LandBridge Q1 2025 presentation: 131% revenue growth as non-O&G royalties hit 92%

LandBridge Co LLC (LB) presented its first quarter 2025 earnings results on May 8, showcasing exceptional year-over-year growth and continued diversification away from traditional oil and gas royalties. The company, which owns approximately 277,000 surface acres in the Permian Basin, reported substantial increases in both revenue and adjusted EBITDA while maintaining high profit margins.

Quarterly Performance Highlights

LandBridge reported Q1 2025 revenue of $44 million, representing a 131% increase year-over-year and a 22% improvement from the previous quarter’s $36 million. Adjusted EBITDA reached $39 million, up 129% year-over-year, with margins remaining robust at 88%.

The company’s surface use royalty volumes increased approximately 72% quarter-over-quarter to 1.4 million barrels per day (MMBPD), driven by both legacy and newly acquired acreage. LandBridge also announced a quarterly cash dividend of $0.10 per share, payable on June 19th to shareholders of record as of June 5th.

As shown in the following chart detailing the company’s quarterly financial performance:

A key highlight from the quarter was the continued diversification of revenue streams, with non-oil and gas royalty revenue reaching a record 92% of total revenue in Q1 2025, significantly reducing the company’s exposure to commodity price volatility.

The breakdown of LandBridge’s revenue streams demonstrates this diversification strategy:

Detailed Financial Analysis

LandBridge’s financial position continued to strengthen during the quarter, with the company reducing its leverage ratio to 2.6x ( Total (EPA:TTEF) Debt/Covenant EBITDA) as of March 2025, down from 2.7x in December 2024 and 4.3x in June 2024. The company is targeting a net leverage ratio of 2.0-2.5x by mid-year 2025.

Free cash flow for Q1 2025 was $15.8 million, compared to $26.7 million in Q4 2024 and $15.7 million in Q2 2024. The company attributes its consistently high margins to its royalty business model, diversified revenue streams, and limited operational expenses and capital expenditures.

LandBridge’s business model has resulted in significant growth and profitability compared to industry peers, as illustrated in this competitive positioning chart:

The reconciliation of non-GAAP financial measures provides additional context for the company’s performance:

Strategic Initiatives

LandBridge continues to expand its surface acreage portfolio, having acquired approximately 3,000 surface acres in Lea County, New Mexico, and another 800 surface acres in Reeves County, Texas during the quarter. These acquisitions bring the company’s total surface acreage to approximately 277,000 acres.

The company is also diversifying beyond traditional energy infrastructure. In November 2024, LandBridge executed a lease development agreement for a data center and related facilities on approximately 2,000 acres of land in Reeves County, Texas. This strategic initiative leverages the company’s contiguous land holdings, access to low-cost power, abundant natural gas, renewables, water for cooling, and fiber optic infrastructure.

As shown in the following illustration of the data center project:

LandBridge’s strategic position in the Delaware Basin continues to be a key advantage, as the region has seen significant production growth:

Forward-Looking Statements

LandBridge outlined its capital allocation strategy, focusing on three key areas: maintaining an appropriate capital structure, returning capital to shareholders, and pursuing value-enhancing acquisitions. The company views the current market as offering significant opportunities to acquire under-utilized and under-commercialized land in a fragmented market.

The company’s symbiotic relationship with WaterBridge, a leading water management solutions provider, remains an important element of its business model. While LandBridge functions as the active surface manager promoting efficient industrial development of land and resources, WaterBridge operates as the water management company.

LandBridge stock closed at $77.99 on May 7, 2025, near the upper end of its 52-week range of $18.75-$84.70, reflecting strong investor confidence in the company’s growth strategy and financial performance. With its diversified revenue streams, high margins, and strategic positioning in the Delaware Basin, LandBridge appears well-positioned to continue its growth trajectory through 2025.

Full presentation:

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