Form 8-K/A
8-K/A — EagleRock Land, LLC
Accession: 0001193125-26-328617
Filed: 2026-07-31
Period: 2026-05-13
CIK: 0002104882
SIC: 6792 (OIL ROYALTY TRADERS)
Item: Financial Statements and Exhibits
Documents
8-K/A — d107284d8ka.htm (Primary)
EX-99.1 (d107284dex991.htm)
EX-99.2 (d107284dex992.htm)
EX-99.3 (d107284dex993.htm)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K/A
8-K/A (Primary)
Filename: d107284d8ka.htm · Sequence: 1
8-K/A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2026
EagleRock Land, LLC
(Exact name of registrant as specified in its charter)
Texas
001-43288
41-3142321
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
9655 Katy Freeway, Suite 375
Houston, Texas 77024
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (713) 280-7002
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
Symbol(s)
Name of each exchange
on which registered
Class A shares representing limited liability company interests
EROK
New York Stock Exchange and NYSE Texas, Inc.
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
EX-99.1
EX-99.1
Filename: d107284dex991.htm · Sequence: 2
EX-99.1
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
EX-99.2
EX-99.2
Filename: d107284dex992.htm · Sequence: 3
EX-99.2
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
TOTAL LIABILITIES AND NET INVESTMENT
$
95,115
$
94,733
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
EX-99.3
EX-99.3
Filename: d107284dex993.htm · Sequence: 4
EX-99.3
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
portion
—
—
—
—
—
Asset retirement
obligations
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
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