Energy companies in the country’s largest oil field have a plan to turn shrub-covered dirt into gold. It has nothing to do with oil—and ever...

Energy companies in the country’s largest oil field have a plan to turn shrub-covered dirt into gold. It has nothing to do with oil—and everything to do with the data-center boom.

Firms including Texas Pacific Land, LandBridge and EagleRock sit on land empires nestled in the Permian Basin, which spans West Texas and New Mexico. Their customers are oil-and-gas producers that pay for the right to build roads, drill wells and dump toxic water that is produced alongside the oil they bring to the surface.

Now, these landowners want a piece of the AI action. The companies’ ambition is to lease land to data centers and sell them everything from water to construction materials. They are betting that developers facing community pushback from Maine to Arizona will be drawn to the Permian’s abundant land, cheap energy and business friendly climate.

“A lot of places you see all over the country they’re worried about water, they’re worried about power, they’re worried about transmission, and the Permian has all of those things in spades,” said EagleRock Chief Executive Greg Pipkin Jr.

The companies’ business model has been like catnip to investors because unlike drilling for oil, which requires huge upfront investments, leasing land is capital light.

Texas Pacific’s stock is trading around 37 times its projected earnings over the next four quarters; LandBridge, about 39 times, which analysts say reflect investors’ growth expectations driven in part by data centers. Their respective stocks are up 14% and 56% so far this year. EagleRock, another firm that sits on a vast land domain, raised $320 million from an initial public offering earlier this year.
SOURCE:https://www.msn.com/en-us/money/economy/data-center-backlash-leads-to-a-new-land-rush-in-the-texas-oil-patch/ar-AA29IXQH?item=themed_featuredapps_enabled&utm_campaign=Waterline%20Newsletter&utm_medium=email&_hsenc=p2ANqtz-_YdqqKzgWf37Jj8IpgBm7j6fzbnjmfkVmCPtBQ3dcnsiqTLQM8S1WdVoPU9z6u12pr7x3FKnfYgznsPQaE7MXrEs319w&_hsmi=433847217&utm_content=433846183&utm_source=hs_email&hsCtaTracking=bafbfe68-4a33-4650-adee-009448a966cd%7Cbd6a75c4-8714-4811-ad1e-236ffb87ae41