re: Updated SEC Endowment Rankings (report on March 19, 2012)

This is a long post but I am very familiar with the Texas A&M Foundation and PUF Endowment. In terms of the Texas PUF Fund, the numbers for that fund over the next 5 years should more than double almost triple due to the new Texas shale horizontal natural gas drilling taking place on public land in south and west Texas. There is a drilling boom going on with the Natural gas shale play that will be a windfall to the PUF over the coming years, even if Natural gas prices stay low. Also the amount to land being leased out over just the last year is staggering ( ExxonMobil, Devon Energy and Anadarko Petroleum).

At meeting I was in at the Foundation in College Station, we were told that the PUF had a 20% increase last year, and now expect a 25-30 percent average increase in the fund each year for next five year, almost tripling the size of PUF assets. The Texas A&M Endowment could be pushing 18 Billion by 2018. This is directly correlated to the Natural Gas shell drilling boom going on Texas at this time. Another note as previously stated both University of Texas and A&M may only use the interest of these funds for capital improvements, but they are able to go to the bond markets and raise capital in the Municipal market getting AAA rating using the cash flow to fund the capital improvements. A&M is now putting together plans on where to use this future cash flow windfall for very large capital improvements on the College Station Campus.

FYI, please note this is not athletic related as the Texas A&M endowment as it is related to the PUF can not be used for Athletic Funding.

On a side note, I thought this was funny, I was heard TU approached A&M with a crazy Idea of both going in together using PUF funds to float bonds to build a High speed rail connection between Austin’s TU Campus and A&M College Station, in the future. My take they want to use PUF money as a green initiative between the two flagship campuses. The leadership in Austin thinks so much more to the left politically than leadership in College Station, it is amazing. Also, there is a growing worry in Austin that as the two University endowments grow at a high speed in the coming years due to the Energy boom in Texas, that the two State chartered flagship Universities will have political pressure at sometime to share with other state universities, i.e. Texas Tech, Sam Houston, SFA, some of there PUF Funds. There is a growing sense that A&M and Texas much work even hearded together with the legisator to protect our intrests. My take as this happens you will see A&M and Texas within the next 2-4 years come together and renew our athletic rivalries on the field of play also. We work together within the state of Texas on to many other fronts. After the TU AD retires you will see pressure from multiple sources to push Texas to play A&M once again, right now the TU leadership needs to save face with the loss of A&M.