Cadiz Inc. (CDZI): Construction Cost Certainty
The Royalty King Report | Update, July 31, 2026 NASDAQ: CDZI
Synopsis
Two execution milestones cleared this month:
BLM’s right-of-way conversion approved and a guaranteed-maximum-price construction contract executed for the northern pipeline. A more subtle shift in the capital structure does more for the equity story than either headline. I raise the base case to $6.50 and widen the bull case to $9–11 and shift the probabiltiy weighting slightly from bear towards base case.
Base case: $6.50 (was $6.00) · Full completion: $9–11. E[PT]: ~$6.35
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Long-time readers know Cadiz from the water mini-series. The opportunity promises land, water, and a 220-mile pipeline that functions like a toll road once operational. This update covers two pieces of news, a valuation refresh, and a cleaner look at what Cadiz shareholders actually own.
What Cadiz Owns - Recap
Cadiz sits on 45,000 acres above one of the largest undeveloped groundwater aquifers in the American Southwest, with 220 miles of pipeline threading through Southern California’s water corridors. The company doesn’t own the whole project outright, as construction is being financed through Mojave Water Infrastructure Company (MWI): a joint entity where outside equity investors hold 51% of the long-term cash flows from groundwater banking and storage, in exchange for funding the roughly $800M build. Cadiz retains 49% of the storage rights plus 100% of its existing water supply contracts, and receives approximately $76M from MWI on closing for contributing the pipeline infrastructure.
The News
The Bureau of Land Management (BLM) has just granted a 50-year right-of-way converting the Northern Pipeline from natural gas to water conveyance. This enables deliveries from the Mojave Groundwater Bank to San Bernardino County of up to 25,000 acre-feet annually, above the existing 21,275 AFY contracted floor. One of the project’s key execution gates is now cleared.
Separately, Cadiz signed an MOU with RIC Energy for on-site solar generation and a green hydrogen platform, with the same pipeline corridor floated for future hydrogen transport. No disclosed terms yet this remains a right tail option and hence not something that belongs in a valuation until more clarity is available.
All the above good news coincides with a share price sell-off.
IMHO, one of the more important pieces of news that has flown completely under the radar is Cadiz executed a guaranteed maximum price contract for the construction of the northern pipeline on July 28. CAPEX is now pegged at $403.3 million. Having certainty around costs helps enormously in securing funding.
