Aris Water Solutions Inc (ARIS) 2024 Q3 法說會逐字稿

Good morning, and welcome to the Aris Water Solutions' third-quarter 2024 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 2024 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) 也加入了我的行列。我們的創始人兼執行主席 Bill Zartler；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, which 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. 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.

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聲明，這些聲明不是對未來業績的保證，並且會受到許多因素的影響。請您注意不要過度依賴前瞻性陳述。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。

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 US GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today’s accompanying presentation.

我還想指出，我們的投資者演示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，我們認為這對於評估我們的業績很有用。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簡報的附錄中包含了與最直接可比較的 GAAP 衡量標準的調整。

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比爾‧札特勒 (Bill Zartler)。

Thank you, David. Aris continued its strong 2024 with an excellent third quarter. We saw steady growth in produced water volumes and increased completions activity, driving further demand for our recycled water. Our ongoing operational improvements delivered consistently strong margins, and as forecasted, our third quarter capital expenditures were down significantly following the completion of our first half weighted capital program. As a result of consistent volume growth, strong margins and efficient capital investment, we are generating excess cash, which allows us greater flexibility to both reinvest in the growth of our business and enhance shareholder returns.

謝謝你，大衛。Aris 憑藉出色的第三季業績延續了 2024 年的強勁勢頭。我們看到採出水量穩定成長，完井活動增加，進一步推動了對再生水的需求。我們持續的營運改善帶來了持續強勁的利潤率，正如預測的那樣，在上半年加權資本計畫完成後，我們第三季的資本支出大幅下降。由於銷售的持續成長、強勁的利潤率和高效的資本投資，我們產生了過剩的現金，這使我們能夠更靈活地再投資於業務成長並提高股東回報。

As anticipated, we're seeing additional inorganic opportunities come to market and continue to evaluate a number of potential targets. Our primary focus is on evaluating adjacent assets in our core operating area where we can drive incremental value and enhance our systems' capabilities. Thus far, we have not yet found an opportunity that offers the right combination of strategic fit, asset and contract quality and financial accretion that we look for. And we will continue to remain disciplined while evaluating all potential opportunities. We want to thank our customers, suppliers and our team for the strong results this quarter and great overall performance thus far in 2024.

正如預期的那樣，我們看到更多的無機機會進入市場，並繼續評估一些潛在目標。我們的主要重點是評估我們核心營運領域的鄰近資產，在這些資產中我們可以推動增值並增強我們的系統功能。到目前為止，我們還沒有找到一個機會來提供我們所尋求的策略契合度、資產和合約品質以及財務增值的正確組合。我們將在評估所有潛在機會的同時繼續保持紀律。我們要感謝我們的客戶、供應商和團隊在本季度取得的強勁業績以及 2024 年迄今的出色整體業績。

We're encouraged by our continued progress and remain optimistic for the end of the year and beyond. With that, I'll turn it over to Amanda.

我們對持續取得的進展感到鼓舞，並對今年年底及以後保持樂觀。這樣，我就把它交給阿曼達。

Thank you, Bill. When we initially forecasted 2024 for investors, we had three primary commitments: to grow alongside our premier contracted customers, to improve margins by driving operational excellence, and to improve cash generation through greater capital efficiency. With the year largely complete, I'm proud to say we have delivered thus far. We had an exceptional third quarter, growing our produced water volumes 2% sequentially and 6% year over year. As indicated last quarter in our outlook, we also saw a significant increase in completion activity in the third quarter, with recycled water volumes growing 25% sequentially and 16% versus the third quarter of last year.

謝謝你，比爾。當我們最初為投資者預測 2024 年時，我們做出了三項主要承諾：與我們的主要簽約客戶一起成長，透過推動卓越營運來提高利潤率，以及透過提高資本效率來改善現金產生。今年已基本結束，我很自豪地說我們迄今為止已經取得了成果。我們的第三季表現異常出色，產出水量較上季成長 2%，較去年同期成長 6%。正如我們上一季的展望所示，我們也看到第三季的完工活動顯著增加，再生水量比上一季成長 25%，與去年第三季相比成長 16%。

We continue to see consistent activity on our dedicated acreage in the core of the Permian Basin from our large long-term dedicated customers. CPI-linked revenue escalation clauses in our contracts and structural operating cost improvements completed over the last year supported third quarter operating margins of $0.45 per barrel, up 13% versus the third quarter of last year. While business mix, flowback timing and skim oil recoveries can drive small quarterly variations in margins, we've maintained our improvement in margins over the past year, resulting primarily from electrification and enhanced operational efficiencies. Accelerating volumetric growth and sustained margin strength resulted in adjusted EBITDA of $54.3 million in the third quarter, up 9% over last quarter, and up 21% year over year. In addition to operational improvements and cost reductions, our margins continue to benefit from increased skim oil recoveries.

我們繼續看到我們的大型長期專用客戶在二疊紀盆地核心的專用面積上持續進行活動。我們合約中與 CPI 相關的收入升級條款以及去年完成的結構性營運成本改善支持第三季度營運利潤達到每桶 0.45 美元，比去年第三季度增長 13%。雖然業務組合、回流時間和脫脂油回收率可能會導致利潤率出現小幅季度變化，但我們在過去一年中保持了利潤率的改善，這主要歸功於電氣化和營運效率的提高。加速的銷售成長和持續的利潤率優勢導致第三季調整後 EBITDA 達到 5,430 萬美元，比上季度增長 9%，比去年同期增長 21%。除了營運改進和成本降低之外，我們的利潤繼續受益於脫脂油回收率的提高。

We've improved our process for recovering skim oil and now believe a significant portion of the increased skim oil recoveries is sustainable over time going forward. While overall, the trend is positive, we've also seen intermittent periods of elevated skim oil recoveries, particularly related to flowback of large pads, and we believe there will continue to be some variability in recoveries quarter to quarter. Looking ahead to the rest of the year, we anticipate slightly increased activity levels from our customers, and thus, we are increasing our adjusted EBITDA range for 2024 from $208 million to $212 million. Consistent with our commitment to capital efficiency, we've outperformed our earnings while maintaining our capital guidance range for the year and are producing the resulting cash flow from our continued growth. Looking at the market, despite commodity price volatility, we see steady to moderately increasing activity levels going well into 2025.

我們改進了脫脂油回收工藝，現在相信，隨著時間的推移，脫脂油回收率的提高很大一部分是可持續的。雖然總體而言，趨勢是積極的，但我們也看到了脫脂油回收率間歇性升高的情況，特別是與大型墊的回流有關，並且我們認為每個季度的回收率仍將存在一些變化。展望今年剩餘時間，我們預計客戶的活動水準將略有增加，因此，我們將 2024 年調整後 EBITDA 範圍從 2.08 億美元增加到 2.12 億美元。與我們對資本效率的承諾相一致，我們在維持今年資本指導範圍的同時超越了我們的收益，並透過我們的持續成長產生了現金流。綜觀市場，儘管大宗商品價格波動，但我們預期 2025 年經濟活動水準將穩定至適度成長。

Our growth is driven by operations on the dedicated acreage of our large long-term contracted customers in the Northern Delaware Basin, which features some of the lowest breakevens in the Lower 48 and decades of remaining inventory. The Permian and specifically New Mexico continue to lead oil production within the United States, and based on initial forecasts received for the year, we anticipate sustained strong investment on and around our asset footprint. We will provide our full outlook for 2025 alongside fourth quarter reporting. But given the customer forecast received thus far, we anticipate growing produced water volumes next year at a pace consistent with our growth rate this year and consistent with overall oil production forecast for the Delaware Basin. Our capital investment next year will depend on the growth rate of our contracted customers as well as incremental organic growth opportunities.

我們的成長是由我們在北特拉華盆地的大型長期合約客戶的專用土地上進行的營運所推動的，該盆地的盈虧平衡點是美國48 個州最低的，而且還有數十年的剩餘庫存。二疊紀盆地，特別是新墨西哥州繼續引領美國石油生產，根據今年收到的初步預測，我們預計我們的資產足跡及其周圍的投資將持續強勁。我們將在第四季報告的同時提供 2025 年的全面展望。但鑑於迄今為止收到的客戶預測，我們預計明年采出水量的成長速度將與今年的成長率一致，並與特拉華盆地的整體石油產量預測一致。我們明年的資本投資將取決於我們簽約客戶的成長率以及增量有機成長機會。

Currently, we anticipate that we will be able to grow alongside our existing customers at a similar level of capital investment to 2024. In 2025, continued volume growth, additional margin progress and efficient capital investments will result in increased cash flow, and we're actively evaluating opportunities to reinvest in growth projects while also allocating capital to increase our shareholder returns. Beyond the cost reduction efforts we successfully implemented this year, we are reviewing opportunities to further improve margins. Looking forward, we have tailwinds from CPI revenue escalation clauses already embedded in our contracts and are pursuing further efficiencies in water handling costs, rental expenses, and labor productivity. For example, third-party landowner royalties are our largest variable operating expense, and we are now looking at opportunities to either accretively acquire surface acreage or partner with landowners to reduce these costs and provide us greater operational flexibility.

目前，我們預計我們將能夠以與 2024 年類似的資本投資水準與現有客戶共同成長。到 2025 年，持續的銷售成長、額外的利潤率成長和高效的資本投資將導致現金流增加，我們正在積極評估對成長項目進行再投資的機會，同時分配資本以增加股東回報。除了我們今年成功實施的成本削減措施之外，我們還在審查進一步提高利潤率的機會。展望未來，我們的合約中已經包含了消費物價指數 (CPI) 收入升級條款，我們將受益於此，並正在尋求進一步提高水處理成本、租賃費用和勞動生產率的效率。例如，第三方土地所有者特許權使用費是我們最大的可變營運費用，我們現在正在尋找機會增加收購地面面積或與土地所有者合作以降低這些成本並為我們提供更大的營運靈活性。

Turning to beneficial reuse. We continue to collaborate with our project partners, ConocoPhillips, ExxonMobil, Chevron, and Coterra and regulators to accelerate the use of treated produced water outside of the oil and gas industry. By year-end, Aris and its partners will have finished testing the third of three desalination technologies for the treatment of high salinity Delaware Basin produced water. The pilot projects thus far have successfully demonstrated the ability over time to lower energy consumption costs and potential capital and operating costs for the treatment of produced water. In 2025, we will be focused on increasing the scale of these promising technologies and confirming costs as we progress to commercialization.

轉向有益的再利用。我們繼續與康菲石油公司、埃克森美孚公司、雪佛龍公司、科泰拉公司等專案合作夥伴以及監管機構合作，加速在石油和天然氣行業之外使用經過處理的採出水。到年底，Aris 及其合作夥伴將完成用於處理特拉華盆地高鹽度採出水的三種海水淡化技術中的第三種技術的測試。迄今為止，試點計畫已成功證明了隨著時間的推移，降低能源消耗成本以及採出水處理的潛在資本和營運成本的能力。2025 年，我們將專注於擴大這些有前途的技術的規模，並在商業化過程中確認成本。

We are also evaluating opportunities on mineral extraction and are working on site selection for our first iodine extraction facility with a strategic partner. In addition to iodine, we're in discussions with several mineral extraction companies who specialize in magnesium, ammonia and lithium and are actively sampling and testing our produced water. We expect to have further updates to our mineral extraction efforts in 2025.

我們也正在評估礦物提取的機會，並與策略夥伴一起為我們的第一個碘提取設施選址。除了碘之外，我們還在與幾家專門生產鎂、氨和鋰的礦物開採公司進行討論，並積極對我們的採出水進行取樣和測試。我們預計 2025 年將進一步更新我們的礦物開採工作。

And with that, I'll turn it over to Steve to discuss our financial results for the quarter and details on our outlook for the fourth quarter.

接下來，我將把它交給史蒂夫討論我們本季度的財務業績以及我們對第四季度前景的詳細信息。

Thank you, Amanda. We recorded adjusted EBITDA for the third quarter of $54.3 million, up 21% from the third quarter of 2023, and up 9% sequentially from the second quarter of 2024 due to stronger produced water and recycled water volumes as well as higher skim oil recoveries. We achieved adjusted operating margin of $0.45 per barrel, up 13% from last year, but down just under $0.01 per barrel from last quarter due primarily to customer mix. While skim oil recovery and business mix can cause fluctuations quarter-to-quarter, we've demonstrated durable margin improvement over the past year due to improved operating efficiency and cost reduction initiatives.

謝謝你，阿曼達。由於採出水和循環水量增加以及脫脂油回收率提高，第三季調整後 EBITDA 為 5,430 萬美元，較 2023 年第三季成長 21%，較 2024 年第二季較上季成長 9%。我們的調整後營業利潤率為每桶 0.45 美元，比去年增長 13%，但比上季度每桶下降近 0.01 美元，這主要是由於客戶組合的原因。雖然脫脂油回收和業務組合可能會導致季度波動，但由於營運效率提高和成本削減舉措，我們在過去一年中證明了利潤率的持久改善。

Turning to CapEx, with our first half weighted capital program substantially completed, expenditures for the third quarter were $8 million, bringing CapEx for the first nine months to $83 million. We are maintaining our full year 2024 capital guidance, with expenditures for the fourth quarter expected to be between $15 million and $22 million, which puts us on track for $98 million to $105 million for the full year.

談到資本支出，隨著我們上半年加權資本計畫基本完成，第三季的支出為 800 萬美元，使前 9 個月的資本支出達到 8,300 萬美元。我們維持 2024 年全年資本指導，第四季度的支出預計在 1,500 萬美元至 2,200 萬美元之間，這使我們全年的資本支出預計將達到 9,800 萬美元至 1.05 億美元。

Looking ahead to fourth quarter volumes, we expect produced water volumes to be between 1.08 million barrels per day and 1.11 million barrels per day, and we're forecasting skin recoveries of approximately 1,550 barrels of oil per day. As Amanda mentioned, we've sustainably increased our skim oil recoveries, and our fourth quarter outlook reflects an approximately 20% increase in recoveries relative to what we guided in the third quarter.

展望第四季的產量，我們預計採出水量將在每天 108 萬桶至 111 萬桶之間，預計每天可採收約 1,550 桶石油。正如阿曼達所提到的，我們持續提高了脫脂油回收率，我們第四季的展望反映了回收率比我們第三季的指導值增加了約 20%。

In the water solutions business, we expect fourth quarter volumes to average 450,000 to 490,000 barrels per day, continuing the strong activity levels we saw on our dedicated acreage in the third quarter. For the fourth quarter, we anticipate adjusted EBITDA of $51 million to $55 million, increasing our full year guidance to $208 million to $212 million.

在水解決方案業務中，我們預計第四季度的平均產量為每天 450,000 至 490,000 桶，延續我們在第三季度專用面積上看到的強勁活動水平。對於第四季度，我們預計調整後 EBITDA 為 5,100 萬美元至 5,500 萬美元，將全年指引提高至 2.08 億美元至 2.12 億美元。

This outlook assumes fourth quarter oil prices of approximately $70 per barrel, which is down 10% from year-to-date realized prices and 2.5% to 3% above the current 2025 strip, which could offset some of the margin benefits we received from increased skim oil recoveries. With regard to our balance sheet, we ended the quarter with net debt of $422 million and a 2.0 times debt to adjusted EBITDA ratio, which is well below our leverage target of 2.5 to 3.5 times, and $325 million of available liquidity, which provides us with significant financial flexibility.

該展望假設第四季度油價約為每桶70 美元，比今年迄今實現的價格下降10%，比目前2025 年油價高出2.5% 至3%，這可能會抵消我們從增加的利潤中獲得的部分利潤收益。就我們的資產負債表而言，本季結束時，我們的淨負債為4.22 億美元，負債與調整後EBITDA 比率為2.0 倍，遠低於我們2.5 至3.5 倍的槓桿目標，以及3.25 億美元的可用流動資金，這為我們提供了具有顯著的財務靈活性。

Finally, we declared our fourth quarter dividend of $0.105 per share to be paid on December 19 to shareholders of record on December 5. Given our ample liquidity, low leverage, growing cash flow and expectations for 2025, we anticipate revisiting our dividend payout level with our Board after the fourth quarter. With that, I'll turn it over to Amanda to wrap up.

最後，我們宣布將於 12 月 19 日向 12 月 5 日登記在冊的股東支付每股 0.105 美元的第四季股利。鑑於我們充足的流動性、低槓桿、不斷增長的現金流以及對 2025 年的預期，我們預計將在第四季度後與董事會重新審視我們的股息支付水平。這樣，我將把它交給阿曼達來總結。

Thanks, Steve. In closing, we again want to thank our customers, suppliers and team for their support, hard work and consistent execution. As a result, we're proud to have exceeded our expectations thus far in 2024 and are encouraged by our outlook for the rest of the year and 2025. We remain focused on providing a safe place to work, delivering exceptional service to our customers, prudently growing the business and generating cash to both reinvest in the growth of our business and return to shareholders.

謝謝，史蒂夫。最後，我們再次感謝我們的客戶、供應商和團隊的支持、辛勤工作和一貫的執行力。因此，我們對 2024 年迄今超出了我們的預期感到自豪，並對今年剩餘時間和 2025 年的前景感到鼓舞。我們仍然專注於提供安全的工作場所，為客戶提供卓越的服務，審慎地發展業務並產生現金以對我們的業務增長進行再投資並回報股東。

We have built an incredibly strong foundation from which we will continue to grow. We're excited about our future, enhancing water sustainability in the areas in which we operate and supporting the industry with innovative, long-term water infrastructure solutions.

我們已經建立了令人難以置信的堅實基礎，我們將在此基礎上繼續發展。我們對我們的未來感到興奮，我們將加強我們營運地區的水資源永續性，並透過創新的長期水基礎設施解決方案來支持該產業。

With that, we are happy to take questions.

因此，我們很樂意回答問題。

(Operator Instructions) John Mackay, Goldman Sachs.

（操作員指令）John Mackay，高盛。

Hey, good morning. Thanks for the time. I wanted to start on just kind of the early look into '25. Pretty supportive commentary. Just wanted to maybe put a finer note on it. Are we looking at something like mid-single-digit volume growth on the produced water side? And are there -- what are the puts and takes on kind of translating that to EBITDA? Thanks.

嘿，早安。謝謝你的時間。我想開始對 25 年進行早期的調查。相當支持的評論。只是想對其進行更詳細的說明。我們是否正在考慮採出水的中位數成長？將其轉化為 EBITDA 的看跌期權和承付款項有哪些？謝謝。

Thanks, John. We are not guiding '25, and we intend to do that, obviously, when we come up with fourth quarter earnings. But as we've indicated, we believe that we're going to see a range of sort of 4% to 7% mid-single-digit growth. We've referred you to our customers and looking at what they have said about their growth. We always grow alongside our customers.

謝謝，約翰。我們不是在指導 25 年，顯然，當我們提出第四季度收益時，我們打算這樣做。但正如我們所指出的，我們相信我們將看到 4% 到 7% 的中個位數成長。我們已將您推薦給我們的客戶，並了解他們對自身成長的評價。我們始終與客戶一起成長。

And you've seen Chevron come out about reaching 1 million barrels next year. You've seen Cono come out -- Conoco come out rather and talk about 7% growth. So we really sort of refer you to our customers and their commentary at this time.

您已經看到雪佛龍明年的產量將達到 100 萬桶。你已經看到 Cono 出來了——Conoco 出來談論 7% 的增長。因此，我們此時確實建議您參考我們的客戶及其評論。

All right, that’s clear. Thanks. And maybe just a comment around the disposal royalties, could you just remind us what your position looks like right now? And if you're thinking about buying some surface acreage to complement that, just what the competitive dynamics are right now? Is it -- is there a large market for service acreage out there? Just anything you could frame up there.

好吧，這很清楚。謝謝。也許只是關於處置特許權使用費的評論，您能提醒我們您現在的情況嗎？如果您正在考慮購買一些地面面積來補充這一點，那麼現在的競爭動態是什麼？是不是──那裡的服務面積有很大的市場嗎？只要你能在那裡框起來的任何東西。

So from a royalty perspective, I think people are beginning to understand the importance of the arrangement we reached a couple of years ago with TPLT, where we became the preferred disposal partner and we had the ability to permit on their property and then drill those permits. And we needed them, which obviously helped our capital position. We did not have to build ahead of need to maintain a permit. There is a land out there. There are opportunities to own land ourselves and avoid royalties and also to continue to partner with landowners.

因此，從特許權使用費的角度來看，我認為人們開始理解我們幾年前與 TPLT 達成的安排的重要性，我們成為首選處置合作夥伴，我們有能力對其財產進行許可，然後鑽探這些許可。我們需要它們，這顯然有助於我們的資本狀況。我們不必在需要維持許可證之前建造。那裡有一塊土地。我們有機會自己擁有土地並避免特許權使用費，也可以繼續與土地所有者合作。

So I think we see both as options. We also have looked ahead. We have a long runway of permits in diverse locations that we can build as we grow our system. So we think we're in a good position. But certainly, we are looking at buying land, other opportunity to reduce our royalties as part of our cost efficiency and savings looking forward.

所以我認為我們將兩者視為選擇。我們也展望了未來。我們在不同地點擁有很長的許可證跑道，隨著我們系統的發展，我們可以建立這些許可證。所以我們認為我們處於有利位置。但當然，我們正在考慮購買土地和其他減少特許權使用費的機會，作為我們未來成本效率和節省的一部分。

Thanks. Appreciate the time.

謝謝。珍惜時間。

Thank you.

謝謝。

Jeffrey Campbell, Seaport Research Partners.

傑弗裡·坎貝爾，海港研究合作夥伴。

Good morning, Amanda, and congratulations on the strong quarter.

早安，阿曼達，恭喜季度業績強勁。

Thank you, Jeff.

謝謝你，傑夫。

I wonder if you could provide us with a regulatory update. In particular, how is disposal of produced water and surface systems progressing in Texas? And is it reasonable to assume that once approved, this would be a less costly disposal method for Aris as opposed to injecting water underground?

我想知道您能否向我們提供最新的監管資訊。特別是，德州採出水和地表系統的處理進度如何？是否可以合理地假設，一旦獲得批准，與將水注入地下相比，這對 Aris 來說將是一種成本更低的處理方法？

I thank you are referring to beneficial reuse going forward. There will always be disposal in Texas. And as we are looking at beneficial reuse as an alternative to disposal, so are our customers. When you look at the sheer volume of water that we will be handling as an industry going into the future that is generated in the Permian Basin, you will continue to see opportunities to both, to continue to develop beneficial reuse and alternatives and to look at any other method that can help with the handling of this water.

我感謝您提到未來的有益重用。德州總會有處置的。當我們正在尋找有益的再利用作為處置的替代方案時，我們的客戶也是如此。當您看到我們作為一個進入未來的行業將處理的二疊紀盆地產生的大量水時，您將繼續看到兩者的機會，繼續開發有益的再利用和替代品，並考慮任何其他有助於處理這種水的方法。

I hope that answers your question. I was not quite clear on the question.

我希望這能回答你的問題。我對這個問題不太清楚。

Well, let me try again. I'm sorry, I wasn't clear enough. There's been some discussion in Texas of allowing the disposal of produced water into surface systems, like, say, the Pecos River or maybe some lakes or something like that. And I was wondering if that's continuing to progress. And I imagine being able to put large volumes of water into Pecos River would be cheaper than having to dispose it underground but may be that's incorrect. So that was where I was trying to go.

好吧，讓我再試一次。抱歉，我說得不夠清楚。德州有一些關於允許將採出水處理到地表系統的討論，例如佩科斯河或一些湖泊或類似的系統。我想知道這是否會繼續取得進展。我認為能夠將大量的水注入佩科斯河會比將其排入地下更便宜，但這可能是不正確的。這就是我想去的地方。

Thank you for the clarification. Certainly, there are opportunities working with the regulators and applying for the appropriate permits for surface discharge into the Pecos River. That is an alternative. We are actively looking at that, as are others. And I think you will see that continue to progress over the next year.

謝謝您的澄清。當然，我們有機會與監管機構合作，申請向佩科斯河進行地表排放的適當許可證。這是一個替代方案。我們和其他人一樣正在積極關注這一點。我想你會看到明年繼續取得進展。

I think maybe to add a finer point to that. The salinity of the produced water in especially the Delaware Basin is way too high to direct inject it. So it will be required to process it in a way to clean it up and that will always leave some level of concentrated brine even if you run it through and end up with water that’s of the quality that we believe can be discharged into the surface waters.

我想也許應該對此補充一點。尤其是特拉華盆地產出水的鹽度太高，無法直接注入。因此，需要以某種方式進行處理以將其清理乾淨，即使您將其排出並最終得到的水的質量達到我們認為可以排放到的水的質量，也總會留下一定程度的濃縮鹽水。水域。

Okay. No, that was very helpful. Thank you. Another question I wanted to ask is on slide 9. I just wondered if you could expand on what Aris and JIP's financial responsibilities will be relative to the 2025 substantial capacity scale up and beneficial lease? And I'm asking that question because with the iodine, it's a royalty arrangement and they're paying the capital cost. I'm wondering if it's going to be different and what you're visualizing for 2025? Thank you

好的。不，這非常有幫助。謝謝。我想問的另一個問題在投影片 9 上。我只是想知道您是否可以詳細說明 Aris 和 JIP 相對於 2025 年大幅產能擴張和受益租賃的財務責任？我問這個問題是因為對於碘來說，這是一項特許權使用費安排，他們正在支付資本成本。我想知道 2025 年情況是否會有所不同以及您的設想是什麼？謝謝

Thank you. So as we look at 2025 and continue to work with our JIP partners and adding partners to that consortium, we are looking at identifying a specific technology, and we have an idea now which one it is. That's extremely promising from a CapEx, OpEx, and energy usage perspective, and then scaling that up. As it relates to our capital commitment in '25, it will not be material. We will continue to share costs with our partners that many of our costs as it relates to allocation of personnel is reimbursed. So -- and as it relates to the iodine project, we've talked before about not spending any capital and about doing that on a royalty basis where our partners spend the CapEx for the infrastructure related to the extraction of the mineral.

謝謝。因此，當我們展望 2025 年並繼續與 JIP 合作夥伴合作並向該聯盟增加合作夥伴時，我們正在考慮確定一項特定技術，現在我們已經知道它是哪一項了。從資本支出、營運支出和能源使用的角度來看，這是非常有前景的，然後再擴大規模。由於它與我們 25 年的資本承諾有關，因此不會產生重大影響。我們將繼續與合作夥伴分擔成本，我們的許多與人員分配相關的成本都會得到報銷。因此，由於與碘項目相關，我們之前討論過不花費任何資本，而是在特許權使用費的基礎上這樣做，我們的合作夥伴將資本支出用於與礦物開採相關的基礎設施。

Okay, great. Thanks very much.

好的，太好了。非常感謝。

Wade Suki, Capital One.

韋德·蘇基，《第一資本》。

Good morning, everyone. Appreciate for taking my question. Clearly you all remain pretty busy on the commercial front. Always appreciate the color you all provide on both organic and organic opportunities. You mentioned maybe adding customers in the basin. Presumably that's in the same zip code, but again, any kind of color you could get would be great. Thank you.

大家早安。感謝您提出我的問題。顯然你們在商業方面仍然非常忙碌。始終欣賞你們為有機和有機機會提供的色彩。您提到可能會在盆地中新增客戶。據推測，它們的郵政編碼相同，但同樣，您可以獲得的任何顏色都很棒。謝謝。

Thank you, Wade. Yes, we continue to be very active on the commercial front. We have great individuals; we've talked about them before on the commercial team who work actively with our existing customers as they continue to grow alongside them as they expand on their acreage as well as working with potential new customers as they begin to move into manufacturing mode on their acreage. We have been working with some customers and anticipate signing some contracts in the future, and we will continue to do so. So yes, Wade, we continue to see a pretty robust market out there to grow with our great customers and new customers that are expanding their operations.

謝謝你，韋德。是的，我們在商業方面繼續非常活躍。我們有優秀的個人；我們之前在商業團隊中討論過他們，他們積極與我們現有的客戶合作，隨著他們擴大種植面積，與他們一起成長，並與潛在的新客戶合作，當他們開始進入他們的種植模式的製造模式。我們一直在與一些客戶合作，預計將來會簽署一些合同，我們將繼續這樣做。所以，是的，韋德，我們繼續看到一個相當強勁的市場，隨著我們的大客戶和正在擴大業務的新客戶的成長。

Fantastic. And then just kind of switching to inorganic. Anything you can sort of share with us on expectations out there, buyer, seller expectations, bid-ask spread? Have we seen that narrow at all? Or has it been pretty sticky since the last update?

極好的。然後就轉向無機。您可以與我們分享一些關於市場預期、買家、賣家預期、買賣價差的資訊嗎？我們看過那麼狹窄嗎？或者自上次更新以來它已經很黏了？

That's a great question. We're always hopeful that we've been very disciplined. Bill, why don't you take that?

這是一個很好的問題。我們總是希望我們一直都非常自律。比爾，你為什麼不接受這個？

It's hard to say whether they've gotten any narrower on the bid-ask spreads. They certainly haven't met yet so.

很難說他們的買賣價差是否縮小。他們肯定還沒見過面。

I mean, we continue to look as we've talked about, Wade, but we're looking for projects where it's accretive, where they're strategic, where we can do more with the assets and they're great asset and contract quality. So we continue to look and hope that we will be able to find an asset that meets our criteria.

我的意思是，我們繼續像我們討論過的那樣尋找，韋德，但我們正在尋找具有增值性、具有戰略性、我們可以利用資產做更多事情的項目，並且它們具有出色的資產和合同質量。因此，我們繼續尋找並希望能夠找到符合我們標準的資產。

And I'd add that we are very comfortable with the current contracts we have, the ones that we're pursuing aggressively, and comfortable with the state of our assets, how we built them and how we're maintaining them. And so I think we have set our own standard and have yet to find anything that fits that as we said in the remarks, both on a financial perspective as well as an asset and contract quality perspective.

我想補充一點，我們對現有的合同非常滿意，我們正在積極追求這些合同，並且對我們的資產狀況、我們如何構建它們以及我們如何維護它們感到滿意。因此，我認為我們已經制定了自己的標準，但尚未找到任何符合我們在評論中所說的標準，無論是從財務角度還是從資產和合約品質角度來看。

Understood. Thank you so much. Appreciate it.

明白了。太感謝了。欣賞它。

Thanks, Wade

謝謝，韋德

Praneeth Satish, Wells Fargo.

普拉尼思‧薩蒂什，富國銀行。

Thanks. Good morning, all. Does the mid-single-digit growth outlook for produced water in 2025 that you provided, does that assume the addition of some of the new customers that you just referenced that you're in discussions or talking to? Or is that just based on your existing customer base and the growth plans that they provided to you at this point?

謝謝。大家早安。您提供的 2025 年採出水的中個位數成長前景是否假設您剛剛提到的正在討論或交談的一些新客戶的增加？或者這只是基於您現有的客戶群以及他們此時向您提供的成長計劃？

Yes, Praneeth, good morning. Thanks for the question. And as Amanda said, we're not providing 2025 guidance at this point. And in fact, we don't have full year forecast for most of our customers in detail. But at this point, this is for existing customers, existing contracts what we do have visibility on into the first part of the year and expectations for (technical difficulty).

是的，普拉尼斯，早安。謝謝你的提問。正如阿曼達所說，我們目前不提供 2025 年指導。事實上，我們並沒有為大多數客戶提供詳細的全年預測。但目前，這是針對現有客戶、現有合同，我們對今年上半年的情況以及預期的了解（技術難度）。

Got it. No, that's helpful. And then maybe just touching on the dividend. It sounds like you're going to have discussions with the Board later this year in terms of how to think about the growth next year. Are you just -- in terms of the framework of how we should think about it, are you kind of considering dividend growth in line with organic EBITDA growth? Or might you pursue a more significant step up or step change given the current payout level and low leverage?

知道了。不，這很有幫助。然後也許只是談談股息。聽起來您將在今年稍後與董事會討論如何考慮明年的成長。就我們應該如何思考的框架而言，您是否認為股息成長與有機 EBITDA 成長一致？或者考慮到當前的支付水準和低槓桿率，您可能會尋求更大幅度的提升或改變？

Yeah, that's a great question. And we do remain consistent in our approach to capital allocation that we've laid out in the past. And what we want to do is increase shareholder returns in a consistent sustainable manner over time. As we did indicate in the prepared remarks, we do expect some additional color on that in Q1. I expect there'll be some dividend growth. I don't expect a step change that's going to put us out of line with the growth of the business. So we're looking at long-term sustainable growth.

是的，這是一個很好的問題。我們過去製定的資本配置方法確實保持一致。我們想要做的是隨著時間的推移以一致且可持續的方式增加股東回報。正如我們在準備好的評論中指出的那樣，我們確實預計第一季會出現一些額外的變化。我預計股息將會有所增長。我預計一步的改變不會讓我們與業務的成長脫節。因此，我們著眼於長期可持續成長。

Got it. Thank you.

知道了。謝謝。

Jeremy Tonet, JPMorgan.

傑里米·託內特，摩根大通。

Hey, this is Noah Katz on for Jeremy. First, I wanted to touch on your capital allocation priorities heading into 2025. Now that Aris has lowered below the 2.5 to 3.5 target at 2 times currently. How would you guys stack rank, accretive M&A opportunities or the potential dividend raise you're speaking of and repurchases going forward? Thanks.

嘿，這是傑里米的諾亞·卡茨。首先，我想談談你們到 2025 年的資本配置優先事項。現在Aris目前已兩次下調至2.5至3.5目標以下。你們如何看待排名、增值併購機會或你們所說的潛在股息增加以及未來的回購？謝謝。

Noah, thank you for the question. As I said, we remain consistent in the capital allocation framework that we've laid out. And we've touched on M&A. We would like to look at attractive fees opportunities where they meet our criteria, but we haven't found those as of this time. We have considered a share repurchase program, but given the limited float that we have, we decided to pass on that at this time.

諾亞，謝謝你的提問。正如我所說，我們在製定的資本配置框架上保持一致。我們已經談到了併購。我們希望尋找符合我們標準的有吸引力的收費機會，但目前我們還沒有找到這些機會。我們已經考慮過股票回購計劃，但鑑於我們的流通量有限，我們決定此時放棄該計劃。

That is something that we'll continue to evaluate. And as we also indicated, there are some additional growth projects that we're looking at for new customers. But I think you should expect us to be consistent more the same what we've delivered.

我們將繼續評估這一點。正如我們還指出的那樣，我們正在為新客戶尋找一些額外的成長項目。但我認為您應該期望我們能夠與我們所交付的內容更加一致。

Sounds good. Thanks for that. And then as a quick follow-up, can you guys speak to the potential you see for the desalination and mineral extraction projects? Should we expect any other projects coming up the pipeline like these? Thanks.

聽起來不錯。謝謝你。然後，作為快速跟進，你們能談談你們看到的海水淡化和礦物開採項目的潛力嗎？我們是否應該期待其他類似的項目即將推出？謝謝。

Thanks, Noah. What we have consistently emphasized is that we are very focused on our core business, and that is important for everybody to have comfort in that fact. We are continuing to look at the future for beneficial reuse. We think that we will finish out the project next year. We will begin to scale up.

謝謝，諾亞。我們一直強調的是，我們非常專注於我們的核心業務，這對每個人來說都很重要。我們將繼續著眼於未來的有益再利用。我們認為我們將在明年完成該項目。我們將開始擴大規模。

And I think it is very promising. But we are not planning on -- at this time on additional projects coming in that are other than the projects we've been discussing. We are looking at industrial water. We have developed tremendous capability and expertise and a thousand patents in the treatment of complex water. So we are exploring opportunities in the industrial sector. But again, most of our attention is our core business and making sure that we perform.

我認為這是非常有前途的。但我們目前沒有計劃進行除我們一直在討論的項目之外的其他項目。我們正在關注工業用水。我們在複雜水處理方面擁有強大的能力和專業知識以及一千項專利。因此，我們正在探索工業領域的機會。但同樣，我們最關注的是我們的核心業務並確保我們的表現。

Thank you.

謝謝。

Charles Bryant, Citi.

花旗銀行的查爾斯·布萊恩特。

Hi, just one from me. There were some news headlines around the new setback rule in New Mexico that could come into play. I know this can pop up from time to time, and it sounds like maybe not much to do around it, at least for now. But curious how you think about the potential impact there if something like that does come into play?

嗨，只有我一個。有關新墨西哥州新的挫折規則的一些新聞頭條可能會發揮作用。我知道這種情況會時不時地出現，而且聽起來似乎沒什麼好做的，至少目前是這樣。但好奇的是，如果類似的事情確實發生，您如何看待潛在的影響？

New Mexico did raise the idea of legislating setbacks. A lot of our customers looked at that and have actually gone out and permitted and have adjusted some drill and rig schedules in making sure that if there were going to be impacts that they were appropriately positioned. So we do not see an impact on our business, and it will be interesting to see how that legislation moves forward this next session.

新墨西哥州確實提出了立法受挫的想法。我們的許多客戶都看到了這一點，並且實際上已經出去並允許並調整了一些鑽探和鑽機時間表，以確保如果發生影響，他們會被適當定位。因此，我們認為這不會對我們的業務產生影響，並且看看該立法如何在下屆會議上取得進展將會很有趣。

Okay, understood. That's all had. Thanks for the time.

好的，明白了。這就是全部了。謝謝你的時間。

Thank you.

謝謝。

Sean Mitchell, Daniel Energy Partners.

肖恩·米切爾，丹尼爾能源合夥人。

Good morning and thanks for taking my question. Happy Election Day.

早安，感謝您提出我的問題。選舉日快樂。

Thank you.

謝謝。

You guys talked in the opening comments about improving skim oil recoveries. Amanda, can you provide more color around what you've done to improve that process? It seems like a pretty nice increase, and it looks like that's going to kind of included in your guidance going forward.

你們在開場評論中談到了提高脫脂油回收率。阿曼達，您能為改善流程所做的工作提供更多資訊嗎？這似乎是一個相當不錯的成長，而且看起來這將包含在您未來的指導中。

Certainly, what we have done is allocate a team that is dedicated to doing nothing else in the field, but skim oil recovery. So it really has been a function of focus. And going out into the field, we have made operational changes that I think it's really the allocation of people. But in addition, we have seen some increase in skim that is coming through in the water. So I think it's a combination.

當然，我們所做的就是分配一個團隊，專門在該領域做其他事情，除了脫脂油回收之外。所以它確實是焦點的函數。進入實地後，我們進行了營運方面的改變，我認為這實際上是人員的分配。但除此之外，我們也發現水中的脫脂物增加。所以我認為這是一個組合。

Okay, thanks for that. And if you're coming out for the barbecue, bring your coat. Its 42 degrees.

好的，謝謝。如果您要出去燒烤，請帶上外套。42度。

As long as it's not raining.

只要不下雨。

You're missing the rain in Houston this morning, Sean.

肖恩，你錯過了休斯頓今天早上的雨。

Thanks, Sean.

謝謝，肖恩。

Yep. See you guys tomorrow, probably.

是的。大概明天見吧。

Thanks.

謝謝。

Thank you. As there are no further questions, I would now hand the conference over to Amanda Brock for her closing comments. Amanda?

謝謝。由於沒有其他問題了，我現在將會議交給阿曼達·布洛克 (Amanda Brock) 聽取她的結束語。阿曼達？

Thank you. So I want to again thank our customers, suppliers and very importantly, our team that continues to execute extremely well. We're growing. We've improved our margins, which improved cash generation. Our balance sheet is in great shape. We feel good through year-end is setting us up well for '25 and beyond. So thank you all, and we look forward to talking to you shortly.

謝謝。因此，我想再次感謝我們的客戶、供應商，更重要的是，感謝我們繼續出色執行的團隊。我們正在成長。我們提高了利潤率，從而改善了現金產生。我們的資產負債表狀況良好。我們在年底感覺良好，這為我們 25 年及以後做好準備。謝謝大家，我們期待很快與您交談。

Thank you. The conference of Aris Water Solutions has now concluded. Thank you for your participation. You may now disconnect your lines.

謝謝。Aris Water Solutions 會議現已結束。感謝您的參與。現在您可以斷開線路。