Permian Oil Player Goes Public at Below Target Price

LandBridge, owner of 220,000 acres in the Delaware Basin, went public this week, raising $246.5 million from the sale of 14.5 million shares.

The company, according to a Bloomberg report, priced the shares below the initial range of between $19 and $22 apiece. The final price, at which the stock was sold was $17 apiece. The company’s market value on the day of the IPO was $1.2 billion.

LandBridge is backed by private equity investor Five Point Energy. A week ago, Reuters quoted the company as saying it eyed proceeds of up to $319 million from the initial public offering.

LandBridge makes money by leasing its acreage to oil and gas producers, and by marketing the commodities extracted from it. It also has one crypto mining company among its clients and is eyeing more deals in the space, as well as in power storage and solar generation.

Over the 12 months to March 2024, the company generated revenues of $102 million from its non-traditional business model, which it says makes it more resilient to oil price swings and demand trends.

Revenue from the crypto mining operations jumped 56% in the period, to account for about half of the total revenue.

Texas is the crypto mining capital of the U.S. thanks to favorable regulation and abundant energy, including from sources such as wind and solar.

However, the environment may change as ERCOT recently warned that energy consumption by crypto miners and data centers hosting AI servers is stretching its resources. Responding to this growth in energy demand would necessitate doubling the state’s grid capacity, ERCOT’s chief executive said earlier this month in a Senate testimony.

According to him, the Texas grid needs to swell from 85 GW to 150 GW in capacity over the next six years, as crypto mining operations and AI data centers come to account for over half of the additional demand coming over the period.

By Charles Kennedy for Oilprice.com

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