Executive Summary

Revenue grew 78% YoY and 7% QoQ to $50.83M with Adjusted EBITDA up 79% YoY to $44.85M and margins holding ~88%; diversified fee-based revenues and rising produced-water activity were key drivers .
Versus S&P Global consensus, revenue modestly beat, while EPS missed and GAAP EBITDA trailed consensus; EPS was pressured by $11.2M non‑cash share-based comp, and consensus appears to compare GAAP EBITDA vs company’s Adjusted EBITDA . Q3 revenue actual $50.83M vs $50.26M estimate*, EPS $0.237 vs $0.507 estimate*, EBITDA $33.47M vs $45.32M estimate* .
FY25 outlook narrowed/tightened to $165–$175M Adjusted EBITDA (from $160–$180M in Q2), effectively raising the low end and lowering the high end; Q3 dividend maintained at $0.10/share .
Strategic milestones: ~37,500-acre acquisition (1918 Ranch & Royalty) expanding pore space and alternative energy optionality; sale of a 3,000-acre solar project (upfront + contingent milestones); long-term lease with an ONEOK subsidiary for a gas processing facility; liquidity strengthened to $108.3M and net leverage improved to 2.1x .

What Went Well and What Went Wrong

What Went Well
- Sustained high margins: Adjusted EBITDA margin 88% with broad-based contribution; revenue +7% QoQ, Adjusted EBITDA +6% QoQ .
- Mix resilience and volume uptick: Fee-based Surface Use Royalties & Revenue +2% QoQ; oil & gas royalties +22% QoQ as net royalty production rose from 814 boe/d to 912 boe/d .
- Strategic portfolio actions: 37,500-acre 1918 acquisition (pore space + alternative energy siting), 3,000-acre solar project sale (upfront and milestone economics), and a long-term ONEOK gas processing lease adding upfront and recurring revenue avenues .
- Management quote: “We control over 300,000 highly contiguous acres… WaterBridge… continues to expand its footprint on our land, reinforcing mutual growth” .
What Went Wrong
- EPS miss vs Street: Primary EPS $0.237 vs $0.507 consensus*, reflecting $11.2M non-cash share-based comp impacting reported earnings .
- EBITDA vs consensus: GAAP EBITDA of $33.47M came in below consensus $45.32M*, though company’s Adjusted EBITDA was $44.85M (non-GAAP) with 88% margin .
- Cash generation decelerated sequentially: Operating cash flow fell to $34.9M (from $37.3M) and FCF to $33.7M (from $36.1M), though both up sharply YoY; capex remained low at $1.2M .

Financial Results

Financial summary (oldest → newest):

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$28.49	$47.50	$50.83
Net Income ($M, consolidated)	$(2.76)	$18.48	$20.29
Net Income Margin (%)	(10%)	39%	40%
Adjusted EBITDA ($M)	$25.01	$42.45	$44.85
Adjusted EBITDA Margin (%)	88%	89%	88%
Cash from Operations ($M)	$7.45	$37.33	$34.91
Free Cash Flow ($M)	$7.15	$36.09	$33.73

Actual vs S&P Global consensus (Street) – focus quarters:

Metric	Q2 2025 Actual	Q2 2025 Consensus	Q3 2025 Actual	Q3 2025 Consensus
Revenue ($M)	$47.50	$49.33*	$50.83	$50.26*
Primary EPS ($)	$0.232*	$0.376*	$0.237*	$0.507*
EBITDA ($M, GAAP)	$31.05	$43.37*	$33.47	$45.32*

Segment breakdown (revenue):

Segment ($M)	Q3 2024	Q2 2025	Q3 2025
Surface Use Royalties & Revenue	$16.5	$34.2	$35.0
Resource Sales & Royalties	$9.1	$10.6	$10.8
Oil & Gas Royalties	$2.9	$2.7	$3.3
Other	$—	$—	$1.7
Total Revenue	$28.49	$47.50	$50.83

KPIs and balance/liquidity:

KPI	Q3 2024	Q2 2025	Q3 2025
Net Royalty Production (boe/d)	—	814	912
Total Liquidity ($M)	—	$95.3	$108.3
Cash & Equivalents ($M)	—	$20.3	$28.3
Revolver Availability ($M)	—	$75.0	$80.0
Borrowings Outstanding ($M)	—	$374.3	$369.3
Net Leverage Ratio (x)	—	2.4x	2.1x
Dividend ($/share)	—	$0.10	$0.10

Note: Asterisks (*) denote values retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	FY 2025	$160–$180 (Q2 guide)	$165–$175	Tightened (raised low end, lowered high end)
Dividend ($/share)	Quarterly	$0.10 (Q2)	$0.10 (Q3)	Maintained
Net leverage target (x)	Ongoing	2.0–2.5x target	2.0–2.5x target	Maintained

Earnings Call Themes & Trends

Topic	Q1 2025 (Prior-2)	Q2 2025 (Prior-1)	Q3 2025 (Current)	Trend
Produced water/pore space strategy	Emphasis on contiguous pore space; Speedway pipeline open season; Wolf Bone Ranch MVC underpinning	New Devon MVC for 300 kbpd pore space (from 2027); state-line pore space constraints recognized	Continued pore space expansion via 1918 acquisition; WaterBridge Kraken ramp; oil & gas royalties +22% QoQ	Strengthening
Data center/power initiatives	Data center option signed Nov-2024; power demand discussions ramping	IPP option for CCGT plant; partnership to accelerate power development	“Package” solution: land + power partners + water; engaged with blue-chip counterparties	Advancing
Regulatory (Texas RRC)	—	Company supportive; aligns with distributed injection strategy; pore space not commodity	Reinforced thesis with Delaware Basin disposal capacity shortfall slide	Supportive tailwind
Revenue mix durability	92% non-oil & gas royalties; commodity-insulated model	Fee-based >90% of mix; Surface Use surged on easements	Fee-based growth persisted; surface revenues +2% QoQ	Durable
M&A and land strategy	Focus on accretive land M&A	Evaluating acquisitions; guidance adjusted for timing of solar monetization	Closed 1918 Ranch & Royalty (~37,500 acres) with 2026 EBITDA potential	Active

Management Commentary

CEO: “We control over 300,000 highly contiguous acres… WaterBridge… continues to expand its footprint on our land, reinforcing mutual growth.”
CFO: “Adjusted EBITDA for the quarter was $44.9 million… with a margin of 88%… net leverage ratio was 2.1x at the end of the third quarter compared to 2.4x last quarter.”
CFO on 1918 acquisition: “Conservatively expecting $20 million of EBITDA… next year [2026].”
CFO on ONEOK lease structure: “Usually upfront payments for long-term lease, with additional annual payments; significant recurring revenue from associated infrastructure (pipelines, electrical, etc.).”

Q&A Highlights

1918 acquisition economics and timeline: ~$20M EBITDA in 2026 (conservative, run-rate based), with 900 kbpd incremental pore space capacity enabling mid-$50M EBITDA potential over 3–4 years as commercialization progresses .
Data center/power posture: “Package solution” (land + power partnerships + water + fiber locations) differentiates LB; multiple processes “fairly far along” with blue-chip counterparties .
Gas processing lease (ONEOK subsidiary): upfront + annual payments; recurring revenue from broader infrastructure buildout (pipelines, power interconnects) .
Pore space scarcity narrative: Management illustrated a forecasted 9 MMBbl/d disposal capacity shortfall in the Delaware Basin by 2035, supporting long-term pricing/volume tailwinds for LB’s pore space .
2026 setup: Expect step-up from 1918 and line-of-sight water volumes (e.g., WaterBridge developments) with surface-use royalties and other surface revenues as primary growth drivers .

Estimates Context

Revenue: Q3 actual $50.83M beat $50.26M consensus by ~$0.57M (~1.1%)* .
EPS: Primary EPS $0.237 missed $0.507 consensus*, impacted by $11.2M non-cash share-based comp and incentive units (not dilutive to public ownership) .
EBITDA (GAAP): $33.47M below $45.32M consensus*, while company-reported Adjusted EBITDA was $44.85M with 88% margin (non-GAAP) .
Looking ahead: Q4 2025 Street sees revenue ~$51.80M and EPS ~$0.432*, implying modest sequential growth from Q3; management tightened FY25 Adjusted EBITDA range to $165–$175M .