ARIS - Earnings call transcript Q1 2022 | Aris Water Solutions, Inc.

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Operator

Greetings, and welcome to the Aris Water Solutions First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, David Tuerff, Senior Vice President of Finance and Investor Relations. Please go ahead.

David Tuerff

Good morning, and welcome to the Aris Water Solutions First Quarter 2022 Earnings Conference Call. by Executive and our Chairman, Schroer. today our Amanda CFO, joined and Founder Bill am our CEO, President Brock; Brenda I Zartler; and

we are forward-looking statements that our current remind the Before and presentation, of regarding like expectations future plans call which related make this guarantees and you will we beliefs, I’d begin, not in to performance materially other actual subject and contemplated forward-looking unknown uncertainties differ and known results events a our risks cause of factors results number to could by and statements. are that and from to and such

the our of measures with U.S. our in a most Amanda to measures I’ll President presentation and in believe accordance undue and non-GAAP in and useful to measures, XX-Q contain our isolation are should prepared our to and measures turn substitute Reconciliations would I over presentation. appendix for not earnings investor These to as call cautioned are to Exchange Please GAAP included discussion will report in considered of statements. quarterly on annual refer report evaluating You out the directly Commission. GAAP. risk the or are today’s in Securities included factors be accompanying financial Brock. not performance. that comparable like place now our with release we also today’s supplemental reliance on Form the forward-looking point financial call Form on conference CEO, the filed XX-K which and

Amanda Brock

volumes XX% first in and million, to barrels levels quarter, growing $XX Aris up EBITDA for to us of XXXX, of Delaware full-cycle Activity water morning. first versus had quarter thanks of approximately XX% Water increasing last the a everybody Mexico to Thank quarter by respectively. total million saw nearly business. the adjusted Basin recycling strong volumes the and per Xx growth approximately X.X and water produced versus are and of we recycled joining you, water David, day our supporting and activity increase, our customers, continue recycled management use continued significant first New demand to growth year. water Basin the in our the this

that our performance financial detail As water press this extensive Chevron, we’re in will New meaningful counties acreage represents of our excited existing strengthens agreement. significantly improving produced new with team. comprehensive relationship. expands of full-cycle further their signing our and in will a and also more new demonstrated track scale recycled including Lea agreement new a large announce record of impact endorsement our management to about and the core water of mentioned and water also of use agreement this results agreement release capabilities provide our sustainability which agreement, from in will and long-term want in Under Culberson across and yesterday, recycling their highlight dedicated with services Chevron acreage in Chevron’s Texas. The with our portion will expands their Aris Mexico increased position. The Chevron’s We water of facilitate in increases acreage in reduce use Delaware operations of the the Brenda our Eddy counties agreement Reeves and groundwater, talk to a footprint. and handling Chevron and this Basin,

expanded Additionally, with alliance Corporation. quarter, Pacific earlier first in our Texas the Land we announced

X recycling Delaware expanded a Pacific’s across has acreage Northern including incremental provide large produced surface Texas water Texas access for Importantly, to suite customers. leading water services Aris of now full in

this system locations that Again, efficiently, had to area on seismicity also seismic revenue customers. our update growth alongside no with would restrictions. will volumetric to key over the material the received provide like response expand of Permian also needed permit additional shallow in Basin. a water as as us we’ve handling our interval brief to quarter, and option curtailment time locations I We as well the or allow issues additional associated

We to are mitigating applicable alongside produced for to water financial closely solutions, which, continue our academic research, technologies impacts and to turn have may with of pilot, other institutions along long-term time. adapt results I’ll it the for on to With quarter. the over working a beneficial customers over on seismicity regulators, industry, and seismic impact solutions that, and our monitor implement Brenda reuse the discuss

Brenda Schroer

XX% of our quarter EBITDA approximately the quarter sequentially of growth volume Amanda Alongside of up recorded $XX.X X% we first substantial for from from up referenced, Amanda. you, XXXX. XXXX, adjusted first and Thank the fourth of million, quarter XXXX the

adjusted was almost first X% margin quarter compared last XXXX, quarter per operating up in year. first the the of $X.XX to Our of barrel

We efficiencies continue in and have able margins maintain to been on to operating environment. inflationary an focus

oil are skim for from commodity We also benefiting given realized sales prices higher-than-anticipated the prices. current

XXXX. capital Our approximately million were the first for expenditures quarter of $X.X

timing expenditures. and levels than this the cash lower our recently working outflows, we our dedicated our updating increased normalize through on capital for quarter XXXX outlook. Based we Chevron to quarters the were of subsequent due on are expenditures our announced associated acreage, with in financial planned capital Our anticipated expect to activity capital but agreement

for $XX for million EBITDA We XXXX to and and are estimate $XXX second million. increasing to our of and the of between XXXX million, million quarter $XX between adjusted $XXX

are the million capital also expected of million. expenditures between $XXX for and year XXXX to updating our $XXX We

long-term by contracts. growth existing Our customer and opportunities underpinned visible increased spending under capital reflects new

in beyond. achieved XXXX historically. incremental Our months returns to on with we X in be the XXXX capital our capital benefit in we what see the anticipate results will so increases capital earnings later, our line much of We spending to generally and investments X of additional

provides greater full-cycle choice to Chevron and increased partner agreement premier water into growth long-term the as customer operators. levels of activity earnings to us new infrastructure establish Our visibility continue ourselves as we

and We maintaining available and end quarter revolving approximately $XXX ended We liquidity. $XX cash leverage available are for sheet ample with an total a while long-term first credit low undrawn conservative the with million a liquidity of growing rapidly approximately $XXX our the balance facility, at in million million. of target

investments on we allows are to us in cash liquidity Chevron. strategic like make hand, strong and with making opportunities specifically, Our growth our

we Friday, growth. share, of that, shareholders second our to quarter peer-leading to continuing cash last $X.XX while commitment maintaining wrap announced XXXX turn to it per up. Additionally, I’ll returning With to our dividend Bill over

Bill Zartler

Brenda. Thanks,

areas, an to shareholders. team had price maintaining return in incentives commodity for also activity excellent commitments to and has while levels increase capital Our our quarter commercially. provided The operationally to both core their customers backdrop their

seeing existing robust business New both continues in areas attractive opportunities reinvest of to remains our contracts. growth accelerating the specifically, core more mode offering flow long-term and this provide Basin even operating and new cash in We’re returns The growth Aris and significant to activity throughout for under and Permian and cash Mexico.

Our great a on underwrites that attractive our Chevron that operator a agreement agreement that expands premier indication with of cycle strategy. return incremental with a full We an is secured network. long-term capital

We with solutions. to continue customers will to at and key regulators, and invest customers returns, and pioneer stakeholders working existing alongside closely new encourage other compelling while reuse beneficial and grow reuse

will efficient we’ll move water technologies industry efforts help around accelerate that targeted, investments our We that can the and could make treatment forward. and evaluate capabilities

to its invest and hit continue alongside sustainability optimistic premier long-term growth volumes, contracted operators. additional prudently industry for record goals are our as We help we the achieve

capabilities. are with both our We momentum of Pacific Land our Corporation infrastructure our milestones and and take Texas significant alignment With Chevron, are tremendously which built team. endorsements record proud track of reflects of This that, we for and strategic will purpose dedicated demonstrated questions.

Operator

Our John with question Goldman Sachs. Mackay comes [Operator from first Instructions]

John Mackay

of agreement. all came out Maybe growth the more on start just your the a forecast was relationship if were Chevron is with us How I’ll at together? them? And initial talk in much you bit little Maybe this you this assumed year? how late it of kind last kind off of laying for can any existing about

Amanda Brock

while. working with we Thanks, for Northern this them areas John. Delaware, of in been were a We’ve expands shorter contracts This contract duration. that the on had in existing certain which quite

of solution, reuse. activities now because this handling dedicated our with the is our but both and not area, So expansion significant a which comprehensive Chevron only it includes constitutes

how included extremely include that whether but see to in these not coming the expect the pleased of about. growth out forecast, the this not terms does came forecast we’re in was it And contracts in the with initial we forecast, original were So contracts included in ‘XX. or of smaller

John Mackay

but Maybe numbers, that not if just increase, about get is you’re on the kind kind look pickup capital from cost just inflation the at any to much? maybe side, or of I exact just know of versus not And of in we’re of is much going that seeing underlying activity? underlying Chevron we how

Bill Zartler

anticipation this a mix, of to Amanda’s whole of spent interesting the we the an capital comment, contract year, year. to and from lot expect the the It’s is being It’s don’t in capital. see of majority incremental so next growth back Chevron

to XX% seeing across We’re increases, some XX% the cost way. small

customers, our Chevron And for really ton the EBITDA for but all So existing with focused a bit of little our on XXXX existing on ‘XX. really increase is of business. growth, it. there’s it capital is that associated of not a Most based

Amanda Brock

in of question, already John, terms your that in. was lot inflation of a baked

we’ve As indicated that. before, we’ve been tracking

in We have have inflationary CPI in anticipated which been pressure. have an in we we the conservative and way our contracts

Operator

Our with is from next question Wells Fargo. Praneeth Satish

Praneeth Satish

E&Ps there guess, you and asking, of to up ratchet can just the appetite it mainly producers across drilling? driving a growth? appetite is start, activity from give broadly sense to from more guess, any private just maybe mostly are public I drilling that footprint? majors terms is in I us Or your the I’m

Bill Zartler

But incrementally, little to have was you’ll to seeing I the longer for I a rig mean, are Well, earlier to we you’re to ask keep the that most wrap right now. part, -- if tendency working finish up, think while going them.

the think think slow reflect up, that. count I has indicated today ramp and that really a Chevron doesn’t is, currently So I rig

that to is So to and are loose think of that rolling people dam economics we’re for break set that a think see you’re don’t going pretty the operators. into incremental smaller or I top I compelling up players, more in of X see the increases on levels times, the rapid players larger clearly, X some contracts, I increases. among activity do of, larger go but going

Praneeth Satish

to then mean, edge as I CapEx, activity or up to higher XXXX Got down. it. than go least it like at And could likely sounds we more look

it but down comparable CapEx just the about So you I same put mean have will it to could you ‘XX? do when together think you ‘XX, go directionally, ‘XX in know in kind agreement we you or levels? I it look ‘XX, Chevron the at of be will it do think be as in

Bill Zartler

‘XX. to go onetime core I event them likely connection addition latest is capital based the Based of in on contract up lower be we’ll don’t more than it was works. our of the on The a in that contract infrastructure and the of ‘XX, than see will think Chevron forecast, more the it way

in moderate to I So begin ‘XX. we -- see think expect to we’ll capital

Operator

question next from Our Johnson with Crist is Don Rice.

Don Crist

you’re revenue very you’re that capital dollars. -- and return looking When I’m capital, or normally your assets a are is as payback building for X- I you you for long-lived on decision is curious could know are generate it X-year deploying business what Or that deploy on long just on to when a time, but capital? those the

Bill Zartler

what I general guidelines think those target, to we are Don.

I and sort is to it in where that X-year think the up [batteries]. the capital connecting range to X.X- capital depending to we’re maybe smaller longer pay we’re of the a on back little pipeline infrastructure, type particular of

but do range. add I that? right David, have mixture, got anything think to a it’s the you’ve to So you

David Tuerff

No.

think correct. I exactly that’s

Don Crist

quarter quite significantly or versus of just to using up water water Was fracs is to in adoption a the going it compared recycled sold fourth on frac? something percentage as there And for Okay. first quarter. more water bumped the there recycled new

Bill Zartler

Amanda. -- combination ahead, a It’s go

Amanda Brock

quantity for using that aggregating water; function is one, can able are It and recycled volumes now the We’ve these in customers fracs. proven increasingly that. and do we are two, way our need to achieve a our collecting the to and of which move and comfortable really are system we volumes with: they

is than adoption So just increased, had recycled water groundwater. time rapidly the this you’re seeing more which why curve at us supply

Don Crist

of always stay increasing think the that of Or here? that fresh do kind to water Okay. And XX%? XX% in materially see will mix you you do from that

Amanda Brock

we to that’s geography The want these of really if are continue happening. function is, to completions able just be and And water that of of we where We But cannot need there a or anticipate going always is because a provide we function water fracs believe recycled depends. it. if them. used are and that higher the a our more recycled blending to are groundwater to for it answer geography means and blend customers get groundwater will

Operator

Bill Zartler like would this the session. back call I Thank closing any you. Ladies for gentlemen, the and to question-and-answer concludes to turn remarks.

Bill Zartler

by employees, strong Thanks, helping like deliver and to to Aris all for our stakeholders I’d thanking conclude XXXX. start a Joe. today of customers

deepen with technology long-standing to new people, infrastructure drive alliances. customers our both and and Our continue valuable relationships

results sharing stay proud you, Have unfolds. to of look continued our year day. forward the our and We’re team as our safe. and updates all, growth a Thank on and great

Operator

you your today’s for participation. conference. Thank concludes This

may You now disconnect.

Aris Water Solutions (ARIS) 14 May 222022 Q1 Earnings call transcript