WaterBridge (WBI) Q3 2026 earnings review
WaterBridge lifts its 2026 profit plan, but its debt climbs
WaterBridge, which runs pipelines that carry and dispose of oilfield wastewater in Texas and New Mexico, filled its new Speedway pipeline faster than planned while borrowing more to keep building. Third-quarter revenue rose 10% from the second quarter, outpacing a 6% gain in water volumes because newer contracts carry higher fees. Chief executive Jason Long lifted the full-year profit outlook for a third time, and by our math the plan points to another 6% step-up in the fourth quarter.
| Revenue | $240.2M +10.3% from last quarter |
|---|---|
| Produced water handled | 2.8M Bbl/d +6% from last quarter |
| Ebitda, excluding one-offs | $124.2M +7.3% from last quarter |
| Full-year Ebitda outlook | Raised $20M middle of the range: $475M |
⚖️ Verdict: 🟢 Bullish
The story got better because existing pipelines and the new Speedway line drove this quarter's outlook raise, answering the worry that growth relied only on buying smaller rivals. Long also named the company's first data-center cooling project, PowerBridge's Alpha Digital campus, though without contract numbers. The bad news: capital spending and acquisitions still outrun cash from operations, pushing total borrowings up by $201 million in a single quarter while operating payments to affiliate companies jumped 19%.
The question now is whether the rising cash from new pipelines will soon cover construction bills or get swallowed by the next wave of projects and affiliate land fees. One view is that today's network can take on new water at low cost; the other is that deferred 2026 projects and a second Speedway phase will keep free cash flow negative through 2027. Management's first 2027 capital budget next quarter will settle it.
🐂 Bull Case
Speedway Pipeline Drives Third Straight Outlook Raise
WaterBridge gathers and disposes of salty water that comes up with oil and gas in West Texas and New Mexico. Its main growth project this year is the first phase of the Speedway Pipeline, which carries that water out of crowded drilling areas. Chief executive Jason Long said volumes on the new line beat internal plans and came with new customer contracts.
- Produced water handled: 2.8 million barrels a day, up 6% from last quarter
- Full-year volume outlook: raised by 50,000 barrels a day at the middle of the range, following two 25,000-barrel increases
- Full-year Ebitda outlook, excluding one-offs: raised $20 million at the middle, after increases of $5 million and $10 million
The size of the raise matters because last quarter's increase came from acquisitions, leaving open whether existing pipelines had stopped growing. Long tied this quarter's gain to "higher overall activity in the basin" and "increased capture of existing volumes in pore-pressure-constrained areas such as the Stateline". That shows customers are sending more water through the core network, not just through newly bought pipes.
What to watch: fourth-quarter water volumes against the 2.94 million barrels a day implied by the middle of the full-year outlook. Beating that mark would show the Speedway pipeline is filling faster than the new plan assumes.
New Contracts Lift Revenue Faster Than Volumes
The company has argued that newer pipelines carry higher fees per barrel than its older contracts. In the third quarter, total revenue grew 10.3% from the second quarter to $240.2 million, outpacing the 6% rise in produced water volumes. WaterBridge said the gap came from higher volumes and "higher rates on contracts operationalized within the quarter".
Core water revenue — handling dirty water plus selling recycled water — rose 9.2% from last quarter to $226.1 million by our math. That kept operating profit per barrel, excluding depreciation and non-water lines, at $0.46, matching the second quarter and up from $0.42 a year ago. Newer contracts are holding unit profit steady even as recently acquired systems join the network.
What to watch: operating profit per barrel in the fourth quarter. A rise above $0.46 would confirm that higher-priced Speedway barrels are lifting the average across the whole network.
Positives this quarter didn't test
Two future growth projects moved forward in commentary or construction, but neither added to third-quarter revenue or disclosed contract terms.
- Data-center cooling water: Long said the company expects to "source, treat and deliver non-potable cooling water and manage produced and discharge water" for PowerBridge's Alpha Digital campus; signed contract rates, volumes and capital costs would test the claim.
- New Devon pipeline project: accelerated last quarter for an early-2027 start; first-quarter 2027 volume and capital disclosures will show its contribution.
🐻 Bear Case
Debt Grows as Spending Outruns Cash Flow
Finance chief Scott McNeely said the network's scale allows the business to grow while "remaining judicious in deploying capital", and noted he cut the middle of the 2026 capital spending plan by 3% to $545 million. Yet that cut only came from "shifting certain project timing into 2027", not from lower project costs.
- Nine-month operating cash flow: $265.6 million, against $358.1 million of capital spending and $275.0 million for acquisitions
- Third-quarter free cash flow: minus $18.3 million by our math, a fourth straight negative quarter
- Total borrowings: $1.84 billion, up $201 million from June after issuing $150 million of 6.50% notes
- Net debt to annualised third-quarter Ebitda, excluding one-offs: 3.6 times by our math, above the long-term sub-3 times goal
Even after pushing spending into next year, the full-year plan leaves $186.9 million of capital spending for the fourth quarter by our math, a 51% jump from the third quarter. Because construction and acquisitions outrun cash from operations, the midstream group keeps borrowing to build.
What to watch: the 2027 capital spending budget when issued next quarter. A budget that stays near 2026 levels would delay positive free cash flow and keep debt above the target.
Affiliate Costs Rise Alongside New Landfill Deal
The Houston-based group is expanding into oilfield waste landfills while relying on surface land owned by affiliates such as LandBridge, which shares the same private-equity sponsor. Over the first nine months of 2026, the business spent $275.0 million in cash on acquisitions and booked $2.2 million of deal costs in the third quarter for the Ranger water system and the Northern Delaware Basin landfill.
Other revenue, which holds the waste business, rose $3.2 million from the second quarter to $14.0 million. At the same time, direct operating costs paid to related parties — day-to-day field expenses such as landowner royalties and surface access paid to affiliates — climbed $2.7 million to $17.3 million, up 18.7% in one quarter. Total direct operating costs rose 1.6 percentage points of revenue from last quarter to 41.8%, trimming Ebitda margin excluding one-offs from 53% to 52%.
What to watch: fourth-quarter waste revenue and related-party operating costs in the full-year filing. If affiliate fees keep rising almost dollar for dollar with non-water revenue, outside shareholders keep less of the landfill expansion.
Risks this quarter didn't answer
Four standing risks from earlier quarters saw no new numbers or decisions in the earnings release.
- Drilling and oil-price sensitivity: nearly all volumes come from Delaware Basin oil and gas producers, so a drop in drilling would test how much volume is protected by minimum commitments.
- Speedway Phase II commitment: the open season ended in April, and a final investment decision with a capital budget will show the cost of the next build cycle.
- State disposal rules: the release gave no update on Texas orphan-well claims or New Mexico disposal permits; the quarterly filing's legal footnote will carry any change.
- Tax-receivable liability and share exchanges: Class A shares stood at 55.8 million and the tax-receivable liability to legacy owners reached $296.0 million; the filing will detail cash payout timing.
💲 Other KPIs
Customer and affiliate bills waiting to be collected — accounts receivable — jumped 20.5% from the second quarter by our math, twice as fast as the 10.3% rise in revenue. Since the end of 2025, total receivables have grown $63.1 million, tying up $49.1 million of operating cash over the first nine months.
Interest costs rose 15.9% from $22.7 million in the second quarter after the operating subsidiary issued $150 million of 6.50% senior notes in August. Higher interest and $77.1 million of depreciation pushed GAAP net income down from $14.6 million in the second quarter to $13.3 million, even as operating profit grew.
Sales of recycled and brackish water to drillers — combining third-party and affiliate revenue — slipped 1.7% from $9.3 million in the second quarter and fell 21.9% from a year ago by our math. While management highlights recycled water as a margin booster, the revenue line has shrunk in two of the past three quarters.
🔮 Guidance
Raised. The plan now calls for $475 million at the middle of the range, up 4% from the prior outlook and up 17.9% from 2025 pro forma results by our math. That leaves $132.0 million for the fourth quarter, or 6.3% growth from the third quarter. It is the third raise this year, and each step is larger than the last: +$5M, +$10M, +$20M.
Raised. Management lifted the bottom of the range by 100,000 barrels a day, moving the middle up 2% to 2.70 million barrels a day. By our math, hitting the middle of the full-year range takes about 2.94 million barrels a day in the fourth quarter, a 5.1% rise from the third quarter. It is the third straight raise: +25k, +25k, +50k barrels a day.
Cut. The company trimmed the top of the spending range by $30 million, lowering the middle by 3% to $545 million as some project spending shifts into 2027. After $358.1 million spent in the first nine months, themiddle of the range still leaves $186.9 million for the fourth quarter by our math, up 50.8% from the third quarter.
❓ Key Questions
What are the contract terms for the Alpha Digital campus?
Chief executive Jason Long named PowerBridge's Alpha Digital campus as a customer for treated cooling water, but gave no numbers. Investors need the capital cost, expected water volumes, per-barrel fees and start date to see if data-center work can earn pipeline-like returns.
How much did the new landfill contribute in Q3?
Other revenues rose $3.2 million from the second quarter to $14.0 million, well short of a full quarter's expected run-rate from the Northern Delaware Basin landfill. The call needs to clarify when the acquisition closed and what a full quarter of waste revenue looks like.
Why did affiliate operating costs jump 19% this quarter?
Direct operating costs paid to related parties rose $2.7 million from the second quarter to $17.3 million, nearly matching the $3.2 million rise in other revenues. Management should break out how much of that increase goes to LandBridge for surface access and royalties.
What will 2027 capital spending look like after the deferral?
Lowering the 2026 capital plan by $15 million at the middle came from pushing work into 2027, while a final decision on Speedway Phase II is still pending. Without a 2027 spending ceiling, it is unclear when operating cash flow will cover construction.