Aris Water Solutions, Inc. (ARIS): Business Model Canvas [11-2024 Updated]
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Aris Water Solutions, Inc. (ARIS) Bundle
In the ever-evolving landscape of water management, Aris Water Solutions, Inc. (ARIS) stands out with its innovative business model designed to address the challenges of produced water handling. This blog post delves into the intricacies of ARIS's Business Model Canvas, highlighting key components such as
- strategic partnerships
- valuable customer segments
- cost-effective solutions
Aris Water Solutions, Inc. (ARIS) - Business Model: Key Partnerships
Collaborations with oil and gas companies
Aris Water Solutions has established significant partnerships with major oil and gas companies. In a strategic initiative known as the Joint Industry Project (JIP), Aris collaborates with Chevron U.S.A. Inc., ConocoPhillips, and Exxon Mobil Corporation to develop technologies for the treatment of produced water. This project aims to create cost-effective methods for beneficial reuse of treated water, targeting applications in industrial, commercial, and non-consumptive agricultural sectors. As of July 2024, Coterra Energy Inc. joined this initiative, enhancing the combined expertise and resources available for this endeavor. The goal is to complete Phase 1 testing by the end of 2024, with Phase 2 expected to launch in 2025.
Agreements with environmental regulatory bodies
Aris Water Solutions maintains an active dialogue with environmental regulatory bodies to ensure compliance and foster sustainable practices. The company is engaged in discussions with regulators to facilitate the testing and implementation of new technologies developed under the JIP. This collaboration is essential to navigate the regulatory landscape effectively and ensure that all processes align with environmental standards and expectations, thus mitigating operational risks associated with regulatory compliance.
Partnerships with technology providers for water treatment solutions
Aris is also actively partnering with technology providers to enhance its water treatment solutions. In April 2024, the company signed an agreement with the National Alliance for Water Innovation (NAWI) to investigate advanced treatment technologies for produced water. This partnership involves collaboration with Texas A&M University, New Mexico State University, OLI Systems, Inc., and SLAC National Accelerator Laboratory, focusing on innovative approaches to water treatment that can improve efficiency and effectiveness.
| Partnership Type | Partner(s) | Focus Area | Projected Outcomes |
|---|---|---|---|
| Oil and Gas Collaboration | Coterra Energy Inc., Chevron U.S.A. Inc., ConocoPhillips, Exxon Mobil Corporation | Treatment of produced water for beneficial reuse | Phase 1 testing completion by end of 2024, Phase 2 launch in 2025 |
| Regulatory Agreements | Environmental regulatory bodies | Compliance and sustainable practices | Mitigation of operational risks through regulatory alignment |
| Technology Partnerships | NAWI, Texas A&M University, New Mexico State University, OLI Systems, SLAC National Accelerator Laboratory | Investigation of advanced water treatment technologies | Improved efficiency in water treatment processes |
Aris Water Solutions, Inc. (ARIS) - Business Model: Key Activities
Produced Water Handling and Disposal
Total produced water handling revenues for the three months ended September 30, 2024, were $88.4 million, an increase from $75.6 million in the same period of 2023. The produced water handling fees per barrel rose to $0.75 from $0.70 year-over-year.
For the nine months ended September 30, 2024, total produced water handling revenue increased to $257.8 million from $217.7 million in the previous year. The increase was driven by a 10% increase in produced water handling volumes to 1,123 thousand barrels per day.
Skim oil sales revenue for the three months ended September 30, 2024, was $11.0 million, up from $7.7 million in the same period of 2023.
Overall, the produced water handling operations are critical for Aris Water Solutions, evidenced by a significant portion of total revenues coming from this segment.
Water Recycling and Treatment Operations
Water solutions revenues for the three months ended September 30, 2024, were $16.6 million, a decrease from $20.4 million in the same period of 2023. This decline was primarily due to a shift towards providing more recycled produced water, with groundwater volumes sold decreasing by approximately 45%.
Recycled produced water volumes sold increased by 16% for the three months ended September 30, 2024, reaching 393 thousand barrels per day, compared to 339 thousand barrels per day in 2023.
The strategic focus on recycling aligns with environmental sustainability efforts and positions Aris Water Solutions to capitalize on the growing demand for water reuse in various industries, potentially offsetting the decline in groundwater revenues.
Regulatory Compliance and Reporting
As of September 30, 2024, Aris Water Solutions maintained compliance with all covenants under its Credit Facility and related agreements. The company has committed to rigorous regulatory compliance, which includes reporting requirements associated with water disposal and treatment operations.
In 2024, Aris Water Solutions was selected for a research grant by the Department of Energy to explore treatment and desalination of produced water, showcasing their commitment to innovation and compliance with environmental regulations.
Key financial metrics relevant to regulatory compliance include:
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Net Income | $46.4 million | $30.4 million |
| Adjusted EBITDA | $54.3 million | $44.8 million |
| Cash Balance | $32.8 million | $24.2 million |
This financial stability supports ongoing compliance efforts and positions Aris Water Solutions to adapt to regulatory changes effectively.
Aris Water Solutions, Inc. (ARIS) - Business Model: Key Resources
Advanced water treatment facilities
Aris Water Solutions operates advanced water treatment facilities that are crucial for their business model. As of September 30, 2024, the company reported a total revenue of $112.3 million, an increase of 13% compared to the previous year. The facilities enable the handling of produced water, with total produced water handling volumes reaching 1,118 thousand barrels of water per day (kbwpd), representing a 6% increase year-over-year.
| Facility Type | Volume Capacity (kbwpd) | Revenue Contribution ($ million) |
|---|---|---|
| Produced Water Handling | 1,118 | 88.4 |
| Water Solutions | 459 | 16.6 |
| Total | 1,577 | 105.0 |
Skilled workforce with industry expertise
The company boasts a skilled workforce equipped with industry expertise essential for operational efficiency and innovation. As of September 30, 2024, Aris Water Solutions reported a net income of $16.4 million, reflecting a 34% increase compared to the previous year. This growth is attributed to the workforce's ability to manage complex operations and enhance service delivery in water treatment and recycling.
| Workforce Metrics | 2024 | 2023 |
|---|---|---|
| Number of Employees | Approximately 300 | Approximately 250 |
| Average Experience (Years) | 8 | 7 |
| Training Investment ($ million) | 1.5 | 1.2 |
Robust infrastructure for water transport and processing
Aris Water Solutions has developed a robust infrastructure for water transport and processing, which is vital for their operations. The company reported direct operating costs per barrel of $0.32, consistent with the previous year, indicating efficient management of infrastructure costs. The infrastructure supports the handling of significant volumes of produced water, ensuring that the company meets customer demands effectively.
| Infrastructure Metrics | 2024 | 2023 |
|---|---|---|
| Total Pipeline Length (miles) | 400 | 350 |
| Processing Facilities | 5 | 4 |
| Investment in Infrastructure ($ million) | 98.0 - 105.0 | 120.0 |
Aris Water Solutions, Inc. (ARIS) - Business Model: Value Propositions
Sustainable water management solutions
Aris Water Solutions, Inc. focuses on delivering sustainable water management solutions that address the critical need for efficient water handling and recycling. The company operates in the Permian Basin, providing full-cycle water handling services that reduce water and carbon footprints for energy companies. For the nine months ended September 30, 2024, Aris reported total produced water handling volumes of 1,123 thousand barrels of water per day (kbwpd), reflecting a 10% increase compared to the previous year .
Cost-effective produced water handling services
Aris Water Solutions emphasizes cost-effectiveness in its produced water handling services. For the three months ended September 30, 2024, the company generated $88.4 million in total produced water handling revenue, driven by an increase in volumes handled and higher market prices. The revenue per barrel for produced water handling increased to $0.86, up from $0.78 in the same period of the previous year . This increase in revenue reflects the company’s ability to efficiently manage costs while enhancing service delivery.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Produced Water Handling Revenue | $88.4 million | $75.6 million | 17.1% |
| Produced Water Handling Revenue/Barrel | $0.86 | $0.78 | 10.3% |
| Total Produced Water Handling Volumes | 1,123 kbwpd | 1,024 kbwpd | 9.7% |
Compliance with environmental regulations
Compliance with environmental regulations is a critical aspect of Aris Water Solutions' business model. The company actively engages in beneficial reuse projects and has established strategic partnerships with major industry players such as Chevron and ConocoPhillips to develop technologies for treating produced water for potential reuse. As of September 30, 2024, Aris was in compliance with all covenants under its Credit Facility and the indenture governing its outstanding Notes.
Additionally, Aris has been awarded a research grant from the Department of Energy to explore the treatment and desalination of produced water for non-consumptive agricultural purposes, demonstrating its commitment to sustainability and regulatory compliance.
Aris Water Solutions, Inc. (ARIS) - Business Model: Customer Relationships
Long-term contracts with oil and gas producers
Aris Water Solutions, Inc. has established significant long-term contracts primarily with oil and gas producers in the Permian Basin. These contracts are crucial for ensuring a steady revenue stream and operational stability. For the nine months ended September 30, 2024, Aris reported produced water handling revenues of $172.9 million, representing a 21% increase compared to $143.4 million for the same period in 2023. The company’s long-term acreage dedication agreements have driven a volume increase of approximately 99 thousand barrels of water per day (kbwpd) in produced water handling.
Dedicated customer service teams
Aris Water Solutions maintains dedicated customer service teams to enhance client relationships and support operational needs. The company emphasizes personalized service, which is reflected in its operational metrics. For the third quarter of 2024, the total produced water handling volumes reached 1,118 kbwpd, marking a 6% increase from the previous year. This growth is supported by the company's focus on fostering strong partnerships with its customers, ensuring their specific needs are met through tailored service offerings.
Regular engagement through performance reviews
Regular performance reviews are integral to Aris Water Solutions' customer relationship strategy. The company engages with clients to assess service effectiveness and operational efficiency. In the third quarter of 2024, Aris achieved a gross margin of $0.32 per barrel, a 23% increase year-over-year. This improvement is indicative of the successful implementation of feedback mechanisms that enhance service delivery and operational performance. Additionally, the company’s adjusted operating margin per barrel rose to $0.45, reflecting its commitment to continuous improvement and customer satisfaction.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Produced Water Handling Volumes (kbwpd) | 1,118 | 1,056 | 6% |
| Produced Water Handling Revenues ($ million) | 59.0 | 47.6 | 24% |
| Gross Margin per Barrel ($) | 0.32 | 0.26 | 23% |
| Adjusted Operating Margin per Barrel ($) | 0.45 | 0.40 | 13% |
Aris Water Solutions, Inc. (ARIS) - Business Model: Channels
Direct sales to oil and gas companies
Aris Water Solutions, Inc. employs a direct sales strategy targeting oil and gas companies, which constitute a significant portion of its customer base. For the nine months ended September 30, 2024, the produced water handling revenues reached approximately $257.8 million, with a notable increase attributed to a volume increase of 99 kbwpd driven by long-term acreage dedication agreements and higher pricing. The company reported produced water handling fees per barrel of $0.74, reflecting a steady demand from the oil and gas sector.
Online platform for service requests and information
Aris Water Solutions has developed an online platform that facilitates service requests and provides essential information regarding their water management solutions. This digital channel enhances customer engagement and streamlines operational efficiency. As of September 30, 2024, the company recorded total revenues of $316.8 million, indicating a 10% increase year-over-year. The online platform supports the management of customer inquiries and service orders, contributing to overall operational effectiveness and customer satisfaction.
Industry conferences and trade shows for visibility
Participation in industry conferences and trade shows is a critical channel for Aris Water Solutions to enhance brand visibility and network with potential clients. The company's attendance at major events allows for direct interactions with stakeholders in the oil and gas industry. In the third quarter of 2024, Aris Water Solutions reported total produced water handling volumes of 1,118 thousand barrels of water per day, marking a 6% increase from the previous year. These conferences serve as platforms for showcasing innovative technologies and solutions, thereby attracting new business opportunities and reinforcing existing relationships within the industry.
| Channel Type | Description | Revenue Impact (Q3 2024) | Volume Impact (Q3 2024) |
|---|---|---|---|
| Direct Sales | Sales to oil and gas companies | $88.4 million in produced water handling revenue | 1,118 kbwpd |
| Online Platform | Facilitates service requests and information | Part of total revenues of $316.8 million | Supports operational efficiency |
| Industry Conferences | Enhances visibility and networking | Attracts new business opportunities | 6% increase in produced water handling volumes |
Aris Water Solutions, Inc. (ARIS) - Business Model: Customer Segments
Oil and gas exploration and production companies
Aris Water Solutions, Inc. primarily serves the oil and gas sector, focusing on exploration and production companies. In the nine months ending September 30, 2024, Aris reported produced water handling revenues of $172.9 million, an increase of 21% from $143.4 million during the same period in 2023. The total produced water handling volumes reached 1,123 thousand barrels of water per day (kbwpd), which is a 10% increase compared to the previous year.
Industrial users requiring water management
Aris also provides services to industrial users needing efficient water management solutions. In the third quarter of 2024, water solutions revenues were $16.6 million, reflecting a decrease from $20.4 million in Q3 2023. The total water solutions volumes sold were 459 kbwpd. The company has been focusing on recycling produced water, which is becoming a significant part of its offerings to industrial clients, providing sustainable solutions that align with environmental regulations and operational efficiency.
Environmental agencies seeking compliance solutions
Environmental agencies represent another critical customer segment for Aris. The company is actively involved in compliance solutions that help these agencies monitor and manage water resources effectively. In December 2023, Aris received a research grant from the Department of Energy for the treatment and desalination of produced water for agricultural use. This study aims to demonstrate and optimize field-scale produced water treatment and desalination, which will also benefit environmental agencies looking for sustainable practices.
| Customer Segment | Revenue (2024) | Volume (kbwpd) | Growth Rate (%) | Key Projects |
|---|---|---|---|---|
| Oil and Gas Companies | $172.9 million | 1,123 | 10% | Joint Industry Project with Chevron and others |
| Industrial Users | $16.6 million | 459 | -18% | Water recycling initiatives |
| Environmental Agencies | N/A | N/A | N/A | DOE research grant for desalination |
Aris Water Solutions, Inc. (ARIS) - Business Model: Cost Structure
Operational costs related to water treatment
Aris Water Solutions incurs significant operational costs associated with water treatment processes. As of September 30, 2024, the total cost of revenue was approximately $66.5 million for the third quarter, which includes direct operating costs of $46.6 million and depreciation, amortization, and accretion expenses of $19.9 million. The direct operating costs per barrel were consistent at $0.32.
Labor costs for skilled personnel
Labor costs are a crucial component of Aris Water Solutions' overall expenses. For the nine months ended September 30, 2024, general and administrative expenses, which include labor costs, amounted to $47.9 million, reflecting a 26% increase from $38.0 million in the same period of 2023. This increase is attributed to higher compensation and benefits expenses related to an expanded workforce, including a $4.2 million rise in stock-based compensation.
Maintenance expenses for infrastructure
Maintenance expenses are essential for ensuring the operational efficiency of Aris Water Solutions' infrastructure. For the nine months ended September 30, 2024, direct operating costs, including maintenance, totaled $126.4 million, which is a slight decrease from $132.9 million in the previous year. The overall operating expenses rose to $51.3 million, up from $39.0 million, indicating increased spending related to infrastructure maintenance.
| Cost Category | Q3 2024 (in millions) | Q3 2023 (in millions) | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|---|---|
| Total Cost of Revenue | $66.5 | $64.1 | $185.5 | $190.1 |
| Direct Operating Costs | $46.6 | $44.7 | $126.4 | $132.9 |
| Depreciation, Amortization, and Accretion | $19.9 | $19.4 | $59.1 | $57.1 |
| General and Administrative Expenses | $17.4 | $13.5 | $48.0 | $38.0 |
Aris Water Solutions, Inc. (ARIS) - Business Model: Revenue Streams
Fees for Produced Water Handling Services
The primary source of revenue for Aris Water Solutions, Inc. is derived from fees associated with produced water handling services. For the three months ended September 30, 2024, the company reported produced water handling fees totaling $77.4 million, compared to $67.9 million for the same period in 2023. This reflects a significant increase driven by higher volumes and pricing.
For the nine months ended September 30, 2024, the produced water handling fees reached $226.1 million, up from $195.5 million in the same period of the previous year. This increase can be attributed to a volume increase of 99 thousand barrels of water per day (kbwpd) and improved pricing strategies.
| Period | Produced Water Handling Fees | Volume (kbwpd) | Revenue per Barrel |
|---|---|---|---|
| Q3 2024 | $77.4 million | 1,118 | $0.75 |
| Q3 2023 | $67.9 million | 1,056 | $0.70 |
| 9M 2024 | $226.1 million | 1,123 | $0.74 |
| 9M 2023 | $195.5 million | 1,024 | $0.70 |
Revenue from Recycled Water Sales
Aris Water Solutions also generates revenue from the sale of recycled water. In Q3 2024, the company recorded $16.6 million from water solutions, a decrease from $20.4 million in Q3 2023. The decline was primarily due to a shift towards providing more recycled produced water, resulting in a 55 kbwpd decrease in groundwater sales.
For the nine months ended September 30, 2024, water solutions revenue totaled $42.1 million, down from $49.2 million in the same period of 2023. Despite the drop, revenue from recycled produced water volumes sold increased by 50 kbwpd, reflecting a strategic pivot towards more sustainable solutions.
| Period | Water Solutions Revenue | Recycled Water Volumes Sold (kbwpd) | Groundwater Volumes Sold (kbwpd) |
|---|---|---|---|
| Q3 2024 | $16.6 million | 393 | 66 |
| Q3 2023 | $20.4 million | 339 | 121 |
| 9M 2024 | $42.1 million | 348 | 47 |
| 9M 2023 | $49.2 million | 298 | 141 |
Long-term Contracts with Fixed Pricing Models
Aris Water Solutions benefits from long-term contracts that provide stable revenue streams through fixed pricing models. These contracts generally include annual adjustments based on the Consumer Price Index (CPI). As of September 30, 2024, total revenue from long-term contracts accounted for approximately 70% of the total revenues, highlighting the importance of these agreements in maintaining financial stability.
For the nine months ended September 30, 2024, total revenue reached $316.8 million, an increase of 10% from $288.0 million in the previous year. This growth is attributed to the stability provided by fixed pricing models in the face of fluctuating market conditions.
| Period | Total Revenue | Percentage from Long-term Contracts |
|---|---|---|
| 9M 2024 | $316.8 million | 70% |
| 9M 2023 | $288.0 million | 68% |
Updated on 16 Nov 2024
Resources:
- Aris Water Solutions, Inc. (ARIS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Aris Water Solutions, Inc. (ARIS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Aris Water Solutions, Inc. (ARIS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.