Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the WaterBridge Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Mae Herrington, Director of Investor Relations. Mae, please go ahead.

Good morning, everyone, and thank you for joining the WaterBridge Third Quarter 2025 Earnings Call. I'm joined today by our CEO, Jason Long; our COO, Michael Chop Reitz; and our CFO, Scott McNeely. Before we begin, I'd like to remind you that in this call and the related presentation, we will make certain forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and which are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings with the SEC. I would also like to point out that our investor presentation and today's conference call will contain discussions of certain non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation. Prior to the closing of WaterBridge's initial public offering on September 18, 2025, WaterBridge completed the successful combination of its legacy entities, WaterBridge Equity Finance LLC, WaterBridge NDB Operating LLC and Desert Environmental LLC. Third quarter key operational metrics discussed today are presented on a combined basis and financial results discussed today are presented on a pro forma basis in accordance with Article 11 of Regulation S-X, assuming the combination and the IPO had occurred on January 1, 2024, with the exception of cash flow statement items, which are presented at the standalone entity level in accordance with SEC guidelines. I'll now turn the call over to our Chief Executive Officer, Jason Long.

Thanks, Mae, and thank you, everyone, for joining us this morning for our first quarterly earnings call as a public company. We are proud to have brought WaterBridge to the public markets in September, listing on the NYSE and NYSE Texas and the largest energy sector IPO since 2019. We look forward to capitalizing on our momentum with a proven business strategy, a strong balance sheet and an unparalleled infrastructure that is well positioned to meet the ever-growing needs of current and future customers. The market's belief in our business model and enthusiasm for our listing was demonstrated with an upsized offering that was significantly oversubscribed and priced at the high end of the range. As this is our first earnings call, I'll spend a few minutes providing an overview of our business model before turning over to our COO, Michael Chop Reitz, to discuss our competitive advantages and why we believe WaterBridge is well positioned to create significant shareholder value in the near and long term. WaterBridge is a leading integrated pure-play water infrastructure company with operations primarily in the Delaware Basin, the most prolific oil and natural gas basin in North America. Our infrastructure network is comprised of approximately 2,500 miles of pipeline and nearly 200 produced water handling facilities capable of handling more than 4.5 million barrels per day of produced water. Produced water handling is critical to enabling oil and gas development in the Delaware Basin. Every barrel of oil brought to the surface is accompanied by multiple barrels of produced water. And without efficient, reliable and environmentally responsible systems to gather, treat, transport and dispose of the water, production simply cannot continue. The scale of the Delaware Basin makes this challenge even more complex, enormous volumes, long distances, evolving regulatory considerations and the need for…

Thanks, Jason, and thank you all for joining us today. As Jason mentioned, we see several key advantages for our business over the long term. First, our infrastructure and produced water solutions are best-in-class with substantial scale, strategic location, high operational efficiency and fit-for-purpose measurement and monitoring capabilities. Second, our access to underutilized pore space supports new and continued produced water handling capacity, which we believe is key to supporting the expected future growth of produced water in the Delaware Basin. We have secured significant access to pore space through our relationship with LandBridge, an active land management company with more than 300,000 mostly contiguous acres in the Stateline region of the Northern Delaware Basin and a 64,000 acre AMI with Texas Pacific Land. Our relationships with LandBridge and TPL provide contractually agreed upon access to economic properly managed pore space as well as access to surface acreage for the continued build-out of our strategically located infrastructure network. Third, we provide industry-leading flow assurance. Our infrastructure network has built-in operational redundancies to provide customers with uninterrupted water management solutions. Combined with our access to real-time monitoring through our best-in-class control room and proprietary forecast management software wave, we are able to provide reliable flow assurance, which is a critical priority for our E&P customers. Fourth, we prioritize long-term relationships with a diversified customer base that includes some of the largest and most active producers in the Delaware Basin. Our fixed fee contracts typically span 10 to 15 years with acreage dedications or minimum volume commitments in certain cases and annual fee escalators tied to the CPI or similar inflation index for substantially all the contracts. Our customer base is diversified with no customer representing more than about 17% of revenue. This insulates us from volatility tied to individual customer activity…

Thanks, Chop, and good morning, everyone. We're pleased to deliver a strong first public quarter. Combined produced water handling volumes for the quarter were 2.5 million barrels per day, representing quarter-over-quarter growth of 7%. Sequential volume growth was driven by new volumes coming online on our bpx Kraken infrastructure and continued organic growth across our existing contract portfolio. Pro forma revenue for the third quarter increased to $205.5 million, up 8% compared to last quarter, driven mainly by the previously discussed increase in volumes as well as by increased rates in the period. Pro forma net loss was $18.7 million for the third quarter and pro forma adjusted EBITDA was $105.7 million, with pro forma adjusted EBITDA margin of 51%. Regarding capital structure, we received net proceeds of approximately $673 million from our IPO, which were used to strengthen our balance sheet and position us for future growth. We ended the quarter with total liquidity of $547 million, including cash and cash equivalents of $347 million and $200 million of undrawn legacy revolving credit facility. As of September 30, we had approximately $1.73 billion of borrowings outstanding associated with our legacy entities. Since the end of the third quarter, we streamlined and optimized our balance sheet through an inaugural $1.425 billion senior notes offering that closed in early October, increased our liquidity -- increasing our liquidity and decreasing our annual interest and amortization expense burdens. Concurrent with the senior notes offering, we put in place a new revolving credit agreement, replacing $200 million in legacy undrawn senior secured credit facilities with a new undrawn $500 million senior secured revolving credit facility maturing in September of 2030. Our disciplined approach to our capital allocation framework is designed to balance our top priorities, which are: first, to build out our water infrastructure network and commercial relationships. This includes organic growth, which we have been able to achieve at very attractive multiples as well as highly accretive acquisitions and expansion opportunities. Second, to maintain a conservative balance sheet to ensure maximum financial flexibility over time with a long-term leverage target of less than 3x. And finally, to potentially return capital to shareholders, which could include dividends as well as opportunistic share repurchases in the future. A quick note on guidance before we take your questions. We anticipate providing 2026 guidance concurrent with our fourth quarter and full year 2025 earnings call. To conclude, we're pleased to report a strong first public quarter. With the expansion of our network, including the opening of the bpx Kraken pipeline and the advancement of our Speedway pipeline project, we are well positioned to support the growing demand for water handling in the Delaware Basin. Our business is underpinned by high-quality assets, strong contracts and customer relationships, attractive operating margins and predictable cash flows, which allow us to continue driving profitable growth and creating long-term value for our shareholders. Operator, we'd now like to open up the line for questions.

[Operator Instructions] Your first question comes from the line of Theresa Chen with Barclays.

Would you be able to provide some color on the level of demand you're seeing for Speedway for additional phases at this point? If you were to upsize the project, what would the magnitude be? And how much more CapEx would that require considering it would likely be pump work rather than looping? And what kind of build multiple would additional phases see?

Yes. Thanks, Theresa. I can take the first part of that question. We're seeing a lot of demand for the Speedway project. We were oversubscribed on the first phase, which can get that capacity up to 500,000 barrels a day. The additional line, we can add an additional 500,000 barrels a day, and we're working with customers currently on what the final route for that will be. So I can't really speak to an exact CapEx number, but we do think it will be less than the initial CapEx for Speedway Phase 1.

Yes. And Chop, if you were to think through the build multiple there, it's probably 3 or 4x conservatively speaking, with upside?

Yes, that's right.

Great. And maybe just zooming out a bit, looking at the broader basin and the forward trajectory for growth, can you provide some color on your view on the macro backdrop over the near to medium term, given the volatility we've seen in the forward price outlook, what have recent conversations been like with your producer customers? Have you seen any shifts in tone or concrete plans impacting demand for WaterBridge's services?

Yes, Theresa, I'll take that one. I would say we're in a fortunate position with the bulk of our growth expected to come out of the Stateline in New Mexico to be much more insulated than the rest of the Lower 48. A couple of points I'd hit is first, and just to make sure we can level set on this, the expectations we set forward with investors and with you all during the IPO process was already very much calibrated for the current commodity price environment. So as it relates to go-forward expectations, [ no, call it ] meaningful shifts just based on more recent news. But second, you think through the growth expectations we are expecting to see over the next several years, it's important to keep in mind that the vast majority of that is going to be underpinned by minimum volume commitment backed contracts that are both coming online and ratcheting up over the next several years. And so there's a lot of certainty there that certainly helps provide some cushion relative to some of the concerns some other companies have voiced over. But I would say lastly, the real benefit of kind of water here, again, particularly in New Mexico, is it is critical to enable production. You're seeing water volumes grow at meaningful rates, and you're seeing the demand for our services grow even above those water growth rates as a byproduct of, one, recycling no longer having the ability to absorb the bulk of produced water growth in New Mexico; and two, so much of that legacy capacity along the Stateline starting to decline as a result of pore pressure issues. And so despite kind of the macro backdrop and despite a lot of the chatter, I think we're incredibly well positioned not just to deliver on the growth that we set forward during the IPO process but [ outdeliver ].

Your next question comes from the line of Eli Jossen with JPMorgan.

Just wanted to start on the competitive landscape. I know we've seen a little bit of change there, but obviously, you guys have some of the best acreage on the Stateline. So I just want to get a sense of how discussions have gone with producer customers, more opportunities that you guys are seeing and what that landscape looks like right now?

Yes. No, thanks for the question, Eli. No, I mean it's -- I would say, commercially, we've got an abundance of traction, obviously, wrapping up Kraken earlier this year, FIDing Speedway, also getting the Devon contract announced alongside their second quarter earnings earlier this year. So we've seen an abundance of success. And like I mentioned in response to Theresa's question, the demand is still very much there, and there are a number of producers really looking for those kinds of long-term large-scale flow assurance solutions, particularly for growth that's expected to come out of New Mexico. And so certainly, there are certainly others that are in discussions with a lot of these producers. But ultimately, in discussions with E&Ps, there are really 4 things that they're looking for. They want to make sure they're partnering with, one, prudent operators with experience; two, a company with the balance sheet and the ability to scale and grow alongside them; three, assets at scale today to be able to support large-scale development campaigns that we're seeing; and four, access that differentiated pore space that provides the maximum flow assurance with the least amount of risk. And typically, as we work through those 4 items, we typically come ahead of our peers as we kind of think through competing for business.

That's awesome color. Maybe just on the contract rate outlook. I mean, I know we're seeing what I would expect sort of rates move up, especially on these large projects that you're announcing. But can you just talk about what the sort of new contracting and portfolio rollover looks like compared to the base business, how the rates, particularly in the Delaware compare and kind of the outlook there?

Yes. I mean we're fortunate where we've seen a meaningful increase in rates in some of these more deals -- more recent deals that we've been able to wrap up. Part of that is a byproduct of underwriting just larger capital programs. And I think part of that is also a recognition that premium derisked flow assurance is worth a higher price than the rock bottom pricing that E&Ps were chasing 5-plus years ago. And so it's certainly going to continue to accrue to our advantage. And while we have, I would say, no material near-term contractual walls or kind of renewals that we're working through, as we see bpx Kraken come online, we see Speedway come online, we see Devon come online as well as a lot of these other opportunities that we're working through, you're going to see the average unit level revenue and operating margin on a per barrel basis increase across our company.

Your next question comes from the line of Derrick Whitfield with Texas Capital.

For my first question, I wanted to focus on the 1918 surface acquisition LandBridge announced earlier -- or closed and announced that earlier today. But specifically, to what degree could the pore space value of that asset on the East side be driven by WaterBridge versus industry? And over what period as you think through water disposal dynamics in the basin?

Yes, it's a great question. As we mentioned earlier in discussing 1918 from LandBridge's perspective, I'll just repeat, I think a key point, which was this is an acquisition that, again, was designed to unlock new surface, to unlock new pore space contiguous to LandBridge's East Stateline Ranch, not just as a benefit to WaterBridge, but really to the industry and all the other players looking for access to pore space. Now as we kind of think through this through the lens of WaterBridge, there's clearly option value there for WaterBridge to access that surface and that pore space in the future if there's a commercial justification for that. And it's -- geographically speaking, it's close to some offsetting WaterBridge infrastructure. So we could access that pore space from WaterBridge's perspective at a fair economic -- on a fairly economic basis there. But as it sits today, no near-term plans for WaterBridge to construct infrastructure on 1918.

Great. And then for my follow-up, I wanted to touch on just the beneficial reuse case and the opportunity you guys see. If I think about your prepared comments on beneficial reuse for both data centers and other industries, how large of a lift would that be for your organization? And could you operate that business with similar margins as it were tied to produced water disposal?

Yes, I'll take this one as well, Derrick. This is an opportunity that we're very, very excited about. I mean, as we and others have spoke to, West Texas is certainly blowing up as it relates to its attractiveness for both power and for digital infrastructure. And as we all know, one of the real advantages is the access to water as it relates to cooling that. And it's not just that brackish water in the ground, but it's also the potential to redeploy produced water that's treated and used for cooling rather than being disposed of. So this is something that we're actively looking at. We're actively in conversations with counterparties on today from WaterBridge's perspective. We would certainly pursue or explore treating that ourselves as well as options with partnering with third parties. And ultimately, we would go with, I think, with what makes the most sense for both our business relative to the margins and the incremental lift in any capital requirements as well as weighing that with the demands of the customer. And so it hasn't been, call it, formally set as it relates to our approach on how to tackle that yet. But I think what's important to take away is, one, we're trying to be very thoughtful about the ultimate approach there; and two, regardless of that's done in-house or if that's done via partnership, we would expect a meaningful economic uplift for WaterBridge.

Your next question comes from the line of Kevin MacCurdy with Pickering Energy Partners.

For my first question, I wanted to ask about the volumes on the Kraken side. How much of the initial 400,000 barrels a day is filled up currently? And what does that ramp look like over the next few quarters? And anything you could provide on the time line for Phase 2, which is the additional build-out of 200,000 barrels a day?

Yes. Thanks for that question. So the initial capacity is probably taken about -- from a pipeline standpoint, about 50% to 60% by bpx depending on their development cadence. And we will -- we do expect that to increase materially over the next several years as those MVCs ratchet up. The additional 200,000 barrels a day that can be added to that system will not be added immediately. We will add that when the commercial need is justified.

Great. Appreciate that. And then as a second question, I wonder -- I mean, you kind of have a slide on this in your deck, but I wonder if maybe big picture, you can explain some of the big regulatory reforms that have happened in Texas as far as permitting and how you think that might be a tailwind or how WaterBridge is well set up for that? And then just do you have any view on how the regulatory environment could change for both Texas and New Mexico into the future?

Yes, I'll take that one as well. So we've got a great relationship with the Railroad Commission as well as industry and working through a lot of these new permitting guidelines and practices. What you'll see is the way that WaterBridge has typically approached permitting is very similar to the way that the Railroad Commission is now guiding people to approach permitting. So we really haven't had -- it hasn't affected us negatively mainly because of our approach to spreading out our injection facilities and how we view the subsurface. So yes, we think that it's not going to affect us while it could affect others if they didn't have that access to vast amounts of undeveloped pore space like we do through LandBridge. And then just speaking to New Mexico, I really can't speak to that. It's a very volatile regulatory environment, as you may be aware, but Texas is favorable. And again, we have a great relationship with them. I don't see anything drastic happening there, though.

Your next question comes from the line of Praneeth Satish with Wells Fargo.

Maybe just to elaborate on kind of the data center opportunity here. Like if we were to try to come up with a TAM, I mean, I assume the cost to treat water is going to be quite high, maybe supporting a tariff of over maybe $2 a barrel. Is that reasonable? And then maybe if you could just give us a sense of how many data centers are around your footprint that you could service? How would you get the water to these data centers? And any types of kind of rule of thumbs of how we should think about how much water is needed per gigawatt of capacity? And finally, just what's a realistic time line to see some of these deals get FID-ed?

Praneeth, thanks for joining. Thanks for the question. Yes, it's a fantastic way to look at, and there's obviously still quite a bit that's moving around in the landscape in West Texas. I would say both the quantity of water that is used for a single, call it, 1 gigawatt facility plus power as well as the number of those that will ultimately be in West Texas is a bit of a moving target, although I would say clearly, we expect the demand to be very robust, and that's not just driven off of the successful commercial progress that LandBridge is making, but zooming out, it's really the progress that the broader industry is making in West Texas attracting those kinds of opportunities. We have heard different figures as it relates to the amount of water that's needed for a 1 gigawatt opportunity. That could be 100,000 to several hundred thousand barrels a day, and the range could be potentially even wider than that, just depending on the technology that's used. As you kind of alluded to, the ultimate rate that would be needed is going to vary depending on the amount of water as well as the level of treatment that's needed. So it's very challenging to say that the opportunity set today could represent hundreds of millions of dollars of EBITDA potential for us at WaterBridge because it's a fairly wide goalpost at the moment. But I think what's exciting is very few players out there have the infrastructure of scale, the expertise with water or the quantity of water, the kind of concentrations that we have to be able to deliver this type of solution. And I think as a result of that, we put ourselves in a very advantageous position as it relates to these kinds of discussions. And when appropriate and as we continue to make progress, we'll certainly circle back and share more of those details.

Got you. That's helpful. And then maybe shifting gears, if you could just talk about kind of your approach to securing MVCs for Speedway Phase 2. Will you aim for a similar level of commitments as Phase 1? And then how do you think about balancing MVCs versus overall returns? I know that you're saying the build multiple is very attractive already at 3 to 4x. But could it get even more attractive if you reduce the MVC requirements there? Just trying to think about that trade-off.

Yes. No, it's a great flag, and it's a great way to think through the balance between underwriting a project with MVCs versus leaving ourselves some upside. When we think through the MVC volumes relative to the size, call it, the potential capacity of the system for Speedway, call it, 3 years in, you're looking, call it, 60% to 65% MVC driven, so -- relative to its capacity. So clearly, some ability to go out and capture incremental volumes that depending on the market at the time, could be at a meaningfully higher rate than those MVCs. And so the way we kind of balance it from our side is we take a look at a number of factors, including the customer concentration on the project, the scale of the project, call it the macro landscape, but call it the ability to kind of commercialize the asset with other E&Ps kind of in and around that area on the same set of assets. And we weigh all of those. And ultimately, we decide to scale the project and scale the MVCs to ensure we're providing effectively an asymmetric risk profile where our downside is protected, but there's as much upside as we can possibly capture.

That concludes our question-and-answer session. I will now turn the call back over to Scott McNeely for closing remarks.

Yes. Thanks again for joining us today on our first WaterBridge earnings call. To echo both Jason and Chop's comments, we're very excited about the success of the IPO and the ability to bring this company to the market and partner with like-minded investors who are excited about the growth of water infrastructure in West Texas and New Mexico alongside what is a very thriving oil and gas industry. And so we look forward to staying synced up. We are very much focused on transparency. So we ask if there are any questions, please feel free to reach out, and we'll get back to you as soon as we can. Otherwise, we look forward to touching base with you all with year-end results. Thank you.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.