Select Water Solutions(WTTR) - 2024 Q4 - Annual Report

Oil and Gas Production - The U.S. shale oil production has increased from approximately 500,000 barrels per day in 2010 to about 9 million barrels per day currently, accounting for around 9% of the total global oil supply[34] - U.S. shale gas production has risen from about 15 billion cubic feet per day in 2010 to approximately 85 billion cubic feet per day as of December 2024, representing nearly 80% of U.S. natural gas production[34] Water Management and Recycling - The completion of a typical horizontal well now requires over 750,000 barrels of water, compared to roughly 75,000 barrels in 2010[37] - Current multi-well pad development plans can require in excess of five million barrels of water to complete all wells on the pad[37] - The company is actively expanding its portfolio of water recycling facilities, emphasizing water recycling as a cornerstone of its operations[30] - The company has significantly increased its focus on recycling and reuse of produced water to meet industry demand and reduce fresh water usage[51] - The company aims to enhance its water infrastructure capabilities through recent acquisitions and new recycling and pipeline projects[48] - The Water Infrastructure segment has a combined daily throughput capacity of approximately 3.2 million barrels per day for active produced water recycling and 21 million barrels of produced water storage[69] - The Water Sourcing service line has secured rights to approximately two billion barrels of water annually from hundreds of strategically located sources across the U.S.[82] - The company operates the largest high-capacity aboveground water storage tanks (ASTs) in the U.S., with sizes ranging from 4,500 to 82,000 barrels[83] - The company has developed over 1,000 miles of temporary and permanent pipeline infrastructure across key regions, including the Permian Basin and Bakken Shale[72] Financial Performance and Acquisitions - In 2024, the company executed strategic acquisitions totaling approximately $163 million, including the Tri-State Acquisition for$58.3 million and the Trinity Acquisition for $30.8 million[44] - The company has$85.0 million in outstanding borrowings and $114.8 million of available borrowing capacity under its Prior Sustainability-Linked Credit Facility as of December 31, 2024[387] - As of February 17, 2025, the company had$250.0 million in outstanding indebtedness and $211.3 million of available borrowing capacity under its Sustainability-Linked Credit Facility[387] Environmental and Regulatory Compliance - The company is subject to various environmental regulations that could increase operational costs and limit operational capabilities[140] - The company is subject to regulations regarding the handling and management of Naturally Occurring Radioactive Materials (NORM), which may be present in oilfield wastes[110] - Under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the company may face strict liability for costs associated with hazardous substance releases, including cleanup and damages[111] - The Clean Water Act (CWA) imposes strict controls on pollutant discharges, requiring permits from the EPA, which could lead to increased compliance costs and project delays[113] - The Oil Pollution Act of 1990 establishes liability for oil spill cleanup costs, with a current limit of$137.7 million for economic damages, unless gross negligence is proven[116] - The Underground Injection Control (UIC) program regulates saltwater disposal wells, and any leakage could result in significant remediation costs and permit suspensions[117] - Recent investigations into induced seismicity linked to wastewater disposal may lead to stricter regulations and operational restrictions in certain states[118] - Hydraulic fracturing is facing increased scrutiny and potential regulatory changes, which could impose additional costs and operational delays for the company and its customers[121] - New regulations on methane emissions finalized by the EPA in December 2023 require states to implement stringent controls, potentially impacting operational costs and compliance[128] - The IRA 2022 establishes a federal fee on methane emissions starting at $900 per ton in 2024, increasing to$1,500 by 2026[129] - Colorado's Energy and Carbon Management Commission adopted rules in January 2024 to scrutinize GHG emissions and set intensity targets for oil and gas operators[131] - President Biden announced a 50-52% reduction in GHG emissions from 2005 levels by 2030, with the U.S. rejoining the Paris Agreement uncertain[132] Operational Efficiency and Technology - The company’s Water Services segment utilizes patented WaterONE™ automation services and AquaView® software for 24/7 monitoring of water-related operations, improving efficiency and safety[32] - The company’s proprietary automation technologies improve efficiency and decrease costs for customers by providing integrated water transfer solutions[83] - The company’s logistics solutions can eliminate approximately 38,500 tank truck loads for a multi-well pad requiring five million barrels of water, significantly reducing costs and environmental footprint[38] - The company’s solid waste management facilities include a 50-acre landfill in North Dakota with more than five million cubic yards of permitted capacity[73] - The company is actively developing and deploying electric pumping units to decrease emissions and reduce the environmental impact of its operations[81] Human Capital and Safety - The company has over 3,700 employees as of December 31, 2024, focusing on human capital management and employee retention[54] - The company emphasizes a strong safety culture, with a Safety Recognition Program that has improved workplace safety and employee morale[53] - The company is committed to promoting human rights and social responsibility, ensuring respect for all individuals without discrimination[61] Market Conditions and Risks - The company faces risks related to capital spending reductions in the oil and gas industry, which could adversely affect liquidity and financial condition[23] - The demand for oilfield services is largely dependent on the level of drilling and completion activity in the U.S. oil and gas industry, influenced by various uncontrollable factors[384] - Sustained low oil and gas prices could lead to lower capital spending and reduced drilling and completion activity, adversely affecting the company's business and financial condition[386] - Litigation risks are increasing against oil and gas companies for contributing to climate change, alleging public nuisances and investor fraud[133] - Access to capital for fossil fuel producers may be restricted due to climate change policies, with institutional investors favoring clean energy[134] - The SEC has finalized a rule requiring climate-related disclosures, but its implementation is currently paused pending litigation[135] Liability and Indemnification - The company assumes responsibility for pollution or contamination from its equipment, while customers generally assume responsibility for other pollution during operations[153] - The company may incur substantial losses that could materially and adversely affect its financial condition due to unforeseen liabilities not addressed by contractual provisions[154] - The company does not currently have or intend to enter into any derivative arrangements to protect against fluctuations in interest rates applicable to its outstanding indebtedness[387] - The company’s MSAs delineate indemnification obligations, with mutual indemnification for personal injury or property loss, except in cases of gross negligence or willful misconduct[153] - The company is exposed to additional liability if it is grossly negligent or commits willful acts causing pollution or contamination[153] - Losses from catastrophic events, such as blowouts, are generally the responsibility of the customer[153]