806000P13Y02779765827797207355605135560518788508063506651100665110000001865187--12-312021Q3false100010001000100010001000100010000001865187us-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:OverAllotmentOptionMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:OverAllotmentOptionMember2021-10-222021-10-220001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:OverAllotmentOptionMember2021-10-212021-10-2100018651872021-05-262021-05-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassBMemberus-gaap:SubsequentEventMember2021-10-262021-10-260001865187us-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2021-10-262021-10-260001865187aris:EquityIncentivePlan2021Memberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsAffiliatesMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingAffiliatesMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsAffiliatesMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingAffiliatesMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsAffiliatesMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingAffiliatesMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterSolutionsAffiliatesMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ProducedWaterHandlingAffiliatesMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:GeneralAndAdministrativeExpenseMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:GeneralAndAdministrativeExpenseMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:GeneralAndAdministrativeExpenseMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:GeneralAndAdministrativeExpenseMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2021-04-012021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2021-01-012021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:SubsequentEventMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:PurchaseCommitmentsMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-01-012020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-01-012020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-01-012020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-01-012020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:LetterOfCreditMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:LetterOfCreditMember2020-12-3100018651872021-10-012021-10-010001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:GeneralAndAdministrativeExpenseMemberaris:BlancoAviationLlcMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SolarisEnergyCapitalllcMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SolarisEnergyCapitalllcMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterGatheringAndHandlingAgreementMemberaris:ConchoResourcesincMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterGatheringAndHandlingAgreementMemberaris:ConchoResourcesincMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassBMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:DebtInstrumentRedemptionOnChangeOfControlMemberaris:SeniorSustainabilityLinkedBondsMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMembersrt:MaximumMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:DebtInstrumentConditionalRedemptionWithNetCashProceedsFromEquityOfferingsMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMembersrt:MaximumMemberaris:SeniorSustainabilityLinkedBondsMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMember2021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConocoPhillipsMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:OxyUsaMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:OxyUsaMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConocoPhillipsMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConocoPhillipsMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:XtoEnergyIncMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:OxyUsaMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConocoPhillipsMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:XtoEnergyIncMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:OxyUsaMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConocoPhillipsMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2019-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2019-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2019-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2019-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-12-310001865187us-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-210001865187us-gaap:CapitalUnitClassBMember2021-10-160001865187us-gaap:CapitalUnitClassAMember2021-10-1600018651872021-05-3100018651872020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMemberus-gaap:WellsAndRelatedEquipmentAndFacilitiesMember2020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMemberus-gaap:PipelinesMember2020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMember2020-06-112020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMember2020-01-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMemberus-gaap:CapitalUnitClassAMember2020-06-112020-06-1100018651872021-05-262021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2019-12-3100018651872021-09-3000018651872021-06-300001865187us-gaap:CapitalUnitClassAMember2021-01-012021-09-300001865187us-gaap:CapitalUnitClassBMember2021-11-010001865187us-gaap:CapitalUnitClassAMember2021-11-0100018651872021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMemberus-gaap:CapitalUnitClassAMember2020-11-092020-11-090001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2020-06-112020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoResourcesincMember2020-11-092020-11-090001865187us-gaap:SubsequentEventMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterGatheringAndHandlingAgreementMemberaris:ConchoResourcesincMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:AdministrativeServicesArrangementMemberaris:SolarisEnergyManagementLlcMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SolarisEnergyManagementLlcMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:WellsAndRelatedEquipmentAndFacilitiesMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:VehiclesMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:PipelinesMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:OfficeEquipmentMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:LandMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterPondsMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ComputerAndOtherEquipmentMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:WellsAndRelatedEquipmentAndFacilitiesMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:VehiclesMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:PipelinesMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:OfficeEquipmentMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:LandMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:WaterPondsMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ComputerAndOtherEquipmentMember2020-12-310001865187us-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-04-012021-04-010001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SurfaceUseAndCompensationMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:OperatingLeasesMember2021-09-3000018651872021-10-1600018651872021-05-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CommonClassAMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-212021-10-210001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:SubsequentEventMemberus-gaap:IPOMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcMemberus-gaap:SubsequentEventMember2021-10-262021-10-260001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-04-012020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassCMember2020-01-012020-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-04-012021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-04-012021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-04-012021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-04-012021-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2021-01-012021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2021-01-012021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2021-01-012021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-01-012021-03-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassBMember2020-04-012020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:CapitalUnitClassAMember2020-04-012020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:CapitalUnitClassDMember2020-04-012020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-04-012020-06-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:SeniorSustainabilityLinkedBondsMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMembersrt:MinimumMemberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:DebtInstrumentLeverageRatioCovenantTestLevelThereafterMemberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:DebtInstrumentLeverageRatioCovenantTestLevelForThirdQuarterOf2021Memberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:DebtInstrumentLeverageRatioCovenantTestLevelForFirstTwoQuartersOf2021Memberus-gaap:RevolvingCreditFacilityMember2021-04-012021-04-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMember2020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMemberaris:ConchoLeaCountyAcquisitionMemberaris:RedeemablePreferredUnitsMember2020-06-112020-06-110001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-12-310001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-07-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2021-01-012021-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-07-012020-09-300001865187aris:SolarisMidstreamHoldingsLlcAndSubsidiariesMember2020-01-012020-09-30iso4217:USDxbrli:purexbrli:sharesaris:classaris:Voteiso4217:USDxbrli:sharesaris:segment

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-40955

Logo, company name

Description automatically generated

Aris Water Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware

87-1022110

(State or other jurisdiction of incorporation or organization

(I.R.S. Employer Identification No.)

9811 Katy Freeway, Suite 700

Houston, Texas

77024

(Address of principal executive offices)

(Zip Code)

281-501-3070

Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 par value per share

ARIS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No *

* The registrant has not been subject to the filing requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the past 90 days as it became subject to such requirements on October 21, 2021 in connection with its initial public offering, but the registrant has filed all such required reports since such time.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Accelerated filer

Large accelerated filer

Smaller reporting company

Non-accelerated filer

Emerging growth company

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of November 1, 2021, the registrant had 20,297,500 shares of Class A common stock, $0.01 par value per share, and 33,202,500 shares of Class B common stock, $0.01 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Cautionary Note Regarding Forward Looking Statements

3

Item 1. Financial Statements (unaudited)

5

Aris Water Solutions, Inc.

5

Balance Sheet

5

Notes to Balance Sheet

6

Solaris Midstream Holdings, LLC and Subsidiaries

9

Condensed Consolidated Balance Sheets

9

Condensed Consolidated Statements of Operations

10

Condensed Consolidated Statements of Cash Flows

11

Condensed Consolidated Statements of Members Equity

12

Notes to Condensed Consolidated Financial Statements

13

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

Item 3. Quantitative and Qualitative Disclosures about Market Risk

44

Item 4. Controls and Procedures

45

PART II. OTHER INFORMATION

45

Item 1. Legal Proceedings

45

Item 1A. Risk Factors

46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3. Defaults upon Senior Securities

46

Item 4. Mine Safety Disclosures

47

Item 5. Other Information

47

Item 6. Exhibits

48

Signatures

50

2

Table of Contents

Introductory Note Regarding Definitions

The registrant, Aris Water Solutions, Inc. (“Aris”), was incorporated on May 26, 2021 as a Delaware corporation. Aris was formed to serve as the issuer in an initial public offering of equity, which was completed on October 26, 2021. Concurrent with the completion of the initial public offering, Aris became the new parent holding company of Solaris Midstream Holdings, LLC, a Delaware limited liability company. Except as otherwise indicated or required by the context, all references to “Solaris,” the “Company,” “we,” “our,” and “us” or similar terms refer to (i) Solaris Midstream Holdings, LLC (“Solaris LLC”) and its consolidated subsidiaries before the completion of the corporate reorganization in connection with the initial public offering and (ii) Aris and its consolidated subsidiaries as of the completion of the corporate reorganization and thereafter.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10Q (the “Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including, without limitation, statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “guidance,” “preliminary,” “project,” “estimate,” “expect,” “continue,” “intend,” “plan,” “believe,” “forecast,” “future,” “potential,” “may,” “possible,” “could” and variations of such words or similar expressions.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report, including, but not limited to, the following:

the severity and duration of global adverse health events, including the novel coronavirus (“COVID-19”) pandemic, which has caused reduced demand for oil and natural gas, economic slowdowns, governmental actions, stay-at-home orders, and interruptions to our operations or our exploration and our production (“E&P”) customers’ operations;
operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions;
the potential deterioration of our customers’ financial condition, including defaults resulting from actual or potential insolvencies;
the level of capital spending and development by oil and gas companies, including significant recent reductions and potential additional reductions in capital expenditures by oil and gas producers in response to lower commodity prices and dramatically reduced demand;
the impact of current and future laws, rulings and federal and state governmental regulations, including those related to hydraulic fracturing, accessing water, handling of produced water, carbon pricing, taxation of emissions, seismic activity, drilling and right-of-way access on federal lands and various other matters;
the degree to which consolidation among our customers may affect spending on U.S. drilling and completions in the near-term;
our reliance on a limited number of customers and a particular region for substantially all of our revenues;
our ability to successfully implement our business plan;

3

Table of Contents

regional impacts to our business, including our infrastructure assets within the Delaware Basin and Midland Basin formations of the Permian Basin;
our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms;
our ability to renew or replace expiring contracts on acceptable terms;
our ability to comply with covenants contained in our debt instruments;
changes in general economic conditions and commodity prices;
our customers’ ability to complete and produce new wells;
risks related to acquisitions and organic growth projects, including our ability to realize their expected benefits;
capacity constraints on regional oil, natural gas and water gathering, processing and pipeline systems that result in a slowdown or delay in drilling and completion activity, and thus a slowdown or delay in the demand for our services;
our ability to retain key management and employees and to hire and retain skilled labor;
our health, safety and environmental performance;
the impact of competition on our operations;
the degree to which our E&P customers may elect to operate their water-management services in-house rather than outsource these services to companies like us;
delays or restrictions in obtaining, utilizing or maintaining permits by us or our customers;
constraints in supply or availability of equipment used in our business;
advances in technologies or practices that reduce the amount of water used or produced in the oil and gas production process, thereby reducing demand for our services;
changes in global political or economic conditions, both generally, and in the specific markets we serve;
physical, electronic and cybersecurity breaches;
accidents, weather, seasonality or other events affecting our business;
changes in tax laws, regulations or policies;
the effects of litigation; and
plans, objectives, expectations and intentions contained in this report that are not historical.

Many of the factors that will determine our future results are beyond the ability of management to control or predict. Should one or more of the risks or uncertainties described in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

4

Table of Contents

PART 1 FINANCIAL INFORMATION

Item 1. Financial Statements

Aris Water Solutions, Inc.

Balance Sheet

(unaudited)

(in whole dollars)

    

September 30, 2021

June 30, 2021

Assets

$

$

Total Assets

$

$

Liabilities and Stockholder’s Equity

Total Liabilities

$

$

Commitments and Contingencies

$

$

Stockholder's Equity:

Receivable from Solaris Midstream Holdings, LLC

$

(10)

$

(10)

Common Stock, $0.01 Par Value; 1,000 Shares Authorized, Issued, and Outstanding at September 30 and June 30, 2021

$

10

$

10

Total Stockholder’s Equity

$

$

Total Liabilities & Stockholder’s Equity

$

$

The accompanying notes are an integral part of these balance sheets

5

Table of Contents

Aris Water Solutions, Inc.

Notes to Balance Sheet

(Unaudited)

1.Organization and Background of Business

Aris Water Solutions, Inc. (“Aris”), was incorporated on May 26, 2021 as a Delaware corporation.

Aris was formed to serve as the issuer in an initial public offering of equity (“IPO” or the “Offering”). Concurrent with the completion of the IPO, Aris became the new parent holding company of Solaris Midstream Holdings, LLC, a Delaware limited liability company (“Solaris LLC”).

As described in more detail in Note 4 – Subsequent Events, on October 26, 2021, Aris completed the Offering of 20,297,500 shares of its Class A common stock, par value $0.01 per share (“Class A common stock”), which includes 2,647,500 shares of Class A common stock issued and sold pursuant to the underwriters’ exercise of their option in full to purchase additional shares of Class A common stock, at a price to the public of $13.00 per share ($12.22 net of underwriting discounts and commissions). After deducting underwriting discounts and commissions and offering expenses payable by Aris, Aris received net proceeds of approximately $246.1 million. Aris contributed all of the net proceeds of the IPO received to Solaris LLC in exchange for Solaris LLC Units. Solaris LLC distributed approximately $213.3 million of the net proceeds to the existing owners of Solaris LLC and retained the remaining $32.8 million of the net proceeds for general corporate purposes, which may include capital expenditures, working capital and potential acquisitions and strategic transactions.

Aris is a holding company and its principal asset is a membership interest in Solaris LLC. As the managing member of Solaris LLC, Aris operates and controls all of the business and affairs of Solaris LLC, and through Solaris LLC and its subsidiaries, conducts its business. As a result, beginning in the fourth quarter of 2021, Aris will consolidate the financial results of Solaris LLC and report noncontrolling interest related to the portion of Solaris LLC Units not owned by Aris, which will reduce net income attributable to Aris’ Class A common stockholders.

As a company with less than $1.07 billion in revenue during our last fiscal year, Aris qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption is required for private companies.

2.Summary of Significant Accounting Policies

Basis of Presentation

The balance sheet has been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Separate Statements of Operations, Changes in Stockholder’s Equity and Statements of Cash Flows have not been presented because we have not had any business transactions or activities since May 26, 2021, other than our initial capitalization, which was funded by an affiliate. In this regard, we have determined that general and administrative costs associated with the formation and daily management of Aris is not significant.

6

Table of Contents

Estimates

The preparation of the balance sheet, in accordance with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the balance sheet and accompanying notes. Actual results could differ from those estimates.

Income Taxes

Aris is a corporation and is subject to U.S. federal and state income taxes. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and income tax basis of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards, using enacted tax rates in effect for the taxing jurisdiction in which we operate for the year in which those temporary differences are expected to be recovered or settled. As of September 30, 2021 and June 30, 2021, there are no income tax related balances reflected in our balance sheets.

3.Stockholders’ Equity

As of September 30, 2021, Aris had an authorized share capital of 1,000 common shares with a $0.01 par value. On May 26, 2021, all 1,000 shares were issued and acquired by an affiliate for consideration of a $10.00 note receivable from that affiliate. Each share has one voting right.

On October 16, 2021, Aris’ certificate of incorporation was amended and restated under which Aris is authorized to issue up to 830,000,000 shares of stock, classified as follows:

50,000,000 shares of preferred stock, par value of $0.01 per share
600,000,000 shares of Class A common stock, par value $0.01 per share, and
180,000,000 shares of Class B common stock, par value $0.01 per share.

The Class A common stock and Class B common stock each provide holders with one vote on all matters submitted to a vote of stockholders.

4.Subsequent Events

Initial Public Offering

On October 26, 2021, we closed the Offering of 20,297,500 shares of Class A common stock (including 2,647,500 shares of Class A common stock issued and sold pursuant to the underwriters’ exercise of their option in full to purchase additional shares of Class A common stock), at a price to the public of $13.00 per share ($12.22 per share net of underwriting discounts and commissions), resulting in gross proceeds of $263.9 million, or net proceeds of $246.1 million after deducting underwriting discounts and commissions pursuant to the Offering.

We contributed all the net proceeds of the IPO, including the net proceeds from the underwriters’ exercise of their option in full to purchase additional shares of Class A common stock, to Solaris LLC in exchange for 20,297,500 units of Solaris LLC.

Equity Incentive Plan

Effective October 26, 2021, our Board of Directors adopted the Aris Water Solutions, Inc. 2021 Equity Incentive Plan. The 2021 Plan will allow for the grant of stock options, both incentive stock options and “non-qualified” stock options; stock appreciation rights, restricted stock and restricted stock units; incentive bonuses, which may be paid in cash, stock, or a combination thereof; and other stock-based awards. A total of 5,350,000 shares of Class A common stock are issuable under our 2021 Equity Incentive Plan.

7

Table of Contents

Tax Receivable Agreement

On October 26, 2021, in connection with the initial public offering, we entered into a Tax Receivable Agreement (“TRA”) with the existing owners of Solaris LLC. The TRA generally provides that we pay 85% of the net cash savings, if any, in U.S. federal, state and local income tax and franchise tax that we realize from certain increases in tax basis that occur as a result of our acquisition of the existing owners’ tax attributes. Additionally, the TRA contains terms that in the event we experience a change of control or there is an early termination under the TRA, we could be required to make an immediate payment to the existing owners.

8

Table of Contents

Solaris Midstream Holdings, LLC and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except units)

    

September 30, 

    

December 31, 

2021

2020

Assets

Cash and Cash Equivalents

$

36,389

$

24,932

Accounts Receivable, Net

32,576

21,561

Accounts Receivable from Affiliate

21,584

11,538

Other Receivables

3,649

3,722

Prepaids, Deposits and Other Current Assets

1,349

4,315

Total Current Assets

95,547

66,068

Fixed Assets

Property, Plant and Equipment

692,231

661,446

Accumulated Depreciation

(60,757)

(43,258)

Total Property, Plant and Equipment, Net

631,474

618,188

Intangible Assets, Net

313,081

337,535

Goodwill

34,585

34,585

Other Assets

2,848

1,429

Total Assets

$

1,077,535

$

1,057,805

Liabilities, Mezzanine and Members' Equity

Accounts Payable

$

10,067

$

16,067

Payables to Affiliate

1,169

1,884

Accrued and Other Current Liabilities

46,774

27,838

Total Current Liabilities

58,010

45,789

Deferred Revenue and Other Long-Term Liabilities

1,336

1,432

Long-Term Debt, Net of Debt Issuance Costs

391,583

297,000

Asset Retirement Obligation

6,032

5,291

Total Liabilities

456,961

349,512

Commitments and Contingencies (see Note. 11)

Mezzanine Equity:

Redeemable Preferred Units, $10,000 par value, none issued or outstanding as of September 30, 2021 and 7,307 outstanding as of December 31, 2020

74,378

Members' Equity:

Class A units, $10 par value, 27,797,658 and 27,797,207 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

308,638

318,394

Class B units, $10 par value, 3,556,051 issued and outstanding as of September 30, 2021 and December 31, 2020

35,773

37,023

Class C units, $0 par value, 878,850 and 806,350 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Class D units, $10 par value, 6,651,100 issued and outstanding as of September 30, 2021 and December 31, 2020

276,163

278,498

Total Members' Equity

620,574

633,915

Total Liabilities, Mezzanine and Members' Equity

$

1,077,535

$

1,057,805

The accompanying notes are an integral part of these condensed consolidated financial statements

9

Table of Contents

Solaris Midstream Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

Three Months Ended

Nine Months Ended

(in thousands)

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

Revenue

Produced Water Handling

$

24,639

$

23,323

$

71,368

$

70,382

Produced Water Handling—Affiliates

23,135

13,312

62,216

35,284

Water Solutions

7,666

1,149

11,824

10,410

Water Solutions—Affiliates

4,059

4,672

16,864

10,472

Total Revenue

59,499

42,456

162,272

126,548

Cost of Revenue

Direct Operating Costs

23,497

22,207

66,703

71,640

Depreciation, Amortization and Accretion

15,378

11,751

45,550

31,529

Total Cost of Revenue

38,875

33,958

112,253

103,169

Operating Costs and Expenses

Abandoned Well Costs

27,402

27,402

General and Administrative

5,228

4,773

15,240

13,421

Other Operating Expenses

940

555

2,590

4,854

Total Operating Expenses

33,570

5,328

45,232

18,275

Operating (Loss) Income

(12,946)

3,170

4,787

5,104

Other Expense

Interest Expense, Net

7,880

2,099

17,855

5,364

Loss on Debt Modification

380

Total Other Expense

7,880

2,099

18,235

5,364

(Loss) Income Before Taxes

(20,826)

1,071

(13,448)

(260)

Income Tax Expense (Benefit)

(83)

9

(81)

15

Net (Loss) Income

$

(20,743)

$

1,062

$

(13,367)

$

(275)

Equity Accretion and Dividend Related to Redeemable Preferred Units

(1,511)

21

(1,928)

Net Loss Attributable to Members' Equity

$

(20,743)

$

(449)

$

(13,346)

$

(2,203)

The accompanying notes are an integral part of these condensed consolidated financial statements

10

Table of Contents

Solaris Midstream Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

Nine Months Ended September 30, 

    

2021

    

2020

Cash Flow from Operating Activities

Net Loss

$

(13,367)

$

(275)

Adjustments to reconcile Net Loss to Net Cash provided by Operating Activities

Depreciation, Amortization and Accretion

45,550

31,529

Abandoned Well Costs

27,402

Loss on Disposal of Asset, Net

225

82

Abandoned Projects

2,035

1,501

Amortization of Deferred Financing Costs

1,320

570

Loss on Debt Modification

380

Bad Debt Expense

216

83

Changes in operating assets and liabilities:

Accounts Receivable

(11,231)

9,387

Accounts Receivable from Affiliate

(10,046)

2,475

Other Receivables

231

56

Prepaids, Deposits and Other Current Assets

2,516

1,522

Accounts Payable

(3,284)

1,793

Payables to Affiliate

(715)

390

Adjustment in Deferred Revenue

(46)

975

Accrued Liabilities and Other

16,000

462

Net Cash Provided by Operating Activities

57,186

50,550

Cash Flow from Investing Activities

Property, Plant and Equipment Expenditures

(62,728)

(121,835)

Net Cash Used in Investing Activities

(62,728)

(121,835)

Cash Flow from Financing Activities

Proceeds from Senior-Sustainability Linked Notes

400,000

Payments for Initial Public Offering Costs

(855)

Payments of Financing Costs Related to Issuance of Senior- Sustainability Linked Notes

(9,352)

Repayment of Credit Facility

(297,000)

Proceeds from Credit Facility

73,000

Redemption of Redeemable Preferred Units

(74,357)

Payments of Financing Costs related to Credit Facility

(1,442)

(491)

Members' Contributions

5

Net Cash Provided by Financing Activities

16,999

72,509

Net Increase in Cash and Cash Equivalents

11,457

1,224

Cash and Cash Equivalents, Beginning of Period

24,932

7,083

Cash and Cash Equivalents, End of Period

$

36,389

$

8,307

The accompanying notes are an integral part of these condensed consolidated financial statements

11

Table of Contents

Solaris Midstream Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of Members’ Equity

(unaudited)

(in thousands)

Three, Six and Nine Months Ended September 30, 2021

Total

Class A

Class B

Class C

Class D

Members'

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Equity

Balance at January 1, 2021

$

318,394

27,797

$

37,023

3,556

$

807

$

278,498

6,651

$

633,915

Capital Contributions

5

1

5

Issuance of C Units

69

Equity Accretion and Dividend related to Redeemable Preferred Units

5

1

1

7

Net Income

2,059

263

493

2,815

Balance at March 31, 2021

320,463

27,798

37,287

3,556

876

278,992

6,651

636,742

Issuance of C Units

3

Equity Accretion and Dividend related to Redeemable Preferred Units

10

1

3

14

Net Income

3,336

427

798

4,561

Balance at June 30, 2021

323,809

27,798

37,715

3,556

879

279,793

6,651

641,317

Net Loss

(15,171)

(1,942)

(3,630)

(20,743)

Balance at September 30, 2021

$

308,638

27,798

$

35,773

3,556

$

879

$

276,163

6,651

$

620,574

Three, Six and Nine Months Ended September 30, 2020

Total

Class A

Class B

Class C

Class D

Members'

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Amount

    

Units

    

Equity

Balance at January 1, 2020

$

232,945

22,104

$

36,296

3,440

$

833

$

276,267

6,386

$

545,508

Forfeiture of C Units

(26)

Net Loss

(281)

(44)

(81)

(406)

Balance at March 31, 2020

232,664

22,104

36,252

3,440

807

276,186

6,386

545,102

Forfeiture of C Units

(1)

Class A Units Issued for Concho Acquisition

77,602

4,561

77,602

Equity Accretion and Dividend related to Redeemable Preferred Units

(305)

(39)

(73)

(417)

Net Loss

(680)

(88)

(163)

(931)

Balance at June 30, 2020

309,281

26,665

36,125

3,440

806

275,950

6,386

621,356

Accretion and Dividend Related to Redeemable Preferred Units

(1,104)

(142)

(265)

(1,511)

Issuance of C Units

16

Forfeiture of C Units

(3)

Net Income

776

100

186

1,062

Balance at September 30, 2020

$

308,953

26,665

$

36,083

3,440

$

819

$

275,871

6,386

$

620,907

The accompanying notes are an integral part of these condensed consolidated financial statements

12

Table of Contents

Solaris Midstream Holdings, LLC and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

1.Organization and Background of Business

Solaris Midstream Holdings, LLC, formed on November 19, 2015 (together with its subsidiaries, the “Company”, “we”, “our, or “us”), is an independent, environmentally-focused company headquartered in Houston, Texas, that provides sustainability-enhancing services to oil and natural gas operators. We strive to build long-term value through the development, construction and operation of integrated produced water handling and recycling infrastructure that provides high-capacity, comprehensive produced water management, recycling and supply solutions for many of the largest operators in the Permian Basin.

2.Significant Accounting Policies

Basis of Presentation

All dollar amounts, except per unit amounts, in the financial statements and tables in the notes are stated in thousands of dollars unless otherwise indicated.

On January 15, 2021, ConocoPhillips acquired Concho Resources, Inc. (“Concho”). We refer to Concho as ConocoPhillips, their successor, throughout these condensed consolidated financial statements (“financial statements”).

Interim Financial Statements

Our accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These financial statements have not been audited by our independent registered public accounting firm, except that the balance sheet as of December 31, 2020 is derived from audited financial statements.

These financial statements include the adjustments and accruals, all of which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. These interim results are not necessarily indicative of results for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited condensed financial statements should be read in conjunction with our annual financial statements for the year ended December 31, 2020, included in our Prospectus.

Consolidation

The financial statements include the accounts of the Company and its wholly owned subsidiaries, Aris Water Solutions Inc., Solaris Water Midstream, LLC, Solaris Midstream DB-TX, LLC, Solaris Midstream MB, LLC, Solaris Midstream DB-NM, LLC, 829 Martin County Pipeline, LLC and Clean H2O Technologies, LLC (collectively, the “subsidiaries”). All material intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

Management has made certain estimates and assumptions that affect reported amounts in these financial statements and disclosures of contingencies. These critical estimates include, among others, determining the fair value of assets and liabilities acquired in acquisitions, the collectability of accounts receivable, useful lives of property, plant and equipment and amortizable intangible assets, the fair value of asset retirement obligations and accruals for environmental matters. Management evaluates estimates and assumptions on an

13

Table of Contents

ongoing basis using historical experience and other factors, including current economic and industry conditions. Actual results could differ from management’s estimates as additional information or actual results become available in the future, and those differences could be material.

Reclassification of Prior Year Presentation

Certain 2020 amounts have been reclassified for consistency with the 2021 presentation. These reclassifications had no effect on the reported results of operations.

Cash and Cash Equivalents

Management considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. We place our cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation, however we maintain deposits in banks which exceed the amount of deposit insurance available. Management routinely assesses the financial condition of the institutions and believes that any possible credit loss would be minimal.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consists of trade receivables recorded at the invoice amount, plus accrued revenue that is earned but not yet billed, less an estimated allowance for doubtful accounts. Accounts receivable are generally due within 60 days or less. Management determines the allowance for doubtful accounts by considering several factors, including the length of time trade accounts receivable are past due, previous loss history, the customer’s current ability to pay its obligation, and macro level conditions of the U.S. economy and the energy industry. Accounts receivable are written off when they are deemed uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. As of September 30, 2021 and December 31, 2020, we had $0.2 million and $0.4 million of allowance for doubtful accounts, respectively.

Revenue Recognition

We generate revenue by providing services related to produced water handling and water solutions. The services related to produced water are fee-based arrangements and are based on the volume of water that flows through our systems and facilities while the sales of recycled produced water and groundwater are priced based on negotiated rates with the customer.

We have customer contracts that contain minimum transportation and/or disposal volume delivery requirements and we are entitled to deficiency payments if such minimum contractual volumes are not delivered by the customer. These deficiency amounts are based on fixed, daily minimum volumes (measured over monthly, quarterly or annual periods depending on the contract) at a fixed rate per barrel.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under contracts, the following steps must be performed at contract inception: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation.

For all our produced water transfer and disposal contracts, revenue is recognized over time utilizing the output method based on the volume of wastewater accepted from the customer. We have determined that the performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits provided by performance of services, typically as customers’ wastewater is accepted. We typically charge customers a disposal and transportation fee on a per barrel basis according to the applicable contract.

14

Table of Contents

For some contracts, we are entitled to shortfall payments if a customer does not deliver a contractually minimum volume of water for handling over a certain period. In these cases, we recognize volumes and the revenues for the difference between the physical volumes handled and the contractual minimum. Moreover, some contracts also have a mechanism that allows for shortfalls to be made up over a limited period of time. As of September 30, 2021 and December 31, 2020, the Company had long-term deferred revenue liabilities of $1.3 million and $1.4 million, respectively, related to these contracts.

For contracts that involve sales of recycled produced water and groundwater, revenue is recognized at a point in time, based on when control of the product is transferred to the customer.

Property, Plant and Equipment

Property, plant and equipment is stated at cost, or at fair value for assets acquired in a business combination, less accumulated depreciation. Depreciation is provided on the straight-line method over the estimated useful service lives of the assets.

All costs necessary to place an asset into operation are capitalized. Maintenance and repairs are expensed when incurred. Upgrades and enhancements that substantially extend the useful lives of the assets are capitalized. When property is abandoned, retired or otherwise disposed of, the cost and accumulated depreciation are removed from appropriate accounts and any gain or loss is included in earnings. Costs incurred for construction of facilities and related equipment and pipelines are included in construction in progress. Direct project costs on potential future projects are capitalized and included in construction in progress. These costs generally relate to acquiring the appropriate permits, rights-of-way and other related expenditures necessary prior to construction. No depreciation is recorded for these assets as they have not been placed in operations. See Note 5—Property, Plant and Equipment for discussion regarding abandoned well costs incurred during the third quarter of 2021.

Capitalization of Interest

We capitalize interest costs associated with significant projects undergoing construction that is necessary to bring them to their intended use. Interest is capitalized using an interest rate equivalent to the weighted average interest rate we pay on long-term debt, including our Senior Sustainability Linked Notes and Credit Facility. Capitalized interest is included in the cost of property, plant and equipment and depreciated with other costs on a straight-line basis.

Asset Retirement Obligations

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred. These obligations are those that the Company has a legal obligation for settlement. The fair value of the liability is added to the carrying amount of the associated asset. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, inflation rates, credit-adjusted risk-free rate, and facilities lives. This additional carrying amount is then depreciated over the life of the asset. The liability increases due to the passage of time based on the time value of money until the obligation is settled. Our asset retirement obligations relate primarily to the dismantlement, removal, site reclamation and similar activities of our pipelines, water handling facilities and associated operations.

Definite-Lived Intangible Assets

Our intangible assets are related to customer contracts that were acquired in connection with acquisitions occurring in 2020, 2019 and 2017. Amortization of these assets is primarily based on the percentage of discounted cash flows expected to occur over the lives of the contract.

15

Table of Contents

Goodwill

Goodwill represents the excess of the purchase price of a business over the estimated fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized and is tested for impairment on an annual basis, or when events or changes in circumstances indicate the fair value may have been reduced below its carrying value. Before employing detailed impairment testing methodologies, management may first evaluate the likelihood of impairment by considering qualitative indicators relevant to the business, such as macroeconomic, industry, market or any other factors that have a significant bearing on fair value. If management, after considering qualitative impairment indicators, determines that it is more likely than not that goodwill is impaired, detailed testing methodologies are then applied. Otherwise, management concludes that no impairment has occurred. Management may also choose to bypass a qualitative approach and opt instead to employ detailed testing methodologies.

If management determines through the qualitative approach that detailed testing methodologies are required, or if the qualitative approach is bypassed, the Company compares the fair value of a reporting unit with its carrying amount under Step 1 of the impairment test. If the carrying amount exceeds the fair value of a reporting unit, the Company performs Step 2 and compares the fair value of reporting unit goodwill with the carrying amount of that goodwill and recognizes an impairment charge for the amount by which the carrying amount exceeds the implied fair value; however, the loss recognized may not exceed the total amount of goodwill allocated to that reporting unit. We have not recognized any goodwill impairment associated with any of our acquisitions.

Impairment of Long-Lived Assets

Long-lived assets, such as property, plant, equipment and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Individual assets are first grouped based on the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets. Management then compares estimated future undiscounted cash flows expected to result from the use and eventual disposition of the asset group to its carrying amount. If the carrying amount is not recoverable, we would recognize an impairment loss equal to the amount by which the carrying amount exceeds fair value. Management estimates fair value based on projected future discounted cash flows. Fair value calculations for long-lived assets and intangible assets contain uncertainties because they require us to apply judgment and estimates concerning future cash flows, strategic plans, useful lives and market performance. The Company also applies judgment in the selection of a discount rate that reflects the risk inherent in the current business model.

Fair Value Measurements

Our financial assets and liabilities are to be measured using inputs from the three levels of the fair value hierarchy, of which the first two are considered observable and the last unobservable, which are as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that management has the ability to access at the measurement date;

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3—Unobservable inputs that reflect management’s assumptions that market participants would use in pricing assets or liabilities based on the best information available.

16

Table of Contents

Fair Value on a Non-Recurring Basis

Nonfinancial assets and liabilities measured at fair value on a non-recurring basis include certain nonfinancial assets acquired and liabilities assumed in a business combination, units granted in acquisitions, and the initial recognition of asset retirement obligations, for which fair value is used. These assets and liabilities are recorded at fair value when acquired/incurred but not re-measured at fair value in subsequent periods.

Asset retirement obligation estimates are derived from historical data as well as management’s expectation of future cost environments and other unobservable inputs. As there is no corroborating market activity to support the assumptions used, management has designated these measurements as Level 3.

Additional Fair Value Disclosures

The fair value of fixed-rate debt is estimated based on the published market prices for the same or similar issues. Management has designated these measurements as Level 2 for the Senior Sustainability-Linked Notes and Level 3 for the Credit Facility.

Fair value information regarding our debt is as follows (in thousands):

September 30, 2021

December 31, 2020

Carrying

Fair

Carrying

Fair

    

Amount

    

Value

    

Amount

    

Value

Senior Sustainability-Linked Notes (1)

$

400,000

$

429,500

$

$

Credit Facility

$

$

$

297,000

$

297,000

(1) See Note 8—Long-Term Debt

The carrying value of the Company’s financial instruments, consisting of cash and cash equivalents, accounts receivable, and accounts payable, approximates their fair value due to the short maturity of such instruments. Financial instruments also consist of a credit facility, for which fair value approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to the Company.

Transaction Costs

Transaction costs are comprised of acquisition related expenses and/or expenses incurred as part of our capital restructuring activities and are included in Other Operating Expenses.

Income Taxes

We are a Delaware limited liability company treated as a partnership for tax purposes, therefore, no federal or state income tax provision is included in the accompanying financial statements, other than Texas franchise tax as discussed below. Except for Texas franchise tax, any taxable income of the Company is reported in the respective tax returns of the Company members.

Management evaluates uncertain tax positions for recognition and measurement in the financial statements. To recognize a tax position, the Company determines whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the financial statements. The Company has no significant uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and various states. There are currently no federal or state income tax examinations underway for these jurisdictions. The Company’s federal and state returns remain open to examination for tax years 2017 through 2020.

17

Table of Contents

The Company is subject to a franchise tax imposed by the State of Texas. The franchise tax rate is 1%, calculated on taxable margin. Taxable margin is defined as total revenue less deductions for cost of goods sold or compensation and benefits in which the total calculated taxable margin cannot exceed 70% of total revenue.

Acquisitions

To determine if a transaction should be accounted for as a business combination or an acquisition of assets, the Company first calculates the relative fair values of the assets acquired. If substantially all of the relative fair value is concentrated in a single asset or group of similar assets, or if not but the transaction does not include a significant process (does not meet the definition of a business), the transaction is recorded as an acquisition of assets. For acquisitions of assets, the purchase price is allocated based on the relative fair values and no goodwill is recorded. All other transactions are recorded as business combinations. The Company records the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. Transactions in which the Company acquires control of a business are accounted for under the acquisition method. The identifiable assets, liabilities and any non-controlling interests are recorded at the estimated fair value as of the acquisition date. The purchase price in excess of the fair value of assets and liabilities acquired is recorded as goodwill.

Environmental Matters

The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. Management has established procedures for the ongoing evaluation of the Company’s operations to identify potential environmental exposures and to comply with regulatory policies and procedures. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation are expensed as incurred. Liabilities are recorded when environmental costs are probable, and the costs can be reasonably estimated. The Company maintains insurance which may cover in whole or in part certain environmental expenditures. See further discussion at Note 11 – Commitments and Contingencies.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. Our chief operating decision maker is the Chief Executive Officer. We view our operations and manage the business as one operating segment. All assets of the Company reside in the United States.

Recent Accounting Pronouncements

The Company is an “emerging growth company”, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 (ASU 2016-02): Leases. The standard requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases with terms of more than 12

18

Table of Contents

months. ASU 2016-02 also requires disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

In the normal course of business, we enter into operating lease agreements to support our operations and lease assets such as ponds, storage yards, office space and other assets. We will adopt the new standard with an effective date of January 1, 2022.

Although we continue to assess the impact of the standard on our financial statements, we believe adoption and implementation will result in an increase in assets and liabilities as well as additional disclosures. We do not expect a material impact on our statement of operations. We have developed and are executing a project plan, which includes contract review and assessment, as well as evaluation of our systems, processes and internal controls. In addition, we plan to implement new lease accounting software.

Goodwill In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This pronouncement removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The pronouncement was effective for public business entities for annual reporting periods beginning after December 15, 2019. The ASU is effective for private companies for fiscal years beginning after December 15, 2021. We will adopt the standard effective January 1, 2022 and we are currently evaluating the impact this new standard may have on our financial statements.

Financial Instruments – Credit Losses On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The ASU was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The ASU is effective for private companies for fiscal years beginning after December 15, 2022. We will adopt this standard effective January 1, 2022 and we are currently evaluating the impact this new standard may have on our financial statements.

COVID 19 Pandemic

COVID 19 contributed to a significant downturn in oil and gas commodity prices in 2020 and continues to cause significant volatility in 2021. Although we cannot predict future commodity prices, we are not currently experiencing significant disruptions with our workforce or supply chain activities. Moreover, we continue to maintain our focus on safe and reliable performance of our systems, while ensuring the safety of our employees and other stakeholders. However, we are unable to predict the future impact of COVID 19, and it is possible that such impact could be negative.

19

Table of Contents

3.Additional Financial Statement Information

Balance Sheet

Other Balance Sheet information is as follows:

(in thousands)

    

September 30, 

    

December 31, 

2021

2020

Other Receivables

Insurance and Third Party Receivables for Remediation Expenses

$

3,624

$

2,543

Capital Call Receivable

1,160

Other

25

19

Total Other Receivables

$

3,649

$

3,722

Prepaids, Deposits and Other Current Assets

Prepaid Insurance and Other

$

1,007

$

4,067

Prepaid Groundwater

294

176

Deposits and Other

48

72

Total Prepaids, Deposits and Other Current Assets

$

1,349

$

4,315

Accrued and Other Current Liabilities

Accrued Operating Expense

$

17,314

$

14,367

Accrued Capital Costs

9,177

6,292

Accrued Interest

15,443

2,661

Other

4,840

4,518

Total Accrued and Other Current Liabilities

$

46,774

$

27,838

20

Table of Contents

Statement of Operations

Other Statement of Operations information is as follows:

Three Months Ended

Nine Months Ended

(in thousands)

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

Depreciation, Amortization and Accretion Expense

Depreciation - Property, Plant and Equipment

$

7,152

$

6,231

$

20,888

$

16,393

Amortization - Intangible Assets

8,151

5,455

24,454

14,957

Accretion of Asset Retirement Obligations

75

65

208

179

Total Depreciation, Amortization and Accretion Expense

$

15,378

$

11,751

$

45,550

$

31,529

Other Operating Expenses

Loss on Disposal of Asset, Net

$

8

$

15

$

225

$

82

Transaction Costs

253

172

330

3,271

Abandoned Projects (1)

679

368

2,035

1,501

Total Other Operating Expense