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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, 2024

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.)

9651 Katy Freeway, Suite 400

Houston, Texas

77024

(Address of principal executive offices)

(Zip Code)

(832) 304-7003

(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 5, 2024, the registrant had 30,567,279 shares of Class A common stock, $0.01 par value per share, and 27,543,565 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

22

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

Item 4.

Controls and Procedures

34

PART II. OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

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, 2023 (our “2023 Annual Report”) and found elsewhere in this Quarterly Report, including, but not limited to, the following:

the impact of the ongoing Russia-Ukraine and Middle Eastern conflicts on the global economy, including the impact on financial markets and the energy industry;
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 reliance on a limited number of customers and a particular region for substantially all of our revenues;
the impact of competition on our operations, including our ability to renew or replace expiring contracts on acceptable terms;
the degree to which our exploration and production customers may elect to operate their water-management services in-house rather than outsource these services to companies like us;
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 current and future laws, rulings and federal and state governmental regulations, including those related to hydraulic fracturing, accessing water, handling of produced water, carbon

3

Table of Contents

pricing, taxation of emissions, seismic activity, drilling and right-of-way access on governmental lands and various other matters;
delays or restrictions in obtaining, utilizing or maintaining permits and/or rights-of-way by us or our customers;
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, such as economic slowdown or recession, or uncertainty regarding the timing, pace and extent of an economic recovery;
adverse results from litigation and the use of financial resources to defend ourselves;
physical, electronic and cybersecurity breaches; and
the other risks described in our 2023 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 2023 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,

    

2024

2023

Assets

    

    

Cash

$

11,526

$

5,063

Accounts Receivable, Net

64,309

59,393

Accounts Receivable from Affiliate

29,132

22,963

Other Receivables

13,432

12,767

Prepaids and Deposits

5,389

8,364

Total Current Assets

123,788

108,550

Fixed Assets

Property, Plant and Equipment

1,116,165

1,041,703

Accumulated Depreciation

(141,019)

(121,989)

Total Property, Plant and Equipment, Net

975,146

919,714

Intangible Assets, Net

213,750

232,277

Goodwill

34,585

34,585

Deferred Income Tax Assets, Net

18,510

22,634

Right-of-Use Assets

15,839

16,726

Other Assets

5,445

5,995

Total Assets

$

1,387,063

$

1,340,481

Liabilities and Stockholders' Equity

Accounts Payable

$

42,112

$

25,925

Payables to Affiliate

679

894

Insurance Premium Financing Liability

1,855

5,463

Accrued and Other Current Liabilities

50,261

64,416

Total Current Liabilities

94,907

96,698

Long-Term Debt, Net of Debt Issuance Costs

444,727

421,792

Asset Retirement Obligations

20,904

19,030

Tax Receivable Agreement Liability

98,274

98,274

Other Long-Term Liabilities

16,071

16,794

Total Liabilities

674,883

652,588

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, 2024 and December 31, 2023

Class A Common Stock $0.01 par value, 600,000,000 authorized, 31,104,226 issued and 30,552,938 outstanding as of June 30, 2024; 30,669,932 issued and 30,251,613 outstanding as of December 31, 2023

310

306

Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,543,565 issued and outstanding as of June 30, 2024 and December 31, 2023

275

275

Treasury Stock (at Cost), 551,288 shares as of June 30, 2024; 418,319 shares as of December 31, 2023

(6,730)

(5,133)

Additional Paid-in-Capital

335,183

328,543

Retained Earnings (Accumulated Deficit)

7,235

(87)

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

336,273

323,904

Noncontrolling Interest

375,907

363,989

Total Stockholders' Equity

712,180

687,893

Total Liabilities and Stockholders' Equity

$

1,387,063

$

1,340,481

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, 

    

2024

    

2023

    

2024

    

2023

Revenue

Produced Water Handling

$

54,815

$

49,716

$

113,921

$

95,816

Produced Water Handling — Affiliate

28,614

23,181

55,441

46,321

Water Solutions

13,795

14,928

25,497

28,810

Water Solutions — Affiliate

3,453

8,163

8,695

16,147

Other Revenue

440

645

969

1,110

Total Revenue

101,117

96,633

204,523

188,204

Cost of Revenue

Direct Operating Costs

40,194

44,446

79,840

88,291

Depreciation, Amortization and Accretion

19,707

19,086

39,128

37,692

Total Cost of Revenue

59,901

63,532

118,968

125,983

Operating Costs and Expenses

General and Administrative

16,037

12,682

30,538

24,481

Research and Development Expense

1,128

650

2,193

1,058

Other Operating Expense (Income), Net

132

(192)

1,047

25

Total Operating Expenses

17,297

13,140

33,778

25,564

Operating Income

23,919

19,961

51,777

36,657

Other Expense

Interest Expense, Net

8,813

7,971

17,251

15,632

Other

1

Total Other Expense

8,813

7,971

17,252

15,632

Income Before Income Taxes

15,106

11,990

34,525

21,025

Income Tax Expense

1,994

1,559

4,583

2,886

Net Income

13,112

10,431

29,942

18,139

Net Income Attributable to Noncontrolling Interest

7,147

5,733

16,354

10,063

Net Income Attributable to Aris Water Solutions, Inc.

$

5,965

$

4,698

$

13,588

$

8,076

Net Income Per Share of Class A Common Stock

Basic

$

0.18

$

0.15

$

0.41

$

0.25

Diluted

$

0.18

$

0.15

$

0.41

$

0.25

Weighted Average Shares of Class A Common Stock Outstanding

Basic

30,549,092

30,036,593

30,451,553

29,985,869

Diluted

30,589,997

30,036,593

30,472,005

29,985,869

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, 

    

2024

    

2023

Cash Flow from Operating Activities

Net Income

$

29,942

$

18,139

Adjustments to reconcile Net Income to Net Cash provided by Operating Activities:

Deferred Income Tax Expense

3,770

2,837

Depreciation, Amortization and Accretion

39,128

37,692

Stock-Based Compensation

8,214

5,585

Abandoned Well Costs

310

Loss on Disposal of Assets, Net

114

57

Abandoned Projects

745

128

Amortization of Debt Issuance Costs, Net

1,436

1,041

Other

735

376

Changes in Operating Assets and Liabilities:

Accounts Receivable

(5,524)

15,097

Accounts Receivable from Affiliate

(6,169)

18,308

Other Receivables

(665)

(4,005)

Prepaids and Deposits

2,975

1,583

Accounts Payable

1,818

(1,001)

Payables to Affiliate

(215)

(578)

Accrued Liabilities and Other

(18,467)

1,208

Net Cash Provided by Operating Activities

58,147

96,467

Cash Flow from Investing Activities

Property, Plant and Equipment Expenditures

(56,879)

(77,981)

Deposit on Assets Held for Sale

1,750

Proceeds from the Sale of Property, Plant and Equipment

94

Net Cash Used in Investing Activities

(56,785)

(76,231)

Cash Flow from Financing Activities

Dividends and Distributions Paid

(11,817)

(10,743)

Repurchase of Shares

(1,326)

(599)

Repayment of Credit Facility

(15,000)

(36,000)

Proceeds from Credit Facility

37,000

30,000

Payment of Insurance Premium Financing

(3,756)

Net Cash Provided by (Used in) Financing Activities

5,101

(17,342)

Net Increase in Cash

6,463

2,894

Cash, Beginning of Period

5,063

1,122

Cash, End of Period

$

11,526

$

4,016

Supplementary Cash Flow Data

    

Cash Paid for Interest

$

16,805

$

17,413

Cash Paid for Income Taxes

$

561

$

80

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, 2024

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

Class A

Class B

Additional

Retained Earnings

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, 2024

$

306

30,669,932

$

275

27,543,565

$

328,543

$

(5,133)

418,319

$

(87)

$

363,989

$

687,893

Stock-Based Compensation Expense

4

428,044

-

-

4,503

-

-

-

(986)

3,521

Deferred Tax Assets Acquired

-

-

-

-

224

-

-

-

-

224

Dividends and Distributions ($0.09 per share or unit)

-

-

-

-

-

-

-

(2,884)

(2,601)

(5,485)

Purchase of Treasury Stock

-

-

-

-

(18)

(1,581)

131,921

-

18

(1,581)

Net Income

-

-

-

-

-

-

-

7,623

9,207

16,830

Balance at March 31, 2024

$

310

31,097,976

$

275

27,543,565

$

333,252

$

(6,714)

550,240

$

4,652

$

369,627

$

701,402

Stock-based Compensation Expense

-

6,250

-

-

2,509

-

-

-

2,184

4,693

Deferred Tax Liabilities Acquired

-

-

-

-

(578)

-

-

-

-

(578)

Dividends and Distributions ($0.105 per share or unit)

-

-

-

-

-

-

-

(3,382)

(3,051)

(6,433)

Purchase of Treasury Stock

-

-

-

-

-

(16)

1,048

-

-

(16)

Net Income

-

-

-

-

-

-

-

5,965

7,147

13,112

Balance at June 30, 2024

$

310

31,104,226

$

275

27,543,565

$

335,183

$

(6,730)

551,288

$

7,235

$

375,907

$

712,180

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

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 a 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/unit 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 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, 2023.

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. As the managing member of Solaris LLC, we operate and control all of 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, 2024, we own approximately 53% of Solaris LLC. Our condensed 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 long-lived assets, 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, accruals for environmental matters, the income tax provision, valuation allowances for deferred tax assets and our Tax Receivable Agreement (“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 period 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, 2023 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, 2024.

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 (as defined below) 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, 2024

December 31, 2023

Carrying

Fair

Carrying

Fair

    

Amount

    

Value

    

Amount

    

Value

Senior Sustainability-Linked Notes

$

400,000

$

401,500

$

400,000

$

405,090

Credit Facility

$

48,000

$

48,000

$

26,000

$

26,000

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

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Intangible Assets

Intangible assets are net of accumulated amortization of $152.9 million and $134.4 million at June 30, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, we had receivables of $29.1 million and $23.0 million, respectively, from ConocoPhillips that were recorded in “Accounts Receivable from Affiliate” on the condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, we had payables of $0.7 million and $0.9 million, respectively, to ConocoPhillips that were recorded in “Payables to Affiliate” on the condensed consolidated balance sheet. Revenues related to ConocoPhillips were $32.0 million and $64.1 million, respectively, for the three and six months ended June 30, 2024. Revenues related to ConocoPhillips were $31.3 million and $62.5 million, respectively, for the three and six months ended June 30, 2023.

Collaborative Arrangements

We have a beneficial reuse strategic agreement (the “Joint Industry Project” or “JIP”) with Chevron U.S.A. Inc., ConocoPhillips and Exxon Mobil Corporation (collectively with us, the “alliance members”) to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities. We previously referred to this agreement as the Beneficial Reuse Strategic Agreement. We account for reimbursements of research and development costs under the JIP as contra-expenses in the period such expenses are incurred. This reflects the joint risk sharing nature of these activities within the collaborative arrangement. We classify advance billings or receivables recorded as “Accrued and Other Current Liabilities” or “Other Receivables,” respectively, on our condensed consolidated balance sheet.

For the three and six months ended June 30, 2024, we incurred $2.6 million and $5.2 million, respectively, in total research and development expenses relating to the JIP, which was offset by $1.9 million and $3.9 million, respectively, in amounts due from the other alliance members for reimbursement of these shared costs. For the three and six months ended June 30, 2023, we incurred $2.0 million and $2.1 million, respectively, in total research and development expenses relating to the JIP, which was offset by $1.5 million and $1.6 million, respectively, in amounts due from the other alliance members for reimbursement of these shared costs.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The amendments in this ASU primarily relate to the rate reconciliation and income taxes paid disclosures and improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024 and may be applied prospectively or retrospectively. Other than the required disclosures, we do not expect a material impact on our condensed consolidated financial statements and related disclosures upon adoption.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU require disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. This ASU is effective for annual periods beginning after December 15, 2024 and should be applied prospectively. Other than the required disclosures,

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we do not expect a material impact on our condensed consolidated financial statements and related disclosures upon adoption.

3.Additional Financial Statement Information

Balance Sheet

Other balance sheet information is as follows:

(in thousands)

    

June 30, 

December 31,

    

2024

2023

Other Receivables

Insurance and Third Party Receivables for Remediation Expenses

$

4,342

$

4,064

Reimbursable Research and Development Receivable

1,450

Property Insurance Receivable

2,337

4,000

Reimbursable Projects

6,753

3,253

Total Other Receivables

$

13,432

$

12,767

Prepaids and Deposits

Prepaid Insurance

$

2,071

$

5,494

Other Prepaids and Deposits

3,318

2,870

Total Prepaids and Deposits

$

5,389

$

8,364

Accrued and Other Current Liabilities

Accrued Operating Expense

$

19,675

$

33,491

Accrued Capital Costs

7,500

3,812

Accrued Interest

8,260

8,510

Accrued Compensation

6,066

10,118

Sales Tax Payable

2,949

1,645

Lease Liabilities

1,763

1,676

Contingent Consideration Liability

1,078

1,221

Other

2,970

3,943

Total Accrued and Other Current Liabilities

$

50,261

$

64,416

Other Long-Term Liabilities

Noncurrent Lease Liabilities

$

14,242

$

14,716

Contingent Consideration Liability

1,829

2,078

Total Other Long-Term Liabilities

$

16,071

$

16,794

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Statement of Operations

Other statement of operations information is as follows:

(in thousands)

Three Months Ended

Six Months Ended

June 30, 

June 30, 

    

2024

    

2023

    

2024

    

2023

Depreciation, Amortization and Accretion Expense

Depreciation - Property, Plant and Equipment

$

10,105

$

9,335

$

19,944

$

18,197

Amortization - Intangible Assets

9,264

9,451

18,527

18,903

Accretion of Asset Retirement Obligations

338

300

657

592

Total Depreciation, Amortization and Accretion Expense

$

19,707

$

19,086

$

39,128

$

37,692