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LandBridge Company LLC(LB) - 2024 Q4 - Annual Report
LBLandBridge Company LLC(LB)2025-03-06 00:51
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Price Volatility and Revenue Impact - The company reported a significant volatility in oil and natural gas prices, with the Henry Hub spot market price for natural gas ranging from 1.21perMMBtuto1.21 per MMBtu to 23.86 per MMBtu over the past five years, and WTI prices fluctuating between negative 36.98perbarreland36.98 per barrel and 123.64 per barrel[516]. - As of December 31, 2024, the Henry Hub spot market price of natural gas was 3.40perMMBtuandthepostedpriceforoilwas3.40 per MMBtu and the posted price for oil was 72.44 per barrel, indicating potential revenue impacts due to price fluctuations[516]. - The company does not currently intend to hedge its indirect exposure to commodity price risk, which may lead to unmitigated impacts from price volatility[517]. Customer Dependency and Revenue Concentration - For the year ended December 31, 2024, three customers accounted for 24%, 14%, and 10% of total revenues, highlighting a concentration risk in customer dependency[521]. Interest Rate Risk - The company is exposed to interest rate risk, with a weighted average interest rate of 8.39% for revolving credit borrowings and 8.47% for term loan borrowings as of December 31, 2024[61]. - The weighted average interest rate for revolving credit borrowings was 8.39%, while for term loan borrowings it was 8.47% for the twelve months ended December 31, 2024[523]. - A 1.0% increase or decrease in the weighted average interest rate would impact interest expense by 3.9millionperyear,assumingnochangeintheamountoutstanding[523].−Thecompanydoesnotcurrentlyhaveorintendtoenterintoanyderivativehedgecontractstoprotectagainstinterestratefluctuations[523].LiquidityandMarketConditions−Thecompany’sliquidityandabilitytoaccesscapitalmarketsareinfluencedbygeneralmarketconditions,includinginflation,tariffs,andpotentialeconomicrecession[53].OperationalStabilityandFutureGrowth−FuturerevenuegrowthisexpectedtobesignificantlyderivedfromWaterBridgeandDesertEnvironmental,makingtheiroperationalstabilitycritical[57].−Thecompanyacknowledgesthatitsoperatinghistoryislimited,makinginvestmentsinitsClassAshareshighlyspeculative[57].CompetitiveEnvironmentandRegulatoryRisks−Thecompanyoperatesinahighlycompetitiveenvironment,withrisksassociatedwithgeographicconcentrationinthePermianBasin[57].−Thecompanyfacesrisksrelatedtoenvironmentalregulationsandpotentiallegalchangesthatcouldrestrictdrillingandproductionactivities[58].DebtandBorrowings−AsofDecember31,2024,thecompanyhad3.9 million per year, assuming no change in the amount outstanding[523]. - The company does not currently have or intend to enter into any derivative hedge contracts to protect against interest rate fluctuations[523]. Liquidity and Market Conditions - The company’s liquidity and ability to access capital markets are influenced by general market conditions, including inflation, tariffs, and potential economic recession[53]. Operational Stability and Future Growth - Future revenue growth is expected to be significantly derived from WaterBridge and Desert Environmental, making their operational stability critical[57]. - The company acknowledges that its operating history is limited, making investments in its Class A shares highly speculative[57]. Competitive Environment and Regulatory Risks - The company operates in a highly competitive environment, with risks associated with geographic concentration in the Permian Basin[57]. - The company faces risks related to environmental regulations and potential legal changes that could restrict drilling and production activities[58]. Debt and Borrowings - As of December 31, 2024, the company had 385.0 million of outstanding borrowings, including 30.0millioninrevolvingcreditand30.0 million in revolving credit and 355.0 million in term loans[523].