WBI earnings call transcript, November 4, 2026

Cycles. Many of the operators we're talking to have just wanted to see those efforts get across the finish line before stepping into any long-term commitments at the scale we're talking about with Speedway Phase 2. We do think that comes here in the coming months. You know, those could very well support an FID on Phase 2. But in this interim period, again, we've been able to capitalize that infrastructure, you know, on the ground. I mean, and the third point, and I think this is a really important one to communicate is there have been a number of just others. Smaller commercial projects and wins and opportunities just across our system, you know, that oftentimes come at fantastic returns and they may be, you know, smaller and not quite as easy to talk to as a large project like Speedway phase two. But in aggregate, they can easily add up to the same type of cash flow contribution, oftentimes at much better returns, but just without the, you know, the fancy name like Speedway phase two. And so, you know, we're in a great spot where we can be patient. You know, and ultimately, I think we're going to get phase two FID tier in the near term, you know, as some of those things come to fruition, but really focus on, you know, aligning that with when firm commitments are in place, when we think phase one has been kind of. properly utilized. And in the interim here, we'll just continue to push, you know, the engineering and planning efforts forward so we can pull the trigger and move quickly when the time is right.

That's great.

Thanks for that.

And just second one for me, you guys talked a lot about the off digital. opportunity on the Lambridge call as well, but maybe more high level. When you're thinking about some of these water opportunities with data center customers, I guess, are you still having kind of technical or let's say operational? Conversations with them, or is that pretty buttoned up now in terms of their comfort in using this kind of water source? And now really, it's mostly just around, let's call it the commercial side. Thanks. Yeah, no, thanks. I think there's an enormous amount of comfort. But at this point with using non-potable brackish water, you know, the treatment efforts there aren't by any means new. So the confidence around the operational and the commercial viability, I don't think is really a question at this point. I think it's really just. Buttoning up some of the finer points and getting these to a point where we can announce it here in the near term. Now, when you think through treated produced water, there's obviously a little longer runway there, more involved in terms of. Treatment that's required, and a bit more complexity on the side of the regulators. But again, I would say there's a very high conviction, you know, ultimately on the operational and commercial viability of that. And I think there's a lot of excitement to transition. to using treated produced water for cooling here, you know, in the medium term.

That's great.

Thank you for the time.

Thanks, John.

Hey, good morning, Eli.

I appreciate the question. Yeah, I mean, ultimately, we don't expect the election to drive any abrupt change on how produced water is regulated. You know, I think it's more important to recognize, as kind of you alluded to, that conservative approach actually positions us very well, should any change arise. I mean, just a few kind of key points to hit. I mean, first, if you're not familiar, the structure of Texas regulatory bodies is actually built for continuity and stability. And so when you look at the RRC, you look at the TCEQ, there is a staggering and sequencing of kind of key personnel there really designed to ensure, you know, on one single day, there isn't a hard pivot in terms of policy. And when you add in the time it takes to actually. You legislate and work through rulemaking, you know, the framework just can't change overnight. But I think the second, third point, you know, more important, I mean, the second point, you know, we have worked over time to develop incredibly strong, lasting relationships with the RRC. The TCEQ, as well as the other state agencies, we remain incredibly transparent and kind of constructive, constant dialogue with them. And we don't see that changing as a result of the election in any way whatsoever. And third, and kind of most importantly, here is really kind of how we operate. You know, we've always been incredibly conservative on how we permit and how we site and how we build our infrastructure. I mean, by design, you know, we spread our facilities out over a broad geographic footprint and maintain minimum spacing, really designed.

To avoid any kind of concentrated pressure or other risks. You know, further, we have in-house expertise as it relates to seismology. And we certainly we are outside experts, you know, before we develop anything, you know, we've we've. Chosen not to operate any kind of deep disposal wells in Texas. This is a further mitigate the risks. And so when you think through, you know, any potential for the RRC tightening it, you know, whatsoever, I would say we're in an incredibly strong spot, you know, to the point where. Look at even last year when they did step out dating the RRC and tightened its permitting guidelines, you know, we at Waterbridge spoke out publicly endorsing the change because it already largely reflects how we're operating. So, I mean, there may be some, you know. Other operators who may be toe the line a bit as you think through staying close to the regulatory limits and, you know, they're going to be more exposed to even small changes in policies. But given we have so much kind of cushion there and given our engagement with the regulatory body. I think we're well positioned to ultimately navigate what's around the corner. And if anything, any tightening of standards should drive more volumes towards a more responsible, well-capitalized system of our own.

That's great.

Thanks for the call.

And then maybe you're shifting back to the digital infrastructure landscape. I know it's early and you're still commercializing, but if we just think about returns compared to the super creative returns on organic stuff. That you do, you know, how do they kind of seem to compare initially? And then would it make sense to kind of do something in the bolt on world to advance your footprint and the digital infrastructure landscape? Thanks. Yeah, no, good follow up on. Yeah, I mean, on the water side, as it relates to digital infrastructure, I would say the return profile we're seeing in these projects are absolutely competitive with how we look at returns across the rest of our investment opportunities. Ultimately, we're ensuring here that what we do on a risk adjusted return basis remains competitive as we work through capital allocation. I think we've been able to hold to that. Now, in terms of like, do we see expanding to further bolster the opportunity? We're constantly looking at what makes sense. You know, we do think this kind of utility style, you know, water model is going to be a growing part of our business going forward. You know, Alpha Digital is a great first step. Validation of that, like you mentioned in our prepared remarks, there is more exciting things around the corner. But as we've said from the get go, we've always viewed, you know, water in West Texas, whether it's non-potable brackish water or produced water as a resource.

And we knew the time was going to come when that, you know, that was proven to the market. And I think we're in a great position to really show that now. And so, yeah, whether it's M&A, whether it's Greenfield Development, I think we'll continue to grow that piece of our business. Given the financial upside we see there, as well as just the runway we have in that in that particular industry. Great.

Thanks, guys.

Thanks.

Yeah, I certainly think the gas-takeaway dynamic has been very material in terms of just growth in the Delaware already. Even before we start looking at the deeper, more exploratory benches that EMPs have been looking at. So, I mean, if you just look earlier this year, you know, the lack of gas-takeaway from the Delaware was actually an impediment to EMP operators. Just the regular way oil operations, because the lack of takeaway just forced them to shut in volumes, even when oil is over $100. And so having that come online, I think one is going to be great in terms of de-bottlenecking the Delaware in general. But. As you point out, I think that there is going to be a growing demand for gas for very obvious reasons, and those deeper zones come with a lot of water. I don't think the industry outlook as a whole is really caught up with that. Certainly nothing that we've seen from third parties. Is really leaning in on the fact that water growth is going to be a byproduct of this demand for gas. We certainly see that as upside, but that's not something we're called predicating the success of our business on here in the near term.

Thanks, Derek.

Hey, Teresa.

Good to hear from you and good question. We have integrated that system into our Speedway system, so that just adds more reliability to not only the Speedway system, but also that Ranger platform. That had a lot of good opportunities for growth. We've had, you know, a lot of great conversations with the producers on that system. And we do expect that to continue to grow. And so we've got the. Ability to really scale that system without having to deploy capital for deep wells in New Mexico. And we can take advantage of that Speedway pipeline and adding incremental capacity at extremely attractive price.

Thank you.

Hey, good morning, Alex.

It's really more just a byproduct of just working capital timing. I mean, we have some large construction efforts going on through year end. You know, as you know, we report cash CapEx. And so to the extent that cash left the door in Q4 versus Q1 is almost call it not not material in terms of when. Projects are coming online. You know, when we were looking at expectations through the back half of the year last quarter, there was the real possibility that some of that cash left the system in December. And so we wanted to just kind of risk wait increasing. guidance to the street in case that were to come to fruition. You know, as we're a little closer to year ends now, we're just seeing some of that cash leave in January versus December. And so there's really not a meaningful shift in timing. Uh, whatsoever. It's just a byproduct of some of these larger projects we have, um, just driving lumpier CapEx payments. And, you know, some of those hitting in the first part of Q1 versus the latter part of Q4. Okay. So what you're saying is literally.

Uh, are you guys, it sounds like you're saying that really there's no impact, uh, from any changes that could happen because either the way you run your assets from having like very vast poor space, not over concentrating, or that rig count hasn't gotten out of whack and, and. The, the Delaware remains just hugely profitable, regardless of where oil is that you don't see really any change. Is that the case? Or are there things that could happen from a political or regulatory standpoint where it's like, Hey, if these things happen, yeah, we could, our business could be impacted. And it's something that we. Watch for. I'm just trying to understand what you guys are watching for as politics changes. I mean, you know, Texas hasn't been blue since the early nineties. So it's a pretty big shift. So just trying to understand what things you guys are really watching that would give you cause for concern versus saying right now, the way the business is run, we feel. Pretty good. Yeah, that's a good question. I mean, just through the course of this year, despite having an incredibly constructive macro backdrop, as it relates to pricing, we haven't seen a massive ramp in activity levels from producers for, for a number of reasons. And so first. As we think that, you know, what does that mean stepping into next year and the year after is there's not, you know, this massive ramp in activity that would somehow need to be unwound in the near term.

You know, I think ultimately what we see in the Delaware Basin is just the best economic. In the lower 48, I think you're going to see ongoing development there regardless of what you see from the political side. You know, we've seen New Mexico continue to grow volumes meaningfully, you know, over the last several years. You know, they have been a blue state for as long as I can remember. And so it serves as a really good analog of the fact that, you know, oil and gas activity is not necessarily, you know, call it opposed by Democrats. And oil and gas states, I think, you know, as we've seen in New Mexico, they can certainly coexist. There's certainly benefits to the state, you know, and Texas is an oil and gas state through and through. And I don't think the incoming administration is going to really think differently there now. We're certainly, you know, keeping an eye on producer sentiment, on permitting, on commodity prices, on all of those kind of leading indicators that can ultimately drive changes in behavior. But at the end of the day, you know, we. You don't see a massive pivot status quo in terms of expectations next year or the near term whatsoever from any of our operators, just based on the recent election. OK, and then just to confirm. So this year there's been no ramp in EMPX. That would cause you concern. And then New Mexico has been a steady grower in water volumes over the past however many number of years, which and the water volumes are consistent.

With oil drilling volumes, or it's as those wells get deeper that maybe the oil volumes don't change, but the water volumes do as the wells get deeper. I'm just trying to understand that. Sure. Yeah, there's been, I mean, there's been very modest growth in oil activity. I don't want to allude to the fact that the macro has not been supportive of that, but what you've not seen is this atypical ramp in volumes and activity that would somehow fall away because of an administration change. Because of commodity prices slowly kind of falling off. Now on the New Mexico side, you have seen oil and subsequently produced water volumes grow meaningfully there over the last five plus years. This activity has really picked up. That is water that is being generated alongside oil and gas production. So that is not necessarily the supply of water to answer your question there. Now I think what is fantastic is we're seeing the same dynamic that we spoke to at our IPO is, you know, the more these volumes grow, the higher water cuts get. And we've seen that play out. So it's not necessarily linear in the sense where, you know, oil is growing at the same rate as water. We're seeing water growth eclipse oil growth. On a rate basis. And so the trend is fantastic. It certainly favors the need, you know, for a long haul takeaway solution like what we offer. The growth that we're seeing can no way be cannibalized by recycling.

And so as as long as we continue to see that growth and that production continue to rise, there is just going to be a growing delta of water volumes that need to have a solution that require bringing them out of New Mexico into Texas. And we're obviously ready to deliver that. Okay, great. Thank you.