Select Water buys Pilot Water for $700 million, about 5.7 times next year's profit; shares jump 12% late

Select Water Solutions agreed on Thursday to buy Pilot Water Solutions, a private company that gathers and disposes of the salty water that comes up with oil and gas, for $700 million. Select will pay $600 million in cash and $100 million in its Class A stock, with up to $15 million more in cash if operating milestones expected in early 2027 are met, according to its announcement filed with the SEC. Investing.com also reported the deal.

Select shares, which closed up 1.2% at $19.53, traded at about $21.90 shortly before 5 p.m., up 12%, according to Nasdaq.com. The stock's 52-week high is $22.55.

What Select is paying for

Pilot's system has about 2.7 million barrels a day of active permitted disposal capacity, another 0.9 million barrels a day permitted but not yet built, and more than 700 miles of pipe. More than 80% of the water it handles comes from the core of the Delaware Basin in New Mexico and Texas. It handled about 850,000 barrels of water a day in the first half of 2026. A new contract for 175,000 barrels a day is expected to lift that to about 1 million barrels a day in 2027.

Select expects Pilot to produce $100 million to $110 million of adjusted EBITDA this year and $120 million to $130 million next year, before $10 million to $15 million of cost savings it is targeting over 12 to 18 months.

The price, three ways

• On this year's profit: 6.8 times estimated 2026 adjusted EBITDA, by Select's own count in its investor presentation.
• On next year's: 5.7 times, or 5.2 times if the cost savings arrive. Most of the gap between the two years is the one new 175,000-barrel contract, so the lower multiple depends on that contract ramping as planned.
• Per barrel of water: about $820 for each barrel a day Pilot handled in the first half, or $700 per daily barrel at the 2027 target, by our arithmetic.

Select's deck puts the Delaware's water-to-oil ratio at about 4 to 1. Roughly, then, a million barrels of water a day goes with something like a quarter of a million barrels of oil a day from the wells that feed the system. That is why this business tracks drilling and production in the basin more than the day-to-day oil price.

The clause that protects the sellers

The $100 million stock payment will be converted into shares using Select's 30-day average price just before closing. If the 30-day average six months after closing is lower, Select owes the sellers a cash true-up, per the release. In plain terms, the sellers take Select stock but Select keeps much of the risk that it falls in the first half-year. The release does not say whether that payment is capped. For existing Select shareholders, it means the true cost of the stock half of the deal is not fixed until six months after closing.

How it gets paid for

Select has debt commitments from JPMorgan Chase Bank and Bank of America. It plans to fund the cash with cash on hand and borrowings, and says net debt will stay below 2 times pro forma EBITDA at closing. The deal is expected to close in the fourth quarter. After it, Select expects its water infrastructure segment to supply about 70% of gross profit before depreciation in 2027. Nearly 90% of the combined minimum volume commitments come from investment-grade customers, the company said.

For context on the oil backdrop, see our coverage of this week's oil move and BP's reported interest in Devon's Eagle Ford unit, another shale asset priced per barrel.

Sources: Select Water Solutions press release and investor presentation (SEC Form 8-K); Investing.com; Nasdaq.com. Per-barrel figures are Chronicle calculations. After-hours prices as of about 4:53 p.m. ET. This is market information, not investment advice.