LandBridge Company LLC (referred to as „LandBridge“ or „the Company“) is a land-focused entity operating primarily in the Delaware Basin portion of the Permian Basin in Texas and New Mexico. The Company owns approximately 220,000 surface acres, generating revenue through royalties and fees from surface use (e.g., for oil and gas infrastructure), easements, resource sales (such as brackish water and caliche), resource royalties, and oil and gas royalties. It benefits from the region’s high energy activity, with key customers including operators in oil, gas, and water management.
Financial Performance Analysis
Revenue Analysis
LandBridge’s revenues are diversified across surface-related activities, resource sales/royalties, and oil/gas royalties, with significant related-party transactions (primarily with affiliates like WaterBridge and Desert Environmental). Continued momentum in third-party related revenues outpacing related-party revenue growth. Total revenues for Q2 2025 reached $47.5 million, up 83% from $26.0 million in Q2 2024. For H1 2025, revenues surged 103% to $91.5 million from $45.0 million in H1 2024.
Key drivers:
- Surface Use Royalties: Grew 139% in H1 to $34.1 million, fueled by increased produced water handling ($17.6 million increase) and industrial waste royalties ($5.4 million), tied to higher drilling and completion activity in the Delaware Basin.
- Easements and Other Surface-Related Revenues: Up 109% in H1 to $26.3 million, driven by new easements for oil/gas gathering ($5.5 million), transportation pipelines ($4.8 million), and drilling locations ($3.4 million).
- Resource Sales: Increased 78% in H1 to $13.0 million, with brackish water sales up $4.4 million (due to higher volumes and prices) and caliche sales up $1.3 million.
- Resource Royalties: Rose 129% in H1 to $12.0 million, mainly from brackish water royalties ($6.7 million increase) post-acquisitions.
- Oil and Gas Royalties: Declined 29% in H1 to $6.1 million, due to lower production volumes (157 MBoe vs. 184 MBoe) and realized prices ($38.98/Boe vs. $44.25/Boe), with no mineral bonus payments in 2025 (vs. $1.6 million in 2024). These now only represent only 7% of the company revenue.
Related-party revenues accounted for ~40% of total in H1 2025, highlighting dependency on affiliates (steadily decreasing as third-party related revenues outpace) but also synergies. Growth was bolstered by the East Stateline Ranch acquisition, adding revenue streams from water infrastructure.
| Revenue Category | Q2 2025 | Q2 2024 | % Change |
|---|---|---|---|
| Surface Use Royalties (third-party) | $9,019 | $3,304 | +173% |
| Surface Use Royalties (related-party) | $7,676 | $3,667 | +109% |
| Surface Use Royalties (combined) | $16,695 | $6,971 | +139% |
| Easements & Other Surface-Related (third-party) | $14,271 | $5,088 | +180% |
| Easements & Other Surface-Related (related-party) | $3,248 | $2,376 | +37% |
| Easements & Other Surface-Related (combined) | $17,519 | $7,464 | +135% |
| Resource Sales (third-party) | $5,456 | $3,618 | +51% |
| Resource Sales (related-party) | $181 | $179 | +1% |
| Resource Sales (combined) | $5,637 | $3,797 | +48% |
| Resource Royalties (third-party) | $3,841 | $2,139 | +80% |
| Resource Royalties (related-party) | $1,107 | $1,107 | +0% |
| Resource Royalties (combined) | $4,948 | $3,246 | +52% |
| Oil & Gas Royalties (third-party) | $2,734 | $4,475 | -39% |
| Oil & Gas Royalties (related-party) | $0 | $0 | N/A |
| Oil & Gas Royalties (combined) | $2,734 | $4,475 | -39% |
| Overall Total (third-party) | $35,321 | $18,624 | +90% |
| Overall Total (related-party) | $12,212 | $7,329 | +67% |
| Overall Total (combined) | $47,533 | $25,953 | +83% |
| Revenue Category | H1 2025 | H1 2024 | % Change |
|---|---|---|---|
| Surface Use Royalties (third-party) | $19,540 | $4,902 | +299% |
| Surface Use Royalties (related-party) | $14,591 | $6,275 | +133% |
| Surface Use Royalties (combined) | $34,131 | $11,177 | +205% |
| Easements & Other Surface-Related (third-party) | $20,711 | $9,842 | +110% |
| Easements & Other Surface-Related (related-party) | $5,581 | $2,759 | +102% |
| Easements & Other Surface-Related (combined) | $26,292 | $12,601 | +109% |
| Resource Sales (third-party) | $12,622 | $7,034 | +79% |
| Resource Sales (related-party) | $367 | $272 | +35% |
| Resource Sales (combined) | $12,989 | $7,306 | +78% |
| Resource Royalties (third-party) | $7,999 | $4,117 | +94% |
| Resource Royalties (related-party) | $3,953 | $1,107 | +257% |
| Resource Royalties (combined) | $11,952 | $5,224 | +129% |
| Oil & Gas Royalties (third-party) | $6,120 | $8,660 | -29% |
| Oil & Gas Royalties (related-party) | $0 | $0 | N/A |
| Oil & Gas Royalties (combined) | $6,120 | $8,660 | -29% |
| Overall Total (third-party) | $66,992 | $34,555 | +94% |
| Overall Total (related-party) | $24,492 | $10,413 | +135% |
| Overall Total (combined) | $91,484 | $44,968 | +103% |
Expenses and Profitability
Operating expenses were well-managed, with a notable reduction in share-based compensation post-IPO, turning prior-year losses into profits. Q2 2025 operating income was $28.5 million (vs. $51.2 million loss in Q2 2024), and net income was $18.5 million (vs. $57.7 million loss). For H1, net income was $33.9 million (vs. $46.9 million loss).
- Key Expense Trends:
- Resource sales-related expenses: Down 28% in H1 to $0.9 million, due to lower utilities and maintenance.
- Other operating & maintenance: Up 94% in H1 to $2.2 million, from higher field overhead, insurance, and taxes linked to acquisitions.
- General & administrative (G&A): Down 61% in H1 to $29.5 million, driven by an 84% drop in share-based compensation ($22.3 million vs. $72.6 million) after reclassifying incentive units as equity post-IPO. Excluding this, G&A rose 111% due to corporate costs, professional fees, and employee expenses.
- Depreciation, depletion, amortization & accretion (DD&A): Up 21% in H1 to $5.1 million, from higher amortization of acquired contracts.
- Interest expense, net: Up 25% in Q2 to $7.9 million and 74% in H1 to $15.9 million, due to higher debt balances (average $372 million vs. $252 million), partially offset by lower rates.
Income tax expense rose to $3.7 million in H1 (vs. $0.2 million), reflecting the Company’s new taxable status post-IPO. Earnings per share (EPS) for Class A shares in Q2 2025: Basic $0.30, Diluted $0.24.
Adjusted EBITDA (a non-GAAP measure) jumped 81% in Q2 to $42.5 million and 101% in H1 to $81.2 million, with margins at 89% (stable YoY), underscoring efficient operations. Free cash flow (another non-GAAP metric, defined as Adjusted EBITDA less capex and interest) was $36.1 million in Q2 (up 130%) and $51.9 million in H1 (up 58%), with margins of 76% and 57%, respectively.
Balance Sheet and Liquidity
As of June 30, 2025, total assets were $1.07 billion (up from $1.03 billion at year-end 2024), driven by property, plant & equipment ($918 million) and deferred tax assets ($59 million). Cash and equivalents stood at $20.3 million (down from $31.5 million), with total debt at $371 million (net of current portion).
Liquidity remains solid, supported by $20.3 million in cash, undrawn credit facilities (post-IPO, the Company entered a new $400 million revolving credit facility), and strong free cash flow. Working capital was positive at $33.8 million. Management noted in MD&A that liquidity is sufficient for operations, with capex focused on growth (e.g., water infrastructure). However, debt levels (leverage ratio not specified) and interest costs pose risks in a high-rate environment.
While full cash flow statements were not exhaustively detailed in the report excerpts, operating cash flows implicitly supported free cash flow generation, with investments in acquisitions and minimal capex (as a royalty-focused business). Financing activities likely included IPO proceeds (post-quarter) and debt management.
| Balance Sheet Highlights (in thousands) | June 30, 2025 | Dec 31, 2024 | Change |
|---|---|---|---|
| Cash & Equivalents | $20,345 | $31,472 | -35% |
| Total Current Assets | $44,140 | $53,315 | -17% |
| Property, Plant & Equipment, Net | $918,312 | $918,236 | +0% |
| Total Assets | $1,066,380 | $1,032,479 | +3% |
| Total Debt (incl. current) | $371,043 | $381,169 | -3% |
| Total Liabilities | $381,415 | $395,408 | -4% |
| Shareholders‘ Equity | $684,965 | $637,071 | +8% |
Operational Analysis
LandBridge’s operations are asset-light, leveraging land ownership for passive income. Key metrics reflect Permian Basin dynamics:
- Net Royalty Volumes (H1): Oil 68 MBbls (down from 88), Natural Gas 351 MMcf (down from 355), NGL 30 MBbls (down from 37), Total Equivalents 157 MBoe (down 15% from 184 MBoe, or 0.4 MBoe/d vs. 1.0).
- Realized Prices (H1): Oil $67.68/Bbl (down 13%), Natural Gas $2.38/Mcf (up 78%), NGL $22.73/Bbl (up 8%), Equivalents $38.98/Boe (down 12%).
- Volumes declined due to lower drilling on Company lands, but surface/water revenues compensated via higher activity from third parties.
The Company benefits from no direct operating costs for oil/gas production, focusing on royalties (typically 25% net revenue interest). Acquisitions like East Stateline enhanced water royalties, aligning with growing demand for brackish/produced water in fracking.
Management’s Discussion and Forward-Looking Statements
In MD&A, management emphasized revenue diversification and Permian growth, crediting acquisitions for 2025 gains. They highlighted risks like commodity volatility (e.g., WTI oil averaged $80/Bbl in Q2 2025 vs. $82 in 2024), regulatory changes (e.g., water permits), and customer concentration. Cybersecurity and environmental risks were noted, with no material incidents.
Forward-looking statements project continued revenue growth from surface/water segments, assuming stable Permian activity. Potential catalysts include more easements and resource sales, but uncertainties include oil price drops, inflation, and supply chain issues. Management plans to use IPO proceeds (~$317 million raised) for debt reduction and growth, with no dividends announced. No specific guidance was provided, but emphasis on free cash flow suggests potential for distributions or reinvestment.
Critical accounting policies include revenue recognition (e.g., royalties based on production reports), impairment testing for long-lived assets, and share-based compensation (shifted to equity accounting post-IPO, reducing volatility).
Conclusion and Outlook
The market still fails to understand that LandBridge is not an oil/gas company. LandBridge’s Q2 2025 results showcase consistency and strength, with 83% revenue growth, profitability, and robust Adjusted EBITDA/free cash flow, positioning it as a beneficiary of Permian energy demand. The business model’s high margins (89% EBITDA) and low capex needs provide resilience, with oil/gas weakness having only a minor effect as they make up <10% of total revenue. Looking ahead the Company is poised for expansion in water/surface segments and growth despite oil/gas weakness. We are more than satisfied with the Q2 performance and will add to our position.
