Select Water Solutions (WTTR) investor relations material

Strategic focus and business evolution

• Operations span all major US basins, with over half of activity in the Permian Basin, focusing on water infrastructure, services, and chemical technologies.

• Shifted from service-based to infrastructure-based revenue, now earning most income from long-term, high-margin water infrastructure contracts.

• Aggressively expanding infrastructure, especially in New Mexico's Lea County, with $400 million invested and a pipeline network enabling efficient water recycling and distribution.

• Secured nearly a million acres under long-term contracts in New Mexico, averaging 11 years in duration, providing stability and predictable cash flow.

• Plans to expand into municipal, agricultural, and industrial water markets, targeting contracts of 30–50 years for greater stability.

Market trends and industry challenges

• Water management is a growing issue in oil and gas, especially in the Permian and Northern Delaware, with increasing produced water volumes and limited disposal capacity.

• Recycling is positioned as the most economic and environmentally aligned solution, costing $0.50 per barrel versus $1–$1.25 for disposal or beneficial reuse.

• Beneficial reuse is not yet permitted in Texas but is expected to become significant post-2030; successful pilots are underway in Texas and Colorado.

• Regulatory pressures are increasing due to seismicity and pore space limitations, but recycling-first strategy reduces exposure to these risks.

• Industry consolidation among operators is expected to drive demand for large-scale, integrated water solutions providers.

Financial performance and capital allocation

• Water infrastructure segment has seen 75–80% CAGR since 2020, with continued meaningful growth in revenue, gross profit, and volumes.

• Infrastructure investments are funded primarily through free cash flow from services and chemicals, maintaining a conservative balance sheet with low leverage.

• Net CapEx for 2024 is projected at $250–$275 million, with 80% allocated to New Mexico system build-out; expected to decrease in subsequent years.

• Dividend program initiated in 2022, increased twice, with future focus on shareholder returns as infrastructure CapEx declines.

• Embedded growth from recent investments is expected to extend through 2027, with a strong commitment to maintaining financial discipline.