Michael Melby of Gate City Capital Management presented his investment thesis on Intrepid Potash (US: IPI) at Best Ideas 2026.
Thesis summary:
Intrepid Potash is a diversified minerals company operating in three segments. The Potash segment produces potash from three solution mines. The Trio segment mines and sells langbeinite, a specialty fertilizer containing potassium, magnesium, and sulfur, which Intrepid markets under the Trio brand name. The Oilfield Solutions segment owns land and water assets in the Permian Basin and sells products and services to energy producers.
Intrepid Potash has a market capitalization of $365 million and with $77 million in net cash, has an enterprise value of $288 million. In 2025, Mike expects Intrepid to generate $297 million in revenue, $61 million in EBITDA, and $27 million in free cash flow. Intrepid recently traded at attractive valuation metrics of 5.4x EV/EBITDA, 0.9x EV/Revenues, 0.7x Price/Tangible Book Value, and a 10% free cash flow yield.
Intrepid also has several valuable assets which might not be obvious to outside investors. In 2023, Intrepid entered into a cooperation agreement with XTO (a subsidiary of Exxon Mobil) regarding Intrepid’s potash mining operations at Carlsbad, New Mexico (located within the Permian Basin). Intrepid agreed to support XTO’s development of oil and natural gas within the vicinity of Intrepid’s Carlsbad operations. In exchange, XTO agreed to pay Intrepid $50 million upfront (fully paid in early 2024), $50 million when XTO receives regulatory approval for the next drilling island, and up to an additional $100 million based on the number of lateral feet that XTO drills.
Mike’s research suggests XTO is progressing on approvals for additional drilling islands. Intrepid also owns nearly 22,000 surface acres of land in Lea County, New Mexico. Several well-capitalized entities have aggressively purchased surface acreage in and around Lea County in recent years at prices north of $5,000/acre, suggesting this non-core acreage could be worth over $100 million.
Intrepid recently entered into a partnership with two firms to develop Intrepid’s lithium resource at the company’s solution mine in Wendover, Utah. Testing indicates that the resource meets key specifications for battery manufacturing and the project should benefit from the prior buildout of infrastructure at the site for legacy potash operations. Intrepid has stated its intention to limit its capital investment in the project.
Intrepid recently underwent a management change after Bob Jornayvaz (Intrepid’s co-founder and former CEO and Chairman) retired from the company after sustaining a serious injury. In December 2024, Kevin Crutchfield was named CEO and has focused on improving operations and avoiding expenditures outside of the company’s core business. In January 2025, Gonzalo Avendano was added to the Board of Directors. Mr. Avendano’s firm owns over 9% of Intrepid shares and his interests are well-aligned with investors. The change in leadership could also lead to shareholder returns, as Intrepid’s sizeable $77 million net cash balance sheet could be utilized to repurchase shares at attractive prices.
Disclaimer
Best Ideas 2026 is held from January 6-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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