There would seem to be precious little water in the sun-baked Permian Basin of arid west Texas, where the tumbleweeds and oil pumps outnumber the people. For hundreds of miles, there are no lakes and just one river. Yet here in America’s biggest oil field, the center of world fracking production, there is water everywhere. That is, if you know where to look, explains David Capobianco, the 57-year-old cofounder of private equity outfit Five Point. Every day, the region produces 7 million barrels of oil and 25 million barrels of water—the equivalent of 1 billion gallons, as much water as all of New York City uses in a day.
“Without water . . . they can’t move any oil; that machine stops,” says Capobianco, who has made this water the linchpin of his multipronged strategy to lure AI data centers to oil country.
Much of that water comes from aquifers, and a lot of it is used for hydraulic fracturing (a.k.a. fracking). But even more water comes out of the wells from the same reservoir rocks as oil. That water is gross: It’s saturated with salt, minerals and chemicals. Historically, after skimming off the oil, operators have paid to haul it away and inject it miles deep underground. That’s where Capobianco comes in: His companies handle 6 million barrels of wastewater per day, moving it through more than 5,000 miles of pipelines and more than 300 water processing and disposal facilities he has accumulated across Texas and New Mexico.
“It’s a waste product, but there’s so much of it. Water in a place that is short of water—it has to have some value,” Capobianco says. “We bought the optionality that others couldn’t see.” In other words, he was betting that there would eventually be big profits in doing something with that water other than simply hauling it away.
Now, with thousands of data centers already operating or proposed across the country—including nearly 400 in Texas alone—each guzzling obscene amounts of water, his option is in the money. Even better, West Texas has two other things data centers need in spades: low-cost land and the world’s cheapest natural gas. Altogether, his firms have spent roughly $2.5 billion, with plans to pour in up to another $5 billion in the next five years on this Texas-sized gamble. Scott Mitchell, CEO of Deep Blue, one of Five Point’s portfolio companies, says of Capobianco’s strategy: “It’s like if Levi’s figured out how to sell the jeans, picks, shovels, all the stuff. You’ll have to make one phone call and you have everything you need to build a massive data center.”
While Capobianco started sharpening this strategy only three years ago, its roots stretch back to 2003, when he moved to Seattle to work for Microsoft cofounder Paul Allen’s Vulcan Capital. The Rhode Island high school tennis champion and Duke graduate had worked as an investment banker in New York City before joining Vulcan to help diversify its investments. “We saw oil as an under-understood asset at the time,” recalls Capobianco, who invested $500 million of Allen’s money into building the 18,000-mile Plains All-American pipeline system, which sprawls from Alberta, Canada, south to Houston and east to St. Louis. That investment was worth $3 billion by 2008, when Allen (d. 2018) fired Capobianco and his team and hired back their underlings at lower pay. According to Capobianco, Allen was a cheapskate. Court documents confirm that he refused to pay Capobianco and another director the final 20% of their share of profits. The pair won more than $20 million in arbitration in 2010; Allen appealed unsuccessfully to the Washington State Supreme Court.
Capobianco came away from the experience determined never to work for someone else again. But he wasn’t interested in running an oil company. Instead, in 2012 he seeded Five Point with $15 million of his own money and later created eight portfolio companies, most of them dedicated to consolidating water assets into an ecosystem of pipelines and processing plants throughout the Permian. There’s WaterBridge on the southwest side of the basin in Texas, near the New Mexico border; San Mateo Midstream on the northwest, in New Mexico; and Deep Blue, focused on the eastern side of the Permian, around Midland, Texas.
Rather than build pipelines from scratch, he looked to partner with oil companies that already had their own infrastructure to move gas and remove wastewater. Five Point paid $175 million in 2017 to oil producer Matador Resources to create the San Mateo joint venture that collects and processes both the water and the natural gas that Matador produces. It generated $290 million in Ebitda last year and is currently buying another water processing company for $750 million. Deep Blue paid Diamondback Energy $675 million in 2023 for 70% of its water assets in a joint venture that analysts expect to make $300 million in Ebitda this year.
In 2021 he founded LandBridge, which now owns 320,000 Permian acres across six counties in Texas and New Mexico. The most strategic parcel he has bought: the former 70,000-acre Hanging H cattle ranch on the Texas–New Mexico border, ideally positioned to pump wastewater from New Mexico, which has tighter restrictions on its disposal, to lighter-regulated Texas. LandBridge paid $210 million for the land, picking it up from a feuding family that, according to the ranch’s court-appointed receiver, Roy Jackson, viewed oil companies as “rattlesnakes.” That meant it had barely been developed.
How To Play It
By John Rotonti
When it comes to AI infrastructure, Florida’s Jabil (revenue: $30 billion) is one of the world’s largest outsourced engineering, supply chain and manufacturing partners, serving diversified end markets including health care, transportation, energy and data centers. AI capabilities span everything from next-gen liquid-cooled racks to servers, storage, power distribution units, switches and transformers. Already, AI accounts for nearly 40% of total revenue and is expected to grow about 50% in fiscal 2026 and fiscal 2027. Jabil recently won its third hyperscale customer and announced a multi-gigawatt AI build with Adani Enterprises in India. With its five-year average ROE running at 42%, Jabil has a long runway of growth ahead. It trades at a P/E of only 20x on 2027 consensus estimates.
John Rotonti is a portfolio manager at Bastion Fiduciary.
Capobianco immediately opened the Hanging H for business and now leases chunks of it to more than 100 energy companies. Oil giant EOG Resources, for example, pays $8 million a year to mine sand from it for fracking. His companies have already made $80 million in operating profits from Hanging H. “We’re taking these crispy old ranchers out of the game and creating the best of all possible partners in the industry,” Capobianco says.
Five Point has already scored some big paydays, including through two initial public offerings. LandBridge went public on the New York Stock Exchange in 2024, raising $250 million; it now boasts a $6 billion market cap. WaterBridge raised $650 million in September 2025 and is worth $1.6 billion. Five Point retains controlling stakes in both, which represents the lion’s share of its $9 billion in assets under management. It also had at least one big exit, unloading gas processing company Northwind for $2.4 billion in cash in July 2025; it pocketed $1.2 billion on the deal, triple its original investment, returning some of that to investors and reinvesting a chunk into water and land.
All this has helped make Capobianco, who owns 70% of the management company running Five Point, very wealthy, with a net worth of at least $1 billion.
Beyond water, Capobianco has broader plans to capitalize on the data center boom—and growing opposition to it. He envisions a data center cluster on 10,000 acres LandBridge owns in desolate Reeves County, which contains just 12,000 people spread over 2,600 square miles. “No people sounds like a bad thing at first,’’ he says. But if it means less opposition to building data centers, “no people’s a good thing.”
Capobianco’s advisor and Five Point investor Jim Davidson (the cofounder of private equity outfit Silver Lake and also a developer of data centers) says land, water and cheap fuel are necessary but not sufficient conditions for building a successful data center. So Five Point is going after the additional ingredients: fiber optics, electricity, people—and a hyperscaler customer.
LandBridge has recently buried hundreds of miles of six-inch conduit tubes through which hyperscalers can easily pull fiber optic cable to connect future data centers to the backbone of the internet. Plus, Five Point set up a natural gas–powered electricity generation arm called PowerBridge, with plans to pour a billion dollars into it. One reason for Capobianco’s bullishness is Texas regulators’ speedy approval of air permits for other developers’ proposed gas-fired power plants.
As for customers, he’s sure they’re out there—as evidenced by Microsoft’s signing in June of a 20-year deal with Chevron to build a Permian data center powered by the oil giant’s gas supply. “The first one to commit is the risky one,” Davidson says. “The second is safer. By the third one, it’s a pool party.”
But can he really attract the necessary technical people to the bleak Reeves County landscape, where tiny Pecos (population 10,000) is the largest town for more than 50 miles? Capobianco is counting on electrical-engineering graduates from Texas Tech and Texas A&M. And he’s sure other workers will flock to jobs building what he predicts will be more than $500 billion of data center investments in the region.
“I look at Pecos and I imagine 200 years ago looking at Houston. If you could have seen the future you would have bought as much surface as you could and then started building,” he says. “I feel like we know the future of Pecos. It will have 150,000 people before the end of the decade.” That’s a lot of thirsty AI gold miners.
This Land Is My Land
David Capobianco has been lassoing up ranchland but still has a long way to go before he ranks among America’s biggest land barons. Here are the top five, according to industry observer The Land Report, excluding cable kingpin Ted Turner, who owned 2 million acres when he died in May.
Stan Kroenke
2.7 million acres
The real estate (shopping plazas, storage centers) and sports (Los Angeles Rams, Denver Nuggets, Colorado Avalanche, Arsenal F.C.) billionaire also owns a Texas ranch nearly the size of Rhode Island. In December he made the largest private land purchase in U.S. history when he bought a 937,000-acre patch of New Mexico.
Archie Aldis Emmerson & family
2.4 million acres
No American owns more timberland than “Red” Emmerson, the 97-year-old billionaire whose Sierra Pacific Industries operates 18 sawmills across California, Oregon and Washington.
John Malone
2.2 million acres
The billionaire Cable Cowboy and conservationist bought a small family ranch near Denver in the 1970s and has been expanding ever since. “We’re not in this to get rich,” he told Forbes in 2011.
Reed family
1.6 million acres
The sixth-generation clan behind Green Diamond Resource Company has been harvesting timber from its vast holdings—now spanning nine states—since Canadian timber raftsman Sol Simpson immigrated to Nevada in the mid-1800s.
Buck family
1.3 million acres
Nuclear physicist Peter Buck (d. 2021) lent a family friend $1,000 in 1965 to open the first Subway restaurant, then invested a bite of his ten-figure profits into Maine timberland.
