Select Energy Services, Inc. (NYSE: WTTR) ("Select" or "the Company"), a leading provider of total water management solutions and a developer and manufacturer of chemical solutions to the North American unconventional oil and gas industry, today announced the commencement of a new fixed pipeline infrastructure project serving both Eddy and Lea Counties, New Mexico in the Northern Delaware Basin.
This investment represents a reallocation of capital away from certain non-core legacy businesses Select expects to divest.
The Company expects to invest approximately $25 million in this fixed pipeline infrastructure, which is anticipated to begin operations by the third quarter of 2019. This project is supported by a 5-year take-or-pay contract with a major international integrated oil company for the purchase and delivery of 75 million barrels in total of water. The pipeline system will initially support the provision of up to 100,000 barrels of water per day utilizing existing rights-of-way and source water rights from recently executed long-term supply agreements with industrial sources.
Holli Ladhani, President and CEO, stated, “This new system complements our existing infrastructure and operations in this highly dynamic area of development. We are pleased to have the opportunity to partner with an important customer to support the initial build-out, and will explore additional commercialization opportunities to provide other operators in the area with the services and solutions they need.
“As we look towards the rest of 2019, we will remain judicious stewards of capital. We anticipate this pipeline project will be fully funded from the proceeds of divestments of certain non-core assets, including our Affirm and Canadian operations, which are slated to be completed in 2019. This provides us with the opportunity to reallocate capital to longer-lived, higher margin infrastructure and should provide enhanced returns on our investment,” concluded Ladhani.
Source: Company Press Release