Aris Water Solutions(ARIS)2025-02-27 21:28Operations and Capacity - As of December 31, 2024, the company has approximately 377,000, 324,000, and 300,000 barrels per day of recycled volumes sold for the years ended December 31, 2024, 2023, and 2022, respectively[13]. - The company operates 68 produced water handling facilities with a total capacity of approximately 1.9 million barrels per day as of December 31, 2024[62]. - The company has secured permits for an additional 195 miles of pipeline and 23 produced water handling facilities, providing a permitted handling capacity of approximately 0.7 million barrels per day[63]. - The company has 20 operational recycling facilities in the Delaware Basin with a treatment capacity of approximately 1.5 million barrels per day and access to 16.4 million barrels of storage capacity[65]. - As of December 31, 2024, the company has approximately 100 contracts with 37 different customers, covering approximately 625,000 dedicated acres[68]. - The company's largest customers, ConocoPhillips and Chevron U.S.A. Inc., represented approximately 53% of total revenue for the year ended December 31, 2024[69]. - The weighted average remaining life of the company's produced water handling acreage dedication contracts is approximately 6.8 years[69]. - The company has a total of approximately 100,000 barrels per day of minimum volume commitments (MVCs) with a weighted average remaining life of 2.1 years[72]. Financial Performance - Total revenue for the year ended December 31, 2024, was 392,118,000 in 2023[333]. - Produced Water Handling revenue increased by 16% to 297,529,000 in 2023, driven by a 78 kbwpd volume increase and higher prices[336]. - Adjusted Operating Margin per Barrel improved by 15% to 0.39 in 2023, reflecting increased efficiency in operations[335]. - Produced Water Handling Volumes rose to 1,120,000 barrels per day in 2024, a 7% increase from 1,042,000 barrels per day in 2023[335]. - Net income for 2024 was 43,412,000 in 2023[333]. - General and Administrative expenses increased by 29% to 50,454,000 in 2023, indicating higher overhead costs[333]. - Skim Oil Volumes recovered increased by 38% to 1,688 barrels per day in 2024, compared to 1,219 barrels per day in 2023[335]. - Water Solutions revenue decreased by 6% to 66,625,000 in 2023, primarily due to a decrease in groundwater volumes sold[333]. - Other Revenue surged by 286% to 2,353,000 in 2023, driven by new agreements and capital recovery charges[333]. - Adjusted EBITDA for the year ended December 31, 2024, was 175.0 million in 2023, reflecting a significant increase in operational performance[355]. Regulatory Environment - The trend in U.S. environmental regulation is increasingly placing more restrictions on activities affecting the environment, which could materially impact the company's financial position[101]. - The company is subject to the Clean Water Act, which imposes strict controls on pollutant discharges into U.S. waters, requiring permits for compliance[106]. - Recent regulatory changes may broaden the scope of the Clean Water Act's jurisdiction, potentially increasing costs and permitting challenges for the company[109]. - The company operates in New Mexico and Texas, where state regulations require seismic activity assessments for new disposal wells to address concerns about induced seismicity[112]. - The company has faced regulatory scrutiny regarding underground injection wells, which may affect its ability to dispose of produced water and other substances[110]. - The company is required to submit daily injection and pressure volumes on a weekly basis due to regulatory requirements[114]. - The company faces potential operational impacts from new federal, state, or local restrictions on hydraulic fracturing, which could increase costs and affect service demand[121]. - The New Mexico Ozone Precursor Rule requires operators to reduce natural gas waste and achieve a reduction in ozone precursor pollutants of approximately 260 million pounds annually[127]. - The company entered into a Candidate Conservation Agreement in January 2023 to gain flexibility in project development in the lesser-prairie chicken range[131]. - The company may incur significant costs due to compliance with chemical safety regulations, including the Lautenberg Act, which requires safety reviews for all chemicals in commerce[132]. - The company is subject to various occupational safety and health regulations to protect worker health and safety, which may require compliance monitoring and disclosure[134]. Capital and Investments - The average outstanding debt balance was 24.9 million in dividends for 2024, with a quarterly dividend of 0.105 for the subsequent quarters[365]. - As of December 31, 2024, the company had a cash balance of 22.8 million, indicating a stable liquidity position[362]. - The company plans to pursue strategic acquisitions to create synergies and enhance customer relationships while maintaining financial flexibility[358]. - Net cash used in investing activities was 149.6 million in 2023, with property, plant, and equipment expenditures decreasing from 100.0 million[368]. - Capital expenditures for 2025 are expected to be between 105.0 million, based on contracted customers' outlooks[373]. - The company has a Credit Facility with commitments of 98.9 million, up from 8.8 million in Q4 2024, with a remaining balance of $6.7 million as of December 31, 2024[382]. Insurance and Risk Management - The company maintains various insurance policies, including general liability and pollution liability, to mitigate risks associated with physical damage and operational interruptions[98]. - The company is committed to evaluating its insurance policy limits as it continues to grow, ensuring adequate coverage for its operations and assets[98]. - The company temporarily curtailed one well in September 2023 due to a seismic event but returned it to pre-curtailment levels on November 1, 2023[114]. - The company operates four wells within the Hat Mesa Seismic Response Area (SRA) and has partially curtailed injection in one well by approximately 5 kbwpd as of December 31, 2024[114]. - The Stanton SRA was established in 2022, but the company no longer operates any wells within this area following the sale of its assets in Martin County in 2023[115]. - The Northern Culberson-Reeves SRA has not materially impacted the company's operations to date[116].