Financial Data and Key Metrics Changes - Total revenue for Q3 2025 reached $50.8 million, up 7% sequentially and 78% year-over-year [9] - Adjusted EBITDA for the quarter was $44.9 million, up 6% sequentially and 79% year-over-year, with a margin of 88% [9][10] - Cash flow from operations totaled $34.9 million, and free cash flow was $33.7 million [10] - Total liquidity stood at $108.3 million, including $28.3 million in cash and $80 million in available borrowing capacity [10] - Net leverage ratio improved to 2.1 times at the end of Q3 from 2.4 times in Q2 [10] Business Line Data and Key Metrics Changes - Surface use royalties and revenue increased by 2%, driven by higher commercial activity and new project easements [9] - Resource sales and royalties also rose by 2%, supported by a rebound in water sales [9] - Oil and gas royalties posted a 22% sequential increase, with net royalty production rising from 814 barrels of oil equivalent per day in Q2 to 912 in Q3 [9] Market Data and Key Metrics Changes - The company continues to unlock new opportunities across energy, infrastructure, and environmental sectors, creating diverse cash flow streams [5] - The acquisition of approximately 37,500 acres is expected to contribute approximately $20 million in EBITDA beginning in 2026 [6] Company Strategy and Development Direction - The growth strategy focuses on maximizing economic output from surface positions and delivering a differentiated value proposition through force-based offerings [4] - The company emphasizes responsible pore space management and avoids over-concentration of produced water handling assets [5] - The company is committed to maintaining a strong balance sheet and returning capital to shareholders through dividends and share repurchases [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential from the recent acquisition and ongoing commercial developments [14][56] - The company anticipates healthy growth in surface use royalties driven by increased produced water volumes from Waterbridge [56] - Management highlighted the critical need for pore space access and the expected shortfall in disposal capacity in the Delaware Basin, which positions the company favorably [50][66] Other Important Information - The company finalized the sale of a 3,000-acre solar energy project with a proposed generation capacity of up to 250 megawatts [5] - A quarterly dividend of $0.10 per share has been declared, payable on December 18, 2025 [11] Q&A Session Summary Question: Can you talk about the new acquisition and its expected EBITDA contribution? - Management conservatively expects $20 million of EBITDA from the acquisition in 2026, with potential for growth based on pore space capacity and infrastructure [14][17] Question: What visibility do you have on commercial agreements related to the acquisition? - Management indicated that discussions are already underway, with a three- to four-year timeline for significant growth in the southern portion of Loving County [26][27] Question: How do you see the power and data center projects evolving in West Texas? - Management noted that hyperscalers are now more engaged in package negotiations, indicating a shift from previous dynamics [36][38] Question: Can you provide details on the natural gas processing lease with One Oak? - Management explained that these deals typically involve upfront payments for long-term leases, with additional recurring revenue from associated infrastructure [42][43] Question: What are the drivers of growth in easement and surface-related revenues? - Management attributed growth to high demand for access to their surface and a healthy commercial backlog [65] Question: Is there a shift in royalty rates due to pore space constraints? - Management confirmed that while there hasn't been a significant shift in royalty rates recently, prudent operators are recognizing the importance of securing pore space [66][67]