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Jun 30, 2023
Aris Water Solutions Q2 2023 Earnings Report
Reported strong results driven by volume growth and improved profitability.
Key Takeaways
Aris Water Solutions reported a strong second quarter with a 21% increase in total water volumes and improved profitability. Net income increased by 158% compared to the second quarter of 2022, and adjusted EBITDA rose by 14%. The company is raising its full-year Adjusted EBITDA outlook due to solid execution and stronger than anticipated first half volumes.
Total water volumes of approximately 1.5 million barrels per day, up 21% versus the second quarter of 2022.
Produced Water volumes of approximately 1,045 thousand barrels per day, up 24% versus the second quarter of 2022.
Water Solutions volumes of approximately 452 thousand barrels per day, up 13% versus the second quarter of 2022.
Net income of $10.4 million, up 158% versus the second quarter of 2022.
Aris Water Solutions
Aris Water Solutions
Aris Water Solutions Revenue by Segment
Revenue by Segment
Produced Water Handling Revenue
CapyFin.comWater Solutions Revenue
CapyFin.comOther Revenue
CapyFin.com Forward Guidance
Aris Water Solutions provided guidance for the third quarter of 2023, expecting produced water and water solutions volumes to be flat to slightly down sequentially. They anticipate a strong finish to the year with fourth quarter produced water volumes forecasted to exceed those realized in the second quarter. The company is updating its previously provided guidance for the full year of 2023 to reflect higher than anticipated volume growth through the first half of 2023 as well as additional capital investment to accommodate further growth anticipated in late 2023 and early 2024.
Positive Outlook
- Volumes have grown steadily, exceeding expectations in the first half of the year.
- Anticipate a strong finish to the year as fourth quarter produced water volumes are forecasted to exceed those realized in the second quarter.
- Forecast skim oil recovery at normalized levels of approximately 0.10% of produced water inlet volumes, consistent with the second quarter.
- Expect CPI linked inflation clauses and cost reduction initiatives to further benefit margins in the second half of the year.
- Updating previously provided guidance to reflect higher than anticipated volume growth through the first half of 2023 as well as additional capital investment to accommodate further growth anticipated in late 2023 and early 2024.
Challenges Ahead
- Expect produced water and water solutions volumes to be flat to slightly down sequentially in the third quarter, reflecting the timing of completions across acreage.
- Deferred well maintenance costs may partially offset margin benefits in the second half of the year.
- Non-recurrence of margin benefits from minimum volume commitment deficiencies recognized in the second quarter.
- Third quarter completions to be weighted toward the second half of the quarter.
- Third quarter Adjusted EBITDA between $39 and $42 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income