Select Water Solutions reported a record adjusted EBITDA of $93 million in the second quarter, reflecting a shift from traditional water services toward a broader water and chemistry platform.
Chemical technologies revenue reached a record $96 million, up 23% sequentially, while consolidated gross margins improved to above 30%, compared with a historical average near 20%. Water infrastructure gross margins ranged from 55% to 60%, supported by a portfolio covering more than 2 million acres of dedication.
The company raised its 2025 growth capital guidance to $250 million to $290 million, with roughly $200 million allocated to growth projects. Maintenance capital requirements are estimated at about $60 million annually. Leverage stood at approximately 0.7x, below the industry average of 2.5x to 3.0x.
Operational scale remains a key driver, with the company handling roughly 1.5 million barrels of produced water per day, including 1.1 million barrels recycled and 400,000 barrels disposed of. Management targets capacity of 2 million barrels per day within 18 months. Pipeline infrastructure exceeds 1,000 miles, and the remote operations center is based in Gainesville, Texas.
Profitability mix reflects a strategic shift toward higher-margin segments. Water infrastructure now accounts for roughly 50% of total profitability, with a target to reach 60% by 2027 and 70% long-term. The segment’s average contract duration is 11 years, and 2025 growth guidance was raised from 20%-25% to 30%. Water services contribute about 34% of profitability, while chemical technologies account for 16%.
Recycled water pricing remains competitive, at 20% to 30% below freshwater alternatives and disposal costs. Emerging growth initiatives include data center water solutions, which generated $6 million in revenue in Q2, with additional revenue expected in Q3. The company is in discussions with FANG companies and hyperscalers regarding West Texas land brokerage agreements.
Mineral extraction agreements signed in recent quarters require no company capital and include three lithium projects in the Haynesville, Midland, and Delaware basins, plus an iodine agreement covering Oklahoma, Texas, and New Mexico. Projected cash flow from these ventures is estimated at $20 million to $30 million by 2030, with the first royalty payment already received.
Select Water completed an equity offering on February 18, 2025, raising net proceeds of $192 million to strengthen its balance sheet amid an oil price environment of $55 to $60. The company also invested $75 million in Colorado water rights originating from the Arkansas River Valley.
