Summary
Texas Pacific Land Corporation announced an agreement with Chevron U.S.A. Inc., a subsidiary of Chevron Corporation, under which TPL provided surface acreage and secured exclusive rights to source aquifer-derived brackish water for a major power generation facility in Reeves County, Texas. The project, named Project Kilby, is being developed to supply power to a customer data center. Following the announcement, TPL shares climbed over 4% on Tuesday.
Deal details
Under the terms disclosed, TPL contributed surface acreage in exchange for cash consideration and obtained the exclusive right to source water from aquifer-derived brackish groundwater for Project Kilby. TPL will supply brackish groundwater to the power facility, which the company said helps reduce pressure on shared freshwater resources in the region. The company also noted it continues to advance solutions for reuse of desalinated produced water originating from oil and gas operations.
Company perspectives
Ty Glover, chief executive officer of TPL, said the development affirms West Texas as a viable location for compute infrastructure. He highlighted the Permian Basin's combination of natural resources, skilled talent and a regulatory environment he described as supportive, saying those elements position the region to become a hub for compute services.
Daniel Droog, vice president of Power Solutions at Chevron, characterized Project Kilby as an example of how large-scale energy infrastructure can be developed in West Texas to meet growing needs for power and technology. Droog emphasized that securing access to land and reliable, non-potable brackish water supplies, engaging with local communities, and working with partners such as TPL are central to supporting regional economic growth while recognizing the importance of water stewardship.
Context and implications
The agreement represents TPL's initial move into supporting data center infrastructure in the Permian Basin region. The arrangement ties land rights, water sourcing and a power generation development that is intended to serve a customer data center in Reeves County.
Key points
- TPL provided surface acreage and received cash consideration plus exclusive rights to aquifer-derived brackish water for Project Kilby.
- Project Kilby is a power generation facility being developed to support a customer data center in Reeves County, Texas, and will use brackish groundwater to lessen demand on shared freshwater supplies.
- The agreement marks TPL's entry into backing data center infrastructure in the Permian Basin and underscores partnerships between landholders and energy companies on regional power projects.
Risks and uncertainties
- The announcement indicates Project Kilby is being developed, but the release does not provide a timetable or definitive details on scale or completion, leaving uncertainty about project timing and implementation.
- Community engagement and water stewardship are explicitly noted as priorities; responses from local stakeholders and the outcomes of community processes could influence project progress.
- The company stated it is advancing solutions for reuse of desalinated produced water from oil and gas operations, but details and outcomes of those efforts are not specified in the announcement.