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What changed in Select Water Solutions, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Select Water Solutions, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+509 added−631 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in Select Water Solutions, Inc.'s 2024 10-K

509 paragraphs added · 631 removed · 365 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

242 edited+75 added−212 removed355 unchanged
Biggest changeFurther escalation of conflict in the Middle East, in particular with Iran, a major oil producer, the Houthi movement in Yemen or the Hezbollah movement in Lebanon, could have an adverse effect on our customers and therefore adversely affect our customers’ demand for our services. ​ The ultimate geopolitical and macroeconomic consequences of these conflicts, and any associated sanctions or geopolitical actions, cannot be predicted, and such events, or any further hostilities, could severely impact the world economy and may adversely affect our financial condition.
Biggest changeIn addition, the instability in the Middle East has contributed to volatility in oil and gas prices, as well as disruptions to supply chains. Further escalation of conflict in the Middle East, in particular with Iran, a major oil producer, could have an adverse effect on our customers and therefore adversely affect our customers’ demand for our services.
Water is essential to the development and completion of unconventional oil and gas wells, where producers rely on hydraulic fracturing to stimulate the production of oil and gas from subsurface rock formations with low permeability.
Water is essential to the development and completion of unconventional oil and gas wells, where oil and gas producers rely on hydraulic fracturing to stimulate the production of oil and gas from subsurface rock formations with low permeability.
Up to fifty percent of the water pumped into the well during the hydraulic fracturing process returns as “flowback” during the first several weeks following the well completion process, and a large percentage of the remainder, plus naturally occurring water in the producing formation, is recovered as produced water over the life of the well.
Up to fifty percent of the water pumped into the well during the hydraulic fracturing process returns as “flowback” water during the first several weeks following the well completion process, and a large percentage of the remainder, plus naturally occurring water in the producing formation, is recovered as produced water over the life of the well.
Litigation risks are also increasing, as a number of states, municipalities and other plaintiffs have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts. ​ Moreover, access to capital by fossil fuel producers as well as other companies supporting the oil and gas industry may be impacted by climate change policies.
Litigation risks related to climate change are also increasing, as a number of states, municipalities and other plaintiffs have sought to bring suit against the largest oil and natural gas exploration and production companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages as a result, or alleging that the companies have been aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts. ​ Moreover, access to capital by fossil fuel producers as well as other companies supporting the oil and gas industry may be impacted by climate change policies.
As a result, by renouncing our interest and expectancy in any business opportunity that may be from time to time presented to any member of the SES Group, SCF Group or the Portfolio Companies or any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group, SCF Group or the Portfolio Companies, our business or prospects could be adversely affected if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
As a result, by renouncing our interest and expectancy in any business opportunity that may be from time to time presented to any member of the SES Group or the Portfolio Companies or any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group or the Portfolio Companies, our business or prospects could be adversely affected if attractive business opportunities are procured by such parties for their own benefit rather than for ours.
As a result, any member of the SES Group, SCF Group or the Portfolio Companies or any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group, SCF Group or the Portfolio Companies may become aware, from time to time, of certain business opportunities, such as acquisition opportunities, and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity.
As a result, any member of the SES Group or the Portfolio Companies or any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group or the Portfolio Companies may become aware, from time to time, of certain business opportunities, such as acquisition opportunities, and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity.
Hazardous substances and wastes. The federal Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Pursuant to rules issued by the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
The federal Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. Pursuant to rules issued by the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
To the extent that this lawsuit is adversely decided against New Mexico, the state could, among other things, be required to provide more water downstream to Texas, which could reduce the availability of, and/or access to, water to existing or new water rights holders in New Mexico, resulting in limitations in our ability to obtain or maintain access to water for certain of our customers’ operations in New Mexico.
To the extent that this lawsuit is adversely decided against New Mexico, the state could, among other things, be required to provide more water downstream to Texas, which could reduce the availability of, and/or access to, water to existing or new water rights holders in New Mexico, resulting in limitations on our ability to obtain or maintain access to water for certain of our customers’ operations in New Mexico.
Layflat hose has a significantly lower risk of spills than most other types of temporary jointed pipe as a result of the strength and durability of the hose as well as the secure nature of any coupling joints used to connect multiple sections of hose. Our layflat hose consists primarily of 12-inch and 10-inch diameter segments, powered by mobile pumps.
Layflat hose has a significantly lower risk of spills than most other types of temporary jointed pipe as a result of the strength and durability of the hose as well as the secure nature of any coupling joints used to connect multiple sections of hose. Our layflat hose consists primarily of 12-inch diameter segments, powered by mobile pumps.
Hydraulic fracturing involves the injection of water, sand or other proppants and chemical additives under pressure into targeted geological formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is an important and common practice that is typically regulated by state oil and natural gas commissions or similar agencies.
Hydraulic fracturing activities. Hydraulic fracturing involves the injection of water, sand or other proppants and chemical additives under pressure into targeted geological formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is an important and common practice that is typically regulated by state oil and natural gas commissions or similar agencies.
As a result, we cannot assure you that we will not undergo an ownership change in the future. We believe that the acquisitions of Rockwater and Nuverra resulted in ownership changes with respect to each of Rockwater and Nuverra, respectively. Accordingly, as described above, some or all of our U.S. federal or state or non-U.S.
As a result, we cannot assure you that we will not undergo an ownership change in the future. We believe that the acquisitions of Rockwater, Nuverra and Buckhorn resulted in ownership changes with respect to each of Rockwater, Nuverra and Buckhorn, respectively. Accordingly, as described above, some or all of our U.S. federal or state or non-U.S.
We place a strong emphasis on the safe execution of our operations, including safety training for our employees and the development of a variety of safety programs designed to make us a market leader in safety standards and performance. We have a comprehensive approach to formulating and managing training requirements for all of Select’s operational employees.
We place a strong emphasis on the safe execution of our operations, including safety training for our employees and the development of a variety of safety programs designed to make us a market leader in safety standards and performance. We have a comprehensive approach to formulating and managing training requirements for all of our operational employees.
ITEM 1. BUSINESS Select Water Solutions, Inc. and its consolidated subsidiaries (collectively referred to as “Select,” the “Company,” “we,” “us,” or “our”) is a leading provider of sustainable water-management and chemical solutions to the energy industry in the U.S.
ITEM 1. BUSINESS Select Water Solutions, Inc. and its consolidated subsidiaries (collectively referred to as “Select,” the “Company,” “we,” “us,” or “our”) is a leading provider of sustainable water-management solutions to the energy industry in the U.S.
The amounts payable, as well as the timing of any payments, under the Tax Receivable Agreements are dependent upon future events and significant assumptions, including the timing of the exchanges of SES Holdings LLC Units, the market price of our Class A 55 Table of Contents common stock at the time of each exchange (since such market price will determine the amount of tax basis increases resulting from the exchange), the extent to which such exchanges are taxable transactions, the amount of the exchanging unitholder’s tax basis in its SES Holdings LLC Units at the time of the relevant exchange, the depreciation and amortization periods that apply to the increase in tax basis, the amount of net operating losses available to us as a result of reorganization transactions entered into in connection with the Select 144A Offering, the amount and timing of taxable income we generate in the future, the U.S. federal income tax rate then applicable, and the portion of our payments under the Tax Receivable Agreements that constitute imputed interest or give rise to depreciable or amortizable tax basis.
The amounts payable, as well as the timing of any payments, under the Tax Receivable Agreements are dependent upon future events and significant assumptions, including the timing of the exchanges of SES Holdings LLC Units, the market price of our Class A common stock at the time of each exchange (since such market price will determine the amount of tax basis increases resulting from the exchange), the extent to which such exchanges are taxable transactions, the amount of the exchanging unitholder’s tax basis in its SES Holdings LLC Units at the time of the relevant exchange, the depreciation and amortization periods that apply to the increase in tax basis, the amount of net operating losses available to us as a result of reorganization transactions entered into in connection with the Select 144A Offering, the amount and timing of taxable income we generate in the future, the U.S. federal income tax rate then applicable, and the portion of our payments under the Tax Receivable Agreements that constitute imputed interest or give rise to depreciable or amortizable tax basis.
Our Water Treatment team works closely with our Chemical Technologies service line as well as our water monitoring, reuse and recycling teams within our Water Services and Water Infrastructure segments to advise our customers on the best economic and operational solutions to manage their water quality and chemical solutions needs. ​ Chemical Technologies Geographic Areas of Operation We provide Chemical Technologies services in most of the major unconventional shale plays in the continental U.S.
Our Water Treatment team works closely with our Completion Chemicals service line as well as our water monitoring, reuse and recycling teams within our Water Services and Water Infrastructure segments to advise our customers on the best economic and operational solutions to manage their water quality and chemical solutions needs. ​ Chemical Technologies Geographic Areas of Operation We provide Chemical Technologies services in most of the major unconventional shale plays in the continental U.S.
While we do not believe that the acquisitions of either Rockwater or Nuverra resulted in an ownership change under Section 382 of the Code with respect to us, future issuances, sales and/or exchanges of our stock (including in connection with an exercise of the Exchange Right or other transactions beyond our control), taken together with prior transactions with respect to our stock, could cause us to undergo an ownership change.
While we do not believe that the acquisitions of Rockwater, Nuverra or Buckhorn resulted in an ownership change under Section 382 of the Code with respect to us, future issuances, sales and/or exchanges of our stock (including in connection with an exercise of the Exchange Right or other transactions beyond our control), taken together with prior transactions with respect to our stock, could cause us to undergo an ownership change.
These solutions incorporate both new oil and gas well development as well as ongoing production activity, including recycling and disposal of flowback and produced water as well as the associated logistics.
These solutions incorporate both new oil and gas well development and ongoing production activity, including recycling and disposal of flowback and produced water and the associated logistics.
We offer ASTs ranging in size from 4,500 to 80,000 barrels (or 189,000 to 3.4 million gallons) per tank, with remote monitoring capability in every major U.S. basin. Our ASTs provide a high-volume, low-cost containment alternative to traditional mobile storage tanks, which typically hold 500 barrels (or 21,000 gallons).
We offer ASTs ranging in size from 4,500 to 82,000 barrels (or 189,000 to 3.4 million gallons) per tank, with remote monitoring capability in every major U.S. basin. Our ASTs provide a high-volume, low-cost containment alternative to traditional mobile storage tanks, which typically hold 500 barrels (or 21,000 gallons).
To the extent that any new final rule or rules issued by the EPA and Corps under the Biden Administration expands the scope of the CWA’s jurisdiction in areas where we or our customers conduct operations, such developments could increase compliance expenditures or mitigation costs, contribute to delays, restrictions, or cessation of the development of projects, and also reduce the rate of production of natural gas or crude oil from operators with whom we have a business relationship and, in turn, have a material adverse effect on our business, results of operations and cash flows.
To the extent that any new final rule or rules issued by the EPA and Corps expands the scope of the CWA’s jurisdiction in areas where we or our customers conduct operations, such developments could increase compliance expenditures or mitigation costs, contribute to delays, restrictions, or cessation of the development of projects, and also reduce the rate of production of natural gas or crude oil from operators with whom we have a business relationship and, in turn, have a material adverse effect on our business, results of operations and cash flows.
We intend to operate such that SES Holdings does not become a publicly-traded partnership taxable as a corporation for U.S. federal income tax purposes. A “publicly-traded partnership” is a partnership, the interests of which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof.
We intend to operate such that SES Holdings does not become a publicly-traded partnership taxable as a corporation for U.S. federal income tax purposes. A “publicly-traded partnership” is a partnership, the interests of which are traded on an established securities market or are readily tradeable on a secondary market or the substantial equivalent thereof.
As a leader in the water solutions industry, we place the utmost importance on safe, environmentally responsible management of oilfield water throughout the lifecycle of a well. Additionally, we believe that responsibly managing water resources through our operations to help conserve and protect the environment in the communities in which we operate is paramount to our continued success.
As a leader in the water management industry, we place the utmost importance on safe, environmentally responsible management of water throughout the lifecycle of a well. Additionally, we believe that responsibly managing water resources through our operations to help conserve and protect the environment in the communities in which we operate is paramount to our continued success.
In the event that an ownership change has occurred, or were to occur, utilization of the relevant corporation’s NOLs would be subject to an annual limitation under Section 382 of the 57 Table of Contents Code, determined by multiplying the value of the relevant corporation’s stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in Section 382 of the Code, and potentially increased for certain gains recognized within five years after the ownership change to the extent of certain net built-in gains at the time of the ownership change.
In the event that an ownership change has occurred, or were to occur, utilization of the relevant corporation’s NOLs would be subject to an annual limitation under Section 382 of the Code, determined by multiplying the value of the relevant corporation’s stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in Section 382 of the Code, and potentially increased for certain gains recognized within five years after the ownership change to the extent of certain net built-in gains at the time of the ownership change.
Demand for our services is largely influenced by the level of drilling and completion activity by E&P companies, which in turn depends largely on the current and anticipated profitability of developing oil and natural gas reserves, as well as the ongoing production of existing wells.
Demand for our services is influenced by the level of drilling and completion activity by E&P companies in the U.S., which in turn depends largely on the current and anticipated profitability of developing oil and natural gas reserves, as well as the ongoing production of existing wells.
Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the U.S. Internal Revenue Service or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows.
Any change or modification of current tax laws, any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the U.S. Internal Revenue Service or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows.
The adoption of any federal, state or local laws or the implementation of regulations or issuance of executive orders regarding hydraulic fracturing activities or leasing activities on federal properties could potentially cause a 46 Table of Contents decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our liquidity, results of operations, and financial condition.
The adoption of any federal, state or local laws or the implementation of regulations or issuance of executive orders regarding hydraulic fracturing activities or leasing activities on federal properties could potentially cause a decrease in the completion of new oil and gas wells and an associated decrease in demand for our services and increased compliance costs and time, which could have a material adverse effect on our liquidity, results of operations, and financial condition.
Increased regulatory requirements regarding our existing or future wastewater disposal facilities, including the 47 Table of Contents requirement to pay increased closure and post-closure costs or to establish increased financial assurance for such activities could substantially increase our operating costs and adversely affect our business, financial condition and results of operations. ​ State and federal legislation and regulatory initiatives relating to our disposal operations and seismicity could harm our business. ​ Our disposal business and the number of SWDs we operate has significantly increased since 2021.
Increased regulatory requirements regarding our existing or future wastewater disposal facilities, including the requirement to pay increased closure and post-closure costs or to establish increased financial assurance for such activities could substantially increase our operating costs and adversely affect our business, financial condition and results of operations. ​ State and federal legislation and regulatory initiatives relating to our disposal operations and seismicity could harm our business. ​ Our disposal business and the number of SWDs we operate has significantly increased since 2021.
The fair value of goodwill is based on estimates and assumptions applied by us such as revenue growth rates, operating margins, weighted-average costs of capital, market multiples, and future market conditions and as affected by numerous factors, including the general economic environment and levels of exploration and production activity of oil 59 Table of Contents and gas companies, our financial performance and trends, and our strategies and business plans, among others.
The fair value of goodwill is based on estimates and assumptions applied by us such as revenue growth rates, operating margins, weighted-average costs of capital, market multiples, and future market conditions and as affected by numerous factors, including the general economic environment and levels of exploration and production activity of oil and gas companies, our financial performance and trends, and our strategies and business plans, among others.
As a company, we continue to provide access to water as demanded by our customers and have significantly increased our focus on the recycling and reuse of produced water, as well as assessing other industrial water sources, to meet the industry’s water demand and align our operations with the goals of our customers.
We continue to provide access to water as demanded by our customers and have significantly increased our focus on the recycling and reuse of produced water, as well as assessing other industrial water sources, to meet the industry’s water demand and align our operations with the goals of our customers.
These conditions can cause: ● disruption in operations; ● substantial repair or remediate costs; ● personal injury or loss of human life; ● significant damage to or destruction of property, plant and equipment; ● environmental pollution, including groundwater contamination; ● impairment or suspension of operations; and ● substantial revenue loss.
These conditions can cause: disruption in operations; substantial repair or remediation costs; personal injury or loss of human life; significant damage to or destruction of property, plant and equipment; environmental pollution, including groundwater contamination; impairment or suspension of operations; and substantial revenue loss.
Furthermore, in response to seismic events in the past several years near underground disposal wells used for the disposal by injection of produced water resulting from oil and gas activities, federal and some state agencies are 25 Table of Contents investigating whether such wells have caused increased seismic activity, and some states have restricted, suspended or shut down the use of such disposal wells in certain areas prone to increased seismic activity.
Furthermore, in response to seismic events in the past several years near underground disposal wells used for the disposal by injection of produced water resulting from oil and gas activities, federal and some state agencies are investigating whether such wells have caused increased seismic activity, and some states have restricted, suspended or shut down the use of such disposal wells in certain areas prone to increased seismic activity.
The adoption and implementation of any international, federal, regional or state legislation, executive actions, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of consuming fossil fuels.
The adoption and implementation of any international, federal, regional or state legislation, executive actions, regulations or other regulatory initiatives that impose more stringent 39 Table of Contents standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased compliance costs or costs of consuming fossil fuels.
Although the Company does not have operations overseas, these conflicts elevate the likelihood of supply chain disruptions, heightened volatility in crude oil and natural gas prices and negative effects on our ability to raise additional capital when required and could have a material adverse impact on our business, financial condition or future results.
Although the Company does not have operations overseas, these conflicts elevate the likelihood of supply chain disruptions, heightened volatility in crude oil and natural gas prices and negative effects on our ability to raise additional capital when required and could have a material adverse impact on our business, financial condition or future results. ​ OPEC+ policy decisions could have a material adverse impact on our business, financial condition or future results.
To the extent SES Holdings has available cash, we intend to cause SES Holdings to make (i) generally pro rata distributions to its unitholders, including us, in an amount at least sufficient to allow us to pay our taxes, pay dividends and to make payments under the Tax Receivable Agreements that we entered into in connection with our restructuring at the Select 144A Offering and any subsequent tax receivable agreements that we may enter into in connection with future acquisitions and (ii) non-pro rata payments to us to reimburse us for our corporate and other overhead expenses.
To the extent SES Holdings has available cash, we intend to cause SES Holdings to make (i) generally pro rata distributions to its unitholders, including us, in an amount at least sufficient to allow us to pay our taxes, pay dividends and to make payments under the Tax Receivable Agreements that we entered 46 Table of Contents into in connection with our restructuring at the Select 144A Offering and any subsequent tax receivable agreements that we may enter into in connection with future acquisitions and (ii) non-pro rata payments to us to reimburse us for our corporate and other overhead expenses.
ASTs can also be set up as part of our Water Treatment & Recycling service offerings, which can be bundled with our Water Sourcing and Water Transfer services. A 40,000 barrel AST can be delivered by three trucks and installed in a single day, replacing the equivalent of 80 trucks delivering individual 500-barrel mobile storage tanks.
ASTs can also be set up as part of our Water Treatment & Recycling service offerings, which can be bundled with our Water Sourcing and Water 16 Table of Contents Transfer services. A 40,000 barrel AST can be delivered by three trucks and installed in a single day, replacing the equivalent of 80 trucks delivering individual 500-barrel mobile storage tanks.
“Certain Relationships and Related Transactions, and Director Independence.” 56 Table of Contents If SES Holdings were to become a publicly-traded partnership taxable as a corporation for U.S. federal income tax purposes, we and SES Holdings might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made by us under the Tax Receivable Agreements even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
“Certain Relationships and Related Transactions, and Director Independence.” If SES Holdings were to become a publicly-traded partnership taxable as a corporation for U.S. federal income tax purposes, we and SES Holdings might be subject to potentially significant tax inefficiencies, and we would not be able to recover payments previously made by us under the Tax Receivable Agreements even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
To support our sales strategy, we have developed a proprietary database that integrates market information such as current rig, completion crew and permit activity and the location of our strategic water sources and networks. 22 Table of Contents Our marketing activities are performed by an internal marketing group with input from key executives.
To support our sales strategy, we have developed a proprietary database that integrates market information such as current rig, completion crew and permit activity and the location of our strategic water sources and networks. Our marketing activities are performed by an internal marketing group with input from key executives.
Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. We are subject to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and therefore are required to make a formal assessment of the effectiveness of our internal controls over financial 50 Table of Contents reporting for that purpose.
Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. We are subject to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and therefore are required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose.
There can be no assurance that confidentiality and other agreements into which we enter and have entered will not be breached, that these agreements will provide meaningful protection for our trade secrets or 31 Table of Contents proprietary know-how, or that adequate remedies will be available in the event of an unauthorized use or disclosure of such trade secrets and know-how.
There can be no assurance that confidentiality and other agreements into which we enter and have entered will not be breached, that these agreements will provide meaningful protection for our trade secrets or proprietary know-how, or that adequate remedies will be available in the event of an unauthorized use or disclosure of such trade secrets and know-how.
For instance, some states require E&P companies to report certain information regarding the water they use for hydraulic fracturing and to 37 Table of Contents monitor the quality of groundwater surrounding some wells stimulated by hydraulic fracturing. Any such decrease in the availability of water, or demand for water services, could adversely affect our business and results of operations.
For instance, some states require E&P companies to report certain information regarding the water they use for hydraulic fracturing and to monitor the quality of groundwater surrounding some wells stimulated by hydraulic fracturing. Any such decrease in the availability of water, or demand for water services, could adversely affect our business and results of operations.
Certain large midstream companies offer some water-oriented and infrastructure services, though these are generally ancillary to their core businesses of gathering and transporting oil and gas volumes. There are also public water-midstream-focused competitors. Additionally, certain of our E&P customers have invested in water infrastructure 20 Table of Contents for their own operations.
Certain large midstream companies offer some water-oriented and infrastructure services, though these are generally ancillary to their core businesses of gathering and transporting oil and gas volumes. There are also public water-midstream-focused competitors. Additionally, certain of our E&P customers have invested in water infrastructure for their own operations.
We have an internal program of inspection designed to monitor and enforce compliance with worker safety requirements. In addition, as part of the services we provide, we operate as a motor carrier and therefore are subject to regulation by the U.S. Department of Transportation (“U.S. DOT”) and analogous state agencies.
We have an internal program of inspection designed to monitor and enforce compliance with worker safety requirements. 27 Table of Contents In addition, as part of the services we provide, we operate as a motor carrier and therefore are subject to regulation by the U.S. Department of Transportation (“U.S. DOT”) and analogous state agencies.
However, despite this general allocation of risk, we may be unsuccessful in enforcing contractual terms, incur an unforeseen liability that is not addressed by the scope of the contractual provisions or be required to enter into an MSA with terms that vary from our standard allocations of risk, as described above.
However, despite this general allocation of risk, we may be unsuccessful in enforcing contractual terms, incur an unforeseen liability that is not addressed by the scope of the contractual provisions or be 29 Table of Contents required to enter into an MSA with terms that vary from our standard allocations of risk, as described above.
Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our Class A common stock respecting dividends and distributions, as our board of directors may determine.
Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our Class A common stock respecting dividends and distributions, as our 45 Table of Contents board of directors may determine.
Almost half of our revenues are derived from our operations in the Permian Basin of Texas and New Mexico , making us vulnerable to risks associated with geographic concentration generally and the Permian Basin specifically, including Basin-specific supply and demand factors, regulatory changes and severe weather impacts that could materially and adversely affect our business . ​ The Permian Basin of Texas and New Mexico is presently our largest operating region, accounting for approximately 48% of our revenue in 2023 and 47% of our revenue in 2022.
Almost half of our revenues are derived from our operations in the Permian Basin of Texas and New Mexico , making us vulnerable to risks associated with geographic concentration generally and the Permian Basin specifically, including Basin-specific supply and demand factors, regulatory changes and severe weather impacts that could materially and adversely affect our business . ​ The Permian Basin of Texas and New Mexico is presently our largest operating region, accounting for approximately 48% of our revenue in both 2024 and in 2023.
Additionally, we rely on a number of vendors, suppliers, and in some cases sole-source suppliers, service providers, toll manufacturers and collaborations with other industry participants to provide us with chemicals, feedstocks and other raw materials, along with energy sources and, in certain cases, facilities that we need to operate our business.
Additionally, we rely on a number of vendors, suppliers, and in some cases sole-source suppliers, service providers, toll manufacturers and collaborations with other industry participants to provide us with chemicals, feedstocks 37 Table of Contents and other raw materials, along with energy sources and, in certain cases, facilities that we need to operate our business.
However, market conditions could trigger constraints in the supply chain of certain equipment or replacement parts for such equipment, which could have a material adverse effect on our business. 45 Table of Contents The majority of our risk associated with supply chain constraints occurs in those situations where we have a relationship with a single supplier for a particular equipment set.
However, market conditions could trigger constraints in the supply chain of certain equipment or replacement parts for such equipment, which could have a material adverse effect on our business. The majority of our risk associated with supply chain constraints occurs in those situations where we have a relationship with a single supplier for a particular equipment set.
Any loss of the RCRA exclusion for drilling fluids, produced waters and related wastes could result in an increase in our and our oil and gas producing customers’ costs to manage and dispose of generated wastes, which could have a material adverse effect on our and our customers’ results of operations and financial position.
Any loss of the RCRA exclusion for drilling fluids, produced waters and related wastes could result in an increase in our and our oil and gas producing customers’ costs to manage and dispose of generated wastes, which 21 Table of Contents could have a material adverse effect on our and our customers’ results of operations and financial position.
Any cost increase that we are not able to pass on to our customers could have a material adverse effect on our business, results of operations, financial condition and liquidity. There are several raw materials for which there are only a limited number of suppliers or a single supplier.
Any cost increase that we are not able to pass on to our customers could have a material adverse effect on our business, results of operations, financial condition and liquidity. 38 Table of Contents There are several raw materials for which there are only a limited number of suppliers or a single supplier.
Depending on the requirements of a project, layflat hose may run from a water source directly to a containment area, such as an above-ground pit or storage tank, or to a wellsite. Water can also be transferred from one containment 16 Table of Contents area to another as part of managing a larger supply network.
Depending on the requirements of a project, layflat hose may run from a water source directly to a containment area, such as an above-ground pit or storage tank, or to a wellsite. Water can also be transferred from one containment area to another as part of managing a larger supply network.
Endangered Species. The federal Endangered Species Act (the “ESA”) restricts activities that may affect endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act (the “MBTA”). The U.S.
Endangered Species. The federal Endangered Species Act (the “ESA”) restricts activities that may affect endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act (the “MBTA”).
These laws 48 Table of Contents and regulations may take the form of laws, regulations, executive actions and various other legal initiatives and result in the imposition of numerous obligations on our operations and the operations of our customers. See Part I, Item 1. “Business – Environmental and Occupational Safety and Health Matters” for more discussion on these matters.
These laws and regulations may take the form of laws, regulations, executive actions and various other legal initiatives and result in the imposition of numerous obligations on our operations and the operations of our customers. See Part I, Item 1. “Business – Environmental and Occupational Safety and Health Matters” for more discussion on these matters.
In addition, the effect of fluctuations on supply and demand may become more pronounced within specific geographic oil and natural gas producing areas such as the Permian Basin, which may cause these conditions to occur with greater frequency or magnify the effects of these conditions.
In addition, the effect of fluctuations on supply and demand may become more pronounced within specific geographic oil and natural gas producing areas such as the Permian Basin, which may cause these conditions to occur with greater frequency or 31 Table of Contents magnify the effects of these conditions.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an unforeseen liability falling outside the scope of such allocation or may be required to enter into an MSA with terms that vary from the above allocations of risk.
However, despite this general allocation of risk, we might not succeed in enforcing such contractual allocation, might incur an unforeseen liability falling outside the scope 33 Table of Contents of such allocation or may be required to enter into an MSA with terms that vary from the above allocations of risk.
In addition, payments we make under the Tax Receivable Agreements will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return.
In addition, payments we make under the Tax Receivable Agreements will be increased by any interest accrued from the due date (without extensions) of the corresponding tax return. We commenced payments under the Tax Receivable Agreements in 2024.
Our future results may be impacted by uncertainty caused by a worldwide economic downturn, continued volatility or deterioration in the debt and equity capital markets, inflation, deflation or other adverse economic conditions that may negatively affect us or parties with whom we do business resulting in a reduction in our customers’ spending and their non-payment or inability to perform obligations owed to us, such as the failure of customers to honor their commitments or the failure of major suppliers to complete orders.
Our future results may be impacted by uncertainty caused by a worldwide economic downturn, continued volatility or deterioration in the debt and equity capital markets, inflation, international conflicts, public health crises, deflation or other adverse economic conditions that may negatively affect us or parties with whom we do business resulting in a reduction in our customers’ spending and their non-payment or inability to perform obligations owed to us, such as the failure of customers to honor their commitments or the failure of major suppliers to complete orders.
This reduction 17 Table of Contents in truck traffic provides a significant reduction in traffic congestion in local communities as well as the associated emissions from the transportation of mobile storage tanks. Our modular tank design allows for twenty different tank configurations to meet each customer’s individual needs.
This reduction in truck traffic provides a significant reduction in traffic congestion in local communities as well as the associated emissions from the transportation of mobile storage tanks. Our modular tank design allows for twenty different tank configurations to meet each customer’s individual needs.
Our customers’ current multi-well pad development plans can require in excess of five million barrels to complete all of the wells on the pad. Furthermore, in recent years and in the pursuit of further efficiencies, operators have advanced the development of “zipper fracturing” and “simul-fracturing” operations.
Our customers’ current multi-well pad development plans can require in excess of five million barrels to complete all of the wells on the pad. Furthermore, in recent years and in the pursuit of further efficiencies, operators have advanced the development of “zipper fracturing,” “simul-fracturing” and “trimul-fracturing” operations.
New technology could also make it easier for 42 Table of Contents our customers to vertically integrate their operations or reduce the amount of waste produced in oil and gas drilling and production activities, thereby reducing or eliminating the need for third-party disposal.
New technology could also make it easier for our customers to vertically integrate their operations or reduce the amount of waste produced in oil and gas drilling and production activities, thereby reducing or eliminating the need for third-party disposal.
The Federal Water Pollution Control Act, also known as the Clean Water Act (“CWA”), and analogous state laws, impose restrictions and strict controls with respect to the discharge of pollutants, 24 Table of Contents including spills and leaks of oil and hazardous substances, into state waters and waters of the U.S.
The Federal Water Pollution Control Act, also known as the Clean Water Act (“CWA”), and analogous state laws, impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and hazardous substances, into state waters and waters of the U.S.
Based on specific market factors and circumstances at the time of prospective impairment reviews and the continuing evaluation of development plans, economics and other factors, we may be required to write down the carrying value of our long-lived and finite- lived intangible assets.
Based on specific market factors and circumstances at the time of prospective impairment reviews and the continuing evaluation of development plans, economics and other factors, we may be required to write 50 Table of Contents down the carrying value of our long-lived and finite- lived intangible assets.
We currently operate over 900 tractor trailers and body load trucks and believe we are one of the largest providers of fluids hauling to the oil and gas industry.
We currently operate over 800 tractor trailers and body load trucks and believe we are one of the largest providers of fluids hauling to the oil and gas industry.
Our Fluids Hauling group, provides transportation for water and various drilling, completion, and production fluids, utilizing our fleet of vacuum, winch and kill trucks, hot oilers, and hydrovacs, along with other related assets, such as mobile storage tanks. Our operations span the Permian, MidCon, Bakken, Eagle Ford, Marcellus/Utica, Haynesville, and Rockies regions. ● Water Monitoring.
Our Fluids Hauling group provides transportation for water and various drilling, completion, and production fluids, utilizing our fleet of vacuum, winch and kill trucks, hot oilers, and hydrovacs, along with other related assets, such as mobile storage tanks. Our operations span the Permian, MidCon, Bakken, Eagle Ford, Marcellus/Utica, Haynesville, and Rockies regions. ​ ● Flowback and Well Testing.
These and other states have begun to consider or adopt laws and regulations that may restrict or otherwise prohibit oilfield fluid disposal in certain areas or underground disposal wells, and state agencies implementing these requirements may issue orders directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations or impose standards related to disposal well construction and monitoring.
These and other states have begun to consider or adopt laws and regulations 40 Table of Contents that may restrict or otherwise prohibit oilfield fluid disposal in certain areas or underground disposal wells, and state agencies implementing these requirements may issue orders directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations or impose standards related to disposal well construction and monitoring.
See Part III, Item 13. “Certain Relationships and Related Transactions, and Director Independence.” 53 Table of Contents We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock.
See Part III, Item 13. “Certain Relationships and Related Transactions, and Director Independence.” We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock.
Treasury regulations provide for certain safe harbors from treatment as a publicly-traded partnership, and we intend to operate such that exchanges or other transfers of SES Holdings LLC Units qualify for one or more such safe harbors.
Applicable U.S. Treasury regulations provide for certain safe harbors from treatment as a publicly-traded partnership, and we intend to operate such that exchanges or other transfers of SES Holdings LLC Units qualify for one or more such safe harbors.
We believe water is a valuable resource and understand that the energy industry as well as other industries and the general public are competing for this resource.
We believe water is a valuable resource and understand that the energy industry, other industries, and the general public are competing for this resource.
Schmitz, and our Executive Vice President, Business Strategy, Cody Ortowski, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. Mr.
Schmitz, and our Executive Vice President, Business and Regulatory Affairs, Cody Ortowski, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. Mr.
If we incur additional indebtedness or issue additional equity securities, our profitability may be reduced and our stockholders may experience significant dilution. Our Sustainability-Linked Credit Facility subjects us to various financial and other restrictive covenants. These restrictions may limit our operational or financial flexibility and could subject us to potential defaults under our Sustainability-Linked Credit Facility.
If we incur additional indebtedness or issue additional equity securities, our profitability may be reduced and our stockholders may experience significant dilution. 43 Table of Contents Our Sustainability-Linked Credit Facility subjects us to various financial and other restrictive covenants. These restrictions may limit our operational or financial flexibility and could subject us to potential defaults under our Sustainability-Linked Credit Facility.
Many potential hazards can cause 39 Table of Contents bodily injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties and liabilities.
Many potential hazards can cause bodily injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties and liabilities.
Moreover, to an increasing extent, many institutional investors have announced plans to transition their portfolios to net-zero greenhouse gas emissions over the next 2-3 decades as part of a commitment to combat climate change.
Moreover, many institutional investors have announced plans to transition their portfolios to net-zero greenhouse gas emissions over the next 2-3 decades as part of a commitment to combat climate change.
For example, our 52 Table of Contents amended and restated certificate of incorporation authorizes our board of directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock without any vote or action by our stockholders.
For example, our amended and restated certificate of incorporation authorizes our board of directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock without any vote or action by our stockholders.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by applicable law, we renounce any interest or expectancy in any business opportunity that involves any aspect of the energy business or industry and that may be from time to time presented to any member of (i) Legacy Owner Holdco; Crestview Partners II SES Investment, LLC; any funds, limited partnerships or other investment entities or vehicles managed by Crestview Partners or controlled by Crestview GP; B-29 Investments, LP; Sunray Capital, LP; Proactive Investments, LP and their respective affiliates, other than us (collectively, the “SES Group”); (ii) SCF-VI, L.P., SCF-VII, L.P. and SCF-VII(A), L.P. and their respective affiliates, other than us (collectively, the “SCF Group”); (iii) the other entities (existing and future) that participate in the energy industry and in which the SES Group and SCF Group own substantial equity interests (the “Portfolio Companies”) or (iv) any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group, the SCF Group or the Portfolio Companies, including our Chairman, President and CEO, John D.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by applicable law, we renounce any interest or expectancy in any business opportunity that involves any aspect of the energy business or industry and that may be from time to time presented to any member of (i) Legacy Owner Holdco; Crestview Partners II SES Investment, LLC; any funds, limited partnerships or other investment entities or vehicles managed by Crestview Partners or controlled by Crestview GP; B-29 Investments, LP; Sunray Capital, LP; Proactive Investments, LP and their respective affiliates, other than us (collectively, the “SES Group”); (ii) the other entities (existing and future) that participate in the energy industry and in which the SES Group owns substantial equity interests (the “Portfolio Companies”) or (iii) any director or officer of the corporation who is also an employee, partner, member, manager, officer or director of any member of the SES Group or the Portfolio Companies, including our Chairman, President and CEO, John D.
Through laboratory and 8 Table of Contents application experience, we apply our expertise in chemistry to develop, manufacture and supply a wide range of specialized and customizable products to our customers for their well completion fluid systems.
Through laboratory and application experience, we apply our expertise in chemistry to develop, manufacture and supply a wide range of specialized and customizable products to our customers for their well completion fluid systems.
Volatility in oil prices or natural gas prices (or the perception that oil prices or natural gas prices will decrease) affects the spending patterns of our customers and may result in the drilling or completion of fewer new wells or lower 33 Table of Contents spending on existing wells.
Volatility in oil prices or natural gas prices (or the perception that oil prices or natural gas prices will decrease) affects the spending patterns of our customers and may result in the drilling or completion of fewer new wells or lower spending on existing wells.
The payments under the Tax Receivable Agreements are not conditioned upon the continued ownership interest in either SES Holdings or us of any holder of rights under the Tax Receivable Agreements. See Part III, Item 13.
The 47 Table of Contents payments under the Tax Receivable Agreements are not conditioned upon the continued ownership interest in either SES Holdings or us of any holder of rights under the Tax Receivable Agreements. See Part III, Item 13.
Our technology also provides us with the unique ability to detect potential issues and prevent them from occurring, as well as to reduce manpower and equipment on certain jobs, in turn mitigating safety and environmental risks while reducing overall fuel emissions. ​ ● Flowback and Well Testing.
Our technology also provides us with the unique ability to detect potential issues and prevent them from occurring, as well as to reduce manpower and equipment on certain jobs, in turn mitigating safety and environmental risks while reducing overall fuel emissions. ​ ● Water Containment.
Following our treatment applications, fluid samples are analyzed again to ensure the treatment is 21 Table of Contents optimized to reduce overall chemical investment. Water Treatment provides disinfection solutions to neutralize microorganisms, hydrogen sulfide (H 2 S), iron sulfide, phenols, mercaptans, and polymers in the surface water.
Following our treatment applications, fluid samples are analyzed again to ensure the treatment is optimized to reduce overall chemical investment. Water Treatment provides disinfection solutions to neutralize microorganisms, hydrogen sulfide (H 2 S), iron sulfide, phenols, mercaptans, and polymers in the surface water.
Such increased interest rates may prevent our customers from being able to obtain debt financing at favorable rates, or at all, which could result in a reduction in our customers’ spending for our services. In addition, in the course of our business we hold accounts receivable from our customers.
For example, elevated interest rates may prevent our customers from being able to obtain debt financing at favorable rates, or at all, which could result in a reduction in our customers’ spending for our services. In addition, in the course of our business we hold accounts receivable from our customers.
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws impose various procedural and other requirements, which could make it more difficult for stockholders to effect certain corporate actions.
Provisions of our amended and restated certificate of incorporation and amended and restated bylaws impose various procedural and other 44 Table of Contents requirements, which could make it more difficult for stockholders to effect certain corporate actions.
Numerous governmental entities, including the EPA, the U.S. Occupational Safety and Health Administration (“OSHA”) and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring difficult and costly actions.
Numerous governmental entities, including the EPA, the U.S. Occupational Safety and Health Administration (“OSHA”) and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits 20 Table of Contents issued under them, often requiring difficult and costly actions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAccordingly, our Board of Directors and our Audit Committee receive regular updates on potential cybersecurity risks and mitigation strategies from the Chief Technology Officer. Management is responsible for assessing and managing risks from cybersecurity threats and implementing the Company’s cybersecurity strategies.
Biggest changeBoard of Directors’ Oversight and Management’s Role Our Board of Directors has delegated the responsibility for the oversight of risks from cybersecurity threats and our cybersecurity practices to the Audit Committee. Our Board of Directors and our Audit Committee receive regular updates on potential cybersecurity risks and mitigation strategies from the Company’s Chief Technology Officer (“CTO”).
Our Vice President has an undergraduate degree from The University of Houston and has served in various Information Technology and Information Security roles for over 20 years across Oil & Gas, Consulting, and Power Generation sectors.
Our Vice President has an undergraduate degree from The University of Houston and has served in various Information Technology and Information Security roles for over 20 years across oil and gas, consulting, and power generation sectors.
To facilitate effective oversight, our Technology Team holds regular discussions with our management team and the Board of Directors around cybersecurity risks, incident trends, and the effectiveness of our cybersecurity measures. ​
To facilitate effective oversight, our Technology Team holds regular discussions with our management team, the Audit Committee and the Board of Directors around cybersecurity risks, incident trends, and the effectiveness of our cybersecurity measures. ​
Our CTO has an Engineering degree from Rice University, a Master of Business Administration from Harvard Business School, more than 20 years' work experience, and a background in leading digital / software development organizations. Supporting our CTO is the Company’s Vice President of Corporate Platform and Infrastructure and our team of cybersecurity experts.
Our CTO has an Engineering degree from Rice University, a Master of Business Administration from Harvard Business School, more than 20 years' work experience, and a background in leading digital / software development organizations. Supporting our CTO is the Company’s Vice President of Corporate Platform and Infrastructure and our team of cybersecurity experts (collectively with the CTO, the “Technology Team”).
In the event of a cybersecurity incident, we have standard incident response practices that contain, analyze, and recover with the goal of minimizing the impact and restoring normal operations after each event. ​ ● Cybersecurity Training and Awareness: Employees receive periodic cybersecurity trainings including phishing campaigns and general awareness campaigns. ​ ● Access Controls: Users are provided with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions.
In the event of a cybersecurity incident, we utilize a range of standard incident response practices to attempt to identify, analyze, contain, and recover the event with the goal of minimizing the impact and restoring normal operations. ​ ● Cybersecurity Training and Awareness: We require that our employees receive periodic cybersecurity trainings including phishing campaigns and general awareness campaigns. ​ 51 Table of Contents ● Access Controls: Users are provided with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions.
ITEM 1C. CYBERSECURITY ​ Processes for Assessing, Identifying, and Managing Cybersecurity Risks ​ Our industry has become increasingly dependent on digital technologies to conduct certain processing activities. For example, we depend on digital technologies to perform many of our services and to process and record financial and operating data.
ITEM 1C. CYBERSECURITY Processes for Assessing, Identifying, and Managing Cybersecurity Risks ​ Our industry has become increasingly dependent on digital technologies to conduct certain processing activities.
No security measure is infallible. See “Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information or operational technology systems. Board of Directors’ Oversight and Management’s Role Our Board of Directors and our Audit Committee oversee risks from cybersecurity threats and our cybersecurity practices.
No security measure is infallible. See “Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information or operational technology systems.
We aim to assess the risks from cybersecurity threats that impact select suppliers and third-party service providers with whom we share personal identifying and confidential information.
We have implemented processes to oversee and identify the risks from cybersecurity threats that impact select suppliers and third-party service providers with whom we share personal identifying and confidential information. The above cybersecurity risk management processes are integrated into the Company’s overall enterprise risk management processes.
The above cybersecurity risk management processes are integrated into the Company’s overall enterprise risk management processes. 60 Table of Contents Impact of Risks from Cybersecurity Threats As of the date of this Report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Impact of Risks from Cybersecurity Threats As of the date of this Report, though the Company and our service providers have experienced certain cybersecurity incidents, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
The Company has a Chief Technology Officer (“CTO”) that focuses on current and emerging cybersecurity matters and is responsible for establishing and maintaining the Company’s cybersecurity-related policies and procedures.
Management is responsible for assessing and managing risks from cybersecurity threats and implementing the Company’s cybersecurity strategies. Our CTO focuses on current and emerging cybersecurity matters and is responsible for establishing and maintaining the Company’s cybersecurity-related policies and procedures.
Removed
We recognize the importance of assessing and managing material risks associated with cybersecurity threats.
Added
For example, we depend on digital technologies to perform many of our services, to process and record financial and operating data and to collect and store sensitive data, including our proprietary business information and personally identifiable information of our employees and others. We recognize the importance of assessing and managing material risks associated with cybersecurity threats.
Removed
In the event of a cybersecurity incident, we utilize a range of standard incident response practices that identify, analyze, contain, and recover the event with the goal of minimizing the impact and restoring normal operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeHowever, we continue to evaluate the purchase or lease of additional properties or the sale or consolidation of our properties, as our business requires. ​ The following table shows our active leased and owned properties categorized by segment as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Region ​ Water Services ​ Water Infrastructure ​ Chemical Technologies ​ Corporate & Other ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased ​ 59 ​ 16 ​ 4 ​ 3 ​ 82 Owned ​ 36 ​ 28 ​ 5 ​ — ​ 69 ​ ​ 95 ​ 44 ​ 9 ​ 3 ​ 151 ​ ​ ​ ​ 61 Table of Contents
Biggest changeHowever, we continue to evaluate the purchase or lease of additional properties or the sale or consolidation of our properties, as our business requires. ​ The following table shows our active leased and owned properties categorized by segment as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Classification ​ Water Infrastructure ​ Water Services ​ Chemical Technologies ​ Corporate & Other ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Leased ​ 43 ​ 45 ​ 4 ​ 6 ​ 98 Owned ​ 35 ​ 38 ​ 6 ​ — ​ 79 ​ ​ 78 ​ 83 ​ 10 ​ 6 ​ 177 ​ ​ ​ ​
Our leased properties are subject to various lease terms and expirations. ​ We believe all the properties that we currently occupy are suitable for their intended uses. We believe that our current facilities are sufficient to conduct our operations.
Our leased properties are subject to various lease terms and expirations. ​ 52 Table of Contents We believe all the properties that we currently occupy are suitable for their intended uses. We believe that our current facilities are sufficient to conduct our operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Dollar Value of ​ ​ Total Number of ​ Weighted-Average Price ​ Purchased as Part of Publicly ​ Shares that May Yet be Purchased Period ​ Shares Purchased ​ Paid Per Share (1) ​ Announced Plans or Programs ​ Under the Plans or Programs (2) October 1, 2023 to October 31, 2023 ​ 22,494 ​ ​ $7.49 ​ — ​ ​ $12,463,632 November 1, 2023 to November 30, 2023 ​ 748,521 ​ ​ $7.33 ​ 709,165 ​ ​ $27,323,825 December 1, 2023 to December 31, 2023 ​ 862,596 ​ ​ $7.20 ​ 853,627 ​ ​ $21,177,432 ​ (1) The average price paid per share includes commissions.
Biggest changeShares remaining available under the 2024 Plan may be issued other than with respect to options, warrants or rights. ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Dollar Value of ​ ​ Total Number of ​ Weighted-Average Price ​ Purchased as Part of Publicly ​ Shares that May Yet be Purchased Period ​ Shares Purchased ​ Paid Per Share (1) ​ Announced Plans or Programs ​ Under the Plans or Programs (2) October 1, 2024 to October 31, 2024 ​ 2,648 ​ ​ $10.59 ​ — ​ ​ $21,177,432 November 1, 2024 to November 30, 2024 ​ 125,566 ​ ​ $12.65 ​ — ​ ​ $21,177,432 December 1, 2024 to December 31, 2024 ​ 10,471 ​ ​ $14.21 ​ — ​ ​ $21,177,432 ​ (1) The average price paid per share includes commissions.
Our future dividend policy is within the discretion of our board of directors, and all future dividend payments are subject to quarterly review and approval by our board of directors, and will depend upon then-existing conditions, including our results of operations and financial condition, capital requirements, business prospects, statutory and contractual restrictions on our ability to pay dividends, including restrictions contained in our Sustainability-Linked Credit Facility and other factors our board of directors may deem relevant.
Our future dividend policy is within the discretion of our board of directors, and all future dividend payments are subject to quarterly review and approval by our board of directors, and will depend upon then-existing conditions, including our results of operations and financial condition, capital requirements, business prospects, statutory and contractual 53 Table of Contents restrictions on our ability to pay dividends, including restrictions contained in our Sustainability-Linked Credit Facility and other factors our board of directors may deem relevant.
Repurchases under the share repurchase program may be made at any time or from time to time, without prior notice, in the open market or in privately negotiated transactions at prevailing market prices, or such other means as will comply with applicable state and federal securities laws and regulations, including the provisions of the Securities Exchange Act of 1934, including Rule 10b5-1 and, to the extent practicable or advisable, Rule 10b-18 thereunder, and consistent with the Company’s contractual limitations and other requirements. ​ ​ 64 Table of Contents STOCK PERFORMANCE GRAPH ​ The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing. ​ Set forth below is a line graph comparing the cumulative total stockholder return for the Company’s Class A common stock, based on the market price of the Class A common stock and assuming reinvestment of dividends, with the cumulative total stockholder return of companies with the New York Stock Exchange Market Value Index (the Company’s broad equity market index) and the Philadelphia Stock Exchange Oil Service Sector Index for the period commencing on December 31, 2018 and ending on December 31, 2023.
Repurchases under the share repurchase program may be made at any time or from time to time, without prior notice, in the open market or in privately negotiated transactions at prevailing market prices, or such other means as will comply with applicable state and federal securities laws and regulations, including the provisions of the Securities Exchange Act of 1934, including Rule 10b5-1 and, to the extent practicable or advisable, Rule 10b-18 thereunder, and consistent with the Company’s contractual limitations and other requirements. ​ STOCK PERFORMANCE GRAPH ​ The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall the information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing. ​ Set forth below is a line graph comparing the cumulative total stockholder return for the Company’s Class A common stock, based on the market price of the Class A common stock and assuming reinvestment of dividends, with the cumulative total stockholder return of companies with the New York Stock Exchange Market Value Index (the Company’s broad equity market index) and the Philadelphia Stock Exchange Oil Service Sector Index for the period commencing on December 31, 2019 and ending on December 31, 2024.
(2) Reflects the total number of shares of Class A common stock (i) subject to outstanding rights under the ESPP and (ii) remaining available for issuance under the 2016 Plan and the ESPP.
(2) Reflects the total number of shares of Class A common stock (i) subject to outstanding rights under the ESPP and (ii) remaining available for issuance under the 2024 Plan and the ESPP.
On November 8, 2023, our board of directors authorized a share repurchase program of up to $25 million of outstanding shares of Class A common stock. This new authorization was in addition to the $7.5 million remaining outstanding under our previous authorization, as of November 8, 2023.
On November 8, 2023, our board of directors authorized a share repurchase program of up to $25 million of outstanding shares of Class A common stock. This new authorization was in addition to the $7.5 million 54 Table of Contents remaining outstanding under our previous authorization, as of November 8, 2023.
The stock price performance included in this graph is not necessarily indicative of future stock price performance. ​ ​ 65 Table of Contents ITEM 6. RESERVED
The stock price performance included in this graph is not necessarily indicative of future stock price performance. ​ ​ 55 Table of Contents ​ ​ ITEM 6. RESERVED ​
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock is listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “WTTR.” As of February 19, 2024, there were 189 stockholders of record of our Class A common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock is listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “WTTR.” As of February 17, 2025, there were 152 stockholders of record of our Class A common stock.
For the avoidance of doubt, while shares of Class A common stock technically remain available for issuance under the ESPP, the Company does not currently have an offering period open with respect to the ESPP. Shares remaining available under the 2016 Plan may be issued other than with respect to options, warrants or rights.
For the avoidance of doubt, while shares of Class A common stock technically remain available for issuance under the ESPP, the Company does not currently have an offering period open with respect to the ESPP.
The ESPP was approved by our stockholders on May 4, 2018. On November 3, 2022, our board of directors approved an amendment to the ESPP, which suspended all offerings on or after December 1, 2022. Our board of directors reserves the right to recommence offerings pursuant to its discretion and the terms of the ESPP.
On November 3, 2022, our board of directors approved an amendment to the ESPP, which suspended all offerings on or after December 1, 2022. Our board of directors reserves the right to recommence offerings pursuant to its discretion and the terms of the ESPP. See “Note 12 — Equity-Based Compensation” for a description of our equity compensation plans.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights(1) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2) (a) (b) (c) Equity compensation plans approved by security holders 1,654,952 $17.01 1,873,435 Equity compensation plans not approved by security holders — (3) — 70,505 (4) Total 1,654,952 $17.01 1,943,940 ​ (1) Only stock options have an exercise price.
The following table provides information about our Class A common stock that may be issued under our equity compensation plans as of December 31, 2024. ​ Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights(1) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2) (a) (b) (c) Equity compensation plans approved by security holders 1,030,595 $19.89 8,783,179 Equity compensation plans not approved by security holders — — — Total 1,030,595 $19.89 8,783,179 ​ (1) Only stock options have an exercise price.
Securities Authorized for Issuance under Equity Compensation Plans The Company maintains the Select Energy Services, Inc. 2016 Equity Incentive Plan (as amended, the “2016 Plan”), the Select Energy Services, Inc.
Securities Authorized for Issuance under Equity Compensation Plans The Company maintains the Select Water Solutions, Inc. 2024 Equity Incentive Plan (as amended, the “2024 Plan”) and the Select Energy Services, Inc. Employee Stock Purchase Plan (the "ESPP”). The 2024 Plan was adopted on March 25, 2024. The ESPP was approved by our stockholders on May 4, 2018.
Removed
Employee Stock Purchase Plan (the "ESPP"), the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “2017 Plan”), and the Nuverra Environmental Solutions, Inc. 2018 Restricted Stock Plan for Directors (the “2018 Plan” and, together with the 2017 Plan, the “Assumed Plans”).
Added
The Company paid quarterly dividends at the same rate through the third quarter of 2024, then the board of directors increased the quarterly dividend paid on November 15, 2024 to $0.07 per share of Class A common stock (along with a comparable distribution of $0.07 per unit to the unitholders of SES Holdings, LLC) .
Removed
The 2016 Plan was approved by our stockholders prior to our initial public offering but has not been approved by our public stockholders; however, the first amendment to the 2016 Plan was approved by our public stockholders in October 2017 and the second amendment to the 2016 Plan was approved by our public stockholders in May 2020.
Added
The Company most recently announced a quarterly dividend of $0.07 per share on January 23, 2025 to be paid on February 14, 2025 to holders of record as of the close of business on February 4, 2025.
Removed
The Assumed Plans were assumed in our acquisition of Nuverra, were not approved by our stockholders, and may only be used to grant awards to legacy Nuverra employees and service providers.
Added
As of December 31, 2024, approximately $21.2 remains outstanding under our prior authorizations, in the aggregate.
Removed
See “Note 12 — Equity-Based Compensation” for a description of our equity compensation plans. 62 Table of Contents The following table provides information about our Class A common stock that may be issued under our equity compensation plans as of December 31, 2023.
Removed
(3) All awards assumed under the Assumed Plans have either fully vested or been forfeited such that as of December 31, 2022, there were no outstanding awards under the Assumed Plans. (4) Reflects the total number of shares of Class A common stock remaining available for issuance under the Assumed Plans to legacy Nuverra employees and service providers.
Removed
Shares remaining available under the Assumed Plans may be issued other than with respect to options, warrants or rights. ​ Features of the Assumed Plans ​ On February 23, 2022, the Company assumed the Assumed Plans and certain equity awards outstanding under the Assumed Plans in connection with the Nuverra acquisition.
Removed
Under the 2017 Plan, the Company may grant to certain eligible participants who were employees, directors or other service providers of Nuverra prior to the Nuverra acquisition options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards, performance awards, or any combination of the foregoing, with respect to up to 1,772,058 shares of Nuverra common stock.
Removed
Under the 2018 Plan, the Company may grant to certain eligible participants who were directors of Nuverra prior to the Nuverra acquisition restricted stock awards with respect to up to 100,000 shares of Nuverra common stock.
Removed
The shares remaining available for issuance under the Assumed Plans were converted into shares of the Company’s Class A common stock at a conversion rate of one Nuverra share to 0.2551 shares of the Company’s Class A common stock such that at the time of the Nuverra acquisition an aggregate of 131,110 shares of the Company’s Class A common stock was available for issuance with respect to assumed awards and future awards under the 2017 Plan and an aggregate of 24,984 shares of the Company’s Class A common stock was available for issuance with respect to assumed awards and future awards under the 2018 Plan.
Removed
The aggregate number of shares of the Company’s Class A common stock available for issuance under the Assumed Plans will be reduced by one share of the Company’s Class A common stock for every one share of the Company’s Class A common stock subject to an award granted under the Assumed Plans.
Removed
If any award granted under the 2017 Plan (in whole or in part) is cancelled, forfeited, exchanged, settled in cash, or otherwise terminated, the shares of the Company’s Class A common stock subject to such award will again be available at a rate of one share of the Company’s Class A common stock for every one share of the Company’s Class A common stock subject to such award, and if any award granted under the 2018 Plan (in whole or part) is forfeited, the shares of the Company’s Class A common stock subject to such award will again be available at a rate of one share of the Company’s Class A common stock for every one share of the Company’s Class A common stock subject to such award.
Removed
The Company registered the securities issuable under the Assumed Plans by filing a registration statement on Form S-8 with the Securities and Exchange 63 Table of Contents Commission on February 23, 2022.
Removed
As of December 31, 2023, the maximum number of shares of the Company’s Class A common stock available for future issuance under the 2017 Plan is 55,769 and under the 2018 Plan is 14,736.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

98 edited+65 added−39 removed43 unchanged
Biggest changeThe results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ ​ 2023 2022 Dollars Percentage ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ Water Services ​ $ 1,032,896 ​ $ 944,497 ​ $ 88,399 9.4 % ​ Water Infrastructure ​ ​ 229,970 ​ ​ 125,284 ​ ​ 104,686 ​ 83.6 % ​ Chemical Technologies ​ ​ 322,487 ​ ​ 317,639 ​ 4,848 1.5 % ​ Total revenue ​ 1,585,353 ​ 1,387,420 ​ 197,933 14.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs of revenue ​ ​ ​ ​ ​ ​ ​ Water Services ​ 814,609 ​ 764,569 ​ 50,040 6.5 % ​ Water Infrastructure ​ ​ 138,191 ​ ​ 82,941 ​ 55,250 66.6 % ​ Chemical Technologies ​ ​ 262,078 ​ ​ 265,648 ​ ​ (3,570) ​ (1.3) % ​ Depreciation and amortization ​ 138,813 ​ 113,507 ​ 25,306 22.3 % ​ Total costs of revenue ​ 1,353,691 ​ 1,226,665 ​ 127,026 10.4 % ​ Gross profit ​ 231,662 ​ 160,755 ​ 70,907 44.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 155,548 ​ ​ 118,935 ​ 36,613 30.8 % ​ Depreciation and amortization ​ 2,276 ​ ​ 2,209 ​ 67 3.0 % ​ Impairments and abandonments ​ ​ 12,607 ​ ​ — ​ ​ 12,607 ​ NM ​ ​ Lease abandonment costs ​ 42 ​ ​ 449 ​ (407) (90.6) % ​ Total operating expenses ​ 170,473 ​ 121,593 ​ 48,880 40.2 % ​ Income from operations ​ 61,189 ​ 39,162 ​ 22,027 56.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ (Loss) gain on sales of property and equipment and divestitures, net ​ ​ (210) ​ ​ 2,192 ​ ​ (2,402) 109.6 % ​ Interest expense, net ​ (4,393) ​ ​ (2,700) ​ (1,693) 62.7 % ​ Bargain purchase gain ​ ​ — ​ ​ 13,352 ​ ​ (13,352) NM ​ ​ Tax receivable agreements expense ​ ​ (38,187) ​ ​ — ​ ​ (38,187) NM ​ ​ Other ​ 2,424 ​ ​ 4,718 ​ (2,294) NM ​ ​ Income before income tax benefit (expense) ​ 20,823 ​ 56,724 ​ (35,901) (63.3) % ​ Income tax benefit (expense) ​ 60,196 ​ (957) ​ 61,153 (6390.1) % ​ Equity in losses of unconsolidated entities ​ ​ (1,800) ​ (913) ​ (887) NM ​ ​ Net income ​ $ 79,219 ​ $ 54,854 ​ $ 24,365 44.4 % ​ ​ Revenue Our revenue increased $197.9 million, or 14.3%, to $1.6 billion for the year ended December 31, 2023, compared to $1.4 billion for the year ended December 31, 2022.
Biggest changeThe results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ ​ 2024 2023 Dollars Percentage ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Revenue ​ ​ ​ ​ ​ Water Infrastructure ​ $ 290,900 ​ $ 229,970 ​ $ 60,930 ​ 26.5 % ​ Water Services ​ ​ 901,657 ​ ​ 1,032,896 ​ ​ (131,239) (12.7) % ​ Chemical Technologies ​ ​ 259,518 ​ ​ 322,487 ​ (62,969) (19.5) % ​ Total revenue ​ 1,452,075 ​ 1,585,353 ​ (133,278) (8.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs of revenue ​ ​ ​ ​ ​ ​ ​ Water Infrastructure ​ ​ 137,573 ​ ​ 138,191 ​ (618) (0.4) % ​ Water Services ​ 720,876 ​ 814,609 ​ (93,733) (11.5) % ​ Chemical Technologies ​ ​ 220,617 ​ ​ 262,078 ​ ​ (41,461) ​ (15.8) % ​ Depreciation, amortization and accretion ​ 153,543 ​ 138,813 ​ 14,730 10.6 % ​ Total costs of revenue ​ 1,232,609 ​ 1,353,691 ​ (121,082) (8.9) % ​ Gross profit ​ 219,466 ​ 231,662 ​ (12,196) (5.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ 159,978 ​ ​ 155,548 ​ 4,430 2.8 % ​ Depreciation and amortization ​ 3,404 ​ ​ 2,276 ​ 1,128 49.6 % ​ Impairments and abandonments ​ ​ 1,237 ​ ​ 12,607 ​ ​ (11,370) ​ NM ​ ​ Lease abandonment costs ​ 358 ​ ​ 42 ​ 316 NM ​ ​ Total operating expenses ​ 164,977 ​ 170,473 ​ (5,496) (3.2) % ​ Income from operations ​ 54,489 ​ 61,189 ​ (6,700) (10.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ Gain (loss) on sales of property and equipment and divestitures, net ​ ​ 3,255 ​ ​ (210) ​ ​ 3,465 NM ​ ​ Interest expense, net ​ (6,965) ​ ​ (4,393) ​ (2,572) 58.5 % ​ Tax receivable agreements expense ​ ​ (836) ​ ​ (38,187) ​ ​ 37,351 NM ​ ​ Other ​ (573) ​ ​ 2,424 ​ (2,997) NM ​ ​ Income before income tax (expense) benefit and equity in losses of unconsolidated entities ​ 49,370 ​ 20,823 ​ 28,547 137.1 % ​ Income tax (expense) benefit ​ (13,568) ​ 60,196 ​ (73,764) (122.5) % ​ Equity in losses of unconsolidated entities ​ ​ (352) ​ (1,800) ​ 1,448 NM ​ ​ Net income ​ $ 35,450 ​ $ 79,219 ​ $ (43,769) (55.3) % ​ ​ Revenue Our revenue decreased $133.3 million, or 8.4%, to $1.45 billion for the year ended December 31, 2024, compared to $1.59 billion for the year ended December 31, 2023.
We are working to further commercialize our services in other businesses and industries through our industrial solutions group. Our Segments Our services are offered through three reportable segments: (i) Water Services; (ii) Water Infrastructure; and (iii) Chemical Technologies. ● Water Services.
We are working to further commercialize our services in other businesses and industries through our industrial solutions group. Our Segments Our services are offered through three reportable segments: (i) Water Infrastructure; (ii) Water Services; and (iii) Chemical Technologies. ● Water Infrastructure.
How We Generate Revenue We currently generate most of our revenue through our water-management services associated with well completions as well as ongoing produced water management, provided through our Water Services and Water Infrastructure segments.
How We Generate Revenue We currently generate most of our revenue through our water-management services associated with well completions as well as ongoing produced water management, provided through our Water Infrastructure and Water Services segments.
We define Adjusted EBITDA as EBITDA plus/(minus) loss/(income) from discontinued operations, plus any impairment and abandonment charges or asset write-offs pursuant to generally accepted accounting principles in the U.S.
We define Adjusted EBITDA as EBITDA plus/(minus) loss/(income) from discontinued operations, plus any impairment and abandonment charges or asset write-offs pursuant to accounting principles generally accepted in the U.S.
The adjustments to EBITDA are generally consistent with such adjustments described in our Sustainability-Linked Credit Facility. See “—Comparison of Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA” for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.
The adjustments to EBITDA are generally consistent with such adjustments described in our Sustainability-Linked Credit Facility. See “—Comparison of Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA” for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
We track gross margins by segment and service line and compare them across prior periods and across segments and service lines to identify trends as well as underperforming segments. EBITDA and Adjusted EBITDA We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income/(loss), plus interest expense, income taxes, and depreciation and amortization.
We track gross margins by segment and service line and compare them across prior periods and across segments and service lines to identify trends as well as underperforming segments. EBITDA and Adjusted EBITDA We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income/(loss), plus interest expense, income taxes, and depreciation, amortization and accretion.
Gross Profit To measure our financial performance, we analyze our gross profit, which we define as revenues less direct operating expenses (including depreciation and amortization expenses). We believe gross profit provides insight into profitability and the true operating performance of our assets.
Gross Profit To measure our financial performance, we analyze our gross profit, which we define as revenues less direct operating expenses (including depreciation, amortization and accretion expenses). We believe gross profit provides insight into profitability and the true operating performance of our assets.
Other intangible assets : The purchase price of acquired businesses is allocated to its identifiable assets and liabilities based upon estimated fair values as of the acquisition date. Other intangible assets are initially recorded at their fair values.
Goodwill and other intangible assets : The purchase price of acquired businesses is allocated to its identifiable assets and liabilities based upon estimated fair values as of the acquisition date. Goodwill and other intangible assets are initially recorded at their fair values.
Additionally, consolidation among our customers, such as the current consolidation of E&P companies in the Permian Basin, can disrupt our market in the near term and the resulting demand for our services.
Additionally, consolidation among our customers, such as the consolidation of E&P companies in the Permian Basin, can disrupt our market in the near term and the resulting demand for our services.
“Risk Factors.” We assume no obligation to update any of these forward-looking statements. Overview We are a leading provider of sustainable water-management and chemical solutions to the energy industry in the U.S. As a leader in the water solutions industry, we place the utmost importance on safe, environmentally responsible management of oilfield water throughout the lifecycle of a well.
“Risk Factors.” We assume no obligation to update any of these forward-looking statements. Overview We are a leading provider of sustainable water-management solutions to the energy industry in the U.S. As a leader in the water solutions industry, we place the utmost importance on safe, environmentally responsible management of oilfield water throughout the lifecycle of a well.
These improvements resulted in a more efficient management of our working capital, thereby augmenting our generation of cash. This increased cash flow provides us with greater flexibility to reinvest in our business or return capital to our shareholders. ​ As of December 31, 2023, we had no material off-balance sheet arrangements.
These improvements resulted in a more efficient management of our working capital, thereby augmenting our generation of cash. This increased cash flow provides us with greater flexibility to reinvest in our business or return capital to our shareholders. ​ As of December 31, 2024, we had no material off-balance sheet arrangements.
However, we note the continued efficiency gains in the well completions process can limit the days we 68 Table of Contents spend on the wellsite and, therefore, negatively impact the total revenue opportunity for certain of our services utilizing day-rate pricing models. ​ This multi-well pad development, combined with recent upstream acreage consolidation and corporate mergers as well as the growing trends around the recycling and reuse applications of produced water provides a significant opportunity for companies like us that can deliver increasingly complex solutions for our E&P customers across large swathes of acreage through our regional infrastructure networks, delivering solutions for the full completion and production lifecycle of wells.
However, we note the continued efficiency gains in the well completions process can limit the days we spend on the wellsite and, therefore, negatively impact the total revenue opportunity for certain of our services utilizing day-rate pricing models. ​ This multi-well pad development, combined with upstream acreage consolidation and corporate mergers as well as the growing trends around the recycling and reuse applications of produced water provides a significant opportunity for companies like us that can deliver increasingly complex solutions for our E&P customers across large swathes of acreage through our regional infrastructure networks, delivering solutions for the full completion and production lifecycle of wells.
The continued trend towards multi-well pad development, executed within a limited time frame, combined with service price inflation and high interest rates, has increased the overall intensity, complexity and cost of well completions, while increasing fracturing efficiency and the use of lower-cost in-basin sand has decreased total costs for our customers.
The continued trend towards multi-well pad development and simultaneous well completions, executed within a limited time frame, combined with service price inflation and elevated interest rates, has increased the overall intensity, complexity and cost of well completions, while increasing fracturing efficiency and the use of lower-cost in-basin sand has decreased total costs for our customers.
While we have some long-term pricing arrangements, particularly in our Water Infrastructure segment, most of our water and water-related services are priced based on prevailing market conditions, giving due consideration to the customer’s specific requirements. 69 Table of Contents We also generate revenue by providing completion and specialty chemicals through our Chemical Technologies segment.
While we have some long-term pricing arrangements, particularly in our Water Infrastructure segment, most of our water and water-related services are priced based on prevailing market conditions, giving due consideration to the customer’s specific requirements. We also generate revenue by providing completion and specialty chemicals through our Chemical Technologies segment.
Such volatility, coupled with an increased cost of capital, due, in part to higher rates of inflation and interest rates, may lead to a more difficult investing and planning environment for us and our customers.
Such volatility, coupled with an increased cost of capital, due, in part to elevated rates of inflation and interest rates, may lead to a more difficult investing and planning environment for us and our customers.
Ultimately, we intend to play an important role in the advancement of water and chemical solutions that are designed to meet the sustainability goals of key stakeholders. ​ Our water logistics, treatment, and chemical application expertise, in combination with advanced technology solutions, are applicable to other industries beyond oil and gas.
Ultimately, we intend to play an important role in the advancement of water and chemical solutions that are designed to meet the sustainability goals of key stakeholders. ​ 58 Table of Contents Our water logistics, treatment, and chemical application expertise, in combination with advanced technology solutions, are applicable to other industries beyond oil and gas.
As of December 31, 2023, we determined that we were in a position to reasonably estimate an amount of liability associated with the Tax Receivable Agreements and determined that future payments under the terms of the Tax Receivable Agreements were probable, and therefore recorded liabilities of $38.2 million as of December 31, 2023.
As of December 31, 2024 and 2023, we determined that we were in a position to reasonably estimate an amount of liability associated with the Tax Receivable Agreements and determined that future payments under the terms of the Tax Receivable Agreements were probable, and therefore recorded liabilities of $38.5 million and $38.2 million, respectively.
The Water Services segment consists of the Company’s services businesses, including water sourcing, water transfer, flowback and well testing, fluids hauling, water monitoring, water containment and water network automation, primarily serving E&P companies. Additionally, this segment includes the operations of our accommodations and rentals business. ● Water Infrastructure.
The Water Services segment consists of the Company’s services businesses, including water sourcing, water transfer, flowback and well testing, fluids hauling, water monitoring, water containment and water network automation, primarily serving E&P companies. Additionally, this segment includes the operations of our accommodations and rentals business. ● Chemical Technologies.
We incurred labor and labor-related costs of $554.4 million, $476.2 million and $285.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. The majority of our recurring labor costs are variable and dependent on the market environment and are incurred only while we are providing our operational services.
We incurred labor and labor-related costs of $530.7 million, $554.4 million and $476.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. The majority of our recurring labor costs are variable and dependent on the market environment and are incurred only while we are providing our operational services.
We also assess incremental changes in revenue compared to incremental changes in direct operating costs and selling, general and administrative expenses across our reportable segments to identify 70 Table of Contents potential areas for improvement, as well as to determine whether segment performance is meeting management’s expectations.
We also assess incremental changes in revenue compared to incremental changes in direct operating costs and selling, general and administrative expenses across our reportable segments to identify potential areas for improvement, as well as to determine whether segment performance is meeting management’s expectations.
This metric works in tandem with gross profit to ensure that we do not seek to increase gross profit at the expense of lower margins, nor pursue higher gross margins at the expense of declining gross profits.
This metric works in tandem with gross profit to ensure that we do not seek to increase gross profit at the expense of lower 60 Table of Contents margins, nor pursue higher gross margins at the expense of declining gross profits.
See “—Recent Developments” and “Note 3—Acquisitions” for a description of these transactions. 71 Table of Contents Results of Operations The following table sets forth our results of operations, including revenue by segment, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
See “—Recent Developments” and “Note 3—Acquisitions” for a description of these transactions. ​ ​ 61 Table of Contents Results of Operations The following table sets forth our results of operations, including revenue by segment, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
This increase was attributed to multiple factors, including the growth in our revenue, the addition of receivables from acquired entities, and the complexities encountered during the integration of these acquisitions. During 2023, in parallel with integration efforts related to previously acquired companies, we implemented enhancements to our billing and collection processes, yielding tangible benefits.
This increase was attributed to multiple factors, including the growth in our revenue, the addition of receivables from acquired entities, and the complexities encountered during the integration of these acquisitions. During 2023, in parallel with integration efforts related to previously acquired companies, we implemented enhancements to our billing and collection processes, yielding tangible benefits, with continued strong collections throughout 2024.
Our primary uses of capital have been to fund current operations, maintain our asset base, implement technological advancements, make capital expenditures to support organic growth, fund acquisitions and minority investments, pay dividends and distributions, and when appropriate, repurchase shares of Class A common stock in the open market.
Our primary uses of capital have been to fund current operations, maintain our asset base, implement technological advancements, make capital expenditures to support organic growth, fund acquisitions and minority investments, pay dividends and distributions, make payments under the Tax Receivable Agreements, and when appropriate, repurchase shares of Class A common stock in the open market.
Refer to “Note 6—Leases” for operating lease obligations as of December 31, 2023 and “Note 10—Debt” for an update to our Sustainability-Linked Credit Facility as of December 31, 2023. ​ 77 Table of Contents Cash Flows ​ The following table summarizes our cash flows for the years ended December 31, 2023 and 2022.
Refer to “Note 6—Leases” for operating lease obligations as of December 31, 2024 and “Note 10—Debt” for an update to our Sustainability-Linked Credit Facility as of December 31, 2024. ​ Cash Flows ​ The following table summarizes our cash flows for the years ended December 31, 2024 and 2023.
Among other measures, management considers each of the following: ● Revenue; ● Gross Profit; ● Gross Margins; ● EBITDA; and ● Adjusted EBITDA. Revenue We analyze our revenue and assess our performance by comparing actual monthly revenue to our internal projections and across periods.
Among other measures, management considers each of the following: ● Revenue; ● Gross Profit; ● Gross Margins; ● EBITDA; ● Adjusted EBITDA; ● Cash Flows; and ● Free Cash Flow. Revenue We analyze our revenue and assess our performance by comparing actual monthly revenue to our internal projections and across periods.
Our exposure (i.e., the self-insured retention or deductible) per occurrence is $0.5 million for general liability, $0.25 million for workers’ compensation and employer’s liability, $0.25 million for auto liability and $0.3 million for health insurance. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate.
Our exposure (i.e., the self-insured retention or deductible) per occurrence is $1.0 million for general liability, $1.0 million for workers’ compensation and employer’s liability, $2.0 million for auto liability and $0.4 million for health insurance. We also have an excess loss policy over these coverages with a limit of $100.0 million in the aggregate.
Changes in our current estimates, due to unanticipated market conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. As of December 31, 2023, valuation allowances against deferred tax assets were $112 million.
Changes in our current estimates, due to unanticipated market conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. As of December 31, 2024, valuation allowances against deferred tax assets were $105.4 million.
The Water Infrastructure segment consists of the Company’s fixed infrastructure assets, including operations associated with our water distribution pipeline infrastructure, our water recycling solutions, and our produced water gathering systems and SWDs, as well as solids disposal facilities, primarily serving E&P companies. ● Chemical Technologies.
The Water Infrastructure segment consists of the Company’s fixed infrastructure assets, including operations associated with our water distribution pipeline infrastructure, our water recycling solutions, and our produced water pipeline gathering systems and SWDs, as well as solids management facilities, primarily serving E&P companies. ● Water Services.
For the year ended December 31, 2023, our Water Services, Water Infrastructure and Chemical Technologies revenues constituted 65.2%, 14.5% and 20.3% of our total revenue, respectively, compared to 68.1%, 9.0 % and 22.9%, respectively, for the year ended December 31, 2022. The revenue changes by reportable segment are as follows: ​ Water Services .
For the year ended December 31, 2024, our Water Infrastructure, Water Services and Chemical Technologies revenues constituted 20.0%, 62.1% and 17.9% of our total revenue, respectively, compared to 14.5%, 65.2 % and 20.3%, respectively, for the year ended December 31, 2023. The revenue changes by reportable segment are as follows: ​ Water Infrastructure.
This program resulted in a financing outflow of $24.9 million and $6.0 million during the years ended December 31, 2023 and 2022, respectively. This quarterly dividend program is expected to continue into 2024 and beyond.
This program resulted in a financing outflow of $29.7 million and $24.9 million during the years ended December 31, 2024 and 2023, respectively. This quarterly dividend program is expected to continue into 2025 and beyond.
The Sustainability-Linked Credit Facility also has a sublimit of $40.0 million for letters of credit and a sublimit of $27.0 million for swingline loans.
The Sustainability-Linked Credit Facility also has a sublimit of $50.0 million for letters of credit and a sublimit of $30.0 million for swingline loans.
If the undiscounted cash flows are less than the carrying amount, we record impairment losses for the excess of their carrying value over the estimated fair value. Fair value is determined, in part, by the estimated cash flows to be generated by those assets.
Recoverability is measured by a comparison of their carrying amount to the estimated undiscounted cash flows to be generated by those assets. If the undiscounted cash flows are less than the carrying amount, we record impairment losses for the excess of their carrying value over the estimated fair value.
Net cash used in investing activities was $137.2 million for the year ended December 31, 2023, compared to $53.2 million for the year ended December 31, 2022.
Net cash used in investing activities was $318.6 million for the year ended December 31, 2024, compared to $137.2 million for the year ended December 31, 2023.
The increase was due primarily to $14.7 million in rebranding costs, $9.5 million in higher wages, associated payroll taxes and employer 401(k) match contributions, a $6.6 million increase in legal and professional fees, a $3.2 million increase in bad debt expense, a $3.0 million increase in incentive and equity-based compensation cost, $2.0 million in higher contract labor, $1.9 million in higher information technology costs, and $1.8 million from a combination of other expenses partially offset by a $3.0 million decrease in transaction costs, a $2.4 million decrease in vehicle lease costs, and a $0.6 million decrease in insurance costs.
The increase was due primarily to a $11.7 million increase in incentive and equity-based compensation cost, $4.9 million in higher wages, associated payroll taxes and employer 401(k) match contributions, $3.2 million in higher legal and professional fees, $0.9 million in higher research and development costs, $0.6 million in higher information technology costs and $0.6 million in severance expense partially offset by $10.5 million in lower transaction and rebranding costs, a $5.1 million decrease in credit loss expense, $0.8 million in lower vehicle lease costs and $1.1million from a combination of other expenses.
We incurred fuel and freight costs of $115.7 million, $118.1 million and $58.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Rising fuel prices impact our transportation costs, which affect the results of our operations. How We Evaluate Our Operations ​ We use a variety of operational and financial metrics to assess our performance.
We incurred fuel and freight costs of $83.4 million, $115.6 million and $118.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. Variability in fuel prices impact our transportation costs, which affect the results of our operations. How We Evaluate Our Operations ​ We use a variety of operational and financial metrics to assess our performance.
Depending on available opportunities, market conditions and other factors, we may also issue debt and equity securities, in the future, if needed. As of December 31, 2023, we had no outstanding bank debt.
Depending on available opportunities, market conditions and other factors, we may also issue debt and equity securities, in the future, if needed. As of December 31, 2024, we had $85.0 million in outstanding borrowings.
Acquisition Activity As described above, we continuously evaluate potential investments, particularly in water infrastructure and other water-related services and technology. To the extent we consummate acquisitions, any incremental revenues or expenses from such transactions are not included in our historical results of operations.
Acquisition Activity As described above, we continuously evaluate potential investments, particularly in water infrastructure and other water-related services and technology. To the extent we consummate acquisitions, any incremental revenues or expenses from such transactions are not included in our historical results of operations. Between January 2023 and December 2024, we completed six business combinations and approximately fourteen asset acquisitions.
Additionally, as of December 31, 2023, accrued health insurance and accrued general liabilities were $6.7 million and $1.3 million, respectively. Tax Receivable Agreements : We intend to fund any obligation under the Tax Receivable Agreements with cash from operations or borrowings under our Sustainability-Linked Credit Facility.
Additionally, as of December 31, 2024, accrued health insurance and accrued general liabilities were $4.4 million and $2.2 million, respectively. 71 Table of Contents Tax Receivable Agreements : We intend to fund any obligation under the Tax Receivable Agreements with cash from operations or borrowings under our Sustainability-Linked Credit Facility.
All future dividend payments are subject to quarterly review and approval by our board of directors. ​ As of December 31, 2023, cash and cash equivalents totaled $57.1 million and we had approximately $250.3 million of available borrowing capacity under our Sustainability-Linked Credit Facility.
All future dividend payments are subject to quarterly review and approval by our board of directors. ​ As of December 31, 2024, cash and cash equivalents totaled $20.0 million and we had approximately $114.8 million of available borrowing capacity under our Prior Sustainability-Linked Credit Facility.
We believe this approach provides us with additional flexibility to evaluate larger investments as well as improved resilience in a sustained downturn versus many of our peers. 76 Table of Contents Based on our current cash and cash equivalents balance, operating cash flow, available borrowings under our Sustainability-Linked Credit Facility and the ongoing actions discussed above, we believe that we will be able to maintain sufficient liquidity to satisfy our obligations and remain in compliance with our existing debt covenants through the next twelve months and beyond, prior to giving effect to any future financing that may occur. ​ We intend to finance most of our capital expenditures, contractual obligations and working capital needs with cash on hand, cash generated from operations and borrowings under our Sustainability-Linked Credit Facility.
Based on our current cash and cash equivalents balance, operating cash flow, available borrowings under our Sustainability-Linked Credit Facility and the ongoing actions discussed above, we believe that we will be able to maintain sufficient liquidity to satisfy our obligations and remain in compliance with our existing debt covenants through the next twelve months and beyond, prior to giving effect to any future financing that may occur. ​ We intend to finance most of our capital expenditures, contractual obligations and working capital needs with cash on hand, cash generated from operations and borrowings under our Sustainability-Linked Credit Facility.
Refer to “Note 10—Debt” for further discussion of the Sustainability-Linked Credit Facility.
Refer to “Note 10—Debt” and “Note 19—Subsequent Events” for further discussion of the Prior Sustainability-Linked Credit Facility and the Sustainability-Linked Credit Facility.
As of December 31, 2023, we estimate the range of exposure to be from $16.2 million to $19.2 million and have recorded liabilities of $17.3 million, which represents management’s best estimate of probable loss related to workers’ compensation and employer’s liability, and auto liability.
As of December 31, 2024, we estimate the range of exposure to be from $18.9 million to $22.8 million and have recorded liabilities of $20.0 million, which represents management’s best estimate of probable loss related to workers’ compensation and employer’s liability, and auto liability.
Gross margin as a percent of revenue was 14.6% and 11.6% during the years ended December 31, 2023 and December 31, 2022, respectively. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $36.6 million, or 30.8%, to $155.5 million for the year ended December 31, 2023, compared to $118.9 million for the year ended December 31, 2022.
Gross margin as a percentage of revenue was 15.1% and 14.6% during the years ended December 31, 2024 and December 31, 2023, respectively. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $4.4 million, or 2.8%, to $160.0 million for the year ended December 31, 2024, compared to $155.5 million for the year ended December 31, 2023.
Financing Activities. Net cash used in financing activities was $98.4 million for the year ended December 31, 2023, compared to $58.5 million for the year ended December 31, 2022.
Net cash provided by financing activities was $46.6 million for the year ended December 31, 2024, compared to net cash used in financing activities of $98.4 million for the year ended December 31, 2023.
While WTI price levels declined during 2023 relative to 2022, these WTI price levels remain supportive of our customers’ drilling and completion programs in the major shale basins. The average Henry Hub natural gas spot price during the year ended December 31, 2023, was $2.54 versus an average of $6.42 for the year ended December 31, 2022.
During the year ended December 31, 2024, the average spot price of WTI crude oil was $76.63 versus an average price of $77.58 for the year ended December 31, 2023. While WTI price levels marginally declined during 2024 relative to 2023, these WTI price levels remain supportive of our customers’ drilling and completion programs in the major shale basins.
Costs of revenue decreased $3.6 million, or 1.3%, to $262.1 million for the year ended December 31, 2023, compared to $265.6 million for the year ended December 31, 2022.
Costs of revenue decreased $41.5 million, or 15.8%, to $220.6 million for the year ended December 31, 2024, compared to $262.1 million for the year ended December 31, 2023.
Impairments and Abandonments We recorded $11.1 million of trademark abandonment in the Chemical Technologies segment during the year ended December 31, 2023. Also, we recorded $1.4 million of abandonment that was primarily attributable to abandoned property and equipment and $0.1 million of impairment in our Water Services segment to write-off the remaining value of a cost-method investment.
For the year ended December 31, 2023, we recorded $11.1 million of trademark abandonment in the Chemical Technologies segment as well as $0.1 million of impairment in our Water Services segment to write-off the remaining value of a cost-method investment.
We incurred raw material costs of $300.7 million, $300.8 million and $209.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. We incur variable transportation costs associated with our service lines, predominately fuel and freight.
We incur raw material costs in manufacturing our chemical products, as well as for water that we source for our customers. We incurred raw material costs of $242.7 million, $299.9 million and $300.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. We incur variable transportation costs associated with our service lines, predominately fuel and freight.
As of February 19, 2024, we had $55.0 million in outstanding indebtedness, the borrowing base under the Sustainability-Linked Credit Facility was $218.4 million, the outstanding letters of credit totaled $17.1 million, and the available borrowing capacity under the Sustainability-Linked Credit Facility was $146.3 million. ​ In 2022, our trade accounts receivable experienced a notable surge, rising from $232.8 million to $430.0 million.
As of February 17, 2025, we had $250.0 million in outstanding indebtedness, the borrowing base for the Revolving Credit Facility (as defined below) under the Sustainability-Linked Credit Facility was $231.2 million, the borrowing base for the Term Loan (as defined below) 66 Table of Contents under the Sustainability-Linked Credit Facility was $426.3 million, the outstanding letters of credit totaled $19.9 million, and the available borrowing capacity under the Sustainability-Linked Credit Facility was $211.3 million. ​ In 2022, our trade accounts receivable experienced a notable surge, rising from $232.8 million to $430.0 million.
The summary of our cash flows for the years ended December 31, 2022 and 2021 is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Cash Flow Changes Between the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ ​ 2023 2022 Dollars Percentage ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 285,355 ​ $ 33,231 ​ $ 252,124 ​ 758.7 % Net cash used in investing activities ​ ​ (137,168) ​ ​ (53,246) ​ ​ (83,922) ​ (157.6) % Net cash used in financing activities ​ ​ (98,423) ​ ​ (58,451) ​ ​ (39,972) ​ (68.4) % Subtotal ​ ​ 49,764 ​ ​ (78,466) ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ​ (3) ​ ​ (13) ​ ​ 10 ​ NM ​ Net increase (decrease) in cash and cash equivalents ​ $ 49,761 ​ $ (78,479) ​ ​ ​ ​ ​ ​ ​ Operating Activities.
The summary of our cash flows for the years ended December 31, 2023 and 2022 is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Cash Flow Changes Between the Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ ​ 2024 2023 Dollars Percentage ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ $ 234,886 ​ $ 285,355 ​ $ (50,469) ​ (17.7) % Net cash used in investing activities ​ ​ (318,623) ​ ​ (137,168) ​ ​ (181,455) ​ (132.3) % Net cash provided by (used in) financing activities ​ ​ 46,641 ​ ​ (98,423) ​ ​ 145,064 ​ 147.4 % Subtotal ​ ​ (37,096) ​ ​ 49,764 ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ ​ (9) ​ ​ (3) ​ ​ (6) ​ NM ​ Net (decrease) increase in cash and cash equivalents ​ $ (37,105) ​ $ 49,761 ​ ​ ​ ​ ​ ​ ​ Operating Activities.
As a result of the Russian invasion of the Ukraine, the U.S., the United Kingdom, the member states of the European Union and other public and private actors have sustained severe sanctions on Russian financial institutions, businesses and individuals. In October 2023, Hamas militants conducted attacks in Israel and an armed conflict has ensued between Israel and Hamas.
As a result of the Russian invasion of the Ukraine, the U.S., the United Kingdom, the member states of the European Union and other public and private actors have imposed severe sanctions on Russian financial institutions, businesses and individuals.
Liquidity and Capital Resources Overview Our primary sources of liquidity are cash on hand, borrowing capacity under the Sustainability-Linked Credit Facility, cash flows from operations and proceeds from the sale of excess property and equipment.
Adjusted EBITDA was $258.4 million for the year ended December 31, 2024 compared to $258.3 million for the year ended December 31, 2023. Liquidity and Capital Resources Overview Our primary sources of liquidity are cash on hand, borrowing capacity under the Sustainability-Linked Credit Facility, cash flows from operations and proceeds from the sale of excess property and equipment.
As of December 31, 2023, the borrowing base under the Sustainability-Linked Credit Facility was $267.4 million, we had zero in outstanding borrowings, and outstanding letters of credit totaled $17.1 million.
As of December 31, 2024, the borrowing base under the Prior Sustainability-Linked Credit Facility was $218.8 million, we had $85.0 million in outstanding borrowings, and outstanding letters of credit totaled $19.0 million.
Additionally, we incur selling, general and administrative costs for compensation of our administrative personnel at our field sites and in our operational and corporate headquarters, as well as for third-party support, licensing and services. We incur significant vehicle and equipment costs in connection with the services we provide, including depreciation, repairs and maintenance, rental and leasing costs.
Additionally, we incur selling, general and 59 Table of Contents administrative costs for compensation of our administrative personnel at our field sites and in our operational and corporate headquarters, as well as for third-party support, licensing and services.
Other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired in a business combination. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Factors Affecting the Comparability of Our Results of Operations to Our Historical Results of Operations Our future results of operations may not be comparable to our historical results of operations for the periods presented, primarily for the reasons described below and those described in “—Recent Trends and Outlook” above.
Accordingly, free cash flow should not be considered a measure of the income generated by our business or discretionary cash available to it to invest in the growth of our business. ​ Factors Affecting the Comparability of Our Results of Operations to Our Historical Results of Operations Our future results of operations may not be comparable to our historical results of operations for the periods presented, primarily for the reasons described below and those described in “—Recent Trends and Outlook” above.
Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for 80 Table of Contents each applicable tax jurisdiction.
The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction.
Changes to our key assumptions related to future performance, market conditions and other economic factors could adversely affect our impairment valuation. Retentions : We assume risk of loss through deductibles and self-insured retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability, vehicle liability, and health insurance.
Retentions : We assume risk of loss through deductibles and self-insured retentions, up to certain levels for losses related to general liability, workers’ compensation and employer’s liability, vehicle liability, and health insurance.
We did not record any bargain purchase gain during the year ended December 31, 2023. ​ Tax Receivable Agreements Expense As of December 31, 2023, we determined that we were in a position to reasonably estimate the amount of the liability associated with the Tax Receivable Agreements and determined that future payment under the terms of the Tax Receivable Agreements were probable, and therefore recorded expense of $38.2 million as of December 31, 2023. ​ Other Other income was $2.4 million for the year ended December 31, 2023, compared to $4.7 million for the year ended December 31, 2022.
Tax Receivable Agreements Expense As of December 31, 2024 and 2023, we determined that we were in a position to reasonably estimate the amount of the liability associated with the Tax Receivable Agreements and determined that future payment under the terms of the Tax Receivable Agreements were probable, and therefore recorded expense of $0.8 million and $38.2 million for the years ended December 31, 2024 and 2023, respectively. ​ Income Tax Expense For the years ended December 31, 2024 and December 31, 2023, we recorded $13.6 million in income tax expense and $60.2 million in income tax benefit, respectively .
Costs of Revenue Costs of revenue increased $127.0 million, or 10.4%, to $1.4 billion for the year ended December 31, 2023, compared to $1.2 billion for the year ended December 31, 2022.
Costs of revenue decreased $0.6 million, or 0.4%, to $137.6 million for the year ended December 31, 2024, compared to $138.2 million for the year ended December 31, 2023.
Our board of directors, management and investors use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and items outside the control of our management team.
Also impacting the 64 Table of Contents decrease was lower gross profit and higher selling, general and administrative expenses partially offset by the trademark abandonment during the year ended December 31, 2023. ​ Comparison of Non-GAAP Financial Measures Our board of directors, management and investors use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, amortization and accretion) and items outside the control of our management team.
Net Interest Expense Net interest expense increased by $1.7 million, or 62.7%, to $4.4 million for the year ended December 31, 2023, compared to $2.7 million for the year ended December 31, 2022, due primarily to higher average borrowings on our Sustainability-Linked Credit Facility and higher interest rates during the year ended December 31, 2023 prior to repaying such borrowings.
Net Interest Expense Net interest expense increased by $2.6 million, or 58.5%, to $7.0 million for the year ended December 31, 2024, compared to $4.4 million for the year ended December 31, 2023 due primarily to higher average borrowing on our Prior Sustainability-Linked Credit Facility partially offset by interest income on cash balances.
We prioritize sustained positive free cash flow and a strong balance sheet, and evaluate potential acquisitions and investments in the context of those priorities, in addition to the economics of the opportunity.
We prioritize sustained positive free cash flow and a strong balance sheet, and evaluate potential acquisitions and investments in the context of those priorities, in addition to the economics of the opportunity. We believe this approach provides us with additional flexibility to evaluate larger investments as well as improved resilience in a sustained downturn versus many of our peers.
Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 75 Table of Contents The following table sets forth our reconciliation of EBITDA and Adjusted EBITDA to our net (loss) income, which is the most directly comparable GAAP measure, for the years ended December 31, 2023 and 2022.
Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
“Risk Factors – Risks Related to Our Organizational Structure. In certain cases, payments under the Tax Receivable Agreements may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the Tax Receivable Agreements.
In certain cases, payments under the Tax Receivable Agreements may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the Tax Receivable Agreements. ​ We have assessed the amount of any liability under the Tax Receivable Agreements required under the provisions of ASC 450 in connection with preparing the consolidated financial statements.
The pandemic had a material negative impact on our financial results for prior periods and may affect the comparability of our results. ​ Many of our customers have demonstrated their resolve to manage their capital spending within budgets and cash flow from operations and increase redemptions of debt and/or returns of capital to investors.
As costs of capital has increased, many of our customers have demonstrated their resolve to manage their capital spending within budgets and cash flow from operations and increase redemptions of debt and/or returns of capital to investors.
Central bank policy actions, bank failures and associated liquidity risks and other factors may negatively impact the value of our equity and that of our customers, and may reduce our and their ability to access liquidity in the bank and capital markets or result in capital being available on less favorable terms, which could negatively affect our financial condition and that of our customers. ​ From an operational standpoint, many of the recent trends still apply to ongoing unconventional oil and gas development.
While customers involved in acquisitions may initially slow activity to focus on integration and portfolio management, we believe we are well-positioned to meet the increased responsibilities of overall water management, including water reuse, recycling, transmitting and balancing across customers and regions, and ultimately disposal, for these larger customers and blocks of contiguous acreage. ​ While the financial health of the broader oil and gas industry has shown improvement as compared to prior periods, central bank policy actions and associated liquidity risks and other factors may negatively impact the value of our equity and that of our customers, and may reduce our and their ability to access liquidity in the bank and capital markets or result in capital being available on less favorable terms, which could negatively affect our financial condition and that of our customers. ​ From an operational standpoint, many of the recent trends still apply to ongoing unconventional oil and gas development.
The increase was comprised of a $50.0 million increase in Water Services costs and a $55.3 million increase in Water Infrastructure costs due to supporting the higher revenue-producing activity discussed above partially offset by a $3.6 million decrease in Chemical Technologies costs. Depreciation and amortization expense also increased by $25.3 million. Water Services .
The decrease was primarily composed of a $0.6 million decrease in Water Infrastructure costs, a $93.7 million decrease in Water Services costs and a $41.5 million decrease in Chemical Technologies costs reflecting the lower revenue-producing activity discussed above, partially offset by an increase of $14.7 million in depreciation, amortization and accretion. Water Infrastructure .
The $9.7 million decrease in EBITDA was driven primarily by $38.2 million in tax receivable agreements expense in 2023, a $36.6 million increase in selling, general and administrative expense in 2023, a $13.4 million bargain purchase gain in 2022 and abandonment costs of $12.6 million in 2023 partially offset by an increase of $96.2 million in gross profit.
The $48.4 million increase in EBITDA was driven primarily by $38.2 million in tax receivable agreements expense in 2023 compared to $0.8 million in 2024, a $2.5 million increase in gross profit and an $11.4 million decrease in impairments and abandonments partially offset by a $4.4 million increase in selling, general and administrative expense.
Intangible assets with finite useful lives are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized.
Intangible assets with finite useful lives are amortized either on a straight-line basis over the asset’s estimated useful life or on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized. 70 Table of Contents Impairment of goodwill, long-lived assets and intangible assets : Long-lived assets, such as property and equipment and finite-lived intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
While these trends have advanced the most in the Permian Basin to date, they are emerging in other basins as well. ​ The increased reuse of produced water requires additional chemical treatment solutions. We have a dedicated team of specialists focused every day on developing and deploying innovative water treatment and reuse services for our customers.
While these trends have advanced the most in the Permian Basin to date, they are emerging in other basins as well and Select has recently performed recycling projects in the Haynesville, Rockies and South Texas regions as well. ​ The increased reuse of produced water requires additional chemical treatment solutions.
Our cash flow estimates are based upon, among other things, historical results adjusted to reflect our best estimate of future market rates, utilization levels, and operating performance. Development of future cash flows also requires management to make assumptions and to apply judgment, including the timing of future expected cash flows, using the appropriate discount rates and determining salvage values.
Development of future cash flows also requires management to make assumptions and to apply judgment, including the timing of future expected cash flows, using the appropriate discount rates and determining salvage values. The estimate of fair value represents our best estimates of these factors based on current industry trends and reference to market transactions and is subject to variability.
Although OPEC+ increased its output in December 2023 due to, among other things, the ongoing conflicts in the Middle East, OPEC+ may, at its discretion, continue to decrease, or increase, production, which will continue to impact crude oil and natural gas price volatility.
In December 2024, OPEC+ announced an extension of such production cuts through the end of 2026. OPEC+ may, at its discretion, continue to decrease, or increase, production, which will continue to impact crude oil and natural gas price volatility.
Depreciation and amortization expense increased $25.3 million, or 22.3%, to $138.8 million for the year ended December 31, 2023, compared to $113.5 million for the year ended December 31, 2022, due primarily to a higher fixed asset base related to the Breakwater acquisition and investments in pipeline and recycling infrastructure in our Water Infrastructure segment. 73 Table of Contents Gross Profit Gross profit was $231.7 million for the year ended December 31, 2023 compared to $160.8 million for the year ended December 31, 2022.
Depreciation, amortization and accretion expense increased $14.7 million, or 10.6%, to $153.5 million for the year ended December 31, 2024, compared to $138.8 million for the year ended December 31, 2023 primarily due to a higher fixed asset base resulting from recent acquisitions as well as investments made into fixed infrastructure projects . 63 Table of Contents Gross Profit Gross profit was $219.5 million for the year ended December 31, 2024 compared to $231.7 million for the year ended December 31, 2023.
The $83.9 million increase in net cash used in investing activities was due primarily to a $64.0 million increase in purchases of property and equipment, a $14.4 million decrease in proceeds received from sales of property and equipment and an increase of $10.7 million spent for acquisitions, net of cash and restricted cash received partially offset by a decrease of $7.2 million in investments made in non-controlled entities.
The $181.5 million increase in net cash used in investing activities was due primarily to an increase of $143.6 million spent for acquisitions net of cash received, a $37.3 million increase in purchases of property and equipment and a $1.1 million decrease in proceeds received from sales of property and equipment. Financing Activities.
Gross profit increased by $38.4 million in our Water Services segment, $49.4 million in our Water Infrastructure segment and $8.4 million in our Chemical Technologies segment. Partially offsetting the increase in gross profit was a $25.3 million increase in depreciation and amortization expense.
Gross profit increased by $61.5 million in our Water Infrastructure segment, decreased by $37.5 million in our Water Services segment and decreased by $21.5 million in our Chemical Technologies segment. Also contributing to the decrease in gross profit was a $14.7 million increase in depreciation, amortization and accretion expense.
These investments typically produce higher gross margins and also foster stronger partnerships with customers, as Select becomes an integral partner in ensuring well integrity for ongoing customer production. The focus is on integrated solutions that enhance contracted infrastructure projects with logistics services and chemical solutions, and expanding our value provided to the customer.
These investments typically produce higher gross margins and also foster stronger partnerships with customers, as Select becomes an integral partner 56 Table of Contents in ensuring well productivity for ongoing customer production over the life of a well.
An intensification of that conflict could also have an adverse effect on our customers and their demand for our services. ​ 67 Table of Contents In addition, OPEC+ countries announced production cuts of around 1.16 million barrels per day in April 2023, bringing its total volume cuts to 3.66 million barrels per day since 2021.
An intensification of that conflict could also have an adverse effect on our customers and their demand for our services. ​ In addition, since 2021, OPEC+ countries instituted production cuts (as well as voluntary production cuts), which currently cut output by 5.86 million barrels/day in the aggregate.
The Russia-Ukraine conflict, and the resulting sanctions and concerns regarding global energy security, has contributed to, and the conflict in the Israel-Gaza region and any heightened hostilities in the Middle East may contribute to, increases and volatility in the prices for oil and natural gas.
In the Middle East, various conflicts have resulted in increased hostilities and instability in oil and gas producing regions in the Middle East as well as in key adjacent shipping lanes and supply chains, including elevated tensions with Iran, a major oil producer. ​ The Russia-Ukraine conflict, and the resulting sanctions and concerns regarding global energy security, has contributed to, and conflicts in the Middle East may contribute to, increases and volatility in the prices for oil and natural gas.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe level of drilling and completion activity is influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; war, armed conflicts, economic sanctions and other constraints to global trade and economic growth; current price levels as well as expectations about future prices of oil and gas; the magnitude and timing of capital spending by our customers; the cost of exploring for, developing, producing and delivering oil and gas; the extent to which our E&P customers choose to drill and complete new wells to offset decline from their existing wells; the extent to which our E&P customers choose to invest to grow production; discoveries of new oil and gas reserves; available storage capacity and pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; environmental regulations; technical advances in alternative forms of energy (e.g. wind and solar electricity, electric vehicles) that encourage substitution for or displacement of oil and gas consumption in end-use markets; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; global health events; merger and acquisition activity and consolidation in our industry, and other factors.
Biggest changeThe level of drilling and completion activity is influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; war, armed conflicts, economic sanctions and other constraints to global trade and economic growth; current price levels as well as expectations about future prices of oil and gas, including announcements and actions taken by the members of OPEC+ with respect to oil production levels; the magnitude and timing of capital spending by our customers; the cost of exploring for, developing, producing and delivering oil and gas; the extent to which our E&P customers choose to drill and complete new wells to offset decline 72 Table of Contents from their existing wells; the extent to which our E&P customers choose to invest to grow production; discoveries of new oil and gas reserves; available storage capacity and pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; instability in oil-producing countries; environmental regulations; technical advances in alternative forms of energy (e.g., wind and solar electricity, electric vehicles) that encourage substitution for or displacement of oil and gas consumption in end-use markets; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; global health events; merger and acquisition activity and consolidation in our industry, and other factors.
Interest Rate Risk As of December 31, 2023, we did not have any indebtedness under our Sustainability-Linked Credit Facility. As of February 19, 2024, we had $55.0 million in outstanding indebtedness and $146.3 million of available borrowing capacity under our Sustainability-Linked Credit Facility.
Interest Rate Risk As of December 31, 2024, we had $85.0 million in outstanding borrowings and $114.8 million of available borrowing capacity under our Prior Sustainability-Linked Credit Facility. As of February 17, 2025, we had $250.0 million in outstanding indebtedness and $211.3 million of available borrowing capacity under our Sustainability-Linked Credit Facility.

Other WTTR 10-K year-over-year comparisons