Q4 2024 LandBridge Co LLC Earnings Call
Speaker Change: Thank you for standing by and welcome to the LandBridge 4th quarter 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers are marked, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one. Thank you. I'd now like to turn the call over to Jason Long, Chief Executive Officer. You may begin.
Jason Long: Good morning, everyone, and thank you for joining our fourth quarter in fiscal year 2024 earnings conference call. We continue our exceptional growth trajectory in the fourth quarter of 2024 growing revenue 109% and adjusted EBITDA 108% year-over-year with an 87% adjusted EBITDA margin.
Jason Long: For the full year ended December 31st, 2024, we grew revenues 51% year-over-year, adjusted even out by 55% year-over-year, and achieved 88% adjusted even out margins.
Jason Long: As we reflect on our first six months as a public company, it is clear that our active land management strategy is working as expected to create value for our shareholders.
Jason Long: 2024 was a year of expansion for LandBridge. We more than tripled our land holdings growing our total surface acres from approximately 72,000 surface acres to approximately 273,000 surface acres with 53,000 of those acres acquired in the fourth quarter of one.
Jason Long: In December , we acquired 46,000 largely contiguous surface acres known as the Wolfbun Ranch, which expanded our position in Reeves and Pekis County, Texas, a highly strategic location for oil and natural gas production that also provides us access to the Wauha natural gas
Jason Long: As part of the acquisition, LandBridge secured a minimum annual revenue commitment of 25 million for each of the next five years from BTX and its affiliates, which includes surface operations, brackish water and royalties from produced water handling.
Jason Long: We continue that momentum into 2025, closing on an acquisition in February for approximately 3,000 acres, continues to our current land position in Lee County, New Mexico. This acquisition increased our current acreage position to approximately 276,000 acres.
Jason Long: Additionally, we see significant future growth opportunities from digital infrastructure, renewable energy, and commercial real estate.
Jason Long: Subsequent to the quarter, we executed two notable agreements. We executed a development agreement with western midstream partners LP providing a surface and poor space solution for a portion of the recently announced pathfinder produced water pipeline and related produced water handling facilities on our e-state line range.
Jason Long: Additionally, we executed solar energy project development agreements with affiliates of Desiree, a leading developer owner and operator of the Minnable Energy Projects.
Jason Long: The agreements included 6,700 acres in Andrews County, Texas, and Lee County, New Mexico, for which Desiree has submitted interconnection requests to the Southwest Power Pool.
Jason Long: We're excited to be able to announce these two agreements that speak to our continued success to actively commercialize our land.
Jason Long: We remain confident that digital infrastructure will be an important growth driver for our business moving forward. The rapid development of AI and related need for data centers, among other high competing power demands such as crypto mining, will continue to require access to cheap power and water for cooling.
Jason Long: Our acreage in West Texas is well positioned to support these requirements and will remain actively engaged in seeking potential opportunities with these interested parties.
Jason Long: As a reminder, in November of 2024, we officially signed our first least development agreement for the development of a data center and subsequently received an $8 million payment in December .
Jason Long: The payment is a one-time non-refundable deposit for a two-year site selection period with the potential for a data center to be constructed within four years thereafter.
Jason Long: The successful IPO, the increase of our surface acreage, and the signing of new commercial agreements, speak to the momentum of our active land management strategy.
Scott, now over to you.
Scott: Thank you Jason and good morning to everyone joining us today. To echo Jason, we're pleased that the results of this quarter proud of the milestones we reached in 2024 and excited for the promising growth opportunities ahead in 2025.
Scott: Our fourth quarter revenues increase to 36.5 million of 28% sequentially in 109% year-over-year. Our full year 2024 revenues increase to 110 million of 51% year-over-year.
Scott: So, Quential Revenue Growth for the Fourth Quarter was driven by surplus-use royalties and revenues, which increased 54% sequentially, including the $8 million payment related to the data center at least development agreement Jason mentioned, as well as increased produced water royalty volumes.
Scott: Revenue from oil and gas royalties also increased 54% sequentially in Q4, driven by an increase in net royalty production. Resource sales and royalties decline 28% sequentially, which is driven by a decrease in brackish water sales and royalty volumes.
Scott: As highlighted, the past few quarters, we continue to shift our revenue mix towards non-oil and gas royalty-based arrangements to further insulate our exposure to commodity price fluctuations.
Scott: and the fourth quarter, non-oil and gas royalty revenue, including surface use royalties and revenues and resource sales and royalties, accounted for nearly 90% of overall revenue, approximately flat from the prior quarter and up about 20% year over year.
Scott: For the full year non-oil and gas mineral royalty revenue represented 85% of total revenue and increased of more than 13% year over year.
Scott: Importantly, our results in 2024 validate our ability to capitalize on growth in the Permian Basin without incurring meaningful operating and capital expenditures. This key feature of our business model translated to an adjusted even a margin of 88% and free cashflow margin of 61% in 2024.
Scott: In the fourth quarter, we delivered 31.7 million of adjusted EBITDA of 27% sequentially in 108% year-over-year, with an adjusted EBITDA margin of 87%. For the full year ended in 2024, we delivered 97.1 million of adjusted EBITDA.
Scott: We also generated free cashflow over approximately 26.7 million and a free cashflow margin at 73% in the fourth quarter. And for the full year ended 2024, we generated 66.7 million of free cashflow.
Scott: As noted last quarter, our free cash flow in 2024 was impacted by non-recurring IPO-related expenses and lease termination costs. Our Q4 free cash flow margin of around 70% is more in line with our long-term expectations.
Scott: Additionally, we'd like to discuss our surface-use economic efficiency, which we define as total revenues less oil and gas mineral royalty revenues divided by the applicable acreage.
Scott: This metric for our legacy 72,000 acre position has increased from $465 per acre in 2022 to $724 per acre in 2023 to $1,018 per acre in 2024.
Scott: We think this speaks to our unique ability to significantly increase cash flows on our acreage over time through our active land management strategy. And we believe similar growth potential exists on the surface acquired in 2024, again, without any meaningful cash outlay for capital expenditures.
Scott: Moving forward, we'll continue to execute on our capital allocation priorities, which include pursuing value-enhancing land acquisitions with a focus on underutilize and under commercialized surface.
Scott: As a reminder, we seek to acquire a service that is not just financially creative, but also offers long-term growth potential that mirrors our existing portfolio.
Scott: We are also focused on maintaining a strong balance sheet to maximize financial flexibility over time. We ended the year with 385 million of outstanding under our credit and debt facilities, which is up from 281.3 million at the end of the third quarter of 2024.
Scott: We updated and amended our debt facilities in part to fund our recent acquisitions as part of the amendments to the requirement for quarterly amortization payments was removed, which will improve cash flow and liquidity to allow for more flexibility and optionality for future capital allocation alternatives.
Scott: As a result of these updates, we ended the year with total liquidity of $107 million, including cash and cash equivalent of $37 million and $70 million available under our amended revolving credit facility.
Scott: Finally, similar to last quarter, it would declare to cash divot into shareholders of 10 cents per share.
Scott: While we will revisit the amount of the dividend on a quarterly basis with our board, we will continue to focus our capital allocation strategy on the robust pipeline of attractive acquisition opportunities available to us.
Scott: Looking ahead, we are reaffirming our previously announced guidance for 2025. For the full year, we expect 170 to 190 million of adjusted EBEDEP driven by incremental contributions from our recent acquisitions, initial solar facility contributions to surface use revenues, and growth of surface use royalties to higher produced water volumes, among other factors detailed in our press release.
Scott: In conclusion, we delivered another outstanding quarter to close out a year of strong growth. Our momentum remains promising and we look forward to advancing development on our surface acreage and partnership with industry leading developers and operators. And now we'd like to open up the line for questions, operator.
Scott: Thank you. We will now begin the question and answer session. If you would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.
Scott: Your first question comes from a line of Jackie Colettis from Goldman Sachs. Your line is open.
Jackie Colettis: Hi, good morning. Thank you so much for the time. First, just want to start, you know, you called out your ability to increase surface use economic efficiency every year. You know, looking ahead, where do you think this metric can go from here as you see the growth across your footprint?
Jackie Colettis: Yeah, hey, good morning, Jackie. It's a great question. You know, we haven't defined a hard cap by any means right now, but we think there's still a lot of room to move that up.
Jackie Colettis: Just to quantify that a bit, we can look at a section or one square mile 640 acres as a good example.
Jackie Colettis: and in that section, we can fit a one-produced water handling facility that can generate one and a half.
Jackie Colettis: $1 million per year at that facility in royalty revenue, but then on top of that, there's a lot of acreage that isn't used by just that tin acre produced water handling facility site that we can do quite a bit with.
Jackie Colettis: You know, I'll give an obvious example, you know, we can fill in, call it that extra space with opportunities like solar, similar to the opportunity we announced on this earnings.
Jackie Colettis: This earnings release, and that could add easily another $500,000 plus across that section. To think we can do $2 million per section per square mile, it equates to a little over $3,000 an acre, I would say is very, very achievable, and that's not giving credit to some of the more, called economically dense opportunities such as sand mines, such as digital infrastructure and so on. A lot of running room left, again, I think that $3,000 plus is a pretty good bogey here
Jackie Colettis: in the near term, but we definitely don't think that's the hard cap.
Jackie Colettis: I got to appreciate it, and then just following up, you know, on your agreement with Wes, he provides just more details on the size and the expected upside from that contract. And then on, are there more third-party agreements that you can win from here beyond, you know, water bridge in general?
Jackie Colettis: Yeah, good question. So, to start with the West piece, the agreement is a bit the spoke just given the fact that we are a portion of the solution there, albeit we think that we're one of the critical pieces of the solution. You know, in terms of just the economic impact.
Jackie Colettis: of Royaltees. It really just depends on the total volumes and the source of those volumes, but I would say a good deal for us, a good deal for West, we're happy to partner with them on this, and I think there's a great upside for both of us here.
Jackie Colettis: Now, as it relates to the second part of the question, we are in process with talks with a lot of other folks out there, a lot of the third parties out there. So, you know, this west agreement is certainly not just called a one-and-done, you know, obviously we have a lot going on with water bridge, but there are a lot of other folks in the water infrastructure space, in the upstream space.
Jackie Colettis: that find both access to our service and do our service incredibly valuable. We continue to have those commercial discussions and hope to share more wins later this year.
Will, thank you all we were there. Thanks, Jacket.
Speaker Change: You are next question comes from a line of Charles Meade from Johnson Race. Your line is open.
Charles Meade: Yes, good morning, Jason Scott. Jason, I want to go back to you. Yeah, I want to go back to some of your prepared comments on the on the data. So the first was great. You guys been talking about this for a while. It's great to see that 8 million in.
Charles Meade: in December , but can you, I think if I heard you right, you said you've got a two-year site selection period and then a four-year construction period.
Speaker Change: Can you give us a sense of what the road map is from here, what the milestones would be?
Speaker Change: for future revenue and whether there's going to be anything when we exit that two-year site selection period and then what the, you know, along the lines what Scott was saying, what the kind of annual revenue opportunity is perhaps after that four-year construction period.
Speaker Change: Yeah, Charles, I'll tackle this one. Yeah, so as we've mentioned previously, this two-year option period, our site selection period, kind of in the process of that right now, the voiceover to us has been expectations likely closer to 12 to 18 months, but they do have that full 24 months.
You know, after that slight selection wraps up.
Speaker Change: We start to see a ratchet of cash flows that work to our benefit and so it will start with a smaller, more subsidized lease component as they kind of stage for construction. But once they actually break ground on construction, we would expect to see that full $8 million a year in lease payments for that 2,000 acres. Now as different phases come online, that's when we would expect to see incremental revenue streams to include the profit interest on the power generation.
Speaker Change: as well as potentially any water sales that are needed for cooling either the power generation or the actual data center itself. But as you alluded to, it is a multi-year timeline. These are large capital projects. And so, I think we're in a really good spot right now with everything moving forward as contemplated. But...
Speaker Change: You know, I guess the takeaway is we would expect to start seeing more revenues from that likely next year and seeing those continue to ratchet up over the subsequent years through construction as different phases of operations come online, you know, and I think finally kind of targeting again that that one gigawatt being probably a few years after that first phase is online. Thank you very much for your time.
Speaker Change: Good job, I know. Thanks for all that detailed news. Got to know you talked about it before, but it's good to get that refresher.
Scott: The Wolfbone Ranch, can you talk about how that integration is going and what, if anything, you've learned any kind of opportunities that you may be aware of, that you weren't when you struck that deal?
Scott: Yeah, I mean, from an integration standpoint, the beauty of surface, and again, not being an oscillating company as the integration component is actually pretty light other than just some back office work, and so, you know, that has gone seamlessly, I would say, the kudos to both.
Scott: You know, our accounting and legal teams, as well as those over at VTOL and VTX, it was a very smooth process there.
Scott: But as we kind of think through opportunities, I think what we found is just a lot of the commercial underwriting but the investment thesis that went into that acquisition. So proximity to Waha, large contiguous blocks, access to various infrastructure, highway frontage, highway frontage, all of that. Yeah, it's come into fruition very, very quickly.
Scott: and we've gotten quite a bit of interest in that, such as having a number of conversations right now for access.
Scott: to surface because of those various resources. So, you know, obviously having just closed on that a couple months ago, we're still kind of in the early inings here, but...
Scott: You know, I would say it's someone off to the races and we've got great traction, you know, out of the gate here and again, you know, hope to be able to share some of the wins later this year as a result of that acquisition.
That's great detail. Thanks, Scott. Thanks, Jason.
Yeah, thanks Charles, Charles, for-
Speaker Change: You're next question comes from a line-up of Derek Whitfield from Texas Capital. Your line is open.
Derek Whitfield: Good morning all and congrats on an impressive first year as a public company.
Thanks, sir.
Speaker Change: First, I wanted to start with the land strategy on page 4. Previously, we're building a wall around the state line for the benefit of the damage water captures, no longer in Delaware water disposal need to grow.
Speaker Change: Could you speak to the opportunity of your shame with the BLM, SLO, Leases, and Lee County?
So
on the BLM and stately stuff.
Majority of those.
Speaker Change: Baker's positions that we've bought, obviously reverse strategic and the fact that
Speaker Change: It gave us the ability to bring some of our supply water from Texas up into Mexico, as well as the produce water piece, so really leveraging on the
Speaker Change: The fee pieces that we bought in and around those leases is where we've been able to get some really good tellwests. Yeah, I think it's important to note that we're not necessarily underwriting any value to those leases when we work through our M&A strategy now.
Speaker Change: just by nature of call it the New Mexico landscape, a lot of this fee surface includes some of these leases, so you tend to be able to capture those. And what if I'll swoop call it, but when we think through, where is?
Speaker Change: Where is the real value proposition in these acquisitions? It is going to be largely on that fee surface. For the sake of the map, we wanted to call out out just to be transparent with those.
Speaker Change: Sure, I can then perhaps figure a question on data centers for my follow-up.
Speaker Change: We've seen a trend of data centers being built and more remote locations like Stargate.
and think about the progression of discussions with your customers.
Speaker Change: How are you seeing that picture unfold for more data centers in the Permian? I guess direction are you guys more bullish than three to six months ago?
Take a son, Jason.
Yeah, look, I think that, you know.
Speaker Change: That there is, we definitely are about to think more bullish. I think that, um,
Speaker Change: You know, timing is everything here. Once this first domino falls, I think there will be a lot more.
Speaker Change: to come with it. You know, power is a big piece of this and obviously access to surface, access to the grid, access to gas are all very important, important pieces of the puzzle. So look, I think that the data center, hyper-scalers are definitely getting...
Speaker Change: More comfortable with these remote locations as we've seen on the Stargate side of things so yeah we're very excited about the opportunity our position in our surface gives us you know really good running room as we have these conversations.
That's great. Thanks for taking my questions.
Yep, thanks, Dirk.
Speaker Change: Your next question comes from a line of Alexander Goldfarb from Piper Sandler. Your line is open.
Hey, hey, more down there.
Thank you for joining us and have a great afternoon
Speaker Change: Hey, morning. Just a few questions. First, you know, you guys are certainly blessed with a great cost of capital in your equity, but you also talked about restructuring your credit facility, I think to eliminate amortization, have, you know, go to IO.
Speaker Change: So how are you guys thinking about the projects that you're looking at from a cash flow perspective versus the funding side where the market is paying a premium for the data centers but those take longer?
Yeah, I think that's it.
It's a good question, I think, you know, that-
Speaker Change: You're spot on. I mean, the market is definitely leaning into the data center theme. Not just for us, I would say more broadly to anyone who kind of touches at this point. The point I always make when folks bring that up is first, I think we're in a fortunate spot where that opportunity is very real for us and we're obviously working through that and we've discussed that.
Quite publicly, but-
Speaker Change: as those come to fruition. And ultimately, when we think through our strategy and the action plan on our side, it's all of the above. I mean, I think we've got these very real opportunities to grow cash flows here in the near term that, again, cost us no capital that we are going to continue to pursue. Now, we're trying to be mindful about the opportunity cost...
Speaker Change: of certain areas of our surface where we think data centers could be best suited relative to some of the other opportunities, but at the end of the day, I mean, there is a lot of runway we have out there on the surface today for opportunity.
Speaker Change: for Opportunities Outside of Data Centers and we're going to continue to push on those and those will be the driver of the growth that we expect to see here in the coming couple of years.
Speaker Change: The data center, you know, call it tailwinds are very real and we think, you know, three, five plus years down the road.
Speaker Change: All of that will start to get layered on to the successes that we achieve, you know, in a lot of these other things, a lot of these other investment opportunities and so.
Speaker Change: I tell folks it's great because we can increase or we believe we can increase our cash flows by orders of magnitude.
Speaker Change: outside of data centers, and I think we're executing on that. We're proving we're executing on that. There's a lot of runway left.
Speaker Change: The Data Center story is additive and so the combination of those two things I think makes this a very, very powerful story in the market which is why the markets received it the way it has and it's on us to continue to execute on both fronts if we want to hold our ground here.
Speaker Change: and then along those lines, you're funding. Do you think that you'll go back and raise more equity or you plan to use debt, like what should we be modeling for capital raises for this year?
Speaker Change: Yeah, I mean, I think, you know, if the right opportunity presents itself, we would raise equity. I think that said, you know, we obviously generate an immense amount of free cash flow.
Speaker Change: You know, I think keeping the balance sheet healthy is a priority. I mean, we're not afraid to put a little bit of leverage on there when it makes sense, but I think keeping a sensible balance is probably the best approach here. I mean, you know, we're in a very healthy position not just from a leverage standpoint, but just from a debt service coverage standpoint. And we want to make sure it stays that way. I mean, that will give us the ability. [inaudible]
Speaker Change: to navigate any volatility or risk that may come up in the future that's unforeseen at the moment. We like that.
Speaker Change: But for us to issue equity, it's got to make sense. It's got to have...
Speaker Change: You know that the acquisition opportunity needs to have a growth profile that we think you know mirrors our own unattractiveness and it needs to be a story that we can go out and tell the public. You know that look this is why equity made sense in this context and you know it's. [inaudible]
Speaker Change: Okay, and just if you'll just one more question, on the water needs for the data centers and forgive me, obviously coming from real estate side, not an oil guy.
Speaker Change: The brackish water and the water that you guys take from others who are drilling or fracking for oil. Does that brackish water, can that be converted to using cooling data centers or data centers require pure fresh?
You know, first generation water, if you will.
Speaker Change: Yeah, good question. So you've got you've got just brackish water, which is not necessarily the same as produced water.
Speaker Change: So you've got, you have brackish water, wells out of the ground, you've got produced water which is coming up with the oil and gas. I think, you know, the latter certainly would require more treatment.
Speaker Change: You know, there's likely to be some level of treatment for either, most definitely with produced water and so I don't want to give the impression it's you know you just connect the pipe up to the data center and it's good I think there would be some costs associated with getting that water to the quality that's needed.
Speaker Change: and all of that is kind of taken into consideration as a lot of these data center developers and operators work through their diligence and underwriting. But I think that said...
Speaker Change: Where we have a big advantage in West Texas is we have an abundance of these resources, both in terms of brackish water and produced water, and while there may be some incremental cost associated with treatment, there isn't a large metropolitan area that you're competing with for these resources. And I think generally speaking, that is very attractive, Jason, you want to add? Well, I just wanted to be clear, is that cost would not be something that LandBridge would...
Great Point, yeah, great point, yep.
Okay, thank you.
Yeah. Thanks guys.
Speaker Change: Here our next question comes from a line of Kevin MacCurdy from Pickering Energy Partners. Your line is open.
Kevin McCurdy: And good morning, Jason and Scott. My first question is on the macro outlook and the impact on your business oil prices have kind of taken a hit over the last week. What oil price and corresponding level activity is built into your 2025 guide and how sensitive do you expect your EBITDA to be at oil prices this year?
Jason Long: Yeah, good, good question, Kevin. Good to hear from you. So, uh...
Kevin McCurdy: No meaningful ramps whatsoever built into our 2025 guide. All of that's based on firm guidance from operators we have. You know, both from the Water Bridge side and others and you know, I think generally speaking as it relates to commodity price.
Kevin McCurdy: Sensitivity, there would need to be a pretty massive swing to the economic potential for the Delaware Bayesian, for that to call it move-off track.
Kevin McCurdy: You know, outside of our small minerals position, which is, you know, we expect to be sub 10% of our business this year. We really don't have any meaningful commodity price sensitivity. So I would say, you know, in summary, as long as the commodity price is kind of...
Kevin McCurdy: Hold to a point where producers continue with their development plans this year as kind of spoken to the public no real impact on us.
Speaker Change: Great, appreciate that detail. And thank you for, you know, the earlier comments on the Western mainstream EBITDA impact. I wonder if you could share the same thing for the newly announced solar agreement looking for any EBITDA impact in the timing.
Speaker Change: Yeah, so for those deals, it takes somewhere between two and three years to get through the permitting and development. You know, in that interim period we get, you know, a smaller call it
Great. Thank you.
Yeah, thanks Kevin.
Speaker Change: Your next question comes from a line of Teresa Chen from Berkley's. Your line is open.
Teresa Chen: Morning. You have been very busy with a flurry of activity within the last year, both on the organic and inorganic front. I wanted to ask on your M&A outlook from here, if you could just remind us, you know, how fragmented as the market at this point, and are there still many areas of desirable surface acreage left and near your footprint that would fit well within your portfolio?
Teresa Chen: Yeah, hey, good morning, Teresa. We have been busy. No, I think to answer your question, there's still quite a bit out there and I think that's...
Teresa Chen: You know, I alluded to that in the prepared remarks, you know, from a capital, capital allocation standpoint, you know, M&A continues to be by a wide margin the best use of our capital.
Teresa Chen: You know, generally speaking, the landscape is still very, very fragmented. There are still a lot of opportunities out there and, you know, we're in talks with the number of those right now. I think
Teresa Chen: You know, there is a real benefit that we bring to the table, particularly in opportunities where the surface owner may own the underlying minerals and wants to encourage more development activity on that surface.
Teresa Chen: That's something we can bring to the table, or in situations where a seller may have, you know, tax considerations, the ability to do, you know, a more tax-advantaged deal, the public currency is also another advantage that we have and so, you know, we continue to look at all the tools that we have to execute on our M&A strategy, we think that, again, the pipeline is very robust right now, we think there's a lot out there that...
Teresa Chen: makes a lot of sense and is incredibly added to our platform, so we will continue to pursue those.
Speaker Change: Understood. And on the topic of surface efficiency for the asses already within your portfolio and getting to that incremental 3000 per acre target, understanding that some of it will be relatively capital light and some of these opportunities might be more involved. But when we think about the average going forward, how much topics do you expect a deploy in order to realize this target?
Speaker Change: Yeah, I mean, you know, just as a reminder, we don't do any of the developing of any of these assets whatsoever.
Speaker Change: You know, I think for this upcoming year, we had expected somewhere between 1 and 2 million of Catholics total and that's just kind of nickel and dime things on, like trucks.
Speaker Change: and other kind of field assets that we need just to manage the business. So the beauty of the business model is
Speaker Change: You know, we acquire a surface, we, you know, we'll go through some of the efforts needed to make that surface commercially viable, but that typically does not involve any capital. And then we go out and try to drive business to that surface, you know, from other folks looking for...
Speaker Change: and sophisticated landowners in the right areas to know how to work with them. And that has gone very, very well for us, and that has allowed us to drive that surface use efficiency metric on that lake sea position, you know, up more than 100% in a couple of years. And like I mentioned earlier, we think that that is a very replicable growth strategy on the rest of our surface. Listen, sound.
Speaker Change: You know, there is a very long runway for us to continue to drive growth on the position as it exists today. Like I mentioned, we think that M&A is only going to be additive and going to help drive that growth. But the point I'd make is outside of acquiring surface, all of that growth does not necessitate Capex, which is, again, the beauty of the business mind here.
Thank you.
Yeah, thank you, Theresa.
Speaker Change: Your next question comes from a line of Roger Read from Wells Fargo. Your line is open.
Yeah, good morning.
Roger Reed: Let me take a slightly different tack here just with the...
Roger Reed: potentially enhancing for you, create an opportunity, kind of ties into the earlier question on
Yeah, I'm with you.
Roger Reed: Great question. We 100% are watching everything that's going on. Obviously, not only potentially could be a benefit for LandBridge, but also the same with Waterbridge on the Waterbridge side as well. As you think through the recycling piece of that, which are...
Roger Reed: Our surface position gives us a really good opportunity to take advantage of that opportunity, right? So you need access to large surface, large continuous surface to create these recycling ponds and...
Roger Reed: basically centers, so yeah, I mean, we do think it's a great opportunity and we're watching it extremely closely.
Roger Reed: and then one of the other things out there was, and this gets back to, you know, the issue was some of the minor earthquakes out in West Texas disposal of water from...
Roger Reed: and neighboring states, which in this case would obviously be in New Mexico. Is there anything that you're looking at you might have to do differently or that would force the industry to be more likely to lean on LandBridge in order to deal with with a pretty swatter from New Mexico?
Speaker Change: Yeah, I mean, that has been one of our biggest thesis from the start, right? It's taken a lot of this water out of New Mexico, where historically it's been...
Speaker Change: Handled in deep injection, which in our view, and I think in the regulatory bodies view, that's what's causing a lot of this seismicity.
Speaker Change: and actually getting that out of basin, that's one solution, but also just spreading out.
Speaker Change: that injection in whole and having access to this large, contiguous surface gives us the ability to.
Speaker Change: Give people like West, and that's a prime example what this recent deal we did with West, give them the opportunity to spread that injection out and bring that water from New Mexico.
Speaker Change: We've got that opportunity with every other third party water provider out there as well.
Speaker Change: And then just as a follow-up on that, are you seeing any change in how you...
Speaker Change: What your costs are or what your revenue potential could change as a result of?
Speaker Change: You know, call it regulation, legislation, needs to spread out. I mean, is that impacting at all?
Speaker Change: What you are able to charge per gown, per barrel, and then think about that on the revenue per acre that you were talking about earlier.
Speaker Change: Yeah, obviously, we have no costs associated with it. I do think that, you know, access to good poor space that's spread out and can be handled in a sustainable way. The price of that, I think, will go up over time. We have seen...
Speaker Change: Rolte's increase over time is yet to access this poor space so we feel like we're in a really good spot and we continue to be optimistic as we think through you know adding to our portfolio of acreage being very mindful of a poor space going forward.
All right. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Sean Milligan from Janie. Your line is open.
Hey, good morning guys. Thanks for taking the questions.
Speaker Change: On the 2025 guidance, I was curious if you'd be willing to provide any guardrails around kind of expected, produced water or volume growth, you know, that's embedded in that guidance range.
Yeah, hey, good morning, Sean.
Speaker Change: Yeah, I can talk through a high level here. I think the way the way to think about it is, you know, with the inclusion of the Wolfbone Ranch acquisition was wrapped up at the end of 2024, you know, that'll put us call it just over a million barrels a day, kind of low low millions.
Speaker Change: You know, through the course of the year, we've got a handful of projects coming online, two of which we've spoken out publicly, so I'll reiterate the first.
is a
Water Bridge's construction of the BPX Kraken line that will
Speaker Change: You know, come online in the end of second quarter, and that will add meaningful volumes when we've talked to that a bit, rather that has been published in a press release, so I'm going over the details of that, but you know, that's going to be fairly additive from a volume perspective towards the end of second quarter, and then the second piece is there are a number of new assets coming online on our legacy surface position that will also be used to handle Devon volumes that are flowing today, that are being diverted off of their legacy position, and so...
Speaker Change: I would expect to see a pretty meaningful step change in produced water volumes, starting to hit in second quarter, but really fully materializing in third quarter. But I would say it's very easy, you know, relative to the call of the million or so barrels a day today, to see, you know, low to mid double digit growth in those produced water volumes through the course of the year and kind of exiting 25.
Speaker Change: Great, that's really helpful. And then on the solar side, I think previously had talked about kind of receiving prepayments.
Speaker Change: Those had been pushed to 2025. I guess like I was expecting those to sort of be in line with what the data center payment was in the fourth quarter. Is that still the right way to think about those payments in 2025?
Yeah, great, great question. So, I'll call...
Speaker Change: You just asked this to a player by an obvious point that the deserty deal that we announced alongside earnings is...
Speaker Change: is different and additive relative to the solar opportunity we've spoken to previously. Yeah, so we are in the process of evaluating different proposals on that right now.
Speaker Change: I've spoken previously about the lack of conformity around how those proposals will look. You know, everyone or each of these developers and operators will put forward some...
Speaker Change: Upfront consideration and some recurring rent effectively. And it is our job then to go through those proposals and determine what presents the best value for the company. Now, we would expect to receive those Upfront milestone payments this year.
Speaker Change: from a total size perspective. It's about, you're thinking of it the right way. It's probably 8 to 10 million this year, but I kind of caveat that a bit with what I said initially, which is, you know, we will nod.
Speaker Change: We will not favor the proposal that has the most caught cash upfront if we get a situation where there is...
Speaker Change: A smaller up front, but a much larger residual over an extended period of time. That would just generate more value for the company.
Speaker Change: You know we would of course go with that but that's something that you know as the dust settles and we choose a path forward I'll be transparent to the market of that just so folks can you know adjust their forecast and expectations accordingly.
Speaker Change: Okay, great. But just to confirm, so the DESRIDEL is separate from the prior deal that we talked about developing yourself. Okay, thank you. That's helpful. Yeah, you got it.
Speaker Change: And that concludes our question and answer session. I will now turn the call back over to Scott McNeely for closing remarks.
Scott McNeely: Thank you, Robin. Thank you everyone for joining us this morning. Again, we were very happy with how the year wrapped up in our very enthusiastic about the tailwinds of our business.
Scott McNeely: Stepping in to 2025. We look forward to sharing just more of our wins and successes with you through the course of this year. To the extent there are any questions or any follow-up discussions would be helpful. Please feel free to reach out to contact at LandBridgeCo.com so we can get a call scheduled. Thanks again, we hope you all enjoyed the weekend.
Speaker Change: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Please wait, the conference will begin shortly Thank you.