Select Energy Services Inc. announced that it will rebrand its company to reflect its mission as a sustainable water management solutions company and detailed recent Permian Basin acquisitions.
Select shared some details of its rebranding and M&A activity with Hart Energy ahead of publication of its financial fourth-quarter and year-end earnings results on Feb. 21 and a Feb. 22 earnings call. Select completed a series of Midland Basin transactions for total consideration of $44 million, including $36 million in cash and 900,000 shares of stock.
The Houston company said it will rebrand as Select Water Solutions Inc. during the first half of 2023 as it wades deeper into providing water solutions to major integrated oil companies and independent E&Ps.
Select president, CEO and board chair John Schmitz said that 2022 was a culmination of its water solutions “as well as a new beginning.” Schmitz said the company strongly believes its expertise in sustainable water and chemical solutions also offers a diverse range of applications beyond the unconventional energy industry.
“Select was initially built to service the energy industry, and I believe we have become a technology leader with uniquely integrated water and chemistry capabilities in the industry,” Schmitz said. “We will remain steadfast in our dedication towards advancing new and sustainable solutions for our customers and other stakeholders that are responsible for producing the fuels needed to provide mobility, the energy needed to power our homes and the refined products needed to engineer advanced materials and technologies.”
As part of its rebranding efforts, Select will retain its WTTR ticker symbol on the New York Stock Exchange. The name change is expected to become effective shortly after the company’s annual meeting of shareholders.
Schmitz said that, for now, Select’s corporate and financial reporting structures will remain unchanged.
“This rebranding more efficiently aligns our employees and field operations, consolidating more than a dozen brands and DBAs [‘doing business as’] currently operating nationwide, while also simplifying our external communications with our customers,” he said.
He said the company has experienced rapid growth in recent years and strategically added new products, services, infrastructure and “most importantly, talented and capable people.”
Schmitz said that at its most fundamental level, “our business is all about making connections, whether it is about further uniting our teams around integrated water and chemistry, creating sustainable partnerships with our customers, integrating large infrastructure networks or being good stewards for the surrounding communities.”
“This change prepares Select for the future as our business evolves and we assess additional diversification opportunities,” he said. “Whether it’s molecules or pipelines or people, we are all connected by water.”
A&D activity
The company also announced Permian infrastructure acquisitions in December 2022 and January 2023.
In December, the company closed on the acquisition of two joint venture interests in produced water recycling facilities in Howard County, Texas, for cash and stock. The acquisitions completed a buyout of minority partner interests that Select owned and operating following the acquisition of Breakwater Energy Partners LLC, which previously closed in November 2022.
Select also acquired approximately 35 miles of gathering and distribution pipelines, 3.5 MMbbl of water storage, approximately 120 brackish source water wells and 25,000 bbl/d of permitted disposal capacity.
In conjunction with the acquisitions, Select initiated the construction of additional pipeline connections to interconnect the acquired assets to existing Select facilities. The company said the infrastructure will provide “significant optionality long-term and expand the scope and reach of our operations across a broader acreage footprint in the core of the Midland Basin.”
Delaware Basin Recycling Project Select also entered into a 10-year agreement with a public independent operator in the northern Delaware Basin, whereby Select will build a produced water recycling facility capable of recycling 100,000 bbl/d of produced water with 1.5 MMbbl of treated produced water storage capacity.
Select plans to construct approximately 5 miles of large diameter pipeline to distribute treated produced water to pad sites throughout the operator’s acreage footprint. The project is supported by a 10-year acreage dedication under which the operator has agreed to purchase from Select’s recycling facility all recycled completions water required for its operations within the dedicated area.
The dedication covers approximately 18,000 acres in the northern Delaware Basin with an additional right-of-first-offer to construct produced water recycling and processing infrastructure on an additional approximately 10,000 acres in Lea County, N.M.
In conjunction with the recycling agreement, Select has also entered into a long-term produced water takeaway agreement with a downstream and logistics company in the vicinity of the planned recycling facility.
Select will connect via pipeline from the recycling facility to the downstream and logistics company’s existing infrastructure to further supplement the operator’s drilling and completion activities and associated water demand in the area. The total project cost is estimated between $10 million and $11 million and the company expects the recycling facility and associated infrastructure to be built and fully operational by year-end 2023.