LandBridge (NYSE:LB) reported record second-quarter revenue of $66.8 million, up 41% from a year earlier and 31% sequentially, as produced-water activity and commercial development across its Delaware Basin acreage increased. The company reaffirmed its full-year 2026 adjusted EBITDA guidance of $210 million to $230 million.
Chief Executive Officer Jason Long said the company’s operating model centers on generating revenue from its more than 325,000 surface acres through land management, royalties, leases and other surface-related uses. He highlighted continued activity in oil and gas development, produced-water handling and disposal, industrial uses, power generation and potential digital infrastructure projects.
Second-Quarter Financial Results
Adjusted EBITDA was $59.8 million, rising 33% sequentially and 41% year over year, with an adjusted EBITDA margin of 89%. Cash flow from operations totaled $41.4 million, while free cash flow was $40.2 million, up 11% from the prior-year period. Free cash flow margin was 60%.
Chief Financial Officer Scott McNeely said the company’s capital-light business model relies primarily on fee-based royalties, leases and surface-related revenue that require limited direct investment by LandBridge.
- Surface-use royalties and revenue increased 41% sequentially, driven by higher produced-water handling volumes and increased commercial activity.
- Resource sales and royalties increased 1%, supported by higher water sales on legacy acreage.
- Oil and gas royalties rose 20% sequentially, primarily due to higher oil prices. The segment represented about 5% of second-quarter revenue.
Capital expenditures totaled $1.1 million during the quarter. Net cash used in investing activities was $11.3 million, including $10.2 million for bolt-on acquisitions.
LandBridge ended the quarter with $269.8 million of total liquidity, including $39.8 million of cash and $230 million available under its revolving credit facility. Total borrowings were $545.2 million, nearly unchanged from the first quarter, and the company reported a net leverage ratio of 2.5 times, compared with 2.7 times in the prior quarter.
After the quarter ended, LandBridge increased its revolving credit facility from $275 million to $375 million, with potential expansion to $475 million. The company also reduced borrowing costs by 25 basis points across the pricing group. McNeely said the company has no debt maturities until 2030.
The company declared a quarterly dividend of $0.12 per share. Its board had previously authorized a $50 million share-repurchase program that may be used through December 2027.
Digital Infrastructure Pipeline Expands
Long said LandBridge is pursuing data center and digital infrastructure opportunities in West Texas, where it believes its land position offers large contiguous sites, access to high-voltage transmission infrastructure, natural gas, fiber connectivity and water supplies. The company said it has access to about 13.4 million acre-feet of brackish groundwater, along with treated produced water and pore space for disposal.
LandBridge said it is under letters of intent, option agreements or late-stage negotiations with seven power and digital infrastructure counterparties representing more than 10 gigawatts of potential power generation and data center capacity across its footprint.
McNeely said those discussions are beyond preliminary outreach, describing them as projects with signed documents undergoing diligence or agreements being negotiated. The counterparties include a mix of hyperscalers, engineering, procurement and construction providers, and power generation companies, he said.
He added that LandBridge expects “multiple” letters of intent and options could convert into firm leases with revenue beginning by the end of next year, while cautioning that the company intends to announce milestones when binding agreements are completed.
Responding to questions about a Texas directive involving new data center approvals pending an ERCOT audit, McNeely characterized the effort as an audit and disclosure exercise rather than an outright moratorium. He said the company believes its contemplated projects are positioned differently because they are generally behind-the-meter and co-located with generation, potentially reducing rather than increasing grid demand. He also said the projects are expected to use brackish or treated produced water rather than compete with local municipal water supplies.
Water Disposal, Acquisitions and Corporate Conversion
McNeely said produced-water infrastructure that came online earlier than expected contributed to second-quarter growth, and LandBridge still expects further volume growth during the second half of the year. He said the company sees increasing value in pore space near the Texas-New Mexico state line as produced-water volumes grow.
According to McNeely, the prevailing royalty rate for new produced-water facilities is about $0.15 per barrel for both WaterBridge and third-party operators. He said LandBridge expects rates to rise over time as disposal capacity becomes scarcer, while legacy WaterBridge sites currently reduce the company’s blended average rate.
On acquisitions, McNeely said LandBridge continues to see a “robust” pipeline and could pursue larger opportunities in the second half of 2026. He said a recent $20 million surface acquisition associated with landfill operations was one the company would have completed with any third party, not solely with WaterBridge.
Separately, LandBridge’s board unanimously approved a plan to convert the company from a Delaware limited liability company into a Texas corporation. McNeely said the move could broaden eligibility for certain S&P, Russell and CRSP indexes, potentially expanding the investor base, improving liquidity and increasing visibility among investors.
About LandBridge (NYSE:LB)
LandBridge Company LLC owns and manages land and resources to support and enhance oil and natural gas development in the United States. It owns surface acres in and around the Delaware Basin in Texas and New Mexico. The company holds a portfolio of oil and gas royalties. It also sells brackish water and other surface composite materials. The company was founded in 2021 and is based in Houston, Texas. LandBridge Company LLC operates as a subsidiary of LandBridge Holdings LLC.
