Select Water Solutions (WTTR) 17th Annual Southwest IDEAS Conference summary

Business strategy and market positioning

• Focused on water solutions for oil and gas, with over half of activity in the Permian Basin and a shift from service-based to infrastructure-based revenue streams.

• Three business segments: water infrastructure (largest), water services, and chemical technologies, with infrastructure now the primary income source.

• Aggressively expanding infrastructure through organic and inorganic growth, emphasizing long-term, fixed-price contracts.

• Leading recycling provider in New Mexico, aiming to increase recycling rates from 50% to 85-90% as infrastructure expands.

• Diversifying into municipal, agricultural, and industrial water markets, with initial investments in Colorado and plans for long-term contracts.

Operational highlights and growth

• Water infrastructure platform has seen significant revenue, gross profit, and volume growth since 2020, with a 75-80% CAGR in recycling and disposal.

• Building a large-scale, bidirectional pipeline network in Lea County, New Mexico, to optimize water gathering and distribution.

• $400 million invested in Lea County, with the majority of capital allocated to high-return infrastructure projects.

• Largest recycling provider in the Delaware Basin, with strong positions in Haynesville, Midland, Northeast, and Bakken basins.

• Expecting infrastructure build-out to be completed by mid-Q3 2026, with incremental expansions offering high returns.

Financial performance and capital allocation

• Infrastructure shift has increased gross margins by 5-10 points, with infrastructure products yielding 2-2.5x service margins.

• Long-term contracts (average 11 years) provide stability, predictable cash flow, and flexibility.

• CapEx for 2024 is $250-275 million, with 80% directed to New Mexico; expected to decrease in 2025 and 2027.

• Conservative balance sheet management, with debt/EBITDA typically under 1.25x and infrastructure funded by free cash flow from other segments.

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