Texas Pacific Land Corporation (TPL) Hội nghị công bố kết quả kinh doanh quý 3 năm 2026: Doanh thu và sản lượng lập kỷ lục

Những điểm nhấn chính

• Texas Pacific Land Corporation đã báo cáo quý thứ ba liên tiếp đạt mức kỷ lục về tổng doanh thu, lợi nhuận ròng và dòng tiền tự do. Doanh thu quý 3/2026 đạt 273 triệu USD, tăng 35% so với cùng kỳ năm trước và tăng 11% so với quý trước.
• EBITDA điều chỉnh tăng 37% so với cùng kỳ năm trước lên 238 triệu USD, tương ứng với biên EBITDA điều chỉnh đạt 87%. Dòng tiền tự do tăng 39% lên 170 triệu USD.
• Sản lượng dầu hưởng tiền bản quyền đạt mức kỷ lục theo quý là 17.100 thùng/ngày, trong khi tổng sản lượng lập kỷ lục ở mức 42.300 thùng dầu quy đổi mỗi ngày.
• Giá bán khí tự nhiên thực tế đã cải thiện từ 0,40 USD/nghìn foot khối trong quý 2 lên 2,40 USD trong quý 3 do công suất đường ống bổ sung tại lưu vực Permian giúp giảm bớt tình trạng nghẽn cục bộ và chênh lệch giá trong khu vực.
• Khối lượng nước đồng hành hưởng tiền bản quyền tăng 14% so với quý trước và tăng 27% so với cùng kỳ năm trước lên mức kỷ lục 5,5 triệu thùng/ngày. Khối lượng bán nước gần như đi ngang so với quý trước, đạt 672.000 thùng/ngày.
• TPL kết thúc quý với 370 triệu USD tiền mặt, không có nợ vay và hạn mức tín dụng 500 triệu USD chưa giải ngân. Sau khi kết thúc quý, công ty đã mua lại khoảng 9.700 mẫu Anh đất bề mặt và 238 mẫu Anh quyền khai thác ròng tại các hạt Midland và Glasscock.

Dữ liệu tài chính cốt lõi

Kết quả kinh doanh và hoạt động

Tiền bản quyền dầu khí

Sản lượng hưởng tiền bản quyền được hưởng lợi từ hoạt động phát triển liên tục trên quỹ đất của TPL và giá bán hàng hóa thực tế thuận lợi. Sản lượng dầu đạt 17.100 thùng/ngày, trong khi tổng sản lượng tăng lên 42.300 thùng dầu quy đổi mỗi ngày, đều là các mức kỷ lục theo quý.

TPL tiếp tục hoàn toàn không phòng ngừa rủi ro giá, giúp công ty tận dụng được mức giá dầu cao hơn do xung đột kéo dài tại Trung Đông. Ban lãnh đạo cũng viện dẫn số lượng giàn khoan ngày càng tăng tại Permian và số lượng giấy phép giếng khoan ngang mới đạt mức kỷ lục là những chỉ dấu hỗ trợ cho hoạt động trong tương lai.

Giá bán khí tự nhiên thực tế đã tăng lên 2,40 USD/nghìn foot khối từ mức 0,40 USD trong quý 2, dù giá tại Henry Hub tương đối đi ngang. Ban lãnh đạo cho rằng sự cải thiện này đến từ công suất đường ống mới giúp giảm bớt tình trạng tắc nghẽn tại Waha Hub và thu hẹp mức chênh lệch giá cơ sở.

TPL có 16,8 giếng ròng trong kế hoạch khai thác vào cuối quý, bao gồm 5,7 giếng ròng đã được cấp phép, 8,6 giếng ròng đã khoan nhưng chưa hoàn thiện và 2,5 giếng ròng đã hoàn thiện nhưng chưa đưa vào khai thác. Lượng giếng tồn kho giảm do các nhà điều hành chuyển đổi các giếng DUC và giếng đã hoàn thiện sang giai đoạn khai thác nhanh hơn tốc độ khoan mới bổ sung.

Hợp đồng thuê đất mặt, quyền sử dụng đất và vật liệu

Doanh thu từ cho thuê đất mặt, quyền sử dụng đất và vật liệu đạt tổng cộng 36 triệu USD, tăng 53% so với quý trước. Tăng trưởng này đến từ cơ sở hạ tầng khí tự nhiên, khí tự nhiên hóa lỏng, điện và tiện ích trên các diện tích đất do TPL nắm giữ.

Ban lãnh đạo cho biết vùng Tây Texas vẫn đang trong giai đoạn đầu của quá trình mở rộng cơ sở hạ tầng gắn liền với sự phát triển công nghiệp, sản xuất, điện lực và trung tâm dữ liệu.

Hoạt động kinh doanh nước

Khối lượng bán nước đạt trung bình 672.000 thùng/ngày, nhìn chung không thay đổi so với quý 2. Ban lãnh đạo cho biết hoạt động hoàn thiện giếng tăng tốc chậm, trong khi giá khí đốt khu vực suy yếu đã khiến hoạt động dịch chuyển từ lưu vực Delaware sang lưu vực Midland và từ Texas sang New Mexico.

Khối lượng nước đồng hành hưởng tiền bản quyền đạt mức kỷ lục 5,5 triệu thùng/ngày. Hoạt động hoàn thiện giếng sụt giảm cũng làm tăng lượng nước đồng hành cần xử lý tiêu hủy thay vì tái chế, qua đó hỗ trợ khối lượng nước được vận chuyển qua đất của TPL để bơm ép ngầm.

Tại cơ sở khử mặn Orla Giai đoạn 2b, công tác vận hành thử nghiệm vẫn tiếp tục với việc sử dụng nước muối mô phỏng nước đồng hành. Khu vực phục hồi đồng cỏ liền kề đã hoàn thành và TPL dự kiến sẽ bắt đầu dẫn nước đồng hành khai thác từ thực địa vào cơ sở này trước cuối năm, tùy thuộc vào tiến độ vận hành thử nghiệm.

Trung tâm dữ liệu và cơ sở hạ tầng điện

TPL cho biết các thỏa thuận thương mại cho một số dự án vẫn đang trong quá trình đàm phán, dù công tác lập kế hoạch dự án, thiết kế, thẩm định và chuẩn bị mặt bằng đã đạt tiến triển. Công ty dự kiến sẽ chi vốn đầu tư trong năm 2027 cho cơ sở hạ tầng phân phối và xử lý nước để phục vụ ban đầu cho các dự án điện và trung tâm dữ liệu.

Ban lãnh đạo ghi nhận số lượng yêu cầu đề xuất và thư hỏi mua tiếp tục ở mức cao nhưng chưa công bố thỏa thuận thương mại lớn mới nào. TPL đang định vị các hoạt động kinh doanh nước tích hợp của mình để cung cấp nước không dùng cho ăn uống, nước sinh hoạt và nước khử khoáng tiêu chuẩn cao.

Triển vọng từ ban lãnh đạo

Ban lãnh đạo kỳ vọng vài quý tới sẽ khởi sắc hơn trên khắp các mảng kinh doanh truyền thống của TPL, viện dẫn số lượng cấp phép cao hơn, số giàn khoan trong lưu vực tăng lên và lịch trình hoàn thiện giếng nước quý 4 sôi động hơn.

Công ty tin rằng hoạt động giàn khoan gia tăng cuối cùng sẽ giúp cân bằng lượng giếng DUC bị khai thác với các mũi khoan mới. Ban lãnh đạo cũng cho biết ngày càng có nhiều khả năng sản lượng dầu tại Permian sẽ lập kỷ lục mới vào năm 2027, dù đây chỉ là đánh giá hiện tại chứ không phải dự báo sản lượng chính thức.

Đối với mảng khử mặn, TPL dự kiến sẽ chuyển từ nước muối nhân tạo sang nước đồng hành từ thực địa vào cuối năm. Thời điểm và quy mô của một cơ sở thương mại sẽ phụ thuộc vào các cuộc thảo luận với những nhà điều hành thượng nguồn và các khách hàng trung tâm dữ liệu quy mô siêu lớn.

Rủi ro và các yếu tố cần theo dõi

• Các cơ quan quản lý tại Texas đã được chỉ đạo rà soát việc đấu nối lưới điện tải trọng lớn và tạm dừng cấp phép cho các trung tâm dữ liệu trong khi chờ đợt rà soát này cùng các cân nhắc bổ sung về môi trường. Ban lãnh đạo dự báo có thể xảy ra tình trạng chậm trễ cấp phép trong ngắn hạn.
• Định hướng chính sách cụ thể của thống đốc đắc cử bang Texas vẫn chưa rõ ràng. Dẫu vậy, TPL kỳ vọng cách tiếp cận chung của bang đối với việc phát triển trung tâm dữ liệu sẽ vẫn chừng mực thay vì trở thành một lệnh cấm toàn diện.
• Giấy phép khí thải, nguồn nước sẵn có, sự gắn kết cộng đồng, giao thông, tiếng ồn và giá điện hợp lý vẫn là những yếu tố quan trọng cần cân nhắc đối với các dự án trung tâm dữ liệu ở Tây Texas.
• Lượng giếng tồn kho trong ngắn hạn đã giảm do các nhà điều hành khai thác các giếng DUC và giếng đã hoàn thiện. Việc bổ sung lượng giếng này phụ thuộc vào việc tiếp tục bổ sung giàn khoan và công suất nứt vỉa thủy lực.
• Sự dịch chuyển hoạt động giữa các lưu vực Delaware và Midland, cũng như giữa Texas và New Mexico, có thể ảnh hưởng đến cơ cấu bán nước và các yêu cầu về cơ sở hạ tầng của TPL.

Điểm nhấn phiên hỏi đáp với chuyên gia phân tích

Các chuyên gia phân tích tập trung nhiều vào tác động của những thay đổi chính trị tại Texas đối với việc phát triển trung tâm dữ liệu. Ban lãnh đạo thừa nhận rằng quy trình cấp phép có thể trở nên khó khăn hơn và ảnh hưởng đến tiến độ dự án trong ngắn hạn. Tuy nhiên, ban lãnh đạo lập luận rằng vùng Tây Texas vẫn rất phù hợp cho hoạt động điện toán quy mô lớn nhờ các địa điểm xa khu dân cư, nguồn tài nguyên khí tự nhiên, nguồn nước không dùng cho ăn uống sẵn có và sự chấp thuận của cộng đồng đối với phát triển công nghiệp.

Về mảng kinh doanh cốt lõi, ban lãnh đạo chỉ ra rằng số lượng giấy phép tăng, số giàn khoan gia tăng và lịch trình hoàn thiện giếng quý 4 sôi động hơn là minh chứng cho thấy hoạt động đang cải thiện. TPL cũng đang mở rộng năng lực xử lý nước tại New Mexico và lưu vực Midland, đồng thời phát triển các phương án xử lý ngoài lưu vực và khử mặn để đón đầu lượng nước gia tăng trong tương lai tại lưu vực Delaware.

Về mảng khử mặn, ban lãnh đạo cho biết giai đoạn tiếp theo phụ thuộc vào nhu cầu thương mại từ cả các nhà điều hành thượng nguồn lẫn khách hàng quy mô siêu lớn. Các ứng dụng tiềm năng cho trung tâm dữ liệu đang được xem xét bao gồm sử dụng nước đồng hành, thu hồi nhiệt thải, quy trình làm lạnh đông và làm mát trực tiếp trên chip.

Toàn văn biên bản cuộc họp công bố kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

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.

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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.