Select Water Solutions Buys Pilot Water for $700M, Expanding Delaware Basin Network

Key Points

• Select Water Solutions will acquire Pilot Water Solutions for $700 million, comprising $600 million in cash and $100 million in Select stock, with closing expected in the fourth quarter of 2026 pending approvals.
• The deal significantly expands Select’s Delaware Basin infrastructure, adding 2.7 million barrels per day of active permitted disposal capacity, more than 700 miles of pipelines and highly contracted volumes expected to reach 1 million barrels per day in 2027.
• Pilot is expected to contribute $120 million–$130 million of adjusted EBITDA in 2027, while Select targets $10 million–$15 million in annual cost synergies; management expects the acquisition to be immediately accretive to cash flow per share and keep closing leverage below 2.0 times.

Select Water Solutions NYSE: WTTR said it has agreed to acquire Pilot Water Solutions for $700 million, expanding its produced-water disposal and pipeline footprint, particularly in the Permian Basin’s Delaware Basin. The transaction is expected to close in the fourth quarter of 2026, subject to customary conditions and regulatory approvals.

The purchase price includes $600 million in cash and $100 million in Select Class A common stock. Pilot’s sellers may also receive up to $15 million in contingent cash consideration tied to operational milestones expected in early 2027. They retain a right to a cash true-up payment if Select’s 30-day volume-weighted average share price six months after closing is below the comparable price at closing.

“With Pilot Water, Select will add highly contracted production-related earning stream at an accretive valuation in the heart of the Delaware Basin,” Founder, Chairman, President and Chief Executive Officer John Schmitz said on a conference call discussing the transaction.

Expanded Delaware Basin Infrastructure

Pilot Water’s platform includes approximately 2.7 million barrels per day of active permitted disposal capacity, nearly 900,000 barrels per day of undeveloped permitted disposal capacity and more than 700 miles of pipelines. During the first half of 2026, Pilot handled about 850,000 barrels per day of produced water, with more than 80% of those volumes sourced from the Delaware Basin in Texas and New Mexico.

A new 175,000-barrel-per-day minimum-volume-commitment contract in the Delaware Basin is expected to lift Pilot’s daily produced-water volumes to 1 million barrels per day in 2027, according to Select. More than 80% of Pilot’s annual revenue is supported by long-term contracts with an average remaining term exceeding seven years, including 480,000 barrels per day of minimum-volume commitments and 306,000 dedicated acres.

Schmitz said the combination will preserve Select’s “recycle-first” strategy while adding disposal capacity that can support system balancing and water-management flexibility. He said Select expects the transaction to add a more than 60% growth leg to its water infrastructure segment in 2027.

Select expects combined daily volumes to exceed 2.5 million barrels per day in the first half of 2027, supported by additional contracted minimum-volume commitments. Water infrastructure is projected to account for roughly 70% of the company’s pro forma consolidated gross profit before depreciation and amortization in 2027.

Financial Outlook and Integration Spending

Executive Vice President and Chief Financial Officer Chris George said Pilot is expected to generate adjusted EBITDA of $100 million to $110 million for full-year 2026 and $120 million to $130 million in 2027. The 2027 increase is primarily tied to the new 175,000-barrel-per-day contract.

Select is targeting an additional $10 million to $15 million in annual cost synergies, beyond the 2027 forecast, within 12 to 18 months. Based on transaction value including contingent consideration and EBITDA guidance midpoints, George said the acquisition represents multiples of 6.8 times 2026 EBITDA, 5.7 times 2027 EBITDA and 5.2 times an implied 2027 run rate with full synergies.

The company expects the acquired assets to require $20 million to $25 million of recurring annual maintenance capital expenditures. It also plans to invest approximately $50 million in one-time integration and network-enhancement capital expenditures in each of the next two years, including spending to tie Pilot’s system into Select’s infrastructure.

Select said the combined network will include:

• 3.8 million barrels per day of recycling capacity;
• 4.8 million barrels per day of active and undeveloped permitted disposal capacity;
• More than 1,600 miles of pipeline; and
• Approximately 57 million barrels of treated and produced-water storage capacity.

Commercial Opportunities

Chief Commercial Officer Michael Skarke said the systems are complementary because Select has been focused on recycling while Pilot has been primarily a disposal provider. He said the company intends to integrate the networks and use Pilot’s disposal capacity to further monetize Select’s large-diameter, dual-pipeline network in New Mexico.

Management expects some commercial synergies to emerge during the initial two-year integration period, while others may occur later. The company also cited potential opportunities in out-of-basin disposal, mineral extraction royalties and beneficial reuse, though it did not quantify potential revenue contributions from those initiatives.

Following the transaction, Select expects to have more than 600,000 barrels per day of minimum-volume commitments, about 90% of which are with investment-grade counterparties, and approximately 3.6 million acres under dedication or rights-of-way for dedication. The weighted average remaining contract term is expected to be about nine years.

Select has entered debt commitment letters with JPMorgan and Bank of America to provide financing for the acquisition. George said the company expects net leverage at closing to remain below 2.0 times after anticipated debt financing and said the acquisition is expected to be immediately accretive to cash flow per share.

About Select Water Solutions (NYSE:WTTR)

Select Water Solutions, Inc provides water management and chemical solutions to the North American oil and gas industry. Its services include water sourcing, transfer, recycling, treatment, storage, and disposal, supporting hydraulic fracturing, drilling, completions, and production operations. The company also provides water infrastructure services and oilfield chemical products and solutions.

The company operates through its Water Services, Water Infrastructure, and Chemical Technologies businesses.

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