Chadd Garcia

Investment analyst presenting a detailed thesis on energy infrastructure and land-based assets.

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Key positions and views

LandBridge is fundamentally a misclassified waste management and infrastructure company, not a traditional energy royalty company, and should be valued accordingly.

Surface rights, especially for water disposal via pore space, are a more valuable, durable, and higher-quality revenue stream than depleting, commodity-linked mineral rights.

LandBridge is significantly undervalued relative to its growth prospects, its peer comparables in waste management, and its predecessor, TPL.

The Permian Basin is poised to become a major hub for energy-intensive data centers due to access to trapped natural gas, creating a massive, long-term growth catalyst for landowners like LandBridge.

The increasing water-to-oil ratio in the Delaware Basin, combined with declining disposal capacity elsewhere, creates a powerful and durable tailwind for LandBridge's core business.

Podcast consensus on Garcia

Points of consensus

▶Garcia consistently emphasizes that LandBridge's business is dominated by surface use royalties, particularly from produced water disposal (pore space), which he states accounts for about 73% of its revenue.May 2026

▶A core point of agreement in his analysis is the stark difference between Texas Pacific Land Corporation (TPL) and LandBridge; TPL derives nearly half its revenue from volatile mineral royalties, while LandBridge earns only 6% from them.May 2026

▶He repeatedly highlights the critical and growing need for produced water disposal in the Delaware Basin, noting the high water-to-oil ratio (4-6 barrels of water per barrel of oil) and the significant revenue LandBridge earns per barrel injected.May 2026

▶Garcia's valuation analysis consistently concludes that LandBridge trades at a lower multiple (around 22x EBITDA) than TPL (around 30x EBITDA), which he views as a valuation discrepancy.May 2026

Points of debate

▶Garcia presents a highly bullish but speculative thesis that data centers will relocate to the Permian Basin for cheap power, citing initiatives like Bolt. However, he also concedes that no large-scale hyperscaler has definitively announced plans to build there yet.May 2026

▶He argues that LandBridge should be valued more like a waste management or infrastructure company, drawing comparisons to Secure Energy. This contrasts with its current GICS classification in the energy sector and likely market perception.May 2026

▶There's an internal tension in his valuation argument: while he notes the valuation gap between TPL and LandBridge, he also speculatively suggests that applying TPL's higher multiple to LandBridge could justify a significantly higher stock price, implying the market may not agree with his re-rating thesis.

▶Garcia projects a 25% CAGR in free cash flow for LandBridge based on utilizing 5 million barrels/day of pore space in five years, a projection that is dependent on management execution and continued drilling activity in the basin.

Key themes

▶The Superiority of Surface Rights over Mineral RightsMay 2026

Garcia consistently argues that surface rights, particularly for water disposal (pore space), easements, and resource sales, are a more valuable and durable revenue stream than traditional, depleting mineral royalties. This is central to his bullish case for LandBridge, which is dominated by surface revenues, compared to the more royalty-exposed TPL.

This reframes land-based energy assets as infrastructure and waste management plays, suggesting their long-term value is increasingly decoupled from volatile commodity prices.

▶LandBridge as a Permian Water Infrastructure PlayMay 2026

He details LandBridge's strategic position in produced water disposal, highlighting its massive pore space capacity, its 15-cent-per-barrel royalty, and the growing water-to-oil ratios in the Delaware Basin. Garcia notes that an expected loss of competitor capacity due to over-pressurization will further strengthen LandBridge's position.

Garcia's analysis suggests LandBridge's primary value driver is not oil production itself, but the management of its most significant and problematic byproduct—water.

▶The Permian Basin as a Future Tech HubMay 2026

Garcia presents a forward-looking thesis that the Permian's abundant, trapped natural gas will attract energy-intensive data centers for AI and large language models. He points to specific initiatives like Bolt, run by Eric Schmidt, and potential power projects with partners like Chevron and NRG as early indicators of this trend.

This theme introduces a significant, non-obvious call option on the land's value, suggesting a long-term pivot from purely energy infrastructure to supporting the digital economy.

▶Valuation Arbitrage and Industry MisclassificationMay 2026

Garcia argues that the market misprices companies like LandBridge by lumping them into traditional energy categories. He uses valuation multiples of royalty companies (Venom, Prairie Sky), waste management firms (Secure Energy), and TPL itself to argue that LandBridge is undervalued given its business model and growth prospects.

His analysis is a classic case of seeking alpha by identifying a company whose business reality—stable, recurring infrastructure revenue—has not yet been reflected in its market classification and valuation.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

1888

Texas Pacific Land is formed from the bankruptcy of the Texas and Pacific Railroad, initially holding 3 million acres of land in Texas.

Pre-LandBridge Formation

TPL operates with a mixed revenue model, with just under half its revenue from mineral royalties and the rest from surface operations like source water, produced water royalties, and easements.

LandBridge's Creation

LandBridge is established to support WaterBridge's infrastructure and to focus specifically on monetizing pore space for produced water disposal, shifting the business model heavily toward surface rights.

Recent Past (Acquisition)

LandBridge acquires a ranch for $375 million at a multiple of 3.3x pro-forma EBITDA, adding 900,000 barrels per day of incremental pore space and demonstrating its acquisitive growth strategy.

September (Recent)

An agreement is announced between LandBridge and NRG to build a power generation facility on its land, marking a step towards supporting next-generation energy infrastructure.

Present Day Analysis

Garcia presents his thesis that LandBridge is undervalued, projecting a 25% CAGR in free cash flow and highlighting the emerging, long-term thesis of Permian-based data centers as a future catalyst.

Suggested prompts

How does Chadd Garcia's valuation of LandBridge depend on the successful execution of the Permian data center thesis? &nearr;What are the primary risks to Garcia's forecast of a 25% free cash flow CAGR for LandBridge over the next five years? &nearr;How does Garcia's distinction between surface rights and mineral rights reframe the investment case for land-based royalty companies? &nearr;Based on Garcia's analysis, what key metrics should an investor monitor to track the performance of LandBridge versus TPL? &nearr;

Key concepts

LandBridge Valuation 1 ep Texas Pacific Land Corp (TPL) Analysis 1 ep Pore Space & Produced Water 1 ep Data Centers & Technology Thesis 1 ep Energy Infrastructure & Power Generation 1 ep Mineral vs. Surface Rights 1 ep Corporate Structure & History 1 ep Peer & Industry Comparables 1 ep LandBridge Revenue Breakdown 1 ep TPL Revenue Breakdown 1 ep

Notable quotes

“The first category they use is surface use royalties. That's about 73 percent of the revenue.”

Chadd Garcia · Chadd Garcia drills into LandBridge's value

“[0:12:52 -> 0:13:09] that large language learning models, data centers will gravitate to the Permian Basin in order to access the trapped natural gas there and get off grid, behind the grid.”

Chadd Garcia · Chadd Garcia drills into LandBridge's value

“[0:20:31 -> 0:20:45] That means that their free cash flow should compound over the next five years at a 25% CAGR. And that's without any other growth in the business.”

Chadd Garcia · Chadd Garcia drills into LandBridge's value

“And they get paid presently 15 cents a barrel, which is all profit.”

Chadd Garcia · Chadd Garcia drills into LandBridge's value

Report last updated: May 4, 2026

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