テキサス・パシフィック・ランド・コーポレーション（TPL）2026年第3四半期決算説明会：売上高と生産量が過去最高を記録

要点

• テキサス・パシフィック・ランドは、総売上高、純利益、フリーキャッシュフローがいずれも3四半期連続で過去最高を記録したと発表した。2026年第3四半期の売上高は前年同期比35%増、前四半期比11%増の2億7,300万ドルに達した。
• 調整後EBITDAは前年同期比37%増の2億3,800万ドルとなり、調整後EBITDAマージンは87%に達した。フリーキャッシュフローは同39%増の1億7,000万ドルとなった。
• ロイヤルティ原油生産量は日量1万7,100バレルと四半期ベースの過去最高を記録し、総生産量も日量4万2,300石油換算バレルと過去最高を更新した。
• パーミアン盆地におけるパイプライン輸送能力の増強により地域的なボトルネックや価格差が緩和されたことで、天然ガスの販売実現価格は第2四半期の1,000立方フィートあたり0.40ドルから第3四半期には同2.40ドルへと改善した。
• 随伴水（生産水）のロイヤルティ取扱量は前四半期比14%増、前年同期比27%増となる日量550万バレルと過去最高を記録した。水販売量は日量67万2,000バレルと前四半期比でほぼ横ばいだった。
• TPLの四半期末時点の現金残高は3億7,000万ドル、無借金で、未使用のクレジットファシリティ（信用枠）が5億ドルあった。四半期末後には、ミッドランド郡およびグラスコック郡で地表地権約9,700エーカーおよび純ロイヤルティ地権238エーカーを取得した。

主要財務データ

事業および業績の動向

石油・天然ガスロイヤルティ事業

ロイヤルティ生産量は、TPLの保有鉱区全体における継続的な開発と堅調なコモディティ販売実現価格の恩恵を受けた。原油生産量は日量1万7,100バレルに達し、総生産量は日量4万2,300石油換算バレルへと増加し、いずれも四半期ベースの過去最高を記録した。

TPLはヘッジ取引を一切行わない方針を維持しており、継続する中東紛争に伴う原油価格の上昇を完全に取り込むことができた。経営陣はまた、パーミアン盆地におけるリグ稼働数の増加や、水平掘削井の新規許可件数が過去最高を記録したことを、今後の事業活動を支える好材料として挙げた。

天然ガスの販売実現価格は、ヘンリーハブ価格がほぼ横ばいであったにもかかわらず、第2四半期の1,000立方フィートあたり0.40ドルから2.40ドルへと上昇した。経営陣はこの改善について、新たなパイプライン容量の追加によりワハ・ハブでの混雑が緩和され、ベーシス差（地域間価格差）が縮小したためであるとした。

TPLの四半期末時点のライン・オブ・サイト井戸（開発見通しの立つ井戸）は純保有ベースで16.8基であり、その内訳は許可済み井戸が5.7基、掘削済み未仕上げ井戸（DUC）が8.6基、仕上げ済み未生産井戸が2.5基だった。オペレーター各社が新規掘削による補充を上回るペースでDUCや仕上げ済み井戸を生産へ移行させたため、在庫井戸数は減少した。

地表賃貸、地役権および資材事業

地表賃貸、地役権および資材事業の売上高は前四半期比53%増の3,600万ドルとなった。この成長は、TPLの保有地全体における天然ガス、天然ガス液（NGL）、電力および公益事業インフラの拡大によるものである。

経営陣は、西テキサス地域における産業、製造業、電力、データセンター開発に伴うインフラ拡張は、依然として初期段階にあると述べた。

水事業

水販売量は日量平均67万2,000バレルとなり、第2四半期からほぼ横ばいだった。経営陣によると、仕上げ作業のペース加速が鈍かったことに加え、地域的なガス価格の低迷により事業活動がデラウェア盆地からミッドランド盆地へ、またテキサス州からニューメキシコ州へとシフトしたことが影響した。

随伴水のロイヤルティ取扱量は過去最高となる日量550万バレルに達した。仕上げ作業の減速により、リサイクルではなく処分を必要とする随伴水の量が増加したことも、地中圧入のためにTPLの土地を経由して輸送される水量を下支えした。

オルラ第2b期脱塩施設では、人工随伴水ブラインを用いた試運転が続けられた。隣接する草地再生区域は完成しており、TPLは試運転の進捗次第で、年末までに実際の油田で生成された随伴水を施設へ通水し始める見込みである。

データセンターおよび電力インフラ事業

TPLは、プロジェクトの計画、設計、デューデリジェンス、現地作業は進展しているものの、複数のプロジェクトに関する商業契約は依然として交渉中であると述べた。同社は電力およびデータセンタープロジェクトへの初期サービス提供に向け、配水・水処理インフラに対して2027年に設備投資を行う見通しである。

経営陣は、提案依頼書（RFP）や問い合わせが引き続き高水準にあると報告したものの、新たな大型商業契約の発表には至らなかった。TPLは、非飲用水、飲料水、高規格の脱塩水を供給できるよう、自社の総合的な水事業の位置づけを強化している。

経営陣の見通し

経営陣は、許認可件数の増加、盆地内での稼働リグ数の増加、第4四半期における水仕上げ作業スケジュールの活発化を挙げ、TPLの従来型事業全体において今後数四半期はさらに好調に推移すると予想している。

同社は、リグ稼働の活発化によって、いずれ新規掘削がDUCの取り崩しと均衡するようになるとみている。経営陣はまた、正式な生産ガイダンスではないとしつつも、現時点の評価としてパーミアン盆地の原油生産量が2027年に再び過去最高を記録する可能性が高まっていると述べた。

脱塩事業について、TPLは年末までに人工ブラインから油田生成随伴水へと移行する計画である。商業化施設の時期や規模は、上流事業者およびハイパースケールデータセンター顧客との協議次第となる。

リスクと注視すべきポイント

• テキサス州の規制当局は、電力網への大容量負荷連系の見直しを行うとともに、その見直しと追加的な環境面の配慮が完了するまでデータセンターの許認可手続きを一時停止するよう指示された。経営陣は、短期的には許認可の遅延が生じる可能性があるとみている。
• 次期テキサス州知事の具体的な政策方針はまだ明確になっていない。それでもTPLは、データセンター開発に対する同州の全体的な姿勢について、全面的な禁止ではなく節度ある対応にとどまると予想している。
• 大気浄化許可、水の確保、地域社会との対話、交通、騒音、電力料金の負担可能性は、西テキサスのデータセンタープロジェクトにおいて引き続き重要な検討事項である。
• オペレーター各社がDUCや仕上げ済み井戸を取り崩したことで、足元の井戸在庫は減少した。在庫の補充は、リグや水圧破砕（フラッキング）能力の継続的な追加にかかっている。
• デラウェア盆地とミッドランド盆地の間、またテキサス州とニューメキシコ州の間での事業活動のシフトは、TPLの水販売構成や必要とされるインフラ要件に影響を与える可能性がある。

アナリスト質疑応答の主な要点

アナリストからは、テキサス州の政治的変化がデータセンター開発に及ぼす影響に強い関心が寄せられた。経営陣は、許認可取得が難しくなり足元のプロジェクト進行時期に影響を与える可能性があることを認めた。しかし、都市部から離れた立地、天然ガス資源、非飲用水の利用可能性、産業開発に対する地域社会の受容性の高さから、西テキサス地域が大規模コンピューティングに極めて適している状況に変わりはないと主張した。

中核事業について経営陣は、許可件数の増加、稼働リグ数の増加、第4四半期の仕上げ作業スケジュールの活発化を挙げ、活動改善の証拠として提示した。TPLはまた、ニューメキシコ州およびミッドランド盆地における水事業の能力を拡大するとともに、将来的なデラウェア盆地での水量増加に備え、盆地外への処分や脱塩の選択肢の開発を進めている。

脱塩事業に関して経営陣は、次の段階へ進むかどうかは上流事業者とハイパースケール顧客の双方からの商業的需要次第であると述べた。現在検討されているデータセンター向けの適用候補には、随伴水の利用、排熱回収、冷凍法に基づくプロセス、チップ直接冷却などが含まれている。

決算説明会の全文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings. Welcome to the Texas Pacific Land Corporation Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Shawn Amini, Vice President of Finance and Investor Relations at Texas Pacific Land Corporation. Thank you. Shawn, you may begin.

Shawn Amini

Thank you for joining us today for Texas Pacific Land Corporation's Third Quarter 2026 Earnings Conference Call. Yesterday afternoon, the company released its financial results and filed its Form 10-Q with the Securities and Exchange Commission, which is available on the Investors section of the company's website at www.texaspacific.com.

As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events.

For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and our recent SEC filings. During this call, we will also be discussing certain non-GAAP financial measures. More information about and reconciliations of these non-GAAP financial measures are contained in our earnings release for this quarter and our SEC filings.

Please also note, we may at times refer to our company by its stock ticker, TPL. This morning's conference call is hosted by TPL's President and Chief Executive Officer, Ty Glover; TPL's Chief Financial Officer, Chris Steddum; and Executive Vice President of Texas Pacific Water Resources, Robert Crain. Management will make some prepared comments, after which we will open the call for questions. Now, I will turn the call over to Ty.

Tyler Glover

Good morning, everyone. For the third consecutive quarter, TPL generated record quarterly total revenue, net income and free cash flow. These results were supported by continued strong development activity across our royalty acreage, supportive commodity price realizations, increased pipeline easement revenue and record produced water royalty volumes.

Starting with oil and gas royalties, oil production of 17,100 barrels per day and total daily production of 42,300 barrels of oil equivalent per day both represent quarterly records. Record production is notable given that oil entered this year below $60 per barrel and upstream operators collectively were dropping rigs.

Oil and gas royalty revenues have benefited from sustained high oil prices as conflict in the Middle East has persisted. We have been and continue to remain today completely unhedged, allowing us to realize the full upside to elevated oil prices. Over the last few months, we have seen an acceleration in Permian activity levels, which we believe will support strong growth for TPL in the basin overall.

Operators were initially cautious for the first part of 2026, unsure of how long the Middle East conflict and higher oil prices would last. In the third quarter of this year, rig counts inflected higher and new permits for horizontal wells set a basin record.

As oil prices have remained strong, we expect the outlook for near-term basin growth to strengthen. New natural gas pipeline capacity has helped to debottleneck the in-basin gas glut, which has alleviated negative prices at the Waha Hub and compressed local basis differentials to U.S. Gulf Coast markets.

TPL's natural gas price realizations improved from $0.40 per thousand cubic feet in the second quarter to $2.40 in the third quarter despite relatively flat benchmark Henry Hub pricing over the same period. The natural gas pipeline egress in the Permian expected to expand substantially in coming years. We're optimistic that prolonged periods of negative prices and wide basis for in-basin gas are behind us.

Our surface leases, easements and materials business, which we refer to as SLEM, had a great quarter with quarterly revenues of $36 million, a 53% sequential increase. Performance was driven by natural gas, natural gas liquids, electric and utility infrastructure growth across our land position.

We're still in the early stages of growth in West Texas for new infrastructure across industrial, manufacturing, power and data centers, and our massive land footprint is well positioned to benefit. We are also investing in additional surface-related opportunities to capture this industrial boom.

Turning to our water business. Water sales volumes were 672,000 barrels per day for the quarter, roughly flat sequentially. Completion activity in the Permian has been slow to ramp even as oil prices have stayed high. Due to weak in-basin gas pricing for most of this year, we've seen an intra-basin shift from the Delaware to Midland as well as an intra-Delaware shift from Texas to New Mexico. In response, we've been increasing our efforts to expand our reach into New Mexico and Midland Basin more broadly.

Our ability to procure produced water for recycling is a major factor that allows us to maintain a presence in New Mexico, especially given operator preferences to reduce disposal needs. Although our acreage is less concentrated in the Midland Basin, we leverage third-party disposal systems on and off our acreage to facilitate completion water sales.

Beyond some of these regional intra-basin dynamics, the near-term water sales outlook for the Permian overall is constructive. As noted, the Permian's record new permits and rising rig counts are leading indicators of higher completion activity and corresponding higher water demand. Produced water royalties had an excellent quarter with record revenue and volumes.

Volumes reached a record 5.5 million barrels per day, which represents growth of 14% sequentially and 27% year-over-year. The near-term and long-term fundamental backdrop for Permian produced water remains strong as activity levels and rising water-to-oil ratios support volume growth.

Recent performance has also been supported by an additional factor. As completion activity declined in the first half of this year, produced water that would otherwise have been recycled for completions instead requires injection into pore space. Thus, more volumes have to move across TPL land for injection into pore space directly on or adjacent to us. This dynamic creates a natural hedge for our water business. Periods of tepid demand for completion water can simultaneously provide tailwinds for our produced water royalties.

Turning to produced water desalination and beneficial reuse. We have made encouraging progress at our Orla Phase 2b facility during the quarter. Our adjacent grassland rehabilitation plot is complete and ready to receive water under our approved land application permit.

With respect to our Texas Pollutant Discharge Elimination System, or TPDES, permit, we hope to receive the final draft of the discharge permit from the TCEQ shortly. In August, we held an on-site grand opening ceremony, which hosted more than 150 guests from across the industry, local and state government, research community, major energy companies and hyperscalers.

Since then, our commissioning process continues, we are inletting increasing concentrations of synthetically produced water brine as we test and calibrate equipment, finalize various process integrations and develop standard operating procedures. Additionally, we are establishing the data collection framework that will allow longer-term efficiency tracking and optimization of the desalination process.

By the end of the year, we hope to flow field-produced water into the Orla facility. We also continue to work on designs related to data center and power generation specific research and development initiatives to further the co-location of produced water desalination facilities.

Turning to our data center efforts. We're working diligently on a number of projects throughout our land position, although commercial agreements are still being negotiated, a significant amount of diligence, project planning and design and site work has progressed.

Recent regulatory moratoriums and new incoming governor at the state level are a couple more things the industry will have to navigate. The outgoing Texas governor directed regulators and ERCOT to conduct a verification and audit for grid-connected projects in ERCOT's large load interconnection process.

Subsequently, the governor also directed the TCEQ to pause issuance of permits to data centers pending the ERCOT review and incorporating other incremental environmental items. And although it's still early, we believe the new incoming governor will take a similarly measured approach to data center development in the state.

With much of West Texas data center projects anticipated to be behind the meter and in relatively rural areas, it does reduce some complexity relative to grid-connected projects that have to undergo interconnection studies. Air permits, water and community engagement remain pertinent for projects and significant focus points for many developers.

It's worth noting that these elements were already major points of emphasis from developers preceding the governor directive and recent election. These actions to date add to the diligence checklist, but these are not viewed as a blanket ban.

Furthermore, and this is true regardless of who's in power, virtually every hyperscaler and AI lab customer we're working with has been extremely focused on minimizing environmental and affordability externalities while maximizing community benefit. This dynamic is largely why these deals take so long to finalize.

Economic terms are obviously important, but customers want to ensure these community issues are proactively resolved and ultimately a net benefit to the local population. In total, we have not sensed waning motivation from landowners, developers and customers to get hyperscale projects built.

As it stands today, we expect to spend capital next year on water-related distribution and treatment infrastructure to serve the initial in-service of power and data center projects. Developers of gigawatt scale infrastructure have spent a lot of time optimizing designs for the unique attributes of West Texas and the scope of these projects continues to evolve. We're collaborating closely with the developers on land, water and easements. For water, quality specification and quantity span across a wide gamut.

TPL's water business is vertically integrated and capable of providing high volumes of non-potable, potable and high-spec demineralized water. Inbounds for quotes and RFPs remain very high, and we've established commercial teams dedicated solely to data center and power customers. We don't have a new major announcement today, but the backlog is robust, and we're well positioned to bring multiple hyperscale projects to West Texas in the near term. And with that, I'll hand the call over to Chris.

Chris Steddum

Thanks, Ty. Consolidated revenues during the third quarter of 2026 were approximately $273 million. This was an all-time high, up 11% sequentially and 35% year-over-year. Consolidated adjusted EBITDA was $238 million, which was up 11% sequentially and 37% year-over-year.

Our adjusted EBITDA margin for the quarter was 87%. Free cash flow was $170 million, which was up 10% sequentially and 39% year-over-year. Net income was $167 million, or $2.42 per diluted share, up 38% year-over-year.

Moving to our well inventory. As of quarter end, TPL had 5.7 net permitted wells, 8.6 net drilled but uncompleted wells, commonly referred to as DUCs and 2.5 net completed, but not producing wells, which we refer to as CUPs. This amounts to 16.8 net line-of-sight wells. Well inventory has declined from recent levels. However, new wells placed on production still supported continued production growth for TPL.

As Ty noted, operators spent the first part of the year drawing down DUCs and CUPs to support strong levels of new wells placed on production. High oil prices incentivize this behavior. With the rigs largely declining, well inventory was converted to production faster than new spuds could replenish inventory. The same dynamic has played out basin-wide. The Permian is setting new highs for oil production, while DUC inventory is down from a year ago.

Over the long term, however, wells turned to sales are limited by how many wells operators spud and complete and DUC inventory is finite. We just started seeing rig additions in the third quarter, which should continue to rise through year-end. As rig counts rise and new spuds increase, the DUC drawdown will level off as new wells drilled and new wells placed on production come into balance.

Historically, sustained high oil prices lead operators to build DUCs and record new horizontal well permits in the third quarter suggest the Permian is currently on the same path. All that said, we're not concerned by the drop in near-term well inventory. DUCs and CUPs can naturally be replenished as rigs and frac spreads are added.

Despite entering 2026 with 5-handle oil, the Permian will once again set a new oil production record this year. And given the activity ramp we're now seeing, it's looking increasingly certain that 2027 will also be another record production year. From our vantage point, the Permian oil machine and by extension, TPL is not even close to slowing down.

Turning to our balance sheet. At quarter end, TPL had $370 million of cash and cash equivalents and no debt with our $500 million credit facility remaining undrawn. After quarter end, we acquired approximately 9,700 surface acres and 238 net royalty acres in Midland and Glasscock counties.

This acreage sits in a high-quality subregion within the Midland Basin and is checkerboarded with 4 legacy TPL sections. The acquired acreage currently generates cash flow from source and produced water, SLEM and mineral interest. The acquisition augments our Midland Basin footprint where we can apply our existing commercial capabilities and expand capture on and off ranch.

Post acquisition, we continue to maintain a pristine balance sheet. We have tremendous flexibility to create value for shareholders as this is an opportunity-rich environment across organic investment, bolt-ons and M&A. We can also opportunistically lean into buybacks given the recent volatility induced by midterms and perceived impacts on the energy and data center industries in Texas.

Meanwhile, current high oil prices augments our free cash flow profile, enabling us to efficiently recycle cash towards attractive growth opportunities or expanded return of capital to shareholders. We remain very focused and disciplined as we look to maximize long-term intrinsic value per share. And with that, operator, we will now take questions.

Operator

[Operator Instructions] Our first question is from Derrick Whitfield with Texas Capital.

質疑応答

Derrick Whitfield

Congrats on a very strong quarter. I'd like to start with the market and political landscape given the impact it had on your stock yesterday. The Blue Wave and change in Texas Governor leadership is perceived to be a headwind to your business. As I think about it, any political or regulatory rebuke against data centers actually makes the case for what you're pursuing with Bolt even stronger, not weaker. A, is that a fair assessment? And b, if so, what's your greatest concern in the new political landscape?

Tyler Glover

Thanks, Derrick. I think that's a fair assessment. Did things get slightly more difficult in Texas? Yes, but they certainly haven't gotten any easier in any other states. So I think the political change, one, just makes us more bullish on West Texas for data centers and compute.

When you think about the concerns of the governor, those are the same concerns that we've been hearing from local communities that we've been talking to out there for the last 1.5 years. And so we've already started working to design these facilities to address those concerns like cheaper power, concerns around using municipal water, traffic and noise.

So I think the type of site that we are trying to build will become the blueprint for how you have to build these things in Texas. And I think the lack of population in West Texas, cheap gas, abundant water, brackish non-potable water, all makes West Texas just the place for large-scale compute to be built.

So again, we're just more bullish. Does it affect the timing of some of these projects in the near term? Yes. But I think it's a net positive for the long-term value proposition for TPL and West Texas more broadly. So look, I think will we have to figure out how to navigate this in the near term? Certainly. But again, I think it's a net positive for TPL and we're just more and more bullish as we go on the value proposition for power generation and compute in West Texas.

Derrick Whitfield

Terrific. And regarding the base business, just on the intra-basin and across basin moves you noted, could you -- I guess, how would you characterize from what you've seen today, how the production and water trajectories look over the next couple of quarters? I'm not asking for like a 2027 guide, but just with how you see the pieces that have moved to date, just how do you think that looks for the business, that base business?

Tyler Glover

Well, we've definitely seen an uptick in permitting. The overall basin rig count is climbing. The percentage of rigs on our acreage versus the basin has continued to climb. Our completion schedule on the water side is much more robust for the fourth quarter than it was third quarter. So I think the next couple of quarters are going to be much stronger kind of across our legacy business for TPL.

Robert Crain

I mean, when we look at that shift, we've seen this shift to Midland Basin coming for a while. I think it's got different characteristics and reasons why it occurred. I think water is probably one of them. And we start to see some -- over the last, let's say, years, some maybe spatial challenges in water handling. I think it just goes even further to say what we've started creating for solutions on the water side, out-of-basin disposal, desal. When we see this shift back to the Delaware, there's going to be higher water volumes to handle. We're putting the framework in place for how to handle that through additional out-of-basin capacity. What we know is going to be the eventual pivot to beneficial reuse and desal and be ready for this activity level when it returns to the Delaware.

Operator

Our next question is from Tim Rezvan with KeyBanc Capital Markets Inc.

Timothy Rezvan

Ty, I appreciated the prepared comments that it's been sort of a shoot first, ask questions later kind of response yesterday and today on the Blue Wave. I was curious, I think not a lot of people assumed Abbott would lose. Did you or anybody else in the organization have discussions with the incoming governor before to understand their positions and where I'm going. Is there any specificity that you can see on what might change either on permitting or developing or time lines? Just any insight would be helpful, if you have any.

Tyler Glover

I don't think we have any real clear insight on where things are going. I mean, I'll be honest, we were in the camp of thinking that Abbott would get reelected. But from what the new governor has put out so far, I mean, we don't expect the view on data centers in Texas and how those are developed to change too significantly.

Robert Crain

I'll say we're heavily engaged in Austin. Again, not saying that anybody saw this coming. But when we're engaged on the regulatory side and on the legislative side as well, I'll reiterate, I think, what Ty said in his first comments of our blueprint for what kind of functional data center and power gen build-out should be.

I completely agree that it strengthens the West Texas thesis. If we look at short-term what permitting is going to look like. Obviously, there's still the moratorium in place that Abbott put on. We're going to continue to work with the regulators to say, okay, what does that proper siting do? I think, again, it strengthens our thesis, probably some short-term headwinds just from a permitting standpoint.

But long term, I think it continues to, if you say, force to compute to the Permian because of the attributes. I think when you look at Permian, too, you have to look at now -- you're going to not just kind of those quantitative inputs of the commodities, the land and the water and the gas.

But I think you also have to look at just the community's acceptance and kind of qualitative acceptance that West Texas sees toward data centers. And if you look at the Permian, it's a more transient community. It's always been that work community. I think the community as a whole are starting to see compute as a way not only get another industry in, but continue to prop up what is West Texas in the upstream side of the world.

Timothy Rezvan

Okay. I appreciate the comments. I know we're about 36 hours into digesting all this, so thank you. As my follow-up, your slide deck had some cursory comments about next steps on the desalination progress. And I know time lines are hazy right now given everything that's happened this week.

But can you just talk about kind of what you would need to see to kind of -- you talked about 2027 and beyond procurement of equipment for a commercial scale facility. Maybe just talk about the next steps on desalination and given the progress to date.

Robert Crain

Sure. Right now, as Ty mentioned in the prepared remarks, commissioning continues. We -- the reason we do synthetic brines to start out, we're being very deliberate in our approach of the commissioning of the system. It's a very complex system with a lot of data sensors and inputs. And when we -- why we run synthetic brines is mainly from a characteristics and waste standpoint. So short term, by the end of the year, we pivot from synthetic brines over to actual produced water and let the system start to run.

When we think about next level initiatives and commercial interest, somewhat twofold. One, when we look at traditional just upstream offtake, a lot of interest from the operators, what does an offtake agreement look like. But then the second piece has been the increasing interest from the hyperscaler community. And for that, it's kind of twofold. We look at the research initiatives that we've talked about before, waste heat capture, possible implementation of our freeze and direct chip cooling. But kind of high level, just what does the use of produced water look like in a data center. Can you pivot back to an evaporative model?

So over the next couple of months, it's going to depend completely on commercial conversations on both those fronts from the upstream side and the hyperscaler side, what the scale-up look like and what does the ultimate use of that water and compute look like.

Timothy Rezvan

I appreciate that, Robert. I know it's still early days.

Operator

This now concludes our question-and-answer session. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.