Ladies and gentlemen, good morning, and welcome to the Select Energy Services, Inc. Fourth Quarter and Year End 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Williams, Vice President, Corporate Finance and Investor Relations at Select Energy Services, Inc. Please go ahead.

Thank you, operator, and good morning, everyone. Appreciate you joining us for Select Energy Services, Inc.'s conference call and webcast to review our financial and operational results for the fourth quarter and full year of 2024. 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 Operating 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 selectenergyservices.com. There will also be a recorded telephonic replay available until March 5, 2025. The access information for this replay was also included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, February 19, 2025, 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 meaning of the United States Federal Securities Law. 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, as well as our quarterly reports on Form 10-Q to understand those risks, uncertainties, and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now, I'd like to turn the call over to John.

Thanks, Garrett. Good morning, and thank you for joining us. I am pleased to be discussing Select Energy Services, Inc. again with you today. Overall, 2024 was another record-setting year for Select both operationally and financially. I'll start by highlighting some of our big wins over the past year, walk through the general outlook for 2025, and discuss a number of large strategic opportunities. I'll then hand it off to Chris to speak to the fourth quarter and future outlook in a bit more detail. During 2024, we transported, recycled, and disposed of record water volumes. This resulted in 26% annual revenue growth and strong 62% growth in annual gross profit from our water infrastructure segment. A new all-time high performance for consolidated adjusted EBITDA and adjusted EBITDA margins and strong cash flow from operations. With this strong operating cash flow in 2024, we were able to fund a diverse capital allocation strategy throughout the year including expediting our organic growth CapEx plans focused on the Water Infrastructure segment, executing nearly a dozen small bolt-on infrastructure acquisitions, increasing our base dividend by 17% during the year, while also funding our maintenance capital to support our market-leading water services and chemical technologies company. With a clear primary focus on our water infrastructure growth strategy, we continue to sign up big organic infrastructure projects with large acreage dedications. During 2024, we signed up eight major new organic infrastructure projects under long-term contracts encompassing about $150 million of growth capital to be spent across 2024 and 2025. We also added more than a dozen additional bolt-on contracts to the existing assets in the portfolio as well. These initiatives combined with our recent acquisitions will provide strong continued growth for the segment in 2025 and well into 2026 as new projects come online and…

Thank you, John, and good morning, everyone. As John mentioned, 2024 was an important year for Select across many key annual financial metrics. This includes generating $1.5 billion of consolidated revenue, 53% gross margins in water infrastructure, $258 million of adjusted EBITDA, $235 million of cash flow from operating activities, and finally, $78 million of free cash flow. These financial results enabled us to invest strategically in the business alongside providing $38 million of total returns to shareholders across dividends and buyback over the course of the year. We were able to raise our quarterly dividend by 17% while finishing the year with a strong balance sheet that we have further enhanced subsequent to year-end. In January of this year, Select entered into a new five-year sustainability-linked credit facility, including $300 million of revolving commitments and $250 million of funded term loan. This facility provides a very attractive financing cost to capital within the traditional bank markets, which I believe will help support enhanced equity returns over time. Select has always maintained a disciplined approach to the use of leverage, which has benefited us during times of cyclical stress in the market. And we firmly expect to maintain this discipline in the future. However, Select's ongoing transition to a growing infrastructure-based production-levered full lifecycle water solutions company provides us with a chance to enhance our capital structure in support of the significant opportunities we have ahead of us. Even with the fully funded term loan, we maintain a net debt to EBITDA leverage ratio at closing substantially below one times, ensuring we sustain a strong conservative balance sheet with enhanced overall liquidity. This new facility also reinforced our overall commitment to good stewardship through the renewal of our two primary sustainability-linked KPIs, growing our recycled produced water volumes, and maintaining…

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You may press star and 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. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from the line of James Rollyson from Raymond James. Please go ahead.

Hey. Good morning, everyone, and that's a lot of information to unpack, but maybe we could start, John, with the new venture in Colorado. You know, I guess you and I have talked about this kind of potential foray into the municipal side of the business. As a longer-term strategy. So kind of interesting to see that here front and center. But maybe you or Chris could talk a little bit about the kind of timeline of investment cycle there and really the return profile and margin profile of just maybe compared to what you've been doing on the recycling side so we get a little sense of that.

Sure. So as we said in the beginning, the call, Mike Lyons is in here with us too, Jim. I don't know if you met Mike yet or not, but he's one of the people that's heading up our efforts here as well. But, you know, when we look at it, we think of it as an opportunity to put really high gross margin-related revenue through the company with contracts that could be up to 50 years in length. And these contracts have escalators in them that really use the returns over the course of the contract life. The other way we look at it is it's really when we say repeatable, predictable, it's very predictable and repeatable in the sense that we own the water rights and those water rights are, you know, in nature, just completely repeatable. They don't go away. They're not depleting, and they're river rock water rights and water rights off of land adjacent and storage that we will build off those water rights for, you know, the management of the water as we go forward. But let me open it up and maybe Mike or Chris have some addition to it here.

Yeah, Jim. As we think about your kind of specific point around the returns and how that compares to our traditional infrastructure and recycling projects, it's definitely a different type of opportunity. This is really more of a resource development opportunity. So, you know, it does come with what I would say are meaningfully higher margins than our traditional water. It's obviously a large upfront investment, you know, to procure and consolidate those resources together. But that provides, you know, immediate valuation uplift for our investment in the longer term. While the payback might be a little more extended here, as we spend the next couple of years getting these contracts in place, you know, we ultimately think that the overall returns are very competitive if not better than some of our other opportunities here and we're quite comfortable making the investment and frankly, the long-term stability and predictability of it. Like John said, create a very different tenure and profile to this opportunity. Mike, anything else to add?

Yeah. I'll maybe just add. I mean, the big operating model change here is this position select to truly be a land and resource owner. These are very senior water rights with broad reach across the state, either through exchange programs or, you know, physical canal connectivity. So this is a scarce resource that is in very high demand across the state. And we're looking to partner with those who need it most. And I think as Chris was saying, the asset is really up into the right because we see even demand in excess of 50,000 acre-feet of water just in the immediate vicinity that we can go get. Which is, you know, many multiples the size of even this water asset that we are consolidating here. And this is one of the largest holdings now in Colorado. Once consolidated, I think this puts us in a great position to partner with the local communities, with local businesses, create jobs, and I think, you know, the economics behind it, as Chris said, are very competitive.

Man, that sounds certainly appealing in the long-term nature of this coming from you guys from having an oilfield background is probably a welcome change. Maybe shifting gears for a follow-up Chris, just if you look, you know, obviously, there's a little bit of puts and takes on water infrastructure from a short-term perspective in that your fourth quarter had a little bit of benefit in that business from kind of the timing of taking some facilities offline. That's gonna hit in one Q and then as you kinda laid out, you ramp into the back half of the year. If we think about that 15 to 25% revenue growth and just trying to understand some of the puts and takes here, obviously, whatever that revenue impact is of facilities being offline temporarily through the growth part of that or, you know, expansion, and then as you if you get up to the 20 or 25% end of that full-year growth, where does that put your kind of exit rate, revenue run rate, you know, as I look into going into four Q, I mean, it seems like the math can get you into the, you know, mid-twenties or higher percentage year-over-year growth on time you're in four Q over this year's or 2024 four Q. Is that in the right ZIP code or maybe how you a little color on how about that.

Yeah. I mean, certainly, Jim, as we think about the, you know, the full year versus the trajectory across the year, you are gonna exit at a, you know, I would say substantially higher exit rate than we're gonna see in the first half of this year. Now you kinda put that into perspective, I would think that the, you know, third quarter and you'll see a little seasonality always impact the business, but the third quarter and the second half, you know, run rate should be, you know, something that approaches, you know, 50% or, you know, even double the kind of growth percentage rate that you'll expect to see on a full-year basis. So your revenue trajectory and profitability trajectory heading into 2026, inherently, absent incremental investment should provide good continued uplifting growth into, you know, into next year. And we would expect to continue to find opportunities to invest over the course of this year that helps support that.

Got it. And then just if I could sneak one little thing in here, you mentioned in the prepared remarks in the press release, you know, at or above 50% margins, 1Q obviously impacted by those facilities being offline. But is there any reason to think that this kind of, you know, mid-fifty plus range you've been over the last couple of quarters doesn't kick back in once you're kind of normalized in the second through the fourth quarters?

I mean, I think, Jim, we've been quite pleased to have gotten to, you know, to those kinds of levels here, you know, we certainly got to that 50 plus percent ahead of schedule. We probably got higher than we, you know, thought we might be able to do over the course of 2024 as well. So, you know, we're quite comfortable with our ability to maintain, you know, margins in that 50 to 60% range. As we continue to bring new investments online, there's always a little bit of time to work through the, you know, the operational efficiency of those assets. But certainly, as we, you know, look forward, we expect to maintain, you know, margins in that overall 50 to 60% range. And, you know, I think we've been positively performing to the upside there, and we were able to maintain 55% in the fourth quarter even with some of that revenue softness. So, you know, near term, maybe a little, you know, lower than that as we get these new assets, you know, brought online and work through that initial, you know, efficiency piece, but I think that we're underwriting, you know, well within that range and have the opportunity to continue to maintain or grow that.

Appreciate that. Opportunity sounds exciting, guys.

Thanks, Jim. The next question comes from the line of Bobby Brooks from Northland Capital Markets. Please go ahead.

Hey, good morning, guys. Thanks for taking my question. I wanna continue on with the Colorado piece. I think that was really interesting and exciting news. Obviously, also, there's kind of a lot of questions that come up with it. So I guess just maybe starting off, could you just help me piece together kinda what you guys are bringing to the table? It seems like you're actually supplying some fresh water. Obviously, you're also bringing your expertise dealing with water. But what are you guys really bringing to the table here and maybe what are the partners bringing?

Yeah. Sure thing. So as we mentioned, I mean, we've been active in this space for more than 15 years. We've operated in and around Colorado for a large majority of that time. So we bring everything from automation, managing canal movements, you know, head gate management, ditch management. So I think we're definitely bringing the operator skill set to this. I think in addition, I think we'd be remiss not to recognize along those 15 years, I mean, we have built and managed very large freshwater resources and commercialized them for our oil and gas customers very successfully. And we continue to do so in many of the other basins that are still predominantly freshwater. So from a day-to-day feel, this is very much our normal operations. I think it's just taking it and expanding it into some higher value markets. The other folks that we are partnered with, I think, bring similar expertise and also brought access to these very unique entities that bring extremely senior water rights, as I mentioned, with very broad reach, existing storage assets of large-scale reservoirs and options to further build thousands of acres of physical land and real property, that I would mention also has very good access to power infrastructure as well. As you think about some of the customers we're targeting, you know, data centers and other customers like that are absolutely on the list. So really, this is in summary, it's just leveraging our existing capabilities and some key strategic partners to unlock new water and new value.

Got it. That's excellent color. And so maybe could you just talk about, like so you've been in and around Colorado doing stuff with water for 15 years. Could you maybe just talk about, like, how did this opportunity really develop? Was it an outbound with your team kinda having a conversation? Hey. We think there's an opportunity to consolidate some assets here and kinda diversify the revenues, or was this kind of an inbound deal? I'm just kinda curious how it developed.

Yeah, Bobby. Maybe to start, you know, obviously, as we continue to look to build out the overall strategy, we've had a focus on what might be opportunities that make sense to take our current capabilities, our current expertise, and how do we deploy that expertise into some direct diversification strategies. So this, you know, this kind of opportunity has always been on the tables of potential future horizons, you know, step out as we build out the infrastructure strategy overall. So, you know, it's certainly kind of been part of the thought process, and we've had ongoing dialogues, relationship development, work over the last couple of years. But, Mike, you wanna speak to this one more specifically?

Yeah. I think, you know, as a part of our core business, we're always asking what else and what next. So I think this largely answers that. And, you know, as I said, our core operations, especially in Colorado, I mean, we feel the water scarcity in that market every day. Like, we already own water rights, own wells, operate wells, own storage, I mean, we're in that market every day. And when you look at the forecasted demand, you know, you talk to municipalities, you talk to industrial customers, all looking to source water, you realize that doing it successfully and at a large scale is just quite challenging. So I think what we saw here was a very, very unique asset that largely hadn't touched those markets. And so I think through the combination of, you know, the skill sets of our partners, of Select, we're able to bring, again, bring this new water to new customers and, you know, ultimately, we've been looking and will continue to look across all of the freshwater assets that we hold to see if there are additional pathways to new growth as well in other basins and other geographies.

And, you know, one thing to add, Bobby, when you think about how water resources are managed and regulated and permitted, it's a very localized market, you know, state by state and, in region by region. And so a lot of those, you know, those experiences we have in terms of managing water resources, you know, overlap with other demand applications for water like these municipal agricultural, you know, type of applications. And so we're, you know, oftentimes, historically, you know, working through our own water rights permitting and seniority through some of these other areas. So in doing so, you know, we've got a lot of relationships and experience and application around how our water rights translate across the space. And what other rights are out there that we might be able to utilize or develop on our own.

Awesome. That's terrific, Colin. Then maybe just one last one for more on the base business. So chemical technologies, nicest sequential step up. And you guys see some nice growth there in one Q with the guidance that you've given. You guys have called out new product initiatives driving market share gains. So I just wanted to dive a little deeper there. You know, where are you running market share and why and from who?

Yeah. No. It's a good question. We certainly have seen quite a bit of progress, you know, over recent months and, you know, in the back half of the year. You know, we certainly saw a little bit of dislocation in our chemicals business over the course of 2024, but it really started to ramp back up in the back half of the year as some of our new product development really took hold in the latter part of 2024. You know, as the market ebbs and flows, you know, we've certainly seen more, I would say, pressure on the completions market space around some of the, you know, the pressure pumping relationships. You know, it's definitely been a lower activity environment, but as we continue to translate our expertise around chemistry and around water to relation, you know, it's translated to opportunities to solve the problems that we face, particularly as we push more towards produced water reuse and recycling. The products, you know, that are required for those solutions, you know, win more towards specialty application of chemistry. They win more towards developing new and creative ways to, you know, to apply new products to, you know, to those recycled barrels. So that's been a key focus for us as we continue to advance our recycling strategy as well. So that's been the focus. But as we look forward, I mean, we certainly see strong, you know, I think growth recovering in that business and the margins improving as we continue to ramp up the production through our manufacturing facilities and see those share gains. But, John, you want to add anything there?

Yeah. I would point out that, you know, a big portion of that business comes out of the Permian Basin. We have the only in-base reactive chemistry plant there. What's become very important and continues to be important is as we came off of freshwaters and onto produced waters, the matching of that chemistry to that water has become very important. And that's staying in front of it, you know, with new formulas and new methods in which we apply. The other thing that's become very apparent is chemistry is getting affected by the laterals. So the longer laterals, the different kind of makeup of chemistry matched to that water, is becoming more and more important. And we have developed really direct relationships with the operators, the people drilling these long laterals and producing these wells, fracking these wells, and whether it's, you know, direct in chemistry that goes through the Frack Horse Park company or direct operator chemistry applications. We're working with the owners of that reservoir rock to how to advance the chemistry to make it do what it's supposed to do in longer laterals. And do it with the dirty water that we're using now to frac with versus fresh.

Yeah. No. That's a great point John raises. The type of chemical product that's required to maximize your productivity out of a well at the end of a four-mile lateral versus the end of a two-mile lateral is a different type of product. It requires a different application of stability to it to get out to that full lateral length. And so that's been one of the key areas that we've been focused on as well as we can continue to extend out these lateral lengths over time. How do you maximize the efficiency of that product? Ensure that you get the same type of benefit at, you know, the end of that four miles that you're looking to get out of that, you know, first or second mile.

Terrific call. I really appreciate it, guys. Then I'll return to the queue. Thank you.

Thanks, Bobby.

Thank you. Next question comes from the line of Jeffrey Robertson from Water Tower Research. Please go ahead.

Thank you. Good morning. On the Colorado business, did I hear right that the demand in the vicinity that you can access with this venture is upwards of 50,000 acre-feet?

Yeah. Hey, Jeff. This is Mike. Yeah. I mean, this is based on, I mean, demand is higher than that. This is based on us just being in the market and thinking about what our natural market is around the assets where we have, you know, easy accessibility through either physical or other exchange, you know, transfer means. So the answer is yes. That just the demand in the area really dwarfs the size of this asset, and this asset is already one of the larger water holdings in the state, you know, that is not directly owned by a municipality at the moment. So it is.

How would you go about increasing beyond the 16,300 feet that this initial business covers to be able to tap into the greater demand that you see?

Yeah. I think, you know, looking farther, so the life cycle of this asset initially, we're actually taking advantage of a bunch of unique state programs. So high-efficiency farming, lease follow practices, it allows us to both create jobs and economic value for, you know, local customers, but also to begin to bring some of this water to municipal and customers over time. If you look carefully in these various ditch systems and groundwater rights systems, there are still shares of these three different share types that we own. That, at least in my opinion, over time, we are a natural owner of these shares as well. And can continue to bring them to market. I think having it in a consolidated play with the complementary storage just makes it even higher value to the end customers. So I think it's that coupling of senior water rights, storage assets, physical land, and access to that power and other utility infrastructure that allows this asset even to continue to grow beyond what I would call a pretty conservative underwriting of what we've marked out today and some of the return profiles and potential margin delivery.

And Jeff, we're pretty comfortable with the market demand and the total addressable market opportunity here. We've utilized not only our own research but third-party experts in research in this space and in this region to help supplement our underwriting capabilities here. So we're pretty confident in the long-term demand. But to your point, there's definitely an opportunity to continue to add to the scale of the resource over time. Albeit, you know, it takes, you know, the relationships, the effort, and the ability to aggregate into a larger resource that can be supplemented for the size of the contracts that we're talking about.

Can you talk a little bit about how long it took to work together with the partners that you have to get you to the point where you are today? And the reason I'm curious is that the ability to use this as some sort of a template in other areas like you spoke about.

Yeah. It's a great question. I mean, similar to Select, our partners have been in this basin and in this business around municipal and industrial water for, I would say, 10 to 15, if not 20 years as well. So I think the partnership is very complementary of folks that only do this as their core business. I think these are folks that make markets that routinely buy and sell water shares. And then us, obviously, who own and administer and operate WaterShares. So I think, you know, the deal itself came together fairly naturally, I would say. I mean, there's an understanding and an appreciation of everybody's skills from across the table. And I think that let the deal come together pretty quickly, and I think we'll also get us into the market quickly as we approach customers for LOIs. And eventually, in the coming, you know, two, three years, like, the actual executed signed contracts and the margins starting to show up on the P and L. And honestly, the demand in the market is high, so I'm probably being a little conservative here, but there are folks in ongoing discussions right now who are in desperate need of the water.

And you're obviously familiar with a lot of the permitting issues in Colorado. I'm just curious about the regulatory requirements that you have to deal with to get to the point where you have these ultra-long-term municipal contracts.

I think so out of the gates, because we are leveraging these state programs, around and obviously, you know, each water share has a different use case attached to it. There's no regulatory or, I would say, water court risk here. We're taking fully the existing shares and putting them to work, and again, I'll highlight that as it's actually a unique capability of this partnership, our ability to work with farmers, with landowners, and put in place this lease follow program. That's not a small lift, but the folks that are in this partnership have done it and know how to do it very well. So this allows us, Jeff, to get out of the gates, with a large chunk of that 16,000 acre-foot holding as available to go to market, and then, of course, over time, we'll continue to monetize that asset, and that gets us towards the higher end of the gross profit targets that Chris had mentioned. I wanna ask John also to chime in on this as he's been very close to this.

Yeah. Jeff. The one thing that I wanna point out because it's really important. I mean, we've known these people for a while. We do believe that the skill sets complement each other in a meaningful way. But with that, we also wanna point out, you know, we've been in the DJ Basin for more than 15 years. The DJ Basin has been procuring freshwater rights and dealing with regulatory and movement and all the various things you had to do in the same manner for 15 years. I mean, we've been in the DJ Basin since the beginning of really applying fresh water into horsepower and procuring and moving and swapping and doing all the things that this exact project is just in a bigger way and with municipality. We've been doing it.

Jeff? Have If I could ask one more just on the base business. Chris, do you have anything in your expectations for margins and infrastructure to reflect the potential for increased utilization on your water assets in some of the gassier areas?

Yeah. That's a good question, Jeff. I mean, you know, certainly, you know, as John, you know, spoke to earlier, you know, I think we probably see a fairly steady commodity price environment overall. That said, we do see upside in the gas markets and particularly probably some upside opportunity in the Haynesville. You know, thinking about that Haynesville position, our business is 90% plus weighted to production in the Haynesville. We built a very strong, you know, market-leading, you know, infrastructure platform out there with our large pipeline gathering infrastructure. So to the extent we start to see, you know, gas market, you know, upside and opportunity, I think, you know, the first and foremost, it's probably gonna come out of that basin. And we are clearly positioned to capitalize on that with, you know, easily the largest disposal, you know, platform in the Haynesville overall.

Thank you for taking my questions.

Thank you. Thanks, Jeff.

Thank you. Next question comes from the line of John Daniel from Daniel Energy.

Hi, guys. Good morning. Thank you for including me. I guess the first one is and not knowing much about municipal or industrial water markets, but is there much in the way of M&A opportunities that you guys could prosecute? To expand?

Yeah. I mean, it's a good question, John. You know, I think first and foremost, we'll be focused on a more organic strategy. You know, obviously, through this partnership, we're deploying capital to, you know, to consolidate and to some extent acquire these water resources from, you know, legacy owners of those rights. So part of the play here is effectively an acquisition and consolidation of those legacy rights into a larger, you know, consolidated portfolio that can then be aggregated into the scale of contracts we're talking about. So that, you know, that was a component of the strategy here. So we view this one as more of a resource play. In terms of other opportunities, I mean, we're not looking to get downstream into the municipal markets. We're looking to focus on being a resource owner and an infrastructure provider. So, you know, as we think about acquisitions, you know, these types of opportunities trade at different values than legacy, you know, energy and oil and gas markets do and if we can build our way into those opportunities, I think that should be a great way for us to participate and deploy capital and provide, you know, overall returns that are competitive with our existing business. But can substantially provide, you know, I think enhanced long-term value.

Okay. Thank you. And then just one, going back to the Haynesville. Someone just asked about that. If I'm not mistaken, aren't the rules with, like, water treatment disposal a little bit trickier in Louisiana versus Texas? And if like, what's the opportunity if all of a sudden there's a call on incremental gas drilling and six.

In Louisiana. Like, what how much capacity do you have? What are any operators reaching out to you now that sorta get prepared?

Yeah, John. This is Michael. So as you know, the rules vary state to state in terms of what you can do in terms of water treatment. The Haynesville is more similar to Texas than it would be to perhaps the Northeast or the Bakken or in Mexico. Where you are more challenged. So I have done water treatment in Haynesville. We could easily ramp that up to support activity. We've built the largest disposal gathering in the network in East Texas, North Louisiana. So we're well-positioned to take advantage of increased activity there. And to the extent that they're able to get the gas out of the Marcellus, we're also very well-positioned there as the largest disposal provider in the Marcellus Utica. Enabled to perform, you know, the largest transfer provider there as well. So we would, you know, welcome the increase in activity from natural from LNG. Associated with natural gas, and I think we're very well-positioned to ramp up and take care of our customers. John, do you wanna add? Sorry. Hey, John.

One thing that I know you Michael, addressed the recycling, and we've seen some of that in Haynesville. Probably see more of it. He discussed a little bit about our system. Our system is a very unique system. There is different application to rights to dispose of water in Louisiana and Texas. And our system goes across Louisiana, and the best acreage there it comes into Texas into the best disposal capacity in that area in Texas, and we have a unique position of being able to deal with the regulatory authority as it relates to disposal as well.

Okay. So maybe to put an example of that, John, we announced that we have 2.5 million acres under dedication. And if you break that down, by region, you know, our largest region is the Permian and the Haynesville. The Permian is fairly obvious given all the deals we've done in the last year and hope we expect to do in the next year. The Haynesville one that might be a bit surprising until you look at the system that we have there. And how you really can't replicate it. And so that's where we're getting a large concentration as well.

But is that how much of that is being piped? Because you know, when you go up there and drive around, you don't see nearly the same number of trucks today as you did a few years back. And, you know, I don't know if that's because the pipe in or just because activity's down. Just any kind of micro question, but just curious.

Yeah. Well, the activity is certainly down, so that would be a part of it, but the overwhelming majority of it is pipe for us. I mean, that's really what sets us apart is the pipeline we have that goes into a variety of wells that creates that reliable, predictable offload for the customer. That is in base and reducing their LOE.

And, John, when you think about the limitations around new disposal capacity, I mean, there's certainly some states that are gonna be more restrictive than others that you're, you know, probably quite familiar with. But when you think about how you resolve that, you either need to figure out recycling to meet the demand for that disposed barrel through a synthetic disposal application. You need to figure out how to deploy it via long-distance out-of-basin disposal, which is effectively what our, you know, Haynesville system does. Which is take that volume from Louisiana to Texas. Or you need to think about longer-term the transition towards, you know, recycling application for, you know, beneficial reuse. When you're limited in new disposal capacity, I mean, those are really your three options. Without impeding the ability to produce the barrel of oil. So if you're gonna keep the barrel of oil producing or produce more barrels, you gotta figure out to solve it via one of those avenues.

Okay. Thank you for all the good color, and congrats on the continued signing of new contracts.

Thank you. Sure. Thanks.

Thank you. Ladies and gentlemen, as there are no further questions, I would now hand the conference over to John Schmitz for his closing comments.

Yeah. Thanks to everybody for joining the call. And for your interest in learning more about Select Energy Services, Inc. And we look forward to speaking to you again next quarter.

Thank you.

Thank you.

Ladies and gentlemen, the conference of Select Energy Services, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.