Greetings, and welcome to the Select Water Solutions conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the call over to your host, Garrett Williams, Vice President, Corporate Finance and Investor Relations. Please go ahead, sir.
Thank you, operator, and good morning, everyone. We appreciate you joining us for Select Water Solutions conference call to discuss our announced acquisition of Pilot Water Solutions. With me today are John Schmitz, our Founder, Chairman, President, and Chief Executive Officer; Chris George, Executive Vice President and Chief Financial Officer; Michael Skarke, Executive Vice President and Chief Commercial Officer; and Mike Lyons, Executive Vice President and Chief Strategy and Technology Officer. Before I turn the call over to John, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our website at selectwater.com. There will also be a recorded telephonic replay until October 9, 2026. The access information for this replay was also included in the acquisition press release.
Please note that the information reported on this call speaks only as of today, September 25th, 2026, and therefore, time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meanings of the United States federal security laws. These forward-looking statements reflect the current views of Select's management. However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read our annual report on Form 10-K, our current reports on Form 8-K, our quarterly reports on Form 10-Q, and our other filings with the SEC to understand those risks, uncertainties, and contingencies as well as to review additional disclosures associated with the pending acquisition.
In addition, comments made by management during this conference call may contain discussions of certain non-GAAP financial metrics. For the definitions of such metrics, please refer to our SEC reports and the related disclaimers set forth therein. These non-GAAP measures should be considered in conjunction with the information contained in our financial statements prepared in accordance with GAAP. The pending transaction of Pilot Water Solutions, which is currently expected to close in the fourth quarter of 2026, is subject to customary closing conditions and receipt of required regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act. Now, I'd like to turn the call over to John.
Thanks, Garrett. Good morning, and thank you for joining us. Today, we announce our agreement to acquire Pilot Water Solutions, a leading private water midstream company with a sizable produced water infrastructure footprint, most notably across the Permian's Delaware Basin. With Pilot Water, Select will add highly contracted production-related earning stream at an accretive valuation in the heart of the Delaware Basin. The Pilot Water acquisition strengthens Select's position as a diversified market-leading water midstream platform. While Select will continue to lead with its recycle-first strategy, with the integration of Pilot Water, we will have a well-balanced overall infrastructure network managing both scaled recycling and disposal across a market-leading presence in the broader Delaware Basin.
Pilot Water's infrastructure platform consists of approximately 2.7 MMbpd of active permitted disposal capacity, nearly 900,000 bbl per day of incremental undeveloped permitted disposal capacity, and more than 700 mi of pipeline infrastructure. In the first half of 2026, Pilot Water has handled about 850,000 bbl per day of produced water, with more than 80% of these volumes coming from the Delaware Basin across both Texas and New Mexico. Additionally, a new 175,000 bbl per day MVC-based contract in the Delaware Basin is expected to increase Pilot Water's daily produced water volumes handled to 1 MMbpd during 2027.
Importantly, Pilot Water's revenue are supported by an attractive contract portfolio with more than 80% of its annual revenue supported by long-term contracts with an average tender of more than seven years. These contracts include 480,000 bbl per day of minimum volume commitments and 306,000 dedicated acres. Select has successfully built a scaled acreage dedication contract portfolio in recent years, and I am very excited to strengthen Select's pro forma contract book with Pilot's sizable MVC contract base, in addition to the incremental dedications, adding greater predictability and durability to Select's future cash flows. Pilot Water's strategic disposal portfolio provides Select with immediately available capacity, which will allow for near-term utilization enhancements and long-term system optimization and water balancing capabilities across Select's broader recycling and disposal network.
When tied in to Select's existing Delaware Basin network, we will be well-positioned to efficiently capture the full life cycle economics of produced and treated produced water across a broader pro forma footprint. Additionally, Pilot Water's approximately 900,000 bbl of undeveloped permitted disposal capacity, largely in the Delaware Basin across both Texas and New Mexico, ensures Select is well-positioned to capture a growing percentage of the industry's produced water volumes in the region, which are expected to grow by more than 10% per year over the next decade. This capacity I outlined is before taking into account the broader leased and owned surface we will acquire in this transaction that provides access to additional high-value pore space, offering incremental optionality for long-term out-of-basin disposal or beneficial reuse solutions efficiently located related to Select's broader New Mexico network.
We will continue to prioritize local recycling as the most cost-advantage solution for every barrel. However, Pilot Water's available disposal capacity and permitted undeveloped pore space availability gives Select the flexibility to optimize volumes across an integrated system and the opportunity to capture the full growth potential of our contracted produced water in the future. Select has been on a steady, growth-oriented strategic path over the last five years to build out our water infrastructure segment and transform our business into a production-weighted midstream business supported by long-term contracts and durable and predictable cash flows. I believe we have been very successful at executing our strategy in recent years with our water infrastructure segment growing at an average annual growth rate of more than 50% over the last five years.
The Pilot Water acquisition is expected to immediately deliver another 60%+ leg of growth for the water infrastructure segment in 2027. We have near-term visibility to growing our combined daily volumes to more than 2.5 MMbpd during the first half of next year, supported by additional contracted MVC volumes. With multiple previously announced projects set to be completed by the end of 2027, we are well-positioned for additional contracted growth in the years ahead. To put that in perspective, in 2027, water infrastructure is now expected to comprise approximately 70% of Select's pro forma consolidated gross profit before depreciation and amortization, with the majority of this earning stream under long-term MVCs or acreage dedication commitments.
To conclude, I am very excited for what's to come for the integrated business, and I look forward to welcoming the new Pilot Water employees into the Select family soon. At this point, I'll hand it over to Chris to provide additional highlights around this accretive acquisition. Chris?
Thank you, John, and good morning, everyone. We are pleased to announce the acquisition of Pilot Water for aggregate closing consideration of $700 million, including $600 million of cash and $100 million of shares of Select's Class A common stock. The sellers also have a right to an additional $15 million contingent cash payment payable upon the satisfaction of certain operational milestones expected in early 2027. Additionally, the sellers retain a right to a cash true-up payment if the 30-day volume-weighted average share price as of the six-month anniversary of the closing date is lower than the 30-day volume-weighted average price at the closing date.
For the full year of 2026, Pilot Water is expected to generate $100 million-$110 million of 2026 adjusted EBITDA, which is expected to grow to $120 million-$130 million in 2027, primarily driven by the new 175,000 bbl per day MVC-based contract that John mentioned earlier. Longer term, we are targeting an additional $10 million-$15 million of annual cost synergies that are incremental to the 2027 forecast and are expected to be achieved during the next 12-18 months. These metrics equate to a highly accretive acquisition represented by valuation multiples of 6.8x, 5.7x, and 5.2x based on the total transaction value, including earn-out consideration relative to the EBITDA guidance midpoints for 2026, 2027, and an implied 2027 run rate with fully realized synergies respectively.
We believe the combined systems, especially in the Delaware Basin, also offer significant revenue synergy potential in the coming years with excess capacity availability, enhanced commercialization opportunities, and broader system balancing capabilities. Additionally, there are incremental opportunities to develop capital-efficient out-of-basin disposal solutions, significantly scale mineral extraction royalties, and efficiently integrate long-term beneficial reuse solutions. We look forward to harvesting incremental value as the combined network positions us to deliver our customers with increased optionality, scaled produced water flow assurance, and ultimately, attractive economic savings. Select's combined network will have significant scale with 3.8 MMbpd of recycling capacity, 4.8 MMbpd of combined active and undeveloped permitted disposal capacity, over 1,600 mi of pipelines, and approximately 57 million barrels of treated and produced water storage capacity.
Looking forward, we expect the acquired assets to require approximately $20 million-$25 million of additional recurring annual maintenance CapEx, while we separately plan to invest approximately $50 million of one-time additional integration and network enhancement CapEx for each of the next two years to enhance, tie in, and integrate Pilot Water's infrastructure into Select's existing networks. As we have continued to grow and mature our water infrastructure segment and its contractually secured earnings streams with a diversified blue-chip customer base, the long-term cash flow visibility and through-cycle stability of the business has been significantly enhanced. On a pro forma basis, Select maintains a highly diversified customer base with no single customer representing more than 7% of consolidated revenues.
As John mentioned, Select's future earnings will be supported by a strong contract portfolio, which on a pro forma basis includes over 600,000 bbl per day of MVC commitments, about 90% of which are with investment-grade counterparties, as well as approximately 3.6 million acres under dedication or row for dedication with a weighted average remaining contract term of approximately nine years. The combined company's robust contract position supports improved visibility through cycle durability and steady growth in produced water volumes across a diversified footprint operating across all major U.S. basins, with an especially strong position in the core of the core in the Delaware Basin within the Permian. Additionally, this contract stability provides us with incremental flexibility as we look at the long-term capital structure of the business.
As noted in the transaction release, in connection with the acquisition, Select has entered into debt commitment letters with JP Morgan and Bank of America to provide committed financing sufficient to fund the acquisition, subject to customary conditions. Select expects to fund the cash portion of the consideration with cash on hand, borrowings under our committed debt financings, or, depending on market conditions, other debt financing. That said, we fully intend to maintain a prudent balance sheet and capital allocation framework, preserving strategic flexibility as we continue to invest in and grow the business in the years ahead. Accordingly, pro forma for the anticipated debt financing required to fund the acquisition of Pilot Water, we anticipate net leverage at closing to remain less than 2.0 x, demonstrating our ongoing commitment to maintaining a more conservative leverage profile as compared to most other competitors in the marketplace.
While we expect a near-term uplift in CapEx with the addition of Pilot Water's assets, the combined company's cash flow generating capabilities are strong and growing, and we expect the transaction to be immediately accretive on a cash flow per share basis. Overall, we believe we are well-positioned to continue investing in the business while still returning cash to shareholders and maintaining a very attractive balance sheet. While the transaction remains subject to the satisfactory completion of customary closing conditions and regulatory approvals, the transaction is expected to close during the fourth quarter of 2026. Ultimately, I am very excited about the opportunities ahead for the pro forma business. With that, I'll hand it over to the operator for any questions. Operator?
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Jim Rollyson with Raymond James. Please proceed with your question.
Hey, good morning, guys. Congrats on the deal and certainly pretty favorable relative multiples here. I don't know if this is for John or Chris, but you guys have been clearly leaders in Permian recycling, and this really seems to round out your capabilities on the disposal side. I guess, I would love to hear your thoughts and any maybe brackets around potential, but what does this combination do for your growth opportunity? Because as I think about this, you guys have been capturing a lot of value, locking things up, particularly led by recycling, and maybe you were getting to later innings in how much potential you had to capture from here. Curious what you think this does for that kind of back end opportunity set.
Yeah, it's a great question, Jim. It obviously expands the opportunity set for us and gives us more choices, but maybe I'll give Michael a chance to weigh in on this one.
Yeah, thank you, Jim. Obviously, we think the systems are highly complementary. We still love our recycling first position, but the optionality and the flexibility that we create by providing the disposal backup from the Pilot assets is significant. I would say that really our goal is to tie the systems together and then to utilize that disposal backup to fully monetize the investment we made in the large diameter dual pipeline system across New Mexico, and further monetize the contracts that both Select and Pilot have as we look out into 2029, 2030, and beyond. We're really excited about this transaction, and we think there is significant revenue and operational synergies that will come in future years.
I presume the revenue opportunities on synergies are meaningfully higher than the $10 million-$15 million just in cost synergies. Chris, on the second, just follow-up question here on kind of cash flows, CapEx, things like that. You laid out maintenance CapEx of $20 million-$25 million at AWS adds, and then the kind of couple years of $50 million a year to integrate all this stuff together. I presume they've been on a similar growth trajectory, somewhat to you guys. But maybe once you get past that integration CapEx, just how to think about ongoing CapEx growth opportunities and kind of how this ultimately builds the free cash flow on a combined basis for you guys.
Yeah, it certainly is going to scale the long-term free cash flow generating capabilities of the business, Jim. As we outlined and you referenced, we do have near-term visibility into the capital needs to put the system together effectively. The MVC that we mentioned that's coming online in 2027 has been an ongoing capital project for Pilot over the course of the bulk of 2026 here, and that'll largely be completed and ready to come online in the early part of 2027. So, there'll be a little bit of capital associated with the completion and build-out of that project. And then the other needs of putting the two systems together. But the maintenance needs of that system at that point, as I referenced, on top of what we've historically outlined for our needs, that we think is an expectation we can maintain go forward.
As we look out two years from now, we'll have a meaningful acceleration in the free cash flow potential of the business. At that point, we'll have a great set of capital allocation choices to continue to invest in growth or to continue to look at other opportunities to return or deploy capital.
Got it. Appreciate it. Again, congrats.
Thanks, Jim.
You bet.
Thank you. Our next question comes from the line of Derrick Whitfield with Texas Capital Securities.
Good morning, guys, and congrats on the acquisition as well.
Thank you, Derrick.
As you think about the synergy associated with Pilot's customers, could you speak to what that could mean for diversification and growth with that client base for you guys?
Sure. The Delaware Basin is a relatively small customer base, so there is obviously a lot of overlap. But there is clearly customers where Select has a stronger relationship and ones where Pilot has a stronger relationship. It is largely centered around the fact that Pilot is a disposal solution and Select is recycling first. So really, our job is to combine the two, integrate the system, and then strengthen both those relationships by bringing our industry-leading recycling solution to those that are primarily disposal. Then by providing, as I mentioned earlier, by providing the disposal backstop to our current recycling solution for our primary customers.
Great. Makes sense. Clearly looking at slide 11, it is a hand-in-glove situation from a fit perspective. But as you guys think about future projects that could drive further synergy, it would seem that bringing down your Eddy Connector pipeline into Culberson or Reeves could be very synergistic for both businesses. How do you think about that opportunity?
That is a good question, Derrick. What I would say is that you are exactly right. The complementary nature of the system from a geographics perspective is really attractive. Then again, from a purpose perspective, one being recycling, one disposal. I would say that this acquisition does present us with several other solutions. One would be it is an avenue to an out-of-basin solution or other distance disposal solutions like the one that you mentioned on Eddy County. Obviously, Pilot was not involved in mineral extraction or beneficial reuse solutions, so we would have technology and partnerships to bring to this relationship through the work we have done over the last 12 - 18 months on those fronts. So there is a number of different opportunities that this will allow us to embark on that really would be harder to have achieved as a standalone company.
Again, congrats on the transaction, guys.
Thank you much.
Thank you. From the line of Scott Gruber with Citigroup. Please proceed with your question.
Yes, good morning, and I will reiterate the congrats on the deal. I am just thinking about the timing around those commercial synergies. Slide six suggests those could be sizable and several times the size of the cost synergies. You talk about two years of investment to integrate the systems. How should we think about the timing around capturing the commercial synergies post-integration?
Yeah, I will maybe start and let Michael add, too, Scott. Obviously, first and foremost, we are focused on getting the transaction to an efficient and timely close. We will be in a position to have more open and discreet discussions with our customers and with the appropriate counterparties at that point in time. So, we think that there is certainly a lot of opportunity here to pull those existing contracts together and find the right opportunities to get the appropriate integrated outcome. The timeline to integrate the system could accelerate to the extent there was an appropriate reason to do so. As we outlined on the cost synergy side, we are targeting a 12 - 18 month timeline here. So we want to make sure that we make the right choices and the appropriate timelines to get the best outcomes.
I think that that 24-month period here is going to be a very important period for us. Michael, anything to add?
Yeah, we agree with you. We think the revenue synergies are really attractive. There is a number that we have identified, and there is a number more that we just think that when we get in there and work with our collective customer base and really show them the full offering, that there is going to be more that we have not identified today. In terms of timing, the first step is getting the system fully integrated and connected. That is a process that we have already began evaluating. There is going to be a phased-in approach. So I would expect some of the synergies to come kind of within that initial two years as we get the system built, and then there is going to be a number of them that are going to be outside of that timeframe.
It is not going to be a light switch where they all just show up once we connect the system. We will have some hopefully next year, certainly the year after, and then continue to build from there.
I appreciate that. Then just looking at the complexion of the systems, obviously, different, being more recycling led in New Mexico and disposal led in Texas. Does the $100 million of CapEx in total to integrate the system, does that contemplate recycling build-out in Texas? Would that come after? Is there interest in that from your customers? Just get a little bit of color on the, kind of how you see the recycling side building out in Texas, if there is interest.
Yeah, it's a good question, Scott. Right now, the focus of that capital is on integrating the system, continuing to complete the build-out of existing projects underway. There is existing permits and capacity for recycling across both portfolios. We will have flexibility of choice, obviously, with the scale of what we've built out on the Select side with recycling. We think that gives us a meaningful avenue to utilize that footprint to treat and distribute barrels efficiently throughout New Mexico. As we look down into Texas, as we previously mentioned, and you'll see, we've got existing projects we've added into the Texas side here in recent periods as well, with contracted frameworks. We do think there's going to be optionality to look at more of an integrated recycling and disposal approach long term across the whole of the footprint.
But we think we can do that pretty efficiently on a recycled barrel basis with the integrated system, with adding that pipeline connectivity between the two systems.
I get it. I appreciate the color. Thank you.
Thank you.
Thank you. Our next question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.
Hey, good morning, team. Thank you for taking the question. Just wanted to touch on the timeline of this coming to fruition. Also just a nice multiple you paid on this. Is it fair to think the Pilot team saw upside in joining Select with having a bigger network, more network effects? Also, obviously, they took a portion of the acquisition as giving them equity in Select, so they continue to have upside exposure to this. Just wanted to hear on those two pieces.
Yeah, thanks. This is John. I would say that both parties come out really well on this transaction. They have a core business that they want to focus on. At the same time, they wanted some value out of their asset base that had some upside. We, on the other side, completely are very excited about the integration opportunity with these two assets. We also are getting both operational and regulatory and permitting and things of that nature out of the team that is staying with us that really enhances our abilities with this system and other things when we think about regulatory application of beneficial reuse or mineral extraction or things of that nature. So I think both parties got really good value out of it.
It allowed the sellers to concentrate on a core that they were very focused on, and it allowed us to actually add to our core in a meaningful way, and that there is a lot of synergies between these two systems.
I agree. Both parties definitely coming out on top. Just on timeline, has this been something, has Pilot Water Solutions been on your radar for, has this been over the past nine months, 18 months? Just any sense there?
Yeah, they were a competitor. So we have had a relationship with them in a positive way for a long period of time. This was an asset that we stayed very close to and understood, and would be something that we'd tell you that we had a long-term focus on. As far as the transaction itself, I think we executed it, and both sides did an extremely good job of executing the due diligence and what we got to yesterday, and we're very proud of that. But we've known them for a long time. They're great people. It's a great asset. It allows both parties to do what they want to do.
Yep, makes perfect sense. Just last one for me. The added disposal volume and permitted undeveloped disposal volume seems very meaningful because it's my view that, or my understanding, getting permits for these SWDs is becoming incrementally harder. Could you just discuss that dynamic, and is my logic fair there? I know you guys touched on that this gives a backstop to the recycling first view. Just wanted to hear more color discussion there. Thank you.
Yeah. So the disposal, they handle a lot of produced water that provides a lot of stability to their earnings, which we like. It does provide a backstop to our disposal to where we can be more aggressive in securing MVCs and making sure that we have an outlet when completion volumes lag or schedules change, which again, strategically and synergistically, we really like. There is a considerable amount of excess capacity. If you think about it, when the 175,000 bbl per day MVC comes online, their Delaware system's going to be about 60% utilized. So we have upside to continue to commercialize that, and we think with the integrated solution, we'll be able to do that. That's before you move into the 900,000 bbl per day in permitted capacity, much of which has already been drilled but uncompleted.
That's going to be, one, you don't have to get the permits when permits are becoming increasingly more challenging to obtain. But it also will be much quicker to bring those assets online and commercialize them. It's all part of how we think about the deal, Bobby, and it's really why we're excited about bringing these two assets together.
Thank you. Our next question comes from the line of Don Crist with Johnson Rice. Please proceed with your question.
Hey, thanks for letting me in, guys. You partially answered this with your response to Bobby's question, but I was going to ask about utilization across the Pilot system. As I appreciate it, your northern Delaware system that you're building out today is roughly 50% utilized, or you expect it to be roughly 50% utilized. So it gives you a lot of optionality on the interruptible side to juice returns. But what about the Pilot system? Are there bottlenecks as you move into Texas that the $50 million in CapEx per year is going to alleviate? Can you just expand on that?
Yeah. No, you're exactly right, Don. So there are bottlenecks in that system that we know we have to alleviate to fully integrate it the way that we want to integrate it. There will also be inevitably bottlenecks that we have not identified now that hopefully we can prior to closing, but maybe not, that we'll have to address, which is why we have that phasing in over two years. But once we do get that all worked out and have the system fully integrated with, I'll just say, large diameter pipe and in many instances dual pipe, then we think we'll have one system that we can be really flexible and opportunistic around commercializing. What was the second part of the question? I'm sorry.
Maybe one thing I will add to it, Don. When you think about that utilization framework you outlined, I would just reinforce. Most of the dedicated acres we have contracted here have been put in place over the last 24 months. We are still actively building out a big piece of that position in the Eddy County side. They are actively underway in building out the project to bring that new MVC online in the early part of next year. So while the utilization of the system today is lower, the pace at which this is getting built out in both the Select and Pilot side across the whole network really is in the early innings of accelerating that commercialization long term, both on the base contracts as we get those core projects built out over the next 18 months.
But furthermore, as we look beyond that to the overall commercialization framework we outlined to use the rest of the capacity, we think we are still in the early stages of executing upon that. But the demand is there and the opportunity set is meaningful.
Okay. I did want to ask about the areas outside of the Permian Basin. Obviously, the Haynesville looks like a pretty decent system. Does that integrate in the other areas outside of the Permian? Do they integrate well with what you have today, and how does specifically the Haynesville look? Because it looks like Pilot had a pretty good system there too.
They did, and we are actually tied into their system already in the Haynesville. So again, it is a system that we know well. It is a team we know well. It is an asset we know well. And we do have overlapping operations in the other basins, and we are really glad that it is part of the deal and coming with it. But as you would expect, at the end of the day, what we are most excited about is the Delaware. The Delaware has been our core focus for the last couple of years, and it has also been Pilot's core focus for the last couple of years. And I know I have said it before, so I apologize for repeating myself, but we just could not be happier with how these two systems marry up from what they are able to accomplish in a geographic standpoint.
And I think some of that smaller diversity across other basins too, it just really put us in a unique position to bring those other positions online and absorb them and integrate them efficiently into what we already have, given the breadth of diversity we have across every basin.
I appreciate the color. I will turn it back. Thanks.
Thank you, Don.
Thank you. Our final question this morning comes from the line of Jeff Robertson with Water Tower Research. Please proceed with your question.
Thank you. Good morning. As you think about putting these two systems together and managing capacity utilization over the next several years, how do you think about the margin profile of the infrastructure business?
Yeah, it's a good question, Jeff. Obviously, as you increase utilization on existing capital assets, you're going to get a margin efficiency over time. We outlined that there's a big opportunity here to continue to scale that mineral extraction potential across now a footprint that's managing 800,000+ bbl a day, going to 1 million barrels next year. So that's a big scale volume base that we can expand that opportunity set around. Obviously, there's more opportunity to harvest and efficiently capture scale out of that system as well. So part of the operational cost synergies we outlined is processes, procedures, things like that, but some of it is operational efficiency, getting everything integrated onto the platform on a combined basis.
We think that there's opportunity to improve the margin profile of the base asset as we get it integrated with ours, where we're seeing a margin profile that's obviously attractive and been moving up here over the recent quarters.
To your point, Chris, about mineral extraction and some of the other ways to maximize the value of the barrel, will the combined system, as you stitch it together, and the volume that it will have moving through it, change the nature of the conversations that you have around those types of opportunities with mineral extractors or ultimately beneficial reuse?
Yeah. It certainly scales the overall potential and will give us opportunities to think through the timelines and the pace and prioritization of where and how we deploy those opportunities. Obviously, expanding the footprint here into the Texas side of the Delaware gives us another set of geographic reach, where you've got obviously varied quality and content across broad geographic footprint where you've got different diversification of opportunity there. We think it's going to continue to add opportunity to scale this thing up in a manner with broader reach that may provide different opportunities than where you're at today. Michael, anything to add?
Yeah. No, I think it's just important to add that when we talk about changing the conversation, the conversation that I think really changes gets back to customers. Because Pilot Water Solutions was having primarily a disposal conversation, and we've been having a recycling first conversation. Being able to go to that customer base and show them a recycling and a disposal option, and really just in conjunction, a one-stop-shop total water management solution, that's the conversation that I think changes the most. Not against mineral extraction, we love that, but that's where the real revenue synergies should occur.
As we think about the long-term opportunity set as well, having that footprint reach into the Texas side as we think about beneficial reuse and the potential flexibility around moving barrels around to maximize the opportunity set around beneficial reuse over the coming years as well, between both New Mexico and importantly into Texas, is another important consideration.
Lastly, Michael or Chris, does Pilot Water Solutions have surface acreage as you think that you could leverage as you think about expanding the recycling business into the southern part of the Delaware Basin?
Yeah, it's a great question, Jeff. They do have some surface acreage on an owned basis as well as a meaningful, as you can imagine, surface use agreement position on a lease basis, both for their existing activities but as well as we think about that existing permit portfolio that they have, as well as incremental acreage positions that would allow for future permitting opportunities. We think it's an opportunity that's going to continue to bring value.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Schmitz for any final comments.
Thanks to everybody for joining the call today to learn more about this exciting acquisition. We appreciate your continued support and interest in Select Water Solutions.
That concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.