lawn says the university is

91
00:05:16,800 --> 00:05:21,080
Speaker 2: diversifying thinking long term, and that means figuring out how

92
00:05:21,080 --> 00:05:24,240
Speaker 2: to better use the land for its above ground resources.

93
00:05:24,680 --> 00:05:29,000
Speaker 1: They're looking for thirty fifty years, maybe the next century,

94
00:05:29,160 --> 00:05:32,120
Speaker 1: and at some point the Permium basin will not be

95
00:05:32,240 --> 00:05:35,520
Speaker 1: generating the same kind of oil once it's drilled, it's

96
00:05:35,560 --> 00:05:39,000
Speaker 1: not being replaced. But with wind in solar, it's an

97
00:05:39,040 --> 00:05:42,120
Speaker 1: asset that could be generating for years.

98
00:05:42,360 --> 00:05:45,560
Speaker 2: In addition to wind and solar, Janet says, UT has

99
00:05:45,640 --> 00:05:49,080
Speaker 2: also started renting land for battery storage and data centers

100
00:05:49,080 --> 00:05:53,080
Speaker 2: for crypto, creating an income stream that barely existed five

101
00:05:53,160 --> 00:05:56,800
Speaker 2: years ago. You described seeing this tract of land for

102
00:05:56,800 --> 00:05:59,320
Speaker 2: the first time. You've gone back now to report on

103
00:05:59,320 --> 00:06:00,960
Speaker 2: what they're doing now and what they hope to do

104
00:06:00,960 --> 00:06:03,120
Speaker 2: in the future. How different does it look? What are

105
00:06:03,120 --> 00:06:05,560
Speaker 2: the landmarks now that are there that wouldn't have been

106
00:06:05,600 --> 00:06:06,680
Speaker 2: there the first time you visited.

107
00:06:06,960 --> 00:06:09,240
Speaker 1: Well, when I was there a few years ago, we

108
00:06:09,320 --> 00:06:12,599
Speaker 1: mostly focused on seeing what the oil production looks like.

109
00:06:12,680 --> 00:06:14,720
Speaker 1: In this time we went to see wind and solar.

110
00:06:14,880 --> 00:06:18,120
Speaker 2: Are we talking about huge solar arrays? A lot of windmills?

111
00:06:18,120 --> 00:06:19,880
Speaker 2: Just physically? What does it look like now that they're

112
00:06:20,080 --> 00:06:21,680
Speaker 2: opening it up to more investment in that?

113
00:06:21,880 --> 00:06:25,159
Speaker 1: Well, they now have five wind and solar sites each.

114
00:06:25,720 --> 00:06:29,320
Speaker 1: And you know, they started signing these contracts several years ago,

115
00:06:29,880 --> 00:06:32,320
Speaker 1: and it takes a long time to build these, so

116
00:06:32,400 --> 00:06:35,239
Speaker 1: you're really starting to see this revenue come in finally.

117
00:06:35,839 --> 00:06:38,799
Speaker 1: But they're quite big. You know, one section of solar,

118
00:06:39,120 --> 00:06:41,000
Speaker 1: you know, I describe it as something like eight hundred

119
00:06:41,040 --> 00:06:42,599
Speaker 1: thousand panels. It's a lot.

120
00:06:43,040 --> 00:06:44,560
Speaker 2: What does that look like? I mean, did you see that?

121
00:06:44,760 --> 00:06:46,920
Speaker 1: Yes, you look one way and the other way and

122
00:06:46,960 --> 00:06:48,359
Speaker 1: the other way, and it's quite vast.

123
00:06:51,440 --> 00:06:55,240
Speaker 2: All told, these surface oriented ventures generated almost one hundred

124
00:06:55,279 --> 00:06:58,520
Speaker 2: and thirty million dollars in the year that ended last August.

125
00:06:58,920 --> 00:07:02,000
Speaker 2: That's the largest amount ever and about five times as

126
00:07:02,080 --> 00:07:05,640
Speaker 2: much as they produced fifteen years ago. It's still a

127
00:07:05,680 --> 00:07:08,839
Speaker 2: small fraction of the income the school generates from fossil fuels,

128
00:07:09,000 --> 00:07:13,200
Speaker 2: but it's an especially valuable fraction because unlike the fossil

129
00:07:13,200 --> 00:07:16,960
Speaker 2: fuel funds, which the state's constitution restricts for capital projects,

130
00:07:17,320 --> 00:07:21,240
Speaker 2: the surface oriented funds come with more flexibility. It's all

131
00:07:21,280 --> 00:07:25,720
Speaker 2: managed through an entity called University Lands. You have looked

132
00:07:25,760 --> 00:07:29,120
Speaker 2: at some of the deals that University Lands has signed recently.

133
00:07:29,200 --> 00:07:30,720
Speaker 2: What can you tell us just about sort of what

134
00:07:30,760 --> 00:07:33,280
Speaker 2: they're looking at. Who's coming to them hoping to lease land.

135
00:07:33,400 --> 00:07:36,240
Speaker 1: Well, they've gotten a flood of request and that's something

136
00:07:36,280 --> 00:07:39,040
Speaker 1: that they had to do was evaluate what is coming

137
00:07:39,080 --> 00:07:42,440
Speaker 1: in because you know, it was everything from Uncle Charlie

138
00:07:42,480 --> 00:07:47,000
Speaker 1: wants to flip this land versus large companies. And they

139
00:07:47,040 --> 00:07:50,440
Speaker 1: have a preliminary agreement with a company for about two

140
00:07:50,560 --> 00:07:53,840
Speaker 1: hundred thousand acres, which is pretty significant, and that the

141
00:07:53,920 --> 00:07:57,520
Speaker 1: idea is that they would generate wind and solar for electricity.

142
00:07:57,800 --> 00:08:00,880
Speaker 2: Are we in early days yet or is it possible

143
00:08:00,880 --> 00:08:02,680
Speaker 2: to say sort of how well this is working out

144
00:08:02,800 --> 00:08:04,679
Speaker 2: for them? Are they making a substantial amount of money

145
00:08:04,720 --> 00:08:06,360
Speaker 2: by getting into these new types.

146
00:08:06,120 --> 00:08:08,680
Speaker 1: Of Entergriyes, well, they're sort of you know, dipping their

147
00:08:08,720 --> 00:08:12,200
Speaker 1: toe as the CEO of University Lands described. You know,

148
00:08:12,200 --> 00:08:15,160
Speaker 1: they were initially looking for some singles and now you

149
00:08:15,240 --> 00:08:18,720
Speaker 1: know they're looking for home runs, which is multi uses

150
00:08:18,920 --> 00:08:19,800
Speaker 1: on one site.

151
00:08:19,920 --> 00:08:22,840
Speaker 2: Tell us about CEO William Murphy, you sat down with him.

152
00:08:23,280 --> 00:08:26,040
Speaker 2: What's his background, what's his perspective on what the future

153
00:08:26,080 --> 00:08:27,400
Speaker 2: looks like for these lands.

154
00:08:27,520 --> 00:08:30,600
Speaker 1: Well, he's sort of looking across a chessboard and you know,

155
00:08:30,680 --> 00:08:34,520
Speaker 1: some things maybe ready to be signed now, and again

156
00:08:34,559 --> 00:08:37,920
Speaker 1: these things take years to build, but he's thinking about

157
00:08:38,040 --> 00:08:42,480
Speaker 1: you know, a long time ways. His early career was

158
00:08:42,520 --> 00:08:46,319
Speaker 1: as an oil and gas attorney, and then he oversaw

159
00:08:46,360 --> 00:08:48,760
Speaker 1: a place called King Ranch, which is one of the

160
00:08:48,840 --> 00:08:51,960
Speaker 1: largest cattle ranches, if not the largest cattle ranch in

161
00:08:52,000 --> 00:08:54,440
Speaker 1: the state of Texas. I think it's over eight hundred

162
00:08:54,440 --> 00:08:57,840
Speaker 1: thousand acres. So it's sort of uniquely qualified to do this.

163
00:08:57,960 --> 00:09:00,240
Speaker 1: And part of his strategy with oil and gas us

164
00:09:00,280 --> 00:09:04,480
Speaker 1: to increase production. So that spectacular year in twenty twenty

165
00:09:04,520 --> 00:09:06,760
Speaker 1: two when they head over two billion dollars in oil

166
00:09:06,840 --> 00:09:10,400
Speaker 1: revenue was partly because of price, but also production.

167
00:09:11,440 --> 00:09:15,080
Speaker 2: We've talked about wind power and solar power. I know

168
00:09:15,120 --> 00:09:18,160
Speaker 2: that there's this push to build huge data centers on

169
00:09:18,200 --> 00:09:20,600
Speaker 2: open land like this. Are they embracing that as well?

170
00:09:20,600 --> 00:09:22,960
Speaker 2: Are companies coming to them hoping to build large data centers?

171
00:09:23,200 --> 00:09:27,400
Speaker 1: Yes. The Public Utility Commission of Texas in April announced

172
00:09:27,400 --> 00:09:31,079
Speaker 1: a pretty big project ten billion dollars for three transmission

173
00:09:31,120 --> 00:09:32,440
Speaker 1: lines in West Texas.

174
00:09:32,720 --> 00:09:35,079
Speaker 2: Explain why that's so important, so they can lease all

175
00:09:35,080 --> 00:09:38,160
Speaker 2: of this land. Companies can have these aspirations of putting

176
00:09:38,160 --> 00:09:41,000
Speaker 2: in data centers or finding new ways to get solar

177
00:09:41,080 --> 00:09:43,439
Speaker 2: energy or wind energy, but they need this infrastructure.

178
00:09:43,480 --> 00:09:46,600
Speaker 1: They need transmission lines because you need to get the

179
00:09:46,720 --> 00:09:49,920
Speaker 1: energy from East Texas to go back and forth from

180
00:09:49,960 --> 00:09:53,880
Speaker 1: East to West Texas. So if you have wind in solar,

181
00:09:54,120 --> 00:09:57,360
Speaker 1: you have to get the energy it's producing to go

182
00:09:57,400 --> 00:09:59,240
Speaker 1: through some sort of transmission line.

183
00:10:00,000 --> 00:10:03,720
Speaker 2: If someone's listening to this and wonders if Texas is

184
00:10:03,760 --> 00:10:07,480
Speaker 2: giving up on oil and natural gas, what would you

185
00:10:07,480 --> 00:10:08,079
Speaker 2: say to them?

186
00:10:08,120 --> 00:10:11,600
Speaker 1: Not a chance. They are not even remotely thinking of that.

187
00:10:12,000 --> 00:10:14,800
Speaker 1: This is adding to their income and they're very clear

188
00:10:14,840 --> 00:10:17,240
Speaker 1: about that. They see oil and gas in their future

189
00:10:17,240 --> 00:10:18,280
Speaker 1: for a very long time.

190
00:10:21,440 --> 00:10:23,920
Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.

191
00:10:24,280 --> 00:10:26,800
Speaker 2: To get more from the Big Take and unlimited access

192
00:10:26,840 --> 00:10:30,000
Speaker 2: to all of Bloomberg dot Com. Subscribe today at Bloomberg

193
00:10:30,000 --> 00:10:33,600
Speaker 2: dot com Slash podcast offer. If you liked this episode,

194
00:10:33,720 --> 00:10:35,720
Speaker 2: make sure to follow and review The Big Take wherever

195
00:10:35,760 --> 00:10:38,240
Speaker 2: you listen to podcasts. It helps people find the show.

196
00:10:38,720 --> 00:10:40,680
Speaker 2: Thanks for listening. We'll be back tomorrow