LandBridge (NYSE:LB) raised its full-year 2026 adjusted EBITDA guidance after reporting record third-quarter revenue, as growth in produced water handling and other land-use activities contributed to higher earnings.
The company now expects adjusted EBITDA of $220 million to $235 million, up from its previous range of $210 million to $230 million. Chief Financial Officer Scott McNeely said the revised outlook includes expected contributions from recent acquisitions beginning in the fourth quarter.
Third-quarter revenue rose 39% from a year earlier to $70.9 million and increased 6% sequentially. Adjusted EBITDA climbed 42% year over year to $63.7 million, while free cash flow increased 45% to $49 million. The company reported an adjusted EBITDA margin of 90% and a free cash flow margin of 69%.
McNeely said the acquisitions closed at the end of the quarter, so the period’s performance reflected organic growth across LandBridge’s key revenue streams. Capital expenditures were approximately $0.6 million.
Acquisitions expand acreage and disposal opportunity
Chief Executive Officer Jason Long said LandBridge added approximately 25,000 surface acres during the quarter, bringing its total position to more than 350,000 acres. Net cash used in investing activities included approximately $266.8 million for the acquisitions.
Long said the purchases added undeveloped pore space outside over-pressured injection zones near the state line. The company is in discussions with oil and gas operators about using that space for produced water disposal, he said.
Land acquired this year was purchased at approximately 10 times EBITDA, Long said. He said LandBridge sees a path to lowering that multiple below six times through near-term pore space monetization and to three times or less over the long term through additional commercial development.
During the question-and-answer session, McNeely said pore space monetization alone could potentially bring the multiple to three times, with other surface opportunities providing further upside. He described the acquisition pipeline as robust but said the company would weigh commercial sensitivities when deciding how much detail to disclose about its purchases.
Surface use royalties and revenues rose $2.1 million sequentially to $54.3 million, supported by higher produced water handling volumes and pipeline easement revenue. Resource sales and royalties increased $1.4 million to $12.5 million, while oil and gas royalties rose $0.5 million to $4.1 million.
Alpha campus moves into construction
LandBridge’s digital infrastructure plans advanced in September when PowerBridge exercised an option on an initial 825 acres of the approximately 3,400 acres under option for the Alpha Digital Campus in Reeves County, Texas. LandBridge entered into a long-term ground lease and a power royalty agreement for power generated at the site.
Long said PowerBridge had received initial permits and begun construction on the first phase, which is expected to include more than 300 megawatts of a planned 2-gigawatt campus. First power delivery is anticipated in the fourth quarter of 2027.
McNeely said material cash flow from the project is expected to begin in the first half of 2027, with ground rent starting next year. He declined to disclose detailed economics but said the agreements fall within LandBridge’s previously stated framework of $10 million to $20 million per gigawatt.
Asked whether that implied $20 million to $40 million annually for a fully scaled 2-gigawatt campus, McNeely said that was the company’s target and expectation as the facility ramps up over several years, not an amount expected next year. He also said he expected a near-term announcement about an anchor customer, while stopping short of confirming a deal.
Long said Alpha’s first phase will use on-site natural gas generation and non-potable brackish water, avoiding demand on the ERCOT grid and freshwater supplies. McNeely said potential policy changes that raise standards for data centers could strengthen LandBridge’s competitive position, although he said it was too early to know what regulatory changes might occur.
Debt rises following acquisitions
LandBridge ended the quarter with $126.8 million in liquidity and $765 million in total borrowings, up from $545.2 million at the end of the second quarter. Covenant net leverage rose to three times from 2.5 times, above the company’s long-term target of two to 2.5 times.
The company increased commitments under its revolving credit facility from $275 million to $375 million. On October 1, it issued an additional $125 million of 6.25% senior unsecured notes due in 2030 and used the proceeds to repay part of its revolving borrowings. Pro forma liquidity was approximately $252 million after the October transactions, McNeely said.
The board declared a $0.12-per-share dividend payable December 10 to shareholders of record November 25. McNeely also said LandBridge completed its conversion from a Delaware limited liability company to a Texas corporation, a change management believes could broaden its investor base through greater index eligibility.
About LandBridge (NYSE:LB)
LandBridge Company (NYSE: LB) is a landowner and infrastructure-focused real estate company serving the energy and industrial sectors. The company owns and manages large tracts of land in the Permian Basin, primarily in West Texas and southeastern New Mexico, one of the leading oil and natural gas producing regions in the United States.
LandBridge generates revenue by providing access to its properties and related resources. Its activities include surface-use agreements, easements, rights-of-way, water services, mineral and royalty interests, and accommodations for energy, logistics, and infrastructure projects.
