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Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the LandBridge First Quarter 2025 Results. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Jake Robichaux, Vice President of Finance. You may begin.

Jake Robichaux: Good morning, everyone, and thank you for joining the LandBridge First Quarter 2025 Earnings Call. I’m joined today by our CEO, Jason Long; and our CFO, Scott McNeely. Before we begin, I’d like to remind you that in this call and related presentation, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and which are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC.

I would also like to point out that in our investor presentation and today’s conference call will contain discussions on non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release in the appendix of today’s accompanying presentation. I’ll now turn over the call to our Chief Executive Officer, Jason Long.

Jason Long : Thank you, Jake. We had a strong start to the year, delivering triple-digit revenue and adjusted EBITDA growth year-over-year of 131% and 129%, respectively, while maintaining an adjusted EBITDA margin of 88%. Since we last reported results, the broader economy has experienced growing macroeconomic volatility. Against that backdrop, I want to begin today by reiterating the core elements of our business model that give us confidence in our ability to continue delivering strong revenue growth and profitability across economic cycles and market variability. First, we benefit from diversified revenue streams, the majority of which are not directly tied to oil and gas prices. We believe this dynamic greatly insulates our exposure to periodic market and macro volatility.

In fact, non-oil and gas royalty revenue streams, including surface use royalties and revenues and resource sales and royalties accounted for approximately 92% of overall revenue during the first quarter, up from approximately 88% last quarter. As we have highlighted before, our surface acreage is strategically located for a broad range of critical land uses, and this allows us to be somewhat agnostic to the quarter-to-quarter volatility that is common with crude and gas prices. Second, a key attribute of our business model is entering into agreements under which our customers bear responsibility for substantially all operating and capital expenditures related to their operations and development projects on our land. With limited OpEx and CapEx, we are well positioned to continue generating strong EBITDA margins and robust cash flow.

Finally, the need for water handling infrastructure in the Delaware Basin continues to be an important driver of business for us through our affiliate company, WaterBridge, and we have seen near- to medium-term demand for those services to continue to grow. In April, WaterBridge announced an open season process for a new large diameter gathering and transportation pipeline, the Speedway Pipeline, which will connect Eddy and Lea Counties in New Mexico to our out-of-basin pore space in the Central Basin Platform. Speedway will provide operators in the Northern Delaware Basin access to our contiguous pore space, a key resource for the sustainable handling of produced water in the Northern Delaware Basin. Based on these factors, we are confident in the resilience of our business model, and we will continue to advance our active land management strategy in 2025.

We are already seeing strong growth driven by the acquisition of the Wolf Bone Ranch in late 2024. In fact, the Wolf Bone Ranch contributed to a greater than 70% quarter-over-quarter increase in produced water royalty volumes. As a reminder, the Wolf Bone Ranch is underpinned by a minimum annual revenue commitment of $25 million for each of the next 5 years. In short, we are pleased with our momentum, and we look forward to continuing to deliver strong results based on the success of our active land management strategy. I’ll now hand things over to Scott to walk through the financials in greater detail. Scott?

Scott McNeely : Thanks, Jason, and welcome to everyone on the call this morning. As Jason mentioned, we had a great start to 2025. Our first quarter revenues increased to approximately $44 million, up 20% sequentially and 131% year-over-year. Sequential revenue growth for the quarter was driven by resource sales and royalties, which increased 118% attributable to increased frac head water sales and royalty volumes from our newly acquired acreage. Revenue from surface use royalties and revenues increased 3% sequentially, driven by a 72% sequential increase in surface use royalty volumes across both legacy and newly acquired acreage. As a reminder, in the fourth quarter of 2024, we received an $8 million payment related to the lease development agreement for a data center on our land that drove a significant increase in our surface use revenues.

Oil and gas royalties declined 24% sequentially, which was driven by a decrease in net royalty production with volumes falling from 1,199 BOE a day in Q4 2024 to 923 BOE a day in Q1 2025. We delivered strong adjusted EBITDA with $38.8 million in Q1, representing a sequential increase of 22% and 129% year-over-year with an 88% adjusted EBITDA margin. We generated free cash flow of approximately $15.8 million and free cash flow margin of 36%. The quarter-over-quarter compression in free cash flow and free cash flow margin was a result of higher accounts receivable. This was directly attributable to significantly increased surface use royalties, resource sales and resource royalties that collectively increased $14.6 million or approximately 85% in the first quarter 2025 as compared to the fourth quarter 2024.

Timing of collection of those revenues resulted in a short-term impact to free cash flow and free cash flow margin. We ended the quarter with total liquidity of $84.9 million, including cash and cash equivalents of $14.9 million and $70 million available under our revolving credit facility. Our capital allocation priorities remain the same for 2025, and we continue to execute on these priorities, which, as a reminder, include maintaining a strong balance sheet to maximize financial flexibility over time and identifying and pursuing value-enhancing land acquisitions. Alongside our first quarter results, we are pleased to announce that our Board has declared a dividend of $0.10 per Class A share payable on June 19 to shareholders of record as of June 5.

To conclude, we’re excited by the strong quarter and start to the year, and we remain confident in our growth as we continue to benefit from our diversified, highly resilient revenue streams. And now we’d like to open up the line for questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Jackie Koletas with Goldman Sachs.

Jackie Koletas: So you touched on it a little bit, but just wanted to talk, we’re starting to see Permian activity levels start to change. How do you think about the broader macro? And more specifically, how a slowdown in production could impact your produced water handling growth across your acreage?

Scott McNeely : Yes. Jackie, thanks for the question. I mean just to start to reiterate what Jason said in the opening remarks, I mean, we’re in a very fortunate position where the vast amount of our business is insulated from any direct commodity price exposure. And we spoke to that having 92% of our business now being those non-mineral royalties, I think, really puts us in a strong spot. I think the second point that we’d make — when you look at the, call it, the inside look we have on producer activity through our co-management of WaterBridge and you couple that with a lot of the public statements that have been made from our major customers along the state line, so the Devons, the ConocoPhillips, the EOGs and so on, the overarching narrative has been, at least at this immediate moment in time, no change in production expectations, no de minimis change in production expectations with a real focus on navigating the current environment through capital and cost synergies.

And so from our seat, at the moment, we have not heard of any changes to development plans whatsoever. We continue to see a substantial amount of demand for services on WaterBridge side, which would obviously flow through to LandBridge. And that’s true for the near term kind of through the medium term. And so we haven’t seen any changes in expectations this year on our footprint, again, the most lucrative area for upstream kind of in the Lower 48 here. So we feel really confident in navigating the current environment. And like everyone else, we’re keeping an eye on things. But based on our strong producer kind of customer base, based on the location geographically we’re in and kind of based on the business model, we think we’re in a really healthy spot to continue to grow going forward.

Jackie Koletas: Got it. That makes sense. And then pivoting, you also touched on the open season and the Speedway Pipeline with WaterBridge. I believe that recently closed. Could you provide us with any details on specifically what the demand for that pipeline looks like and how you expect the project to drive growth for that be, be timing or specifically, again, like the produced water handling royalty growth we could see?

Scott McNeely : Yes. I mean the contracts there are getting firmed up now. We would expect to be able to kind of announce the formal outcome of that here in the coming weeks. Generally speaking, I think there’s — I mean, as you would expect, a great outcome for LandBridge here. I mean, the pipeline itself kind of stretching from Eddy to Lea County over to the Speed Ranch in the northeastern part of our footprint, could be up to roughly 500,000 barrels a day of incremental water handling capacity, which would just generate, call it, approximately $30-plus million a year of cash flow once it’s all up and running. Now that will get sequenced in over time here. We could expect the first, call it, phase of that to come online around year-end, so in fourth quarter.

So from LandBridge’s perspective, we’d start to see some of those initial surface damage payments kind of get made in the back half of this year with volume royalties coming on in fourth quarter and ratcheting up through the first half of next year.

Operator: Our next question comes from the line of Kevin MacCurdy with Pickering Energy Partners.

Kevin MacCurdy : A large E&P company recently came out and said they thought oil production in the Permian was rolling over. I guess my question is, if Permian oil production across the whole basin is rolling over, what do you think that means for both oil production and then water production in your part of the world in the Northern Delaware?

Scott McNeely : Yes, it’s a fair question. I mean I think, again, I’d reiterate some of the answers I just kind of relayed to Jackie. I mean I think we’re really fortunate where our surface really overlays some of the best rock in the Lower 48 and even the chatter out there at the moment would suggest that a lot of the development is kind of being consolidated here in these more economic areas away from the fringier areas. And so I’d say, by design, we are in a fantastic spot to navigate this year going forward. I mean, so from a produced water perspective, we — like I said, we continue to see very strong demand in that core area here for the near term through the medium term. And so producers certainly haven’t backed off of their development plans through kind of ’27 and ’28 at this point in time.

So we would expect to continue to see growth there. So some of the more fringier areas may start to see the impact here. But I think fortunately, again, by design, we’re not in those areas. So we feel pretty comfortable navigating that dynamic should it play out.

Kevin MacCurdy : Got you. And then second question is just any update on the data centers in West Texas? And maybe just can you talk about what you’re working on there?

Scott McNeely : Yes. Yes. Like I mentioned in November when we signed that initial deal, it will be about 12 to 18 months from that point in time before we come back with an update. That hasn’t changed. I would say traction remains as strong as it has been. I would say the sense that there is an arms race out there continues to be very real. As you would expect, given the scope of these projects, there’s just a lot of scrutiny going into the underwriting of these locations. I mean we’re talking $10-plus billion capital projects. And so they take a little time, but we continue to see just kind of great momentum in that space, continue to have a lot of discussions despite some of the macro chatter in the background. But I think taking a step back and what’s probably just as attractive to us is a lot of the discussions around in-basin power at the moment.

I mean there is this huge demand in West Texas right now for power generation. There’s been a lot of talk about that and how it relates to data centers, but the need really transcends digital infrastructure and touches everywhere. And so we’re having a lot of discussions just more generally on the power side. As you would imagine, those folks need land, those folks need water. We’re well positioned to deliver both in a very sophisticated way. And again, despite how attractive and how enthusiastic we are about the digital infra play, we continue to see more and more momentum more broadly on power and would expect to see some more positive updates on that here in the near term.

Operator: Our next question comes from the line of Derrick Whitfield with Texas Capital.

Derrick Whitfield: Perhaps I just wanted to reframe an earlier macro question just to kind of properly think about where — how water is going in the basin. Do you have a sense on the underlying growth in produced water volumes across the basin before any activity adjustments? And where I’m going is if you kind of set aside water oil ratio, the increase in water oil ratio within a well over time, we are broadly seeing an industry shift to deeper intervals, which are more water wet. So it seems to me there’s quite a bit of momentum there with water growth pre-activity adjustments.

Jason Long : Yes. No, it’s a great, great flag and a good observation, Derek. I think that dynamic really holds true, especially if you look at like the core area of the Stateline, so Northern Loving County, kind of Southwestern through Central Western Lea County as well. I mean the dynamic we’ve seen over the last few years is an increase in kind of water oil ratios in that area over time, and that’s largely due to flatter PDP declines. And if you look at those wells kind of by vintage, you can observe that dynamic. And so when you think of kind of those shallower PDP declines in that core area and you couple that with what you just pointed out, which is focus on deeper benches, which are inherently more volumetric on the water standpoint, you’re going to see water growth meaningfully eclipse oil growth.

Now I think we’re — we haven’t resolved ourselves to like the growth percentage is X because I think a lot of that does depend on ultimately how producers develop out these deeper benches and at which pace and at what mix. But I think we are comfortable saying that we would expect to see, again, kind of in that core development area, water growth that would eclipse oil growth here for the foreseeable future.

Derrick Whitfield: Terrific. And then as my follow-up, I wanted to ask how you guys are thinking about the desalination opportunities your peers are pursuing. I’m really thinking about this more from the standpoint of a WaterBridge perspective and the power opportunities you just referenced in an earlier question.

Jason Long : Yes. So WaterBridge would be the one that kind of really looks into that in partnership with Five Point, their capital sponsor. And so I mean we’ve got a number of pilot projects that we coordinate with Five Point on. Five Point has a strong relationship with Bechtel, which is obviously a big engineering firm that is a thought leader in a lot of this. And so we kind of collectively LandBridge, WaterBridge, Five Point continue to really kind of push the envelope, so to speak, to look for solutions that would work here. Now I know we’ve spoken about it previously as some of our peers out there. The — while the cost curve continues to improve, there’s a bit more wood to chop, I think, before we get to the point where that’s really feasible at scale.

But yes, I mean, at the end of the day, I think from LandBridge’s perspective, the point I’d obviously make is — we are ultimately agnostic. I think we’re strong supporters, obviously, if we need these efforts. But at the end of the day, all of those efforts are going to need land, and we would get the royalty stream from those efforts. So it’s more of a WaterBridge thing, but I think LandBridge, obviously, happy to accommodate it. It would be economically beneficial for us. And obviously, I think it would be good for the industry and the region as a whole.

Operator: That concludes the question-and-answer session. I would like to turn the call back over to Scott McMeaney for closing remarks.

Scott McNeely: Yes. Thanks again for everyone joining us this morning. Again, another great quarter. Despite the macro noise, we feel really solid heading into the second quarter here and kind of through 2025. Great momentum commercially, great momentum on the M&A front. We look forward to sharing more news with you all here in a few months on second quarter earnings. But as always, if any incremental follow-up would be helpful, please feel free to reach out. We are happy to hop on the phone. But otherwise, thanks again, and have a good weekend.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you all for joining, and you may now disconnect.