US-based Select Water Solutions has agreed to acquire Delaware Basin-focused water midstream company Pilot Water Solutions for $700m.
Under the agreement, Select, which is listed on the New York Stock Exchange, will acquire the business on a debt-free basis for $600m in cash and $100m in Class A common stock.
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The consideration also includes up to $15m in contingent cash payable upon achieving operational milestones in early 2027.
The share count will be calculated using Select’s 30-day volume-weighted average price prior to completion, supported by a six-month price-protection cash true-up provision.
Select, a provider of water and chemical solutions to the energy sector, has secured committed debt financing from JP Morgan Chase Bank and Bank of America to fund the cash consideration, alongside existing cash.
Pilot Water is forecast to generate adjusted earnings before interest, taxes, depreciation and amortisation of $100m–110m in 2026, increasing to between $120m and $130m in 2027.
Select attributed this earnings growth to a new 175,000 barrel per day (bpd) minimum volume commitment contract, while targeting an additional $10m–15m in annual cost synergies within 12–18 months.
Water infrastructure is forecast to represent approximately 70% of Select’s pro forma profitability by 2027, with pro forma net leverage remaining below 2.0x at closing.
Select board chairman, president and CEO John Schmitz said: “We are excited to announce our agreement to acquire Pilot Water Solutions, a leading private water midstream company with a core position in the Delaware Basin.
“We expect this acquisition to further solidify Select’s position as a diversified, market-leading water midstream platform operating across the US. With Pilot Water, Select will add highly contracted, production-related earnings streams at an accretive valuation in the heart of the Delaware Basin.”
Pilot Water operates 2.7 million barrels per day (mbbl/d) of active permitted disposal capacity (PDC), 900,000bpd of undeveloped PDC and more than 700 miles of pipelines.
More than 80% of its produced water volumes originate in the Delaware Basin, alongside operations across the Midland, Eagle Ford, Haynesville, Rockies and North-east regions.
More than 80% of annual revenue is underpinned by long-term contracts averaging more than seven years, including 480,000bpd in volume commitments and 306,000 dedicated acres. Handled volumes are expected to reach 1mbbl/d during 2027.
The combined platform will comprise 3.8mbbl/d of recycling capacity, 4.8mbbl/d of total disposal capacity, more than 1,600 miles of pipelines and 57mbbl of storage, handling more than 2.5mbbl/d in 2027 across 3.6 million dedicated acres.
The transaction is scheduled to close in the fourth quarter of 2026, subject to Hart-Scott-Rodino Act clearance.
JP Morgan Securities and BofA Securities advised Select, with Vinson & Elkins serving as legal counsel.
