Yet Another Value Podcast - Chadd Garcia drills into LandBridge's value

Episode Date: April 26, 2026

In this episode of Yet Another Value Podcast, host Andrew Walker is joined by returning guest Chad Garcia to discuss LandBridge and the broader Permian Basin ecosystem. Chad outlines how land-based royalty models differ from traditional energy investments, highlighting surface rights, produced water, and infrastructure as key drivers. The conversation covers LandBridge’s growth through pore space expansion, strategic land acquisitions, and its relationship with WaterBridge. They also examine valuation differences versus peers like TPL, the role of data centers in West Texas, and why the market may be underestimating future cash flow. The episode concludes with an update on Secure Energy’s acquisition and its implications for the waste infrastructure thesis.____________________________________________________________[00:00:00] Introduction and Chad Garcia returns[00:04:07] LandBridge overview and investment thesis[00:05:26] History of land royalty businesses[00:08:57] TPL business model breakdown[00:13:21] LandBridge business and revenue streams[00:16:11] Valuation comparison versus TPL[00:17:21] Market skepticism and short thesis[00:20:59] Incremental pore space growth potential[00:24:27] Sponsor ownership and insider alignment[00:26:50] Structure and related party concerns[00:29:12] Acquisition strategy and value creation[00:31:30] Strategic land positioning explained[00:36:01] Competitive advantages in pore space[00:39:37] Data center opportunity in Permian[00:43:38] Challenges to data center deployment[00:46:42] Valuation framework and growth outlook[00:48:36] LandBridge versus WaterBridge comparison[00:49:31] Secure Energy acquisition overview[00:51:06] Waste thesis validation discussion[00:55:35] Reaction to acquisition valuation[00:58:16] Market education still ongoing[01:01:12] Closing thoughts and disclaimerLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

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I'm your host, Andrew Walker. Today's podcast, I have Chad Garcia on. This is Chad's sixth time on. You're going to see Chad's got the, if you're on the YouTube's, Chad has the yet another value podcast shirt on. And in the background, you can kind of see the yet another value podcast hat. Chad is, he is an expert on the Permian and the Permian and kind of the infrastructure space when it comes to energy and the waste management business, the water waste management

side. I mean, you know, I know a lot of very thankful shareholders who listen to us. podcast in November 24 and talked about secure energy. We'll talk about secure energy right at the end because they just had a big deal getting taken out for billions by GFL, kind of affirms his thesis on the water side. But that's not what we're talking about today until the end. We're talking about Land Bridge, which is just more a straight land play. The derivative of everything that's happening in the Permian and in Texas, whether it's data centers, oil, water, you name it, Landbridge is a beneficiary. Chad's been involved there and following it for years and he's going to talk about the thesis there

and why, you know, it trades at a kind of optically high headline multiple, but why he thinks there is just so much growth and it's such good business and kind of the market is missing just just how good this is. So we're going to get there all in one second. But first, word from our sponsors. Today's podcast is sponsored by OfficeSense. Look, earning season is coming up. It's basically already here as I'm recording this on April 20th. And earning season is tough. There are, you know, you're following dozens of companies you're following the companies you're investing in. And you're following all the companies that tack on to the companies you're invested in. And it takes a lot of time. You know, there's the famous story of when you're on the sell side, earning season,

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And if you like to try AlphaSense for free, request your trial at Alpha-Sense.com slash YAVB. That's alpha dash sense.com slash yavp. All right. Hello and welcome to the yet another value podcast. I'm your host, Andrew Walker, with me today. I'm happy to have on yet another value podcast. Hall of Famer, Hall of Fame inductee. I'm not sure, but Chad Garcia, he's wearing the shirt.

I see the hat all the way in the background over there. Chad, how's it going? It's going great. It's going great. How you doing, Andrew? Doing great. I was telling you beforehand, you look awesome, man. But let's, we're going to dive into it one second before you get to their disclaimer.

remind everyone, nothing on this podcast is Investing Advice. Please consult financial advisor. Chad and I are going to talk about one company, but I think that might have all into seven or eight different companies. So please just remember all that. Links and disclaimer are then. Chad, the company we're going to talk to talk about today is Land Bridge. I was sending you messages because I think people think you are, maybe not the godfather

of the Permian at this point, but among small cap value investors, you're kind of the king of the Permian and all these land plays. You've got Land Bridge, water bridge. We might talk secure energy, which is certainly not Permian, but kind of related. TPL, all that sort of stuff. But we're talking Landbridge. So I'll stop rambling and toss it over to you. What is Landbridge, Amar?

They're so interesting. Well, the real godfather is Marie Saul. I know, I know. Maybe we'll have a, hopefully I can do justice to talking about these names. I mean, you are right. And I know you, I believe you at some, I mean, he's the one who everybody, unfortunately he passed and everybody was sending around the recommendation of TPL at, you know, $8 per share in 1994.

or something, and, you know, he just held it and wrote it. And I think a lot of these, as you said, the tack-on plays are, owe him a debt of gratitude. Well, it is, TPL at $8 was certainly a different business because between then and now, fracking has been invented and put to wide use. And so TPL is definitely a different business. Well, you know, if I could just, Andrew, you are right, right? Like, nobody imagined the fracking and everything. But I think the core thing with TPL, and this is Charlie Munger, you know, the joke on their deathbed, every Texas man tells their grandkids never sell the oil rights. You know, the great thing about a TPL or an NRP, you own these mineral rights. And, you know, you never know. If you own the mineral right in the 1800s, you wouldn't even know that oil was worth a thing. You know, you own the 2000s. And there's lots of green things that you're starting to mine for in minerals. Like, you just own a perpetual option. And you never know if that's going to hit in the money or not.

Well, even I think more valuable than mineral rights are the surface rates. Yeah. And that's people that don't know the space when they look at like a Venom, which is a pure oil and gas royalty company that's based in the Permian Basin or Prairie Sky, which is an oil and gas royalty play based in Western Canada. I mean, those companies trade in the U.S. 10 times EBDA for Prairie Sky is more 16 times EBITA. and they look at something like TPL, which is 30 times, and they don't really get it. Because they're equating the two with being the same, which part of it is the same, but then there's a lot that's not. And so, you know, we're going to talk about Land Bridge, but I think it's best to kind of go through a history of land-based royalty companies. We can start with TPL because that one is the largest at nearly $30 billion of market cap.

And it's, you know, very well known because of the strong price performance it's had for over, you know, decades. But what are these businesses like land-based royalty companies? So if you look at TPL, TPL was formed in 1888 on the on the back of a bankruptcy of the Texas and Pacific railroad. The financier J. Gold tried to build a railroad between Texas and the Pacific Ocean. What do you need? You need lots of land. And the government agreed to give him, you know, X amount of acres per mile of railroad that he built. He was a little too slow in and building it out. It went bankrupt. But at the time of the bankruptcy, the government had given him three million acres of land. And so the bankruptcy court took all the debt that was outstanding of the bonds, put it into a

trust, and then commanded the trust to sell off acres and return the capital to unit holders via share repurchases and or dividends. And then at some point, the trust went public. It's a little, you know, people a little confused on what it happened. It could have happened as early as 1888. But, you know, we know that for certain by the 1920s, it was on the New York Stock Exchange. So long history there. And so if you look at TPL, like, how does TPL make money?

Well, as you mentioned, just under half of the revenue comes from, from mineral royalties. TPL has a vast portfolio of royalties focused in the, in the Permian Basin. And when fraccon was developed and put the use there, that value got unlocked. You know, hence it's been a 10-baggers since my firm resumed it, or excuse me, 20-baggers since my firm to zone it in 2016, 2017. They, you know, they started with 3 million acres. Now they have about 882,000 acres.

And as you can imagine, if your job is to sell off land, you sold off any land that had value for agricultural use or development use years and years ago. And so that leaves you with land in the most desolate part of the country, which is the West Texas Permian Basin. I mean, it's like I've driven across there several times, and it looks like you're on Mars in certain parts of it. Completely desolate.

But there's no value except for now there's there's immense value. And so the real estate there is probably worth the real estate value of Manhattan. Oh! If you're directly on top of a big oil, well, probably. But aside from that, I do hear where you're coming from. Yeah. Well, you know, because they have, TPL's land is laid out in a checkerboard fashioned. And so the government gave them called like 600 acres squares that are laid out in a check of work fashion.

And if you have that amount of land, one thing you can do with it is develop infrastructure on it. And so around 2016, 1718, they hired a business, some guys from EOG and they developed a really nice source water business. And so source water is the water that's used when you frack wells. And fracking takes an immense amount of water. water, particularly the style of fracking that they're doing these days, the columns call signol fracking, and if you can deliver vast quantities at one time, I think the EMP companies are pretty price and sensitive to that. So it's going to be a pretty good business. You know, it is tied to new drilling activities, so it's like a little lower in the quality

scale. But they have a vast amount of acres, and so they were able to build up this infrastructure sure and develop probably the leading source water business in the basin. That's about 30% of the revenues. And then the next business they have is produce water royalties. And so because they have this large land position, they have poor space. And so poor space, you know, as we talked about on the water bridge and probably the secure podcast we've done in the past, poor space is the geological formation under the land, which is suitable to have saltwater disposal wells.

So saltwater disposal wells is the produce water that comes up with the oil. And in the Delaware Basin, it's about four to six barrels of water per one barrel of oil. And this isn't water that's the water that's used in fracking. This is water that was buried with the organic matter. tens of millions of years ago when a Gatopgenitor that has now become oil and only gas was buried. And so it's very salty, maybe six to seven times

the salty as the ocean and it's been mixed with hydrocarbons. So it's nasty stuff and that's what needs to get cleaned and process. The solids are separated from it and put into landfills and the water itself is deposited in saltwater disposal walls. That's about, call it 16% of their business. And then you get to surface heathens.

And so for an EMP company to drill a well and frack, you know, they need to build out roads. They need to build a drill pad. They need to put infrastructure such as power lines in place. They need to put pipes for produce water. They need to put pipes for source water. They need to put oil and gas pipes. to access TPL's land, they're going to charge a fee for that. That's a really nice, high-quality, recurring revenue-type business.

And then they also have gravel pits and sand pits that they use for frac sand, which would be more tied to new drilling activity as opposed to ongoing and recurring. So this is maybe 10% of the revenue. And then occasionally they'll still sell some land, but it's episodic and kind of sporadic. And so it's not really, you don't really need to focus on that too much. And then lastly, they have next gen opportunities. And so there is a thesis.

And Murray was a big proponent of it that large language learning models, data centers will gravitate to the Permian Basin in order to access the trapped natural gas there. and kind of get off grid, behind the grid. That was a great overview. And I think we're going to be talking about that. So that's the overview of TPL. Why don't we drive it more towards Landbridge at this point?

Okay, so Landbridge is a sister company of Waterbridge, which we did the podcast on in November. Landbridge, it's reason to live, you know, aside from the next gen opportunity, which we can talk about later. is to help Water Bridge grow out its pipeline infrastructure and provide poor space for water bridges, for the Water Bridge business, as well as some other produce water companies in the basins. They're probably about 30% of the water currently comes from Water Bridge and the rest comes from some other operators

because they have a vast amount of poor space. And so if you look at their business, they categorize their business a little differently than TPL. The first category that uses surface use royalties. That's about 73% of the revenue. Most of this is the porous base royalties that they get for the water, produce water companies injecting water on their land. But it would also include the surface use royalties, such as access to drill pads and infrastructure. etc. The next category of revenue is resource sales. And so here they'll combine frac sand and

gravel and sourced water. That's about 20% of the business. And then like TPL, they have minerals as well, but it's only 6% of their revenue. And unlike TPL, you know, they don't go out and look to acquire more mineral royalties. Mineral royalties, while it generates a ton of cash for TPL, it's the least, it's the lowest quality revenue stream because once you extract a mineral and the royalties paid on it, it's gone forever. Yep. Furthermore, it's directly tied to the, to the price of oil and gas. And so, you know, as oil and gas goes up and down, so does the the amount that you get paid for your royalty. Landbridge will acquire minerals, but only incidentally,

if it comes with land that they want, fine, but they're not going to go out looking for it. I'd imagine that this would go down over time as a percent of revenue. Let me, so you laid it out, right? And I think if I'm driving to where, if I'm looking at where you're driving, I think you're saying, hey, if you break out these revenue sources, you've laid out what Landberg is, the constant CPL, what you're driving to is Landberg is probably a higher quality.

I don't know. You can correct you wrong, but I guess I want to adjust. There are 2026 Investrate. It just happens, right? Right. And I think the market's onto it that this is a good business, right? There's 2026 Investoray. I think it's like the sixth slide.

They say, hey, we trade for 30 times EBIT, and they've got all sorts of peers, right? They have REITs, publicly traded MLPs, all this sort of stuff. The best peer they list is TPL, and they say it trades at 44 times EBITA. So I want to pose two questions. Why the multiple, why the maximum disparity? Go ahead. Well, a lot's changed between now and then. So TPL is more like 30 times itself and Lambridge is more 22 times.

So I did not update it because. But it's still there. Yeah, it happened. I mean, it was like literally two and a half weeks ago. But so I just asked why the multiple disparity between the two. And then I want to, the second question on us is, even if I just like look at Lambridge, 30, 35, wherever it is, you know, I think to me, I look and I say, hey, the market is on to this.

This is a very, very good business. But if you read what they say, you know, they have a big pushback, which I can quote later, we can go to that. But if you're on the podcast because you think the market is a competitive place, but this is a risk-adjusted opportunity. So the second question I ask is, how do you generate alpha from kind of this valuation? So I threw a lot out there, but that's kind of what I'll drop to.

I don't think the market is on it yet because they did say some things at the investor that were extremely bullish, and the market reaction has been somewhat muted. And so we can talk about, you know, there can be various reasons why that is when we can talk about it. But the valuation, you know, it's trading on 26, 2070, but maybe 20, 22 times for LAMBridge, 28, 31 times, is for TPL. And if you say, okay, let's put a 10 times multiple on Lambridge's mineral royalty business in line with like venom, then maybe the what's left over is valued a couple terms higher. So yeah, I call it 22, 24 times. Okay.

Now, if you do the same for TPL and you say, okay, well, let's put Prairie Sky's 16 multiple on their mineral package because it's just vast, and maybe that's a better comp. Then TPL would be closer to, for what's remaining, which is the produced water business and the source water business and the surface easements, that's 50 times EBITA. So, I mean, he almost got a 20 turn spread between the two. And, yeah, there may be various reasons why TPL, you know, trades at a premium. As Munger said, no, never sell, don't ever sell your royalty checks. I mean, there are a lot of families that have had this for decades, and the rule is never sell royalties.

So there's probably some of that. Horizon Kinetics has a nice 15% position. They sell, you know, that's been turning down a little bit, but not too much. You have a lot of fans of Murray's, and rightly so, and so, you know, they've, there have been long-term holders. So you do have a lot of long-term holders there. But, you know, going back to Landbridge, you know, one thing that they that they talked about was the amount of incremental pore space that they have in their portfolio. And so Landbridge has about 1.7 million barrels a day of water that it's being injected into its saltwater disposal walls for which it's getting paid a royalty. They have over 5 million barrels a day of incremental porcelain.

space that's permitted. On top of that, they probably have another two and a half million of land that has incremental poor space that they just need to get permitted. So it shouldn't be a problem. So call it over seven and a half million barrels a day of incremental por space. Management, as well as a chairman, several times during the analyst date, stated, you know, while not giving long-term guidance, they said they could see it pretty easily that in the next five years that they can go through five million barrels of day of incremental force base.

And they get paid presently 15 cents a barrel, which is all profit. And it's a royalty. It's not going to be any incremental expense to that. So you multiply that out and throw some taxes on it. That means that their free cash flow should compound over the next five years at a 25% K-year. And that's without any other growth in the business. That's without any any data centers that's without any royalties for surface use or for fraxan or for cliche or any of that growth. That's just on that incremental force base. I'm laughing where you say without giving incremental guidance because they said it would, if I'm remembering correctly the number, they said this would generate 300 million of incremental free cash flow. And I think they mentioned that

like 15 times throughout it. So I'm just laughing. It's not long term guidance, but it's 300 million of cash flow, but it's not long-term guidance. So I hear you. I certainly hear you, right? But I would just push back a little bit, right? This is 20 to 22 times, even 25 times, whatever you want to call it. Yes, you do have a lot of free cash flow and growth coming, but like you need that just to justify that multiple, right?

So like, what do you think the market? Do you think it's just like there's just so much optionality, the market is underpricing the optionality? Do you think the market is doubting that that, this is a $5 billion market cap, $6,000,000, billion EV. Do you think the market is just kind of, the management keeps saying 300 million in the market saying, we'll believe it when we see it. Like, what do you think the market is missing on this? I think, well, earlier in the year, and at the end of 25, there was a pretty heavy short position on the company. And my take was that there was a lot of TMT investors who just said,

You know, I don't believe the data center thesis. That's a zero. And the rest of the business should trade like a royalty business. And they're looking maybe at Venom as a comp, which is at 10 times. And he said, okay, well, you know, the 10 to, maybe it's 20 times even if that. So the 10 to 20, that's the data center value. And so I think it was a very easy short for them. And then I think they thought that if the short went against them, they would get bailed out because

five-point, the sponsor that brought this public, still has a sizable stake in it. And they figured, okay, well, the sponsor will hit the bid if it goes up and unleashed, and unlocks and shares. So I think that's what's kind of keeping it, keeping the value where it's at. When you compare it to a TPL, who's, you know, is on an absolute basis, eight to ten turns higher and then, you know, when you adjust out the mineral business, you know, 20 turns higher. Well, you mentioned five points.

So let me ask on them. You know, I've been on this corporate dark arts kick recently. And I just, one of the things that really just like gets me up in the morning is seeing companies give juicy stock option grants and seeing, you know, insiders bullish. And I don't think insiders are bearishier by any means. Again, I can, I've got the quote from the investor day where they say, hey, investors are looking at the stock and saying this is the yield on the stock today. And that's the wrong way to think about it.

We've got all these macro tailwinds. There's going to be substantial growth. over the next decade with little work. I don't think they're rational. The Insiders own a ton of stock and there's this complicated structure, but they own a ton of, but I want to put that. Go ahead. 13% of the company.

Management does, and that doesn't even include like the five point earnings. That's just, right. But I would push back and be like, hey, you know, Five Point did do a second, did do several secondaries in 2025, if I remember correctly. Management, you're not seen insider buying. I haven't seen like the greedy PSU targets or stock options artists that I want to do. So I'm not here saying, hey, you know, there's some pump. Everybody's trying to get out.

But I would say, like, you know, Chad is laying up this massively bullish future. The company's laying out this massively bullish future. And I see a secondary from Fivepoint. And I don't see insiders really buying shares. So, like, why that divergence? Yeah, I think that, well, I think they have bought some shares. So I'll have to, we'll have to check on that. Because I was talking to him at a dinner maybe a month ago.

And I think, I think they noticed that, I think they did mention that they had bought some shares. so I'll have to check on that one. But, you know, five points of sponsor and sponsors have responsibilities to their investors. But that being said, I think from here forward, and I don't have any information on this, but I would think that Waterbridge, you'll see more, you may see more selling at Waterbridge and you would at Lambbridge. I think Lambridge is the vehicle that the sponsor is going to want to own. for as long as possible.

I mean, he's putting a billion dollars into Power Bridge, a separate investment, which if that works out, it will be driving a lot of the next-gen opportunities at Lambbridge. And so, you know, he sees the sponsors, they see a lot of, they see more than we do, right? And so if something's common, you know, they're going to know about it. And Land Bridge is going to benefit from it without having to put capital up, you know, too benefit from it. So I think they'll want to hold on to it as long as they can. That actually brings me, I mean, we talked about this in Waterbridge,

but you mentioned the Power Bridge and they're very bullish. I want to talk about the Data Centers in a little bit. They're very bullish on the Data Center side here. They're bullish on a lot of different Land Bridge stuff if you read the Investor Day and take the method word, right? But it strikes me like, you know, they're doing the data centers through Power Bridge and the fiber, I believe the fiber is through Power Bridge as well. Water Bridge does the water itself, and then Land Bridge is just

kind of this royalty play on it. But when you've got these, you know, I was looking at the proxy, and it's the 2025 proxy, not this year's, but I was looking at the proxy, 10% of the proxy is detailing related party transactions, you know? At the Investor Day, I've got this quote that jump out to me, Landbridge is the enabler for Waterbridge's growth, and in turn, Landbridge benefits from the royalty stream

from Water Bridge, and it's going to be the same for Power Bridge. I just look at it, like, why are these separate companies? It seems like either too much financial engineering or, you know, it's just like ripe with conflicts of interest. And I don't understand why we should have these are separate companies or why this like it doesn't. It just makes the hair on the back of my neck standoff. Well, for one, the LPs of the three businesses are all different. So they're different funds. It's not like they were all invested at the same funds.

And so you will have some diverging views there. You know, it's averaging interest as far as like the timing of the monetizations of the, of the, of, of each of these entities. Number two is that look at where land royalty companies trade. I mean, they trade at a huge premium. And Water Bridge, we'll get into this probably a little bit later, should benefit by being viewed as a waste company because that piece seems to be playing out. At least it is in Canada.

But, you know, even if they got five turns and traded in line with municipal waste as secure, it's not going to be, it would be nothing compared to the premium that they get for being a Atlanta royalty company. But, I mean, looking at Landbridge, Landbridge should be the beneficiary of all this. I mean, even if you think there's, like, they have conflicts committees at each of these businesses. Waterbridge is owned by, in part, by a large EMP company. I think it was Devin. Devin was the partner. It's owned by Devin. And so there's plenty of checks and balances there.

I mean, I don't think, you know, Devin is not going to want to see Waterbridge, but he can take an advantage of for the sake of Lambbridge. They have, you know, they have a big stick there. So I don't think there's anything untoward. happening. But, I mean, if you want to be skeptical and say, oh, well, some of Waterbridge's economics is coming to Landbridge. You know, as a Lambridge shareholder, okay, you know. No, I certainly hear you. It's just like, I don't even know why they got into this and just have them all different. Like, it just seems to close. Let me go to something different.

I thought one of the really interesting things, you mentioned a bunch, I mean, they put out a bunch of numbers at the Investor Day, which I thought were bullish. But the most interesting thing to me was they, it was a little line. And they said, look, they buy, they buy some, right? They do acquisitions. I think they did 200 million of acquisitions in 2025. I could be wrong in that number. But they do bolt on acquisitions at Landbridge. The most bullish thing they said to me was, hey, our 2024 acquisitions, we increased the free cash flow at those acquisitions by 150% year over year in 2025. One year, 150% increase. And obviously, you know, you can't say every acquisition they do going forward, but they talked about the active land management and how they did

that. And as somebody who has followed TPL for a while, I remember the old bull case for TPL was, hey, go talk to any oil company. They'll call TPL and they'll say, hey, you have land in between our point A and point B. We'd love to pay you money to move water through it. And TPL just wouldn't pick up the phone, right? That was the bull case for TPL. They're not picking up the phone. I'm a hundred percent of believer that if you're actively managing these things and calling the oil and gas companies, like you can create a lot of value. So I'd love to just ask you, you know, the leading question. How are they creating this 150% uplift?

And how do you think about that kind of accretive growth going forward for Landbridge when you're looking at this? Yeah, so they call this the surface use economic efficiency. And so they lay this out on, on. I was counting if there was a good acronym, surface use economic issues. It's just too, not very good. So they lay this out like by vintage. And right?

And so as we do this, I think it's important to talk about how land bridge got built out. Okay. So, as I mentioned earlier, Waterbridge was first. And then around 2019, 2020, they wanted to purchase land to do a couple of things, one, to help Waterbridge grow and to eat and to pick up some poor space for it in kind of southern. and central Reeds County. And then if you go north of that near the state line with New Mexico, they wanted to be able to bring water from New Mexico into Texas and across the state line. And so, like, as we discussed on the Water Bridge podcast,

New Mexico has way more water than they can handle within New Mexico because of regulatory process issues and, in like a por space, et cetera. I remembered it from our pod, but one thing that jumped out to me just reading this yesterday was how they were all kind of laughing and being like, we've got Texas. And if you're in New Mexico, like, you really need to come to us because New Mexico is kind of a piece of work. There is some force space that you could use for saltwater disposal in New Mexico, but it's not

much. And even if the regulatory regime changed, the EMP companies aren't going to trust it. because if, you know, more water and more problems, if you don't have takeaway for your produce water, your production shuts down. And so, you know, they want to sign 10, 15-year deals that guarantee you that the water's gone and never think about it again. Okay. And so the water needs the cross from New Mexico to Texas, either from a north-south border or on the east-west border into the panhandle. And a big chunk of land was owned in checkerboard fashion in Loving County, on the western part of Loving County, by TPL. And every landowner's land you crossed with infrastructure is an opportunity for somebody to take a toll.

And Land Bridge, or Waterbridge, wanted to unlock the checkerboard. And so they filled in the checkerboard buying all this land. that abuts TPLs. And because they did that, they were able to enter into an agreement with TPL to allow kind of free crossing for both and use of some POR space, et cetera. And so basically, that was the first deal that they did that unlocked for space. And, you know, they've grown the suey, you know, 14% over that, you know, since they bought it. So that was the first acreage. The second acreage is the big one.

That's the one that went up 150%. And so, you know, when we talked about this on the Waterbridge podcast, that Waterbridge underpressurized their pore space compared to the rest of the industry. And then the regulations change in the rest of the industry to bring the rest of industry up to kind of water bridge's standards. And, you know, there's various reasons why you don't want to overpressurize your poor space. But if you look at the TPL LAMBRIGMI and you go immediately east of that, that area along the state line was the first area where shallow water disposal wells were used. And that whole area has been over pressurized. and so there's not going to be too much incremental pore space there.

And in the next three to five years, we'll probably be losing two million barrels a day of poor space there because the wells aren't going to be usable anymore. Okay. And so Waterbridge, Land Bridge kind of picked up that poor space was going to be key. And so what they did in the 2024 acquisition is if you look at the panhandle, where the south, east corner of New Mexico, they basically locked it up with respect to the poor space in Texas and the access to that poor space at that corner. So they basically, they bought themselves a bunch of poor space and they have a blocking position.

So that is probably the, you know, as of right now, without any data centers online, that's probably the highest value land that they have just because it gave them all the same. incremental pore space and then kind of a blocking position. So, for example, there are pipelines that cross that, you know, competitor pipelines. I think in GL has a pipeline that crosses it. I think it hits some TPL for space. Well, you know, those, I think that pipeline that crosses it, you know, looking at some industry data, probably handles 300,000 barrels a day. There's likely a cap, like an agreed cap on how much can go through that pipeline. And like once that pipeline gets filled up to that cap, then the competitors will have to come to a land bridge and negotiate

an agreement for what they're going to pay them for anything in excess. So that was a very strategic piece of land that they bought. They sounded very, very confident about future agreements on water in the call. One more thing on that. So the third big acquisition of land that they did, they did October of 2025. And this was the 1918 ranch. Some of that ranch is very suitable for data centers, but let's set that aside. They did pick up 900,000 barrels a day of incremental pore space that adjoins and is contiguous

with and abuts the poor space that they bought in 2024, kind of at the corner of New Mexico, Southeast corner of New Mexico. That, they paid, you know, 370,000. $25 million for that land, it has $20 million of EBITA currently. If you pro forma out the value of that poor space, it's about $75 million. So they paid $3.3 times EBDA for this land. And really, they're the only ones that could do that, because if you're a competitor and you wanted to access that land with water coming from New Mexico, well, guess what's between

it, Landbridge land. They made this point on the call, and I especially like when they're like, look, I mean, who do you think we're going to compete with? Hedge funds are going to go buy this stuff before TNX? I guess the one competitor I would ask you about TPL. Why wouldn't TPL and then kind of, you'd still get oligopoly pricing, but why wouldn't TPL kind of compete with them and say, hey, you guys have over there, we have over here, we can kind of compete for all the incremental acquisitions?

Well, TPL has been buying some poor space, including the poor space we just talked about, is accessed by the NGL pipeline. So that was interesting. But they are, I think what makes land bridge and water bridge valuable is that you have the combination of both of the companies working together. And so for poor space to be really valuable, you need to have a lot of incremental port space and you need to be able to hit multiple different, multiple different saltwater disposal walls because it provides what they call flow assurance to the EMP customers.

that would enable premium pricing. And so TPL built out a source water business because it's much easier to handle that type of water. Produce water is a little tougher to handle. I don't think they wanted kind of the headache of it. And so they don't have infrastructure. They just have the land. This is, so I was just reviewing my notes,

but the one thing, when you say, hey, you know, you've got Land Bridge and Waterbridge working together. That's one of the reasons you unlock this and people want to work with you. I won't believe it to the point. But again, it just seems like they belong together. The last thing I want to hit here is Data Center. The company is really talking about Data Center upside. You mentioned, I think, one of the reasons people got excited about the stock last summer,

one of the reasons, TPL this, Murray was big on this. A lot of data centers are going here. And again, the company, they have a joke, hey, Maybe data centers, we start building them on the moon or we start putting them in space. But until then, it seems like the incremental is going to West Texas in particular. So I'd love to just ask you, you know, what's driving the incremental? Do you think that's real? When do you think it starts impacting Land Bridge?

And how do you just kind of think about that opportunity as it relates to mainly Land Bridge, but also Waterbridge? Right. Well, there hasn't been a large hyperskiller data center announced, definitively announced. in the Permian Basin yet. But we are starting to get little glimpses, okay? Is that true? I thought Facebook had, I'm going to, while you talk, I'm going to look at them. I believe that Facebook is looking at some land in Ector County from what I hear.

And then they're a big one that's announced is in El Paso. Okay, so you were just referring specifically to the Permian because I'm looking at it is, it is slide 34 there in their investment. They've got, I was like, there's no way that's true because they've got, like, you know, 12 different data centers all around West Texas. But you're saying the Permian, we've yet to see someone kind of reaching there. We've yet to see that happen. Now, Chevron announced in their analyst day in mid-November that they wanted to put a

paragon facility in West Texas. They never said where. I was kind of using AI and Google alerts to check for tax abatements because they said one of the two things that they needed was the requisite tax abatements and then they needed an opt-take agreement. And to give you some perspective on the sides of this, this is a envision to be a two-and-a-half gigawatt data power gen facility that is expandable to five. it would cost between $5 and $7 billion for the first part of it. Their LTM CAPEX is $16 billion. So this is a real, it could be a real project, right? And in December, we found that they were filing for the tax abatements in Reefs County,

and we found some environmental air quality environmental permits that Chevron filed. And so we knew where it was. It was in Reefs County, which is like, part of TPL land bridge land land landerge land. This data center is, or excuse me, not data center, the Paraguam facility is contemplated to be on 6,000 acres. A lot of that acres are TPL acres and it abuts Landbridge acres.

So maybe a role for both of them in this, if it comes to fruition. It was announced a couple weeks ago that the off-take agreement is being contemplated with Microsoft. It could also be with Bolt. You know, Bolt can kind of jump in there. That's the business that TPL invested in in December that's run by Eric Schmidt of Google with a stated goal bearing 10 gigawatts of data centers to the Permian Basin. So you have Eric Schmidt, who definitely believes in the thesis.

He founded the company to exploit it. So, you know, you're starting to see a little nibbles. And then Lambridge itself has an agreement with NRG, which was announced in September, to build another power gen facility there. You know, of course, it uses tax abatements, which it's, you know, in process of getting. So you're seeing kind of the power first, but I, you know, before I'm going to say it's going to happen, you know, you need the, you need the opt-take agreement with a, with a hyperscaler?

I mean, it's, you know, it fits and starts. I would say, like, you know, if we were doing this January, 2025, the Deep Seek News, it was like, oh, it's an overbuild. And then, you know, by March, everything, you know, everything's going, then by, but it just, it seems like there is just such a rush. And, you know, as an investor, you see talent or micro or whatever. And you're like, when is it going to stop? It's like, look, at one point we'll be overbuilt, but every new model,

it just gets better and better. and the rush is there, and power is the bottleneck. All right, let me add to some quick. Go ahead. I do think that the reason why we haven't seen it yet is that the agreements that are going to have to be negotiated among the various parties are going to be highly complicated. I mean, you have, like, let's say you're Amazon, right, and you have a bunch of chips that you've paid for.

You have capital costs on them, so you want the data centers in the paragon facilities to deploy it on time. You want a certain amount. You want a guaranteed uptime. These contracts, if they're going to, you know, you'll probably want 10 to 15 years. The PowerGent facilities and a data set provider is going to want 50 to 25 years. The damages both ways, you know, could be immense. So it makes sense why this is taking a bit of time.

But, you know, if you look at, you know, you mentioned talent. PowerBridge is led by the former CEO and CFO of talent. And then he left to form Cumulus, which was a company that took two Tallinn nuclear power facilities in Pennsylvania. Before this, there were zero data centers in the state of Pennsylvania. He secured power from the two nuclear power plants. He built out a powered shell. He said that there was nobody that had wanted anything to do with this project until it was complete. And then once it was done, there was insatiable demand.

It was sold to Amazon who subsequently committed $20 billion to build out this campus. And then it's attracted Blackstone and QTS and other players. And I think the total commitment to this facility is $100 billion of capital. And then he sees the same opportunity in the Permian and went to run Power Bridge, kind of make it happen. And, you know, I know it's somewhat affiliated because of the common ownership. of control of Fivepoint, but, you know, FivePoint is funding this separately, and it's not going to be any capital from Landbridge that's going to be required to make this happen, right?

Let me, so as you and I are talking, Landbridge trades for about $70 per share, 67, 58 as we're recording. Let me just, you know, again, we laid out numbers, and the deep value investor in me says, oh, like, I'm just going to choose 25 times EBDA. 25 times EBDA. That's expensive. I would also say like 25 times EBITI here versus what is Walmart trading for? 50 times P.E., I'd probably rather, hey, 25.

Even is pretty close to it. Even though it's very clean. It's very clean and there's some other stuff, but it's very clean. But I guess it would just ask, the growth story is great here, right? There's a great growth story. You've got the data center. Everything's talking about. How do you think about fair value here?

I know you love this company and you think it's got a very bright future in the company. But where would you say, hey, this is the fair value. It's kind of incorporated. It's hard when you've got 25, 30 percent incremental growth with no RIC as far as the agency. It's hard. But how would you think about how this should be valued? You look at like a low single digit free cash flow yield and then you add on the 25 to 35 percent free cash flow of Kager over the next five years. I mean, it doesn't scream too expensive from that basis.

And then you get all the free options. I don't think the data centers need to be, need to hit in order for this to work out well, just because there's going to be an ample amount of growth just from the water part of the business. And you can see it if you look at Waterbridge and you see the announced projects that they have. I mean, you can go and get to a million barrels a day of incremental. water flow per year for the next two years just on projects that have been announced. I noticed you didn't give a firm fair value number, but I will let that slide. Let me ask you.

That's the something with options. I think in the triple digits, it's pretty reasonable. I mean, you start applying TPL multiples to this thing and you get to $150 pretty quick, but. Let me ask a different question. And this will start producing at least, Sue, I want to talk about secure at the end here. But, you know, I think the last time we had you on was, I can't believe it was already November. If you had put a gun to my head, I would have said, oh, yeah, Chad was on in like early February, I think. I can't believe it was November.

Last time I had you on was from Waterbridge. Right. This first Waterbridge, Landbridge versus Waterbridge. We have, I've talked and both on the Waterbridge and this podcast, I said, hey, I don't understand why these two are combined. They both have great ups and they're intercorrelated, but I just asked you, I put you on the spot. If a listener was like, hey, I'm going to go back and listen to Chad in November on Waterbridge, and I'm going to listen to chat on Lambertge now, which is the one that you would say, like, right now is the better opportunity,

the one they should be focused on. What would you choose if I was making you choose between two of your children? I mean, I own them both, but I think Lambridge is going to, Lambertge probably has the most free cash flow per share growth of the two, and it has ample re-rate opportunities, just, you know, A, because of the growth, B, because the differential between it and TPL and C, it's got the free call option on the data centers.

Whereas Waterbridge will have nice double-digit growth as well, that you can easily build the bridge out and see just because of the announced project. And it could also have a re-rate of the multiple, if the municipal waste thesis, gravitates down to the Permian, which it should. Because I think Secure is going to certainly shine a big light on that one. But yeah, at current prices, I think Lambridge. Well, that was a great move to the last question.

I wanted to end with a little update on Secure. So the fourth time you were on the podcast was for Secure. This is Canadian company. And your thesis was, hey, secure people look at this as an energy play. And it is not. It is water, it is water management. It is infrastructure place, it's waste management up there. And the reason I bring Secura up for a little update, A, is because I think there are a lot of yet another value podcast guests.

You should be thanking you because I know there was a lot. I know, and you know there were a lot of inbound and a lot of people who I think bought the stock on the Hillstack. But B, they just got bought out. I mean, seven days ago, they got bought out by GFL. And I'm sure that's a deal. A deal was announced. Let's see it because. And I'm sure that's bittersweet for you.

Because on the one hand, it is a validation of your thesis, right? Your thesis was, this is waste management. And boom, GFL, which is what, like the third, second largest waste management company, is buying them on the thesis, this is waste management. On the other hand, you know, I think a lot of shareholders were a little disappointed by the multiple here. I know just before you and I started recording Abrams Capital, which now might be the largest secure shareholder, if not they're the second largest.

They just boosted their stake over 10%. And they said, we're voting against this deal. we don't think it's a fair value for secure. You know, I know a few other shareholders who have said they're disappointed by the price. So I'd love to just ask you, you know, you've got the secure deal, kind of validates the thesis. I think you think the thesis is moving down to Waterbridge so we can talk that. Or we can talk, hey, how do you think about the secure deal? I mean, people should listen to the secure episode.

I think it was a really good one. But go back to 2009 through 2015, secure was fixed. 50% energy services. And it was in the name, secure energy services. They subsequently changed it to secure waste infrastructure corp. And then the analysts that covered it were energy services analysts in Canada. So it was definitely viewed as an energy services company. And the management, to their credit, said, you know, when the oil prices got smoked in 2015,

that didn't really work out well for us. And so we're going to change this business to be much more recurring in nature. And they did. So 25% of the business are their gathering and transportation pipelines. And then 75% is their waste business, 80% of which is all recurring revenue from ongoing production. You know, there's a small part of that business that's tied to new drilling. But most of it, it's all ongoing production, like very recurring. And it was that management team that started making the case.

Like, we're not a, we are not energy service to term. We are a waste company. We have long-term contracts. We have durable waste streams. This was proven out even last year when oil prices were down. The rec count in Canada was down 20% and their volumes held up. They have higher margins in IRACs and the waste companies because they don't have the trucks. You know, they don't have the trucks that they have to keep investing into to,

collect, you know, that's in a very expensive collection asset. And so, you know, my thought was on that podcast, it was, okay, I think that these things should trade in line with municipal waste companies. And, you know, even if there is a little bit of a negative with the 20% of the waste business that's tied to new drilling, well, you know, it should be made up on the higher RACs and higher margins that secure has. And so maybe it's a push. Okay. So they should trade the same. And then, you know, I think I made the point that midst full of waste companies have agreed with me. If you look at waste connections, they bought R360, you know, several years ago, which is a waste focused landfill in Texas. Secure had rolled up 90% of the business,

and the Canadian Competition Tribunal made them divest 20%. Who bought that? that, waste connections, you know, they validated it. And so now you have GFL going in there and trying to buy the rest for 11 times. You know, now it wasn't the, it wasn't the 15 times that a lot of the municipal waste companies are currently trading at, but, you know, it certainly does validate the job that management has done. You know, I was a little disappointed with the price, but then, you know, if you take a look at it, the stock's up 77% in the last year. It's up 465% in the last five years. This is probably, you know, a crowning achievement for them.

So I was a bit happy for them. And as a GFL shareholder, you know, I think it brings a lot to GFL. I mean, GFL is going to be able to increase their organic growth because Secure has, you know, the municipal waste companies in the last few years have been, their organic growth has been more driven by price as opposed to volume. Secure's got price and volume. The municipal waste companies have been doing a lot of tuck-ins. That's kind of like what they do. Secure's got opportunities to do that as well,

as well as like doing more greenfield and brownfield growth. It's going to be margin and RAC accretive to them. And then, you know, GFL is pretty savvy with capital allocation. Maybe they can divest a chunk of the pipelines and, you know, free up some capital for share repurchases. So it'll be interesting. I forgot you were one of the godfathers of the GFL thesis as well. But let me just, I mean, are you, you kind of mentioned crowning achievement, stocks, and well, are you disappointed by the price?

Or if I can, are you voting for the steal or what's your thoughts? I don't know. I do you think about that. I mean, as a GFL shareholder, one of mine seems to see them come together. But no, I do think that the price is too cheap. So, just if I was, like, putting on my adventure and having looked at that, I mean, I don't, I don't 100% disagree with you. But, you know, you've got management owns, managers done a good job here. I think they own 2% and they're in a support agreement.

I forgot there was one larger shareholder who owns 20% and they're a support agreement. I'd have to guess. Go ahead. I think in Canada, they remove the ones that are locked up in the support agreement. And so I think it's going to be, I think it's like, it's two-thirds of all the shareholders, but 50% of like of the ones that aren't in the support agreement. I wasn't talking about in terms of bump potential. I was talking about in terms of like, you know, I am a big believer of if you could,

if you're a company owned gets acquired and we have not seen a proxy year yet, but if they get acquired for a premium and the company was shopped, right, then you kind of just hit the bed. Now, I don't know if this was shot, but I just look at it. say, well, management and a large shareholder under a support agreement, there were probably only, what, like, three strategic players and seven private equity firms to reach out to here. Like, I guess they got the highest price they could do. So absent that, I'm kind of like, I get it to disappoint multiple, but this was probably fully shop.

Like, isn't this just worth anything in the bid? But I don't know. I mean, I'm an outsider looking in, but that's just kind of what's tingling back my head. I think that the thesis was just playing out because, like, you know, they recently changed their name. The Gix code has even been changed. So they still have an energy geeks code. They did change the industry code in Bloomberg, which just happened.

The reporting, the financial reporting, they just got changed. And so, you know, if you recall from the podcast, they had to report pass-through oil on a gross basis as opposed to a net basis. And so it made the business revenue look much more volatile than it is, and it made the margins look a lot lower than they are. And so the company screened horribly. that just changed in Q4. And so, like, all these positive things were starting to play out. I remember going to the Raymond James conference a year ago, and there's maybe 12 people in the room listened to the story.

There was, you know, between 30 and 40 people in the room this year listened to the story. And so I think that, you know, there was a lot of traction they could have gotten with new investors. I don't discreet. But my, like the just code, that is helpful. I think people have different views on it. It's certainly helpful for finding and maybe like Lisa multiple,

but you have a strategic who, you know, again, I think this was probably fully shopped. You had strategic saying like, this is the price, is the high bid. Isn't that just like kind of the signal? Or do you think it's just like, hey, if we had played this out for another 18 months, like the earnings growth was so great,

it would have been just much more demand? Well, just look at some of the research reports to talk about, GFL not being a pure play municipal waste company anymore. I'm like, well, okay, let's, well, what about waste connections? Like, pure play like them? I mean, 6% of their business is in their EMP business. And they made an acquisition in 2024, which is a secure business.

And then they made another acquisition in Q1, 2025, which was a small private Texas-based produced water company. You know, is it like Republic, which is their industrial business is 10 to 11% of their revenue, you know, in which sets their oil and gas business. I mean, there's, there are no pure play, but even, even the, um, the sell side analysis, uh, kind of getting this getting this wrong, not all of them, but, but a lot of them. So I, I think there was a lot of education, um, left, left to do. And I, again, as you and I are talking, I think, uh, like just a couple hours before today, Abrams capital went over 10% and, uh, bought stock like

right around here and is saying they're voting against SES. So we'll see how that, we'll see how that place. Yeah, what's interesting is that, I don't think Abrams goes over 10% on any other positions or much over 10%. I don't know much about Canada, about the rules in Canada, but I know in the U.S. people are very hesitant to go over 10% unless there's a very good reason to. So I'm sure that's the same. There's obviously some companies that they backed like from the start that they're that they're over on.

But from like just a straight up equity investment, I don't think they, usually go too much over 10. And so if you look at the release from the day, the press release, like, they were very close to 10%. And, you know, they didn't have to, like, disclose that until they went over 10. And so they did go over 10 by buying a little bit more shares today and then coming out, same were against this deal. But obviously, like, they didn't, I mean, they want to be public about it now.

And what's interesting is that, you know, that's a firm that a lot of people kind of ride on their goattails. And so this thesis, the produce water thesis, you know, and it's similarities with municipal waste, you know, as I said, I still think there's a lot of education that the market needs to learn about. And this should help it. Cool. Cool. Well, hey, Chad, this has been great. Six time on. Looking forward to catch it up in the near future.

forward to having you on in the near-to-meeting future. And yeah, look, I think, just going backwards, I think there are a lot of secure shareholders over the past couple weeks who owe you a huge debt of gratitude. And I know who owed the podcast a huge of gratitude. And Waterbridge has been similar and Land Bridge, fascinating story. So, all right, Chad Garcia. We'll talk soon. All right. Have a good day. A quick disclaimer. Nothing on this podcast should be considered investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor.

Thanks.