LandBridge Company LLC Class A Shares Representing Limited Liability Company Interests

Ladies and gentlemen, thank you for joining us and welcome to the LandBridge First Quarter 2026 results call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. I will now hand the conference over to May Harrington, Director of Investor Relations. May, please go ahead.

Good morning, and thank you for joining LandBridge's first quarter 2026 earnings call. I'm joined today by our Chief Executive Officer, Jason Long, and our Chief Financial Officer, Scott McNeely. Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and 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 our investor presentation and today's conference call will contain discussions of 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 presented in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation. I'll now turn the call over to our CEO, Jason Long.

Thank you, Mae, and good morning, everyone. I'm pleased to report that we began 2026 consistent with our plan and our confidence in the model. with strong year-over-year growth and commercial momentum heading into Q2. Our second half 2026 growth drivers are on track, and as Scott will further detail, we are also raising our full year 2026 guidance. This decision is grounded in increased visibility and conviction in our commercial pipeline for the remainder of the year, combined with a more supportive macroeconomic environment. In the first quarter, we grew both revenue and adjusted EBITDA by approximately 16% year over year, achieving an adjusted EBITDA margin of 88%. Sequentially, results were softer, and that was anticipated. Q4 was a strong quarter, and Q1 is typically slower commercially, as certain service-related payments, including easement payments and new SUA execution, follow the rhythm of operator activity, which is naturally weighted toward the second half of the year as E&P programs ramp. We execute commercial deals with the goal of reaching the best and most accretive terms for our business over the long term. And we remain committed to that approach. Q2 commercial activity is already tracking ahead of Q1. Our second half catalysts are developing as planned. And the macroeconomic environment has become meaningfully more supportive since we last provided guidance. That combination accelerating internal momentum and more constructive external backdrop gives us the conviction to raise our full year outlook, not simply reaffirm it. The softer Q1 was anticipated, the confidence behind the raise is driven by what we can see in our pipeline today. On the commercial front, we closed several bolt-on acquisitions that further enhance the scale of our position, which now encompasses more than 320,000 surface acres across the heart of the Delaware basin. A portfolio we have intentionally built around fee surface ownership. Owning the service outright, whether than relying on leasehold or access rights that require renewal, gives us permanent control, long-duration optionality for every commercial use from produce water to data centers, and a compounding asset base that doesn't erode over time. That is the structural advantage, not an incidental one. That permanence is what allows us to offer multi-decade commitments to data center developers, long-duration infrastructure rights to pipeline operators, and deep commercial certainty to operators who need to plan multi-year development programs. Our strategy is focused on maximizing the economic output of our surface through active land management, a fundamentally different model from the traditional passive or minerals-focused landowner. We think of the surface as an active commercial platform, not a static asset. Surface acreage is critical for oil and gas development, power generation, digital infrastructure, and more. The same acre that generates produce water royalties from an oil and gas operator may also support a fiber corridor, an electrical transmission easement, and eventually a data center campus. Each layer of development makes the next more valuable, better access, more infrastructure, and greater certainty for the next user. That is the compounding dynamic at the heart of our model. In addition, our state line and southern positions are located on the Texas side of the Texas-New Mexico regulatory divide, an advantage that translates directly into commercial demand. Texas provides a more consistent and favorable permitting environment for produce water disposal, which means operators and midstream companies prioritize Texas side surface acreage. We are structurally positioned to benefit from this dynamic for the foreseeable future. Our relationship with WaterBridge is a genuine structural advantage. Water Bridge operates one of the largest water midstream networks in the Delaware Basin, and approximately 1.5 million barrels a day of that infrastructure sits on our land today, with additional permitted capacity on our land continuing to grow to enable future development. That gives us a front row seat to basin activity, deep operator relationships, and the ability to continuously identify and convert commercial opportunities that others simply cannot see. It's a compounding dynamic. As Waterbridge grows, so does our royalty base, and that growth does not require us to look at them. Beyond oil and gas, our active management approach continues to open new commercial opportunities. This quarter, we announced an agreement with PowerBridge for the lease and development of the Alpha Digital Data Center campus in Reeves County, Texas. PowerBridge has the option to lease up to 3,400 acres for a gigascale campus, a category of hyperscale digital infrastructure that requires hundreds to thousands of acres of contiguous land, co-located power, and long-duration site control. Initial power delivery is expected next year with large-scale generation coming online in 2028. We aren't disclosing specific economic terms at this stage, but the structure is consistent with our model, a long duration lease with royalty economics that scale with development, with no capital outlay required from leverage. This is an important milestone and a clear validation of our thesis. West Texas is an ideal location for data centers, low cost power, abundant water, fiber connectivity, and a favorable permitting environment. And critically, data center developers require certainty. certainty of long-term land control, utility corridor access, and the ability to expand the footprint as their needs grow. Our fee surface ownership model provides exactly that. Leasehold positions or acreage held on shorter term or renewable tenors cannot offer a multi-decade campus commitment. We can. Approximately 10 gigawatts of capacity has been announced in the region over the past two years, including the Alpha Digital Campus. We have higher conviction than ever that West Texas is on its way to becoming the next major data center hub in the United States. The power bridge agreement demonstrates the value of our acreage and commercial relationships and reflects our capital-efficient asset-like model. We retain ownership of the surface and monetize it through long-duration lease economics that scale with development. By layering multiple commercial uses on the same acreage, we grow revenue without additional capital investments. Alpha Digital is one of several advanced commercial opportunities in our pipeline, and the state of the pipeline today is the primary basis for our guidance race. Our model is designed for exactly this moment. The convergence of energy infrastructure demand, digital growth, and land-constrained development in the Permian Basin and the macro environment is, if anything, accelerating that convergence. I look forward to sharing more as these partnerships develop. Now let me hand it over to Scott, who will walk through the numbers behind our updated outlook.

Thank you, Jason, and good morning, everyone. As Jason discussed, we delivered strong year-over-year growth in Q1 and are building momentum as we move through 2026. That momentum, combined with the state of our commercial pipeline and an improved macroeconomic backdrop, gives us the confidence to raise our full-year 2026 adjusted EBITDA guidance to $210 million to $230 million, an increase of $5 million at both the low and high end of the range. This reflects two key considerations. First, increased visibility and conviction in our commercial pipeline for the remainder of the year, as we have better line of sight into committed and near-committed activity in Q2 through Q4 than we did when we initially set guidance. And second, a macroeconomic environment that has become more supportive of basin activity levels since our last communication. The structural resilience of our fee-based model provides the floor, and our commercial pipeline provides the upside that justifies taking the range higher. First, the clearest demonstration of our model's quality this quarter was cash generation. Cash flow from operations was 41.1 million and free cash flow was 40.9 million, representing a 158% increase year over year and a free cash flow margin of 80%. 80 cents of every revenue dollar converting to free cash flow on minimal capital investment is the structural output of a business built around owning the surface and letting our customers fund the infrastructure. That dynamic does not change with commodity prices or quarterly activity patterns. In the first quarter, we reported total revenue of $51 million, a 16% increase year-over-year. Net income was up $17.9 million, also up 16% year-over-year, with a net income margin of 35%. The primary revenue growth driver was surface use royalties and revenues, which increased 41% year-over-year to $37 million, reflecting royalties from Waterbridge's BPX Kraken development, new easement payments, and broader commercial activity across our surface. Sequentially, revenue declined approximately 11%, coming in at $51 million compared to $56.8 million in Q4. As Jason discussed, this was anticipated and reflects three factors, the strength of Q4 2025, the general quarterly lumpiness of certain surface-related payments, and the seasonally slower pace of commercial agreement activity in Q1. Revenue declined modestly across all three categories. Surface-use royalties and revenues were down 6%, resource sales and royalties declined 9%, and oil and gas royalties were down approximately 5%. The operating commercial environment in the basin has improved. While we expect that to support activity levels over the mid to longer term, our direct commodity exposure remains limited regardless, with oil and gas royalties representing approximately 6% of year-to-date revenue. Adjusted EBITDA for the quarter was $44.9 million, up 16% year-over-year, with an adjusted EBITDA margin of 88%. consistent with the prior year quarter and reflective of the durable high margin nature of our model. On a sequential basis, adjusted EBITDA declined broadly in line with revenue. Capital expenditures were 0.2 million and net cash used in investing activities was 2.1 million. On the financing side, we repaid 25.2 million of debt in the quarter, demonstrating continued balance sheet discipline. We ended the quarter with total liquidity of 259.7 million comprising $29.7 million of cash and approximately $230 million of available borrowing capacity under our revolving credit facility. Total borrowings outstanding were $545 million as of March 31st, down from $570 million at year end. Our net leverage ratio was 2.7 times at the end of the quarter compared to 2.8 times last quarter, and we have no near-term maturities. On capital allocation, we remain focused on three priorities. Our first priority is accretive M&A. We closed strategic bolt-on acquisitions this quarter and have added nearly 50,000 surface acres over the past year, all while maintaining disciplined underwriting criteria. Our M&A criteria are anchored on fee surface ownership. We are building a compounding permanent asset base. We are not interested in acreage that requires periodic renewal and provides only temporary commercial control. That discipline may mean we pass on transactions that others pursue, but it means every acre we add strengthens our long-term platform rather than simply growing our headline acreage count. Secondly, we are focused on maintaining balance sheet strength, where we continue to target a long-term net leverage ratio of two to two and a half times. Third and finally, we are committed to shareholder returns. This quarter, we declared a 12 cent per share dividend, continuing our track record of quarterly distributions since our IPO. As a reminder, we previously announced that our board authorized a 50 million share repurchase program, which we are able to deploy opportunistically through December of 2027. In closing, LandBridge delivered strong year-over-year growth across revenue, net income, and adjusted EBITDA in Q1, consistent with our internal plan. We are raising full-year guidance to $210 to $230 million, reflecting increased confidence in our commercial pipeline and a more supportive macroeconomic backdrop. The foundation we have built, fee-owned surface, durable contracted cash flows, a model that requires minimal capital to grow, is what makes that confidence sustainable. Thank you. Operator, please open the line for questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Derek Whitfield with Texas Capitol. Your line is open. Please go ahead.

Good morning, all, and thanks for your time. Good morning, Derek. With your increased 2026 guidance and the updates coming out of Waterbridge today, it's clear you guys are very excited about the opportunity you have ahead of you this year. As we think about really Project Speedway phase one and the timing for which you guys would reach functional peak utilization, could you offer some color around that? And then also just when you think about Project Speedway phase two, when could that really start to contribute into your outlook?

Yeah, again, good morning, Derek. Good to hear from you. So Speedway Phase 1 comes online this summer. Certainly far from being 100% utilized at that point in time. We expect volumes on Speedway to ramp effectively from this summer through October. And so, you know, as we sit today, back half of the year, obviously excited about the traction we have with Speedway Phase 1, and we see continued demand for that pipeline, including new interruptible volumes that we could potentially capture on the Waterbridge side, which would feed, you know, increased royalties over to Landbridge. But there's a lot of room to grow beyond the back half of this year. For Speedway Phase 2, you know, really looking to bring that online to solve for back half of 2027 operational needs. You know, clearly nothing has been kind of voiced over or contemplated as we think through the guidance of the messaging in the street on that just yet. But obviously as we're forming up our expectations for 2027 and it's time to deliver guidance, we'll certainly speak to the contribution from that project and the expectations.

Great. And then maybe shifting over to the PowerGen and Data Center macro environment for the Permian. You guys have been very intentional with your releases to date. Given the recent alpha digital announcement and some of your peers messaging heightened urgency year over year among the hyperscalers, could you help frame how that opportunity has changed for you guys over the last six months, last year?

Yeah, absolutely. We stepped out and started speaking to the benefits of West Texas as it relates to data centers. Late 23, early 24, working through the IPO process, we were engaged in outreach with all the major players, hyperscalers and data center developers, kind of coming off of our efforts there. And it was a bit of an education effort, but if you look at the last six to 12 months, we've seen sentiment just grow so meaningfully. where we sit today, we're engaged with discussions and negotiations and documentation with virtually every hyperscaler that's out there in some capacity. And so West Texas has certainly been validated as the place to go for these large scale data center projects. And we're very happy with where we are in the mix. As you put, we're being very thoughtful about making sure that we get to those right milestones before we step out and speak publicly, particularly as it relates to engagements with some of these larger counterparties, but we're excited to do that when we get to that point.

Great. Okay, guys, thanks for your time. Yeah, thanks, Gary.

Your next question comes from the line of John McKay with Goldman Sachs. Your line is open. Please go ahead.

Hey, team. Thank you for the time. I wanted to start on the acreage acquisitions, maybe two parts of this one. First, we've seen the larger deals from you guys, but these are kind of newer, smaller, bolt-on. Is there a right cadence to think about for what you guys can do on this smaller deal size? And on a related note, you paid something around $1,000 an acre, let's say, on average for this. Just any commentary on what that looks like against the broader market would be helpful. Thanks.

Hey, good morning, John. Good to hear from you. We have been and will continue to be focused on these smaller telcan acquisitions as we think through. coring up critical areas of our footprint, you know, when there's opportunities to fill in the gaps or expand the contiguous nature of certain positions we have, we're absolutely going to execute on that and we'll continue to do so. As you mentioned, the price per acre here kind of remains competitive and in line with what we paid historically for similar surface positions. You know, and as it sits today, we have no reason to believe that's going to change.

All right, that's clear. Appreciate that one. Second for me is just going back to kind of the quarter versus the full year guide. Understand there's some timing dynamics here. It does still imply a kind of, you know, decently higher, let's say 2Q through 4Q run rate versus first quarter. Are there any kind of bigger, chunkier pieces you want us to have an eye on? And then more broadly as part of that, you know, if you think about the run rate for the balance of the year, how much of that is actually kind of rateable quarter in, quarter out revenues that you get from your contracts versus, let's say, you know, cycling on new commercial deals each quarter.

Yeah, John, you cut out there for a second, but I think you were implying, you know, effectively you're asking what is driving Q2 through Q4 expectations. You know, we've got We've got three primary tailwinds. The first, obviously, just better visibility and conviction on the opportunity set, particularly on surface revenues relative to where we're at the beginning of the year. And then coupled with that is just growth in that opportunity set. And so there's no discrete, chunky or lumpy projects that I would call out just yet to the extent or when we get those across the finish line. We'll obviously be eager to share that with the market. But it is a pretty mixed and diverse group of opportunities and customers there that we're working through. Now, the second piece is just better visibility on produced water volumes and the read-through on royalties there for LandBridge. Now, we've seen just greater demand, you know, both on the WaterBridge side as it relates to produced water handling volume needs for the back half of the year, but also with our third-party partners. And so, again, that's just more read-through on the royalty piece that will provide some upside for LandBridge and then Finally, obviously, it's a very different macro backdrop today relative to where we were at at the beginning of the year during budgeting, and that more constructive E&P environment over the near to medium term is just driving an increased demand on the resource side, both on sand and supply water. there are a number of different items feeding uh called our increased enthusiasm for the year and we you know we would expect that to continue now um you know as you kind of think through the cadence or or kind of the the regular way repeatability of of these revenue streams uh the vast majority of the revenue we get uh is going to be recurring in some fashion um you know we obviously do get those surface damage payments um that sometimes can be these one-time payments but The point we've made in the past, and it certainly still holds true today, is you really need to think of that as a great, call it forward-looking indicator of repeatable revenue to come. And a good example of that is going to be improved water handling infrastructures installed on our surface, whether it's by Waterbridge or others. there will be those one-time upfront damage payments, but that's going to translate into recurring revenue and royalty streams, hopefully perpetually over time. The same holds true for a lot of other types of infrastructure on our land. And so, again, while a lot of this is going to be repeatable, kind of recurring revenue, to the extent we do get those one-time payments, I would encourage you to remember that that is typically just one piece of what is going to be a very recurring revenue stream thereafter.

Okay, I appreciate the comments, and we'll get some more in on the Waterbridge call.

Your next question comes from the line of Alexander Goldfarb with Piper Sandler. Your line is open. Please go ahead.

Oh, thank you, and good morning down there. Jason, just a question on production down there in the Delaware and Permian, or I guess I should say Midland. Clearly, there's a demand for US production with what's going on over in Iran. BUT AS PEOPLE RAMP UP PRODUCTION, HOW QUICKLY DOES IT FLOW THROUGH TO YOU GUYS AS FAR AS REVENUE? MEANING, LIKE, IF THERE'S SUDDENLY A LOT MORE DRILLING, A LOT MORE, YOU KNOW, USE OF SAND AND ALL THE FUN STUFF, HOW QUICKLY DOES THAT TRANSLATE TO REVENUE FOR YOU? AND THEN THE SECOND PART OF THAT QUESTION IS, HOW MUCH OF YOUR, YOU KNOW, WHEN YOU LOOK AT YOUR DIFFERENT REVENUE BUSINESSES, how many of them do you think are directly related to increased energy production versus other uses that, you know, happen longer over, you know, a longer period of time versus instantly like, hey, we need more oil to ship overseas, what have you?

Yeah, I'll take, I appreciate that, Alex. I'll take the first one. So if you think about just the payments associated with increased oil and gas activity, you've got damages right off the bat. So when you're moving a rig on location, you're paying damages. You've got, fees for pipelines, right-of-ways, et cetera, and then that obviously gets accelerated into the produced water once the wells are completed. So we start to see that revenue trickle in over time and then a large portion of it on the latter part of the well's life.

Yeah, I would just add, when you look at our revenue mix today, roughly 22% of our revenue is going to be on that resource side, and that is going to be the piece that's most meaningfully kind of tied to that new development on the upstream side. But that's somewhat by design because the remainder of our business, or rather on the surface side in particular, which is 72% of our revenue, that is going to be the more recurring rent, lease, production type exposed royalty and revenue streams that just have much more longevity to it. So as we've said from the beginning, we've always been very, very focused on maximizing the surface use revenues and royalties just given the the stickiness and the longevity. And while we certainly like that 22% we get on the resource side, at the end of the day, that has always been secondary to the surface, given we like having that long-term production exposure, not that short-term development exposure.

Okay. So if I understand you correctly, basically round numbers, 20% of your revenue could see an impact of increased production in terms of what's going on over in Iran, where 70% is more stable and less likely to be near-term impacted by that. Is that correct?

I would frame it more as about 20% of our revenue is going to see an immediate impact due to an increase in development activity. The remaining 70% could see some uptick, but the benefit of that uptick is it is more prolonged because it is production driven. So even if development starts to taper back a bit, you still get the benefit of that long-term kind of rent royalty stream that comes from the production exposure versus that drill bit exposure.

Okay. The next question is on PowerBridge. I don't think you guys disclosed any, you know, economics or what the, if there was an upfront, well, I guess what the upfront deposit was. But, you know, can you just give a little bit more color on some of the terms and, you know, what the upfront payment is and, you know, how long they have to engage and such?

Yeah, happy to. So it is a one-year option. They paid $2.6 million for that option. It is for 3,400 acres in Reeves County and one of our positions there. You know, they're planning to bring on up to two gigawatts of initial power generation capacity with the ability to scale beyond that. So it's it's something we're very happy about. They're targeting bringing first power online late next year. And so, you know, it is it is quick to move forward. But again, I think this is a real reflection of the benefit of the ecosystem. It's a real reflection, I think, of PowerBridge's kind of capabilities, obviously led by Alex Hernandez, who's an incredibly well-known, capable leader in the space. And we're really happy to partner with him on this.

Okay. So the $2.6 million, that was recognized in the first quarter? That's right. Okay. And then are there any lease payments? from now until late 27, or there's no payments until late 27?

The payment structure will pivot should they execute on the option and converts to a lease. And so when that time comes, we will obviously circle back to the market and speak to the terms there. Awesome.

Thank you very much, Scott. Yeah, thanks, Alex.

As a reminder, if you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Your next question comes from the line of Charles Mead with Johnson Rice. Your line is open. Please go ahead.

Good morning, Jason and Scott, and to the rest of your team there. Scott, you approached this question in an earlier answer, but on the subject of acquisitions, you guys have attracted a lot of, I guess, copycats or competitors with the success you've had in the Delaware Basin. I wonder if you could talk about how the complexion maybe has or hasn't changed on the acquisition front and whether I think you said that the price hasn't really gone up, but maybe are there more people in the room or just, you know, what's changing on your, what are you seeing change on the acquisition front?

Yeah, no, hey, Charles, good to hear from you. We haven't seen much in the way of impact just yet. I mean, just as a reminder, we alluded to this in the prepared remarks, you know, we've been very focused from day one on acquiring that fee surface acreage. It's very important to us to get you know, to get that title rather than like BLM or state leases as an alternative. And so when you think that just the focus that we've had on that, there really just hasn't been, call it, many counterparties that have stepped in and really looked to compete in that regard. You know, it's put us in a good spot today, though. We think that there's just much, you know, the economics of that position is just going to be much better than the alternative. And we've been able to build that position, obviously, to over 300,000 acres today. You know, I think if we were to step into a situation where, you know, we were looking to acquire BLM or state leases, there are others kind of looking to grow that a bit. But for all the reasons we've discussed over the last several years, that's just not a focus of ours.

Got it. Got it. That makes sense. And then, Scott, you also alluded, I believe you alluded earlier in your prepared comments about the normal seasonality in in commercial uh commercial agreements can you can you talk about what can you decompose what's going on there is this is this just uh companies that that uh maybe it takes a while to organize your priorities with the new capital budget or is this or what's the seasonality there and and uh and is that something we should expect going forward

Yeah, you know, we often see seasonality kind of exiting the year, stepping into a new year as our customers kind of wrap up their capital cycles for the year and start working through the budgeting process. And so it's not atypical to see slower starts to the year. And, you know, and that was what we saw this year, just to some extent that obviously influenced kind of Q1 results. The second piece I kind of flagged there, and I do think this is important, is You know, at the end of the day, when we work through really driving and creating value for this company, particularly on the surface side, you know, ultimately we're not focused on what quarter, you know, a particular agreement gets signed. And that's going to lead to, you know, a little bit of ebb and flow in terms of when that revenue is recognized. And there's going to be time for that very clearly works to our advantage. We saw a fantastic fourth quarter exiting the year. You know, there's going to be times just depending on when contracts are signed, if it's, you know, the next quarter that it just ends up having a little bit of lumpiness to it. But I think what's important to keep in mind and something that we've said from the get go is the wins and losses of this company are not measured quarter over quarter. This is about generating year over year compounding growth. I think we continue to do that. We'll continue to do that going forward, regardless of the seasonality and other kind of shorter term nuances that we just talked through.

Great color. Thank you.

Yeah, thanks, Chelsea.

There are no further questions at this time. I will now turn the call back to Scott McNeely for closing remarks.

Yeah, thanks again for everyone's participation this morning. We, as always, appreciate your thoughtful questions and your support. I look forward to staying synced up, and please feel free to reach out if we can be helpful.

This concludes today's call. Thank you for attending. You may now disconnect.