Aris Water Solutions, Inc.

Good morning and welcome to the ARIS Water Solutions third quarter 2021 earnings conference call. I am joined today by our founder and executive chairman, Bill Zartler, our president and CEO, Amanda Brock, and our CFO, Brenda Schroer. Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors included in our prospectus filed with the Securities and Exchange Commission in connection with our IPO. I would also like to point out that our investor presentation and today's conference call will contain discussion of non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. Reconciliation to the most directly comparable gap measures are included in our earnings release and the appendix of today's accompanying presentation. I'll now turn the call over to our founder and executive chairman, Bill Zarler.

Thank you, David. I'd like to welcome everyone to ARIS Water Solutions' first conference call as a public company. We thank everyone for their investment and belief in our company and are excited to begin our next chapter as a public company. As a reminder, we own and operate a leading environmental water infrastructure and recycling business in the Northern Delaware and Midland Basins. Our built-for-purpose, high-capacity, produced water handling and recycling systems provide our customers with proven produced water takeaway assurance and access to significant recycled produced water volumes for sustainable water supply. Our growing water recycling capabilities and infrastructure help our customers meet their water-related sustainability targets and mitigate their impact on local groundwater sources. We operate over 660 miles of high-capacity water pipelines, have 48 active water handling facilities, and 10 high-capacity produced water recycling facilities. ARIS Water had a strong third quarter as we continue to recognize the benefits of our large-scale infrastructure and increased demand for recycling produced water. In the third quarter, we executed four new long-term acreage dedications with a weighted average life of 10 years, increasing our dedicated acreage by 20,000 acres. Two of these contracts with leading operators include long-term, full-cycle water handling and recycling solutions. We also set records for total volumes handled and produced water volumes recycled. We continue to see steady increases in completions activity in the Northern Delaware and Midland Basins and anticipate continued further volume growth going forward. We have a demonstrated and differentiated ESG track record that is core to our operations and mission. Amanda will now expand further on our operating performance. Thank you, Bill.

As Bill indicated, in the third quarter we saw record volumes of water handled and sold on our integrated water handling and reuse infrastructure network. We handled 961,000 barrels per day of total water volume in the third quarter of 2021, which is an increase of 42% versus the third quarter of 2020, and an increase of approximately 4% from the second quarter of 2021. These record volumes were driven by the increased activity of our long-term contract at Blue Chip customer base and continued demand for our recycling solutions. We continue to differentiate our capabilities through our ability to aggregate and deliver to multiple operators recycled water in the quantity, quality, and timeframe they need for their completion. Recycled produced water made up more than 60% of source volume supply for the quarter, exceeding our sustainability performance target that was established for our 2022 fiscal year under our sustainability link notes. The sustainability performance target was to have recycled water constitute 60% of total sourced volumes sold by December 2022. Since July 2019, ARIS has recycled more than 2.1 billion gallons of treated produced water, directly displacing the use of groundwater. We continue to work closely with our customers on reuse and evaluating opportunities to increase water sustainability and are making demonstrable progress toward helping the industry maximize water recycling. Our infrastructure also provides us the capability to work with customers to pilot technologies that promote beneficial reuse of treated produced water outside of the oil and gas industry, and we continue to make progress as we evaluate and pursue these opportunities. Our adjusted operating margin per barrel was 41 cents in the third quarter of 2021, compared to 38 cents per barrel in the third quarter of 2020. We have also made significant progress in reducing structural costs through automation and increased recycling activities. While we have seen some recent impact from cost inflation, particularly around chemicals for treatment, We continue to be focused on operating efficiencies and opportunities to add incremental margin going forward. We also have inflation escalation clauses in our contracts that help mitigate inflationary cost pressures. And with that, I'll turn it over to Brenda to discuss our third quarter financial results.