EagleRock Land (NYSE: EROK) details IPO cash and major contributions
EagleRock Land, LLC filed an amended report to add detailed historical and pro forma financial information related to its recent reorganization and initial public offering. The amendment provides unaudited carve-out financial statements for DE IV Flow, LLC and Shallow Valley Ranch, along with unaudited pro forma condensed consolidated statements reflecting the DE Flow and Shallow Valley contributions, the Up-C reorganization and the Class A share offering.
For the three months ended March 31, 2026, DE IV Flow generated total revenues of $20,546,698 and net income of $11,206,394 on total assets of $75,089,163. Shallow Valley Ranch reported total revenues of $5,166 thousand and net income of $3,439 thousand on total assets of $95,115 thousand. The pro forma information also incorporates EagleRock’s offering of 17,300,000 Class A shares, the underwriters’ 2,595,000-share option and related net proceeds of $330.4 million, together with OpCo units valued at $988,583 thousand for the DE Flow contribution and $455,445 thousand for the Shallow Valley contribution.
Positive
- Raised $330.4 million in net proceeds from the Class A share offering, increasing the company’s cash resources following the reorganization.
Negative
- None.
Filing Explained
The completed reorganization leaves contributed owners with OpCo/Class B interests exchangeable for Class A shares; pro forma valuations remain preliminary.
The disclosed transaction is at the completed state: EagleRock says the reorganization closed on
DE Flow and Shallow Valley were contributed for 45,873,930 and 21,134,331 OpCo units, respectively, with corresponding Class B shares; the pro forma describes initial OpCo ownership of approximately
The pro forma valuations and purchase-price allocations are preliminary, and the filing says actual reclassification and transaction-accounting adjustments may differ and may be material. The historical DE Flow and Shallow Valley results are carve-outs that use allocated shared costs and exclude parent or contributor cash and financing, so they are not presented as historical results of standalone public-company operations.
8-K Event Classification
Key Figures
Key Terms
carve-out financial statements financial
Up-C Reorganization financial
asset retirement obligations financial
Texas Margin Tax financial
Current Expected Credit Losses financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What does EagleRock Land (EROK) disclose in this 8-K/A amendment?
How did DE IV Flow, LLC perform for the quarter ended March 31, 2026 for EROK?
What are the key Q1 2026 financial results for Shallow Valley Ranch in the EROK filing?
What were the main terms and cash impact of EagleRock Land’s IPO mentioned for EROK?
How large are the DE Flow and Shallow Valley contributions to EagleRock Land (EROK)?
What is the Up-C reorganization described for EagleRock Land (EROK)?
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class |
Trading |
Name of each exchange | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Introductory Note.
On May 19, 2026, EagleRock Land, LLC (the “Company”) filed a Current Report on Form 8-K (the “Original Report”) with the U.S. Securities and Exchange Commission (the “Commission”). The Original Report disclosed the consummation of certain restructuring transactions previously announced by the Company (the “Reorganization”), pursuant to that certain Contribution and Assignment Agreement (the “Contribution Agreement”), dated as of May 4, 2026, by and among the Company, EagleRock Land Operating, LLC (“OpCo”) and the Contributors (as defined in the Contribution Agreement), in connection with the Company’s initial public offering. The Reorganization was consummated on May 15, 2026.
This Current Report on Form 8-K/A amends the Original Report to include the financial statements required by Item 9.01(a) and the pro forma financial information required by Item 9.01(b). Except as provided herein, the disclosures made in the Original Report remain unchanged.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Businesses Acquired. |
The following historical financial statements of DE IV Flow, LLC are incorporated herein by reference:
| • | The audited combined carve-out financial statements of DE IV Flow, LLC as of and for the years ended December 31, 2025 and 2024, and the related notes thereto, incorporated by reference to pages F-86 through F-104 of the Prospectus filed pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended, with the Commission on May 14, 2026 (the “Final Prospectus”). |
| • | The unaudited interim condensed combined carve-out financial statements of DE IV Flow, LLC as of March 31, 2026 and for the three months ended March 31, 2026 and March 31, 2025, and the related notes thereto, attached as Exhibit 99.1 hereto. |
The following historical financial statements of Shallow Valley Ranch are incorporated herein by reference:
| • | The audited combined carve-out financial statements of Shallow Valley Ranch as of and for the years ended December 31, 2025 and 2024, and the related notes thereto, incorporated by reference to pages F-105 through F-119 of the Final Prospectus. |
| • | The unaudited interim condensed combined carve-out financial statements of Shallow Valley Ranch as of March 31, 2026 and for the three months ended March 31, 2026 and March 31, 2025, and the related notes thereto, attached as Exhibit 99.2 hereto. |
| (b) | Pro Forma Financial Information. |
The following unaudited pro forma financial statements of the Company are incorporated herein by reference:
| • | The unaudited pro forma condensed consolidated financial statements of the Company as of and for the year ended December 31, 2025, and the related notes thereto, incorporated by reference to pages F-7 through F-25 of the Final Prospectus. |
2
| • | The unaudited pro forma condensed consolidated financial statements of the Company as of and for the three months ended March 31, 2026, and the related notes thereto, attached as Exhibit 99.3 hereto. |
(d) Exhibits.
| Exhibit | Description | |
| 99.1 | Unaudited interim condensed combined carve-out financial statements of DE IV Flow, LLC as of March 31, 2026 and for the three months ended March 31, 2026 and March 31, 2025. | |
| 99.2 | Unaudited interim condensed combined carve-out financial statements of Shallow Valley Ranch as of March 31, 2026 and for the three months ended March 31, 2026 and March 31, 2025. | |
| 99.3 | Unaudited pro forma condensed consolidated financial statements of the Company as of and for the three months ended March 31, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 31, 2026
| EAGLEROCK LAND, LLC | ||
| By: | /s/ Greg Pipkin Jr. | |
| Name: | Greg Pipkin Jr. | |
| Title: | Chief Executive Officer | |
4
Exhibit 99.1
DE IV Flow, LLC
Unaudited Interim Condensed Combined Carve-Out Financial Statements
As of March 31, 2026, and December 31, 2025
And for the Three Months Ended March 31, 2026, and March 31, 2025
1
DE IV FLOW, LLC
INDEX TO THE UNAUDITED INTERIM CONDENSED COMBINED CARVE-OUT FINANCIAL STATEMENTS
| Page | ||||
| Condensed Combined Carve-Out Balance Sheets as of March 31, 2026, and December 31, 2025 |
3 | |||
| Condensed Combined Carve-Out Statements of Operations for the Three Month Periods Ended March 31, 2026, and March 31, 2025 |
4 | |||
| Condensed Combined Carve-Out Statements of Changes in Net Parent Investment for the Three Month Periods Ended March 31, 2026, and March 31, 2025 | 5 | |||
| Condensed Combined Carve-Out Statements of Cash Flows for the Three Month Periods Ended March 31, 2026, and March 31, 2025 |
6 | |||
| Notes to the Condensed Combined Unaudited Carve-Out Financial Statements |
7 | |||
2
DE IV Flow, LLC
Condensed Combined Carve-Out Balance Sheets
(Unaudited)
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Accounts receivable |
$ | 521,977 | $ | 1,074,368 | ||||
| Insurance receivable |
1,641,993 | 2,345,589 | ||||||
| Sourced water inventory |
1,423,687 | 716,638 | ||||||
| Other current assets |
25,000 | 25,000 | ||||||
|
|
|
|
|
|||||
| Total current assets |
3,612,657 | 4,161,595 | ||||||
| Property, plant and equipment: |
||||||||
| Land |
2,663,696 | 300,076 | ||||||
| Property, plant and equipment |
74,738,740 | 71,407,976 | ||||||
|
|
|
|
|
|||||
| Total property, plant and equipment |
77,402,436 | 71,708,052 | ||||||
| Less: Accumulated depreciation, amortization and accretion |
(5,925,930 | ) | (4,739,230 | ) | ||||
|
|
|
|
|
|||||
| Total property, plant and equipment, net |
71,476,506 | 66,968,822 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 75,089,163 | $ | 71,130,417 | ||||
|
|
|
|
|
|||||
| Liabilities and Net Parent Investment |
||||||||
| Current liabilities: |
||||||||
| Accrued liabilities |
$ | 542,952 | $ | 1,357,973 | ||||
| Accrued capital expenditures |
2,978,097 | 2,789,846 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
3,521,049 | 4,147,819 | ||||||
| Deferred tax liability |
121,101 | 124,589 | ||||||
| Asset retirement obligations |
2,617,287 | 2,443,097 | ||||||
| Commitments and contingencies (Note 8) |
||||||||
| Net parent investment |
68,829,726 | 64,414,912 | ||||||
|
|
|
|
|
|||||
| Total liabilities and net parent investment |
$ | 75,089,163 | $ | 71,130,417 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these condensed combined carve-out financial statements.
3
DE IV Flow, LLC
Condensed Combined Carve-Out Statements of Operations
(Unaudited)
| For the Three Months Ended March 31, 2026 |
For the Three Months Ended March 31, 2025 |
|||||||
| Revenues: |
||||||||
| Midstream revenues - related party |
$ | 20,272,491 | $ | 3,852,901 | ||||
| Midstream revenues - third party |
274,207 | 177,423 | ||||||
|
|
|
|
|
|||||
| Total revenues |
20,546,698 | 4,030,324 | ||||||
|
|
|
|
|
|||||
| Cost of revenues: |
||||||||
| Cost of goods sold |
7,003,841 | — | ||||||
| Direct operating expenses |
523,009 | 1,322,854 | ||||||
| Depreciation, amortization and accretion |
1,233,504 | 493,365 | ||||||
|
|
|
|
|
|||||
| Total cost of revenues |
8,760,354 | 1,816,219 | ||||||
|
|
|
|
|
|||||
| Gross profit |
11,786,344 | 2,214,105 | ||||||
| Operating Expenses: |
||||||||
| Loss on property abandonment |
494 | — | ||||||
| General and administrative |
497,758 | 74,012 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
498,252 | 74,012 | ||||||
|
|
|
|
|
|||||
| Income from operations |
11,288,092 | 2,140,093 | ||||||
| Other income (expense): |
||||||||
| Interest expense |
(85,186 | ) | (3,297 | ) | ||||
|
|
|
|
|
|||||
| Income before income taxes |
11,202,906 | 2,136,796 | ||||||
| Income tax expense (benefit) |
(3,488 | ) | 22,746 | |||||
|
|
|
|
|
|||||
| Net income |
$ | 11,206,394 | $ | 2,114,050 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these condensed combined carve-out financial statements.
4
DE IV Flow, LLC
Condensed Combined Carve-Out Statements of Changes in Net Parent Investment
(Unaudited)
| Net Parent Investment |
||||
| Balance - December 31, 2024 |
$ | 28,137,160 | ||
| Net transfers to parent |
(2,392,016 | ) | ||
| Net income |
2,114,051 | |||
|
|
|
|||
| Balance - March 31, 2025 |
$ | 27,859,195 | ||
|
|
|
|||
| Balance - December 31, 2025 |
$ | 64,414,912 | ||
| Net transfers to parent |
(6,791,580 | ) | ||
| Net income |
11,206,394 | |||
|
|
|
|||
| Balance - March 31, 2026 |
$ | 68,829,726 | ||
|
|
|
|||
The accompanying notes are an integral part of these condensed combined carve-out financial statements.
5
DE IV Flow, LLC
Condensed Combined Carve-Out Statements of Cash Flows
(Unaudited)
| For the Three Months Ended March 31, 2026 |
For the Three Months Ended March 31, 2025 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 11,206,394 | $ | 2,114,051 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation, amortization and accretion |
1,233,504 | 493,365 | ||||||
| Amortization of deferred financing costs |
5,591 | 349 | ||||||
| Deferred tax expense (benefit) |
(3,488 | ) | 22,746 | |||||
| Abandonment of properties |
494 | — | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
552,391 | 98,239 | ||||||
| Insurance receivable |
703,596 | — | ||||||
| Sourced water inventory |
(707,049 | ) | (124,728 | ) | ||||
| Accrued liabilities |
(815,021 | ) | (949,982 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
12,176,412 | 1,654,040 | ||||||
|
|
|
|
|
|||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
(5,384,832 | ) | (60,830 | ) | ||||
| Proceeds from sale of properties |
— | 798,806 | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used in) investing activities |
(5,384,832 | ) | 737,976 | |||||
|
|
|
|
|
|||||
| Cash flows from financing activities: |
||||||||
| Net transfers to parent |
(6,791,580 | ) | (2,392,016 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(6,791,580 | ) | (2,392,016 | ) | ||||
|
|
|
|
|
|||||
| Net increase (decrease) in cash |
— | — | ||||||
|
|
|
|
|
|||||
| Cash - Beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| Cash - End of period |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Supplemental cash flow information: |
||||||||
| Cash paid for interest |
$ | 74,221 | $ | 2,800 | ||||
| Non-cash transactions: |
||||||||
| Additions (reductions) to accrued property, plant and equipment |
$ | 188,251 | $ | (37,378 | ) | |||
| Asset retirement obligations incurred or acquired |
$ | 127,385 | $ | — | ||||
The accompanying notes are an integral part of these condensed combined carve-out financial statements
6
DE IV Flow, LLC
Notes to the Unaudited Condensed Combined Carve-Out Financial Statements
| 1. | ORGANIZATION AND NATURE OF BUSINESS |
Description of the Business and Formation – The accompanying condensed combined carve-out financial statements and notes present the condensed combined statements of financial position, statements of operations, and cash flows of DE IV Flow, LLC (“DE Flow” or the “Company”). DE Flow is a wholly owned subsidiary of Double Eagle IV Midco, LLC (the “Parent”), a Delaware limited liability company.
The Company consists of all the assets and operations of the midstream water business of the Parent. The Company was formed to source, recycle and transport supply water to entities engaged in the development of oil and natural gas properties and for the gathering and disposal of produced water volumes related to oil and natural gas operations in the Midland Basin of the Permian Basin in West Texas.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation – These condensed combined carve-out financial statements reflect the combined historical results of operations, financial position and cash flows of the Company for the periods presented. The Company has historically operated as a component of the Parent’s consolidated entity and not as a standalone entity. The accompanying condensed combined carve-out financial statements represent the historical operations of the Company (as that term has been defined by Rule 11-01(d) of Regulation S-X) and have been derived from the Parent’s historical accounting records. The condensed combined carve-out financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim reporting. The condensed combined carve-out financial statements of the Company reflect the assets, liabilities, revenue and expenses directly attributable to the Company, as well as allocations of certain costs deemed reasonable by management, to present the financial position, results of operations, changes in net parent investment and cash flows of the Company as a carved-out entity. The unaudited condensed combined carve-out financial statements do not include all of the disclosures required for complete annual financial statements prepared in conformity with U.S GAAP. Therefore, the accompanying unaudited condensed combined carve-out financial statements and related notes should be read in conjunction with the combined carve-out financial statements for the fiscal year ended December 31, 2025.
The financial information included herein may not necessarily reflect the condensed combined carve-out financial position, results of operations, changes in net parent investment and cash flows of the Company in the future or what they would have been had the Company been a separate, stand-alone entity during the periods presented. Further, the condensed combined carve-out financial statements may not be indicative of the Company’s future performance, financial position, or cash flows. All intracompany transactions and account balances have been eliminated in the condensed combined carve-out financials of the Company.
Carve-Out Principles – the following summarizes the carve-out principles applied in the preparing these condensed combined carve-out financial statements.
The condensed combined carve-out financial statements reflect the revenue and expenses attributable to the Company. Revenue and operating expenses that have been specifically identified as pertaining to the Company have been attributed directly without separate allocation or apportionment.
Balance sheet items have been generally attributed based on their actual use during the periods presented, that is, if assets and liabilities are primarily used by and relate to the Company, they have been attributed to the condensed combined carve-out statements of financial position. For shared assets and liabilities that remain with the Parent and are not recognized in these condensed combined carve-out financial statements, the corresponding cost of using the asset or liability has been included in the condensed combined carve-out results of operations.
The condensed combined carve-out financial statements also include the separate allocation of income, expense, assets, liabilities and cash flows which are based on management judgment, assumptions and estimates as described below. The most significant estimates, judgments and assumptions relate to long-term debt, income tax and net parent investment.
Management considers that the allocations have been made on a reasonable basis, but they are not necessarily indicative of the income and costs that would have been incurred if the Company had been a standalone entity preparing financial statements for the periods presented. All intracompany transactions have been eliminated. All transactions between the Company and the Parent have been included in these condensed combined carve-out financial statements but have not been historically settled in cash. The aggregate net effect of transactions between the Company and the Parent has been reflected in the condensed combined balance sheets as net parent investment and in the condensed combined statements of cash flows as net transfers from (to) parent.
7
Corporate Allocations - Corporate allocations include costs from centralized corporate functions associated with executive management, accounting, treasury, tax, human resources, procurement and other shared services. These costs were allocated to the Company based on direct usage when identifiable and, when not directly identifiable, on a pro-rata basis. In the condensed combined carve-out financial statements, costs have been allocated based on a ratio of revenues of the Company to the total revenues of the Parent. For the three months ended March 31, 2026, and 2025, the Company incurred approximately $0.5 million and $0.07 million, respectively, which is included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations. Management believes this methodology, including underlying assumptions regarding the allocation of general corporate expenses from the Parent, is reasonable. However, these condensed combined carve-out financial statements may not include all the actual expenses that would have been incurred had the Company operated as a standalone company during the periods presented. Actual costs that would have been incurred had the Company operated as a standalone company would depend on multiple factors. The Company may also incur additional costs associated with being a standalone Company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical condensed combined carve-out results of operations, financial position and cash flows. See Note 7 Related Party Transactions for further discussion.
Long-Term Debt - The Parent is the legal obligor of a debt instrument that is primarily used to finance oil and gas property development, including the assets of the Company. As the Parent is the legal obligor of the debt instrument and no obligation will be transferred to the Company, the Parent will retain the obligation associated with the debt instrument. Due to the historical operations of the Company benefitting from the financing provided for oil and gas property development, and because borrowings associated with the debt instrument are primarily driven by capital spend, interest expense and debt cost amortization related to this debt instrument have been allocated to the Company using a ratio of capital additions of the Company to the total capital additions of all the Parent. Management believes this methodology is reasonable; however, the allocated interest expense may not be indicative of the interest expense the carve-out entity would have incurred on a standalone basis since the carve-out entity did not operate with independent financing during the periods presented. As a result, the interest expense reflected herein may differ significantly for interest expense that would be incurred as a standalone entity.
Income Tax - The deferred tax liability and income tax expense represent Texas Franchise Taxes, all operations are under a single jurisdiction. Texas Franchise Tax was derived primarily from the net profit of the oil and gas properties. The current portion of income tax expense and payable will be retained by the Parent since the expense relates to net taxable profits derived from the retained properties and the Parent is responsible for the related payment.
Net Parent Investment - Net parent investment represents the Parents’s historical net investment in the Company resulting from various transactions with and allocations from the Parent. Balances due to and due from the Parent and accumulated earnings attributable to the Company’s operations are included in net parent investment. The Parent uses a centralized approach to cash management and financing of its operations, and as such financial transactions related to the Company are accounted for through net parent investment. Accordingly, cash and cash equivalents and debt of the Parent have not been included within these condensed combined carve-out financial statements of the Company. The cash generated by the Company’s operations and expenses paid are reflected in “Net transfers from (to) parent” in the accompanying condensed combined carve-out statements of cash flows.
Use of Estimates – The preparation of condensed combined carve-out financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed combined carve-out financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates and judgments are based on information available at the time such estimates and judgments are made which include historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Although management believes the estimates are appropriate, actual results may differ from those estimates.
The most significant estimates pertain to the assessment of recoverability of long-lived assets, the fair value of asset retirement obligations, estimates relating to midstream revenues and expenses, and estimates of expenses related to legal, environmental and other contingencies. Certain of these estimates require assumptions regarding future costs and expenses.
8
Accrued Liabilities – Accrued liabilities are comprised of the following as of March 31, 2026, and December 31, 2025:
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Accrued direct operating expenses |
$ | 122,210 | $ | 86,503 | ||||
| Accrued environmental liability |
400,000 | 1,242,090 | ||||||
| Accrued property tax |
20,742 | 29,380 | ||||||
|
|
|
|
|
|||||
| Total accrued liabilities |
$ | 542,952 | $ | 1,357,973 | ||||
|
|
|
|
|
|||||
Concentrations of Credit Risk – The Company is subject to risk resulting from the concentration of its midstream service revenues with the Parent. For the three months ended March 31, 2026, and March 31, 2025, the Parent comprised approximately 99% and 96%, respectively, of the midstream service revenues. The Company is almost entirely dependent upon the continued activity of the Parent. See Note 7 Related Party Transactions for further discussion.
Recently Issued Accounting Standards
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). Recently issued ASUs not yet effective were assessed and determined not to be applicable.
| 3. | PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment, net of accumulated depreciation, amortization and accretion consist of the following amounts:
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Pipelines |
$ | 45,460,657 | $ | 44,146,731 | ||||
| Produced water disposal wells |
12,606,856 | 11,939,238 | ||||||
| Recycled water ponds |
13,419,310 | 12,155,453 | ||||||
| Facilities |
2,725,115 | 2,656,976 | ||||||
| Water wells |
526,802 | 509,578 | ||||||
| Land |
2,663,696 | 300,076 | ||||||
|
|
|
|
|
|||||
| Total property, plant and equipment |
77,402,436 | 71,708,052 | ||||||
|
|
|
|
|
|||||
| Less: Accumulated depreciation, amortization and accretion |
(5,925,930 | ) | (4,739,230 | ) | ||||
|
|
|
|
|
|||||
| Total property, plant and equipment, net |
$ | 71,476,506 | $ | 66,968,822 | ||||
|
|
|
|
|
|||||
For the three months ended March 31, 2026, and March 31, 2025, depreciation, amortization and accretion expense was $1.2 million and $0.5 million, respectively.
| 4. | ASSET RETIREMENT OBLIGATIONS |
The following table describes the changes to the Company’s ARO obligation for the following periods:
| For the Three Months Ended March 31, 2026 |
For the Three Months Ended March 31, 2025 |
|||||||
| Asset retirement obligations, beginning of period |
$ | 2,443,097 | $ | 776,709 | ||||
| Liabilities incurred |
127,385 | — | ||||||
| Accretion expense |
46,805 | 14,881 | ||||||
|
|
|
|
|
|||||
| Asset retirement obligations, end of period |
$ | 2,617,287 | $ | 791,590 | ||||
|
|
|
|
|
|||||
9
As of March 31, 2026, and March 31, 2025, no assets were legally restricted for use in settling asset retirement obligations, and all obligations were classified as long-term in the condensed combined carve-out balance sheets as the Company does not expect to incur any of these charges within the next year.
| 5. | NET PARENT INVESTMENT |
All significant intercompany transactions between the Company and the Parent have been included in the condensed combined carve-out financial statements and are considered to be effectively settled for cash at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the condensed combined carve-out statements of cash flows as a financing activity, in the condensed combined carve-out statements of changes in net parent investment as net transfers from parent, and in the condensed combined carve-out balance sheets as a component of net parent investment.
| 6. | INCOME TAXES |
Income Taxes
The Company is not a separate legal or taxable entity for federal income tax purposes and, as a result, no provision has been made for federal income taxes. The Parent is organized as a partnership for U.S. federal income tax purposes; therefore, generally not subject to U.S. federal income taxes. Accordingly, the income or loss of the Company is included in the tax returns of the individual members of the Parent. The Company has no tax returns that are subject to examination by the Internal Revenue Service (“IRS”) or applicable state taxing authority.
Under the centralized partnership audit rules, the IRS assesses and collects underpayments of tax from the entity instead of from each member. The Company may be able to pass the adjustments through to its members by making a push-out election or, if eligible, by electing out of the centralized partnership audit rules. The collection of tax from the Company is only an administrative convenience for the IRS to collect any underpayment of income taxes including interest and penalties. Income taxes on Company income, regardless of who pays the tax or when the tax is paid, is attributed to the members. Any payment made by the Company because of an IRS examination will be treated as a distribution from the Company to the members in the condensed combined carve-out financial statements.
Texas Margin Tax
The Company’s net income is subject to the Texas Margin Tax that requires tax payments at a maximum statutory effective rate of 0.75% on the taxable margin of each taxable entity that does business in Texas. The margin tax qualifies as an income tax under Accounting Standards Codification 740, Income Taxes (“ASC 740”), which requires the Company to recognize currently the impact of this tax on the temporary differences between the book basis and the tax basis attributable to such tax. As of March 31, 2026, and 2025, the Company had temporary differences between GAAP and tax basis, creating a deferred tax liability using the asset and liability method.
For the three months ended March 31, 2026, the Company recognized a deferred tax liability in the amount of approximately $0.1 million related to the Texas Margin Tax which is included in the accompanying condensed combined carve-out balance sheets. The Company recognized income tax benefit of approximately $3,488 related to the Texas Margin Tax.
For the three months ended March 31, 2025, the Company recognized a deferred tax liability in the amount of approximately $0.06 million related to the Texas Margin Tax which is included in the accompanying condensed combined carve-out balance sheets. The Company recognized income tax expense of approximately $22,746 related to the Texas Margin Tax.
Uncertain Tax Positions
Uncertain tax positions are recognized in the condensed combined carve-out financial statements only if that position is more-likely-than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company had no uncertain tax positions as of March 31, 2026, and December 31, 2025.
10
| 7. | RELATED PARTY TRANSACTIONS |
The Company evaluated its relationships, commitments, and other agreements with its counterparties to determine the existence of related party transactions. The following transactions were determined to be between related parties, such as equity partners which own a controlling interest in the Company, certain members of management or entities affiliated therewith.
Acquisitions and Divestitures of Land
From time to time, the Company acquires and/or divests properties from/to other management members’ controlled entities.
For the three months ended March 31, 2026, the Company paid consideration to management members’ controlled entities of approximately $2.4 million for the acquisition of land. There were no amounts included in “Accounts receivable” or “Accrued liabilities” as of March 31, 2026, in the accompanying condensed combined carve-out balance sheets.
For the three months ended March 31, 2025, the Company received consideration from management members’ controlled entities of approximately $0.8 million for the sale of land. No gain or loss was recognized regarding the sale of land.
Midstream Revenues
Related party transactions include transactions with the Parent and its affiliates. The Company has entered into certain agreements that govern these transactions, the most significant of which are commercial agreements for the provision of midstream services to the Parent. The Company derives substantially all its revenue from these commercial agreements, which consist of the following amounts for the three months ended March 31, 2026, and March 31, 2025:
| For the Three Months Ended March 31, 2026 |
For the Three Months Ended March 31, 2025 |
|||||||
| Sourced water sales |
$ | 12,576,651 | $ | — | ||||
| Produced water gathering and disposal |
7,695,840 | 3,852,901 | ||||||
|
|
|
|
|
|||||
| Total |
$ | 20,272,491 | $ | 3,852,901 | ||||
|
|
|
|
|
|||||
Management Services Agreements
The Company is subject to a management services agreement with the management entity that oversees the Parent. Whereas the employees of the management entity provide all related services to the Company for the operation, maintenance and reporting of the Company. For the services provided, the Company pays actual general and administrative expenses incurred by the management entity. For the three months ended March 31, 2026, the Company incurred approximately $0.3 million related to this agreement which is included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations. For the three months ended March 31, 2025, the Company incurred approximately $0.04 million related to this agreement which is included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations.
In addition to the approved general and administrative expense amount, the management service agreement allows for certain direct costs to be billed to the Company. These costs include salaries and burdens related to dedicated operational employees employed by the management entity, and associated direct costs related to the job requirements of those employees. These amounts are directly billed to the Company based on those specific costs. For the three months ended March 31, 2026, the Company incurred approximately $0.1 million related to the costs which are included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations. For the three months ended March 31, 2025, the Company incurred approximately $0.01 million related to the costs which are included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations.
Direct Business Activities
The Company periodically utilizes direct business services from management-controlled entities. These services utilized relate to IT support, and travel. For the three months ended March 31, 2026, the Company incurred approximately $0.02 million in direct business services, which is in included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations. For the three months ended March 31, 2025, the Company incurred approximately $0.02 million in direct business services, which is in included in “General and administrative expenses” in the accompanying condensed combined carve-out statements of operations.
11
| 8. | COMMITMENTS AND CONTINGENCIES |
Litigation
From time-to-time the Company is party to certain legal, regulatory, or administrative proceedings that arise in the ordinary course and are incidental to the business. As of March 31, 2026, there are no such pending proceedings to which the Company is party to that management believes will have a material adverse effect on the Company’s results of operations, cash flows or financial condition. However, future events or circumstances, currently unknown to management, will determine whether the resolution of any litigation or claims will ultimately have a material effect on the results of operations, cash flow or financial condition in any future reporting periods.
Environmental
Environmental expenditures that relate to existing conditions caused by past operations and that have no future economic benefits are expensed. Environmental expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Liabilities for expenditures that will not qualify for capitalization are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. Such liabilities are undiscounted unless the timing of cash payments for the liability is fixed or reliably determinable. Environmental liabilities normally involve estimates that are subject to revision until settlement or remediation occurs.
Casualties and Other Risks
The Company maintains coverage from various insurance programs, which provide the Company with property damage and other coverage which are customary for the nature and scope of operations.
The Company believes it has adequate insurance coverage, although insurance will not cover every type of loss that might occur. As a result of insurance market conditions, premiums and deductibles for certain insurance policies could increase significantly, and in certain instances, insurance may become unavailable, or available at reduced coverage.
If the Company were to incur a significant loss for which it was not adequately insured, the loss could have a material impact on the results of operations, cash flow or financial condition. In addition, the proceeds of any available insurance may not be paid in a timely manner and may be insufficient if such an event were to occur. Any event that interrupts revenues, or which causes the Company to make a significant expenditure not covered by insurance, could reduce the ability to meet future financial obligations.
The Company has recorded an undiscounted environmental remediation liability of $1.6 million based on current estimates of costs to remediate a site, of which $1.2 million has been incurred and paid as of March 31, 2026. These estimates are subject to change as additional information becomes available and the ultimate cost of remediation may vary due to uncertainties in regulatory requirements, remediation technologies, and site conditions. At this time, management cannot reasonably estimate additional losses, if any, that may be incurred. The Company has insurance policies that provide coverage for certain environmental remediation costs. Expected insurance recoveries are recorded as receivables when recovery is deemed probable, based on the terms of the policies and the Company’s experience with its insurers. As of March 31, 2026, insurance receivables of $1.6 million were recorded in “Insurance receivable” in the accompanying condensed combined carve-out balance sheets.
12
Commitments
Minimum Commitments
The Company entered into a fresh water supply agreement (“WSA”) with a third-party during the year ended December 31, 2025. The WSA contains minimum payment obligations over the two-year term of the WSA. For the three months ended March 31, 2026, the Company purchased approximately $0.9 million in fresh water from the third-party under the WSA. As of March 31, 2026, total minimum commitments from purchase obligations not qualifying as leases were as follows:
| Total Minimum Commitments |
||||
| 2026 |
$ | 802,083 | ||
| 2027 |
666,667 | |||
| 2028 |
— | |||
| 2029 |
— | |||
| 2030 |
— | |||
| Thereafter |
— | |||
|
|
|
|||
| Total minimum commitments |
$ | 1,468,750 | ||
|
|
|
|||
| 9. | SUBSEQUENT EVENTS |
On May 4, 2026, EagleRock Land, LLC, EagleRock Land Operating, LLC and certain contributing entities, including the Company (the “Contributors”) entered into a Contribution and Assignment Agreement that sets forth the terms of the corporate reorganization to be effected in connection with, and contingent upon, the closing of EagleRock’s proposed initial public offering (the “Offering”).
On May 14, 2026, EagleRock completed its initial public offering of 17,300,000 Class A shares representing limited liability company interest (“Class A shares”) at a price to the public of $18.50 per share. In addition, EagleRock granted the underwriters a 30-day option to purchase up to an additional 2,595,000 Class A shares at the public offering price, less underwriting discounts and commissions. The Offering, including the underwriters’ option, closed on May 15, 2026.
Concurrent with the completing of the Offering, all interests in the Company were contributed to EagleRock Land Operating, LLC (“EagleRock Operating” or “OpCo”) in exchange for 45,873,930 membership interests in OpCo (“OpCo Units”) and a corresponding number of limited liability company interest (“Class B shares”).
The Company has evaluated subsequent events through June 4, 2026, the date the condensed combined carve-out financial statements were available to be issued, and determined that there were no additional events that would materially affect the condensed combined carve-out financial statements.
13
Exhibit 99.2
Shallow Valley Ranch
Unaudited Combined Carve-Out Financial Statements
For the Three Months Ended March 31, 2026 and 2025
1
Shallow Valley Ranch
Table of Contents
| Page | ||||
| Unaudited Combined Carve-Out Financial Statements: |
||||
| Unaudited Combined Carve-Out Balance Sheets |
3 | |||
| Unaudited Combined Carve-Out Statements of Income |
4 | |||
| Unaudited Combined Carve-Out Statements of Changes in Net Investment |
5 | |||
| Unaudited Combined Carve-Out Statements of Cash Flows |
6 | |||
| Notes to the Unaudited Combined Carve-Out Financial Statements |
7 | |||
2
Shallow Valley Ranch
Unaudited Combined Carve-Out Balance Sheets
(amounts in thousands)
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Accounts receivable, net |
$ | 2,310 | $ | 2,403 | ||||
|
|
|
|
|
|||||
| Total current assets |
2,310 | 2,403 | ||||||
|
|
|
|
|
|||||
| Property, plant and equipment, net of accumulated depreciation |
28,909 | 28,434 | ||||||
| Land |
63,896 | 63,896 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 95,115 | $ | 94,733 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND NET INVESTMENT |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ | 169 | $ | 214 | ||||
| Deferred revenue |
144 | 206 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
313 | 420 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies (Note 5) |
||||||||
| NET INVESTMENT |
94,802 | 94,313 | ||||||
|
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|
|
|
|||||
| TOTAL LIABILITIES AND NET INVESTMENT |
$ | 95,115 | $ | 94,733 | ||||
|
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|
|
|||||
The accompanying notes are an integral part of these unaudited combined carve-out financial statements.
3
Shallow Valley Ranch
Unaudited Combined Carve-Out Statements of Income
(amounts in thousands)
| Three Months Ended March 31, 2026 |
Three Months Ended March 31, 2025 |
|||||||
| REVENUES |
||||||||
| Water sales |
$ | 4,258 | $ | 2,342 | ||||
| Easement and surface damages |
827 | 2,262 | ||||||
| Other |
81 | 135 | ||||||
|
|
|
|
|
|||||
| Total revenues |
5,166 | 4,739 | ||||||
| COSTS AND EXPENSES |
||||||||
| Cost of sales (exclusive of depreciation) |
741 | 1,308 | ||||||
| Depreciation expense |
769 | 584 | ||||||
| General and administrative expense |
217 | 56 | ||||||
| Gain on sale of property, plant and equipment |
— | (1,965 | ) | |||||
|
|
|
|
|
|||||
| Total operating expenses (income) |
1,727 | (17 | ) | |||||
|
|
|
|
|
|||||
| INCOME FROM OPERATIONS |
3,439 | 4,756 | ||||||
|
|
|
|
|
|||||
| NET INCOME |
$ | 3,439 | $ | 4,756 | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these unaudited combined carve-out financial statements.
4
Shallow Valley Ranch
Unaudited Combined Carve-Out Statement of Changes in Net Investment
(amounts in thousands)
| BALANCE – JANUARY 1, 2025 |
$ | 67,100 | ||
| Net change in investment |
(5,249 | ) | ||
| Net income |
4,756 | |||
|
|
|
|||
| BALANCE – MARCH 31, 2025 |
$ | 66,607 | ||
|
|
|
| BALANCE – JANUARY 1, 2026 |
$ | 94,313 | ||
| Net change in investment |
(2,950 | ) | ||
| Net income |
3,439 | |||
|
|
|
|||
| BALANCE – MARCH 31, 2026 |
$ | 94,802 | ||
|
|
|
The accompanying notes are an integral part of these unaudited combined carve-out financial statements.
5
Shallow Valley Ranch
Unaudited Combined Carve-Out Statements of Cash Flows
(amounts in thousands)
| Three Months Ended March 31, 2026 |
Three Months Ended March 31, 2025 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 3,439 | $ | 4,756 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
769 | 584 | ||||||
| Gain on sale of property, plant and equipment |
— | (1,965 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
93 | 123 | ||||||
| Accounts payable and accrued liabilities |
(45 | ) | 218 | |||||
| Deferred revenue |
(62 | ) | (56 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by operating activities |
4,194 | 3,660 | ||||||
|
|
|
|
|
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Proceeds from the sale of land |
— | 2,000 | ||||||
| Additions to property, plant and equipment |
(1,244 | ) | (376 | ) | ||||
| Additions to land |
— | (35 | ) | |||||
|
|
|
|
|
|||||
| Net cash provided by (used in) investing activities |
(1,244 | ) | 1,589 | |||||
|
|
|
|
|
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Change in net investment |
(2,950 | ) | (5,249 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities |
(2,950 | ) | (5,249 | ) | ||||
|
|
|
|
|
|||||
| Net change in cash |
— | — | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period |
— | — | ||||||
|
|
|
|
|
|||||
| CASH AND CASH EQUIVALENTS, end of period |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these unaudited combined carve-out financial statements.
6
Shallow Valley Ranch
Notes to Unaudited Combined Carve-Out Financial Statements
Note 1. Organization and Basis of Presentation
Description of the Company
The accompanying combined carve-out financial statements include the assets, liabilities, revenues and expenses of Shallow Valley Ranch, which consists of certain tracts or parcels of land located in Upton, Reagan, Glasscock, Midland, Martin and Howard Counties in Texas (“Land”) along with assets located on the Land (collectively, the “Shallow Valley Ranch” or the “Company”). Such Land is owned separately by Abyss, Inc, Cactus Energy, Inc, Owl Exploration, LLC, Shallow Valley Land, LLC (“SV Land”), and by Mark T. Dehlinger, (hereinafter, collectively referred to as the “Contributors”) was contributed to EagleRock Land, LLC (“EagleRock”) in connection with its initial public offering (“the Offering”). As described further in Note 7, the Contributors completed the contribution of their interests to EagleRock Land Operating, LLC (“EagleRock Operating”) in connection with the Offering which closed on May 15, 2026.
Shallow Valley Ranch includes certain ranch equipment, ranch permits, service contracts, buildings, water pipelines, structures and surface agreements associated with and located on the Land.
Basis of Presentation of Financial Statements
The accompanying combined carve-out financial statements were prepared on a carve-out basis and were derived from the financial statements and accounting records of the Contributors as the Shallow Valley Ranch does not constitute substantially all of the Contributors’ assets, liabilities, revenues or expenses. The combined carve-out financial statements were prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany balances and transactions have been eliminated. The historical costs and expenses reflected in the combined carve-out financial statements of the Shallow Valley Ranch include an allocation for certain shared general operating expenses such as repairs & maintenance, salaries, payroll taxes and other miscellaneous general and administrative. These expenses have been allocated to the combined carve-out financial statements of the Shallow Valley Ranch pro-rata based upon revenues, which is considered to be a reasonable reflection of the historical utilization levels of these expenses.
The Shallow Valley Ranch is dependent upon the Contributors for all of its working capital. These combined carve-out financial statements do not include any of the Contributors’ cash and cash equivalents as such amounts are not allocable to the Shallow Valley Ranch. Net investment represents the Contributors’ interest in the recorded net assets of the Shallow Valley Ranch. All significant transactions between the Shallow Valley Ranch and the Contributors have been included in the accompanying combined carve-out financial statements. Transactions with the Contributors are reflected in the accompanying Combined Carve-Out Statement of Changes in Net Investments as “change in net investment” and in the accompanying Combined Carve-Out Balance Sheets within “net investment”.
In the opinion of management, the accompanying combined carve-out financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the assets, liabilities, and net investment of the Shallow Valley Ranch as of March 31, 2026 and December 31, 2025, and the reported amounts of revenues and expenses for the three months ended March 31, 2026 and 2025 of the Shallow Valley Ranch.
Subsequent events have been evaluated through the issuance date of these financial statements. Any material subsequent events that occurred prior to such a date have been properly recognized or disclosed in the accompanying combined carve-out financial statements.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of the combined carve-out financial statements requires management to make estimates and assumptions to determine the reported amounts of assets, liabilities, revenue and expenses, and in the disclosure of commitments and contingencies. Although management believes these estimates are reasonable, actual results could differ from these estimates.
7
Accounts Receivable
The Shallow Valley Ranch has accounts receivable representing amounts due from various counterparties for water sales and easement payments, which are generally unsecured. The Shallow Valley Ranch monitors credit loss exposure primarily by reviewing credit ratings, financial statements and payment history. Credit terms are extended based on an evaluation of each counterparty’s creditworthiness, and collateral is not typically required. Accounts receivable as of January 1, 2025 was $2.7 million.
Shallow Valley Ranch applies the Current Expected Credit Losses model to estimate expected credit losses on accounts receivable. The allowance for credit losses is based on historical loss experience, current economic conditions and reasonable and supportable forecasts. As of March 31, 2026 and December 31, 2025, Shallow Valley Ranch determined that expected credit losses were immaterial and recorded no allowance for credit losses. This conclusion considered factors such as the absence of historical credit losses, the short-term nature of receivables, current economic conditions and the counterparties’ ability to pay.
Property, Plant and Equipment
The properties associated with the Shallow Valley Ranch are stated at cost and are depreciated using the straight-line method over their estimated useful lives, which is estimated as 15 years. Gains and losses on asset sales are reflected in the year of disposal. Repair and maintenance costs associated with property, plant and equipment are expensed as incurred if the costs do not extend the useful life of the asset. If such costs extend the useful life of the asset, the costs are capitalized and depreciated over the appropriate remaining useful life.
Property, plant and equipment are subject to impairment assessments should there be events or changes in circumstances indicating that the carrying amount may not be recoverable. Impairment losses, if any, are recognized in the combined carve-out statement of income in the period in which it occurs. For the three months ended March 31, 2026 and 2025, there were no indicators of impairment present for the property, plant and equipment associated with the Shallow Valley Ranch. Please see “Note 3 – Plant, Property, and Equipment” for further discussion.
Land
Land assets are stated at cost less accumulated impairment, if any. Capitalized costs include the purchase price, professional fees and any directly attributable costs to acquire and bring the land to its intended use. Land assets are not subject to depreciation, as they are considered to have an indefinite useful life. However, the land assets are subject to impairment assessments should there be events or changes in circumstances indicating that the carrying amount may not be recoverable. Impairment losses, if any, are recognized in the combined carve-out statement of income in the period in which it occurs. As of March 31, 2026 and December 31, 2025, there were no indicators of impairment present for land assets associated with the Shallow Valley Ranch.
Revenue Recognition
Revenues from easements and surface damages, surface use royalties, water sales and resource sales are recognized in the period that the related performance obligations are satisfied. Performance obligations are satisfied when (i) the customer obtains right to use the Land or receive the water or resource; (ii) the customer obtains control of the product; (iii) there are no further obligations to perform related to the revenue; (iv) the transaction price has been determined; and (v) collectability is reasonably assured.
Revenues from easements and surface damages primarily arise from agreements with external customers for the use of the Land. The performance obligation associated with easements and surface damages are identified at the inception of each surface use contract. These obligations typically involve granting access or usage rights to the Land for a specified period of time. The transaction price for these performance obligations is determined based on the consideration expected to be received in exchange for granting access or usage rights. This consideration may include upfront payments, periodic payment based on construction milestones or other forms of consideration stipulated in the contracts. Revenue recognition occurs as the access or usage rights are provided to the external parties and payment can be reasonably measured.
8
Revenues from the sale of resources such as caliche or sand are recognized when control of the product is transferred to the customer and collectability is reasonably assured. The performance obligations associated with caliche and sand sales revenues are identified at the inception of the contract. These obligations involve the delivery of the resources to the customer in accordance with the terms of the resource sale agreement. The consideration received for these obligations is usually a fixed price per unit of resource measurement sold. Revenues for caliche and sand sales are recognized at a point in time when control of the products is transferred to the customer. Control of the product is transferred upon receipt of the resources into the customers’ loading vehicles, at which point the customer obtains the ability to direct the use and obtain the benefits from the resources obtained.
Revenues from water sales and surface use royalties primarily involve providing oil and natural gas producers access to saltwater disposal wells and freshwater resources for oil and natural gas production activities in exchange for royalty payments based on volumes disposed onto these saltwater disposal wells or other agreed-upon terms. The performance obligations associated with freshwater production are identified at the inception of the contract. Revenues from freshwater production royalty payments are recognized over time as each delivery of contract-specified freshwater production volume measurement occurs and the collectability for royalty payments is reasonably assured. The performance obligations associated with the royalty revenue occurs through daily acceptance of saltwater at the disposal facility and revenues are recorded based upon actual volumes disposed per contractually agreed-upon per barrel rate as royalty payments.
Deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes prepayments received for unfulfilled performance obligations that will be recognized on a straight-line basis over the remaining term. Deferred revenue as of March 31, 2026 and December 31, 2025 was $0.1 million and $0.2 million, respectively. During the three months ended March 31, 2026 and 2025, the Company recognized revenues of less than $0.1 million related to deferred revenue.
Income Taxes
The Contributors, excluding Mark T. Dehlinger, are not taxpaying entities for purposes of federal and state income taxes. Mark T. Dehlinger is a taxpayer for federal and state income tax purposes; however, the amount of federal and state income taxes associated with the net revenues of Mark T. Dehlinger are not significant. Accordingly, for purposes of these combined carve-out financial statements, no taxes associated with the Shallow Valley Ranch have been recorded in the combined carve-out financial statements.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Liabilities for environmental remediation or restoration claims resulting from allegations of improper operation of assets are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Shallow Valley Ranch enters into commitment contracts with customers providing access to certain assets, including frac pits and water supply. These contracts were not significant as of March 31, 2026, and as of December 31, 2025.
Fair Value Measurements
Shallow Valley Ranch measures certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified according to a hierarchy that prioritizes the inputs underlying the valuation techniques. This hierarchy consists of three broad levels:
| • | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| • | Level 2: Observable inputs other than quoted prices, such as prices for similar assets or liabilities. |
| • | Level 3: Unobservable inputs reflecting Shallow Valley Ranch’s own assumptions. |
9
As of March 31, 2026, and December 31, 2025, the Shallow Valley Ranch did not have any assets or liabilities measured at fair value on a recurring basis. Nonrecurring fair value measurements may occur for long-lived assets when impairment indicators are present. No impairments were recorded during the period.
Note 3. Property, Plant and Equipment
The following table reflects the aggregate capitalized costs of Shallow Valley Ranch (in thousands):
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Property, plant and equipment: |
||||||||
| Water wells |
$ | 10,176 | $ | 10,118 | ||||
| Frac pit |
7,547 | 7,547 | ||||||
| Buried poly |
5,928 | 5,928 | ||||||
| Buildings |
1,588 | 1,588 | ||||||
| Road bores |
308 | 308 | ||||||
| Water transfer system |
14,121 | 12,935 | ||||||
| Fences |
1,193 | 1,193 | ||||||
|
|
|
|
|
|||||
| Total property, plant and equipment |
40,861 | 39,617 | ||||||
| Less: Accumulated depreciation |
(11,952 | ) | (11,183 | ) | ||||
|
|
|
|
|
|||||
| Property, plant and equipment, net |
$ | 28,909 | $ | 28,434 | ||||
|
|
|
|
|
|||||
Note 4. Supplemental Disclosures to Combined Carve-Out Financial Statements
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following at the dates indicated (in thousands):
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Accrued cost of sales |
$ | 124 | $ | 203 | ||||
| Accrued general and administrative expense |
46 | 11 | ||||||
|
|
|
|
|
|||||
| Accounts payable and accrued liabilities |
$ | 169 | $ | 214 | ||||
|
|
|
|
|
|||||
Accounts Receivable, Net
Components of accounts receivable, net include the following (in thousands):
| As of March 31, 2026 |
As of December 31, 2025 |
|||||||
| Accrued water sales |
$ | 2,281 | $ | 2,402 | ||||
| Accrued easement and surface damages |
29 | 1 | ||||||
| Gross accounts receivable |
2,310 | 2,403 | ||||||
| Allowance for credit losses |
— | — | ||||||
|
|
|
|
|
|||||
| Accounts receivable, net |
$ | 2,310 | $ | 2,403 | ||||
|
|
|
|
|
|||||
Note 5. Commitments and Contingencies
Environmental Remediation
Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the Shallow Valley Ranch. It is not anticipated that the Shallow Valley Ranch will be required to expend significant amounts for compliance with such federal, state and local laws and regulations and therefore no amounts have been accrued for such purposes.
10
Litigation
From time to time, the Shallow Valley Ranch can be involved in various legal proceedings including, but not limited to, commercial disputes, property damage claims, personal injury claims, regulatory compliance matters, disputes with tax authorities and other matters. While the outcome of these legal matters cannot be predicted with certainty, management is not aware of any claims or legal proceedings that it expects to have a material effect on the financial condition, results of operations or cash flows of the Shallow Valley Ranch.
Commitments
Shallow Valley Ranch has periodically entered into certain contracts that provide guaranteed access to specified assets and resources. In 2018, the Company entered into an agreement with a third-party to provide use of a frac pit for 20 years. Additionally, in 2023, the Company entered into an agreement with a third-party to be the exclusive provider of water for its frac sand mining facility. These contracts were not significant as of March 31, 2026, and as of December 31, 2025.
Note 6. Related Party Transactions
The Shallow Valley Ranch had transactions with entities under common ownership and control during the three months ended March 31, 2026 and 2025. These transactions primarily relate to the provision of goods and services necessary for its operations, as summarized below.
Nature of Transactions:
SV Land has a management services agreement (the “Management Agreement”) with certain immediate family members (the “Related Parties”).
Pursuant to the Management Agreement, the Related Parties provide various operational services to SV Land, including maintaining, expanding, marketing and overseeing the freshwater system, overseeing all third-party activity on the Land, installing and maintaining the improvements of SV Land, negotiating easements, rights-of-way and all related agreements along with various other services. In consideration for these services, SV Land pays a management fee equal to 10.0% of its gross revenues.
Amounts Recorded in the Financial Statements:
Costs associated with the Management Agreement totaled $0.1 million for the three months ended March 31, 2026 and 2025, and are included in “Cost of sales (exclusive of depreciation)” in the combined carve-out statement of income.
Terms and Conditions:
Transactions with related parties were conducted on terms that management believes approximate those prevailing in arm’s-length transactions; however, because of the related-party nature of such transactions, the terms may differ from those that would have been negotiated with unrelated third parties.
Management believes these transactions were necessary for SV Land and were settled in the normal course of business. All intercompany transactions between Shallow Valley Ranch and the Contributors, other than those described above, have been reflected in “Net Investment” in the accompanying Combined Carve-Out Statement of Changes in Net Investment.
Note 7. Subsequent Events
In preparing the accompanying financial statements of the Shallow Valley Ranch, management has evaluated all subsequent events and transactions for potential recognition or disclosure through July 24, 2026, the date the combined carve-out financial statements were available for issuance and concluded that no such material events have occurred, other than described below.
11
Initial Public Offering: On May 4, 2026, EagleRock, EagleRock Operating and certain contributing entities, including the Company (the “EROK Contributors”) entered into a Contribution and Assignment Agreement that sets forth the terms of the corporate reorganization to be effected in connection with, and contingent upon, the closing of the Offering.
On May 15, 2026, EagleRock completed its initial public offering of 17,300,000 Class A shares representing limited liability company interest (“Class A shares”) at a price to the public of $18.50 per share. In addition, EagleRock granted the underwriters a 30-day option to purchase up to an additional 2,595,000 Class A shares at the public offering price, less underwriting discounts and commissions. The Offering closed on May 15, 2026 and the underwriters exercised their option on May 16, 2026. Concurrent with the completion of the Offering, all interests in the Company were contributed in exchange for 21,134,331 membership interests in EagleRock Operating (“OpCo Units”) and cash was contributed to EagleRock for a corresponding number of limited liability company interest (“Class B shares”). The remaining EROK Contributors, Lea & Eddy Holdings, LLC excluding Hydrosource Logistics, LLC (“L&E”) and Double Eagle IV Midco (“Double Eagle”) contributed all interests to EagleRock Operating in exchange for OpCo Units (and a corresponding number of Class B shares).
12
Exhibit 99.3
EagleRock Land, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Introduction
EagleRock Land, LLC (the “Company”, or “EagleRock”) is a Texas limited liability company formed by Lea & Eddy Holdings, LLC (“Predecessor”, or “Lea & Eddy”) on December 1, 2025 to engage in the acquisition and management of surface acreage in the Delaware and Midland sub-basins within the Permian Basin. The following unaudited pro forma condensed consolidated financial statements of the Company reflect the historical results of the Predecessor, on a pro forma basis to give effect to the following transactions, which are defined and described in further detail below, as if they had occurred on March 31, 2026 for purposes of the unaudited pro forma balance sheet, and on January 1, 2025 for purposes of the unaudited pro forma statement of operations:
| • | the Accelerated Acquisition; |
| • | the exclusion of certain assets and liabilities of Predecessor that were not conveyed to the Company (the “Excluded Assets”); |
| • | the Shallow Valley Contribution; |
| • | the DE Flow Contribution; |
| • | the Up-C Reorganization; and |
| • | the initial public offering of Class A shares of the Company and the use of net proceeds therefrom as described in “Use of Proceeds” (the “Offering”). |
The Accelerated Acquisition. On April 14, 2025, Predecessor acquired 100% of the membership interests in Accelerated Water Resources, LLC (the “Accelerated Acquisition”) for a total purchase price of $191.7 million. Predecessor acquired approximately 72,000 surface acres and water infrastructure as part of the Accelerated Acquisition. In connection with the Accelerated Acquisition, Predecessor raised $204.0 million in financing. Predecessor accounted for the Accelerated Acquisition under the acquisition method of accounting
The Shallow Valley Contribution. In connection with the Offering, the Shallow Valley Contribution occurred pursuant to which the existing owners of Shallow Valley Ranch (“Shallow Valley Owners”) contributed Shallow Valley Ranch, including approximately 41,000 surface acres and associated assets, to EagleRock in exchange for OpCo Units representing an initial approximate 19.3% ownership interest in OpCo (“the Shallow Valley Contribution”), prior to the dilutive effect of any other transactions. The Shallow Valley Contribution was accounted for under the acquisition method of accounting.
The DE Flow Contribution. In connection with the Offering, the DE Flow Contribution occurred pursuant to which Double Eagle IV Midco, LLC (“Double Eagle”) contributed DE IV Flow, LLC (“DE Flow”), including certain water infrastructure assets, to EagleRock in exchange for OpCo Units representing an initial approximate 41.8% ownership interest in OpCo (“the DE Flow Contribution”), prior to the dilutive effect of any other transactions. The DE Flow Contribution was accounted for under the acquisition method of accounting. In conjunction with the DE Flow Contribution, DE Flow entered into a Water System Management Agreement (the “DE Flow WSMA”) with DEF Operating.
The Up-C Reorganization. In connection with the Offering, each of Lea & Eddy, the Shallow Valley Owners, and Double Eagle contributed cash to the Company in exchange for Class B shares. Additionally, the Company and Eagle Rock Land Operating, LLC (“OpCo”) amended their operating agreements to facilitate the Offering (the “Up-C Reorganization”).
The Offering. For the purposes of the unaudited pro forma condensed consolidated financial statements, the Offering is defined as the issuance and sale to the public of 17,300,000 Class A shares of the Company, as well as the exercise of the option granted to the underwriters to purchase an additional 2,595,000 Class A shares and the application by the Company of the net proceeds from such issuance. The net proceeds from the sale of Class A shares were $330.4 million, net of underwriting discounts and commissions of $25.8 million and other offering-related expenses payable by the Company, which were approximately $11.9 million based on the initial offering price (excluding costs paid as of March 31, 2026).
1
The unaudited pro forma condensed consolidated balance sheet of the Company is based on the unaudited historical consolidated balance sheet of the Predecessor as of March 31, 2026 and includes pro forma adjustments to give effect to the DE Flow Contribution, the Shallow Valley Contribution, the Up-C Reorganization and Offering as if they had occurred on March 31, 2026. There are no pro forma adjustments to give effect to the Accelerated Acquisition since the results of the Accelerated Acquisition are included in the Predecessor historical consolidated balance sheet as of March 31, 2026.
The unaudited pro forma condensed consolidated statement of operations of the Company is based on the audited historical consolidated statement of operations of the Predecessor for the year ended December 31, 2025 and the unaudited historical consolidated statement of operations of the Predecessor for the three months ended March 31, 2026 and includes pro forma adjustments to give effect to the Accelerated Acquisition, the DE Flow Contribution, the Shallow Valley Contribution, Up-C Reorganization and the Offering as if they had occurred on January 1, 2025.
The unaudited pro forma condensed consolidated financial statements have been prepared on the basis that the Company has elected to be taxed as a corporation under the Internal Revenue Code of 1986. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the notes thereto and with the audited historical consolidated financial statements and related notes of the Predecessor and with the unaudited interim historical consolidated financial statements and related notes of the Predecessor, as well as the other audited historical financial statements of Accelerated, DE Flow and Shallow Valley and the unaudited interim historical financial statements of Accelerated, DE Flow and Shallow Valley.
The pro forma data presented reflect events directly attributable to the described transactions and certain assumptions that the Company believes are reasonable. The pro forma data are not necessarily indicative of financial results that would have been attained had the described transactions occurred on the dates indicated below or which could be achieved in the future because they necessarily exclude various operating expenses, such as incremental general and administrative expenses associated with being a public company. The adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual adjustments may differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma financial statements.
Accounting for the Contributions
The purchase price allocation and related adjustments reflected in this unaudited pro forma condensed consolidated financial information are preliminary and subject to revision based on final allocation of the fair value of the net assets after the date of the Final Prospectus. See Note 1: Basis of Presentation for more information.
The contributions are subject to reclassification and transaction accounting adjustments that have not been finalized. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purposes of providing unaudited pro forma condensed combined financial information in accordance with SEC rules including Article 11 of Regulation S-X. Differences between these preliminary estimates and the final reclassification and transaction accounting adjustments may be material.
2
EagleRock Land, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
as of March 31, 2026
| Historical Lea & Eddy Holdings, LLC |
Excluded Assets |
Transaction Accounting Adjustments |
Formation Related Adjustments |
Pro Forma | Up-C Reorganization and Offering |
Pro Forma, as adjusted |
||||||||||||||||||||||
| (a) | (c) | |||||||||||||||||||||||||||
| (in thousands, except unit counts) | ||||||||||||||||||||||||||||
| ASSETS |
||||||||||||||||||||||||||||
| Current assets: |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 4,118 | $ | (4,118 | ) | $ | — | $ | — | $ | — | $ | 57,736 | (d) | $ | 57,736 | ||||||||||||
| Accounts receivable, net |
14,934 | (3,758 | ) | — | — | 11,176 | — | 11,176 | ||||||||||||||||||||
| Accounts receivable—related party |
— | — | — | — | — | — | ||||||||||||||||||||||
| Inventory |
308 | — | — | — | 308 | — | 308 | |||||||||||||||||||||
| Prepaid expenses and other current assets |
8,499 | (8,214 | ) | — | — | 285 | (58 | ) (e)(f)(j) | 227 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current assets |
27,859 | (16,090 | ) | — | — | 11,769 | 57,678 | 69,447 | ||||||||||||||||||||
| Non-current assets: |
||||||||||||||||||||||||||||
| Property, plant and equipment, net |
55,105 | (843 | ) | — | 324,547 | 378,809 | — | 378,809 | ||||||||||||||||||||
| Right-of-use asset, net |
1,636 | (1,394 | ) | — | — | 242 | — | 242 | ||||||||||||||||||||
| Intangible assets, net |
187,806 | — | — | 585,003 | 772,809 | — | 772,809 | |||||||||||||||||||||
| Net investment in sales-type lease |
3,225 | — | — | — | 3,225 | — | 3,225 | |||||||||||||||||||||
| Goodwill |
— | — | — | 552,590 | 552,590 | — | 552,590 | |||||||||||||||||||||
| Deferred offering costs |
4,878 | — | — | — | 4,878 | (4,860 | ) (e) | 18 | ||||||||||||||||||||
| Other noncurrent assets |
1,149 | (287 | ) | — | — | 862 | 3,441 | (j) | 4,303 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total non-current assets |
253,799 | (2,524 | ) | — | 1,462,140 | 1,713,415 | (1,419 | ) | 1,711,996 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total assets |
$ | 281,658 | $ | (18,614 | ) | $ | — | $ | 1,462,140 | $ | 1,725,184 | $ | 56,259 | $ | 1,781,443 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| LIABILITIES AND MEMBERS’ DEFICIT |
||||||||||||||||||||||||||||
| Current liabilities: |
||||||||||||||||||||||||||||
| Accounts payable |
$ | 6,161 | $ | (1,142 | ) | $ | — | $ | — | $ | 5,019 | $ | (3,047 | ) (e) | $ | 1,972 | ||||||||||||
| Accounts payable—related party |
1,780 | (1,670 | ) | — | 15,494 | 15,604 | — | 15,604 | ||||||||||||||||||||
| Accrued liabilities |
3,293 | (2,306 | ) | — | — | 987 | — | 987 | ||||||||||||||||||||
| Current income taxes payable |
149 | — | — | — | 149 | — | 149 | |||||||||||||||||||||
| Current deferred revenue |
169 | — | — | — | 169 | — | 169 | |||||||||||||||||||||
| Current operating lease liability |
608 | (513 | ) | — | — | 95 | — | 95 | ||||||||||||||||||||
| Current debt—related party |
6,900 | — | — | — | 6,900 | (6,900 | ) (f) | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total current liabilities |
19,060 | (5,631 | ) | — | 15,494 | 28,923 | (9,947 | ) | 18,976 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Noncurrent liabilities |
||||||||||||||||||||||||||||
| Operating lease liability, less current portion |
994 | (884 | ) | — | — | 110 | 110 | |||||||||||||||||||||
| Deferred tax liability, net |
10,835 | — | — | — | 10,835 | (10,835 | ) (i) | — | ||||||||||||||||||||
| Deferred revenue, less current portion |
99 | — | — | — | 99 | — | 99 | |||||||||||||||||||||
| Long-term debt—related party, less current portion |
289,022 | — | — | — | 289,022 | (289,022 | ) (f) | — | ||||||||||||||||||||
| Asset retirement obligations |
— | — | — | 2,617 | 2,617 | — | 2,617 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total noncurrent liabilities |
300,950 | (884 | ) | — | 2,617 | 302,683 | (299,857 | ) | 2,826 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Commitments and Contingencies |
— | — | ||||||||||||||||||||||||||
| Equity |
||||||||||||||||||||||||||||
| Common units (2,095 units authorized, 1,195 units outstanding as of December 31, 2025) |
14,016 | — | (14,016 | ) (b) | — | — | — | — | ||||||||||||||||||||
| Additional paid in capital—members’ interests |
(1 | ) | — | 1 | (b) | — | — | — | — | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
3
| Historical Lea & Eddy Holdings, LLC |
Excluded Assets |
Transaction Accounting Adjustments |
Formation Related Adjustments |
Pro Forma | Up-C Reorganization and Offering |
Pro Forma, as adjusted |
||||||||||||||||||||||
| (a) | (c) | |||||||||||||||||||||||||||
| (in thousands, except unit counts) | ||||||||||||||||||||||||||||
| Additional paid in capital—warrants—related party |
18,416 | — | (18,416 | ) (b) | — | — | — | |||||||||||||||||||||
| Additional paid-in capital |
— | — | 32,431 | (b) | 1,444,029 | 1,476,460 | (1,476,460 | ) (g) | — | |||||||||||||||||||
| Accumulated deficit |
(70,783 | ) | (12,099 | ) | — | — | (82,882 | ) | 82,882 | (d)(e)(g)(f) | — | |||||||||||||||||
| Class A members’ equity |
— | — | — | — | — | 366,759 | (g) | 366,759 | ||||||||||||||||||||
| Class B members’ equity |
— | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total shareholders’ and members’ equity attributable to EagleRock Land, LLC |
(38,352 | ) | (12,099 | ) | — | 1,444,029 | 1,393,578 | (1,026,819 | ) | 366,759 | ||||||||||||||||||
| Noncontrolling interest |
— | — | — | — | — | 1,392,882 | (g)(h) | 1,392,882 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total shareholders’ and members’ equity |
(38,352 | ) | (12,099 | ) | — | 1,444,029 | 1,393,578 | 366,063 | 1,759,641 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total liabilities and equity |
$ | 281,658 | $ | (18,614 | ) | $ | — | $ | 1,462,140 | $ | 1,725,184 | $ | 56,259 | $ | 1,781,443 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
4
EagleRock Land, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the Three Months Ended March 31, 2026
| Historical Lea & Eddy Holdings, LLC, as adjusted |
Excluded Assets |
Transaction Accounting Adjustments |
Formation Related Adjustments |
Pro Forma |
Up-C Reorganization and Offering |
Pro Forma, as adjusted |
||||||||||||||||||||||
| (a) | (c) | (f) | (n) | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||||||
| Resource sales |
$ | 18,953 | $ | (6,629 | ) | $ | — | $ | 3,096 | $ | 15,420 | $ | — | $ | 15,420 | |||||||||||||
| Resource sales—related party |
126 | (126 | ) | — | 387 | 387 | — | 387 | ||||||||||||||||||||
| Resource royalties |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Resource royalties— related party |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Surface use related revenues |
3,183 | — | — | 908 | 4,091 | — | 4,091 | |||||||||||||||||||||
| Surface use related revenues—related party |
— | — | — | — | — | — | — | |||||||||||||||||||||
| Surface use royalties |
794 | — | — | 775 | 1,569 | — | 1,569 | |||||||||||||||||||||
| Surface use royalties—related party |
— | — | 2,055 | (d) | 11,718 | 13,773 | — | 13,773 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total revenues |
23,056 | (6,755 | ) | 2,055 | 16,884 | 35,240 | — | 35,240 | ||||||||||||||||||||
| Cost of sales (exclusive of depreciation and amortization) |
4,858 | (539 | ) | — | 741 | 5,060 | — | 5,060 | ||||||||||||||||||||
| Related party cost of sales |
2,861 | (2,861 | ) | — | — | — | — | — | ||||||||||||||||||||
| General and administrative expense |
4,588 | (1,940 | ) | — | 217 | 2,865 | (2,049 | ) (m) | 816 | |||||||||||||||||||
| Related party general and administrative expense |
6 | (6 | ) | 51 | (d) | — | 51 | — | 51 | |||||||||||||||||||
| Depreciation and amortization expense |
4,591 | (108 | ) | — | 11,181 | 15,664 | — | 15,664 | ||||||||||||||||||||
| Gain on investment in sales-type lease |
(3,275 | ) | — | — | — | (3,275 | ) | — | (3,275 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating expenses |
13,629 | (5,454 | ) | 51 | 12,139 | 20,365 | (2,049 | ) | 18,316 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating Income (Loss) |
9,427 | (1,301 | ) | 2,004 | 4,745 | 14,875 | 2,049 | 16,924 | ||||||||||||||||||||
| Interest expense |
— | — | — | (e) | — | — | (181 | ) (l) | (181 | ) | ||||||||||||||||||
| Interest expense—related party |
(5,834 | ) | — | — | — | (5,834 | ) | 5,834 | (h) | — | ||||||||||||||||||
| Interest income |
— | — | — | — | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income from operations before taxes |
3,593 | (1,301 | ) | 2,004 | 4,745 | 9,041 | 7,702 | 16,743 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income tax expense (benefit) |
230 | — | — | — | 230 | 977 | (i) | 1,207 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income (loss) |
3,363 | (1,301 | ) | 2,004 | 4,745 | 8,811 | 6,725 | 15,536 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Less: net income (loss) attributable to non-controlling interests |
— | — | — | — | — | (13,023 | ) (j) | (13,023 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income (loss) attributable to EagleRock Land, LLC |
$ | 3,363 | $ | (1,301 | ) | $ | 2,004 | $ | 4,745 | $ | 8,811 | $ | (6,298 | ) | $ | 2,513 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income per share of common stock |
||||||||||||||||||||||||||||
| Basic |
(k) | $ | 0.09 | |||||||||||||||||||||||||
| Diluted |
(k) | $ | 0.09 | |||||||||||||||||||||||||
| Weighted average common stock outstanding |
||||||||||||||||||||||||||||
| Basic |
(k) | 28,184,518 | ||||||||||||||||||||||||||
| Diluted |
(k) | 28,184,518 | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
5
EagleRock Land, LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the Year Ended December 31, 2025
| Historical Lea & Eddy Holdings, LLC, as adjusted |
Historical Accelerated Water Resources, LLC for the period January 1, 2025 through April 14, 2025, as adjusted |
Excluded Assets |
Transaction Accounting Adjustments |
Formation Related Adjustments |
Pro Forma |
Up-C Reorganization and Offering |
Pro Forma, as adjusted |
|||||||||||||||||||||||||
| (a) | (b) | (c) | (f) | (n) | ||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| Revenues |
||||||||||||||||||||||||||||||||
| Resource sales |
$ | 54,670 | $ | 23,446 | (25,017 | ) | $ | — | $ | 11,419 | $ | 64,518 | $ | — | $ | 64,518 | ||||||||||||||||
| Resource sales—related party |
509 | — | (509 | ) | — | 1,800 | 1,800 | — | 1,800 | |||||||||||||||||||||||
| Resource royalties |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Resource royalties— related party |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Surface use related revenues |
13,667 | 4,661 | (3,960 | ) | — | 7,555 | 21,923 | — | 21,923 | |||||||||||||||||||||||
| Surface use related revenues—related party |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Surface use royalties |
3,327 | 901 | (581 | ) | — | 2,267 | 5,914 | — | 5,914 | |||||||||||||||||||||||
| Surface use royalties—related party |
— | — | — | 7,889 | (d) | 40,000 | 47,889 | — | 47,889 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total revenues |
72,173 | 29,008 | (30,067 | ) | 7,889 | 63,041 | 142,044 | — | 142,044 | |||||||||||||||||||||||
| Cost of sales (exclusive of depreciation and amortization) |
20,863 | 4,454 | (4,092 | ) | — | 5,255 | 26,480 | — | 26,480 | |||||||||||||||||||||||
| Related party cost of sales |
10,207 | — | (10,207 | ) | — | — | — | — | — | |||||||||||||||||||||||
| General and administrative expense |
9,834 | 738 | (3,004 | ) | — | 309 | 7,877 | 71,491 | (g) | 79,368 | ||||||||||||||||||||||
| Related party general and administrative expense |
235 | — | (235 | ) | 205 | (d) | — | 205 | — | 205 | ||||||||||||||||||||||
| Depreciation and amortization expense |
14,984 | 1,439 | (347 | ) | — | 44,723 | 60,799 | — | 60,799 | |||||||||||||||||||||||
| Gain on sale of property, plants and equipment, net |
(2,067 | ) | 174 | — | — | (1,940 | ) | (3,833 | ) | — | (3,833 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total operating expenses |
54,056 | 6,805 | (17,885 | ) | 205 | 48,347 | 91,528 | 71,491 | 163,019 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Operating Income (Loss) |
18,117 | 22,204 | (12,182 | ) | 7,684 | 14,694 | 50,516 | (71,491 | ) | (20,975 | ) | |||||||||||||||||||||
| Interest expense |
— | (2 | ) | — | 2 | (e) | — | — | (723 | ) (l) | (723 | ) | ||||||||||||||||||||
| Interest expense—related party |
(21,185 | ) | — | — | — | — | (21,185 | ) | 21,185 | (h) | — | |||||||||||||||||||||
| Interest income |
— | 109 | — | — | — | 109 | — | 109 | ||||||||||||||||||||||||
| Loss on extinguishment of debt |
(70,001 | ) | — | — | — | — | (70,001 | ) | 64,878 | (h) | (5,123 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Income from operations before taxes |
(73,069 | ) | 22,311 | (12,182 | ) | 7,686 | 14,694 | (40,561 | ) | 13,849 | (26,712 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Income tax expense (benefit) |
2 | — | — | — | — | 2 | (2 | ) (i) | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income (loss) |
(73,071 | ) | 22,311 | (12,182 | ) | 7,686 | 14,694 | (41,563 | ) | 13,851 | (26,712 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Less: net income (loss) attributable to non-controlling interests |
— | — | — | — | — | — | 21,146 | (j) | 21,146 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income (loss) attributable to EagleRock Land, LLC |
$ | (73,071 | ) | $ | 22,311 | $ | (12,182 | ) | $ | 7,686 | $ | 14,694 | $ | (41,563 | ) | $ | 34,997 | $ | (5,566 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Net income per share of common stock |
||||||||||||||||||||||||||||||||
| Basic |
(k) | $ | (0.20 | ) | ||||||||||||||||||||||||||||
| Diluted |
(k) | $ | (0.20 | ) | ||||||||||||||||||||||||||||
| Weighted average common stock outstanding |
||||||||||||||||||||||||||||||||
| Basic |
(k) | 27,690,825 | ||||||||||||||||||||||||||||||
| Diluted |
(k) | 27,690,825 | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed
consolidated financial statements.
6
EagleRock Land, LLC
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
The pro forma condensed consolidated financial information has been prepared by the Company in accordance with Article 11 of Regulation S-X. For purposes of the unaudited pro forma condensed consolidated balance sheet, it is assumed that the DE Flow Contribution, the Shallow Valley Contribution, the Up-C Reorganization and the Offering occurred on March 31, 2026. For purposes of the unaudited pro forma condensed consolidated statement of operations, it is assumed the Accelerated Acquisition, the DE Flow Contribution, the Shallow Valley Contribution, the Up-C Reorganization and the Offering occurred on January 1, 2025.
The unaudited pro forma condensed consolidated financial information was prepared using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and based on the historical consolidated financial statements of the Company and the historical consolidated financial statements of Accelerated, DE Flow and Shallow Valley. As such, assets of the subsidiaries contributed by the Predecessor will be recorded by the Company at their historical carrying value while the assets associated with the Shallow Valley Contribution and DE Flow Contribution will be recognized at their acquisition-date fair values.
The results of operations of Accelerated Water Resources, LLC (“Accelerated”) from January 1, 2025 to April 14, 2025 (the date of the Accelerated Acquisition) are included in the condensed consolidated pro forma statement of operations for the year ended December 31, 2025 in order to give effect to the Accelerated Acquisition as if it had occurred on January 1, 2025. The results of Accelerated are included in the results of the Predecessor for the period April 15, 2025 to December 31, 2025. There is no adjustment made to the condensed consolidated pro forma balance sheet for the Accelerated Acquisition, as the assets and liabilities of Accelerated are included in the results of the Predecessor as of March 31, 2026.
The transaction accounting adjustments represent Company management’s best estimates and are based upon currently available information and certain assumptions that we believe are reasonable under the circumstances; however actual results may differ from estimates.
Our management has identified certain reclassification adjustments given all currently available information related to the DE Flow Contribution and Shallow Valley Contribution, which would be necessary to conform the presentation of its financial statements or accounting policies to those of the Company. Refer to Note 3(c)(1) and Note 4(f)(1) below for additional information.
Note 2: Purchase Price
We accounted for the Accelerated Acquisition as a business combination in accordance with ASC 805, as the transaction met the definition of businesses under generally accepted accounting principles in the United States of America (“GAAP”). Accordingly, the identifiable assets acquired and liabilities assumed were recognized at their acquisition-date fair values. The total consideration transferred was measured at the fair value of the consideration exchanged with the sellers. The purchase price was allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values in accordance with ASC 805-20. There was no excess of consideration transferred over the fair value of the identifiable net assets acquired and, as such, no goodwill was recognized.
We accounted for the Shallow Valley Contribution and the DE Flow Contribution as business combinations in accordance with ASC 805, as the transactions preliminarily meet the definition of businesses under GAAP and this preliminary conclusion could materially impact results. Accordingly, the identifiable assets acquired and liabilities assumed are recognized at their acquisition-date fair values. The total consideration transferred is measured at the fair value of the consideration exchanged with the sellers. The purchase price is allocated to the identifiable assets acquired and liabilities assumed based on their relative fair values in accordance with ASC 805-20. Any excess of the consideration transferred over the fair value of the identifiable net assets acquired, if applicable, is recognized as goodwill.
7
The determination of fair value used in the Shallow Valley Contribution and DE Flow Contribution transaction adjustments presented herein are preliminary and based on management estimates of the fair value of the assets acquired and have been prepared to illustrate the estimated effect of the respective transactions. The final determination of the purchase price allocation will depend on a number of factors that cannot be predicted with certainty at this time. Therefore, the actual purchase price allocation for each transaction may differ from the transaction accounting adjustments presented in these unaudited condensed pro forma statements.
Note 3: Pro Forma Adjustments—Unaudited Pro Forma Condensed Consolidated Balance Sheet
The Company made the following adjustments in the preparation of the unaudited pro forma condensed consolidated balance sheet as of March 31, 2026.
| (a) | Adjustments to reflect the Excluded Assets that will be retained by the Predecessor’s Owner, and thus will not be contributed to the Company. |
| (b) | Adjustment to reflect, pursuant to the Warrant Exercise Agreement, the exercise and partial forfeiture of the L&E Warrants by the TCW Entities, the termination of each Warrant Agreement and the immediate issuance of OpCo Units to the TCW Entities and the owners of Lea & Eddy. |
| (c) | Adjustments to reflect the total effect of the DE Flow Contribution and the Shallow Valley Contribution on the pro forma condensed consolidated balance sheet, as follows: |
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| ASSETS |
||||||||||||||||||||
| Current assets: |
||||||||||||||||||||
| Cash and cash equivalents |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Accounts receivable, net |
522 | (522 | ) (3) | 2,310 | (2,310 | ) (3) | — | |||||||||||||
| Accounts receivable—related party |
— | — | — | — | — | |||||||||||||||
| Inventory |
1,424 | (1,424 | ) (3) | — | — | — | ||||||||||||||
| Prepaid expenses and other current assets |
1,667 | (1,667 | ) (3) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total current assets |
3,613 | (3,613 | ) | 2,310 | (2,310 | ) | — | |||||||||||||
| Non-current assets: |
||||||||||||||||||||
| Property, plant and equipment, net of accumulated depreciation |
71,477 | 6,699 | (2) | 92,805 | 153,566 | (4) | 324,547 | |||||||||||||
| Right-of-use assets, net |
— | — | — | — | — | |||||||||||||||
| Intangible assets, net |
— | 448,797 | (2) | — | 136,206 | (4) | 585,003 | |||||||||||||
| Goodwill |
— | 472,646 | (2) | — | 79,944 | (4) | 552,590 | |||||||||||||
| Deferred offering costs |
— | — | — | — | — | |||||||||||||||
| Other noncurrent assets |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-current assets |
71,477 | 928,142 | 92,805 | 369,716 | 1,462,140 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total assets |
$ | 75,089 | $ | 924,529 | $ | 95,115 | $ | 367,406 | $ | 1,462,140 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| LIABILITIES AND MEMBERS’ DEFICIT |
||||||||||||||||||||
| Current liabilities: |
||||||||||||||||||||
| Accounts payable |
— | — | 169 | (169 | ) (3) | — | ||||||||||||||
| Accounts payable—related party |
— | 8,418 | (2) | — | 7,076 | (4) | 15,494 | |||||||||||||
| Accrued liabilities |
3,521 | (3,521 | ) (3) | — | — | — | ||||||||||||||
| Current income taxes payable |
— | — | — | — | — | |||||||||||||||
| Current deferred revenue |
— | — | 144 | (144 | ) (3) | — | ||||||||||||||
| Current operating lease liability |
— | — | — | — | — | |||||||||||||||
| Current debt—related party |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total current liabilities |
3,521 | 4,897 | 313 | 6,763 | 15,494 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Noncurrent liabilities |
||||||||||||||||||||
| Operating lease liability, less current portion |
— | — | — | — | — | |||||||||||||||
| Deferred tax liability, net |
121 | (121 | ) (2) | — | — | — | ||||||||||||||
8
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Deferred revenue, less current portion |
— | — | — | — | — | |||||||||||||||
| Long-term debt – related party, less current |
— | — | — | — | — | |||||||||||||||
| Asset retirement |
2,617 | — | — | — | 2,617 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noncurrent liabilities |
2,738 | (121 | ) | — | — | 2,617 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Commitments and Contingencies |
||||||||||||||||||||
| Equity |
||||||||||||||||||||
| Common units (2,095 units authorized, 1,195 units outstanding as of March 31, 2026) |
— | — | — | — | — | |||||||||||||||
| Additional paid in capital—members’ interests |
— | — | — | — | — | |||||||||||||||
| Additional paid in capital—warrants—related party |
— | — | — | — | — | |||||||||||||||
| Additional paid in capital |
— | 988,583 | (2) | — | 455,445 | (4) | 1,444,029 | |||||||||||||
| Accumulated deficit |
68,830 | (68,830 | ) (2) | 94,802 | (94,802 | ) (4) | — | |||||||||||||
| Class A members’ equity |
— | — | — | — | — | |||||||||||||||
| Class B members’ equity |
— | — | — | — | — | |||||||||||||||
| Total shareholders’ and members’ equity attributable to EagleRock Land, LLC |
68,830 | 919,753 | 94,802 | 360,643 | 1,444,029 | |||||||||||||||
| Noncontrolling interest |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total shareholders’ and members’ equity |
68,830 | 919,753 | 94,802 | 360,643 | 1,444,029 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total liabilities and equity |
75,089 | 924,529 | 95,115 | 367,406 | 1,462,140 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | The columns represent the historical audited balance sheets of DE Flow and Shallow Valley, presented elsewhere in this filing, as adjusted to reflect reclassifications necessary to conform with the Company’s presentation going forward. Such amounts are reflected in the “Historical DE Flow, as adjusted” and “Historical Shallow Valley, as adjusted” columns: |
| Historical DE Flow |
EagleRock Land, LLC |
Reclassified Balances | ||||
| Balance Sheet FSLI | (in thousands) | |||||
| Insurance receivable |
Prepaid expenses and other current assets | 1,642 | ||||
| Sourced water inventory |
Inventory | 1,424 | ||||
| Other assets |
Prepaid expenses and other current assets | 25 | ||||
| Accrued capital expenditures |
Accrued liabilities | 2,978 | ||||
| Net parent investment |
Accumulated deficit | 68,830 | ||||
| Historical Shallow Valley |
EagleRock Land, LLC |
Reclassified Balances | ||||
| Balance Sheet FSLI | (in thousands) | |||||
| Property, plant and equipment, net of accumulated depreciation |
Property, plant and equipment, net | 28,909 | ||||
| Land |
Property, plant and equipment, net | 63,896 | ||||
| Accounts payable and accrued liabilities |
Accounts payable | 169 | ||||
| Deferred revenue |
Current deferred revenue | 144 | ||||
| Net investment |
Accumulated deficit | 94,802 | ||||
| (2) | Adjustments to reflect changes associated with the DE Flow Contribution in exchange for OpCo Units representing an initial approximate 41.8% ownership interest in OpCo, prior to the dilutive effect of any other transactions. |
A summary of the consideration transferred, and the fair value of the assets and liabilities acquired in connection with the DE Flow Contribution is as follows (in thousands, except for unit counts):
9
| Value of the 45,873,930 units of OpCo to be issued in exchange for the DE Flow Contribution (based on the closing price of $21.55 per Class A share) |
$ | 988,583 | ||
| Fair value of assets acquired: |
||||
| Fair value of property, plant and equipment, net |
78,175 | |||
| Fair value of customer contracts |
448,797 | |||
| Asset retirement obligations |
(2,617 | ) | ||
| Reimbursement payable |
(8,418 | ) | ||
| Goodwill |
472,646 | |||
|
|
|
|||
| Total net assets acquired |
$ | 988,583 | ||
|
|
|
The Company used $21.55 as the value of each OpCo unit, as this was the price the Class A shares closed at on May 15, 2026 which was the closing date of the DE Flow Contribution. As each OpCo unit (along with a corresponding Class B share) can be exchanged for one Class A share, the Company determined that $21.55 was the best evidence of fair value for the OpCo units as of the closing date of the DE Flow Contribution.
| (3) | Adjustments to reflect balances that were not contributed to the Company as part of the Shallow Valley Contribution and DE Flow Contribution. |
| (4) | Adjustments to reflect changes associated with the Shallow Valley Contribution in exchange for OpCo Units representing an initial approximate 19.3% ownership interest in OpCo, prior to the dilutive effect of any other transactions. |
A summary of the consideration transferred, and the fair value of the assets and liabilities acquired in connection with the Shallow Valley Contribution is as follows (in thousands, except for unit counts):
| Value of the 21,134,331 units of OpCo to be issued in exchange for the Shallow Contribution (based on the closing price of $21.55 per Class A share) |
$ | 455,445 | ||
| Fair value of assets acquired: |
||||
| Fair value of property, plant and equipment, net |
246,371 | |||
| Fair value of intangible assets |
136,206 | |||
| Reimbursement payable |
(7,076 | ) | ||
| Goodwill |
79,944 | |||
|
|
|
|||
| Total net assets acquired |
$ | 455,445 | ||
|
|
|
The Company used $21.55 as the value of each OpCo unit, as this was the price the Class A shares closed at on May 15, 2026 which was the closing date of the Shallow Valley Contribution. As each OpCo unit (along with a corresponding Class B share) can be exchanged for one Class A share, the Company determined that $21.55 was the best evidence of fair value for the OpCo units as of the closing date of the Shallow Valley Contribution.
| (d) | Adjustments to reflect the gross proceeds from the issuance and sale of 17,300,000 Class A shares at the initial public offering price of $18.50 per share, net of underwriting discounts and commissions and additional estimated expenses related to the Offering as well as the exercise of the underwriter’s option to purchase an additional 2,595,000 Class A shares at the initial public offering price of $18.50. Adjustments also reflect the issuance of Class B shares to the Lea & Eddy, Double Eagle and Shallow Valley Owners related to the Up-C Reorganization. |
The following table provides a reconciliation of the pro forma cash expected to be received and used in connection with the consummation of the Offering and the net proceeds from the Offering as disclosed in the Final Prospectus (in thousands):
| Gross proceeds from the Offering |
$ | 368,058 | ||
| Estimated underwriting discounts and commissions |
25,764 | |||
| Issuance expenses (1) |
11,936 | |||
|
|
|
|||
| Pro forma cash received from the Offering |
$ | 330,358 | ||
|
|
|
|||
| Repayment of Predecessor Credit Facility (2) |
(263,343 | ) | ||
| Payment of Credit Facility debt issuance costs(3) |
(9,279 | ) | ||
|
|
|
|||
| Net pro forma cash provided by the Offering |
$ | 57,736 | ||
|
|
|
| (1) | Excludes $1.8 million of expenses paid as of March 31, 2026. |
| (2) | Refer to Note (f) below for additional information. |
10
| (3) | Includes debt issuance costs of $3.5 million incurred to enter into the Credit Facility. Refer to Note 3(j) for more information. |
| (e) | Represents the offsetting of $1.8 million of deferred offering costs from Deferred offering costs and $3.0 million from Accounts payable against proceeds from the Offering. |
| (f) | Represents a $263.3 million pay down of the Predecessor Credit Facility, consisting of $256.3 million of the term loan and $7.0 million of the revolver, the write-off of debt premium of $32.6 million and prepaid interest of $0.1 million within Prepaid expenses and other current assets, and additional payments to paydown the Predecessor Credit Facility. |
| (g) | Adjustments to members’ equity reflecting (i) $366.8 million for Class A shares outstanding following this offering and application of the net proceeds therefrom calculated as the 20.8% controlling interest in OpCo’s pro forma, as adjusted members’ equity as of March 31, 2026 and (ii) a decrease of $1,392.9 million in members’ equity to allocate a portion of the Company’s equity to the non-controlling interest described in Note (h) below. |
| (h) | Adjustments to non-controlling interest due to consolidation of financial results of OpCo. The Company will initially have a minority economic interest in OpCo, but will have control over the management of OpCo. Therefore, we consolidated the financial results of OpCo and will report a non-controlling interest on our consolidated balance sheet for the percentage of OpCo units not held by the Company. Upon completion of the contemplated transactions, the non-controlling interest is expected to own approximately 79.2% of OpCo. |
| Pro forma members’ equity as of March 31, 2026 |
$ | 1,393,578 | ||
| Gain on extinguishment of debt |
26,701 | |||
| IPO bonus compensation expense |
(57,350 | ) | ||
| RSU share-based compensation expense |
(14,243 | ) | ||
|
|
|
|||
| Pro forma members’ equity as of March 31, 2026, adjusted |
$ | 1,348,686 | ||
| Gross proceeds from the Offering |
368,058 | |||
| Remeasurement of deferred tax liability |
10,835 | |||
| IPO bonus share issuance |
57,350 | |||
| RSU share-based compensation expense |
14,243 | |||
| Underwriting discounts and offering costs (1) |
(39,530 | ) | ||
|
|
|
|||
| Pro forma, as adjusted OpCo members’ equity as of March 31, 2026 |
$ | 1,759,641 | ||
|
|
|
|||
| Estimated noncontrolling interest percentage of EagleRock Land, LLC |
79.2 | % | ||
|
|
|
| (1) | Includes offering costs paid as of March 31, 2026. |
| (i) | Adjustments to reflect the estimated change in long-term deferred tax liabilities for temporary differences between the historical cost basis and tax basis of the Company’s assets and liabilities assuming the Company’s status as a subchapter C corporation. Adjustments result in a deferred tax asset offset by an equivalent valuation allowance. Deferred income tax adjustments arising from fair value adjustments have been estimated at the expected tax rate of approximately 26.25% in the unaudited pro forma condensed consolidated statement of operations. Adjustments are based on information currently available, using applicable assumptions and estimates. Actual results are subject to change, which could be material. |
| (j) | Adjustments to reflect the debt issuance costs of $3.5 million related to a new credit facility (the “Credit Facility”) the Company expects to enter into following completion of this Offering and the associated repayment and termination of the Predecessor Credit Facility. |
Note 4: Pro Forma Adjustments—Unaudited Pro Forma Condensed Consolidated Statement of Operations
The Company made the following adjustments in the preparation of the unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2026, and the year ended December 31, 2025.
| (a) | The column represents the historical audited and unaudited activity of Lea & Eddy, presented elsewhere in this filing, as adjusted to reflect reclassification necessary to conform with the Company’s presentation going forward. Such amounts are reflected in the “Historical Lea & Eddy, LLC, as adjusted” column. |
11
| For the three months ended March 31, 2026 | ||||||||||||||||
| Historical Lea & Eddy Holdings, LLC |
Water sales reclassification |
Surface and other revenues reclassification |
Historical Lea & Eddy Holdings, LLC, as adjusted |
|||||||||||||
| (in thousands) | ||||||||||||||||
| Historical Lea & Eddy |
||||||||||||||||
| Water sales |
$ | 18,672 | $ | (18,672 | ) | $ | — | $ | — | |||||||
| Related party water sales |
126 | (126 | ) | — | — | |||||||||||
| Surface and other revenues |
4,258 | — | (4,258 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total historical revenue |
$ | 23,056 | $ | (18,798 | ) | $ | (4,258 | ) | $ | — | ||||||
| EagleRock Land, LLC |
||||||||||||||||
| Resource sales |
$ | — | $ | 18,392 | $ | 561 | $ | 18,953 | ||||||||
| Resource sales—related party |
— | 126 | — | 126 | ||||||||||||
| Surface use related revenues |
— | 280 | 2,903 | 3,183 | ||||||||||||
| Surface use royalties |
— | — | 794 | 794 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | — | $ | 18,798 | $ | 4,258 | $ | 23,056 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| For the year ended December 31, 2025 | ||||||||||||||||
| Historical Lea & Eddy Holdings, LLC |
Water sales reclassification |
Surface and other revenues reclassification |
Historical Lea & Eddy Holdings, LLC, as adjusted |
|||||||||||||
| (in thousands) | ||||||||||||||||
| Historical Lea & Eddy |
||||||||||||||||
| Water sales |
$ | 55,199 | $ | (55,199 | ) | $ | — | $ | — | |||||||
| Related party water sales |
509 | (509 | ) | — | — | |||||||||||
| Surface and other revenues |
16,465 | — | (16,465 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total historical revenue |
$ | 72,173 | $ | (55,708 | ) | $ | (16,465 | ) | $ | — | ||||||
| EagleRock Land, LLC |
||||||||||||||||
| Resource sales |
$ | — | $ | 50,323 | $ | 4,348 | $ | 54,671 | ||||||||
| Resource sales—related party |
— | 509 | — | 509 | ||||||||||||
| Surface use related revenues |
— | 4,876 | 8,790 | 13,666 | ||||||||||||
| Surface use royalties |
— | — | 3,327 | 3,327 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | — | $ | 55,708 | $ | 16,465 | $ | 72,173 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (b) | The column represents the historical unaudited activity of Accelerated, presented in the Final Prospectus, as adjusted to reflect reclassification necessary to conform with the Company’s presentation going forward. Such amounts are reflected in the “Historical Accelerated Water Resources, LLC for the period January 1, 2025 through April 14, 2025, as adjusted” column. |
| Historical Accelerated |
EagleRock Land, LLC |
Reclassified Balances – Q1’25 |
Reclassified Balances – January 1, 2025 to April 14, 2025 |
|||||||
| (in thousands) | ||||||||||
| Fresh water sales |
Resource sales | $ | 17,591 | $ | 23,206 | |||||
| Surface use land rights |
Surface use related revenues | 3,917 | 4,231 | |||||||
| Fresh water transfer services |
Surface use related revenues | 321 | 430 | |||||||
| Caliche sales |
Resource sales | 179 | 229 | |||||||
| Topsoil sales |
Resource sales | — | 11 | |||||||
| Produced water disposal services |
Surface use royalties Cost of sales (exclusive of |
827 | 901 | |||||||
| Operating expenses |
depreciation and amortization) | 185 | 221 | |||||||
| General & administrative expenses |
General and administrative expense | 609 | 738 | |||||||
12
| Historical Accelerated |
EagleRock Land, LLC |
Reclassified Balances – Q1’25 |
Reclassified Balances – January 1, 2025 to April 14, 2025 |
|||||||
| (in thousands) | ||||||||||
| Accretion of discount on asset retirement calculation |
Depreciation and amortization expense | 8 | 10 | |||||||
| Loss on disposition of assets |
Gain on sale of property, plants and equipment, net | 174 | 174 | |||||||
| Other income |
Interest income | 109 | 109 | |||||||
| (c) | Adjustments to reflect the removal of activity related to the Excluded Assets that will be retained by the Predecessor’s Owners and replaced by the Hydrosource produced water recycling rights agreement (the “Hydrosource Recycling Agreement”) going forward (refer to Note (d) below for additional information). |
| (d) | Adjustments to reflect the royalty revenue received related to the Hydrosource Recycling Agreement entered into as part of the transaction. Net royalty payment is based on a percentage of the gross selling price received by Hydrosource for recycled water stored, treated, processed, purchased or sold on our land, and for each barrel of recycled water sold off our land. The agreement also contains provisions for additional royalty income if Hydrosource engages in additional revenue generating activities on our land including solid waste operations and sand mine operations. The adjustment reflects approximately $7.9 million and $2.1 million in royalties that would have been recognized if the Hydrosource Recycling Agreement had been in place as of January 1, 2025 using historical volumes and contractual rates for the three months ended March 31, 2026 and the year ended December 31, 2025, respectively. Adjustment to operating expenses includes the Company’s 50% share of the corporate lease cost. |
| (e) | Adjustments to reflect the elimination of Accelerated’s historical interest expense incurred prior to its acquisition by the Predecessor, as the Predecessor did not assume the related debt in the Accelerated Acquisition. |
| (f) | Adjustment to reflect the total effect of the DE Flow Contribution and the Shallow Valley Contribution on the pro forma condensed consolidated statement of operations, as follows: |
| For the three months ended March 31, 2026 | ||||||||||||||||||||
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenues |
||||||||||||||||||||
| Resource sales |
$ | — | $ | — | $ | 3,096 | $ | — | $ | 3,096 | ||||||||||
| Resource sales—related party |
12,577 | (12,577 | ) (2) | 387 | — | 387 | ||||||||||||||
| Resource royalties |
— | — | — | — | — | |||||||||||||||
| Resource royalties—related party |
— | — | — | — | — | |||||||||||||||
| Surface use related revenues |
— | — | 908 | — | 908 | |||||||||||||||
| Surface use related revenues—related party |
— | — | — | — | — | |||||||||||||||
| Surface use royalties |
274 | (274 | ) (2) | 775 | — | 775 | ||||||||||||||
| Surface use royalties—related party |
7,696 | 4,022 | (2) | — | — | 11,718 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
20,547 | (8,829 | ) | 5,166 | — | 16,884 | ||||||||||||||
| Cost of sales (exclusive of depreciation and amortization) |
7,527 | (7,527 | ) (2) | 741 | — | 741 | ||||||||||||||
| Related party cost of sales |
— | — | — | — | — | |||||||||||||||
13
| For the three months ended March 31, 2026 | ||||||||||||||||||||
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| General and administrative expense |
498 | (498 | ) (2) | 217 | — | 217 | ||||||||||||||
| Related party general and administrative expense |
— | — | — | — | — | |||||||||||||||
| Depreciation and amortization expense |
1,234 | 7,848 | (3) | 769 | 1,330 | (5) | 11,181 | |||||||||||||
| Gain on sale of property, plants and equipment, net |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
9,259 | (176 | ) | 1,727 | 1,330 | 12,139 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (Loss) |
11,288 | (8,653 | ) | 3,439 | (1,330 | ) | 4,745 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest expense |
(85 | ) | 85 | (4) | — | — | — | |||||||||||||
| Interest expense—related party |
— | — | — | — | — | |||||||||||||||
| Interest income |
— | — | — | — | — | |||||||||||||||
| Loss on extinguishment of debt |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from operations before taxes |
11,203 | (8,567 | ) | 3,439 | (1,330 | ) | 4,745 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income tax expense (benefit) |
(3 | ) | 3 | (4) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income (loss) |
11,206 | (8,571 | ) | 3,439 | (1,330 | ) | 4,745 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less: net income attributable to non-controlling interests |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income (loss) attributable to EagleRock Land, LLC |
$ | 11,206 | $ | (8,571 | ) | $ | 3,439 | $ | (1,330 | ) | $ | 4,745 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenues |
||||||||||||||||||||
| Resource sales |
$ | 10 | $ | (10 | ) (2) | $ | 11,419 | $ | — | $ | 11,419 | |||||||||
| Resource sales—related party |
34,433 | (34,433 | ) (2) | 1,800 | — | 1,800 | ||||||||||||||
| Resource royalties |
— | — | — | — | — | |||||||||||||||
| Resource royalties—related party |
— | — | — | — | — | |||||||||||||||
| Surface use related revenues |
— | — | 7,555 | — | 7,555 | |||||||||||||||
| Surface use related revenues—related party |
— | — | — | — | — | |||||||||||||||
| Surface use royalties |
1,424 | (1,424 | ) (2) | 2,267 | — | 2,267 | ||||||||||||||
| Surface use royalties—related party |
20,641 | 19,359 | (2) | — | — | 40,000 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
56,508 | (16,508 | ) | 23,041 | — | 63,041 | ||||||||||||||
14
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Historical DE Flow, as adjusted |
Transaction Accounting Adjustments |
Historical Shallow Valley, as adjusted |
Transaction Accounting Adjustments |
Total | ||||||||||||||||
| (1) | (1) | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Cost of sales (exclusive of depreciation and amortization) |
26,275 | (26,275 | )(2) | 5,255 | — | 5,255 | ||||||||||||||
| Related party cost of sales |
— | — | — | — | — | |||||||||||||||
| General and administrative expense |
1,093 | (1,093 | )(2) | 309 | — | 309 | ||||||||||||||
| Related party general and administrative expense |
— | — | — | — | — | |||||||||||||||
| Depreciation and amortization expense |
2,673 | 33,654 | (3) | 2,357 | 6,039 | (5) | 44,723 | |||||||||||||
| Gain on sale of property, plants and equipment, net |
25 | — | (1,965 | ) | — | (1,940 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating expenses |
30,066 | 6,286 | 5,956 | 6,039 | 48,347 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Operating income (Loss) |
26,442 | (22,794 | ) | 17,085 | (6,039 | ) | 14,694 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest expense |
(516 | ) | 516 | (4) | — | — | — | |||||||||||||
| Interest expense—related party |
— | — | — | — | — | |||||||||||||||
| Interest income |
— | — | — | — | — | |||||||||||||||
| Loss on extinguishment of debt |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income from operations before taxes |
25,926 | (22,278 | ) | 17,085 | (6,039 | ) | 14,694 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income tax expense (benefit) |
91 | (91 | )(4) | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income (loss) |
25,835 | (22,187 | ) | 17,085 | (6,039 | ) | 14,694 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Less: net income attributable to non-controlling interests |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income (loss) attributable to EagleRock Land, LLC |
$ | 25,835 | $ | (22,187 | ) | $ | 17,085 | $ | (6,039 | ) | $ | 14,694 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | The columns represent the historical audited activity of DE Flow and Shallow Valley, presented elsewhere in this filing, as adjusted to reflect the reclassification necessary to conform with the Company’s presentation going forward. Such amounts are reflected in the “Historical DE Flow, as adjusted” and “Historical Shallow Valley, as adjusted” columns. |
The reclassifications of revenues are shown in the tables below:
| For the three months ended March 31, 2026 | ||||||||||||||||
| Historical DE Flow |
Midstream revenues – related party Reclassification Adjustments |
Midstream revenues – third party reclassification |
Historical DE Flow, as adjusted |
|||||||||||||
| (in thousands) | ||||||||||||||||
| Historical DE Flow |
||||||||||||||||
| Midstream revenues—related party |
$ | 20,073 | $ | (20,073 | ) | $ | — | $ | — | |||||||
| Midstream revenues—third party |
274 | — | (274 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total historical revenue |
$ | 20,547 | $ | (20,072 | ) | $ | (274 | ) | $ | — | ||||||
| EagleRock Land, LLC |
||||||||||||||||
| Resource sales |
$ | — | $ | — | $ | — | $ | — | ||||||||
| Resource sales—related party |
— | 12,577 | — | 12,577 | ||||||||||||
| Surface use royalties |
— | — | 274 | 274 | ||||||||||||
| Surface use royalties—related party |
— | 7,696 | — | 7,696 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total EagleRock Land, LLC revenue |
$ | — | $ | 20,273 | $ | 274 | $ | 20,547 | ||||||||
15
| For the year ended December 31, 2025 | ||||||||||||||||
| Historical DE Flow |
Midstream revenues – related party Reclassification Adjustments |
Midstream revenues – third party reclassification |
Historical DE Flow, as adjusted |
|||||||||||||
| (in thousands) | ||||||||||||||||
| Historical DE Flow |
||||||||||||||||
| Midstream revenues—related party |
$ | 55,074 | $ | (55,074 | ) | $ | — | $ | — | |||||||
| Midstream revenues—third party |
1,434 | — | (1,434 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total historical revenue |
$ | 56,508 | $ | (55,074 | ) | $ | (1,434 | ) | $ | — | ||||||
| EagleRock Land, LLC |
||||||||||||||||
| Resource sales |
$ | — | $ | — | $ | 10 | $ | 10 | ||||||||
| Resource sales—related party |
— | 34,433 | — | 34,433 | ||||||||||||
| Surface use royalties |
— | — | 1,424 | 1,424 | ||||||||||||
| Surface use royalties—related party |
— | 20,641 | — | 20,641 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total EagleRock Land, LLC revenue |
$ | — | $ | 55,074 | $ | 1,434 | $ | 56,508 | ||||||||
| For the three months ended March 31, 2026 | ||||||||||||||||||||
| Historical Shallow Valley |
Water sales reclassification |
Easement and surface damages reclassification |
Other reclassification |
Historical Shallow Valley, as adjusted |
||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Historical Shallow Valley |
||||||||||||||||||||
| Water sales |
$ | 4,258 | $ | (4,258 | ) | $ | — | $ | — | $ | — | |||||||||
| Easement and surface damages |
827 | — | (827 | ) | — | — | ||||||||||||||
| Other |
81 | — | — | (81 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total historical revenue |
$ | 5,166 | $ | (4,258 | ) | $ | (827 | ) | $ | (81 | ) | $ | — | |||||||
| EagleRock Land, LLC |
||||||||||||||||||||
| Resource sales |
$ | — | $ | 3,096 | $ | — | $ | — | $ | 3,096 | ||||||||||
| Resource sales—related party |
— | 387 | — | — | 387 | |||||||||||||||
| Surface use related revenues |
— | — | 827 | 81 | 908 | |||||||||||||||
| Surface use royalties |
— | 775 | — | — | 775 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total EagleRock Land, LLC revenue |
$ | — | $ | 4,258 | $ | 827 | $ | 81 | $ | 5,166 | ||||||||||
16
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Historical Shallow Valley |
Water sales reclassification |
Easement and surface damages reclassification |
Other reclassification |
Historical Shallow Valley, as adjusted |
||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Historical Shallow Valley |
||||||||||||||||||||
| Water sales |
$ | 15,486 | $ | (15,486 | ) | $ | — | $ | — | $ | — | |||||||||
| Easement and surface damages |
7,026 | — | (7,026 | ) | — | — | ||||||||||||||
| Other |
529 | — | — | (529 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total historical revenue |
$ | 23,041 | $ | (15,486 | ) | $ | (7,026 | ) | $ | (529 | ) | $ | — | |||||||
| EagleRock Land, LLC |
||||||||||||||||||||
| Resource sales |
$ | — | $ | 11,419 | $ | — | $ | — | $ | 11,419 | ||||||||||
| Resource sales—related party |
— | 1,800 | — | — | 1,800 | |||||||||||||||
| Surface use related revenues |
— | — | 7,026 | 529 | 7,555 | |||||||||||||||
| Surface use royalties |
— | 2,267 | — | — | 2,267 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total EagleRock Land, LLC revenue |
$ | — | $ | 15,486 | $ | 7,026 | $ | 529 | $ | 23,041 | ||||||||||
Other reclassification adjustments for the unaudited pro forma condensed consolidated statement of operations are shown in the tables below:
| For the three months ended March 31, 2026 | ||||||
| Historical DE Flow |
EagleRock Land, LLC |
Reclassified Balances | ||||
| (in thousands) | ||||||
| Cost of goods sold |
Cost of sales (exclusive of depreciation and amortization) | 7,004 | ||||
| Direct operating expenses |
Cost of sales (exclusive of depreciation and amortization) | 523 | ||||
| Depreciation, amortization and accretion |
Depreciation and amortization expense | 1,234 | ||||
| General and administrative |
General and administrative expense | 498 | ||||
| Income tax expense |
Income tax expense (benefit) | (3 | ) | |||
| For the year ended December 31, 2025 | ||||||
| Historical DE Flow |
EagleRock Land, LLC |
Reclassified Balances | ||||
| (in thousands) | ||||||
| Cost of goods sold |
Cost of sales (exclusive of depreciation and amortization) | $ | 23,401 | |||
| Direct operating expenses |
Cost of sales (exclusive of depreciation and amortization) | 2,874 | ||||
| Depreciation, amortization and accretion |
Depreciation and amortization expense | 2,673 | ||||
| Loss on property abandonment |
Gain on sale of property, plant and equipment, net | 25 | ||||
| General and administrative |
General and administrative expense | 1,093 | ||||
| Income tax expense |
Income tax expense (benefit) | 91 | ||||
17
| For the three months ended March 31, 2026 | ||||||
| Historical Shallow Valley |
EagleRock Land, LLC |
Reclassified Balances | ||||
| (in thousands) | ||||||
| Cost of sales (exclusive of depreciation) |
Cost of sales (exclusive of depreciation and amortization) | $ | 741 | |||
| Depreciation expense |
Depreciation and amortization expense | 769 | ||||
| General and administrative expense |
General and administrative expense | 217 | ||||
| For the year ended December 31, 2025 | ||||||
| Historical Shallow Valley |
EagleRock Land, LLC |
Reclassified Balances | ||||
| (in thousands) | ||||||
| Cost of sales (exclusive of depreciation) |
Cost of sales (exclusive of depreciation and amortization) | $ | 5,248 | |||
| Depreciation expense |
Depreciation and amortization expense | 2,357 | ||||
| Severance and ad valorem tax expense |
Cost of sales (exclusive of depreciation and amortization) | 7 | ||||
| General and administrative expense |
General and administrative expense | 309 | ||||
| Gain on sale of property, plant and equipment |
Gain on sale of property, plant and equipment | (1,965 | ) | |||
| (2) | Adjustments to reflect the effect of the DE Flow WSMA entered into as part of the DE Flow Contribution. The DE Flow WSMA replaced historical revenue and direct operating expenses with royalty revenue. Net royalty payment is based on a royalty equal to 90% of net proceeds generated by the assets operated by DEF Operating and the contractually specified minimum royalty. The adjustment reflects $11.3 million and $40.0 million in royalties, inclusive of any shortfall payments, that would have been recognized if the DE Flow WSMA had been in place as of January 1, 2025, using historical DE Flow net proceeds and contractually specified rates in the DE Flow WSMA for the three months ended March 31, 2026 and the year ended December 31, 2025, respectively. |
| (3) | Adjustment to reflect the depreciation and amortization associated with the fair value step up of assets acquired in the DE Flow Contribution (in thousands except for useful life). |
| Depreciation, amortization and accretion expense |
||||||||||||||||
| Description |
Weighted Average Remaining Useful Life |
Fair Value | Three Months Ended March 31, 2026 |
Year Ended December 31, 2025 |
||||||||||||
| Property, plant and equipment: |
||||||||||||||||
| Wells, pits, piping and water assets |
25.4 | $ | 55,171 | $ | 582 | $ | 2,327 | |||||||||
| Roads and land improvements |
14.0 | 1,826 | 33 | 130 | ||||||||||||
| Machinery, electrical other equipment |
11.6 | 7,770 | 170 | 680 | ||||||||||||
| Land |
N/A | 4,990 | — | — | ||||||||||||
| Identifiable intangible assets: |
||||||||||||||||
| Customer contracts |
13.0 | 399,282 | 7,678 | 30,714 | ||||||||||||
| Customer relationships |
20.0 | 49,515 | 619 | 2,476 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total pro forma depreciation, amortization and accretion expense |
9,082 | 36,327 | ||||||||||||||
| Less: historical depreciation, amortization and accretion expense |
(1,234 | ) | (2,673 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total pro forma adjustment depreciation, amortization and accretion expense |
$ | 7,848 | $ | 33,654 | ||||||||||||
|
|
|
|
|
|||||||||||||
| (4) | Adjustments to reflect the removal of interest expense and tax expense that was historically pushed down in the preparation of DE Flow carve out financial statements, as the related debt will not be contributed as part of the DE Flow Contribution. |
| (5) | Adjustments to reflect the adjustment to depreciation and amortization associated with the fair value step up of assets acquired in the Shallow Valley Contribution (in thousands except for useful life). |
| Depreciation, amortization and accretion expense |
||||||||||||||||
| Description |
Weighted Average Remaining Useful Life |
Fair Value |
Three Months Ended March 31, 2026 |
Year Ended December 31, 2025 |
||||||||||||
| Property, plant and equipment: |
||||||||||||||||
| Wells, pits, piping and water assets |
17.6 | $ | 39,371 | $ | 583 | $ | 2,330 | |||||||||
| Land, building and site improvements |
8.0 | 2,751 | 103 | 411 | ||||||||||||
| Machinery, vehicles, and other equipment |
3.0 | 618 | 52 | 206 | ||||||||||||
18
| Depreciation, amortization and accretion expense |
||||||||||||||||
| Description |
Weighted Average Remaining Useful Life |
Fair Value | Three Months Ended March 31, 2026 |
Year Ended December 31, 2025 |
||||||||||||
| Land |
N/A | 197,000 | — | — | ||||||||||||
| Identifiable intangible assets |
||||||||||||||||
| Source water reserves |
25.0 | 136,206 | 1,362 | 5,448 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total pro forma depreciation, amortization and accretion expense |
2,099 | 8,396 | ||||||||||||||
| Less: historical depreciation, amortization and accretion expense |
(769 | ) | (2,357 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total pro forma adjustment depreciation, amortization and accretion expense |
$ | 1,330 | $ | 6,039 | ||||||||||||
|
|
|
|
|
|||||||||||||
| (g) | Adjustments to reflect IPO Bonuses paid to certain members of management in connection with the Offering and RSU awards issued to certain employees and non-employees. |
| (h) | Adjustments to reflect (i) the removal of $5.8 and $21.2 million of historical interest expense related to the Predecessor Credit Facility for the three months ended March 31, 2026 and for the year ended December 31, 2025, respectively; (ii) the removal of a $70.0 million non-cash loss on debt extinguishment that was related to the modification to upsize the Predecessor Credit Facility during the year ended December 31, 2025, and (iii) the recognition of a $5.1 million non-cash loss on debt extinguishment resulting from the use of Offering Proceeds to pay off all historical debt balances existing as of January 1, 2025. |
| (i) | Adjustments to reflect the estimated incremental income tax provision associated with the Company’s historical results of operations and pro forma adjustments assuming the Company’s earnings had been subject to federal income tax as a subchapter C corporation using an effective tax rate of approximately 26.25%. This rate is inclusive of federal and state income taxes. |
| (j) | Adjustments to reflect the increase in net income attributable to non-controlling interest for OpCo’s historical results of operations. Upon completion of the contemplated transactions, the non-controlling interest is expected to own approximately 79.2% of OpCo. |
| (k) | On a pro forma basis, basic earnings per share and diluted earnings per share are $0.09 and $0.09 for the three months ended March 31, 2026 and $(0.20) and $(0.20) for the year ended December 31, 2025. Earnings per share on a pro forma basis is computed as follows: |
| Three Months Ended March 31, 2026 |
Year Ended December 31, 2025 |
|||||||
| (in thousands) | ||||||||
| Pro forma, as adjusted income (loss) before income taxes |
$ | 16,743 | $ | (26,712 | ) | |||
| Pro forma, as adjusted income tax expense (benefit) |
1,207 | — | ||||||
|
|
|
|
|
|||||
| Pro forma, as adjusted net income (loss) attributable to members’ equity |
15,536 | (26,712 | ) | |||||
| Net income (loss) attributable to noncontrolling interests |
(13,023 | ) | 21,146 | |||||
|
|
|
|
|
|||||
| Pro forma, as adjusted income (loss) available to Class A members |
$ | 2,513 | $ | (5,566 | ) | |||
|
|
|
|
|
|||||
| Weighted average number of Class A shares outstanding |
28,184,518 | 27,690,825 | ||||||
| Pro forma, as adjusted net income (loss) available to Class A members per share |
$ | 0.09 | $ | (0.20 | ) | |||
|
|
|
|
|
|||||
| (l) | Adjustment to reflect interest expense related to the amortization of the Credit Facility debt issuance costs as described in Note 3(j), as well as other costs associated with the Credit Facility. The debt issuance costs are amortized over the five-year term of the Credit Facility. |
| (m) | Adjustment to reflect stock-based compensation expense related to RSUs granted to certain employees and non-employees as well as the removal of transaction costs related to the Offering recorded as expenses in the historical results of the Predecessor, as these amounts would have been incurred in prior periods had the Offering occurred on January 1, 2025. |
| (n) | The pro forma, as adjusted data presented reflects events directly attributable to the transactions described and certain assumptions that the Company believes are reasonable. The pro forma, as adjusted data does not reflect certain costs and events, including incremental general and administrative expenses associated with operating as a public company, and are not necessarily indicative of financial results that would have been attained had the described transactions occurred on the dates indicated above nor is it necessarily indicative of the future results of the Company’s business and operations. Refer to the Introduction for additional information on what transactions are reflected in the pro forma data presented. |
19