GICS Sector : Utilities
Aris Water Solutions, Inc., an environmental infrastructure and solutions company, provides water handling and recycling solutions.The company's produced water handling business gathers, transports, unless recycled, and handles produced water generated from oil and natural gas production.Its water solutions business develops and operates recycling facilities to treat, store, and recycle produced water.
Aris Water Solutions reported a robust first quarter for 2025, with adjusted EBITDA reaching a record $56.5 million, marking a 4% sequential increase and a 6% year-over-year improvement. The company's adjusted operating margin stood at $0.44 per barrel, reflecting strong cost efficiency despite commodity price uncertainty. Volumes in Produced Water Handling and Water Solutions segments saw a 7% sequential growth, driven by higher completion activity and sustained takeaway demand. Stephen Tompsett, CFO, highlighted that the current WTI price strip presents a $6-$8 million headwind, but robust volumes and CPI-linked revenue escalation are offsetting this impact.
Publication Date: May -08
The company demonstrated operational resilience, with volumes in the Northern Delaware Basin remaining stable. Bill Zartler, Founder and Executive Chairman, noted that long-term contracts and significant acreage dedication provide a solid foundation. The integration of McNeill Ranch is exceeding expectations, with 330,000 barrels of permitted disposal capacity and growing interest for monetization. The company is advancing beneficial reuse efforts and exploring opportunities in industrial water treatment and mineral extraction, including a planned iodine facility in 2026.
For Q2 2025, Aris provided volume guidance of 1.2-1.25 million barrels per day for Produced Water and 475,000-525,000 barrels per day for Water Solutions. Adjusted operating margin is expected to be $0.41-$0.43 per barrel. Capital expenditures were $21 million in Q1, down 44% year-over-year, reflecting disciplined capital allocation. The company emphasized flexibility in reducing capital spending by 25%-30% if needed, focusing on sustaining capital and dynamic adjustments based on customer activity.
With a P/E ratio of 23.62 and an EV/EBITDA of 8.99, the stock appears to be pricing in the company's strong operational performance and growth potential. The company's net debt-to-EBITDA ratio of 2.32 underscores its balanced approach to leverage. Aris maintained its commitment to shareholder value, declaring a $0.14 dividend and prioritizing annual dividend growth. The company's strong free cash flow yield of 6.36% further supports its attractive total return profile.
Aris is well-positioned to navigate potential disruptions and capture opportunities during volatility. The company's focus on cost efficiency, disciplined capital investment, and strategic growth initiatives positions it for long-term success. With a strong balance sheet and a resilient customer base, including major operators like Chevron and Conoco, Aris is poised to maintain its competitive standing in the water midstream sector.
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Aris Water Solutions' 8.5% growth in Produced Water Handling is driven by increasing oil production, rising water-to-oil ratios, and growing environmental regulations. Additionally, the shift towards sustainable water management practices, advancements in water recycling technologies, and strategic acquisitions are contributing to the segment's growth.
Aris Water Solutions' Produced Water Handling affiliate growth is driven by increasing oil production, rising water-to-oil ratios, and stringent environmental regulations. Additionally, the affiliate's expertise in water treatment and recycling, as well as its strategic partnerships, contribute to its 8.4% growth. Furthermore, the growing demand for sustainable and cost-effective water management solutions in the energy sector also fuels this growth.
Aris Water Solutions' 8.5% growth is driven by increasing demand for water conservation and efficiency solutions, stringent regulations on water usage, and growing adoption of digital water management technologies. Additionally, the company's focus on innovative products and services, such as water recycling and reuse, and its expanding presence in the industrial and municipal markets, contribute to its rapid growth.
Aris Water Solutions' affiliate, Water Solutions, drives 8.38% growth through increasing demand for water treatment and recycling services, expansion into new markets, and strategic partnerships. Additionally, growing concerns over water scarcity and environmental regulations fuel growth, as industries seek sustainable water management solutions.
Aris Water Solutions' 8.37% growth is driven by increasing demand for water management solutions in the oil and gas industry, coupled with the company's strategic acquisitions and expansion into new markets. Additionally, growing environmental concerns and regulations are boosting adoption of water recycling and reuse technologies, further fueling growth.
Aris Water Solutions, Inc. provides water midstream services, which include water gathering, treatment, and disposal. This service enables oil and gas operators to focus on their core business while outsourcing water management to Aris.
Aris offers water treatment and recycling services, which involve the removal of contaminants and impurities from produced water, allowing it to be reused in oil and gas operations or safely discharged into the environment.
Aris provides water infrastructure and logistics services, including the design, construction, and operation of water pipelines, storage facilities, and disposal wells.
Aris offers data analytics and consulting services, which provide oil and gas operators with insights and recommendations to optimize their water management operations and reduce costs.
Aris Water Solutions, Inc. faces moderate threat from substitutes due to the availability of alternative water treatment technologies.
The bargaining power of customers is low due to the specialized nature of Aris Water Solutions, Inc.'s products and services.
The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but Aris Water Solutions, Inc.'s dependence on a few key suppliers.
The threat of new entrants is high due to the growing demand for water treatment solutions and the relatively low barriers to entry in the industry.
The intensity of rivalry is high due to the presence of several established players in the market, leading to a competitive landscape.
| Value | |
|---|---|
| Debt Weight | 56.98% |
| Debt Cost | 8.00% |
| Equity Weight | 43.02% |
| Equity Cost | 12.18% |
| WACC | 9.80% |
| Leverage | 132.43% |
Value: 6.0
Growth: 8.6
Quality: 4.7
Yield: 5.0
Momentum: 8.5
Volatility: 3.3
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Value: 6.2
Growth: 4.7
Quality: 5.3
Yield: 7.0
Momentum: 2.0
Volatility: 9.3
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Value: 6.4
Growth: 5.6
Quality: 6.9
Yield: 4.0
Momentum: 3.5
Volatility: 6.7
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Value: 2.9
Growth: 6.3
Quality: 8.2
Yield: 0.0
Momentum: 5.5
Volatility: 7.3
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Value: 3.7
Growth: 5.7
Quality: 6.4
Yield: 4.0
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Volatility: 7.7
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Value: 4.0
Growth: 4.8
Quality: 6.6
Yield: 4.0
Momentum: 2.0
Volatility: 7.7
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