Our volume growth is combined with continued rate improvements to contribute to full year 2025 pro forma revenues of $790,000,000, a 19% annual increase compared to pro forma 2024 revenues. Shortly, Michael will walk us through how we plan to continue our operational and commercial momentum in 2026 and then Scott will translate that into details for our 2026 guidance. But first, I want to walk through some context of the business today.
WaterBridge Infrastructure LLC provides innovative and full-cycle produced water solutions to E&Ps and is well-positioned to meet evolving industry needs via our produced water handling capacity of more than 5,000,000 barrels per day of produced water handling capacity across over 2,600 miles of integrated pipeline to 112 produced water handling facilities. With this extensive produced water handling and supply network, and deep operational and geological expertise in the Delaware Basin, the most prolific oil and natural gas basin in North America, we are well positioned to be a sought-after partner for years to come.
Our value proposition of providing innovative, geologically focused, technologically advanced solutions for our E&P partners has translated into a strong track record of growth as demonstrated by our more than 22% CAGR in produced water handling volume since 2022. Due to the significant remaining inventory of low breakeven locations, produced water volumes continue to grow alongside and even recently outpacing oil volume growth in the Delaware Basin, where the water-to-oil ratios are among the highest in the U.S. Our permanent integrated water infrastructure network is strategically located to meet this need, and we anticipate continued revenue growth in the coming years.
To meet that growth, we continue to dedicate significant capital to high-return organic growth projects and pipelines in the basin, focusing on long-haul and out-of-basin solutions for New Mexico customers as they continue to increase operational focus in the high-return, high-inventory Northern Delaware Basin. The strong demand and positive response we received during the open season for the first phase of the Speedway Pipeline Project led us to continue those discussions with customers via the recently announced Speedway Phase Two pipeline. As a long-term flow assurance partner of choice in the basin, we expect to continue dialogues with existing and new customers in the region to ensure that we can expand water infrastructure capacity in step with their development needs.
With that, I will turn it over to our COO, Michael Reitz, to talk about operational momentum and priorities for 2026.
Michael Reitz: Thanks, Jason. At the operational level, we continue to prioritize delivering critical flow assurance for our customers through unparalleled pore space access as well as our advanced technology and measurement systems. Our continued execution is reflected in our produced water handling volume growth, and in the fourth quarter, we achieved a single-day record of 2,900,000 barrels per day of water handling. In 2025, we achieved 99.7% operational uptime with measurement variance of less than 1% across our system, driven by our proprietary forecasting capabilities and real-time measurement and monitoring technologies. Commercial efforts continue to advance meaningfully. In 2025, we brought high-value new infrastructure online and expanded existing facilities across our network, enabling 15% year-over-year combined volume growth.
In particular, we brought the Kraken project online, representing an initial capacity of approximately 450,000 barrels per day. This project will continue to drive volume growth in 2026 with a midyear minimum volume commitment, or MVC, increase. As previously announced, this project includes a 10-year MVC from BPX to support its long-term development plans in the region. We also meaningfully advanced the development of our Speedway Project, which will provide produced water transport and handling in the Northern Delaware Basin, connecting oil and gas development to out-of-basin pore space owned by Landbridge in the Central Basin Platform.
Phase One was oversubscribed, and we anticipate the project to be put into service in the middle of this year with the bulk of key contracts and MVCs going into effect in the third quarter. The first phase of Speedway is expected to drive volume growth in 2026 and beyond, as it continues to ramp through 2028. Speedway’s Phase Two open season was launched in February 2026, and demand is already outperforming expectations. We also anticipate being able to accelerate some early Phase Two projects into 2026, which represents an opportunity to leverage recently constructed Phase One assets, unlocking operational synergies and subsequently providing an incremental EBITDA contribution in 2027.
The success of the Speedway project emphasizes the continued benefits from our synergistic relationship with Landbridge, which not only provides critical access to underutilized, high-quality pore space, but also continues to expand its surface and subsurface portfolio, subsequently derisking future needs. Access to pore space through Landbridge and other large strategic landowner relationships is a key differentiator for WaterBridge Infrastructure LLC and a critical component of the reliable, redundant flow assurance solution that we provide our customers. Finally, we expect to begin construction on the previously announced new Devon project in 2026 and will continue to execute incremental high-return capital projects to meet the existing customer demand throughout our infrastructure footprint.
With that, I will turn things over to our CFO, Scott McNeely, for an update on our financial results and formal 2026 guidance.
Scott McNeely: Thank you, Michael, and good morning to everyone on the call today. We entered 2026 with significant commercial momentum, having realized major successes in 2025 with our IPO, the launch of Kraken, and the success of the Speedway Phase One project, all while executing on record water handling volumes for the full year as Jason and Michael mentioned. In the fourth quarter, our first full quarter as a publicly traded company, we achieved record revenue of $208.9 million, up 2% compared to the pro forma third quarter revenue. Fourth quarter net loss was $13.6 million, and adjusted EBITDA for the quarter came in at $103.8 million with a 50% adjusted EBITDA margin.
For the year, we delivered pro forma revenue of $790.0 million, representing 19% year-over-year pro forma revenue growth. Full year pro forma net loss was $58.1 million. Full year adjusted EBITDA was $402.8 million, a 16% year-over-year increase. In Q4, we further optimized our balance sheet by closing on an inaugural $1.425 billion senior unsecured notes offering, which will help WaterBridge Infrastructure LLC capitalize on the many compelling opportunities before us. We ended the year with total liquidity of $527.0 million, including $52.0 million of cash and cash equivalents and $475.0 million undrawn under our new $500.0 million secured revolving credit facility.
Our covenant net leverage ratio was 3.3x at the end of the year, and we remain committed to our long-term goal to be under 3.0x levered. Capital expenditures in the fourth quarter were $89.2 million, mainly driven by spending on the development of Speedway Phase One and continued expansion projects on our Stateline systems as we continue to grow our footprint with high-quality assets. Our disciplined capital allocation framework allows us to effectively deploy free cash flow and manage our top priorities, which includes, first, prioritizing high-return capital projects, building out our water infrastructure network, and maintaining our commercial relationships. This also includes selective strategic acquisitions.
Second, maintaining a conservative balance sheet and prudent capital structure to ensure maximum financial flexibility over time. And finally, returning capital to shareholders through opportunistic share repurchases and dividends. This quarter, we declared an inaugural quarterly dividend of $0.50 per share. As anticipated, we are initiating annual guidance this quarter. For full year 2026, we expect produced water handling volumes of 2,500,000 to 2,700,000 barrels per day, driven by the midyear BPX Kraken MVC increase and Speedway Phase One. We also expect CapEx to be between $430,000,000 and $490,000,000. Importantly, our expectations for Speedway Phase One CapEx have not materially changed.
This guide contemplates approximately $100,000,000 of newly sanctioned CapEx attributable to the incremental Speedway Phase Two projects Michael discussed as well as other commercial projects throughout our acreage. Finally, we expect 2026 adjusted EBITDA between $420,000,000 and $460,000,000, representing 9% annual adjusted EBITDA growth. This is expected to be weighted towards the second half of 2026 following the Kraken MVC increase and initiation of Speedway Phase One. With our ongoing commercial success and in anticipation of Speedway Phase Two, expectations for 2027 are meaningfully higher than previously contemplated.
To conclude, we are proud to have delivered a strong year of growth and look forward to continuing to deliver for our customers in 2026 and beyond as we meet the increasing demand for produced water handling across the Delaware Basin and innovate for the future. We will now open for questions. Operator?
Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Derrick Whitfield of Texas Capital. Your line is open.
Derrick Whitfield: Good morning, all, and congrats on a strong 4Q. Hey, good morning, Jason. I wanted to start with your 2026 produced water handling volumes guidance of 2,500,000 to 2,700,000 barrels per day. In our view, it seems that you have baked some degree of conservatism in your plan relative to where you exited the year. Could you speak to when this activity projection was assessed and what price forecast is assumed, and finally, highlight any timing considerations that could place you on the upper side of your forecast.
Scott McNeely: Thanks for the question, Derrick. I would answer it in two different ways. First, we had a very strong fourth quarter. Volumes came in and kind of exited the year in that position of strength, which is what we wanted to see, and so we feel really good stepping into 2026. I would say the second piece, when we worked through budgeting for this year, like many others did so at the end of 2025, we were just in a very different macro environment than we are in today. The bulk of the volumes that are baked into the guidance are informed by producer feedback that was provided when oil was in the mid to high fifties.
Where we are sitting today, it is just a drastically different environment, and as such, we think that there is a lot of upside, particularly in the back half of the year, if the current macro backdrop holds. I think we feel really good about the conservatism baked into the guidance. Again, we did that by design, but the world we are living in today is very different than the one we were living in when we received that producer input. I think as a result, there is a lot more upside now than we would have expected to see back then.
Derrick Whitfield: And then for my follow-up, I wanted to shift over to the Devon and Coterra merger and think through that for a bit. With the understanding that clearly the merger is not final, it would seem logical to us that the consummation of that merger could present incremental growth opportunities for WaterBridge Infrastructure LLC. Based on past discussions with both counterparties, do you see or expect to see greater opportunity from the Coterra side of the house based on your working relationship with Devon? I know that Coterra’s Franklin Mountain asset literally sits on top of Project Speedway.
Scott McNeely: It is a great observation. We are obviously excited for the Devon team and the Coterra team. They are going to be stepping out of the merger in a very strong position. We have a great relationship with the Devon team, with a lot of the folks that we work with day to day as part of that new management team, so I think we are excited to step into conversations with them about what is next for their plans. We have had great relationships with Coterra in the past as well, and so I think a lot of those, we hope, will continue to accrue to our benefit. Stepping out of this, we are excited.
The combined company is going to be a great one in the Delaware Basin. We are excited to work for them, and we are excited to deliver our part in enabling what is next for their company.
Derrick Whitfield: Thanks. Great update.
Scott McNeely: Thanks, Derrick.
Operator: Your next question comes from the line of Elias Jossen of JPMorgan. Your line is open. Please go ahead.
Elias Jossen: Thanks, everyone. I wanted to start on the acceleration of growth project opportunities you alluded to. I think you talked about some opportunities to accelerate in 2026, leveraging some of the ongoing construction. Can you just speak more specifically to the magnitude of that, help us understand what the kind of 4Q exit rate might look like, and the overall framing you see for 2027? Thanks.
Scott McNeely: Yeah. Hey, Elias. I appreciate the question. We are in a really great spot right now where we have received a number of inbound inquiries and are working through a number of different commercial discussions, which is ultimately what sparked the announcement around Speedway Phase Two. In addition to that, we also have several commercial projects that are fairly firmed up at this point that will serve somewhat as the foundation for Speedway Phase Two as well. We added another $100,000,000 to capital expectations for this year. That is still somewhat front-weighted for the year, but the bulk of that extra $100,000,000 is going to be tied to these new projects that will serve as the foundation for Speedway Two.
There is a smaller amount—I am not going to quantify it—but we will say a smaller amount which is going to be related to the Devon projects. If you recall, Devon has an MVC with us that comes online in 2027. We are just accelerating the construction of that infrastructure by a few months, and it is really just to derisk the construction phase. As a result of that, we expect just a little more cash to go out the door at the end of this year versus 2027.
So no real change in the scope of that project, but recognizing the fact that cash may leave the system a little bit earlier than we were thinking, again by design, just to derisk the development there.
Elias Jossen: Thanks. And then shifting to the capital allocation philosophy subsequent to the growth project spend, it seems like there might be a bit of a free cash flow inflection as you get Speedway Two in service and, I guess, the Devon project as well. As that spend comes to a conclusion at 2027, maybe 2028 looks more like an inflection on free cash flow. How do you think about what the capital allocation framework looks like at that point?
Scott McNeely: It is a great question. As we said during the IPO process, we will continue to prioritize these higher-return organic growth projects. You look at Kraken, you look at Speedway, we would expect for Speedway Phase Two to be incredibly attractive from a return standpoint. That will continue to be the most accretive use of the cash flow that we are generating as a business. I do not expect that changes, and we aim to continue finding creative ways to continue to generate those same kinds of returns. Beyond that, we will continue to explore M&A.
It does need to compete with the organic growth projects that we are working through as we think through our capital allocation framework, but to the extent there is an opportunity that checks all of those boxes on a risk-adjusted basis, we would absolutely be open to pursuing M&A as another way to continue to feed growth to the company. Lastly, we think through balance sheet management and return of capital. Making sure that we work through this growth while keeping the balance sheet healthy is a top priority. Staying kind of at mid-3s at max during growth is something we are comfortable with, but getting sub-3.0x is certainly a longer-term—call it medium-term—goal for us.
Beyond that, we have initiated this first dividend. We are not looking to overly lean into dividends here, particularly through this growth phase, but there is potential for those to grow going forward depending on other competing uses of capital. Likewise, we could potentially explore buybacks in the future when it makes sense in the context of other capital allocation options we have, as well as the float and the float dynamics at the time.
Elias Jossen: Great. Thanks very much.
Scott McNeely: Thanks, Elias.
Operator: Your next question comes from the line of John McKay of Goldman Sachs and Company. Your line is open. Please go ahead.
John McKay: Hey, guys. Thank you for the time. Maybe I will go back to the first one around the 2026 guide. I appreciate the comments, but I wanted to follow up. When you are talking about it potentially being conservative, how much is that based on maybe comments that the higher oil deck will incentivize new activity versus just saying you are baking a little bit of wiggle room into these numbers? Are you expecting activity to pick up at this higher deck? Because we are generally not seeing it elsewhere.
Scott McNeely: Hey, John. Good question. The conservatism was really in the context of what was a high-$50 oil environment when we worked through that budget. When I think through the conservatism today, I would make the argument that it is that much more conservative given the context of where WTI is at and expectations through year-end. We have certainly heard some initial chatter on thoughts from producers, although most of that was really around the thought process of: is this a short-term blip, or do we expect to see a more enduring elevation of WTI through year-end?
Over the last couple of weeks, the market certainly seems to think that WTI is going to stay escalated at least to a certain extent through year-end at this point, as we have seen the backwardation start to fall off slightly. It is too early to aggregate feedback from producers and producer reaction just yet, but what was a conservative outlook in a high-$50 oil environment, I think, is again very conservative now, particularly in the context of the strip through year-end. To the extent producers are able to capitalize on that, I would expect some of them will, although, as we all know, there are different idiosyncrasies with different producers out there.
All that to say, I would say we have much stronger tailwinds now than we had in late 2025 as it relates to the macro backdrop.
John McKay: Thanks for that. And maybe just a quick follow-up on Speedway Two. I know the open season closes next month. Can you walk us through expectations for reaching FID? And then on the CapEx for this year, how much of total project CapEx—or maybe if you are able—can you compare it to what the build for Phase One looked like? Thanks.
Scott McNeely: We have gotten a few of the core commercial deals we expect to be part of Phase Two buttoned up at this point. That is why the CapEx is incorporated in the budget now. Those are projects that we will pursue regardless of the outcome of the broader Phase Two process, and I want to make that perfectly clear that this is not speculative CapEx that is built into the budget. These are discrete projects that we expect great returns from even on a standalone basis, although they could certainly serve as the commercial foundation for broader Phase Two.
It is too early to say exactly what the aggregate capital spend or returns will look like on the broader Phase Two, but I would expect those to be fairly in line with what we saw for Phase One, if not slightly more attractive, just depending on how the dust settles.
John McKay: Cool. Sounds good. Looking forward to Thursday. Thanks.
Scott McNeely: Thanks, John.
Operator: If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Your next question comes from the line of Theresa Chen of Barclays. Your line is open. Please go ahead.
Theresa Chen: Hi there. On the topic of Speedway and the commercial development momentum that you have seen to date, is there a possibility or likelihood at this point for Phase III? Is there a likelihood that you will loop the 30-inch system given the demand for the egress?
Scott McNeely: Hey, Theresa. I appreciate the question. The short answer is yes. We see a lot of demand throughout New Mexico, Eddy and Lea County, and I would say expectations certainly have not dropped. They are growing rapidly as developers look for water solutions out of what is a very challenged environment, and we are obviously positioned to deliver that. The timing of that will ultimately be driven by the outcome of commercial discussions for Phase Two and when initial operating capability is going to be needed for Phase Three. We are having all those discussions now.
What is exciting, if you look at Kraken, you look at Speedway Phase One, you look at Devon coming online, we have already set the stage for what is great growth exiting 2026, 2027, 2028. These new commercial projects plus Speedway Phase Two are only going to further bolster the back half of 2027 stepping into 2028. As you allude to, there is a need for Speedway Phase Three. There is a need for more water takeaway, and we see fantastic growth over the next several years. We are working very diligently to ensure that we are being thoughtful around the underwriting, we are derisking those projects with MVCs, and we are setting ourselves up for long-term, derisked growth.
Theresa Chen: Got it. And on that note of just persistent tightness in supply and demand for water takeaway, what are you seeing in the evolution of rates at this point? What is the going rate at this juncture as you try to commercialize the second phase of Speedway in addition to future organic endeavors versus your legacy $0.60-per-barrel-ish rate?
Michael Reitz: Thanks, Theresa. This is Michael. Rates are increasing over time, as you would expect, as capital needs for these projects increase over time. We are seeing more demand, and rates are increasing along with that demand.
Scott McNeely: Relative to the mid-$0.60 kind of average that we had through the middle of last year, these new rates—Kraken, Speedway, some of these others that we are working through and talking through—are meaningfully higher. To Michael’s point, some of that is to underwrite the capital coming out of New Mexico, and some of that is just a reaction by the market to the supply-demand economics for water takeaway.
Scott McNeely: Thanks, Theresa.
Operator: Your final question comes from the line of Kevin MacCurdy of Pickering Energy Partners. Your line is open. Please go ahead.
Kevin MacCurdy: Hey. Good morning. Maybe to follow up on the question about rates. Your 2026 EBITDA guidance was in line with expectations, but maybe on slightly lower volumes than anticipated. Are we right to think that margins will be a little bit higher in 2026 compared to what we saw in 2025? If so, any comments you can provide on the near-term driver of that?
Scott McNeely: Hey, Kevin. Good question. Yes is the answer. As we see Kraken step up, we see Speedway come online, and we see these other new commercial projects come online, we would expect the higher unit-level revenue from those contracts to continue to drive margin expansion across the system. We would expect that trend to continue going forward for all the reasons I just walked through with Theresa. Obviously, some of that is going to be used to underwrite the capital that is needed for some of these larger projects, and some of that also is just a reaction to the supply-demand economics for water takeaway today.
Kevin MacCurdy: Thanks for that answer. I appreciate your comments on what you are seeing on the ground in terms of activity pickups, or not seeing so far yet. I am curious what your capacity is to handle more produced water volumes in both the short and the near term. You did 2,900,000 barrels in the fourth quarter. Is that a near-term cap, or could you go even higher?
Scott McNeely: We could go even higher than that. There are some regional dynamics that are involved, and the system obviously is not wholly fungible from any other point of the system, so operational realities come into the mix. The point I would make is, if you look through our average of roughly 2,600,000 barrels a day against our peak of 2.9 million, it is a real reflection of the criticality of having infrastructure of scale in place today.
Producers are working through much larger well pads that bring on much higher peaks, and you have to have the operational expertise and the infrastructure already in place that can accommodate those peaks and do so with the certainty that is needed by these E&P operators. There is a real competitive moat that is introduced as a result of that.
When you look forward to 2026 and think through our ability to capture the upside potential, I would make the argument we already have those assets in hand to do quite a bit of that today, and that is before we bring Speedway online midyear, which only gives us an additional asset to continue to capture what we would expect to see as some upside coming out of New Mexico in today’s commodity price environment. We feel very good about being well positioned through the year to continue to enable some of the E&P development, particularly in the back half of this year, that is resulting from the macro evolution we have seen over the last couple of months.
Kevin MacCurdy: Thank you, and congratulations on the quarter.
Scott McNeely: Thanks, guys.
Operator: There are no further questions at this time. I will now turn the call to Scott McNeely, Chief Financial Officer, for closing remarks.
Scott McNeely: Thank you, operator, and thanks to everyone for joining us today. We are very happy with how we exited the year and how we are stepping into 2026. We feel like there is a lot of upside for us in 2026 stepping into 2027, and, as I mentioned, there are a lot of commercial opportunities out there for us to continue to pursue and drive growth. As always, please feel free to reach out to our team here if there are any questions. Otherwise, we hope everyone has a great week and we look forward to staying synced up. Thank you.
Operator: This concludes today’s call. Thank you for attending. You may now disconnect.
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WaterBridge (WBI) Q4 2025 Earnings Call Transcript was originally published by The Motley Fool
