Select Water Solutions' Q2 2025: Key Contradictions in Revenue Growth, Strategy, and Divestiture Plans

Water infrastructure revenue growth rate expectations, strategic alignment and role of Peak Rentals in electrification, water infrastructure revenue projections, long-term contracts and acreage dedication, and divestiture strategy are the key contradictions discussed in Select Water Solutions' latest 2025Q2 earnings call.



Operational and Financial Growth:
- Select Water Solutions increased net income by 22% and adjusted EBITDA by 13% in Q2 2025.
- The company improved operating margins across each segment, leading to an increase in consolidated gross margin by nearly 2 percentage points.
- This growth was driven by strong top line and bottom line growth in the Water Infrastructure segment, supported by increased recycling and disposal volumes.

Infrastructure Expansion and Contract Wins:
- Select Water Solutions executed multiple long-term agreements for large gathering, recycling, distribution, and disposal projects in New Mexico, adding approximately 60,000 acres of additional leasehold dedication and 385,000 acres under right of first refusal agreements.
- These contracts encompassed the full water life cycle, including gathering, recycling, disposal, and treated water distribution, and planned for multiple new recycling facilities and dual-line large-diameter pipeline installations.
- The expansion was driven by strategic objectives to grow water infrastructure, scale, and margin, and to take advantage of high-gross-margin growth potential.

Asset Rationalization and Strategic Transactions:
- Select Water Solutions closed a transaction with OMNI Environmental Solutions, involving the exchange of certain noncore assets in the Northeast, Mid-Con, and Bakken regions for strategic infrastructure assets in the Bakken region.
- This transaction allowed Select to monetize and rationalize noncore assets while expanding its infrastructure business, enhancing its market position in solids management.
- The strategic move was aimed at focusing resources on high-gross-margin growth areas and reducing operational risk.

Peak Rentals and Distributed Power Generation:
- The company carved out Peak Rentals as a stand-alone operating company, with a focus on distributed power generation in partnership with Scott McNeil.
- Peak's business model is expanding into the production side of the oilfield, driven by demand for mobile off-grid power solutions due to limited electrical grid generation and the need for critical energy infrastructure.
- The integration of battery power systems alongside generators is expected to enhance efficiency and reduce operational costs.