Texas Pacific Land (TPL) Q4 FY25 earnings call: guidance and Q&A

How has the opportunity for power and data center development evolved for TPL, beyond the Bolt Energy partnership?

The opportunity is larger than initially perceived, with TPL's scale in land, gas, and water being a key differentiator. The long-term goal is to build multiple multi-gig energy campuses, not just smaller facilities. Efforts are promising, with commercial negotiations ongoing for several deals.

“The further we dig into it, the bigger we think the opportunity is. We've got a few projects we're working on, some Bolt related, some not. But I think when you look at that business, just like any other business, at the end of the day, scale is what really matters.”

asked by Derrick Whitfield · answered by Tyler Glover

Are investor estimates of a 10 GW data center campus, $125M per GW in water revenue, and 120k-200k bbl/day water usage reasonable for Bolt Energy?

For certain facility designs, these numbers are very reasonable, and some power generators could require substantially higher water usage. The actual usage varies greatly depending on the specific design of the power plant (e.g., single vs. combined cycle) and data center cooling methods. TPL aims to facilitate customer design from a water perspective.

“But with certain designs, yes, those numbers are very reasonable. And we've talked to some power generators that the water usage numbers seem substantially higher than that.”

asked by Derrick Whitfield · answered by Tyler Glover

What is driving the strength in TPL's traditional water business, given the broader contraction in Permian activity?

Record water volumes are due to legacy contracts ensuring volume direction, and a long-term strategy implemented years ago focusing on out-of-basin pore space and desalination. TPL acts as a solutions provider for produced water management, and its expanding source water system allows it to capture more market share even with slight overall activity contractions.

“The results you're seeing in those higher numbers is a result of those legacy contracts and our strategy that we've implemented. We look at the produced water management space of -- we're the solutions provider, again, to the operators and the midstream company, and I think you're seeing the results in the numbers.”

asked by Derrick Whitfield · answered by Robert Crain

Will TPL provide more information on the data center opportunity, or is the current shareholder commentary sufficient?

TPL plans to release more information eventually but is currently bound by strict confidentiality agreements with counterparties. Keeping commercial terms private, especially in the near term, is considered a competitive advantage, similar to how the water business was handled initially.

“I think eventually, we'll put more information out. We've got pretty strict confidentiality agreements in place with all of our counterparties. And kind of like when we started the water business, keeping most of the commercial terms private, at least in the near term, we think, is a competitive advantage for us.”

asked by Timothy Rezvan · answered by Tyler Glover

How do the new process adaptations and waste heat capture improve desalination efficiency and address concerns about power intensity?

The primary goal is to reduce energy consumption (kilowatt per hour per barrel) to lower the price per barrel of treated water. The design adaptations aim to process water with less energy. Waste heat capture, especially when desal is combined with power generation, provides almost free energy, further reducing the kilowatt per hour per barrel treated.

“The overall goal in water desal is to reduce energy consumption to overall reduce your price per barrel. If you look at how desal metrics are measured, it's really in your kilowatt per hour per barrel of water treated.”

asked by Timothy Rezvan · answered by Robert Crain

Will water for the Bolt partnership be supplied through source water, treated desal water, or a combination, and how does desal water meet spec requirements?

It will likely be a combination of both source water and treated desal water, depending on the specific design requirements for volume and quality. There are significant synergies in combining desal with power generation and data center usage, particularly leveraging produced water, which is unique to oil and gas operations. Conversations are progressing well on this front.

“I think when you look at Bolt and some of the other deals we work on, eventually, it's going to be a combination of both of the water sources. We love the produced water component that could be used in power gen and combining desal with power gen and data center usage, there's some synergies there that are pretty amazing when you dig into them from waste heat capture, freeze technology.”

asked by Oliver Huang · answered by Robert Crain

Does TPL have the capacity to ramp treated water to required volumes for large-scale data centers, or are there caps, and what capital is needed for incremental capacity?

There is no feedstock shortage, with 25 million barrels per day of produced water in the Permian. Scaling facilities to meet demand will depend on the eventual water needs and potential capital offsets from power generation and compute to make the desal facility economically viable. It's too early to determine specific constraints or capital needs without final gen capacity and water requirements.

“When you look at the -- if we look at it just from a feedstock point, Ty mentioned in the commentary, there's 25 million barrels a day in the Permian Basin in produced water aspect. We're never going to have a feedstock shortage of water usage for power gen or compute.”

asked by Oliver Huang · answered by Robert Crain