Aris Water Solutions, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions

Acquisitions

12 Months Ended

Dec. 31, 2023

Acquisitions

Acquisitions

4.Acquisitions

Delaware Energy Asset Acquisition

On August 1, 2022, we acquired from Delaware Energy, LLC (“Delaware Energy”) certain produced water handling facilities and other related assets and rights in Lea County and Eddy County, New Mexico. In connection with the closing and as consideration for the assets, we issued to the seller 3,365,907 shares of our Class A common stock and included volumetric-based contingent consideration. We estimated the fair value of the contingent consideration using a discounted cash flow model based on estimated royalty payments to be made over a five-year contractual period. Allocation of the purchase price to the acquired assets was based on relative fair values.

The following table sets forth our purchase price allocation:


(in thousands, except share and per share amounts)
Equity Consideration
Number of Class A Shares Issued ⁽¹⁾		3,365,907
Fair Value Per Share on Transaction Closing Date	$	21.16
Total Fair Value of Equity Consideration	$	71,223
Fair Value of Contingent Consideration ⁽²⁾		3,899
Total Fair Value of Consideration	$	75,122

Purchase Price Allocation
Produced Water Handling Facilities	$	72,736
Gathering Systems and Pipelines		2,716
Total Fair Value of Property Acquired		75,452
Less: ARO Liabilities Assumed		(330)
Total Purchase Price Allocation	$	75,122

(1)

A portion of these shares are held in escrow and are released pursuant to the terms and conditions of the asset purchase agreement with Delaware Energy. During the year ended December 31, 2023, 85,471 of these shares were released and returned to the Company for the reimbursement of certain post-acquisition workover costs. See Note 12. Stockholders’ and Members’ Equity for further details.

(2)

As of December 31, 2023 and 2022, liabilities for contingent consideration of $1.2 million and $1.3 million are included in “Accrued and Other Current Liabilities,” respectively, on the consolidated balance sheet, and liabilities for contingent consideration of $2.1 million and $2.7 million are included in “Other Long-Term Liabilities,” respectively, on the consolidated balance sheet.

Contemporaneously with the issuance of the shares of Class A common stock, Solaris LLC issued 3,365,907 Solaris LLC units to Aris Inc.

Water Standard Asset Acquisition

In October 2022, we acquired certain intellectual property rights and related proprietary treatment technologies and assets from Water Standard Management (US), Inc. (“Water Standard”) that will support and accelerate the advanced treatment and beneficial reuse of produced water in the Permian Basin. In connection with the closing and as consideration for the assets, we issued the seller 85,193 shares of our Class A common stock, which was valued on the acquisition date at $16.16 per share for total equity consideration of $1.4 million. We also paid the seller $1.2 million in cash for total consideration of $2.6 million. Contemporaneously with the issuance of the shares of Class A common stock, Solaris LLC issued 85,193 Solaris LLC units to Aris Inc.

Other Asset Acquisitions During the Year Ended December 31, 2022

During the second half of 2022, we purchased six ponds from ConocoPhillips, a related party, for a cash purchase price of $3.9 million.