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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 June 30, 2023

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

Graphic

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 

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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

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 August 1, 2023, the registrant had 30,074,118 shares of Class A common stock, $0.01 par value per share, and 27,554,042 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

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Cash Flows

7

Condensed Consolidated Statements of Stockholders’ Equity

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

Item 4.

Controls and Procedures

35

PART II. OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Defaults upon Senior Securities

36

Item 4.

Mine Safety Disclosures

36

Item 5.

Other Information

36

Item 6.

Exhibits

36

Signatures

38

2

Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10Q (this “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,” “outlook,” “expect,” “continue,” “will,” “intend,” “plan,” “targets,” “believe,” “forecast,” “future,” “potential,” “should,” “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” in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 Annual Report”) and found elsewhere in this Quarterly Report, including, but not limited to, the following:

the impact of the current conflict between Russia and Ukraine on the global economy, including its impacts on financial markets and the energy industry;
the impacts of cost inflation on our operating margins and capital costs;
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 governmental lands, and various other matters;
our reliance on a limited number of customers and a particular region for substantially all of our revenues;
the level of capital spending and development by oil and gas companies, including potential reductions in capital expenditures by oil and gas producers in response to commodity price volatility and/or reduced demand;
our ability to renew or replace expiring contracts on acceptable terms;
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;

3

Table of Contents

the impact of competition on our operations;
the degree to which our 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 and/or rights-of-way by us or our customers;
constraints in supply or availability of equipment used in our business;
changes in global political or economic conditions, both generally, and in the specific markets we serve, such as an economic slowdown or recession, concern over a potential recession, or increased uncertainty regarding the economic outlook;
physical, electronic and cybersecurity breaches; and
the other risks described in our 2022 Annual Report filed with the United States Securities and Exchange Commission (“SEC”).

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 or in our 2022 Annual 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, are expressly qualified in their entirety by this cautionary statement. We do not undertake to update any forward-looking statement that we may make from time to time except as required by applicable law.

4

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Aris Water Solutions, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except for share and per share amounts)

    

June 30, 

December 31,

    

2023

2022

Assets

    

    

Cash

$

4,016

$

1,122

Accounts Receivable, Net

66,586

81,683

Accounts Receivable from Affiliate

27,721

46,029

Other Receivables

8,732

4,354

Prepaids and Deposits

4,222

5,805

Assets Held for Sale

17,777

Total Current Assets

129,054

138,993

Fixed Assets

Property, Plant and Equipment

982,857

907,784

Accumulated Depreciation

(102,578)

(88,681)

Total Property, Plant and Equipment, Net

880,279

819,103

Intangible Assets, Net

250,942

269,845

Goodwill

34,585

34,585

Deferred Income Tax Assets, Net

27,670

30,424

Right-of-Use Assets

9,165

9,135

Other Assets

998

1,281

Total Assets

$

1,332,693

$

1,303,366

Liabilities and Stockholders' Equity

Accounts Payable

$

36,718

$

22,982

Payables to Affiliate

2,443

3,021

Accrued and Other Current Liabilities

73,699

65,411

Total Current Liabilities

112,860

91,414

Long-Term Debt, Net of Debt Issuance Costs

423,856

428,921

Asset Retirement Obligation

18,051

17,543

Tax Receivable Agreement Liability

98,093

97,980

Other Long-Term Liabilities

10,467

10,421

Total Liabilities

663,327

646,279

Commitments and Contingencies (see Note 10)

Stockholders' Equity

Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of June 30, 2023 and December 31, 2022

Class A Common Stock $0.01 par value, 600,000,000 authorized, 30,313,173 issued and 30,074,118 outstanding as of June 30, 2023; 30,115,979 issued and 29,919,217 outstanding as of December 31, 2022

302

300

Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,554,042 issued and outstanding as of June 30, 2023; 27,575,519 issued and outstanding as of December 31, 2022

276

276

Treasury Stock (at Cost), 239,055 shares as of June 30, 2023; 196,762 shares as of December 31, 2022

(3,490)

(2,891)

Additional Paid-in-Capital

323,799

319,545

Accumulated Deficit

(5,291)

(7,722)

Total Stockholders' Equity Attributable to Aris Water Solutions, Inc.

315,596

309,508

Noncontrolling Interest

353,770

347,579

Total Stockholders' Equity

669,366

657,087

Total Liabilities and Stockholders' Equity

$

1,332,693

$

1,303,366

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

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

Three Months Ended

Six Months Ended

(in thousands, except for share and per share amounts)

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Revenue

Produced Water Handling

$

49,716

$

35,525

$

95,816

$

70,625

Produced Water Handling — Affiliate

23,181

23,207

46,321

44,288

Water Solutions

14,928

14,708

28,810

26,352

Water Solutions — Affiliate

8,163

2,828

16,147

5,972

Other Revenue

645

118

1,110

118

Total Revenue

96,633

76,386

188,204

147,355

Cost of Revenue

Direct Operating Costs

44,446

30,781

88,291

57,452

Depreciation, Amortization and Accretion

19,086

16,203

37,692

32,782

Total Cost of Revenue

63,532

46,984

125,983

90,234

Operating Costs and Expenses

Abandoned Well Costs

5,415

5,415

General and Administrative

12,682

11,567

24,481

22,278

Impairment of Long-Lived Assets

15,597

Research and Development Expense

650

81

1,058

100

Other Operating (Income) Expense

(192)

513

25

1,577

Total Operating Expenses

13,140

17,576

25,564

44,967

Operating Income

19,961

11,826

36,657

12,154

Other Expense

Interest Expense, Net

7,971

7,315

15,632

15,100

Income (Loss) Before Income Taxes

11,990

4,511

21,025

(2,946)

Income Tax Expense (Benefit)

1,559

472

2,886

(368)

Net Income (Loss)

10,431

4,039

18,139

(2,578)

Net Income (Loss) Attributable to Noncontrolling Interest

5,733

2,645

10,063

(1,750)

Net Income (Loss) Attributable to Aris Water Solutions, Inc.

$

4,698

$

1,394

$

8,076

$

(828)

Net Income (Loss) Per Share of Class A Common Stock

Basic

$

0.15

$

0.06

$

0.25

$

(0.05)

Diluted

$

0.15

$

0.05

$

0.25

$

(0.05)

Weighted Average Shares of Class A Common Stock Outstanding

Basic

30,036,593

21,984,313

29,985,869

21,918,639

Diluted

30,036,593

22,101,106

29,985,869

21,918,639

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

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

Six Months Ended June 30, 

    

2023

    

2022

Cash Flow from Operating Activities

Net Income (Loss)

$

18,139

$

(2,578)

Adjustments to reconcile Net Income (Loss) to Net Cash provided by Operating Activities:

Deferred Income Tax Expense (Benefit)

2,837

(384)

Depreciation, Amortization and Accretion

37,692

32,782

Stock-Based Compensation

5,585

5,539

Impairment of Long-Lived Assets

15,597

Abandoned Well Costs

5,415

Loss on Disposal of Asset, Net

57

578

Amortization of Debt Issuance Costs, Net

1,041

1,099

Other

504

393

Changes in Operating Assets and Liabilities:

Accounts Receivable

15,097

(20,922)

Accounts Receivable from Affiliate

18,308

(1,492)

Other Receivables

(4,005)

1,021

Prepaids and Deposits

1,583

1,313

Accounts Payable

(1,001)

(2,201)

Payables to Affiliate

(578)

620

Accrued Liabilities and Other

1,208

477

Net Cash Provided by Operating Activities

96,467

37,257

Cash Flow from Investing Activities

Property, Plant and Equipment Expenditures

(77,981)

(48,318)

Deposit on Assets Held for Sale

1,750

Net Cash Used in Investing Activities

(76,231)

(48,318)

Cash Flow from Financing Activities

Dividends and Distributions Paid

(10,743)

(13,859)

Repurchase of Shares

(599)

Repayment of Credit Facility

(36,000)

Proceeds from Credit Facility

30,000

Net Cash Used in Financing Activities

(17,342)

(13,859)

Net Increase (Decrease) in Cash

2,894

(24,920)

Cash, Beginning of Period

1,122

60,055

Cash, End of Period

$

4,016

$

35,135

Supplementary Cash Flow Data

    

Cash Paid for Interest

$

17,413

$

15,250

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

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

Three and Six Months Ended June 30, 2023

(in thousands, except for share and per share amounts)

Class A

Class B

Additional

Non-

Total

Common Stock

    

Common Stock

Paid-in

Treasury Stock

Accumulated

controlling

Stockholders'

Amount

    

Shares

Amount

Shares

Capital

Amount

Shares

Deficit

Interest

Equity

Balance at January 1, 2023

$

300

30,115,979

$

276

27,575,519

$

319,545

$

(2,891)

196,762

$

(7,722)

$

347,579

$

657,087

Redemption of Class B Shares for Class A Shares

-

20,953

-

(20,953)

267

-

-

-

(267)

-

Stock-based Compensation Expense

2

175,717

-

-

2,383

-

-

-

83

2,468

Increase in TRA Liability Related to Share Redemption

-

-

-

-

(110)

-

-

-

-

(110)

Deferred Tax Assets Acquired

-

-

-

-

82

-

-

-

-

82

Dividends and Distributions ($0.09 per share or unit)

-

-

-

-

-

-

-

(2,826)

(2,588)

(5,414)

Purchase of Treasury Stock

-

-

-

-

-

(599)

42,293

-

-

(599)

Net Income

-

-

-

-

-

-

-

3,378

4,330

7,708

Balance at March 31, 2023

$

302

30,312,649

$

276

27,554,566

$

322,167

$

(3,490)

239,055

$

(7,170)

$

349,137

$

661,222

Redemption of Class B Shares for Class A Shares

-

524

-

(524)

7

-

-

-

(7)

-

Stock-based Compensation Expense

-

-

-

-

1,626

-

-

-

1,491

3,117

Increase in TRA Liability Related to Share Redemption

-

-

-

-

(3)

-

-

-

-

(3)

Deferred Tax Assets Acquired

-

-

-

-

2

-

-

-

-

2

Dividends and Distributions ($0.09 per share or unit)

-

-

-

-

-

-

-

(2,819)

(2,584)

(5,403)

Net Income

-

-

-

-

-

-

-

4,698

5,733

10,431

Balance at June 30, 2023

$

302

30,313,173

$

276

27,554,042

$

323,799

$

(3,490)

239,055

$

(5,291)

$

353,770

$

669,366

Three and Six Months Ended June 30, 2022

Class A

Class B

Additional

Non-

Total

Common Stock

    

Common Stock

Paid-in

Treasury Stock

Accumulated

controlling

Stockholders'

Amount

    

Shares

Amount

Shares

Capital

Amount

Shares

Deficit

Interest

Equity

Balance at January 1, 2022

$

218

21,858,022

$

317

    

31,716,104

    

$

212,926

    

$

(135)

10,191

    

$

(457)

    

$

389,670

    

$

602,539

Redemption of Class B Shares for Class A Shares

1

148,087

(1)

(148,087)

1,786

-

-

-

(1,786)

-

Stock-based Compensation Expense

-

515

-

-

958

-

-

-

1,379

2,337

Increase in TRA Liability Related to Share Redemption

-

-

-

-

(1,531)

-

-

-

-

(1,531)

Deferred Tax Assets Acquired

-

-

-

-

1,666

-

-

-

-

1,666

Dividends and Distributions ($0.09 per share or unit)

-

-

-

-

-

-

-

(2,062)

(2,947)

(5,009)

Net Loss

-

-

-

-

-

-

-

(2,222)

(4,395)

(6,617)

Balance at March 31, 2022

$

219

22,006,624

$

316

31,568,017

$

215,805

$

(135)

10,191

$

(4,741)

$

381,921

$

593,385

Redemption of Class B Shares for Class A Shares

1

107,914

(1)

(107,914)

1,315

-

-

-

(1,315)

-

Stock-based Compensation Expense

-

-

-

-

1,318

-

-

-

1,884

3,202

Increase in TRA Liability Related to Share Redemption

-

-

-

-

(1,021)

-

-

-

-

(1,021)

Deferred Tax Assets Acquired

-

-

-

-

422

-

-

-

-

422

Dividends and Distributions ($0.09 per share or unit)

-

-

-

-

-

-

-

(2,068)

(2,966)

(5,034)

Net Income

-

-

-

-

-

-

-

1,394

2,645

4,039

Balance at June 30, 2022

$

220

22,114,538

$

315

31,460,103

$

217,839

$

(135)

10,191

$

(5,415)

$

382,169

$

594,993

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

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Aris Water Solutions, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(unaudited)

1.Organization and Background of Business

Aris Water Solutions, Inc. (“Aris Inc.,” the “Company,” “we,” “our,” or “us”) is an independent, environmentally-focused company headquartered in Houston, Texas, that, through its controlling interest in Solaris Midstream Holdings, LLC, a Delaware limited liability company (“Solaris LLC”), 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 operators in the Permian Basin.

We are the parent holding company of Solaris LLC. As the sole managing member of Solaris LLC, we operate and control the business and affairs of Solaris LLC, and through Solaris LLC and its subsidiaries, conduct our business. We consolidate the financial results of Solaris LLC and report noncontrolling interest related to the portion of Solaris LLC units not owned by us.

These unaudited condensed consolidated financial statements reflect the financial statements of the consolidated Company including Aris Inc., Solaris LLC and Solaris LLC’s subsidiaries.

2.Basis of Presentation and Significant Accounting Policies

Basis of Presentation

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

Interim Financial Statements

These condensed consolidated 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.

These condensed consolidated 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 SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Consolidation

We have determined that the members with equity at risk in Solaris LLC lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact Solaris LLC’s economic performance; therefore, Solaris LLC is considered a variable interest entity (“VIE”). As the managing member of Solaris LLC, we operate and control the business and affairs of Solaris LLC, as well as have the obligation to absorb losses or the right to receive benefits that could be potentially significant to us. Therefore, we are considered the primary beneficiary and consolidate Solaris LLC.

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Table of Contents

Noncontrolling Interest

As of June 30, 2023, we own approximately 52% of Solaris LLC. Our consolidated financial statements include a noncontrolling interest representing the percentage of Solaris LLC units not held by us.

Use of Estimates

Management has made certain estimates and assumptions that affect reported amounts in these condensed consolidated financial statements and disclosures of contingencies. These estimates include, among others, determining the fair values of assets acquired, liabilities assumed, and/or contingent consideration paid in acquisitions or nonmonetary exchanges or disposed of through sale, determining the fair value and related impairment of assets held for sale, determining the fair value of performance-based restricted stock units (“PSUs”), useful lives of property, plant and equipment and amortizable intangible assets, goodwill impairment testing, the fair value of asset retirement obligations (“ARO”), accruals for environmental matters, the income tax provision, valuation allowances for deferred tax assets and the liability associated with our Tax Receivable Agreement (the “TRA liability”). Management evaluates estimates and assumptions on an 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 prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Significant Accounting Policies

See Note 2. Significant Accounting Policies to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for the discussion of our significant accounting policies. There were no significant updates or revisions to our accounting policies during the six months ended June 30, 2023.

Goodwill

All of our goodwill is assigned to a single reporting unit. We perform our annual goodwill impairment test during the fourth quarter of our fiscal year, and more frequently if impairment indicators exist.

During the quarter ended March 31, 2023, we conducted a quantitative interim test of goodwill due to a decline in the price of our Class A common stock during the period. As a result of our interim test, no goodwill impairment was identified. The fair value of our reporting unit exceeded the carrying value by more than 10%. We concluded there were no new impairment triggering events as of and for the three months ended June 30, 2023. As such, there was no goodwill impairment as of June 30, 2023.

Some of the inherent estimates and assumptions used in determining the fair value of our reporting unit are outside the control of management, including interest rates, cost of capital, tax rates, market multiples and credit ratings. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting unit, it is possible a material change could occur. If our actual results are not consistent with our estimates and assumptions used to calculate fair value, it could result in a material impairment of our goodwill.

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Fair Value Information

The fair value of our 7.625% Senior Sustainability-Linked Notes (the “Notes”), which are fixed-rate debt, is estimated based on the published market prices for the same or similar issues. Management has designated this measurement as a Level 2 fair value measurement. The fair value of our Credit Facility approximates carrying value as the debt bears interest at a variable rate which is reflective of current rates otherwise available to us. Management has designated this measurement as Level 3. Fair value information regarding our debt is as follows:

(in thousands)

June 30, 2023

December 31, 2022

Carrying

Fair

Carrying

Fair

    

Amount

    

Value

    

Amount

    

Value

Senior Sustainability-Linked Notes

$

400,000

$

388,908

$

400,000

$

398,828

Credit Facility

$

29,000

$

29,000

$

35,000

$

35,000

The carrying values of our other financial instruments, consisting of cash, accounts receivable and accounts payable, approximate their fair values due to the short maturity of such instruments.

Intangible Assets

Intangible assets are net of accumulated amortization of $115.7 million and $96.8 million at June 30, 2023 and December 31, 2022, respectively.

Related Parties

We and ConocoPhillips, one of our principal owners, are parties to a long-term water gathering and handling agreement, pursuant to which ConocoPhillips dedicates all the produced water generated from its current and future acreage in a defined area of mutual interest in New Mexico and Texas. As of June 30, 2023 and December 31, 2022, we had accounts receivable from ConocoPhillips of $27.7 million and $46.0 million, respectively, that were recorded in accounts receivable from affiliate, and we had payables to ConocoPhillips of $2.4 million and $3.0 million, respectively, that were recorded in payables to affiliate. Revenues and expenses related to ConocoPhillips were as follows:

(in thousands)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Revenues from ConocoPhillips

$

31,344

$

26,035

$

62,468

$

50,260

Operating Expenses Reimbursed to ConocoPhillips

(75)

375

(17)

760

Operating expenses reimbursed to ConocoPhillips are related to ConocoPhillips’ costs incurred on our behalf and other ongoing operating expenses.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) interest rate or another reference rate expected to be discontinued because of reference rate reform. This guidance was to be effective prospectively upon issuance through December 31, 2022 and applied from the beginning of an interim period that included the issuance date of this ASU. However, in December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848” which deferred the sunset date from December 31, 2022 to December 31, 2024. All other provisions of ASU 2020-04 were unchanged. In May 2023, the Credit Agreement was amended to, among other things, transition the loans under the Credit Facility to be made at the Secured Overnight Financing

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Rate (“SOFR”) instead of LIBOR. The Company adopted this accounting pronouncement with the execution of the First Amendment to the Second Amended and Restated Credit Agreement in May 2023. See Note 6 Long-Term Debt for further discussion of the Company's accounting for its outstanding debt, credit facility and related issuance costs. This guidance provides an optional practical expedient that allows qualifying modifications to be accounted for as a debt modification rather than be analyzed under existing guidance to determine if the modification should be accounted for as a debt extinguishment. In adopting this accounting standard, we have elected to apply this optional expedient. Adopting this accounting standard did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

3.Additional Financial Statement Information

Balance Sheet

Other balance sheet information is as follows:

(in thousands)

    

June 30, 

December 31,

    

2023

2022

Other Receivables

Insurance and Third Party Receivables for Remediation Expenses

$

4,233

$

3,600

Reimbursable Research and Development Receivable

1,578

Reimbursable Projects and Other

2,921

754

Total Other Receivables

$

8,732

$

4,354

Prepaids and Deposits

Prepaid Insurance and Other

$

4,179

$

5,744

Deposits

43

61

Total Prepaids and Deposits

$

4,222

$

5,805

Accrued and Other Current Liabilities

Accrued Operating Expense

$

31,615

$

28,877

Accrued Capital Costs

20,504

16,161

Accrued Interest

7,722

8,262

Accrued Compensation

5,076

4,809

Lease Liabilities

1,185

1,176

Asset Retirement Obligation

762

2,242

Held for Sale Liability

554

Other

6,281

3,884

Total Accrued and Other Current Liabilities

$

73,699

$

65,411

Other Long-Term Liabilities

Noncurrent Lease Liabilities

$

8,116

$

7,719

Contingent Consideration Liability

2,351

2,702

Total Other Long-Term Liabilities

$

10,467

$

10,421

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Statement of Operations

Other statement of operations information is as follows:

(in thousands)