Fireside chat with CFO Chris George and COO Michael Skarke of Select Water Solutions. We're also joined today by Garrett Williams, who handles Select's investor relations. I'm Jeff Robertson, Managing Director for Natural Resources at Water Tower Research. Before we begin, I would like to remind participants that today's discussion could include forward-looking statements as of today, November 13, 2024. Select's disclosures regarding such statements can be found under the Investor tab of its corporate homepage. Chris, Michael, Garrett, I'd like to thank you for joining us today. Yeah, thanks for having us, Jeff. Select is a leading full-cycle sustainable water and chemical solutions provider to the U.S. oil and natural gas production industry. The company serves its customers' needs in every major producing basin in the U.S. Select reports operations in three segments: water infrastructure, which is its highest margin segment, water services, and chemical technologies. Growing industry demand for produced water recycling use solutions is driving demand for the services that Select provides to its customers. It currently has around 3 million barrels per day of recycling capacity, more than 1,000 mi of water gathering and distribution pipelines, and further, Select operates about 15 million barrels of produced water storage capacity and more than 20 million barrels of fresh and brackish water storage. The company also has about 2 million barrels of permitted daily water disposal capacity. Revenue in Select's water infrastructure segment grew 41% year-on-year in 3Q 2024, and the gross profit before depreciation and amortization was about 57%. The company's highest margin segment, water infrastructure, is expected to provide about 50% of profitability by the end of 2025, and importantly, the growing contribution from the segment, which is underpinned by long-term customer contracts that serve to increase the earnings and cash flow visibility of Select in future periods. Select has closed 12 acquisitions for an aggregate consideration of about $160 million and a number of new customer agreements to build the water infrastructure segment in 2024. Acquisitions have added to the company's footprint in every producing basin it operates. Michael, let's just start on the acquisition and growth opportunity front. Can you talk about how organic and acquisition and growth opportunities feed off one another to increase flexibility to meet customer needs? Sure. And thank you, Jeff. We're really opportunistic, whether it's organic or inorganic. So if we can build it cheaper and faster to meet our specs, then we can buy it. That's what we do. And so you've seen us do a lot of organic opportunities around recycling. We were first to market with recycling in the Permian. We had the first commercial recycling facility with the largest recycling in the Permian. There's really not a lot of acquisitions that make sense because we have our model. We're very good at it. And we just continue to roll it out for new customers. Conversely, you've seen us make, what, 11 acquisitions this year on the disposal side. And we've been very focused on that because we've been able to buy assets that are strategic, that are fit for our system for cheaper than we can put them in the ground. And so our goal is to add assets to our systems, link systems to create networks. The more interconnectivity you have, the more likely you are to be able to balance the longs and shorts of water to multiple operators, solve the problem, and do it in a very efficient way. So I would say, getting back to your original question, really indifferent whether it's buy or build. We're just looking for the most value for ourselves and for our customers. The Permian Basin represented about 50% of third quarter 2024 revenue. With the completion of the projects that you all have announced to date, the Northern Delaware system will have more than 1 million barrels per day of recycling capacity and nearly 13 million barrels per day of produced storage capacity, all interconnected by about 175 mi of pipelines. How does a system like that meet the needs of your customers in one of the largest producing regions in the U.S.? Yeah, the Northern Delaware is really interesting. And it's an area we've been very focused on and very successful this year in building out assets and getting committed contracts. You have a ton of inventory remaining. You have multiple benches. You have large water cuts. There are regulatory restrictions that make it hard to dispose of water, particularly as you get further north in Lea County. And source water is limited as well. So it's really ripe for recycling. And we've gone in and been pretty aggressive in securing contracts and building out infrastructure to support water recycling. And the more, as I mentioned earlier, the more operators you could have connected, the more likely it is that between that co-op, you can dispose of a barrel through recycling or synthetic disposal and then source that water back to an operator. So one of our biggest customers, for example, in Lea County, they're going to have five months where they don't have a well. However, we will be able to take all of their produced water in that area, recycle it, and send it back out to our other operators. And that's the importance of a large system that has multiple operators that's connected to various parts of the region, different basins, not different basins, different sub-basins. And that's what we're trying to create in the Northern Delaware and have had success in doing so far. What's really the value proposition that Select brings to customers that would cause them to work with you versus try to solve some of these water solutions on their own? Sure. So there's really two value propositions. The first is single-user systems are inherently underutilized. When you're relying on recycling your own produced water, you have to match your frac schedule with your produced water. And operators do not want to manage frac schedule by water demand. It's kind of the tail wagging the water. So what you have is when that happens, you have operators who build the system to peak and still struggle to consume all of their produced water or utilize all their produced water for their completion part, relying on fresh fracs. And so it's inefficient from a capital deployment standpoint. It's inefficient from an operating standpoint. What we do is we step in and we commercialize it. So we make sure that for our anchor tenants, we are disposing of all of their produced water via recycling, and that we're able to use our recycling systems and water from other operators, as well as their own water, source it for new well. So it's considerably more efficient. And as a result, it's much more economic for us and for the operator. The other thing I would say is operators generally don't work well with one another. And managing completion schedules is very challenging because they're constantly moving. It's not at all unheard of for us to have a frac move up four or six weeks, which just wrecks your water balance. Because we work with everybody, and we work with everybody in the Northern Delaware, we have interconnections to most of them. We're able to accommodate those meaningful fluctuations, and we're able to do it without an adversarial position that I've seen occur when two operators are trying to work together. And so it's just a frictionless way for us to make sure that we are recycling barrels in lieu of disposing of them and that we're sourcing barrels, sourcing recycling barrels instead of fresh fracs. And that's really part of where the economics come in. The traditional way is you take a barrel of produced water, you pipe or truck it into disposal, and then you source a barrel of fresh and brackish water. And the rates vary based on where you are. The Northern Delaware actually has some of the highest cost of disposal, some of the highest cost of source fresh and brackish water. However, when you're able to implement a recycling solution, you can bring those rates down dramatically, so it's not at all, it's not at all unusual for us to be able to cut the cost of recycling and disposal via disposal through recycling by half, and the same thing for sourcing another barrel [audio distortion], so in this instance, green is actually green, and it's really easy to get people on board with that. So is a way to think about it that water balancing, which is what you're describing, solves all of their problems of producers, but creates economic opportunity for them through lower costs and for Select with the services you provide? That is exactly our value proposition. And if you need a role as a salesman job, I got you, man. That's perfect, Jeff. There's obviously been a lot of industry consolidation and E&P companies trying to extract value out of M&A transactions. We've seen a couple of them this week in the Permian Basin, including one this morning. How does Select really capitalize on the consolidation trend that's been taking place in the E&P industry? There's really two things that we're doing. The first is, and we said it before, but I'll repeat it because I think it's true. We think scale seeks scale. So as you get more and more operators that are consolidators, that are larger, that are bigger, they're looking to bigger companies to solve their problems. It really knocks out some of the smaller, some of the more thinly capitalized companies because they just can't scale with the operator and provide the full solution. Whereas Select, we have public currency, low debt, strong cash flow. We're able to meet the needs of any operator. If they need one disposal well or six recycling facilities, something that we can step up and commit to without any hesitation, whereas some of the smaller competitors or companies with higher leverage are strong. So I would say that's the first part. The second part, you mentioned efficiency, and I'll maybe hit on that. Operators are absolutely searching for efficiency. They want to do more with less every single time. And that can be a challenge, particularly on the services side where you're operating on a day rate. So you've seen operators drill rig or drill wells much more efficiently, which means fewer rig days. Same thing with completions. There's fewer pumping days to complete a well. Fortunately, on the infrastructure side, we're by the barrel. So as volumes increase, our revenue increases correspondingly. And even if that occurs in fewer days, it's still the same with more barrels, which has a positive to neutral impact on our revenue. So we're a proponent of consolidation for the industry because we think it plays for our strengths. And maybe, Jeff, a couple of things I'll add on the consolidation point as well. You've seen it in a number of the transactions that have taken place between the customer base. One of the key focus areas for consolidation is how to reduce that lease operating expense over time, how to get efficiency of scale and reduce that operating margin or increase that operating margin on a per barrel basis out of a larger production base. Well, ultimately, one of the highest cost components of that LOE is produced water management. So when you think about how operators are looking to extract value from consolidation beyond kind of pure cost synergies and inefficiency, LOE reduction is a key focus area. The solutions we're providing that Michael mentioned in terms of that integrated solution providing a net benefit economic advantage. That's going to drive that LOE cost down, which is a core focus of what operators are looking to do through this consolidation. Then the other thing I'd say is, I mean, similar to how our operator customers are focused on consolidation to not only add efficiency, but as importantly, add inventory. They're adding inventory through this that adds longevity to their production base over a longer duration, particularly in core areas like the Permian. What Select is focused on doing alongside of our customer base is through the infrastructure footprint, adding these long-term contracts and building out infrastructure. As we add acreage dedications to the portfolio, we ourselves are effectively adding long-term inventory to the business over time as well. We really are focused on how we can be a better partner to our customer. To Michael's point, the consolidators here are really looking for large-scale service providers and midstream partners that can provide that visibility into the long-lived production scope that they have through building out an increased inventory over time as well. So far, we've talked a fair bit about the Northern Delaware system that you've put together. But do you see opportunities in the Midland Basin to put together networks and expand networks like you've done in the Delaware? There's absolutely opportunities. The Midland Basin is a little more established, and it's also a more fragmented market, so I think that's part of the reason it's been a little slower to develop in the Northern Delaware, where it was newer and the assets needed to be put in the ground, but there's definitely areas where you can create larger systems and link systems, and it's something that we're working on doing, excuse me, working on doing right now, and I suspect we'll have success at it in 2025. Yeah. I mean, the Midland Basin side, Jeff, I would reiterate. I mean, when we really started building out recycling as a service offering, it started in the Midland Basin. The first facility we built was in the Midland Basin and is coincidentally in the middle of one of the largest SRAs. And we've seen great reception and commercialization out of that facility. We've got half a dozen or so recycling facilities in the Midland Basin side. There is more opportunity, to your question, to interconnect that asset base efficiently. But that's really where recycling took off initially as we built the first one in the industry and kind of expanded it from there. But the Delaware side is really more of a greenfield opportunity as a newer, less developed footprint, particularly as you push further north. But it's really taking the learnings of the Midland Basin to build out from there. So is that like three yards in a cloud of dust in the Midland Basin where you piecemeal things, piecemeal assets together as you cobble them? It's certainly an opportunity. I mean, we've got a really nice system in Howard County. We had a press release last summer that talked about doing 300,000 barrels a day for Endeavor in what we think is the largest produced water job. And we were able to do it because we had 10 operators tied into the system. And so that's really, I would say, the marketing system for us in the Midland Basin and one of the marketing systems in the Midland Basin. I think there's certainly an opportunity among the other five systems we have to continue to grow and expand them. And we'll do that. And some of it could involve acquisitions, as you mentioned, if it's cheaper than organic development. But there's not the same greenfield opportunity today that exists in the Delaware because you're continuing to expand the territory north. Assets have to be put in the ground. We've been urged to do that. One thing I would add, yeah, to the Midland Basin side is our customers themselves have quite a bit of infrastructure in the ground in the Midland Basin side. And we may have more pipe in the ground in the Delaware than we do in the Midland, but we're interconnected to a lot of customer pipe through that facility footprint. So it may be a less kind of Select-owned network, but we are interconnected into our customer base in a way that does add expansive reach and optionality to that footprint. And that's really utilizing that customer-owned asset that we can expand that utilization of over time. The 50% of your revenue comes from the Permian Basin, then 50% comes from the other basins that you operate in. Which basins offer the best opportunity over the next 12 to 18 months? I'd start with the Permian. Everything starts and stops with the Permian. That's why half of our revenue comes from there and will continue to, but you've seen us execute transactions in every basin across our footprint, so we're very glad we have the optionality we do because if things were to change, if gas gets back to $8 or anything like that, we're going to really like our position in the Haynesville in the Northeast, and so the optionality there is important to us. In terms of the near term, outside of the Permian, we do have one recycling facility in the DJ. We made some acquisitions in the Northeast in the Haynesville in preparation for resurgence in natural gas, so to the extent that LNG continues to get support from there, we think we'll see pop in the Haynesville. We're really happy with our position in the Bakken and the ability to continue to grow up there. So I would say that we're looking everywhere, Jeff, and there are definitely opportunities across the footprint. We just want to see which one makes the most sense from an economic standpoint, and that's the one we're going to attack first. On last week's earnings call, I think it might have been John talked about the legacy or connecting or converting, I'm sorry, the legacy freshwater trunk line between your Northern and Southern New Mexico systems to a produced water line. What will the produced water interconnect or unlock or allow you to achieve in the Delaware Basin? And why is converting that line so important to your water balancing efforts there? It was really a pretty easy decision. I mean, when you have a freshwater completion water pipeline and you have the ability to convert that to handle produced and treated produced water, that's where the market's heading. That's what our infrastructure portfolio has largely been built around. And so it was an easy decision for us to spend the money and do that. What made it really neat, though, is we have a system to the south in Southern New Mexico, and we have a system in the northern end of the play, but they were completely disparate. They were cut off. There was no connection between the two. And converting this 26-inch pipeline allows us to move water north and south. And part of it is double lines. So we can move water south while simultaneously moving it up north. And so it really takes two large, substantial systems, but allows it to be one. And that's where your interconnectivity and your water balancing take a whole nother level because you're able to access different geography, different customers, and do it very efficiently. So we're really excited about the opportunities that that presents when that's complete in mid or late Q1. I think, Jeff, one thing to add to it as well is, I mean, the ability to utilize an existing asset. I mean, that asset was underwritten with a long-term take-or-pay contract and provided a great economic return for us. But our ability to redeploy that asset and not have to build effectively new capital, assets in the ground, is going to provide a great capital efficiency for us. And the ability to utilize existing infrastructure, it's part of the focus around acquiring the assets that we have in as well. The bulk of our acquisitions are acquiring assets at below replacement cost. So similar to the conversion effort here, taking existing infrastructure and figuring out ways to efficiently utilize it to not only advance where we're going with the marketplace overall, but expand the utilization of assets over time and best preserve our capital for further additional growth. Most of your, or you have an infrastructure footprint in every basin, as we talked about. I think most of your competitors are focused almost entirely on the Permian Basin. What really drove the strategic decision to invest capital and approach your infrastructure investments in other basins to expand Select footprint? I'd start by saying the returns. So the Permian Basin has huge opportunities and a lot of longevity to it. But there are absolutely needs in the other basins, and there can be a good business. When I started with Select over 15 years ago, coming up on 16 years ago, we were a Barnett Shale company when the Barnett Shale was the only basin. And what we found is when the Barnett took a downturn and people started to leave, it was still a good business in the Barnett Shale that we had, particularly around infrastructure. You have to manage that water. And the next thing you knew, the Haynesville was all people wanted to talk about. And we're really excited about our position in the Haynesville because we do think there's going to be a resurgence there through LNG and sustained natural gas. And so we really like the optionality. We really like the opportunity. We know there's water needs in all the basins. And we're happy to serve them. And in some instances, we can have better returns in one basin at a certain period of time than another. And to our footprint, we can capitalize on that. And it also allows people to look at us as the solutions. When you're dealing with the biggest operators who have footprints in multiple basins, they'll know us from what we do in the Permian or in the DJ. And we're usually one of the first people they call saying, "Hey, we have this problem. We've seen you solve it. Living close to the Barnett Shale, I think the one thing you still see, although I can't remember the last time there was a rig operating out there, is you do still see the water hauling trucks moving around out there. Yep. Chris, we talked about acquisitions and organic growth, and you mentioned utilization. How do all of those things fit together to really drive Select's margins? Yeah. I mean, the margin profile of the business continues to improve over time, Jeff, driven on the back of that infrastructure footprint. We had initially set out a year ago a target of getting that segment to a 50%+ margin profile by 2025. We were able to quickly pull that forward into the first half of this year and saw the margins lift up to 57% in the third quarter, largely on the back of continued growth and utilization enhancement in that infrastructure footprint. We've been able to integrate the assets we bought efficiently as well. So not only have we been able to buy good existing operating assets, but we've been able to enhance that utilization both through just concerted efforts and customer relationships, but through interconnectivity to our other assets to create that network effect out of what might have been standalone assets. So that creates a lot of efficiency over time that drives margin improvement. Ultimately, that resulted in us getting to a 20% EBITDA margin in the third quarter for effectively the highest EBITDA margin in the company's history. And we see further upside to that looking into 2025. We think that we talked about the geographic footprint, the service footprint as well, the diversification we can offer to the customer base through services and chemistry alongside that infrastructure. We got more room to go on the margin efficiency in those businesses. But even in a relatively flat or more challenging activity environment like we've seen here more recently, we've been able to drive margin improvement through that growth in the key part of the infrastructure business. So is it fair to think about it that in an area like the trunk line you talked about connecting northern and southern parts of the Delaware Basin, if adding infrastructure assets or acquiring infrastructure assets that increase the utilization of the overall system ultimately is margin accretive for the system and the business and helps you preserve and maintain a very high-margin business? Yeah. I mean, it not only allows you to maintain a high-margin business, Jeff. Every incremental barrel you can put through a piece of fixed infrastructure generates an accretive margin profile generally for that asset. But it also allows us to access and ensure we can capture more inventory over time as well. That interconnectivity really allows you to more efficiently manage that water balancing such that you can maintain a conviction around that synthetic disposal of pulling that barrel into a recycling system and knowing that over the larger geographic footprint of that network, you're going to have an outlet for that barrel on the demand side for new well completions as well. So it improves the margin profile of the asset, but also allows us to expand the overall inventory capture of the asset over time as well. I know you don't have 2025 guidance out yet for some time, but you do have some projects coming on stream in the infrastructure segment in the first half of next year. Can you talk a little bit about how you think margins in that segment will progress in 2025 with the new capacity additions? Yeah. Generally, as we're underwriting these new projects, they're getting underwritten at something that has historically provided an accretive margin profile to the segment as a whole. So we do think there remains upside opportunity to that segment over time looking into 2025. That said, obviously, getting to 57% was a very strong outcome of performance for us this year. So we're going to maintain a very disciplined approach to how we underwrite our capital investments, and they should provide good incremental return profiles to us. But anywhere in that 50%-60% margin profile provides a very attractive overall return to us. And so we'll maintain a focus on trying to drive margin efficiency in that segment overall. But based on how we're underwriting new capital projects and the efficiency we expect to capture, we do think that year over year, we should see continued margin growth in that segment that will drive consolidated margin growth alongside of it. We have work, Chris. We want to make sure we stay out of the margin trap. We're executing at 57%, and we see a really good project at 55% meets our return criteria. We should do that project. We haven't talked about water services or chemical technologies a lot. But I'm just curious, does the water infrastructure growth have some pull-through opportunities that affect those two segments? Yeah. We definitely are seeing more success, Jeff, in terms of the value of capturing the full scope of what Select brings to bear in that contractual relationship with the customer base. Ultimately, if you're talking about a full life cycle reuse solution, taking that produced water barrel, treating it, redeploying it for new well completions, to get it to where it needs to go for that new well completion requires last-mile logistics. And that's one of Select's core competencies within our water services segment. And we're the clear market leader in that capability. So we are seeing more integration of that full service scope into those contractual relationship opportunities with the customer base. We've also seen additional progress in getting that chemistry side of the business involved in those conversations as well. When you're talking about reuse, an important part of making a reuse solution efficient and, frankly, viable is to have the important chemical application of that frac fluid system that you mix and match with that water quality. So it is a clear value opportunity for Select to provide not only value benefit to the customer base, but I think stability for Select as well over time as we develop a longer-term relationship across the full scope of what we do in services and chemistry alongside the infrastructure. And maybe to add two more examples. So on all of our recycling facilities, we use chemistry. And the chemistry we use is Select's chemistry. So we think we're leaders in the chemistry. And as the water changes, chemistry needs to adapt as well, either type of chemistry or dosage. So we're making sure that we have our team focused on that so that we provide the best output for the customer. And then on the service side, Chris mentioned the last-mile logistics. And I think that part is huge because you need the flexibility of the service to complete the solution. But also, as we're putting these assets in the ground, you need a temporary solution. And we're able to use our services as a temporary solution so the pipes actually get in the ground. That's been one of the real unexpected benefits of having the solution offering we have. If you step back a little bit, Select's solutions are really critical to water conservation and mitigating the environmental impact of oil and gas development in every basin that you operate. Select published a 2023 sustainability report, which people can look at on the website back in July of 2024, or 2023 sustainability report, I should say. Really, without the cost-effective solutions that Select provides, would the industry be able to develop its resources? It's a good question, Jeff. I mean, one of the things we've seen is not only has the industry become more receptive to the transition to produced water recycling, we've been able to do that through both the proving of the technology and the viability of it in terms of not only can you ensure you don't impair your well performance, you might actually have opportunity to enhance your well performance if done in the right way. But that obviously limits the demand for fresh water consumption and limits the need for disposal in certain areas. And that need for disposal is a very critical concern for the industry overall. You've seen a very keen focus of both the Texas Railroad Commission and the New Mexico regulators around the seismic concerns that we've seen develop over the last couple of years around wastewater injection. And so there are clear limitations coming to bear on the industry and the ability to add new disposal capacity. And what those limitations ultimately lead to is a need for more recycling. If you can't dispose of that barrel, you have to do something with it, or else you are otherwise impairing your customer's ability to keep producing their oil and gas or potentially develop new acreage that they have in some of these key areas. And so the ability to add new recycling capacity, develop creative solutions, and create more economic efficiency between industry partners is driving an ability of the industry to actually continue to develop at pace that's keeping what has been a growing production base over time steady and providing long-term opportunity in what might have otherwise been a constrained environment if you did not have those outlets. Am I interpreting what you said, Chris, that from a regulatory standpoint, both federal and state, that some of that regulatory environment actually supports demand for the services that Select is able to provide its customers? Yeah. It's less federal, Jeff, and more state. But yes, you're exactly right. That state regulatory authority is very real and very disciplined and very focused on this. We are doing everything we can to be a good partner to the regulators in whether that's Texas, New Mexico, or Colorado and elsewhere, spending a lot of time on how we create solutions that not only allow the industry to keep developing its resources, but develop improved stewardship over time. You think about not only the limitation of seismic considerations with recycling, but the more you put pipe in the ground, you get trucks off the road, you actually are also reducing the emissions intensity of the industry over time as well. So it really does drive a kind of a multifaceted intersection of good stewardship and good economics in terms of looking at what Select brings to the market. We talked about water balancing in the Delaware Basin especially. But if you think about it in a sustainability standpoint, just in simple terms, how does the water balancing capability reduce the industry's demand for fresh water by increasing its ability to process and use recycled water? So the idea behind recycling is you are instead of taking a barrel to be disposed of, you're repurposing that barrel for completion water. So for every one barrel recycled, that's one barrel that's not disposed and one fresh water or brackish water barrel that's not used for completions that in turn becomes produced water and unused. So it's truly a one-for-two savings from an environmental standpoint. And that's what Chris was saying. And I think that's really important. And then from an economic standpoint, as I mentioned earlier, it's roughly half the cost. Now, the key with water balancing is it makes the system asset much more efficient than it would otherwise be. So again, the more operators you have connected, the more you're able to manage everyone's schedules. The more you're able to say yes despite changes, the more efficient you're going to be, the more economic you're going to be, the more environmentally conscious you're going to be. And that's really, again, that's our value prop. And that's why I think to get to your prior question, you would not see the level of activity that exists today in the Northern Delaware without selecting the services that we provide or others basically. It takes the recycling. It takes the water balancing. Otherwise, I believe you would have a reduction in activity. Select maintains a $270 million sustainability-linked credit facility. With the recent share price gains in your project backlog that you've discussed, how do you think the future financing decisions that you could take will leverage, and what kind of leverage levels, rather, would Select be comfortable with to fund growth in terms of the runway you see ahead? Yeah. It's a good question, Jeff. That sustainability-linked facility we have was really kind of first of its kind in the industry. It's provided a great source of capital for us in terms of managing the pace of growth we've looked to bring to bear. We obviously generate a lot of strong free cash flow out of the business, particularly out of our kind of core services and chemicals businesses that have allowed us to invest in growth and infrastructure. That said, obviously, as we're adding more long-term contracts to the business over time, that adds more stability, more flexibility, and more optionality around how we look at the balance sheet over time as well. We definitely appreciate the benefit of our partner banks in giving us the rate efficiency out of that sustainability-linked component that's driven fundamentally by growing our produced water recycling barrels through our asset base. When we put that in place, we didn't even have the infrastructure in place needed to actually meet our obligations for that facility. We've been able to not only meet but exceed those targets, and it's been driven by the capital availability we've been able to access, so I think as you continue to see the investment opportunities grow, both organically and inorganically, we'll continue to assess what's the right capital structure for the business, but as we add more 10, 15-year contracts to the business, there's definitely going to be flexibility and optionality in terms of how we can build a capital structure that's appropriate for the business over time. I think Select has far exceeded the metrics that the sustainability facility is linked to. Chris, has that had a positive impact on your borrowing costs versus what other sources of capital might have been available when you put the facility in place? Yeah. By achieving those targets, Jeff, and exceeding them, we actually do get a reduced rate on our borrowing costs. And inversely, if we had not, there's actually penalties associated with it. So we're clearly putting our money where our mouth is here in terms of investing in the business in the right way. And we have been able to use that facility this year to help expedite the pace of growth. And we've been able to do that to not only invest in the organic projects, but keep the acquisition focused on building out the portfolio as well. We talked earlier about having a goal of water infrastructure contributing about 50% of total profitability for the company by the end of 2025. I think it was 46% in third quarter 2024. So you're not too far off. And you have a number of projects that will come on stream in the first quarter. Is that pipeline really what will drive you to the 50% threshold by the end of the year, do you think? Yeah. It's a great point, Jeff. It's driven not only by the kind of the future pipeline, but we've got a number of active under-construction projects that are already underway right now that have already been supported by incremental contracts. We do think that backlog will continue to benefit the business over the next couple of quarters. And so we're very comfortable with our view that we can get the infrastructure segment to not only become the largest segment of the business, but drive more than half of the profitability of the overall company at some point in 2025, really, which provides a just fundamental shift and transition for the business from where we were looking back three to five years, three to five years ago, where that infrastructure segment was 7%-8% of the overall profitability. So not only has it been a tremendous growth vehicle for us, but it's adding a high-margin growth profile for us under long-term contract. So it's just fundamentally adding a stability and distinct kind of fundamental shift in the business profile from where we were as a largely completions-leveraged service company a few years ago. Those long-term contracts include, in I guess, most cases, acreage dedications, but also rights of first refusal on future acreage. When you think about the visibility in the business that you were talking about, Chris or Michael, how do those parts of those agreements really support the pathway or the visibility pathway that you see for earnings and cash flow growth? Yeah. I'll maybe start and then let Michael speak to the future kind of development opportunities associated with those rights of first refusal. But when we structure our contracts, Jeff, we're really looking for that anchor tenant to provide visibility to a good capital recovery and a growth profile over time, but generally to underwrite up to half of the capacity of the asset. That provides not only opportunity to grow the utilization over time, but to commercialize it with additional operators like we talked about. Those rights of first refusal, we generally add to our contracts to ensure that we have clear visibility into future growth potential. But it also allows us to limit the capital obligations on the company upfront such that we do not obligate ourselves to future capital expense. It provides flexibility for market cyclicality. It provides flexibility for the business as we look at all of our investment opportunities across the portfolio. And those rights of first refusal ensure that we have an appropriate opportunity to look at growth. And when you have that fundamental asset in the ground, your brownfield ability to invest around that asset provides what should likely be the best economic outcome for not only Select, but the customer. But it maintains flexibility for us to make the right decisions at the appropriate point in time when new capital might be required to develop and reach new acreage that's yet undeveloped. There's not a lot of meat left on that bone. I guess what I'd say is it is material, Jeff. I mean, I think the ROFR acreage that we've announced this year is twice we have from dedicated acreage. So it's certainly meaningful. And it's something we have visibility into. Because as Chris said, once you have primary asset in place, making a small expansion of that asset into a ROFR area, it's very incremental or, yeah, very incremental for us, very additive. And it's a lot more efficient from a customer standpoint than having them go out and hire someone or build a brand new [audio distortion]. So it's something that we're excited about because it's another level of growth that we see a high conviction around. It's something the customer is willing to give because they know that we're going to be the best solution for that additional acquisition. Capital efficiency is a term that's thrown around an awful lot across most industries, especially energy. So a ROFR essentially allows Select to be very capital efficient by building infrastructure that's sized properly now and gives you the option to add to that infrastructure as development moves through the basin. Am I thinking about that correctly? Yeah. That's right, Jeff. It gives us the flexibility to invest additional capital and capture additional growth. But at the same time, if there's a reason that the return profile may not fit what is our general underwriting standards, the future inventory has changed, customer bases have turned over, we can flexibly choose to allocate our capital elsewhere without obligating ourselves to that. But we've got first shot at what should be a tremendous growth potential to continue to expand the network. You think about the business. It seems from a financial perspective that Select is compounding the free cash flows generated by water infrastructure, but also significant free cash flows generated by water services and chemical technologies to invest in growth projects that add incremental capacity and drive utilization of the asset base and ultimately earnings and cash returns to shareholders. How do you leverage all three of those segments to contribute visible margin accretion, earnings and future cash flow potential? Yeah. We've said this before, Jeff, but when you think about our more completions-leveraged segments in terms of water services and chemicals, they're effectively driving kind of the cash flow machine that allows us to really invest in the growth profile and maintain a very disciplined balance sheet over time. So we're generating generally 70%-80-plus% free cash flow out of the profit margin we're generating out of services and chemicals. They're fairly capital-light service models, chemicals being a manufacturing-based business primarily, and then services being a much more capital-efficient and capital-light part of the service industry compared to some of the more capital-intensive areas around drilling and pressure pumping. So that allows us to maintain a very strong cash flow profile for the overall business, even though we're effectively over-investing in infrastructure based on the current business profile. But that's allowed us to double the infrastructure business year over year for a couple of years in a row now and have a strong continued trajectory to do so into the future, even in a market environment that's moving the wrong way on a number of folks in the industry. And I think that, frankly, fundamentally provides a distinct advantage for us from a competitive landscape standpoint, given that diverse business model we bring to bear. If we can simplify that down a little bit, are there two or three characteristics of the water infrastructure business that you think people should really be aware of that are most supportive to cash flow growth and lengthening the runway or dividend runway? I mean, I think if you look at the business overall, Jeff, fundamentally, what we're doing within infrastructure, adding not only contracts to the business, but we're increasing the production-levered scope of the business as well. So taking what was a historically completions-levered company towards something that continues to grow a production-levered exposure to that full life cycle of the well's life, that adds stability. It adds visibility to the business. And as we continue to grow the production base, which we've already grown it from roughly 5% of the business to about a third of the overall revenue stream of the business today, adding stability to the business with that production-related revenue. Furthermore, adding contracts around full life cycle solutions, even beyond that. It just adds more conviction around our ability to not only grow, but shareholder returns over time, but add flexibility to the business and the capital allocation that we can use to continue to supplement that growth. The dividend was increased 17% for the fourth quarter of 2024. I think that was announced on November 5th. How should investors think about the dividend policy as you look out to in 2025? Yeah. I mean, similar to what we just talked about, we do think that we'll have continued opportunities to grow that base shareholder return over time. It's the second year in a row we've grown the dividend since initiating it. And we would say at this juncture, we would continue to maintain it at a minimum of an annual approach towards looking at growing that dividend over time. We have added to that base dividend with share repurchases over the last couple of years as well. So we've definitely been focused on deploying our capital in a way that's most efficient for overall long-term shareholder returns. And if we can supplement that base dividend with supplemental buybacks that are going to be competitive with our internal investment opportunities, that's something that we will weigh more tactically over time out of free cash flow. First and foremost, we're focused on investing and continuing to grow that infrastructure footprint. But as we add that stability, we'll continue to look at growing that base dividend and supplementing it over time with repurchases if and when appropriate. You operate in an industry where capital spending cycles are largely driven by oil and gas prices, especially in the drilling and completion segments. Obviously, water infrastructure, which serves a well over its life, has the duration of the well as long as it's producing water. Something has to be done with that produced water. When you look at the business today and what you see about capital spending talk for 2025, how is Select positioned to succeed in the current environment? Yeah. I mean, I think overall, Jeff, we anticipate a fairly flat overall activity environment in 2025 with maybe some modest low single-digit or downside or upside to that. So we're not anticipating a material change in the overall activity environment that's going to drive, I think, a change in behavior of how we approach 2025. That said, I think that the fundamental secular shifts and trends in the industry do more with less, more intensity on a well site, simul-frac, trimul-frac, extending lateral lengths, all lead to more intensity and more complexity for what we do around water and chemistry. So I do think we have fundamental opportunities to capture share around the base business in our services and chemicals business. But I do think that the secular need of the water management industry is going to continue to drive new capital opportunities for us. Similar to what you've seen in the consolidation in the upstream space, I think you'll continue to see consolidation in the overall service landscape and midstream landscape as well. I think that will continue to drive, I think, opportunities for Select to further distinguish ourselves. Yeah. And just to Jeff, I'll jump in here for a moment on the heels of that for a question that came into the Q&A about 2025 kind of growth capital expectations. While we haven't provided a kind of formal guidance framework for 2025, we'll do so on the next earnings call. We did note on our latest call that we do think 2025 does see a growth CapEx level pretty similar and commensurate with what we saw in 2024. As Michael and Chris have spoke to, we see pretty robust opportunities on the business development front and water infrastructure. So our current visibility lends us to a similar growth CapEx outlook next year. To put a number on that, that's roughly call it about $150 million of growth capital in 2024 that should translate into a comparable spend next year as well, so. So if your customers try to do more with less, which results in more intensity and complex well designs, complex stimulations, all of which require water handling solutions and maybe some innovative solutions, that really plays to Select's strength in the areas you operate, right? Yeah. That's generally the case, Jeff. Obviously, two plus two doesn't always equal four from an activity standpoint as we see the industry continue to consolidate. But the intensity of what is needed around water management is, I think, a fundamental opportunity that will continue to, I think, bring further growth to us over the next year. And more often than not, the acquirer has a more completion-intensive program. They're the ones who are laying the longer laterals. They're the ones doing the trimul-fracs. So the service intensity is often higher with the acquirer than the acquiring. I think the fundamental focus on the importance of good stewardship as well. The larger operators are very focused on ensuring that, I mean, as you transition from moving, storing, utilizing fresh water to produce water, it's a fundamentally different environmental risk consideration. That lends itself towards the solutions we bring not only on the infrastructure side, but with automation and all the things we can add around machine learning, visibility, remote control, and more centralized visibility into the overall water supply chain and that services footprint as well. It sounds like the water infrastructure is situated well for another strong year in 2025. Growth in the highest margin sector has an overall benefit to the overall company. Chris, I think we're almost at the bottom of the hour. I think we'll leave it there for today. Chris, Michael, Garrett, I want to thank you so much for taking your time. We will look forward to doing another fireside chat in the near future. Sounds good. Thanks for hosting us, Jeff, and thank you to everybody that joined to listen in and the interest in Select. Thank you.