Detailed Narrative
Strategic Acquisitions and Investments
WaterBridge closed the acquisition of Ranger Water Midstream, significantly increasing its capacity in Lea County, New Mexico, with 70,000 barrels per day of permitted disposal capacity, 30 miles of pipelines, and a 100,000 barrels per day water treatment facility. The company also acquired the NDB Landfill in Lea County, a 560-acre facility with 44 million cubic yards of permitted capacity, representing over 40 years of future volumes. Additionally, WaterBridge approved the organic construction of a 280-acre environmental waste management facility in the Stateline region, expected to begin construction in Q3 2026 and be in-service by mid-2027, with an anticipated 2-year capital payback period. These waste management transactions are expected to double the company's total facility count and permitted waste handling capacity in the Delaware Basin.
Operational Milestones and Project Acceleration
Speedway Phase 1 launched on schedule in July, with first volumes coming online, and is expected to ramp up to approximately 100,000 barrels per day over the next couple of months, adding high-margin volume growth. Momentum for Speedway Phase 2 continues to build, with robust customer demand and commercial discussions advancing towards a Final Investment Decision (FID) expected by year-end 2026. The New Devon project, a pipeline to transport volumes from New Mexico to low-pressure LandBridge-owned pore space, had its in-service date accelerated to early 2027, shifting growth into the next fiscal year. The company also plans to invest in connecting Ranger and Speedway in the second half of the year to fully unlock operational advantages.
Strong Financial Performance and Outlook
WaterBridge delivered record Q2 revenue of $217.8 million, an 8% sequential increase, primarily driven by higher produced water volumes and new contract rates. Adjusted EBITDA grew 12% sequentially to $115.8 million, with the adjusted EBITDA margin improving to 53%, reflecting scalability and operating discipline. Net income was $14.6 million, up from $9.5 million in Q1. As a result of accretive acquisitions and accelerated projects, the company raised its full-year 2026 guidance for volumes to 2.55 million to 2.75 million barrels per day and adjusted EBITDA to $435 million to $475 million. Capital expenditures guidance was also increased by $100 million to $530 million to $590 million to fund these opportunities.
Disciplined Capital Allocation and Enhanced Liquidity
The company maintains a disciplined capital allocation framework, prioritizing organic growth, accretive acquisitions, and a conservative balance sheet. All incremental projects are expected to meet or exceed capital allocation criteria, featuring build multiples below 5x, long-term contracts, and creditworthy counterparties. WaterBridge ended the quarter with total liquidity of $347.6 million, including $47.6 million of cash and $300 million of available borrowing capacity. Subsequent to quarter-end, the revolving credit facility was expanded from $500 million to $750 million, with the ability to grow to $1 billion, and borrowing costs were reduced by 25 basis points, enhancing financial flexibility. The covenant net leverage ratio was 3.3x, with a long-term target of sub 3x.
Emerging Digital Infrastructure Opportunity
WaterBridge is uniquely positioned to participate in the rapidly developing digital infrastructure market in the Delaware Basin, potentially serving as a full-scale utility partner to hyperscalers. This opportunity leverages the company's 5 million barrels per day of produced water handling capacity and LandBridge's access to approximately 13.4 million acre-feet of brackish water. The integrated network connects these resources to high-demand growth centers. The company is actively exploring the use of treated produced water for data center cooling and is collaborating with local, state, and national officials to define the necessary regulatory framework, expressing high confidence in the operational and commercial viability of this solution.
Growth in Environmental Waste Management Business
The environmental waste management business is growing to approximately 10% of WaterBridge's total business, up from 5% at IPO. This expansion is driven by similar fundamentals to the core produced water business, including overlapping customers, criticality of surface control, and regulatory competitive moats. The NDB Landfill acquisition provides immediate high-margin revenue, while the organic Stateline facility offers attractive returns, with a 2-year capital payback expected. The company views this as a natural, intelligent growth area that also provides vertical integration benefits by reducing waste hauling costs for its core water operations.