Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40955 | |
Entity Registrant Name | Aris Water Solutions, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-1022110 | |
Entity Address, Address Line One | 9651 Katy Freeway | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Houston | |
Entity Address State Or Province | TX | |
Entity Address, Postal Zip Code | 77024 | |
City Area Code | (832) | |
Local Phone Number | 304-7003 | |
Title of 12(b) Security | Class A Common Stock, $0.01 par value per share | |
Trading Symbol | ARIS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001865187 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 30,148,929 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 27,543,565 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash | $ 24,184 | $ 1,122 |
Other Receivables | 18,077 | 4,354 |
Prepaids and Deposits | 2,241 | 5,805 |
Total Current Assets | 125,618 | 138,993 |
Fixed Assets | ||
Property, Plant and Equipment | 1,021,516 | 907,784 |
Accumulated Depreciation | (112,151) | (88,681) |
Total Property, Plant and Equipment, Net | 909,365 | 819,103 |
Intangible Assets, Net | 241,550 | 269,845 |
Goodwill | 34,585 | 34,585 |
Deferred Income Tax Assets, Net | 25,783 | 30,424 |
Right-of-Use Assets | 16,760 | 9,135 |
Other Assets | 853 | 1,281 |
Total Assets | 1,354,514 | 1,303,366 |
Liabilities and Stockholders' Equity | ||
Accrued and Other Current Liabilities | 81,189 | 65,411 |
Total Current Liabilities | 113,340 | 91,414 |
Long-Term Debt, Net of Debt Issuance Costs | 429,324 | 428,921 |
Asset Retirement Obligation | 18,136 | 17,543 |
Tax Receivable Agreement Liability | 98,164 | 97,980 |
Other Long-Term Liabilities | 16,756 | 10,421 |
Total Liabilities | 675,720 | 646,279 |
Commitments and Contingencies (see Note 10) | ||
Stockholders' Equity | ||
Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of September 30, 2023 and December 31, 2022 | ||
Treasury Stock (at Cost), 310,573 shares as of September 30, 2023; 196,762 shares as of December 31, 2022 | (4,259) | (2,891) |
Additional Paid-in-Capital | 325,655 | 319,545 |
Accumulated Deficit | (2,683) | (7,722) |
Total Stockholders' Equity Attributable to Aris Water Solutions, Inc. | 319,291 | 309,508 |
Noncontrolling Interest | 359,503 | 347,579 |
Total Stockholders' Equity | 678,794 | 657,087 |
Total Liabilities and Stockholders' Equity | 1,354,514 | 1,303,366 |
Class A Common Stock | ||
Stockholders' Equity | ||
Common stock value | 303 | 300 |
Class B Common Stock | ||
Stockholders' Equity | ||
Common stock value | 275 | 276 |
Nonrelated Party | ||
Assets | ||
Accounts Receivable, Net | 57,820 | 81,683 |
Liabilities and Stockholders' Equity | ||
Accounts Payable | 30,974 | 22,982 |
Related Party | ||
Assets | ||
Accounts Receivable, Net | 23,296 | 46,029 |
Liabilities and Stockholders' Equity | ||
Accounts Payable | $ 1,177 | $ 3,021 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Treasury Stock (in shares) | 310,573 | 196,762 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, issued (in shares) | 30,334,399 | 30,115,979 |
Common stock, outstanding (in shares) | 30,023,826 | 29,919,217 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 180,000,000 | 180,000,000 |
Common stock, issued (in shares) | 27,543,565 | 27,575,519 |
Common stock, outstanding (in shares) | 27,543,565 | 27,575,519 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | ||||
Total Revenue | $ 99,789 | $ 90,776 | $ 287,993 | $ 238,131 |
Cost of Revenue | ||||
Direct Operating Costs | 44,687 | 43,885 | 132,978 | 101,337 |
Depreciation, Amortization and Accretion | 19,445 | 16,942 | 57,137 | 49,724 |
Total Cost of Revenue | 64,132 | 60,827 | 190,115 | 151,061 |
Operating Costs and Expenses | ||||
Abandoned Well Costs | 1,214 | 9,222 | 1,214 | 14,637 |
General and Administrative | 13,526 | 11,052 | 38,007 | 33,330 |
Impairment of Long-Lived Assets | 15,597 | |||
Research and Development Expense | 809 | 430 | 1,867 | 530 |
Other Operating (Income) Expense | (2,121) | 239 | (2,096) | 1,816 |
Total Operating Expenses | 13,428 | 20,943 | 38,992 | 65,910 |
Operating Income | 22,229 | 9,006 | 58,886 | 21,160 |
Other Expense | ||||
Interest Expense, Net | 7,955 | 6,763 | 23,587 | 21,863 |
Income (Loss) Before Income Taxes | 14,274 | 2,243 | 35,299 | (703) |
Income Tax Expense (Benefit) | 2,032 | 287 | 4,918 | (81) |
Net Income (Loss) | 12,242 | 1,956 | 30,381 | (622) |
Net Income (Loss) Attributable to Noncontrolling Interest | 6,829 | 1,257 | 16,892 | (493) |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. | $ 5,413 | $ 699 | $ 13,489 | $ (129) |
Net Income (Loss) Per Share of Class A Common Stock | ||||
Basic (in dollars per share) | $ 0.17 | $ 0.02 | $ 0.42 | $ (0.03) |
Diluted (in dollars per share) | $ 0.17 | $ 0.02 | $ 0.42 | $ (0.03) |
Weighted Average Shares of Class A Common Stock Outstanding | ||||
Basic (in shares) | 30,050,560 | 24,499,953 | 30,007,433 | 22,779,077 |
Diluted (in shares) | 30,050,560 | 24,546,632 | 30,007,433 | 22,779,077 |
Nonrelated Party | Produced Water Handling | ||||
Revenue | ||||
Total Revenue | $ 47,574 | $ 39,674 | $ 143,390 | $ 110,299 |
Nonrelated Party | Water Solutions | ||||
Revenue | ||||
Total Revenue | 20,370 | 20,392 | 49,180 | 46,744 |
Nonrelated Party | Other Revenue | ||||
Revenue | ||||
Total Revenue | 761 | 246 | 1,871 | 364 |
Related Party | Produced Water Handling | ||||
Revenue | ||||
Total Revenue | 28,036 | 24,796 | 74,357 | 69,084 |
Related Party | Water Solutions | ||||
Revenue | ||||
Total Revenue | $ 3,048 | $ 5,668 | $ 19,195 | $ 11,640 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flow from Operating Activities | ||||
Net Income (Loss) | $ 12,242 | $ 1,956 | $ 30,381 | $ (622) |
Adjustments to reconcile Net Income (Loss) to Net Cash provided by Operating Activities: | ||||
Deferred Income Tax Expense (Benefit) | 4,773 | (96) | ||
Depreciation, Amortization and Accretion | 19,445 | 16,942 | 57,137 | 49,724 |
Stock-Based Compensation | 8,945 | 9,134 | ||
Impairment of Long-Lived Assets | 15,597 | |||
Abandoned Well Costs | 1,214 | 9,222 | 1,214 | 14,637 |
(Gain) Loss on Disposal of Assets, Net | (2,600) | (100) | (2,574) | 481 |
Amortization of Debt Issuance Costs, Net | 1,580 | 1,563 | ||
Other | (345) | 377 | ||
Changes in Operating Assets and Liabilities: | ||||
Accounts Receivable | 22,594 | (33,683) | ||
Accounts Receivable from Affiliate | 22,771 | (5,581) | ||
Other Receivables | (13,359) | (2,139) | ||
Prepaids and Deposits | 3,564 | 4,215 | ||
Accounts Payable | (155) | 3,233 | ||
Payables to Affiliate | (1,844) | 913 | ||
Accrued Liabilities and Other | 17,843 | 19,432 | ||
Net Cash Provided by Operating Activities | 152,525 | 77,185 | ||
Cash Flow from Investing Activities | ||||
Property, Plant and Equipment Expenditures | (131,874) | (96,991) | ||
Cash Paid for Asset Acquisitions | (3,353) | |||
Proceeds from Sale of Property, Plant and Equipment | 20,100 | 7,400 | 20,119 | 7,441 |
Net Cash Used in Investing Activities | (111,755) | (92,903) | ||
Cash Flow from Financing Activities | ||||
Dividends and Distributions Paid | (16,083) | (19,157) | ||
Repurchase of Shares | (625) | |||
Repayment of Credit Facility | (51,000) | |||
Proceeds from Credit Facility | 50,000 | |||
Net Cash Used in Financing Activities | (17,708) | (19,157) | ||
Net Increase (Decrease) in Cash | 23,062 | (34,875) | ||
Cash, Beginning of Period | 1,122 | 60,055 | ||
Cash, End of Period | $ 24,184 | $ 25,180 | 24,184 | 25,180 |
Supplementary Cash Flow Data | ||||
Cash Paid for Interest | $ 18,230 | $ 15,250 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock Class A Common Stock | Common Stock Class B Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Deficit | Noncontrolling Interest | Class A Common Stock | Class B Common Stock | Total |
Beginning Balance at Dec. 31, 2021 | $ 218 | $ 317 | $ 212,926 | $ (135) | $ (457) | $ 389,670 | $ 602,539 | ||
Beginning Balance (in shares) at Dec. 31, 2021 | 21,858,022 | 31,716,104 | 10,191 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Redemption of Class B Shares for Class A Shares | $ 1 | $ (1) | 1,786 | (1,786) | |||||
Redemption of Class B Shares for Class A Shares (in shares) | 148,087 | (148,087) | |||||||
Stock-based Compensation Expense | 958 | 1,379 | 2,337 | ||||||
Stock-based Compensation Expense (in shares) | 515 | ||||||||
Increase in TRA Liability Related to Share Redemption | (1,531) | (1,531) | |||||||
Deferred Tax Assets Acquired | 1,666 | 1,666 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,062) | (2,947) | (5,009) | ||||||
Net Income (Loss) | (2,222) | (4,395) | (6,617) | ||||||
Ending Balance at Mar. 31, 2022 | $ 219 | $ 316 | 215,805 | $ (135) | (4,741) | 381,921 | 593,385 | ||
Ending Balance (in shares) at Mar. 31, 2022 | 22,006,624 | 31,568,017 | 10,191 | ||||||
Beginning Balance at Dec. 31, 2021 | $ 218 | $ 317 | 212,926 | $ (135) | (457) | 389,670 | 602,539 | ||
Beginning Balance (in shares) at Dec. 31, 2021 | 21,858,022 | 31,716,104 | 10,191 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income (Loss) | (622) | ||||||||
Ending Balance at Sep. 30, 2022 | $ 261 | $ 308 | 282,917 | $ (135) | (7,094) | 390,565 | 666,822 | ||
Ending Balance (in shares) at Sep. 30, 2022 | 26,166,400 | 30,811,322 | 10,191 | ||||||
Beginning Balance at Mar. 31, 2022 | $ 219 | $ 316 | 215,805 | $ (135) | (4,741) | 381,921 | 593,385 | ||
Beginning Balance (in shares) at Mar. 31, 2022 | 22,006,624 | 31,568,017 | 10,191 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Redemption of Class B Shares for Class A Shares | $ 1 | $ (1) | 1,315 | (1,315) | |||||
Redemption of Class B Shares for Class A Shares (in shares) | 107,914 | (107,914) | |||||||
Stock-based Compensation Expense | 1,318 | 1,884 | 3,202 | ||||||
Increase in TRA Liability Related to Share Redemption | (1,021) | (1,021) | |||||||
Deferred Tax Assets Acquired | 422 | 422 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,068) | (2,966) | (5,034) | ||||||
Net Income (Loss) | 1,394 | 2,645 | 4,039 | ||||||
Ending Balance at Jun. 30, 2022 | $ 220 | $ 315 | 217,839 | $ (135) | (5,415) | 382,169 | 594,993 | ||
Ending Balance (in shares) at Jun. 30, 2022 | 22,114,538 | 31,460,103 | 10,191 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Class A Shares issued for Acquisitions | $ 34 | 54,588 | 16,601 | 71,223 | |||||
Class A Shares issued for Acquisitions (in shares) | 3,365,907 | ||||||||
Redemption of Class B Shares for Class A Shares | $ 7 | $ (7) | 8,275 | (8,275) | |||||
Redemption of Class B Shares for Class A Shares (in shares) | 648,781 | (648,781) | |||||||
Stock-based Compensation Expense | 1,848 | 1,747 | 3,595 | ||||||
Stock-based Compensation Expense (in shares) | 37,174 | ||||||||
Increase in TRA Liability Related to Share Redemption | (3,446) | (3,446) | |||||||
Deferred Tax Assets Acquired | 3,813 | 3,813 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,378) | (2,934) | (5,312) | ||||||
Net Income (Loss) | 699 | 1,257 | 1,956 | ||||||
Ending Balance at Sep. 30, 2022 | $ 261 | $ 308 | 282,917 | $ (135) | (7,094) | 390,565 | 666,822 | ||
Ending Balance (in shares) at Sep. 30, 2022 | 26,166,400 | 30,811,322 | 10,191 | ||||||
Beginning Balance at Dec. 31, 2022 | $ 300 | $ 276 | 319,545 | $ (2,891) | (7,722) | 347,579 | 657,087 | ||
Beginning Balance (in shares) at Dec. 31, 2022 | 30,115,979 | 27,575,519 | 196,762 | 29,919,217 | 27,575,519 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Redemption of Class B Shares for Class A Shares | 267 | (267) | |||||||
Redemption of Class B Shares for Class A Shares (in shares) | 20,953 | (20,953) | |||||||
Stock-based Compensation Expense | $ 2 | 2,383 | 83 | 2,468 | |||||
Stock-based Compensation Expense (in shares) | 175,717 | ||||||||
Increase in TRA Liability Related to Share Redemption | (110) | (110) | |||||||
Deferred Tax Assets Acquired | 82 | 82 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,826) | (2,588) | (5,414) | ||||||
Purchase of Treasury Stock | $ (599) | (599) | |||||||
Purchase of Treasury Stock (in shares) | 42,293 | ||||||||
Net Income (Loss) | 3,378 | 4,330 | 7,708 | ||||||
Ending Balance at Mar. 31, 2023 | $ 302 | $ 276 | 322,167 | $ (3,490) | (7,170) | 349,137 | 661,222 | ||
Ending Balance (in shares) at Mar. 31, 2023 | 30,312,649 | 27,554,566 | 239,055 | ||||||
Beginning Balance at Dec. 31, 2022 | $ 300 | $ 276 | 319,545 | $ (2,891) | (7,722) | 347,579 | 657,087 | ||
Beginning Balance (in shares) at Dec. 31, 2022 | 30,115,979 | 27,575,519 | 196,762 | 29,919,217 | 27,575,519 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net Income (Loss) | 30,381 | ||||||||
Ending Balance at Sep. 30, 2023 | $ 303 | $ 275 | 325,655 | $ (4,259) | (2,683) | 359,503 | 678,794 | ||
Ending Balance (in shares) at Sep. 30, 2023 | 30,334,399 | 27,543,565 | 310,573 | 30,023,826 | 27,543,565 | ||||
Beginning Balance at Mar. 31, 2023 | $ 302 | $ 276 | 322,167 | $ (3,490) | (7,170) | 349,137 | 661,222 | ||
Beginning Balance (in shares) at Mar. 31, 2023 | 30,312,649 | 27,554,566 | 239,055 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Redemption of Class B Shares for Class A Shares | 7 | (7) | |||||||
Redemption of Class B Shares for Class A Shares (in shares) | 524 | (524) | |||||||
Stock-based Compensation Expense | 1,626 | 1,491 | 3,117 | ||||||
Increase in TRA Liability Related to Share Redemption | (3) | (3) | |||||||
Deferred Tax Assets Acquired | 2 | 2 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,819) | (2,584) | (5,403) | ||||||
Net Income (Loss) | 4,698 | 5,733 | 10,431 | ||||||
Ending Balance at Jun. 30, 2023 | $ 302 | $ 276 | 323,799 | $ (3,490) | (5,291) | 353,770 | 669,366 | ||
Ending Balance (in shares) at Jun. 30, 2023 | 30,313,173 | 27,554,042 | 239,055 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Redemption of Class B Shares for Class A Shares | $ 1 | $ (1) | 136 | (136) | |||||
Redemption of Class B Shares for Class A Shares (in shares) | 10,477 | (10,477) | |||||||
Stock-based Compensation Expense | 1,816 | 1,544 | 3,360 | ||||||
Stock-based Compensation Expense (in shares) | 10,749 | ||||||||
Increase in TRA Liability Related to Share Redemption | (71) | (71) | |||||||
Deferred Tax Assets Acquired | 48 | 48 | |||||||
Dividends and Distributions ($0.09 per share or unit) | (2,805) | (2,577) | (5,382) | ||||||
Purchase of Treasury Stock | (73) | $ (769) | 73 | (769) | |||||
Purchase of Treasury Stock (in shares) | 71,518 | ||||||||
Net Income (Loss) | 5,413 | 6,829 | 12,242 | ||||||
Ending Balance at Sep. 30, 2023 | $ 303 | $ 275 | $ 325,655 | $ (4,259) | $ (2,683) | $ 359,503 | $ 678,794 | ||
Ending Balance (in shares) at Sep. 30, 2023 | 30,334,399 | 27,543,565 | 310,573 | 30,023,826 | 27,543,565 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Stockholders' Equity | ||||||
Dividends and Distributions Declared (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 |
Organization and Background of
Organization and Background of Business | 9 Months Ended |
Sep. 30, 2023 | |
Organization and Background of Business | |
Organization and Background of Business | 1. Aris Water Solutions, Inc. (“Aris Inc.,” the “Company,” “we,” “our,” or “us”) is an independent, environmentally-focused company headquartered in Houston, Texas, that, through its controlling interest in Solaris Midstream Holdings, LLC, a Delaware limited liability company (“Solaris LLC”), provides sustainability-enhancing services to oil and natural gas operators. We strive to build long-term value through the development, construction and operation of integrated produced water handling and recycling infrastructure that provides high-capacity, comprehensive produced water management, recycling and supply solutions for operators in the Permian Basin. We are the parent holding company of Solaris LLC. As the sole managing member of Solaris LLC, we operate and control the business and affairs of Solaris LLC, and through Solaris LLC and its subsidiaries, conduct our business. We consolidate the financial results of Solaris LLC and report noncontrolling interest related to the portion of Solaris LLC units not owned by us. These unaudited condensed consolidated financial statements reflect the financial statements of the consolidated Company including Aris Inc., Solaris LLC and Solaris LLC’s subsidiaries. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation All dollar amounts, except per share amounts, in the condensed consolidated financial statements and tables in the notes are stated in thousands of dollars unless otherwise indicated. Interim Financial Statements These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These financial statements have not been audited by our independent registered public accounting firm. These condensed consolidated financial statements include the adjustments and accruals, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 . Consolidation We have determined that the members with equity at risk in Solaris LLC lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact Solaris LLC’s economic performance; therefore, Solaris LLC is considered a variable interest entity (“VIE”). As the managing member of Solaris LLC, we operate and control the business and affairs of Solaris LLC, as well as have the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Solaris LLC . Noncontrolling Interest As of September 30, 2023, we own approximately 52% of Solaris LLC. Our consolidated financial statements include a noncontrolling interest representing the percentage of Solaris LLC units not held by us . Use of Estimates Management has made certain estimates and assumptions that affect reported amounts in these condensed consolidated financial statements and disclosures of contingencies. These estimates include, among others, determining the fair values of assets acquired, liabilities assumed, and/or contingent consideration paid in acquisitions or nonmonetary exchanges or disposed of through sale, determining the fair value and related impairment of assets held for sale, determining the fair value of performance-based restricted stock units (“PSUs”), useful lives of property, plant and equipment and amortizable intangible assets, goodwill impairment testing, the fair value of asset retirement obligations (“ARO”), accruals for environmental matters, the income tax provision, valuation allowances for deferred tax assets and the liability associated with our Tax Receivable Agreement (the “TRA liability”). Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including current economic and industry conditions. Actual results could differ from management’s estimates as additional information or actual results become available in the future, and those differences could be material. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Significant Accounting Policies See Note 2. Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for the discussion of our significant accounting policies. There were no significant updates or revisions to our accounting policies during the nine months ended September 30, 2023. Goodwill All of our goodwill is assigned to a single reporting unit. We perform our annual goodwill impairment test during the fourth quarter of our fiscal year, and more frequently if impairment indicators exist. During the quarter ended March 31, 2023, we conducted a quantitative interim test of goodwill due to a decline in the price of our Class A common stock during the period. As a result of our interim test, no goodwill impairment was identified. The fair value of our reporting unit exceeded the carrying value by more than 10%. We concluded there were no new impairment triggering events as of and for the three and nine months ended September 30, 2023. As such, there was no goodwill impairment as of September 30, 2023. Some of the inherent estimates and assumptions used in determining the fair value of our reporting unit are outside the control of management, including interest rates, cost of capital, tax rates, market multiples and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting unit, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in a material impairment of our goodwill. Fair Value Information The fair value of our 7.625% Senior Sustainability-Linked Notes (the “Notes”), which are fixed-rate debt, is estimated based on the published market prices for the same or similar issues. Management has designated this measurement as a Level 2 fair value measurement. The fair value of our Credit Facility (as defined below) approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to us. Management has designated this measurement as Level 3. Fair value information regarding our debt is as follows: (in thousands) September 30, 2023 December 31, 2022 Carrying Fair Carrying Fair Amount Value Amount Value Senior Sustainability-Linked Notes $ 400,000 $ 387,308 $ 400,000 $ 398,828 Credit Facility $ 34,000 $ 34,000 $ 35,000 $ 35,000 The carrying values of our other financial instruments, consisting of cash, accounts receivable and accounts payable, approximate their fair values due to the short maturity of such instruments . Intangible Assets Intangible assets are net of accumulated amortization of $125.1 million and $96.8 million at September 30, 2023 and December 31, 2022, respectively . Related Parties We and ConocoPhillips, one of our principal owners, are parties to a long-term water gathering and handling agreement, pursuant to which ConocoPhillips dedicates all the produced water generated from its current and future acreage in a defined area of mutual interest in New Mexico and Texas. As of September 30, 2023 and December 31, 2022, we had accounts receivable from ConocoPhillips of $23.3 million and $46.0 million, respectively, that were recorded in accounts receivable from affiliate, and we had payables to ConocoPhillips of $1.1 million and $3.0 million, respectively, that were recorded in payables to affiliate. Revenues and expenses related to ConocoPhillips were as follows: (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues from ConocoPhillips $ 31,084 $ 30,464 $ 93,552 $ 80,724 Operating Expenses Reimbursed to ConocoPhillips (1,160) 403 (1,177) 1,163 Operating expenses reimbursed to ConocoPhillips are related to ConocoPhillips’ costs incurred on our behalf and other ongoing operating expenses. Collaborative Agreements In November 2022, we announced that we had entered into a strategic agreement (the “Beneficial Reuse Strategic Agreement”) with Chevron U.S.A. Inc. and ConocoPhillips to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities. In January 2023, Exxon Mobil Corporation (together with the Company, Chevron U.S.A. Inc. and ConocoPhillips, the “alliance members”) joined the Beneficial Reuse Strategic Agreement. The Company reviewed the Beneficial Reuse Strategic Agreement and determined that it should be accounted for as a collaborative arrangement pursuant to Accounting Standards Codification 808, “Collaborative Arrangements” (“ASC 808”), as the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity. ASC 808 describes arrangements within its scope and considerations surrounding presentation and disclosure, with recognition matters subjected to other authoritative guidance, in certain cases by analogy. The Company has concluded that ASC 730, “Research and Development,” should be applied to the Beneficial Reuse Strategic Agreement. The Company accounts for reimbursements of research and development costs under the Beneficial Reuse Strategic Agreement as contra-expenses in the period such expenses are incurred. This reflects the joint risk sharing nature of these activities within the collaborative arrangement. The Company classifies payments owed or receivables recorded as “Accrued and Other Current Liabilities” or “Other Receivables,” respectively, on the Company’s condensed consolidated balance sheet. For the three and nine months ended September 30, 2023, the Company incurred $1.8 million and $3.9 million, respectively, in total research and development expenses relating to the Beneficial Reuse Strategic Agreement, which was offset by $1.4 million and $2.9 million, respectively, in amounts due from the other alliance members for reimbursement of these shared costs. As of September 30, 2023, the Company recorded $1.5 million due from the other alliance members for reimbursement of shared costs in “Other Receivables” on the Company’s condensed consolidated balance sheet. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, .” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) interest rate or another reference rate expected to be discontinued because of reference rate reform. This guidance was to be effective prospectively upon issuance through December 31, 2022 and applied from the beginning of an interim period that included the issuance date of this ASU. However, in December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” which deferred the sunset date from December 31, 2022 to December 31, 2024. All other provisions of ASU 2020-04 were unchanged. In May 2023, the Credit Agreement (as defined below) was amended to, among other things, transition the loans under the Credit Facility to be made at the Secured Overnight Financing Rate (“SOFR”) instead of LIBOR. The Company adopted this accounting pronouncement with the execution of the First Amendment to the Second Amended and Restated Credit Agreement in May 2023. See Note 6. Long-Term Debt for further discussion of the Company's accounting for its outstanding debt, credit facility and related issuance costs. This guidance provides an optional practical expedient that allows qualifying modifications to be accounted for as a debt modification rather than be analyzed under existing guidance to determine if the modification should be accounted for as a debt extinguishment. In adopting this accounting standard, we have elected to apply this optional expedient. Adopting this accounting standard did not have a material impact on the Company's condensed consolidated financial statements and related disclosures. |
Additional Financial Statement
Additional Financial Statement Information | 9 Months Ended |
Sep. 30, 2023 | |
Additional Financial Statement Information | |
Additional Financial Statement Information | 3. Balance Sheet Other balance sheet information is as follows: (in thousands) September 30, December 31, 2023 2022 Other Receivables Insurance and Third Party Receivables for Remediation Expenses $ 7,323 $ 3,600 Reimbursable Research and Development Receivable 1,466 — Property Insurance Receivable 6,000 — Reimbursable Projects and Other 3,288 754 Total Other Receivables $ 18,077 $ 4,354 Prepaids and Deposits Prepaid Insurance and Other $ 2,208 $ 5,744 Deposits 33 61 Total Prepaids and Deposits $ 2,241 $ 5,805 Accrued and Other Current Liabilities Accrued Operating Expense $ 35,858 $ 28,877 Accrued Capital Costs 12,767 16,161 Accrued Interest 15,330 8,262 Accrued Compensation 9,032 4,809 Lease Liabilities 1,504 1,176 Asset Retirement Obligation 1,156 2,242 Other 5,542 3,884 Total Accrued and Other Current Liabilities $ 81,189 $ 65,411 Other Long-Term Liabilities Noncurrent Lease Liabilities $ 14,543 $ 7,719 Contingent Consideration Liability 2,213 2,702 Total Other Long-Term Liabilities $ 16,756 $ 10,421 Statement of Operations Other statement of operations information is as follows: (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Depreciation, Amortization and Accretion Expense Depreciation - Property, Plant and Equipment $ 9,749 $ 7,658 $ 27,946 $ 21,755 Amortization - Intangible Assets 9,392 9,183 28,295 27,551 Accretion of Asset Retirement Obligations 304 101 896 418 Total Depreciation, Amortization and Accretion Expense $ 19,445 $ 16,942 $ 57,137 $ 49,724 Other Operating (Income) Expense (Gain) Loss on Disposal of Assets, Net $ (2,631) $ (97) $ (2,574) $ 481 Transaction Costs 528 336 673 1,269 Other (18) — (195) 66 Other Operating (Income) Expense $ (2,121) $ 239 $ (2,096) $ 1,816 Interest Expense Interest on Debt Instruments $ 8,373 $ 7,759 $ 25,477 $ 23,365 Amortization of Debt Issuance Costs 612 610 1,830 1,830 Total Interest Expense 8,985 8,369 27,307 25,195 Less: Amounts Capitalized (1,030) (1,606) (3,720) (3,332) Interest Expense, Net $ 7,955 $ 6,763 $ 23,587 $ 21,863 |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment. | |
Property, Plant and Equipment | 4. Property, plant and equipment (“PP&E”) is stated at cost, less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful service life of the asset. PP&E consists of the following: (in thousands) September 30, December 31, 2023 2022 Wells, Facilities, Water Ponds and Related Equipment $ 528,103 $ 437,894 Pipelines 413,092 363,577 Vehicles, Equipment, Computers and Office Furniture 24,091 20,219 Assets Subject to Depreciation 965,286 821,690 Land 463 463 Projects and Construction in Progress 55,767 85,631 Total Property, Plant and Equipment 1,021,516 907,784 Accumulated Depreciation (112,151) (88,681) Total Property, Plant and Equipment, Net $ 909,365 $ 819,103 Accrued PP&E additions totaled $31.2 million and $26.4 million at September 30, 2023 and December 31, 2022, respectively. Asset Exchanges No asset exchanges were completed during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, we completed multiple nonmonetary transactions. The transactions included exchanges of wells, facilities, permits and other assets. The total net book value of the divested assets and liabilities was $3.8 million. The acquired assets were recorded at a total fair value of $3.2 million, which resulted in a total pre-tax loss of $0.6 million. Assets Sold and Asset Impairment During the second quarter of 2023, management entered into a non-binding letter of intent with a third party to sell certain of our assets. These assets met the criteria for classification as assets held for sale as of June 30, 2023, and we closed the sale of these assets during the third quarter of 2023. We received cash consideration of $20.1 million and recorded a gain of $2.6 million, which is included in “Other Operating (Income) Expense” in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023. During the first quarter of 2022, management committed to a plan to sell certain of our assets located in the Midland Basin and determined that these assets met all the criteria for classification as assets held for sale. These assets were re-measured at their fair values less costs to sell, which resulted in the recognition of pre-tax impairment expense of $15.6 million during the first quarter of 2022. We estimated the fair value of the assets using indicative bids, which were representative of a Level 2 fair value measurement, and we ceased recording depreciation on the assets. During the third quarter of 2022, we closed the sale of these assets for proceeds of $7.4 million and recorded a gain of $0.1 million. Abandoned Assets During the three months ended September 30, 2023, management determined a stand-alone produced water handling facility was no longer economically beneficial to the operations of the Company and should be shut-in and taken out of service. Accordingly, we removed the costs and the associated accumulated depreciation and recognized a $1.2 million charge for the remaining book value of the asset. This charge is included in “Abandoned Well Costs” in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023. During the third quarter of 2022, a stand-alone produced water handling facility was taken out of service, and $9.2 million in abandoned well costs are included in the condensed consolidated statements of operations for the three months ended September 30, 2022. Total abandonment expense of $14.6 million was recorded during the nine months ended September 30, 2022 and included the facility discussed above, as well as additional abandonment expense related to two previously acquired facilities that were no longer economically beneficial to the operations of the Company and the abandonment of a well under construction. Delaware Energy Asset Acquisition On August 1, 2022, we acquired from Delaware Energy, LLC (“Delaware Energy”) certain produced water handling facilities and other related assets and rights in Lea County and Eddy County, New Mexico. In connection with the closing and as consideration for the assets, we issued to the seller 3,365,907 shares of our Class A common stock and included volumetric-based contingent consideration. We estimated the fair value of the contingent consideration using a discounted cash flow model based on estimated royalty payments to be made over a five-year contractual period. Allocation of the purchase price to the acquired assets was based on relative fair values. The following table sets forth our purchase price allocation as of December 31, 2022: (in thousands, except share and per share amounts) Equity Consideration Number of Class A Shares Issued (1) 3,365,907 Fair Value Per Share on Transaction Closing Date $ 21.16 Total Fair Value of Equity Consideration $ 71,223 Fair Value of Contingent Consideration (2) 3,899 Total Fair Value of Consideration $ 75,122 Purchase Price Allocation Produced Water Handling Facilities $ 72,736 Gathering Systems and Pipelines 2,716 Total Fair Value of Property Acquired 75,452 Less: ARO Liabilities Assumed (330) Total Purchase Price Allocation $ 75,122 (1) A portion of these shares are held in escrow and are released pursuant to the terms and conditions of the asset purchase agreement with Delaware Energy. During the three months ended September 30, 2023, 68,918 of these shares were released and returned to the Company for the reimbursement of certain post-acquisition workover costs. See Note 9. Stockholders’ Equity for further details. (2) As of September 30, 2023 and December 31, 2022, liabilities for contingent consideration of $1.2 million and $1.3 million are included in “Accrued and Other Current Liabilities,” respectively, on the condensed consolidated balance sheet, and liabilities for contingent consideration of $2.2 million and $2.7 million are included in “Other Long-Term Liabilities,” respectively, on the condensed consolidated balance sheet. Contemporaneously with the issuance of the shares of Class A common stock, Solaris LLC issued 3,365,907 Solaris LLC units to Aris Inc. Other Asset Acquisition During the third quarter of 2022, we purchased five ponds from ConocoPhillips, a related party, for a cash purchase price of $3.4 million. |
Tax Receivable Agreement Liabil
Tax Receivable Agreement Liability | 9 Months Ended |
Sep. 30, 2023 | |
Tax Receivable Agreement Liability | |
Tax Receivable Agreement Liability | 5. Our tax receivable agreement (“TRA”) with the legacy owners of Solaris LLC units (each such person, a “TRA Holder,” and together, the “TRA Holders”) generally provides for the payment by us to each TRA Holder of 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that we actually realize or, are deemed to realize in certain circumstances, in periods after our initial public offering (the “IPO”) as a result of certain increases in tax basis that occur as a result of our acquisition or Solaris LLC’s redemption, respectively, of all or a portion of such TRA Holder’s Solaris LLC units in connection with the IPO or pursuant to the exercise of a redemption right or call right. We retain the remaining 15% of these cash savings. The future benefit of these cash savings is included, alongside other tax attributes, in our total deferred income tax asset balance at September 30, 2023. The TRA liability totaled $98.2 million at September 30, 2023. The liability increased $0.2 million during the nine months ended September 30, 2023 due to the redemption of Class B shares to Class A shares. See Note 9. Stockholders’ Equity. As of September 30, 2023, we estimated that if all the remaining Solaris LLC units were redeemed for shares of our Class A common stock, the TRA liability would be approximately $220.9 million. If we experience a change of control (as defined under the TRA, which includes certain mergers, asset sales and other forms of business combinations and change of control events) or the TRA terminates early (at our election or as a result of our breach), we could be required to make an immediate lump-sum payment under the terms of the TRA. As of September 30, 2023, we estimated the liability associated with this lump-sum payment (or “early termination payment”) would be approximately $132.5 million, discounted. These amounts can be significantly impacted by the closing price of our Class A shares on the applicable redemption date. We currently do not anticipate experiencing a change of control or an early termination of the TRA. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Long-Term Debt | |
Long-Term Debt | 6. Our long-term debt consists of the following: (in thousands) September 30, December 31, 2023 2022 7.625% Senior Sustainability-Linked Notes $ 400,000 $ 400,000 Credit Facility (1) 34,000 35,000 Total Long-Term Debt 434,000 435,000 Less: Unamortized Debt Issuance Costs (4,676) (6,079) Total Long-Term Debt, Net of Debt Issuance Costs $ 429,324 $ 428,921 (1) Credit Facility borrowings bore weighted average interest rates of 8.246% and 6.967% at September 30, 2023 and December 31, 2022, respectively. Senior Sustainability-Linked Notes Our 7.625% Senior Sustainability-Linked Notes (the “Notes”) are due April 1, 2026. The Notes are unsecured and effectively subordinated to the Credit Facility to the extent of the value of the collateral securing the Credit Facility (see below). The Notes are guaranteed on a senior unsecured basis by our wholly-owned subsidiaries. Interest on the Notes is payable on April 1 and October 1 of each year. We may redeem all or part of the Notes at any time at redemption prices ranging from 103.8125% through March 31, 2025 to 100% on or after April 1, 2025. If we undergo a change of control, we may be required to repurchase all or a portion of the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued interest. During 2023, we notified the trustee for the Notes that, for the year ended December 31, 2022, we had satisfied the Sustainability Performance Target (as defined in the indenture governing the Notes) in accordance with the requirements and procedures of the indenture. As a result, the interest rate on the Notes will remain 7.625% for the remainder of the term of the Notes. Credit Facility Prior to the October amendment (discussed further below), our amended and restated credit agreement (as it may be amended and/or restated from time to time, the “Credit Agreement”) provided for, among other things, (i) commitments of $200.0 million, (ii) a maturity date of April 1, 2025, (iii) loans made under our revolving credit facility (the “Credit Facility”) and unused commitment fees to be determined based on a leverage ratio ranging from 3.00:1.00 to 4.50:1.00, (iv) an accordion feature permitting the Company to seek an increase of the Credit Facility of up to $75.0 million, subject to certain conditions, (v) a leverage ratio covenant comprising a maximum total funded debt to EBITDA ratio, net of $40.0 million of unrestricted cash and cash equivalents if the facility is drawn, and net of all unrestricted cash and cash equivalents if the facility is undrawn, (vi) a leverage ratio covenant test level of 4.50 to 1.00 and (vii) a secured leverage covenant of 2.50 to 1.00. In May 2023, the Credit Agreement was amended to, among other things, transition the loans under the Credit Facility to be made at SOFR instead of LIBOR and to allow financial reporting to be satisfied based on delivery of the consolidated financial statements of Aris Water Solutions, Inc., so long as it remains a passive holding company, instead of Solaris Midstream Holdings, LLC. Following the May 2023 amendments, and prior to the October 2023 amendments, the Credit Facility provided for, at our option: i. Base rate borrowings bearing interest at the highest of (a) the prime rate, (b) the federal funds effective rate plus 0.50% and (c) Term SOFR for an interest period of one month plus 1.00% ; plus a margin ranging from 175 basis points to 275 basis points, depending upon our leverage ratio; or ii. SOFR borrowings bearing interest at Term SOFR plus SOFR Adjustment of 0.10% plus a margin ranging from 275 basis points to 375 basis points, depending upon our leverage ratio. In addition, the Credit Facility provided for commitment fee rates ranging from 37.5 basis points to 50.0 basis points, depending upon our leverage ratio. As of September 30, 2023, we had $150 thousand in letters of credit outstanding and $165.9 million in revolving commitments available. In October 2023, the Credit Agreement was amended and restated to provide for, among other things, (i) commitments of $350.0 million, (ii) a maturity date of October 12, 2027, with a springing maturity of 91 days ahead of the Notes’ due date of April 1, 2026 in the event the Notes are voluntarily redeemed, repurchased, refinanced or otherwise retired in full prior to such springing maturity date, (iii) loans made under the Credit Facility and unused commitment fees to be determined based on a leverage ratio ranging from 3.00:1.00 to 4.50:1.00, (iv) an accordion feature permitting the Company to seek an increase of the Credit Facility of up to $150.0 million, subject to certain conditions, (v) a leverage ratio covenant which comprises a maximum total funded debt to EBITDA ratio, net of $40.0 million of unrestricted cash and cash equivalents if the facility is drawn, and net of all unrestricted cash and cash equivalents if the facility is undrawn, (vi) a leverage ratio covenant test level which is currently 4.50 to 1.00 and (vii) a secured leverage covenant of 2.50 to 1.00. The Credit Facility provides for, at our option: i. Base rate borrowings that bear interest at the highest of (a) the prime rate, (b) the federal funds effective rate plus 0.50% and (c) Term SOFR for an interest period of one month plus 1.00% ; plus a margin that ranges from 175 basis points to 275 basis points, depending upon our leverage ratio; or ii. SOFR borrowings that bear interest at Term SOFR plus SOFR Adjustment of 0.10% plus a margin that ranges from 275 basis points to 375 basis points, depending upon our leverage ratio. The Credit Facility is secured by all the real and material personal property owned by Solaris LLC or any of its subsidiaries, other than certain excluded assets. At September 30, 2023, we were in compliance with all covenants contained in the Credit Facility. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 7. In the normal course of business, we enter into operating lease agreements to support our operations. Our leased assets include right-of-way easements for our wells and facilities, office space and other assets. We currently have no finance leases. Balance Sheet Information The following table provides supplemental consolidated balance sheet information related to leases: (in thousands) September 30, December 31, Classification 2023 2022 Assets Right-of-Use Assets Right-of-Use Assets $ 16,760 $ 9,135 Liabilities Current Lease Liabilities Accrued and Other Current Liabilities $ 1,504 $ 1,176 Noncurrent Lease Liabilities Other Long-Term Liabilities 14,543 7,719 The increase in our Right-of-Use Assets and related lease liabilities from December 31, 2022 is primarily related to our new corporate office space operating lease, which commenced during the three months ended September 30, 2023. The new office lease resulted in the recognition of a Right-of-Use Asset of $7.7 million, a Current Lease Liability Noncurrent Lease Liability Statement of Operations Information The following table provides the components of lease cost, excluding lease cost related to short-term leases: (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Direct Operating Costs $ 324 $ 244 $ 927 $ 690 General and Administrative 230 166 627 498 Total Lease Cost $ 554 $ 410 $ 1,554 $ 1,188 Short-Term Leases Our short-term lease cost, which consisted primarily of field equipment rentals, totaled $5.3 million and $3.9 million for the three months ended September 30, 2023 and 2022, respectively, and $12.6 million and $7.7 million for the nine months ended September 30, 2023 and 2022, respectively. Cash Flow Information The following table summarizes supplemental cash flow information related to leases: (in thousands) Nine Months Ended September 30, 2023 2022 Cash Paid for Amounts Included in Lease Liabilities $ 1,051 $ 969 Right-of-Use Assets Obtained in Exchange for Operating Lease Liabilities, Net 9,462 723 Lease Terms and Discount Rates The following table provides lease terms and discount rates related to leases: September 30, 2023 December 31, 2022 Weighted Average Remaining Lease Term (Years) 7.8 6.6 Weighted Average Discount Rate 6.17% 2.85% Annual Lease Maturities The following table provides maturities of lease liabilities at September 30, 2023: (in thousands) Remainder of 2023 $ 462 2024 2,315 2025 2,072 2026 1,814 2027 2,954 Thereafter 11,186 Total Lease Payments 20,803 Less: Interest (4,756) Present Value of Lease Liabilities $ 16,047 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | 8. Our predecessor, Solaris LLC, is a Delaware limited liability company treated as a partnership for federal income tax purposes and, therefore, has not been subject to U.S. federal income tax at an entity level. As a result, the consolidated net income (loss) in our historical financial statements does not reflect the tax expense (benefit) we would have incurred if we were subject to U.S. federal income tax at an entity level during periods prior to the IPO. Solaris LLC continues to be treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, taxable income is allocated to members, including Aris Inc., and except for Texas franchise tax, any taxable income of Solaris LLC is reported in the respective tax returns of its members. Income Tax Expense (Benefit) We recorded income tax expense of $2.0 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, substantially all of which was deferred. We recorded income tax expense (benefit) of $4.9 million and $(0.1) million for the nine months ended September 30, 2023 and 2022, respectively, substantially all of which was deferred. Effective Tax Rate We record our income tax expense (benefit) using an estimated annual effective tax rate (“ETR”) and recognize specific events discretely as they occur. The ETR for the nine months ended September 30, 2023 and 2022 was 13.9% and 11.5%, respectively. The difference between the federal statutory rate and our estimated annual ETR is primarily due to the impact of the noncontrolling interest. Deferred Tax Assets We regularly evaluate the realizable tax benefits of deferred tax assets and record a valuation allowance, if required, based on an estimate of the amount of deferred tax assets that we believe does not meet the more- likely-than-not criteria of being realized. The balance of our deferred income tax assets, net decreased $4.6 million during the nine months ended September 30, 2023. Tax Examinations Solaris LLC files income tax returns in the U.S. federal jurisdiction and various states. There are currently no federal or state income tax examinations underway for these jurisdictions. Its federal and state returns remain open to examination for tax years 2018 through 2022. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Redemptions During the nine months ended September 30, 2023, Solaris LLC units, together with an equal number of shares of our Class B common stock, were redeemed for shares of our Class A common stock on a one-for-one basis as follows: ● 20,953 shares were redeemed on March 1, 2023; ● 524 shares were redeemed on June 1, 2023; and ● 10,477 shares were redeemed on September 1, 2023. During the nine months ended September 30, 2022, Solaris LLC units, together with an equal number of shares of our Class B common stock, were redeemed for shares of our Class A common stock on a one-for-one basis as follows: ● 148,087 shares were redeemed on February 28, 2022; ● 107,914 shares were redeemed on June 1, 2022; and ● 648,781 shares were redeemed on September 1, 2022. Dividends and Distributions On March 3, 2023, May 8, 2023 and August 2, 2023, we announced that our Board of Directors had declared quarterly dividends of $0.09 per share for the first, second and third quarters of 2023, respectively, on our Class A common stock. In conjunction with the dividend payments, a distribution of $0.09 per unit was paid to unit holders of Solaris LLC for each of the first, second and third quarters of 2023, subject to the same payment and record dates. On October 31, 2023, our Board of Directors declared a quarterly dividend of $0.09 per share for the fourth quarter of 2023 on our Class A common stock. The dividend will be paid on December 21, 2023, to holders of record of our Class A common stock as of the close of business on December 7, 2023. In conjunction with the dividend payment, a distribution of $0.09 per unit will be paid to unit holders of Solaris LLC, subject to the same payment and record dates. Treasury Stock In connection with the assets acquired from Delaware Energy, as discussed above, certain shares of our Class A common stock issued to the seller are held in escrow and can be released to the Company under certain conditions, including for the reimbursement of certain post-acquisition workover costs pursuant to the terms of the asset purchase agreement. During the three months ended September 30, 2023, 68,918 of these escrow shares were released and returned to the Company for reimbursement of such workover costs and are included in treasury stock at a value of $0.7 million, which was their fair market value at the date of receipt. The receipt of these shares was recorded as a non-cash treasury stock transaction, with an allocation of the difference between the contractually ascribed value of the shares per the asset purchase agreement and the cost of the shares at the date of receipt recorded against the workover costs in the amount of $0.5 million. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 10. In the normal course of business, we are subject to various claims, legal actions, contract negotiations and disputes. We provide for losses, if any, in the period in which they become probable and can be reasonably estimated. In management’s opinion, there are currently no such matters outstanding that would have a material effect on the accompanying financial statements. Delivery Commitment In the first quarter of 2023, we entered into an agreement with an unaffiliated water disposal company to dispose of a minimum volume of produced water over a term of seven years, for a total financial commitment of approximately $28.0 million, undiscounted. The agreement requires us to make payments for any shortfall in delivering an annual minimum volume under the commitment as well as a cumulative minimum volume over the duration of the term of the commitment. The minimum volume commitment is contingent on several performance factors to be achieved by the unaffiliated water disposal company throughout the term of the contract, which, if not achieved, would provide us with the option of cancelling the contract and discharging the remaining minimum volume commitment. We began delivering produced water under this agreement in June 2023. Purchase Obligations In the normal course of business, we enter into short-term purchase obligations for products and services, primarily related to purchases of pipe, pumps and other components. As of September 30, 2023, we had purchase obligations and commitments of approximately $31.5 million due in the next twelve months. Environmental We are also subject to various federal, state and local laws and regulations relating to the protection of the environment. For the three and nine months ended September 30, 2023, we recognized $1.1 million and $4.0 million of expense, respectively, related to environmental matters that were recorded in direct operating cost. For the three and nine months ended September 30, 2022, the expense related to environmental matters was $0.9 million and $1.9 million, respectively. We also have insurance proceeds receivable of $7.3 million at September 30, 2023, which we believe are probable to collect and are reasonably estimable. Although we believe these estimates are reasonable, actual results could differ from these estimates. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Earnings Per Share | 11. Earnings Per Share Net Income (Loss) Per Share Basic and diluted net income (loss) per share attributable to our Class A common stock is computed by dividing net income (loss) attributable to Aris Water Solutions, Inc. by the weighted average number of shares of Class A common stock outstanding for the same period, including shares of restricted stock and restricted stock units (“RSUs”), which receive nonforfeitable dividends. Shares issued during the period are weighted for the portion of the period in which the shares were outstanding. The following table sets forth the computation of basic and diluted net income (loss) per share attributable to our Class A common stock: (in thousands, except for share and per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net Income (Loss) Attributable to Stockholders' Equity $ 12,242 $ 1,956 $ 30,381 $ (622) Less: Net Income (Loss) Attributable to Noncontrolling Interest 6,829 1,257 16,892 (493) Net Income (Loss) Attributable to Aris Water Solutions, Inc. 5,413 699 13,489 (129) Participating Basic Earnings (1) (344) (179) (835) (539) Basic Net Income (Loss) Attributable to Aris Water Solutions, Inc. $ 5,069 $ 520 $ 12,654 $ (668) Reallocation of Participating Net Income (Loss) - - - - Diluted Net Income (Loss) Attributable to Aris Water Solutions, Inc. $ 5,069 $ 520 $ 12,654 $ (668) Basic Weighted Average Shares Outstanding 30,050,560 24,499,953 30,007,433 22,779,077 Dilutive Performance-Based Stock Units - 46,679 - - Dilutive Weighted Average Shares Outstanding 30,050,560 24,546,632 30,007,433 22,779,077 Basic Net Income (Loss) Per Share of Class A Common Stock $ 0.17 $ 0.02 $ 0.42 $ (0.03) Diluted Net Income (Loss) Per Share of Class A Common Stock $ 0.17 $ 0.02 $ 0.42 $ (0.03) (1) Unvested shares of restricted stock and RSUs represent participating securities because they participate in nonforfeitable dividends or distributions with the common equity holders of the Company. Participating earnings represent the distributed and undistributed earnings of the Company attributable to participating securities. Unvested RSUs do not participate in undistributed net losses as they are not contractually obligated to do so. Shares of Class B common stock are considered potentially dilutive shares of Class A common stock because they may be redeemed for shares of Class A common stock on a one-for-one basis. A total of 27,550,626 weighted average shares and 27,557,774 weighted average shares of Class B common stock outstanding for the three and nine months ended September 30, 2023, respectively, were determined to be antidilutive and were excluded from the computation of diluted earnings (loss) per share of Class A common stock. In addition, all PSUs were determined to be antidilutive for each 2023 period and were excluded from the computation of diluted earnings (loss) per share for those periods. A total of 31,248,544 weighted average shares and 31,481,479 weighted average shares of Class B common stock outstanding for the three and nine months ended September 30, 2022, respectively, were determined to be antidilutive and were excluded from the computation of diluted earnings (loss) per share of Class A common stock. In addition, 19,086 and all PSUs were determined to be antidilutive for the three and nine months ended September 30, 2022, respectively, and were excluded from the computation of diluted earnings (loss) per share for those periods. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 12. Our 2021 Equity Incentive Plan (the “2021 Plan”) allows for the grant of, among other types of awards, stock options; restricted stock; RSUs; and PSUs. Restricted Stock and Restricted Stock Units RSU activity during the period was as follows: RSUs Weighted-Average Grant Date Fair Value Outstanding at December 31, 2022 1,317,072 $ 13.78 Granted 1,120,528 10.26 Forfeited (166,996) 11.86 Vested (223,640) 15.17 Outstanding at September 30, 2023 2,046,964 $ 11.86 The RSUs granted during the nine months ended September 30, 2023 generally vest in the following installments: (i) one-third one-third one-third roximately $ million of compensation cost related to unvested shares of restricted stock and RSUs remained to be recognized. The cost is expected to be recognized over a weighted-average period of years. Performance-Based Restricted Stock Units PSU activity during the period was as follows: PSUs Weighted-Average Grant Date Fair Value Outstanding at December 31, 2022 144,526 $ 25.36 Granted 358,551 8.44 Forfeited (45,363) 16.11 Outstanding at September 30, 2023 457,714 $ 13.02 The PSUs granted in 2023 were granted t ● Relative PSUs: 50% of the PSUs are based on total shareholder return relative to the total shareholder return of a predetermined group of peer companies. This relative total shareholder return is calculated at the end of the performance periods stipulated in the PSU agreement. ● Absolute PSUs: 50% of the PSUs have a performance criteria of absolute total shareholder return calculated at the end of the performance period stipulated in the PSU agreement. The vesting and payout of the PSUs occur when the related service condition is completed, which is approximately three years after the grant date regardless of the duration of the stipulated performance period. The PSUs can be paid out in either Class A common stock or cash, at our election. As of September 30, 2023, approximately $ million of compensation cost related to unvested PSUs remained to be recognized. The cost is expected to be recognized over a weighted-average period of years. The grant date fair value was determined using the Monte Carlo simulation method and is expensed ratably over the service period. Expected volatilities used in the fair value simulation were estimated using historical periods consistent with the remaining performance periods. The risk-free rate was based on the U.S. Treasury rate for a term commensurate with the expected life of the grant. We used the following assumptions to estimate the fair value of PSUs granted during the nine months ended September 30, 2023: Assumptions Risk-free Interest Rate 4.32% Volatility Range 24.31% - 78.49% |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation All dollar amounts, except per share amounts, in the condensed consolidated financial statements and tables in the notes are stated in thousands of dollars unless otherwise indicated. |
Interim Financial Statements | Interim Financial Statements These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These financial statements have not been audited by our independent registered public accounting firm. These condensed consolidated financial statements include the adjustments and accruals, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 . |
Consolidation | Consolidation We have determined that the members with equity at risk in Solaris LLC lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact Solaris LLC’s economic performance; therefore, Solaris LLC is considered a variable interest entity (“VIE”). As the managing member of Solaris LLC, we operate and control the business and affairs of Solaris LLC, as well as have the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Solaris LLC . |
Noncontrolling Interest | Noncontrolling Interest As of September 30, 2023, we own approximately 52% of Solaris LLC. Our consolidated financial statements include a noncontrolling interest representing the percentage of Solaris LLC units not held by us . |
Use of Estimates | Use of Estimates Management has made certain estimates and assumptions that affect reported amounts in these condensed consolidated financial statements and disclosures of contingencies. These estimates include, among others, determining the fair values of assets acquired, liabilities assumed, and/or contingent consideration paid in acquisitions or nonmonetary exchanges or disposed of through sale, determining the fair value and related impairment of assets held for sale, determining the fair value of performance-based restricted stock units (“PSUs”), useful lives of property, plant and equipment and amortizable intangible assets, goodwill impairment testing, the fair value of asset retirement obligations (“ARO”), accruals for environmental matters, the income tax provision, valuation allowances for deferred tax assets and the liability associated with our Tax Receivable Agreement (the “TRA liability”). Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including current economic and industry conditions. Actual results could differ from management’s estimates as additional information or actual results become available in the future, and those differences could be material. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Significant Accounting Policies | Significant Accounting Policies See Note 2. Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for the discussion of our significant accounting policies. There were no significant updates or revisions to our accounting policies during the nine months ended September 30, 2023. |
Goodwill | Goodwill All of our goodwill is assigned to a single reporting unit. We perform our annual goodwill impairment test during the fourth quarter of our fiscal year, and more frequently if impairment indicators exist. During the quarter ended March 31, 2023, we conducted a quantitative interim test of goodwill due to a decline in the price of our Class A common stock during the period. As a result of our interim test, no goodwill impairment was identified. The fair value of our reporting unit exceeded the carrying value by more than 10%. We concluded there were no new impairment triggering events as of and for the three and nine months ended September 30, 2023. As such, there was no goodwill impairment as of September 30, 2023. Some of the inherent estimates and assumptions used in determining the fair value of our reporting unit are outside the control of management, including interest rates, cost of capital, tax rates, market multiples and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting unit, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in a material impairment of our goodwill. |
Fair Value Information | Fair Value Information The fair value of our 7.625% Senior Sustainability-Linked Notes (the “Notes”), which are fixed-rate debt, is estimated based on the published market prices for the same or similar issues. Management has designated this measurement as a Level 2 fair value measurement. The fair value of our Credit Facility (as defined below) approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to us. Management has designated this measurement as Level 3. Fair value information regarding our debt is as follows: (in thousands) September 30, 2023 December 31, 2022 Carrying Fair Carrying Fair Amount Value Amount Value Senior Sustainability-Linked Notes $ 400,000 $ 387,308 $ 400,000 $ 398,828 Credit Facility $ 34,000 $ 34,000 $ 35,000 $ 35,000 The carrying values of our other financial instruments, consisting of cash, accounts receivable and accounts payable, approximate their fair values due to the short maturity of such instruments . |
Intangible Assets | Intangible Assets Intangible assets are net of accumulated amortization of $125.1 million and $96.8 million at September 30, 2023 and December 31, 2022, respectively . |
Related Parties | Related Parties We and ConocoPhillips, one of our principal owners, are parties to a long-term water gathering and handling agreement, pursuant to which ConocoPhillips dedicates all the produced water generated from its current and future acreage in a defined area of mutual interest in New Mexico and Texas. As of September 30, 2023 and December 31, 2022, we had accounts receivable from ConocoPhillips of $23.3 million and $46.0 million, respectively, that were recorded in accounts receivable from affiliate, and we had payables to ConocoPhillips of $1.1 million and $3.0 million, respectively, that were recorded in payables to affiliate. Revenues and expenses related to ConocoPhillips were as follows: (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues from ConocoPhillips $ 31,084 $ 30,464 $ 93,552 $ 80,724 Operating Expenses Reimbursed to ConocoPhillips (1,160) 403 (1,177) 1,163 Operating expenses reimbursed to ConocoPhillips are related to ConocoPhillips’ costs incurred on our behalf and other ongoing operating expenses. |
Collaborative Agreements | Collaborative Agreements In November 2022, we announced that we had entered into a strategic agreement (the “Beneficial Reuse Strategic Agreement”) with Chevron U.S.A. Inc. and ConocoPhillips to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities. In January 2023, Exxon Mobil Corporation (together with the Company, Chevron U.S.A. Inc. and ConocoPhillips, the “alliance members”) joined the Beneficial Reuse Strategic Agreement. The Company reviewed the Beneficial Reuse Strategic Agreement and determined that it should be accounted for as a collaborative arrangement pursuant to Accounting Standards Codification 808, “Collaborative Arrangements” (“ASC 808”), as the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity. ASC 808 describes arrangements within its scope and considerations surrounding presentation and disclosure, with recognition matters subjected to other authoritative guidance, in certain cases by analogy. The Company has concluded that ASC 730, “Research and Development,” should be applied to the Beneficial Reuse Strategic Agreement. The Company accounts for reimbursements of research and development costs under the Beneficial Reuse Strategic Agreement as contra-expenses in the period such expenses are incurred. This reflects the joint risk sharing nature of these activities within the collaborative arrangement. The Company classifies payments owed or receivables recorded as “Accrued and Other Current Liabilities” or “Other Receivables,” respectively, on the Company’s condensed consolidated balance sheet. For the three and nine months ended September 30, 2023, the Company incurred $1.8 million and $3.9 million, respectively, in total research and development expenses relating to the Beneficial Reuse Strategic Agreement, which was offset by $1.4 million and $2.9 million, respectively, in amounts due from the other alliance members for reimbursement of these shared costs. As of September 30, 2023, the Company recorded $1.5 million due from the other alliance members for reimbursement of shared costs in “Other Receivables” on the Company’s condensed consolidated balance sheet. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, .” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) interest rate or another reference rate expected to be discontinued because of reference rate reform. This guidance was to be effective prospectively upon issuance through December 31, 2022 and applied from the beginning of an interim period that included the issuance date of this ASU. However, in December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” which deferred the sunset date from December 31, 2022 to December 31, 2024. All other provisions of ASU 2020-04 were unchanged. In May 2023, the Credit Agreement (as defined below) was amended to, among other things, transition the loans under the Credit Facility to be made at the Secured Overnight Financing Rate (“SOFR”) instead of LIBOR. The Company adopted this accounting pronouncement with the execution of the First Amendment to the Second Amended and Restated Credit Agreement in May 2023. See Note 6. Long-Term Debt for further discussion of the Company's accounting for its outstanding debt, credit facility and related issuance costs. This guidance provides an optional practical expedient that allows qualifying modifications to be accounted for as a debt modification rather than be analyzed under existing guidance to determine if the modification should be accounted for as a debt extinguishment. In adopting this accounting standard, we have elected to apply this optional expedient. Adopting this accounting standard did not have a material impact on the Company's condensed consolidated financial statements and related disclosures. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Schedule of fair value information of debt | (in thousands) September 30, 2023 December 31, 2022 Carrying Fair Carrying Fair Amount Value Amount Value Senior Sustainability-Linked Notes $ 400,000 $ 387,308 $ 400,000 $ 398,828 Credit Facility $ 34,000 $ 34,000 $ 35,000 $ 35,000 |
Schedule of revenue and expenses from ConocoPhillips | (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues from ConocoPhillips $ 31,084 $ 30,464 $ 93,552 $ 80,724 Operating Expenses Reimbursed to ConocoPhillips (1,160) 403 (1,177) 1,163 |
Additional Financial Statemen_2
Additional Financial Statement Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Additional Financial Statement Information | |
Schedule of Other Balance Sheet information | (in thousands) September 30, December 31, 2023 2022 Other Receivables Insurance and Third Party Receivables for Remediation Expenses $ 7,323 $ 3,600 Reimbursable Research and Development Receivable 1,466 — Property Insurance Receivable 6,000 — Reimbursable Projects and Other 3,288 754 Total Other Receivables $ 18,077 $ 4,354 Prepaids and Deposits Prepaid Insurance and Other $ 2,208 $ 5,744 Deposits 33 61 Total Prepaids and Deposits $ 2,241 $ 5,805 Accrued and Other Current Liabilities Accrued Operating Expense $ 35,858 $ 28,877 Accrued Capital Costs 12,767 16,161 Accrued Interest 15,330 8,262 Accrued Compensation 9,032 4,809 Lease Liabilities 1,504 1,176 Asset Retirement Obligation 1,156 2,242 Other 5,542 3,884 Total Accrued and Other Current Liabilities $ 81,189 $ 65,411 Other Long-Term Liabilities Noncurrent Lease Liabilities $ 14,543 $ 7,719 Contingent Consideration Liability 2,213 2,702 Total Other Long-Term Liabilities $ 16,756 $ 10,421 |
Schedule of Other Statement of Operations information | (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Depreciation, Amortization and Accretion Expense Depreciation - Property, Plant and Equipment $ 9,749 $ 7,658 $ 27,946 $ 21,755 Amortization - Intangible Assets 9,392 9,183 28,295 27,551 Accretion of Asset Retirement Obligations 304 101 896 418 Total Depreciation, Amortization and Accretion Expense $ 19,445 $ 16,942 $ 57,137 $ 49,724 Other Operating (Income) Expense (Gain) Loss on Disposal of Assets, Net $ (2,631) $ (97) $ (2,574) $ 481 Transaction Costs 528 336 673 1,269 Other (18) — (195) 66 Other Operating (Income) Expense $ (2,121) $ 239 $ (2,096) $ 1,816 Interest Expense Interest on Debt Instruments $ 8,373 $ 7,759 $ 25,477 $ 23,365 Amortization of Debt Issuance Costs 612 610 1,830 1,830 Total Interest Expense 8,985 8,369 27,307 25,195 Less: Amounts Capitalized (1,030) (1,606) (3,720) (3,332) Interest Expense, Net $ 7,955 $ 6,763 $ 23,587 $ 21,863 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment. | |
Schedule of PP&E | (in thousands) September 30, December 31, 2023 2022 Wells, Facilities, Water Ponds and Related Equipment $ 528,103 $ 437,894 Pipelines 413,092 363,577 Vehicles, Equipment, Computers and Office Furniture 24,091 20,219 Assets Subject to Depreciation 965,286 821,690 Land 463 463 Projects and Construction in Progress 55,767 85,631 Total Property, Plant and Equipment 1,021,516 907,784 Accumulated Depreciation (112,151) (88,681) Total Property, Plant and Equipment, Net $ 909,365 $ 819,103 |
Schedule of purchase price allocation | (in thousands, except share and per share amounts) Equity Consideration Number of Class A Shares Issued (1) 3,365,907 Fair Value Per Share on Transaction Closing Date $ 21.16 Total Fair Value of Equity Consideration $ 71,223 Fair Value of Contingent Consideration (2) 3,899 Total Fair Value of Consideration $ 75,122 Purchase Price Allocation Produced Water Handling Facilities $ 72,736 Gathering Systems and Pipelines 2,716 Total Fair Value of Property Acquired 75,452 Less: ARO Liabilities Assumed (330) Total Purchase Price Allocation $ 75,122 (1) A portion of these shares are held in escrow and are released pursuant to the terms and conditions of the asset purchase agreement with Delaware Energy. During the three months ended September 30, 2023, 68,918 of these shares were released and returned to the Company for the reimbursement of certain post-acquisition workover costs. See Note 9. Stockholders’ Equity for further details. (2) As of September 30, 2023 and December 31, 2022, liabilities for contingent consideration of $1.2 million and $1.3 million are included in “Accrued and Other Current Liabilities,” respectively, on the condensed consolidated balance sheet, and liabilities for contingent consideration of $2.2 million and $2.7 million are included in “Other Long-Term Liabilities,” respectively, on the condensed consolidated balance sheet. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Long-Term Debt | |
Schedule of long-term debt instruments | (in thousands) September 30, December 31, 2023 2022 7.625% Senior Sustainability-Linked Notes $ 400,000 $ 400,000 Credit Facility (1) 34,000 35,000 Total Long-Term Debt 434,000 435,000 Less: Unamortized Debt Issuance Costs (4,676) (6,079) Total Long-Term Debt, Net of Debt Issuance Costs $ 429,324 $ 428,921 (1) Credit Facility borrowings bore weighted average interest rates of 8.246% and 6.967% at September 30, 2023 and December 31, 2022, respectively. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Summary of supplemental consolidated balance sheet information | (in thousands) September 30, December 31, Classification 2023 2022 Assets Right-of-Use Assets Right-of-Use Assets $ 16,760 $ 9,135 Liabilities Current Lease Liabilities Accrued and Other Current Liabilities $ 1,504 $ 1,176 Noncurrent Lease Liabilities Other Long-Term Liabilities 14,543 7,719 |
Summary of supplemental statement of operation information | (in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Direct Operating Costs $ 324 $ 244 $ 927 $ 690 General and Administrative 230 166 627 498 Total Lease Cost $ 554 $ 410 $ 1,554 $ 1,188 |
Summary of supplemental statement of cash flow information | (in thousands) Nine Months Ended September 30, 2023 2022 Cash Paid for Amounts Included in Lease Liabilities $ 1,051 $ 969 Right-of-Use Assets Obtained in Exchange for Operating Lease Liabilities, Net 9,462 723 |
Summary of lease terms and discount rates | September 30, 2023 December 31, 2022 Weighted Average Remaining Lease Term (Years) 7.8 6.6 Weighted Average Discount Rate 6.17% 2.85% |
Summary of annual operating lease maturities | (in thousands) Remainder of 2023 $ 462 2024 2,315 2025 2,072 2026 1,814 2027 2,954 Thereafter 11,186 Total Lease Payments 20,803 Less: Interest (4,756) Present Value of Lease Liabilities $ 16,047 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Schedule of computation of basic and diluted net loss per share | (in thousands, except for share and per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net Income (Loss) Attributable to Stockholders' Equity $ 12,242 $ 1,956 $ 30,381 $ (622) Less: Net Income (Loss) Attributable to Noncontrolling Interest 6,829 1,257 16,892 (493) Net Income (Loss) Attributable to Aris Water Solutions, Inc. 5,413 699 13,489 (129) Participating Basic Earnings (1) (344) (179) (835) (539) Basic Net Income (Loss) Attributable to Aris Water Solutions, Inc. $ 5,069 $ 520 $ 12,654 $ (668) Reallocation of Participating Net Income (Loss) - - - - Diluted Net Income (Loss) Attributable to Aris Water Solutions, Inc. $ 5,069 $ 520 $ 12,654 $ (668) Basic Weighted Average Shares Outstanding 30,050,560 24,499,953 30,007,433 22,779,077 Dilutive Performance-Based Stock Units - 46,679 - - Dilutive Weighted Average Shares Outstanding 30,050,560 24,546,632 30,007,433 22,779,077 Basic Net Income (Loss) Per Share of Class A Common Stock $ 0.17 $ 0.02 $ 0.42 $ (0.03) Diluted Net Income (Loss) Per Share of Class A Common Stock $ 0.17 $ 0.02 $ 0.42 $ (0.03) (1) Unvested shares of restricted stock and RSUs represent participating securities because they participate in nonforfeitable dividends or distributions with the common equity holders of the Company. Participating earnings represent the distributed and undistributed earnings of the Company attributable to participating securities. Unvested RSUs do not participate in undistributed net losses as they are not contractually obligated to do so. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Schedule of RSU activity | RSUs Weighted-Average Grant Date Fair Value Outstanding at December 31, 2022 1,317,072 $ 13.78 Granted 1,120,528 10.26 Forfeited (166,996) 11.86 Vested (223,640) 15.17 Outstanding at September 30, 2023 2,046,964 $ 11.86 |
Schedule of PSU activity | PSUs Weighted-Average Grant Date Fair Value Outstanding at December 31, 2022 144,526 $ 25.36 Granted 358,551 8.44 Forfeited (45,363) 16.11 Outstanding at September 30, 2023 457,714 $ 13.02 |
Schedule of assumptions to estimate the fair value of PSUs | Assumptions Risk-free Interest Rate 4.32% Volatility Range 24.31% - 78.49% |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies - Noncontrolling Interest, Goodwill (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Goodwill impairment | $ 0 |
Solaris LLC | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Ownership percentage | 52% |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Senior Sustainability-Linked Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate | 7.625% | 7.625% |
Carrying Amount | Level 2 | Senior Sustainability-Linked Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 400,000 | $ 400,000 |
Carrying Amount | Level 3 | Credit Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 34,000 | 35,000 |
Fair Value | Level 2 | Senior Sustainability-Linked Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | 387,308 | 398,828 |
Fair Value | Level 3 | Credit Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt | $ 34,000 | $ 35,000 |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Basis of Presentation and Significant Accounting Policies | ||
Accumulated amortization of intangible assets | $ 125.1 | $ 96.8 |
Basis of Presentation and Sig_7
Basis of Presentation and Significant Accounting Policies - Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||
Total Revenue | $ 99,789 | $ 90,776 | $ 287,993 | $ 238,131 | |
Related Party | |||||
Related Party Transaction [Line Items] | |||||
Accounts Receivable, Net | $ 23,296 | $ 23,296 | $ 46,029 | ||
Accounts Receivable, after Allowance for Credit Loss, Current, Related Party, Name [Extensible Enumeration] | aris:ConocoPhillipsMember | aris:ConocoPhillipsMember | aris:ConocoPhillipsMember | ||
Accounts Payable | $ 1,177 | $ 1,177 | $ 3,021 | ||
Related Party | ConocoPhillips | |||||
Related Party Transaction [Line Items] | |||||
Accounts Payable | 1,100 | 1,100 | $ 3,000 | ||
Total Revenue | 31,084 | 30,464 | 93,552 | 80,724 | |
Operating Expenses Reimbursed to (from) ConocoPhillips | $ (1,160) | $ 403 | $ (1,177) | $ 1,163 |
Basis of Presentation and Sig_8
Basis of Presentation and Significant Accounting Policies - Collaborative Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Collaborative Agreements | ||||
Research and Development Expense | $ 809 | $ 430 | $ 1,867 | $ 530 |
Beneficial Reuse Strategic Agreement | ||||
Collaborative Agreements | ||||
Research and Development Expense | 1,800 | 3,900 | ||
Reimbursement of shared costs | 1,400 | 2,900 | ||
Receivables due from alliance members | $ 1,500 | $ 1,500 |
Additional Financial Statemen_3
Additional Financial Statement Information - Other Balance Sheet information (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other Receivables | ||
Insurance and Third Party Receivables for Remediation Expenses | $ 7,323 | $ 3,600 |
Reimbursable Research and Development Receivable | 1,466 | |
Property Insurance Receivable | 6,000 | |
Reimbursable Projects and Other | 3,288 | 754 |
Total Other Receivables | 18,077 | 4,354 |
Prepaids and Deposits | ||
Prepaid Insurance and Other | 2,208 | 5,744 |
Deposits | 33 | 61 |
Total Prepaids and Deposits | 2,241 | 5,805 |
Accrued and Other Current Liabilities | ||
Accrued Operating Expense | 35,858 | 28,877 |
Accrued Capital Costs | 12,767 | 16,161 |
Accrued Interest | 15,330 | 8,262 |
Accrued Compensation | 9,032 | 4,809 |
Lease Liabilities | $ 1,504 | $ 1,176 |
Current Lease Liabilities, Classification | Total Accrued and Other Current Liabilities | Total Accrued and Other Current Liabilities |
Asset Retirement Obligation | $ 1,156 | $ 2,242 |
Other | 5,542 | 3,884 |
Total Accrued and Other Current Liabilities | 81,189 | 65,411 |
Other Long-Term Liabilities | ||
Noncurrent Lease Liabilities | $ 14,543 | $ 7,719 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Total Other Long-Term Liabilities | Total Other Long-Term Liabilities |
Contingent Consideration Liability | $ 2,213 | $ 2,702 |
Total Other Long-Term Liabilities | $ 16,756 | $ 10,421 |
Additional Financial Statemen_4
Additional Financial Statement Information - Other Statement of Operations information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Depreciation, Amortization and Accretion Expense | ||||
Depreciation - Property, Plant and Equipment | $ 9,749 | $ 7,658 | $ 27,946 | $ 21,755 |
Amortization - Intangible Assets | 9,392 | 9,183 | 28,295 | 27,551 |
Accretion of Asset Retirement Obligations | 304 | 101 | 896 | 418 |
Total Depreciation, Amortization and Accretion Expense | 19,445 | 16,942 | 57,137 | 49,724 |
Other Operating (Income) Expense | ||||
(Gain) Loss on Disposal of Assets, Net | (2,631) | (97) | (2,574) | 481 |
Transaction Costs | 528 | 336 | 673 | 1,269 |
Other | (18) | (195) | 66 | |
Other operating (income) expense | (2,121) | 239 | (2,096) | 1,816 |
Interest Expense | ||||
Interest on Debt Instruments | 8,373 | 7,759 | 25,477 | 23,365 |
Amortization of Debt Issuance Costs | 612 | 610 | 1,830 | 1,830 |
Total Interest Expense | 8,985 | 8,369 | 27,307 | 25,195 |
Less: Amounts Capitalized | (1,030) | (1,606) | (3,720) | (3,332) |
Interest expense, net | $ 7,955 | $ 6,763 | $ 23,587 | $ 21,863 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) item | Mar. 31, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Property, Plant and Equipment | ||||||
Assets Subject to Depreciation | $ 965,286 | $ 965,286 | $ 821,690 | |||
Land | 463 | 463 | 463 | |||
Projects and Construction in Progress | 55,767 | 55,767 | 85,631 | |||
Total Property, Plant and Equipment | 1,021,516 | 1,021,516 | 907,784 | |||
Accumulated Depreciation | (112,151) | (112,151) | (88,681) | |||
Total Property, Plant and Equipment, Net | 909,365 | 909,365 | 819,103 | |||
Accrued PP&E additions | 31,200 | 26,400 | ||||
Net book value of divested assets and liabilities in noncash asset exchange | $ 3,800 | $ 3,800 | ||||
Net book value of assets acquired in noncash asset exchange | 3,200 | 3,200 | ||||
Pre-tax loss on exchange of assets at fair value | 600 | |||||
Impairment expense of assets held for sale | $ 15,600 | |||||
Proceeds from sale of assets | 20,100 | 7,400 | 20,119 | 7,441 | ||
Gain on sale of assets | 2,600 | 100 | 2,574 | (481) | ||
Abandoned Well Costs | 1,214 | $ 9,222 | 1,214 | $ 14,637 | ||
Number of saltwater disposal wells | item | 2 | |||||
Wells, Facilities, Water Ponds, and Related Equipment | ||||||
Property, Plant and Equipment | ||||||
Assets Subject to Depreciation | 528,103 | 528,103 | 437,894 | |||
Pipelines | ||||||
Property, Plant and Equipment | ||||||
Assets Subject to Depreciation | 413,092 | 413,092 | 363,577 | |||
Vehicles, Equipment, Computers and Office Furniture | ||||||
Property, Plant and Equipment | ||||||
Assets Subject to Depreciation | $ 24,091 | $ 24,091 | $ 20,219 |
Property, Plant and Equipment -
Property, Plant and Equipment - Delaware Energy Asset Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Aug. 01, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
Equity Consideration | |||
Less: ARO Liabilities Assumed | $ (18,136) | $ (17,543) | |
Contingent Consideration, non-current | 2,213 | $ 2,702 | |
Eddy And Lea County Asset Acquisition | |||
Equity Consideration | |||
Number of Class A Shares Issued | 3,365,907 | 3,365,907 | |
Contractual period | 5 years | ||
Fair Value Per Share on Transaction Closing Date | $ 21.16 | ||
Total Fair Value of Equity Consideration | $ 71,223 | ||
Fair Value of Contingent Consideration | 3,899 | ||
Total Fair Value of Property Acquired | 75,452 | ||
Less: ARO Liabilities Assumed | (330) | ||
Total Purchase Price Allocation | 75,122 | ||
Contingent Consideration, current | 1,200 | 1,300 | |
Contingent Consideration, non-current | $ 2,200 | 2,700 | |
Escrow shares released | 68,918 | ||
Eddy And Lea County Asset Acquisition | Solaris LLC | Capital Unit, Class A | |||
Equity Consideration | |||
Issuance of units in shares | 3,365,907 | ||
Eddy And Lea County Asset Acquisition | Produced Water Handling Facilities | |||
Equity Consideration | |||
Total Fair Value of Property Acquired | 72,736 | ||
Eddy And Lea County Asset Acquisition | Gathering Systems and Pipelines | |||
Equity Consideration | |||
Total Fair Value of Property Acquired | $ 2,716 |
Property, Plant and Equipment_3
Property, Plant and Equipment - Other Asset Acquisition (Details) - Other Assets Acquisition - Related Party [Member] - ConocoPhillips $ in Millions | 3 Months Ended |
Sep. 30, 2022 USD ($) Asset | |
Business Acquisition [Line Items] | |
Number of assets acquired | Asset | 5 |
Cash purchase price | $ | $ 3.4 |
Tax Receivable Agreement Liab_2
Tax Receivable Agreement Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Tax Receivable Agreement Liability | $ 98,164 | $ 97,980 |
Tax Receivable Agreement | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Payment of net cash saving, percent | 85% | |
Retention of net cash saving, percent | 15% | |
Tax Receivable Agreement Liability | $ 98,200 | |
Increase in TRA liability | 200 | |
Liability upon conversion | 220,900 | |
Early termination payment liability | $ 132,500 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total Long-Term Debt | $ 434,000 | $ 435,000 |
Less: Unamortized Debt Issuance Costs | (4,676) | (6,079) |
Total Long-Term Debt, Net of Debt Issuance Costs | $ 429,324 | $ 428,921 |
Senior Sustainability-Linked Notes | ||
Debt Instrument [Line Items] | ||
Interest rate | 7.625% | 7.625% |
Total Long-Term Debt | $ 400,000 | $ 400,000 |
Credit Facility | ||
Debt Instrument [Line Items] | ||
Total Long-Term Debt | $ 34,000 | $ 35,000 |
Weighted average interest rate | 8.246% | 6.967% |
Long-Term Debt - Senior Sustain
Long-Term Debt - Senior Sustainability-Linked Notes (Details) - Senior Sustainability-Linked Notes | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Interest rate | 7.625% | 7.625% |
Redemption when there is change in control | ||
Debt Instrument [Line Items] | ||
Percentage of principal redemption | 101% | |
On or after April 1, 2023 | ||
Debt Instrument [Line Items] | ||
Redemption price percentage | 103.8125% | |
On or after April 1, 2025 | ||
Debt Instrument [Line Items] | ||
Redemption price percentage | 100% |
Long-Term Debt - Credit Facilit
Long-Term Debt - Credit Facility (Details) $ in Thousands | 1 Months Ended | 9 Months Ended |
Oct. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 200,000 | |
Leverage ratio | 2.50 | |
Unrestricted cash and cash equivalents | $ 40,000 | |
Incremental revolving facility | 75,000 | |
Commitments available | $ 165,900 | |
Credit Facility | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 350,000 | |
Leverage ratio | 4.50 | |
Unrestricted cash and cash equivalents | $ 40,000 | |
Incremental revolving facility | $ 150,000 | |
Secured leverage ratio | 2.50 | |
Credit Facility | Debt Instrument, Leverage Ratio Covenant Test Level For Current Fiscal Year [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 4.50 | |
Credit Facility | Minimum | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 3 | |
Commitment fee percentage | 0.375% | |
Credit Facility | Minimum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 3 | |
Credit Facility | Maximum | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 4.50 | |
Commitment fee percentage | 0.50% | |
Credit Facility | Maximum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 4.50 | |
Credit Facility | SOFR | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 0.10% | |
Base Rate Borrowings [Member] | Federal funds | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 0.50% | |
Base Rate Borrowings [Member] | Federal funds | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 0.50% | |
Base Rate Borrowings [Member] | SOFR | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 1% | |
Base Rate Borrowings [Member] | SOFR | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 1% | |
Base Rate Borrowings [Member] | SOFR | Minimum | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 1.75% | |
Base Rate Borrowings [Member] | SOFR | Minimum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 1.75% | |
Base Rate Borrowings [Member] | SOFR | Maximum | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 2.75% | |
Base Rate Borrowings [Member] | SOFR | Maximum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 2.75% | |
SOFR Borrowings [Member] | SOFR | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Variable rate (as a percent) | 0.10% | |
SOFR Borrowings [Member] | SOFR | Minimum | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 2.75% | |
SOFR Borrowings [Member] | SOFR | Minimum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 2.75% | |
SOFR Borrowings [Member] | SOFR | Maximum | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 3.75% | |
SOFR Borrowings [Member] | SOFR | Maximum | Subsequent Event. | ||
Line of Credit Facility [Line Items] | ||
Additional Interest Margin Based On Leverage Ratio | 3.75% | |
Letters of Credit | ||
Line of Credit Facility [Line Items] | ||
Letter of credits outstanding | $ 150 |
Leases - Balance Sheet Informat
Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Right-of-Use Assets | $ 16,760 | $ 9,135 |
Current Lease Liabilities | $ 1,504 | $ 1,176 |
Current Lease Liabilities, Classification | Accrued and Other Current Liabilities | Accrued and Other Current Liabilities |
Noncurrent Lease Liabilities | $ 14,543 | $ 7,719 |
Noncurrent Lease Liabilities, Classification | Other Long-Term Liabilities | Other Long-Term Liabilities |
New Office Lease | ||
Leases | ||
Right-of-Use Assets | $ 7,700 | |
Current Lease Liabilities | $ 300 | |
Current Lease Liabilities, Classification | Accrued and Other Current Liabilities | |
Noncurrent Lease Liabilities | $ 6,400 | |
Noncurrent Lease Liabilities, Classification | Other Long-Term Liabilities |
Leases - Operations Information
Leases - Operations Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||||
Direct Operating Costs | $ 324 | $ 244 | $ 927 | $ 690 |
General and Administrative | 230 | 166 | 627 | 498 |
Total Lease Cost | 554 | 410 | 1,554 | 1,188 |
Short term lease cost | $ 5,300 | $ 3,900 | $ 12,600 | $ 7,700 |
Leases - Cash Flow Information
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases | ||
Cash Paid for Amounts Included in Lease Liabilities | $ 1,051 | $ 969 |
Right-of-Use Assets Obtained in Exchange for Operating Lease Liabilities, Net | $ 9,462 | $ 723 |
Leases - Lease Terms and Discou
Leases - Lease Terms and Discount Rates (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted Average Remaining Lease Term (Years) | 7 years 9 months 18 days | 6 years 7 months 6 days |
Weighted Average Discount Rate | 6.17% | 2.85% |
Leases - Annual Lease Maturitie
Leases - Annual Lease Maturities (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases | |
Remainder of 2023 | $ 462 |
2024 | 2,315 |
2025 | 2,072 |
2026 | 1,814 |
2027 | 2,954 |
Thereafter | 11,186 |
Total Lease Payments | 20,803 |
Less: Interest | (4,756) |
Presents Value of Lease Liabilities | $ 16,047 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent, Accrued And Other Liabilities, Current |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Taxes | ||||
Income Tax Expense (Benefit) | $ 2,032 | $ 287 | $ 4,918 | $ (81) |
Effective Tax Rate | 13.90% | 11.50% | ||
Decrease in deferred income tax assets, net | $ (4,600) |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||||||||||
Sep. 01, 2023 shares | Jun. 01, 2023 shares | Mar. 01, 2023 shares | Sep. 01, 2022 shares | Jun. 01, 2022 shares | Feb. 28, 2022 shares | Dec. 31, 2023 $ / shares | Sep. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2023 $ / shares shares | Mar. 31, 2023 $ / shares shares | Sep. 30, 2022 $ / shares shares | Jun. 30, 2022 $ / shares shares | Mar. 31, 2022 $ / shares shares | Sep. 30, 2023 USD ($) | Sep. 30, 2022 | Dec. 31, 2022 USD ($) | |
Stockholders' and Members' Equity | ||||||||||||||||
Conversion ratio | 1 | 1 | ||||||||||||||
Dividend declared (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | ||||||||||
Treasury stock value | $ | $ 4,259 | $ 4,259 | $ 2,891 | |||||||||||||
Eddy And Lea County Asset Acquisition | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Escrow shares released | shares | 68,918 | |||||||||||||||
Treasury stock value | $ | $ 700 | $ 700 | ||||||||||||||
Non-cash treasury stock transaction in connections with assets acquired | $ | $ 500 | |||||||||||||||
Class A Common Stock | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Dividend declared (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | |||||||||||||
Class A Common Stock | Subsequent Event. | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Dividend declared (in dollars per share) | $ 0.09 | |||||||||||||||
Common Stock | Class A Common Stock | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Exchange of Class B Shares for Class A Shares (in shares) | shares | 10,477 | 524 | 20,953 | 648,781 | 107,914 | 148,087 | 10,477 | 524 | 20,953 | 648,781 | 107,914 | 148,087 | ||||
Common Stock | Class B Common Stock | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Exchange of Class B Shares for Class A Shares (in shares) | shares | (10,477) | (524) | (20,953) | (648,781) | (107,914) | (148,087) | ||||||||||
Solaris LLC | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Dividend distribution paid (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.09 | |||||||||||||
Solaris LLC | Subsequent Event. | ||||||||||||||||
Stockholders' and Members' Equity | ||||||||||||||||
Dividend distribution paid (in dollars per share) | $ 0.09 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Commitments and Contingencies. | ||||||
Commitment agreement term | 7 years | |||||
Financial commitment | $ 28,000 | |||||
Purchase obligations and commitments | $ 31,500 | $ 31,500 | ||||
Environmental expenses | $ 1,100 | $ 900 | $ 4,000 | $ 1,900 | ||
Environmental Remediation Expense, Statement of Income or Comprehensive Income [Extensible Enumeration] | General and Administrative Expense | General and Administrative Expense | General and Administrative Expense | General and Administrative Expense | ||
Insurance Settlements Receivable | $ 7,323 | $ 7,323 | $ 3,600 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic and Diluted Net Loss Per Share (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net Income (Loss) Attributable to Stockholders' Equity | $ 12,242 | $ 1,956 | $ 30,381 | $ (622) |
Less: Net Income (Loss) Attributable to Noncontrolling Interest | 6,829 | 1,257 | 16,892 | (493) |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. | 5,413 | 699 | 13,489 | (129) |
Participating Basic Earnings | (344) | (179) | (835) | (539) |
Basic Net Income (Loss) Attributable to Aris Water Solutions, Inc. | 5,069 | 520 | 12,654 | (668) |
Diluted Net Income (Loss) Attributable to Aris Water Solutions, Inc | $ 5,069 | $ 520 | $ 12,654 | $ (668) |
Basic Weighted Average Shares Outstanding | shares | 30,050,560 | 24,499,953 | 30,007,433 | 22,779,077 |
Dilutive Performance-Based Stock Units | shares | 46,679 | |||
Dilutive Weighted Average Shares Outstanding | shares | 30,050,560 | 24,546,632 | 30,007,433 | 22,779,077 |
Basic Net Income (Loss) Per Share of Class A Common Stock | $ / shares | $ 0.17 | $ 0.02 | $ 0.42 | $ (0.03) |
Diluted Net Income (Loss) Per Share of Class A Common Stock | $ / shares | $ 0.17 | $ 0.02 | $ 0.42 | $ (0.03) |
Conversion ratio | 1 | 1 | ||
PSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from computation of diluted net earnings per share | shares | 19,086 | 19,086 | ||
Class B Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Shares excluded from computation of diluted net earnings per share | shares | 27,550,626 | 31,248,544 | 27,557,774 | 31,481,479 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock and Restricted Stock Units (Details) - 2021 Plan - RSUs $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
RSUs and PSUs | |
Outstanding at beginning period (in share) | shares | 1,317,072 |
Granted (in share) | shares | 1,120,528 |
Forfeited (in share) | shares | (166,996) |
Vested (in share) | shares | (223,640) |
Outstanding at ending period (in share) | shares | 2,046,964 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning period (in dollars per share) | $ / shares | $ 13.78 |
Granted (in dollars per share) | $ / shares | 10.26 |
Forfeited (in dollars per share) | $ / shares | 11.86 |
Vested (in dollars per share) | $ / shares | 15.17 |
Outstanding at ending period (in dollars per share) | $ / shares | $ 11.86 |
Compensation cost remaining to be recognized | $ | $ 16.9 |
Weighted-average period of recognition | 1 year 1 month 6 days |
First anniversary of the award date | |
Weighted-Average Grant Date Fair Value | |
Vesting percentage | 33.33% |
Second anniversary of the award date | |
Weighted-Average Grant Date Fair Value | |
Vesting percentage | 33.33% |
Third anniversary of the award date | |
Weighted-Average Grant Date Fair Value | |
Vesting percentage | 33.33% |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance-Based Restricted Stock (Details) - 2021 Plan $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
PSUs | |
RSUs and PSUs | |
Outstanding at beginning period (in share) | shares | 144,526 |
Granted (in share) | shares | 358,551 |
Forfeited (in share) | shares | (45,363) |
Outstanding at ending period (in share) | shares | 457,714 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning period (in dollars per share) | $ / shares | $ 25.36 |
Granted (in dollars per share) | $ / shares | 8.44 |
Forfeited (in dollars per share) | $ / shares | 16.11 |
Outstanding at ending period (in dollars per share) | $ / shares | $ 13.02 |
Vesting period | 3 years |
Compensation cost remaining to be recognized | $ | $ 3.6 |
Weighted-average period of recognition | 2 years |
Risk-free Interest Rate (as percentage) | 4.32% |
Volatility Range, minimum (as percentage) | 24.31% |
Volatility Range, maximum (as percentage) | 78.49% |
Relative PSUs | |
Weighted-Average Grant Date Fair Value | |
Percentage of performance criteria | 50% |
Absolute PSUs | |
Weighted-Average Grant Date Fair Value | |
Percentage of performance criteria | 50% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 5,413 | $ 699 | $ 13,489 | $ (129) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |