2022 Sustainability Report
Message from the CEO
To Our Stakeholders,
At our core, Select is fundamentally dedicated to our vision to be the recognized leader and trusted partner in sustainable water management solutions. As we reflect on the achievements of 2022 and look ahead to the future, we are proud to report that Select has made significant strides in this commitment to sustainability and growth. Select was initially built to service the energy industry over the last fifteen years, and in that time we have refined our focus to become a technology leader, uniquely positioned as the only integrated full lifecycle water and chemistry company in the industry.
Our focus on sustainable value creation across our business is displayed in a number of notable recent accomplishments. During 2022, we:
- Closed on multiple acquisitions and organic growth projects that significantly increased our earnings power while meaningfully expanding our water recycling, gathering, storage and disposal capacities;
- Developed and closed the energy service industry’s first sustainability-linked credit facility and meaningfully exceeded our initial annual water recycling and employee safety targets embedded in the facility, resulting in a lower borrowing rate; and
- Initiated our first-ever quarterly dividend during Q4 of 2022, reinforcing our dedication to delivering
sustainable shareholder returns out of free cash flow.
These recent strategic efforts have meaningfully added to our operational and financial capabilities, while supplementing our sustainability initiatives as well. In 2022 alone, we expanded our daily recycling capabilities by over 400% to more than 3 million barrels per day, through a combination of both organic development and acquisitions, providing critical, sustainable solutions for traditional energy operations.
Operationally, our integrated infrastructure projects and innovative chemistry technologies have not only helped us grow our market share across all segments, but also rapidly led the industry towards sustainable recycling and reuse solutions. Considering a pro forma full year of our recent acquisitions, Select recycled 192 million barrels of produced water for reuse, or approximately 8 billion gallons of water. Put into perspective, this is equal to more than two months of total water usage of the city of Austin, TX. Approximately half of this came from our fixed facilities under long-term contracts, with the other half coming from active mobile operations. These recycling solutions provide critical sustainable solutions for the traditional energy industry, allowing it to continue to provide for our country’s energy security and prosper as part of the energy transition in the years ahead, while contributing significantly to the global effort to combat climate change.
As we look towards the future, our commitment to sustainability will remain unwavering. We will continue to focus on expanding our expertise in sustainable water and chemical solutions across diverse applications, both within and beyond unconventional shale resource development and production. We will continue to invest in the development of new technologies and regulations that allow for the beneficial reuse of produced water for alternative uses beyond the traditional energy industry, which provides a tremendous long-term opportunity for the industry to contribute positively to the overall water lifecycle. Our efforts are aimed at meeting the global demand for clean, reliable, and affordable energy as part of a comprehensive energy transition.
In the first half of 2023, Select will undergo a corporate rebranding initiative, changing our name to Select Water Solutions, Inc. and consolidating our various brands and DBAs. This rebranding reflects our dedication to sustainability and water management solutions, while enhancing our external communications with customers and other stakeholders, thereby maximizing brand recognition across our operations.
As we move into 2023, our growth opportunities include:
- Expanding our infrastructure asset footprint through organic investments in recycling, pipelines, and system capacity, ensuring the integration of environmentally responsible technologies;
- Boosting operating margins by focusing on internal efficiency efforts and capitalizing on easing cost inflation, while maintaining our commitment to sustainable practices; and
- Finally, and most importantly, we expect 2023 to bring a large uplift in our free cash flow. Through the rebranding and streamlining of operations, systems integrations, and other working capital initiatives, we expect to deliver free cash flow of roughly two-thirds of our Adjusted EBITDA which will support our continued opportunities to invest in R&D and enhanced sustainability initiatives.
By successfully executing on the above objectives, we will not only comfortably fund our capital program promoting new sustainable initiatives and investments, but also offer additional flexibility and optionality around our commitment to shareholder returns through a strong cash position. In conclusion, we are excited about the future of Select and look forward to further executing our vision through operational execution, infrastructure investments, earnings growth, shareholder returns in 2023, all while maintaining our commitment to sustainability. We extend our gratitude to our more than 4,000 highly skilled and dedicated employees for their continued support as we embark on this journey under the banner of Select Water Solutions.
Chairman, President & CEO
Key ESG Data
Sustainability At Select
Learn more about how Select prioritizes sustainability by downloading our complete report or contact us at:
1233 West Loop South, Suite 1400 | Houston, Texas
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