Oil price crash threatens Texas university endowments

[Jonnyeagle]

The oil price crash that has hammered the US shale industry is now threatening to put the squeeze on one of America’s biggest university endowments. The University of Texas and Texas A&M University systems have amassed one of the largest college endowments in the US through their economic interest in swaths of land, just over half of which is leased to oil and gas producers. The companies hand over a share of their revenues to University Lands, which manages about 2.1m acres of territory in West Texas for the educational institutions.

Over the past 10 years, the Permanent University Fund (PUF) has reaped $8.2bn from the arrangement, helping to push its assets to $24bn by the end of 2019. But as the economic upheaval unleashed by the coronavirus pandemic has sent the oil price tumbling, the universities have been forced to rip up their forecasts. The royalties the PUF will receive are expected to drop to $500m for the year ending August 2021, according to a spokeswoman for the University of Texas system. “Obviously the royalty flow is not going to be $1bn this year,” says Dale Craymer, president of the Texas Taxpayers and Research Association. “We’re probably going to see much slower growth of the corpus as a result of the oil price drop.”

read more:  https://www.ft.com/content/ab2f0277-1ec0-47ea-a674-9c205fa22c01

Edited May 5, 2020 by Jonnyeagle

[meanrob]

Let me get my violin 

[Rudy]

So texass u and aTm lose money?  That's good. 

[GrandGreen]

UT should spread some of that pain around.  Every college in the state would like to have that problem. 

[drex]

Don't laugh...eventually it will negatively impact UNT.

[SilverEagle]

33 minutes ago, drex said:

Don't laugh...eventually it will negatively impact UNT.

….doesn't it always?

[El Paso Eagle]

A&M and UT will be OK. As mentioned above, the pain will be felt down stream. For everyone's sake the price of oil needs to go back up. 

[Greenrex]

Fook 'em.

 

[Green Crazy]

Oil also effects tech as a lot of their donors are oil men.

Texas won't get hurt too much they have a billion invested in gold on top of everything else.

[untjim1995]

Texas and A&M will always be fine financially--huge alumni, major research projects, and gigantic followings. Tech has to have the network money, so if they have it, they are fine. 

To me, the energy fall really kills UH. That school depends on resources outside of network money because of the G5 conference setup.

Beyond that, the rest of us are going to feel it some, but nothing like UH will.

[UNTLifer]

On 5/6/2020 at 1:41 AM, Green Crazy said:

Oil also effects tech as a lot of their donors are oil men.

Texas won't get hurt too much they have a billion invested in gold on top of everything else.

Tech will take a beating.