Here’s a trivia question for you: This entity saw its first oil well drilled in 1923 on acreage in West Texas. In its fiscal year ending in August, it was producing 220,000 boe/d. Who is it?

It’s an endowment called the University of Texas System Lands.

If it were a company, it would be one of the top five oil producers in Texas. It manages 9,000 producing wells on 2.1 million fee acres, and some 120 operators drill on its lands.

Known as UL, University Lands was formally established by the Texas Constitution in 1876 for the benefit of funding the UT and Texas A&M systems of higher education. Revenue from oil and gas mineral leases on University Lands flows to the Permanent University Fund, an endowment that today is valued at $17.5 billion.

Its under-the-radar profile may be about to change, because Mark A. Houser, former president and CEO of EV Energy Partners LP, became the first-ever CEO of the University Lands Office in March 2015.

“This is an endowment we will hold forever, so how do we want to manage it? How much do we want to push these leases? Do we want to alter our royalty rates?” Houser told the Houston Energy Finance Group in October.

“These are very unique assets. If we were a public royalty company based on current market conditions, we’d be valued at about $14- to $16 billion,” Houser said. At one point UL was generating as much as $1 billion annually before oil prices crashed.

The University of Texas System board of regents decided it was time to build a professional, more proactive management team.

“Part of my job is to educate the regents on what we have, its value and how to better manage our cash flow,” Houser said, adding that “we’ll probably drill about 200 wells this year.”

When Houser was appointed in March, regent Jeff Hildebrand, CEO of Hilcorp Energy Co., an independent based in Houston, said, “Recent advances in technology have dramatically improved the ability to recover oil and gas from reservoirs that previously were non-productive. As a result, gross production on University Lands has more than doubled since 2008, and revenue has tripled since 2010.”

The profile of University Lands should increase now. Houser intends to run it “less like an agency and more like a professional minerals company,” he said.

“This is really like managing a giant, cash-flow-positive ranch,” he said. “We have oil and gas production. We are one of the largest producers of water in the state. We manage the largest pronghorn herd in the country. We have a winery, a wind farm…and we just signed an easement for a company to build a gas pipeline across our lands into Mexico.”         

Since taking over as CEO, Houser has sought to create “a more business-oriented, forward-looking culture.” To that end he has hired two geologists and brought on some other technical people in oil and gas, water management and a general counsel. His “boss” is the board of regents, which includes several prominent alums who are highly successful independent oil and gas producers, including Alex Cranberg of Aspect Resources in Denver and Hildebrand.

Two-thirds of the University Lands’ oil and gas revenues go to the University of Texas and one-third to Texas A&M. Once a month royalty income is swept into Utimco, the University of Texas Investment Management Co., and once a year Utimco sweeps a distribution into the Permanent University Fund (PUF) that aids the two schools.

Total fiscal year 2016 revenues are estimated to be $600- to $800 million based on 15.4 million boe of production—down from the peak in 2014 but still significant, Houser said. The biggest driver of income is not upfront fees, but the royalty income generated from production.