4.Acquisitions

Concho Lea County Acquisition

On June 11, 2020, we acquired certain produced water handling, transportation and water disposal assets in Lea County, New Mexico (the “Lea County Acquisition”) from a wholly-owned subsidiary of Concho. This acquisition further expanded our water infrastructure system in the Delaware basin and further extended and expanded our water management agreement with Concho.

The net purchase consideration was $149.6 million, which comprised $77.6 million of Class A units (4,561,391 units) and $72.0 million of Redeemable Preferred Units with a face value of $75.0 million. (See Note 10. Redeemable Preferred Units). We incurred $1.6 million of acquisition-related costs, which are included in Transaction Costs in 2020.

The following table sets forth our purchase price allocation:

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During the year ended December 31, 2020, we recorded revenue and earnings of $4.0 million and $1.5 million, respectively, in the consolidated statement of operations associated with the Concho Lea County Acquisition.

Concho Eddy County Acquisition

On July 30, 2019, we acquired certain produced water handling, transportation and water disposal assets in Eddy County, New Mexico and Reeves and Culberson Counties, Texas of a wholly-owned subsidiary of Concho. The net purchase consideration was $330.6 million, which comprised $55.4 million in cash and $275.2 million of Solaris LLC Class D units (6,385,948 units). This acquisition expanded our water infrastructure system in the Northern Delaware Basin and established a long-term produced water management agreement with Concho.

The purchase price was allocated primarily to intangible assets for acquired customer contracts ($270.4 million), property plant and equipment ($50.2 million), and goodwill ($11.1 million).

During 2020, we made measurement period adjustments to reflect facts and circumstances that existed at the time of the acquisition. The adjustments resulted in a $0.6 million increase in Goodwill and a $0.6 million decrease to Property, Plant & Equipment.

During the year ended December 31, 2019, we recorded revenue and earnings of $8.8 million and $4.7 million, respectively, in the consolidated statement of operations associated with the Concho Eddy County Acquisition. We incurred $1.0 million of acquisition-related costs, which is included in Transaction Costs.

Proforma – Concho Lea and Eddy County Acquisitions

The unaudited pro forma results presented below have been prepared to give effect to the acquisitions discussed above on our results of operations for the years ended December 31, 2020 and 2019 as if the acquisitions had been consummated on January 1, 2019. The unaudited pro forma results do not purport to represent what our actual results of operations would have been if the acquisitions had been completed on such date or to project results of operation for any future date or period.

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