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

☐	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

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.

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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

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10‑Q (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;

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●

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.

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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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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)