Aris Water Solutions Inc (ARIS) 2023 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Aris Water Solutions Third Quarter 2023 Earnings Conference Call. Our host for today's call is David Tuerff, Senior Vice President of Finance and Investor Relations. (Operator Instructions)

女士們、先生們，美好的一天，歡迎參加 Aris Water Solutions 2023 年第三季財報電話會議。我們今天電話會議的主持人是財務和投資者關係高級副總裁 David Tuerff。 （操作員說明）

I would now like to turn the call over to your host, Mr. Tuerff, the floor is yours.

現在我想將電話轉給主持人圖爾夫先生，請發言。

Good morning, and welcome to the Aris Water Solutions Third Quarter 2023 Earnings Conference Call. I am joined today by our President and CEO, Amanda Brock, our Founder and Executive Chairman, Bill Zartler; and our CFO, Stephan Tompsett.

早安，歡迎參加 Aris Water Solutions 2023 年第三季財報電話會議。今天，我們的總裁兼執行長阿曼達·布洛克 (Amanda Brock)、我們的創始人兼執行主席比爾·扎特勒 (Bill Zartler) 也加入了我的行列。以及我們的財務長 Stephan Tomsett。

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

在我們開始之前，我想提醒您，在本次電話會議和相關演示中，我們將就我們當前的信念、計劃和期望做出前瞻性陳述，這些陳述並不是對未來業績的保證，並且受到一些已知和未知的風險和不確定性以及其他因素可能導致實際結果與此類前瞻性陳述預期的結果和事件有重大差異。請您注意不要過度依賴前瞻性陳述。

Please refer to the risk factors and other cautionary statements included in our filings made from time to time with the Securities and Exchange Commission. I would also like to point out that our investor presentation and today's conference call will contain discussion of non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation.

請參閱我們不時向美國證券交易委員會提交的文件中包含的風險因素和其他警告聲明。我還想指出，我們的投資者介紹和今天的電話會議將包含對非公認會計準則財務指標的討論，我們認為這有助於評估我們的績效。這些補充措施不應被孤立地考慮或作為根據美國公認會計準則制定的財務措施的替代品。我們的收益報告和今天隨附的簡報的附錄中包含了與最直接可比較的公認會計準則衡量標準的調節。

I'll now turn the call over to our Founder and Executive Chairman, Bill Zartler.

現在我將把電話轉給我們的創辦人兼執行主席 Bill Zartler。

Thank you, David, and thanks, everyone, for joining us this morning. Aris continued its positive momentum with an excellent third quarter. Our contracted customers continue allocating capital to activity on our dedicated acreage in the Northern Delaware Basin, resulting in sustained water volume growth over the past several years. Our customers substantial inventory depth and attractive economics in our area of operations support a critical multi-decade need comprehensive water management services. We are continuing our growth alongside our customers, expanding our infrastructure to meet their needs while also providing the industry with sustainable solutions. Aris' water volumes are up nearly 60% over the last 2 years. And in the third quarter of this year, we made significant progress in recapturing margins, increasing profitability while supporting the consistent pace of development on our acreage.

謝謝大衛，也謝謝大家今天早上加入我們。 Aris 繼續保持積極勢頭，第三季表現出色。我們的合約客戶繼續將資金分配給我們在北特拉華盆地的專用區域的活動，導致過去幾年水量持續成長。我們的客戶在我們的營運領域擁有大量的庫存深度和有吸引力的經濟效益，支援幾十年來關鍵的綜合水管理服務需求。我們與客戶一起繼續發展，擴大我們的基礎設施以滿足他們的需求，同時也為業界提供可持續的解決方案。過去 2 年，Aris 的水量增加了近 60%。今年第三季度，我們在恢復利潤、提高獲利能力方面取得了重大進展，同時支持了我們種植面積的持續發展速度。

We continue to drive greater efficiency and return on capital in our business, and we are proud of our execution thus far in 2023. With respect to inorganic growth, we remain disciplined in our approach with a continued focus on strategic fit accretion in both the short and long term and maintaining a conservative balance sheet.

我們繼續提高業務效率和資本回報率，我們對 2023 年迄今的執行情況感到自豪。在無機成長方面，我們在方法上保持嚴格，繼續專注於短期內的策略契合度成長。長期並維持保守的資產負債表。

With that, I'll turn it over to Amanda.

這樣，我就把它交給阿曼達。

Thank you, Bill. Our primary initiative for 2023 was to improve our profitability and recapture margins while continuing to expand our infrastructure footprint to support our customers' growing volumes in the core of the Northern Delaware Basin. We're extremely pleased to report significant progress in the third quarter and believe this positive momentum will continue into next quarter finishing the year at the high end of EBITDA guidance. Our focus on electrification of infrastructure, efficiency in the field and business process improvement helped deliver $0.02 per barrel sequential improvement in adjusted operating margin per barrel and our adjusted operating margin of $0.40 per barrel was in line with margins we recognized prior to inflationary pressures which began to impact us in early 2022.

謝謝你，比爾。我們 2023 年的主要計劃是提高盈利能力並奪回利潤，同時繼續擴大我們的基礎設施足跡，以支持客戶在北特拉華盆地核心不斷增長的產量。我們非常高興地報告第三季度的重大進展，並相信這種積極勢頭將持續到下季度，最終達到 EBITDA 指導的上限。我們對基礎設施電氣化、油田效率和業務流程改進的關注幫助每桶調整後營業利潤連續提高了 0.02 美元，調整後營業利潤為每桶 0.40 美元，與我們在通膨壓力開始之前確認的利潤一致。2022年初對我們產生影響。

Further supporting our enhanced profitability was our eighth consecutive quarter of produced water volume growth and better-than-anticipated water solution volumes enabling us to grow adjusted EBITDA to nearly $45 million for the quarter, up 5% sequentially and up 14% year-over-year. In our produced water business, we averaged 1,050,000 barrels per day for the third quarter, ahead of our expectations and continuing our sequential growth.

進一步支持我們增強盈利能力的是我們連續第八個季度的產水量增長和好於預期的水解決方案量，使我們能夠將本季度調整後的EBITDA 增長至近4500 萬美元，環比增長5%，同比增長14%。年。在我們的採出水業務中，第三季我們平均每天生產 1,050,000 桶，超出了我們的預期，並繼續實現環比成長。

Skim oil recoveries of 0.11% per inlet barrel of produced water were also ahead of expectations and operational changes implemented earlier this year to improve skim oil yields are delivering consistent results. Our skim oil sales also benefited from rising commodity prices in the quarter. We also saw higher water solutions volumes than we anticipated as completion activity was pulled forward from the fourth quarter into the third quarter and we won additional spot business. While much of our Water Solutions business is under long-term agreements, we also often win shorter-cycle spot volumes over the course of the quarter as operators water need shift.

每進口桶採出水的脫脂油回收率為 0.11%，也超出了預期，今年稍早為提高脫脂油產量而實施的營運變革也取得了一致的結果。我們的脫脂油銷售也受惠於本季大宗商品價格的上漲。由於完工活動從第四季度推遲到第三季度，我們還看到了比我們預期更高的水解決方案銷量，並且我們贏得了額外的現貨業務。雖然我們的大部分水解決方案業務都簽訂了長期協議，但隨著營運商用水需求的變化，我們也經常在本季度贏得週期較短的現貨量。

Our water recycling and sourcing business sold 460,000 barrels of water per day or over 42 million barrels in the third quarter, growing sequentially by 2% supported by our expansive infrastructure network that allows Aris to aggregate significant volumes of water on its system for recycling and redelivery to other areas across the basin. As we've seen, while completion schedules may move up or push out in a given quarter, we are outpacing our expectations for Water Solutions volumes for the year. We also made significant progress in reducing reuse rental equipment and diesel fuel expenses by continuing to convert facilities to permanent electrified infrastructure.

我們的水回收和採購業務每天售出460,000 桶水，第三季度售出超過4200 萬桶水，在我們廣泛的基礎設施網絡的支持下，環比增長了2%，該網絡使Aris 能夠在其係統上聚合大量水以進行回收和再交付到流域其他地區。正如我們所看到的，雖然特定季度的完工進度可能會提前或推遲，但我們對今年水解決方案產量的預期超出了預期。我們也透過持續將設施轉變為永久性電氣化基礎設施，在減少重複使用租賃設備和柴油費用方面取得了重大進展。

Compared to the third quarter a year ago, we've reduced our rental equipment and diesel fuel cost by approximately $5.4 million on an annualized basis, delivering on our commitment to improve margins to mitigate inflationary pressures we experienced in 2022. In terms of revenue, the largest of our CPI escalations took effect at the beginning of the third quarter, and combined with the success of our electrification projects and rental expense reductions. We are proud to have delivered meaningful incremental margin improvement in the third quarter. While there is still work to do, we have driven material margin improvements while continuing our consistent volumetric growth and the results are reflected in our profitability.

與去年同期相比，我們的租賃設備和柴油成本按年計算減少了約 540 萬美元，兌現了我們提高利潤率以減輕 2022 年通膨壓力的承諾。在收入方面，我們的消費物價指數（CPI）最大幅度的上漲發生在第三季初，再加上我們電氣化專案的成功和租金費用的減少。我們很自豪在第三季實現了有意義的增量利潤改善。儘管仍有工作要做，但我們在繼續保持銷售持續成長的同時，推動了實質利潤率的提高，其結果反映在我們的獲利能力中。

Looking ahead to 2024, we are working closely with our customers on their water infrastructure needs as they finalize their plans for next quarter and we will have further updates to our 2024 outlook alongside fourth quarter reporting. Our volumes, earnings profile and infrastructure expansion for next year will depend on the expected rate of growth of our customers and we will moderate our capital spending proportionate to that volumetric outlook.

展望 2024 年，我們正在與客戶密切合作，滿足他們的水基礎設施需求，因為他們最終確定了下個季度的計劃，我們將在第四季度報告的同時進一步更新 2024 年的展望。我們明年的銷售、獲利狀況和基礎設施擴張將取決於客戶的預期成長率，我們將根據銷售前景相應地調整資本支出。

On the basis of the forecast we've received thus far from our currently contracted customers, we expect 2024 capital expenditures to be lower sequentially versus 2023. We will also selectively pursue additional organic growth opportunities provided they meet our return thresholds. Importantly, however, with the business and system improvements we have made through our 2023, we believe we can sustain increased operating margins and improved the rate of return on our capital investments, improving our operational flexibility and better optimizing our capital spending and assets.

根據我們迄今為止從目前簽約客戶收到的預測，我們預計 2024 年的資本支出將比 2023 年連續下降。我們還將有選擇地尋求額外的有機成長機會，只要它們滿足我們的回報門檻。然而，重要的是，隨著我們在2023 年所做的業務和系統改進，我們相信我們能夠維持營業利潤率的成長並提高資本投資的回報率，提高我們的營運靈活性並更好地優化我們的資本支出和資產。

Now turning toward our beneficial reuse efforts. We remain focused on working alongside our customers to solve long-term water management challenges and pursue opportunities to use produced water in applications outside of the oil and gas industry, our beneficial reuse pilot project with ConocoPhillips, Chevron and ExxonMobil were underway in the third quarter, and we are testing several promising technologies through the first half of next year. In addition, as we mentioned last quarter, while we are piloting numerous technologies, we are also in the early stages of identifying potentially valuable constituents in our long-term produced water brine stream, and we are encouraged by the data we have seen so far. We are engaging in preliminary conversations with third parties to determine whether mineral constituents in our water can be commercialized.

現在轉向我們有益的再利用工作。我們仍然專注於與客戶合作，解決長期的水管理挑戰，並尋求在石油和天然氣行業以外的應用中使用採出水的機會，我們與康菲石油公司、雪佛龍和埃克森美孚的有益再利用試點計畫已於第三季開始實施，我們將在明年上半年測試幾項有前景的技術。此外，正如我們上季度所提到的，雖然我們正在試驗多種技術，但我們也處於識別長期產出鹽水流中潛在有價值成分的早期階段，迄今為止所看到的數據令我們感到鼓舞。我們正在與第三方進行初步對話，以確定我們水中的礦物質成分是否可以商業化。

With that, I'll turn it over to Steve to discuss our financial results for the quarter.

接下來，我將把它交給史蒂夫討論我們本季的財務表現。

Thank you, Amanda. We recorded adjusted EBITDA for the third quarter of $44.9 million, up 14% from the third quarter of 2022 and up 5% sequentially from the second quarter of 2023, again, exceeding our expectations for the quarter. The sequential increase was largely due to a pull forward of contracted Water Solutions volumes into the third quarter and additional spot water solutions volumes sold higher-than-anticipated skim oil recoveries and realized pricing as well as improved adjusted operating margins driven by the expense reductions mentioned earlier. For capital expenditures, we incurred $40 million in the quarter, in line with our full year expectations of $160 million to $170 million.

謝謝你，阿曼達。我們第三季的調整後 EBITDA 為 4,490 萬美元，比 2022 年第三季成長 14%，比 2023 年第二季環比成長 5%，再次超出了我們對該季度的預期。環比成長主要是由於水解決方案合約銷售提前至第三季度，以及額外銷售的現貨水解決方案銷量高於預期的脫脂油回收率和實現定價，以及上述費用削減推動的調整後營業利潤率的提高早些時候。對於資本支出，本季我們支出了 4,000 萬美元，與我們 1.6 億至 1.7 億美元的全年預期一致。

During the third quarter, we also closed on the sale of certain noncore assets in Martin County, Texas for cash consideration of $20.1 million. This accretive transaction allows us to redeploy capital into higher returning projects in our core Northern Delaware Basin system, though it did reduce our produced water volumes beginning in the third quarter. The assets which were sold handled approximately 50,000 barrels per day of produced water though at margins lower than our system average.

第三季度，我們也完成了德州馬丁縣某些非核心資產的出售，現金代價為 2,010 萬美元。這項增值交易使我們能夠將資本重新部署到我們北特拉華盆地核心系統的回報率更高的項目中，儘管它確實從第三季度開始減少了我們的採出水量。出售的資產每天處理約 50,000 桶採出水，但利潤率低於我們系統的平均水準。

Looking ahead to the fourth quarter, we expect produced water volumes to be up approximately 2% to 3% relative to the third quarter, adjusting for the impact of our recent asset sale. We're forecasting skim oil recoveries of 0.1% of produced water inlet volumes at an average WTI price of approximately $87 per barrel. As a reminder, every $1 change in oil price relative to our expectations would correspond to a change of an estimated $100,000 in EBITDA per quarter. For the Water Solutions business on the basis of our current forecast we expect volumes of 405,000 to 420,000 barrels of water per day for the quarter, declining moderately sequentially due to the pull forward of volumes originally scheduled for the first quarter and the potential for seasonal slowdowns.

展望第四季度，我們預期產出水量將較第三季成長約 2% 至 3%，並根據近期資產出售的影響進行調整。我們預計，在 WTI 平均價格約為每桶 87 美元的情況下，脫脂油回收率為採出水入口量的 0.1%。提醒一下，油價相對於我們的預期每變動 1 美元，就相當於每季 EBITDA 估計變動 10 萬美元。對於水解決方案業務，根據我們目前的預測，我們預計本季的日產量為 405,000 至 420,000 桶，由於原定第一季產量的提前以及季節性放緩的可能性，該業務量將連續適度下降。

And as always, given the shorter cycle opportunities that arise in Water Solutions, our commercial team continues to pursue opportunities to add spot volumes to the quarter. With the changes we've made to our operations, we believe we'll be able to maintain the operating margin improvements realized in the third quarter and are projecting adjusted operating margins of $0.39 to $0.41 per barrel. For the fourth quarter, we're forecasting adjusted EBITDA of $41 million to $45 million, further increasing our guidance range for the year of 2023 to the upper end of our expectations of $166 million to $170 million. Our capital expenditures remain on track to meet our full year guidance of $160 million to $170 million.

像往常一樣，考慮到水解決方案中出現的更短週期的機會，我們的商業團隊繼續尋求機會增加本季的現貨量。透過營運所做的改變，我們相信我們將能夠維持第三季實現的營業利潤率的提高，並預計調整後的營業利潤率為每桶 0.39 美元至 0.41 美元。對於第四季度，我們預計調整後 EBITDA 為 4,100 萬美元至 4,500 萬美元，進一步將 2023 年的指導範圍擴大至我們預期的上限 1.66 億美元至 1.7 億美元。我們的資本支出仍有望達到 1.6 億至 1.7 億美元的全年指引目標。

Turning to our balance sheet. We ended the quarter with a debt to adjusted EBITDA ratio of 2.53x at the low end of our long-term leverage target and $190 million of available liquidity. In October, we announced we had opportunistically refinanced our credit facility, extending maturity through 2027 and increasing the facility to $350 million, which is proportionate to the company's growth since the prior facility was put in place. While the prior facility was not due to go current until April 2024, we felt it prudent to refinance early while we had a supportive market given the recent volatility in the banking sector. Finally, we recently announced our ninth consecutive dividend of $0.09 per share, which will be paid December 21 to shareholders of record as of December 7.

轉向我們的資產負債表。本季結束時，我們的負債與調整後 EBITDA 比率為 2.53 倍，處於長期槓桿目標的低端，可用流動資金為 1.9 億美元。 10 月，我們宣布對信貸額度進行了機會性再融資，將期限延長至 2027 年，並將額度增加至 3.5 億美元，這與公司自上次額度到位以來的成長成正比。雖然先前的融資要到 2024 年 4 月才會生效，但考慮到銀行業近期的波動，我們認為儘早再融資是明智的做法，同時我們擁有一個支持性的市場。最後，我們最近宣布連續第九次派發每股 0.09 美元的股息，將於 12 月 21 日向截至 12 月 7 日在冊的股東支付股息。

With that, I'll turn it over to Amanda to wrap up.

這樣，我將把它交給阿曼達來總結。

Thanks, Steve. I'm very proud of our team's execution thus far in 2023. We began the year with a focus on profitability and cost reduction initiatives and quarter-over-quarter, we've made meaningful progress, and we know we're not done. We remain committed to maintaining these efficiencies while identifying further opportunities to enhance profitability. Our business in the prolific Northern Delaware Basin is supported by large operators, making sizable investments through commodity cycles in areas with multi-decade inventory and compelling upstream economics. So looking to the future, we are optimistic about our ability to continue to meet our customers' long-term water infrastructure needs while pursuing opportunities to utilize produced water outside of the oil and gas industry.

謝謝，史蒂夫。我對我們團隊在2023 年迄今為止的執行力感到非常自豪。今年伊始，我們就重點關注盈利能力和成本削減計劃，逐季度來看，我們取得了有意義的進展，而且我們知道我們還沒有完成。我們仍然致力於維持這些效率，同時尋找進一步提高獲利能力的機會。我們在多產的北特拉華盆地的業務得到了大型營運商的支持，他們透過商品週期在擁有數十年庫存和引人注目的上游經濟的地區進行了大量投資。因此，展望未來，我們對繼續滿足客戶長期水基礎設施需求的能力感到樂觀，同時尋求在石油和天然氣行業之外利用採出水的機會。

With that, we will take questions.

接下來，我們將回答問題。

(Operator Instructions) Your first question comes from John Mackay of Goldman Sachs.

（操作員說明）您的第一個問題來自高盛的約翰·麥凱。

Congrats on the quarter. Maybe if we could just break down a little bit more some of the moving pieces on the margin recovery you mentioned electrification and bringing down the rental expense. Just curious if you can share a little bit on -- again, on the moving pieces there, how confident you are in the kind of trajectory going forward? And maybe if we can be greedy kind of where you think these margins could get to over time?

恭喜本季。也許我們可以進一步分解您提到的電氣化和降低租金費用方面的利潤恢復方面的一些變化因素。只是好奇您是否可以分享一些關於正在發生的事情，您對未來的發展軌跡有多大信心？也許我們可以貪婪一點，你認為隨著時間的推移，這些利潤會達到什麼程度？

Thanks, John. We do think that this margin recovery is sustainable, and we continue to look for other opportunities to actually increase it over time. I'll let Steve take you through the actual specifics on the electrification and rentals, but rest assured, we're looking at all aspects of our business to continue to see where we can increase efficiencies. .

謝謝，約翰。我們確實認為這種利潤率恢復是可持續的，並且我們將繼續尋找其他機會來隨著時間的推移實際提高利潤率。我將讓史蒂夫帶您了解電氣化和租賃的實際細節，但請放心，我們正在研究業務的各個方面，以繼續尋找可以提高效率的地方。 。

Yes, John. On the electrification and rentals that we talked about, when you look at our Aris facilities, 3 of the 8 are already done. We've started to realize the savings from that. Two of the facilities have been done, and we're waiting for a break in schedule, so we can implement those. So we'll see incremental savings as we go into next year. Now we have 3 facilities that are still in the QFX that we expect to be completed this quarter.

是的，約翰。關於我們談到的電氣化和租賃，當你查看我們的 Aris 設施時，8 個設施中的 3 個已經完成。我們已經開始意識到由此帶來的節省。其中兩個設施已經完工，我們正在等待時間表的休息，以便我們可以實施這些設施。因此，進入明年，我們將看到增量節省。現在我們有 3 個設施仍在 QFX 中，預計將於本季完工。

So we're going to see continued margin improvement from those. And then on the rentals, we continue to have cost savings forecasted into this quarter and next year. On the produced water side, right now, we have 13 of the 20 booster pumps that we talked about early in the year, converted and we've got an additional 2 that are going to be put in place this year. We did have several slip in Excel schedule into next year. So we're going to have 4 or 5 that are going to push into Q1. And again, that's out of our control. We're ready and waiting for them. So we're going to continue to see some incremental margin improvement on those projects.

因此，我們將看到這些產品的利潤率持續改善。然後在租金方面，我們預計本季和明年將繼續節省成本。在產出水方面，目前，我們已對今年年初討論的 20 台增壓泵中的 13 台進行了改造，另外 2 台將於今年安裝到位。我們確實有幾次將 Excel 計劃推遲到了明年。因此，我們將有 4 或 5 個將進入第一季。再說一遍，這是我們無法控制的。我們已準備好並等待他們。因此，我們將繼續看到這些項目的利潤率有所改善。

All right. I appreciate all that. Maybe just thinking about the asset sale, could you comment a little more on maybe -- I don't know if you want to say EBITDA or multiple sold I think you have a little left in the Midland as well. Should we think about that as being in the noncore bucket? And if there's anything else kind of across the footprint more broadly that could be cored up.

好的。我很感激這一切。也許只是考慮資產出售，你能多評論一下嗎——我不知道你是否想說 EBITDA 或多重出售，我認為你在米德蘭也還剩下一點。我們是否應該將其視為非核心類別？如果更廣泛的足跡上還有其他可以被核心化的東西。

I think we've been pretty specific about where our primary focus has been in the Northern Delaware. When we sold this asset, it was more opportunistic and that there was a buyer coming in who wanted to enter the basin, this was an accretive deal. It was noncore to us with lower margin. So we're very happy with the outcome of this deal. Do you want to add anything to that, David, Steve.

我認為我們對於特拉華州北部的主要關注點已經非常具體。當我們出售這項資產時，更多的是機會主義，有買家想要進入盆地，這是一筆增值交易。它對我們來說不是核心業務，利潤率較低。所以我們對這筆交易的結果非常滿意。大衛、史蒂夫，你想補充什麼嗎？

Yes. We haven't disclosed the multiple of the transaction. But as Amanda indicated, it was accretive to us. It was a stand-alone asset. So we're very happy with the transaction.

是的。我們尚未透露交易的倍數。但正如阿曼達所說，這對我們來說是有好處的。這是一項獨立的資產。所以我們對這筆交易非常滿意。

Your next question comes from Spiro Dounis with Citi.

您的下一個問題來自花旗銀行的 Spiro Dounis。

This is Chad on for Spiro. Starting off, we're hearing more about produced water constraints in the Permian. Do you see a scenario where water takeaway actually becomes a bottleneck? And what's the solution to present that?

這是斯皮羅的查德。首先，我們聽到更多有關二疊紀採出水限制的資訊。您是否看到了水外賣實際上成為瓶頸的情況？提出這個問題的解決方案是什麼？

There is a lot more conversation about produced water constraints and concerns that there will be enough takeaway. This is actually a tailwind for us. So we are looking at a lot of different options as to how we can assure that this wave of water that continues to come in the Northern Delaware can be dealt with beneficial reuse pipeline potentially out of the basin and continuing to look at ways in which we can be more efficient with our disposal volumes. But there is a lot of attention on it, and that is positive for us.

關於採出水限制的討論越來越多，擔心會有足夠的外帶。這對我們來說實際上是一個順風車。因此，我們正在考慮許多不同的選擇，以確保如何確保特拉華州北部持續湧入的這波水能夠通過可能從盆地流出的有益再利用管道進行處理，並繼續尋找我們可以採用的方法。我們的處理量可以提高效率。但它受到了很多關注，這對我們來說是積極的。

Great. That's helpful. And then just following up. I know execution has been a focus this year. Just curious how the M&A landscape is shaping up in the current environment and how that could play into your growth outlook going forward beyond this year?

偉大的。這很有幫助。然後就跟進。我知道執行力是今年的重點。只是好奇在當前環境下併購格局如何形成，以及這將如何影響您今年以後的成長前景？

Thanks, Chad. We've been very, very disciplined. We've sent this every quarter. For M&A, for us, it's got to be accretive. It's got to make sense strategically. And valuations have to make sense, both now short term as well as long term. And while there've been things we'd like to have looked at and we'd like to have done, if they don't meet our thresholds, we're not going to transact.

謝謝，查德。我們一直非常非常有紀律。我們每季都會發送一次。對於併購，對我們來說，它必須是增值的。它必須具有戰略意義。估值必須合理，無論是短期或長期。雖然有些事情我們想要考慮並且我們想要完成，但如果它們不符合我們的閾值，我們就不會進行交易。

You got it?

你說對了？

Okay. Understood. Hope so.

好的。明白了。希望如此。

Sorry, I was asking Bill if you had anything to add.

抱歉，我問比爾你是否還有什麼要補充的。

That's exactly right. .

完全正確。 。

We work closely on it.

我們為此密切合作。

Your next question comes from Wade Suki with Capital One.

您的下一個問題來自第一資本的 Wade Suki。

Not to harp on the prior couple of questions on the M&A front. But it sounds like we don't have to read into this asset. So I don't read into anything with that. But we've talked about this before. We don't mind maybe walking us through what some of the consolidation in the basin might do for opportunities. And we've got a big player out here who's maybe a little bit more strategic minded. How do you think about the opportunities longer term given that backdrop?

不再糾纏前面關於併購方面的幾個問題。但聽起來我們不必深入研究這個資產。所以我不會對此進行任何解讀。但我們之前已經討論過這一點。我們不介意帶我們了解盆地的一些整合可能會帶來哪些機會。我們這裡有一位大牌球員，他可能更有戰略思維。在這種背景下，您如何看待長期機會？

Wade, you're talking about the consolidation opportunities that are going on between the E&P guys or how?

韋德，您是在談論勘探與生產人員之間正在發生的整合機會，或者是如何整合的？

Exactly, exactly. One big customer in particular, is sort of what I'm referring to.

完全正確。我指的是一個特別大的客戶。

Well, trust us, we watch it very closely. It's interesting in that our customers tend to be consolidated. Our customers tend to be sort of Conoco and Chevron and the larger companies who are dedicated to the Permian Basin and dedicated, particularly into Northern Delaware and allocating a lot of capital to continued growth there. So the recent deals that we've seen, the Pioneer Exxon deal does not really impact us being in the Midland Basin.

好吧，相信我們，我們非常密切地關注它。有趣的是，我們的客戶往往會被整合。我們的客戶往往是康菲石油公司和雪佛龍公司以及致力於二疊紀盆地的大型公司，特別是特拉華州北部，並分配大量資金以促進那裡的持續成長。因此，我們最近看到的交易，先鋒埃克森美孚的交易並沒有真正影響我們在米德蘭盆地的業務。

But our contracts run with the land, and so that means that there is a consolidation, we are not concerned with any contractual impact. And we do believe that being on this great rock with these great customers that this is a tailwind for us. You will see increased efficiencies people are making acquisitions to grow, and this is great rock. Bill, you look at this a lot with anything else.

但我們的合約是與土地一起運作的，因此這意味著存在整合，我們不關心任何合約影響。我們確實相信，與這些偉大的客戶一起在這塊偉大的岩石上，這對我們來說是一種順風。你會看到人們透過收購來實現成長的效率不斷提高，這是一塊巨大的石頭。比爾，你經常把這個和其他事情一起看。

So I think the consolidation is actually good for us. We have focused on the larger customers and longer transactions. And so as the roll-up, there's been several levels of consolidation. Obviously, there's the big mega deals, and then there's been a lot of smaller consolidation among the formerly private equity-backed companies that have gone public and put themselves together and formed up some great mid type companies. And as those do, I think we -- they look more strategic. We end up rolling anchorage with them, and their activity sort of swings more than the activity of the majors. And so that's why we've been really steadily growing is because we've had a proportionate share with the majors versus those that are in the middle of transactions.

所以我認為整合其實對我們有利。我們專注於較大的客戶和較長的交易。因此，隨著整合的進行，出現了多個層級的整合。顯然，有一些大型交易，然後在以前由私募股權支持的公司之間進行了許多較小的整合，這些公司已經上市並整合在一起，組建了一些很棒的中型公司。正如這些所做的那樣，我認為我們——它們看起來更具戰略意義。我們最終和他們一起滾動錨地，他們的活動比專業的活動波動更大。這就是為什麼我們一直在穩定成長，因為我們與主要交易者相比，在交易過程中擁有一定比例的份額。

Great. Just switching gears a little bit to the kind of the reuse are we going on right now. But what kind of milestones or maybe guidepost should we be looking for over the next few months or any data related?

偉大的。只是稍微切換到我們現在正在進行的重用類型。但是，在接下來的幾個月裡，我們應該尋找什麼樣的里程碑或路標或任何相關數據？

Yes. We expect sort of in Q1 to begin to talk to you guys about what we are seeing in the brines and the work that we are doing in understanding the valuable constituents that maybe in trained in our produced water that we can also begin to see if there's additional revenue stream there. And so far as the actual pilot that we are underway with right now. We will keep everybody informed as to how the technology results are coming through as we work with Exxon and Chevron and Conoco. So I think you will hear a lot more in '24 about what we are doing and what we see as potential upside next year.

是的。我們預計在第一季開始與你們討論我們在鹽水中看到的情況以及我們正在做的工作，以了解可能在我們的採出水中訓練的有價值的成分，我們也可以開始看看是否有在那裡有額外的收入來源。就我們目前正在進行的實際試點而言。當我們與埃克森美孚、雪佛龍和康菲公司合作時，我們將讓所有人了解技術成果的進展。因此，我認為您將在 24 年聽到更多關於我們正在做的事情以及我們認為明年的潛在優勢的信息。

Your next question comes from Jeffrey Campbell with Seaport Research Partners.

您的下一個問題來自 Seaport Research Partners 的 Jeffrey Campbell。

Alliance participant ExxonMobil does not appear to have much acreage in Aris' core state line area even accounting for the recent Pioneer acquisition. I just wondered how this affects their participation in the beneficial water reuse effort.

即使考慮到最近先鋒公司的收購，聯盟參與者埃克森美孚在阿里斯的核心州線區域似乎也沒有太多面積。我只是想知道這如何影響他們參與有益的水再利用工作。

Jeffrey, our focus with the beneficial reuse is really sort of agnostic as to where acreage is, and they are very committed to that consortium because finding what we can do with beneficial reuse is actually not just a Permian issue, it's just everywhere. But in terms of their acreage, they have significant acreage with Poker Lake and the other acreage positions in Lea and Eddy. So in fact, and they are a great customer for us and will continue to be a great customer as we grow our position with them.

傑弗裡，我們對有益再利用的關注實際上與面積在哪裡無關，他們非常致力於該聯盟，因為尋找我們可以利用有益再利用做什麼實際上不僅僅是二疊紀問題，而是無處不在。但就其面積而言，他們在 Poker Lake 以及 Lea 和 Eddy 的其他面積位置上擁有大量面積。事實上，他們是我們的偉大客戶，隨著我們與他們的地位不斷提高，他們將繼續成為我們的偉大客戶。

Yes. I think a fundamental nature of the business. The beneficial reuse may be along the state line but our pipeline network that's moving water around extends far up into Eddy and Lea County and actually does surround Exxon at Poker Lake and Jens Ranch. .

是的。我認為這是業務的基本性質。有益的再利用可能是沿著州線進行的，但我們輸送水的管道網絡一直延伸到埃迪縣和李縣，實際上確實包圍了埃克森美孚的撲克湖和延斯牧場。 。

Great. Between technology commercialization and regulatory approval, I'm talking about the reuse -- beneficial reuse. Which do you regard as more challenging?

偉大的。在技​​術商業化和監管批准之間，我談論的是重複使用——有益的重複使用。您認為哪個更具挑戰性？

I think at this point, we are very focused on the regulatory approvals that will be needed, particularly in New Mexico. We've seen a lot of progress made with the Rail Road Commission and other regulators in Texas. The issue in technology is, technology is there to treat this water. What we are trying to do is to make sure that it is robust and that it is cost effective. So a lot of our focus is on bringing down the cost of treating this high TDS water to the lowest cost we can accommodate with what we have to achieve in terms of dealing with the constituents.

我認為目前我們非常關注所需的監管批准，特別是在新墨西哥州。我們看到與德克薩斯州鐵路委員會和其他監管機構合作取得了許多進展。技術問題是，有技術可以處理這些水。我們正在努力做的是確保它穩健且具有成本效益。因此，我們的重點是把處理這種高 TDS 水的成本降低到我們能夠適應的最低成本，以滿足我們在處理成分方面必須實現的目標。

Okay. Great. And if I could just 1 last one. Regarding the effort to commercialize high-value materials and minerals in your brine stream, will this require a significantly different technical approach than the beneficial use effort. And given water volumes be exposed to both efforts? Are they going to have to be discrete to 1 effort or the other?

好的。偉大的。如果我能只有最後一張就好了。關於將鹽水流中的高價值材料和礦物商業化的努力，這是否需要與有益利用工作截然不同的技術方法。考慮到水量會受到這兩種努力的影響？他們是否必須專注於一項努力或另一項努力？

No, it is a process. the beneficial reuse pilot is focused on treating water to make that water limited use very simple terms to clean it to a certain standard, so it can be used for a certain purpose like ag, discharge or whatever you're going to use it for. When we're focused on the brines, we are more focused not on treating it to make it clean, but how can we treat to extract from that water the highest concentrate of whatever mineral or valuable material you're trying to extract. So it's slightly different, but it is a process. It is just more of a different approach when it comes to the extractive side.

不，這是一個過程。有益的再利用試點的重點是對水進行處理，使水有限使用非常簡單的術語將其清潔到一定的標準，這樣它就可以用於特定的目的，如農業、排放或任何你想要使用它的目的。當我們關注鹽水時，我們更關注的不是對其進行處理以使其清潔，而是如何處理以從水中提取您想要提取的任何礦物質或有價值材料的最高濃度。所以略有不同，但這是一個過程。當涉及到提取方面時，這只是一種不同的方法。

Yes. And if you think about the beneficial reuse, you're removing as much good water as possible and you're concentrating the constituents in that heavier brine, that heavier brine and the concentrated brine allows you to more cost effectively potentially extract those other minerals.

是的。如果您考慮有益的再利用，您將盡可能去除優質水，並將成分濃縮在較重的鹽水中，較重的鹽水和濃縮鹽水使您能夠更經濟有效地提取其他礦物質。

Like we'd explain it.

就像我們解釋的那樣。

Your next question comes from Selman Akyol with Stifel.

您的下一個問題來自Stifel 的 Selman Akyol。

Just sort of following up on John's question earlier in terms of -- you guys talked about sort of the electrification and the additional pumps that can be removed, et cetera. I'm just curious, can you put some dollar figures on what's left to go in terms of -- you characterized it as sort of $5.4 million on an annual basis. With what you see coming up, can you talk about maybe the savings you're trying to capture in terms of dollars on a go-forward basis?

只是跟進約翰之前的問題——你們談到了某種電氣化和可以拆除的額外泵等等。我只是很好奇，你能否給出一些關於剩餘資金的數字——你將其描述為每年 540 萬美元。根據您所看到的情況，您能否談談您在未來的基礎上試圖以美元形式節省的費用？

Yes, happy to. On those 2 projects, specifically, we talked about $7.5 million to $8 million in total and it's all done. So we made some potential progress towards that goal. So we're confident we're going to achieve those figures. Beyond that, we are looking across the business for other ways to optimize vendors, contracts, operations, et cetera. So this is a mindset of continuous improvement. But in terms of those 2 projects, we're tracking well towards our $7.5 million plus or minus target.

是的，很高興。具體來說，在這兩個項目上，我們總共討論了 750 萬至 800 萬美元，現在全部完成了。因此，我們在實現這一目標方面取得了一些潛在進展。因此，我們有信心實現這些數字。除此之外，我們正在整個企業尋找其他方法來優化供應商、合約、營運等。所以這是一種持續改進的心態。但就這兩個項目而言，我們正在順利實現 750 萬美元上下的目標。

Got it. So the $5.4 million is out of that $7.5 million, plus or minus.

知道了。所以 540 萬美元是 750 萬美元中的一部分，加上或減去。

That's right.

這是正確的。

Okay. Great. Understood. And then in terms of just sort of the brine stream opportunity or exploration that you're doing, and I know we're going to get more of it in '24. But should we be thinking of this as still several years out for revenue generation? Or are you seeing something potentially maybe sooner?

好的。偉大的。明白了。然後就你正在進行的鹽水流機會或勘探而言，我知道我們將在 24 年獲得更多。但我們是否應該認為這還需要幾年的時間才能創造收入？或者你有可能更快看到一些東西嗎？

I think we -- on the brine side, we believe that may be sooner, but this is still several years out. So we want to explain to everybody that we are very focused on it. We are very encouraged by what we are seeing, but we are not at a point where we are going to come out and sort of talk about what the revenue expectation is.

我認為，在鹽水方面，我們相信這可能會更快，但這仍然需要幾年的時間。所以我們想向大家解釋我們非常關注它。我們對所看到的情況感到非常鼓舞，但我們還沒有到要出來談論收入預期的程度。

Your next question comes from Praneeth Satish with Wells Fargo.

您的下一個問題來自富國銀行的普拉尼思·薩蒂什 (Praneeth Satish)。

Maybe just, I guess, following up on the brine questions here. And yes, I know you'll give more clarity next year. But I'm just wondering, conceptually, if you kind of perfect the pilot? Are you looking to apply this across all of your water volumes? Or is it just kind of certain regions that are more concentrated and more economically viable? I guess, how homogeneous is this opportunity? .

我想，也許只是跟進這裡的鹽水問題。是的，我知道明年你會說得更清楚。但我只是想知道，從概念上講，你是否完善了飛行員？您是否希望將其應用於所有水量？或只是某些更集中且經濟上更可行的地區？我想，這個機會的同質性如何？ 。

Praneeth, good to hear from you. So we are very focused, and we've always said that we're focused on waste to asset or waste to value. So we are constantly looking at our produced water to see what we can do with it other than just dispose of it and what is there that got value. So we have reuse and recycle as much as we can, and we continue to be very focused on reuse. In addition then, this pilot for beneficial reuse is to provide technology that can be used for water across the basin. And so it is not that it's just specific for certain areas of the basin. It is going to have flexibility that can be used with different influence water across the basin.

普拉尼斯，很高興收到你的來信。所以我們非常專注，我們總是說我們專注於廢棄物變資產或廢棄物變價值。因此，我們不斷關注產出水，看看除了處理它之外，我們還能用它做什麼，以及其中有什麼價值。因此，我們盡可能地進行再利用和回收，我們將繼續非常注重再利用。此外，這個有益再利用的試點是提供可用於整個流域的水的技術。因此，這並不是說它只針對盆地的某些區域。它將具有靈活性，可以與流域內不同影響的水一起使用。

Got it. That's helpful. And then switching gears. I know it's a little early, but as you look out to 2024, do you envision being free cash flow positive after dividends? And then if so, would you consider raising the dividend at that point or increasing capital overtime?

知道了。這很有幫助。然後換檔。我知道現在有點早，但展望 2024 年，您是否預期股息後自由現金流為正？如果是這樣，您會考慮當時提高股息還是加班資本？

Yes. I think we are very focused on free cash flow, and we know it's very important. Steve, why don't you go ahead and explain how we're looking at this.

是的。我認為我們非常關注自由現金流，我們知道它非常重要。史蒂夫，你為什麼不繼續解釋一下我們是如何看待這個問題的呢？

Yes, Praneeth. At this point, we don't have full year outlooks from our customers for the back half of the year. We have some indications for the first quarter and into the second quarter. But as Amanda mentioned in our prepared comments, we do expect CapEx to come down relative to this year. And we expect EBITDA to be up. So at this point, we're going to have to defer more full demand until our full year call in a couple of months. But again, as a main step, we're very focused on it. We know the importance of it to our investors, and we'll have more to communicate here, fortune long.

是的，普拉尼斯。目前，我們還沒有客戶對下半年的全年展望。我們對第一季和第二季有一些跡象。但正如阿曼達在我們準備好的評論中提到的那樣，我們確實預計資本支出相對於今年會下降。我們預計 EBITDA 將會上升。因此，在這一點上，我們將不得不推遲更全面的需求，直到幾個月後的全年電話會議。但同樣，作為一個主要步驟，我們非常關注它。我們知道它對我們的投資者的重要性，我們將在這裡進行更多交流，祝好運。

At this time, it appears there are no further questions. I'd like to turn the call back over to management for any closing remarks.

目前看來沒有其他問題了。我想將電話轉回管理層以供結束語。

Thank you all for participating today. We want to thank everybody on the team for a great quarter. We know we have more work to do, but we are very excited about what's to come. We also want to thank our customers for their continued support, and we look forward to talking to you all again on the fourth quarter earnings call. Have a great day and if we weren't be talking to you before then, have a great thanksgiving.

感謝大家今天的參與。我們要感謝團隊中的每個人，他們度過了一個美好的季度。我們知道我們還有更多工作要做，但我們對即將發生的事情感到非常興奮。我們也要感謝客戶的持續支持，我們期待在第四季財報電話會議上再次與大家交談。祝你有美好的一天，如果我們在那之前沒有和你說話，祝你感恩節快樂。

This concludes today's Aris Water Solutions Third Quarter 2023 Earnings Conference Call. Thank you for attending, and have a wonderful rest of your day.

今天的 Aris Water Solutions 第三季 2023 年財報電話會議到此結束。感謝您的出席，祝您有個愉快的一天。