Aris Water Solutions, Inc. (ARIS): Business Model Canvas [Dec-2025 Updated]

You're looking at a critical moment for the water midstream sector, especially with the pending $1.5 billion acquisition of Aris Water Solutions, Inc. by Western Midstream Partners, LP (WES). Honestly, this isn't just another pipeline play; it's a full-cycle water management powerhouse in the Permian Basin, underpinned by rock-solid, long-term contracts with giants like ConocoPhillips and Chevron. We're talking about 790 miles of owned infrastructure and guidance pointing toward $215 million to $235 million in Adjusted EBITDA for 2025, all while driving ESG performance through massive recycling volumes. So, if you want to see exactly how this business converts produced water into reliable revenue streams-from the dedicated 625,000 acres under contract to the final recycling fee-dive into the essential building blocks below.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that underpin Aris Water Solutions, Inc.'s operations and future strategy as of late 2025. These aren't just vendor agreements; they are deep, often multi-faceted alliances that secure volume and drive innovation, especially around water reuse.

Western Midstream Partners, LP (WES) for the pending $1.5 billion acquisition

The pending acquisition by Western Midstream Partners, LP (WES) fundamentally reshapes Aris Water Solutions, Inc.'s partnership structure, moving it under a larger midstream umbrella. The definitive agreement, announced in August 2025, values Aris at approximately $1.5 billion in an equity-and-cash transaction, with a total enterprise value around $2.0 billion before transaction costs. This deal is expected to close in the fourth quarter of 2025.

Here's a quick look at the deal terms that define this major partnership shift:

This combination creates a fully integrated produced-water value chain, enhancing WES's ability to compete for new business development opportunities across the Delaware Basin, including expanding WES's New Mexico footprint in Lea and Eddy Counties.

Major E&P customers: ConocoPhillips, Chevron, Exxon Mobil, Marathon Oil

Aris Water Solutions, Inc. relies heavily on long-term contracts with major Exploration and Production (E&P) operators. As of the year ended December 31, 2024, affiliates of ConocoPhillips and Chevron U.S.A. Inc. were the two largest customers, collectively representing approximately 53% of that year's revenue. These relationships are secured by long-term contracts and acreage dedications, with average contract tenor for produced water handling being approximately ten years.

The key E&P customer base includes:

• ConocoPhillips: A primary customer with long-term contracts.
• Chevron U.S.A. Inc.: A primary customer with long-term contracts.
• Exxon Mobil Corporation: A significant business partner, especially in reuse initiatives.
• Marathon Oil: Also noted as a significant business partner.
• Occidental Petroleum: Identified as the 4th largest customer for Aris.

The company's produced water handling infrastructure, as of the acquisition announcement, included approximately 790 miles of produced-water pipeline and 1,800 MBbls/d of produced-water handling capacity.

Strategic partners for beneficial reuse and mineral extraction

A major focus area involves strategic alliances to treat produced water for uses outside of traditional oil and gas operations. Aris Water Solutions, Inc. leads a Joint-Industry Project (JIP) focused on developing and piloting technologies for beneficial reuse.

Partners in the JIP include:

• Chevron U.S.A. Inc.
• ConocoPhillips Company
• Exxon Mobil Corporation
• Coterra Energy Inc.

This effort targets non-consumptive agricultural, alternative power generation, and other industrial applications. Aris Water Solutions, Inc. is also evaluating mineral recovery opportunities, including caustic, HCL, bromine, and lithium. A pilot project is underway with Texas A&M University to evaluate irrigation for growing cotton using treated produced water, building on a 2016 feasibility study.

Technology providers for advanced water treatment and desalination

Advancing treatment capabilities requires collaboration with academic and engineering entities. Aris Water Solutions, Inc. secured a research grant from the Department of Energy (DOE) to further its work on treatment and desalination of produced water for agricultural irrigation. This DOE funding supports the optimization framework for produced water management, which received approximately $4,000,000 in funding for a 2021 project.

Key technical collaborators include:

• Department of Energy (DOE): Provided a research grant for desalination.
• National Alliance for Water Innovation (NAWI): Signed an agreement to investigate treatment technologies.
• Garver: Led the design, construction, and startup of a multi-year pilot treatment system.
• Texas A&M AgriLife: Collaborator on the greenhouse study using treated and desalinated water.

The company expects its iodine extraction facility, which supports mineral recovery, to be operational by year-end 2025. For context, as of September 10, 2025, Aris Water Solutions, Inc.'s stock price was $24.13, with a market capitalization of $789M.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Key Activities

Produced water gathering, transportation, and disposal

• Produced Water Handling volumes reached 1,234 thousand barrels of water per day for the three months ended June 30, 2025.
• This represented a 13% year-over-year growth in Produced Water Handling volumes.
• Aris Water Solutions has approximately 790 miles of produced water pipeline.
• The company has a produced water handling capacity of 1.8 million barrels of water per day (b/d).
• Aris Water Solutions extended its Water Gathering and Disposal Agreement with ConocoPhillips, setting the new primary term end date as May 31, 2040.
• The acreage-weighted remaining term of produced water contracts was extended to over 10 years.

Large-scale water recycling and reuse for hydraulic fracturing

• Recycled Produced Water Volumes Sold for the second quarter of 2025 were 425 thousand barrels of water per day.
• Recycled water volumes saw a 35% increase year-over-year for the second quarter of 2025.
• The company possesses 1.4 million b/d of water recycling capacity.
• Groundwater Volumes Sold in the second quarter of 2025 were 98 thousand barrels of water per day.

Infrastructure development (pipeline and facility construction)

Aris Water Solutions manages its business through an integrated pipeline system and related infrastructure, which includes dedicated acreage commitments.

• As of June 30, 2025, Aris Water Solutions had approximately 625,000 dedicated acres from other parties.
• The company's leverage ratio at the end of the second quarter of 2025 was 2.0X.
• Net debt as of June 30, 2025, was approximately $445 million.

Skim oil recovery and emerging mineral extraction initiatives

• Skim oil recoveries reached 2,845 barrels of oil per day for the three months ended June 30, 2025.
• This represented a 45% increase in skim oil recoveries compared to the previous quarter.
• Skim oil recoveries represented 0.23% of produced water volumes in the second quarter of 2025.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Key Resources

You're looking at the core physical and contractual assets that make Aris Water Solutions, Inc. a powerhouse in the Permian Basin water management space. These aren't abstract concepts; they are tangible infrastructure and long-term commitments that lock in revenue visibility. Honestly, this asset base is what made the company an attractive target for Western Midstream Partners, LP in the August 2025 transaction.

The foundation of Aris Water Solutions, Inc.'s operations is its integrated network. This infrastructure acts as a significant barrier to entry for competitors because building out this scale takes massive capital and time, plus securing the necessary rights-of-way.

Here's a breakdown of the physical and contractual backbone:

• The extensive pipeline network spans approximately 790 miles across the Permian Basin.
• The company secured 625,000 dedicated acres under long-term contracts with investment-grade counterparties as of December 31, 2024.
• The McNeill Ranch, acquired in the fourth quarter of 2024 for $45.0 million, covers 45,000 acres across New Mexico and Texas.

The scale of their water handling and recycling capabilities, as reported around early 2025, is critical to servicing these dedicated areas:

The contractual framework supporting these assets provides the revenue stability you look for in infrastructure plays. The long-term nature of these agreements means volumes are highly visible, which is key for valuation.

The acreage dedications and contract tenors are concrete evidence of customer commitment:

• The 625,000 dedicated acres are supported by contracts with approximately 37 different customers as of December 31, 2024.
• The weighted average remaining life for produced water handling acreage dedication contracts was approximately 6.8 years as of December 31, 2024.
• The average contract tenor for produced-water volumes was approximately ten years, and for water solutions volumes, approximately eight years, as of August 2025.
• Approximately 80% of forecasted Water Solutions business was under long-term dedication with an average tenor of 8 years as of February 2025.

The McNeill Ranch acquisition specifically bolsters disposal capacity, which is a necessary complement to the gathering and recycling network. Management believed the Ranch had disposal capacity for up to 400,000 barrels per day, though initial permits were for 180,000 barrels per day. This asset also offers surface use optionality for future development, including renewable power generation and industrial applications.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Value Propositions

Full-cycle water management for E&P operators in the Permian Basin

Aris Water Solutions, Inc. delivers full-cycle water handling and recycling solutions that increase the sustainability of energy company operations. Its integrated pipelines and related infrastructure create long-term value by delivering high-capacity, comprehensive produced water management, recycling and supply solutions to operators in the core areas of the Permian Basin. Aris Water Solutions, Inc. serves premier operators under long-term contracts. This service helps energy companies reduce their water and carbon footprints.

• Delivers high-capacity, comprehensive produced water management, recycling and supply solutions.
• Infrastructure serves premier operators in core areas of the Permian Basin.

Enhanced environmental, social, and governance (ESG) performance via high-volume recycling

Aris Water Solutions, Inc. has established one of the largest produced water recycling footprints in the Permian Basin. The company set an additional target to recycle 85% of all barrels of water sold to its customers by 2025. Recycled water volumes grew 41% year-over-year in the first quarter of 2025. For the second quarter of 2025, recycled water volumes grew 35% year-over-year.

Long-term flow assurance and service reliability via integrated pipeline infrastructure

The integrated pipeline network provides long-term flow assurance. Produced Water Handling volumes reached a record in the second quarter of 2025, growing 4% sequentially and 13% year-over-year. The company had approximately ~715 miles of pipeline as of a previous reporting period. The infrastructure supports high-capacity water management.

• Produced Water Handling volumes for Q2 2025 expected at 1,200 to 1,250 thousand barrels/day.
• Water Solutions volumes for Q2 2025 expected at 475,000 to 525,000 barrels/day.
• Q1 2025 Produced Water Handling volumes grew 7% sequentially.
• The company had $347 million available under its revolving credit facility as of June 30, 2025.

Cost-effective, non-fresh water supply for drilling and completion activities

By concentrating on infrastructure that supports efficient water handling, Aris Water Solutions, Inc. helps its customers reduce truck traffic, lower emissions, and optimize overall well economics. The company maintains strong margins on its services. The Adjusted Operating Margin per Barrel was $0.44 in the first quarter of 2025.

• Full Year 2025 Adjusted Operating Margin per Barrel projected between $0.43 and $0.45.
• Q2 2025 Adjusted Operating Margin per Barrel expected between $0.41 and $0.43.
• Full Year 2025 Adjusted EBITDA guidance is $215 to $235 million.
• Full Year 2025 Free Cash Flow projected between $75 to $95 million.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Customer Relationships

You're looking at the core of Aris Water Solutions, Inc.'s stability, which is built on deep, long-term commitments from major Permian Basin producers. This isn't transactional; it's infrastructure-level partnership.

Long-term acreage dedication contracts, often exceeding 10 years are the bedrock. These contracts tie Aris Water Solutions, Inc.'s services to specific geographic areas, ensuring a steady flow of produced water for handling and recycling as long as the customer operates there. The relationship with ConocoPhillips, for example, saw a July 2025 extension that pushed the acreage-weighted remaining term of produced water contracts from approximately six years to over ten years. As of August 2025, the average contract tenor supports volumes with approximately ten years for produced-water services and eight years for water solutions.

The scale of dedication is significant. As of December 31, 2024, Aris Water Solutions, Inc. managed approximately 625,000 dedicated acres across about 100 contracts with roughly 37 different customers. The weighted average remaining life for these acreage dedication contracts was 6.8 years at that same date.

Here's a quick look at the contract footprint as of year-end 2024:

Minimum-volume commitments (MVCs) for revenue stability provide a crucial floor. Under these arrangements, customers either deliver a set minimum daily volume or pay a deficiency fee. This structure smooths out revenue volatility. As of December 31, 2024, the aggregate contracted MVCs stood at approximately 100,000 bwpd of produced water. The remaining life on these specific MVCs was shorter, at 2.1 years weighted average.

The service model is inherently direct and dedicated, focusing on large, well-capitalized customers. For the year ended December 31, 2024, the top two customers, affiliates of ConocoPhillips and Chevron U.S.A. Inc., accounted for approximately 53% of total revenue. This concentration highlights the reliance on these major operators who are increasingly outsourcing water management to integrated providers like Aris Water Solutions, Inc. The service provided is full-cycle, covering:

• Produced water transportation
• Produced water handling operations
• Recycled water supply

Finally, the fee structure includes mechanisms to protect margins against inflation. All produced water transported on the gathering pipeline infrastructure is subject to fee-based contracts that generally include limited annual CPI-based adjustments. This indexing helps mitigate cost inflation impacts, as noted in performance discussions where margin expansion was attributed, in part, to these CPI-indexed contracts.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Channels

You're looking at how Aris Water Solutions, Inc. (ARIS) gets its services-water handling and recycling-to its E&P (Exploration and Production) company customers in the Permian Basin. This is all about physical infrastructure and direct customer engagement.

Integrated, owned, and operated pipeline network in the Permian Basin

Aris Water Solutions, Inc. (ARIS) relies on its owned infrastructure to move produced water. This network is entirely located in the Delaware and Midland sub-basins of the broader Permian Basin. As of December 31, 2024, the recognized operational capability included significant mileage and facilities, which the company was building upon in 2025.

The company has permits to expand further, holding permits for an additional 23 water handling facilities and 20 water recycling facilities.

Direct sales and service teams engaging E&P company water managers

The channel to market is heavily reliant on direct relationships with major operators. Long-term contracts provide substantial revenue visibility. Approximately 80% of forecasted 2025 revenue is secured under these long-term agreements with premium oil companies. For the Water Solutions segment, an extended acreage dedication contract with a major customer now has an average tenor of 8 years.

Volume expectations for the full year 2025, which reflect this direct customer engagement, are:

• Produced Water Handling volumes forecasted between 1,150 and 1,210 thousand barrels of water per day.
• Water Solutions volumes forecasted between 460 and 520 thousand barrels of water per day.

For the second quarter of 2025, Produced Water Handling volumes grew 4% sequentially, and Recycled water volumes grew 35% year-over-year.

Strategic surface and subsurface assets like McNeill Ranch

The acquisition of the McNeill Ranch is a key strategic channel for cost optimization and future capacity. Aris Water Solutions, Inc. (ARIS) purchased the 45,000-acre ranch in New Mexico and Texas for $45.0 million in the fourth quarter of 2024. This asset offers significant subsurface disposal capacity, with a permit for 180,000 barrels a day, though the company believes the capacity could reach 400,000 barrels. The direct benefit of owning the disposal site is avoiding landowner royalties, which is one of their largest expenses. Surface Use compensation is projected to fall from $11.3 million in 2026 to $1.3 million in 2027, representing an annual saving of about $10 million.

Spot market sales for excess produced water handling capacity

While the core channel is long-term contracts, the infrastructure also supports transactional business. The growth in Q1 2025 was partly driven by increased spot volume demand on the infrastructure network. The company's operational flexibility allows it to absorb this variable demand. For instance, Q1 2025 Produced Water Handling volumes grew 7% sequentially, partly due to these higher-than-anticipated customer activity levels.

The company's Q2 2025 guidance reflected this capacity utilization, projecting Produced Water Handling volumes between 1.2 million and 1.25 million barrels/day.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Customer Segments

You're looking to map out who Aris Water Solutions, Inc. (ARIS) serves right now, late in 2025. Honestly, their customer base is highly concentrated, which gives them great visibility but also ties their fortunes closely to the big players in the Permian.

Large, investment-grade exploration and production (E&P) companies

Aris Water Solutions, Inc. focuses heavily on securing long-term relationships with top-tier operators. You see this commitment in their contract structure; as of early 2025 forecasts, 80% of Aris Water Solutions, Inc.'s projected 2025 revenue came from these long-term dedication contracts. This segment includes major names; for example, Aris Water Solutions, Inc. has long-term contracts with major oil companies like ConocoPhillips and Chevron. This reliance on investment-grade counterparties helps support their capital structure, evidenced by their successful senior notes refinancing which was upsized to $500 million due to strong investor demand.

Oil and gas operators in the Northern Delaware Basin of the Permian Basin

The core of Aris Water Solutions, Inc.'s operations is serving producers within the prolific Permian Basin. They have built out significant infrastructure to support this. Specifically, Aris Water Solutions, Inc. operates about 640 miles of permanent, large-diameter pipelines dedicated to transporting produced, recycled, and non-potable water to operators in the heart of the Northern Delaware Basin in Texas and New Mexico, alongside the Midland Basin in Texas. Their customers are seeing efficiency gains, like longer lateral lengths, which drives increased demand for Aris Water Solutions, Inc.'s recycled water and produced water handling services.

Customers seeking high-volume, full-cycle water solutions

Aris Water Solutions, Inc. targets customers needing comprehensive, high-capacity water management. They handle both produced water gathering/transport and water solutions (recycling/supply). For instance, in the second quarter of 2025, Aris Water Solutions, Inc. expected Produced Water Handling volumes to land between 1,200 and 1,250 thousand barrels of water per day. Water Solutions volumes for that same quarter were projected between 475,000 and 525,000 barrels of water per day. To give you context on their growth trajectory, recycled water volumes saw a 41% year-over-year increase in the first quarter of 2025.

Industrial water users (emerging segment via Crosstek Membrane Technology)

Aris Water Solutions, Inc. is actively moving beyond pure oilfield services to capture broader industrial demand. This push is being accelerated by the acquisition of Crosstek Membrane Technology LLC in February 2025. This move is designed to help Aris Water Solutions, Inc. enter wider industrial markets, including industrial water and wastewater treatment. The initial cash outlay for acquiring the intellectual property rights and assets was $2.0 million, with potential future payments up to $1.0 million based on sales over a four-year period. This emerging segment represents a clear diversification path for their customer base.

Here's a quick look at the scale of operations serving these segments as of mid-2025 data:

The company's customer base is clearly weighted toward large, established producers in the Permian, but the Crosstek acquisition shows a deliberate move to broaden that base into industrial applications. If onboarding takes longer than expected for those new industrial clients, churn risk rises, defintely.

• Primary geographic focus: Permian Basin (Northern Delaware and Midland Basins).
• Key contracted customers include ConocoPhillips and Chevron.
• High reliance on long-term contracts covering 80% of 2025 revenue forecasts.
• Water Solutions revenue in Q1 2025 was $27.4 million.
• Produced Water Handling revenue in Q1 2025 was $92.2 million.

Finance: draft 13-week cash view by Friday.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Cost Structure

The Cost Structure for Aris Water Solutions, Inc. centers heavily on capital deployment for its infrastructure network and the ongoing costs to operate that network, underpinned by significant financial obligations.

Capital Expenditures (CapEx) for Infrastructure Build-Out

Aris Water Solutions, Inc. guides for substantial investment in its physical assets to support growth. The full-year 2025 projection for Capital Expenditures remains firm, despite flexibility built into the plan.

Operating Expenses: Power, Chemicals, and Maintenance Timing

Direct operating costs are variable based on throughput, but the timing of large, planned expenses like maintenance creates short-term shifts in the cost profile. For instance, an expected shift in maintenance spending impacted Q1 2025 results.

• Maintenance activity timing provided an approximately $2 million benefit in Q1 2025, which was planned to be incurred in the second quarter.
• Direct operating expenses per barrel saw an increase in Q2 2025, reported at $0.36 per barrel, up from $0.32 per barrel sequentially.

High Fixed Costs and Financial Obligations

The ownership of extensive pipeline and facility infrastructure translates directly into high fixed costs, which are further amplified by the company's debt structure. This structure involves substantial long-term financing commitments.

The refinancing of senior notes in Q1 2025 increased the total principal amount outstanding, creating a fixed financial cost base.

This debt level resulted in a leverage ratio of 2.0X at the end of Q2 2025, based on trailing twelve months Adjusted EBITDA of $219.9 million.

Aris Water Solutions, Inc. (ARIS) - Canvas Business Model: Revenue Streams

You're looking at how Aris Water Solutions, Inc. actually brings in the money, which is really the core of their business model. It's almost entirely fee-for-service, which gives you a good degree of revenue predictability, especially with those long-term contracts they've been locking down, like the extension with ConocoPhillips through 2040. That long tenor really helps smooth out the near-term view.

The two main buckets for revenue are Produced Water Handling and Water Solutions. These are structured around volumes-how much water moves through their pipes and how much recycled or fresh water they sell. Honestly, the fixed fee per barrel structure is what analysts like to see because it ties revenue directly to activity, not commodity price swings, though skim oil is the exception.

Here's a quick look at the scale based on first quarter 2025 results and second quarter guidance to give you a feel for the revenue mix:

Regarding the specific fee components you asked about, the Produced Water Handling revenue comes from those fixed fee per barrel arrangements for using their transportation and water handling infrastructure. For Water Solutions sales, that's the fixed fee per barrel charged for the recycled or groundwater they sell to customers. While the exact dollar amount per barrel isn't always public, the volume metrics show the engine running strong; for example, Q2 2025 produced water handling volumes were guided between 1.2 million and 1.25 million barrels per day.

Skim oil is the variable piece. It's revenue recognized when custody of the recovered crude oil transfers, sold at market rates minus marketing costs. You mentioned Q2 2025 recoveries at 2,845 barrels per day. To be fair, the guidance issued in May 2025 projected recoveries in the 1,800 - 2,000 barrels per day range for Q2, but the August report noted actual Q2 skim oil recoveries were up 45% compared to the previous quarter.

The overall financial expectation for the full year 2025 ties all these revenue streams together into the bottom line guidance. You should definitely keep this range front and center for valuation work:

• Full-year 2025 Adjusted EBITDA guidance is set between $215 million to $235 million.
• Q2 2025 actual Adjusted EBITDA came in at $54.6 million.
• Q2 2025 net income was $14.1 million.
• The Q3 2025 dividend declared was $0.14 per share.

Finance: draft 13-week cash view by Friday.