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PART II ‑ OTHER INFORMATION
Item 1. Legal Proceedings
We are periodically party to proceedings and claims incidental to our business. We will continue to evaluate proceedings and claims involving us on a regular basis and will establish and adjust any estimated reserves as appropriate to reflect our assessment of the then current status of the matters. See Note 12 — Commitments and Contingencies within the notes to our condensed consolidated financial statements and Note 10 — Commitments and Contingencies within the notes to the WBEF unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of material legal proceedings.
Item 1A. Risk Factors
Investing in our Class A shares involves a significant degree of risk. The risks described below as well as all other information contained in this Quarterly Report, including our condensed consolidated financial statements and the notes thereto and the matters addressed under the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Statement Regarding Forward‑Looking Statements” in this Quarterly Report and including our historical and pro forma financial statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations in our final prospectus on Form 424(b)(4) filed with the SEC on September 18, 2025, should be considered carefully before deciding to invest in our Class A shares. The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also materially affect our business. The occurrence of any of the following risks or additional risks and uncertainties that are currently deemed immaterial or unknown could have a material adverse effect on our business, financial condition, liquidity, results of operations, cash flows and prospects. In such an event, the trading price of our Class A shares could decline, and you may lose all or part of your investment.
Risks Related to Our Business
Our revenues are substantially dependent on ongoing oil and natural gas exploration, development and production activity in our areas of operation.
The volume of water we manage is driven primarily by the level of crude oil and natural gas production and development in our areas of operation. We have no control over the oil and natural gas development activity in our areas of operation, and the willingness and ability of E&P companies to continue development activities in our areas of operation is dependent on a variety of factors that are outside of their and our control, including:
•the demand for and supply of oil and natural gas;
•prevailing oil and gas prices and expectations regarding future oil and natural gas prices;
•the capital costs required for drilling, completion and production activities;
•access to, and cost of, capital;
•the availability of suitable drilling equipment, production and transportation infrastructure and qualified operating personnel;
•consolidation in the oil and natural gas industry, which may result in lower overall drilling and completion activity;
•the producers’ expected return on investment in wells drilled in our areas of operation as compared to opportunities in other areas;
•trade policies of domestic and foreign governments, including the imposition of tariffs or other levies on cross-border movement of goods and services; and
•governmental regulations, including environmental restrictions.
Demand for our water management solutions depends substantially on capital spending by producers to construct and maintain infrastructure and explore for, develop and produce oil and natural gas in our areas of operation. These expenditures are generally dependent on such producers’ overall financial position, capital allocation priorities, ability to access capital and their views of future demand for, and prices of, oil and natural gas. Volatility in oil or natural gas prices (or the perception that oil or natural gas prices will decrease) affects such producers’ capital allocations and willingness to pursue development activities within our areas of operation. This, in turn, could lead to lower demand for our water management solutions, delays in payment of, or nonpayment of, amounts that are owed to us and cause lower revenue from our water management solutions and lower utilization of our assets. As a result, a significant decrease in the price of oil and natural gas or decrease in levels of production of oil and natural gas in our areas of operation could adversely affect our results of operations, cash flows and financial position.
The willingness of E&P companies to engage in drilling, completion and production activities in our areas of operation is substantially influenced by the market prices of oil and natural gas, which are highly volatile.
Market prices for oil and natural gas are volatile and a decrease in prices could reduce drilling, completion and production activities by producers in our areas of operation, resulting in a reduction in the demand for our services. The market prices for oil and natural gas are subject to U.S. and global macroeconomic and geopolitical conditions, among other things, and, historically, have been subject to significant price fluctuations and may continue to change in the future. Prices for oil and natural gas may fluctuate widely in response to relatively minor changes in supply and demand, market uncertainty and a variety of additional factors that are beyond our control and the control of producers in our areas of operation, such as:
•general market conditions, including macroeconomic trends, inflation, interest rates and associated policies of the Federal Reserve;
•the domestic and foreign supply of and demand for oil and natural gas;
•the price and quantity of foreign imports and U.S. exports of oil and natural gas;
•market expectations about future prices of oil and natural gas;
•oil and natural gas drilling, completion and production activities and the cost of such activities;
•political and economic conditions and events domestically and in foreign oil and natural gas producing countries, including embargoes, increased hostilities in the Middle East, and other sustained military campaigns, the Russia-Ukraine war, as well as the conditions in South America, Central America, China and Russia and acts of terrorism or sabotage;
•the ability of and actions taken by members of OPEC+ and other oil-producing nations in connection with their arrangements to maintain oil prices and production controls;
•the impact on worldwide economic activity of an epidemic, outbreak or other public health event;
•the level of consumer product demand and any efforts that may negatively impact the future production of oil and natural gas;
•weather conditions, such as winter storms, fires, earthquakes and flooding and other natural disasters;
•U.S. and non-U.S. governmental regulations and energy policy, including environmental initiatives and taxation;
•changes in global and domestic political and economic conditions, both generally and in the specific markets in which we operate, including the impact related to changing U.S. and foreign trade policies, such as increased trade restrictions or tariffs;
•the effects of litigation;
•physical, electronic and cybersecurity breaches;
•the proximity, cost, availability and capacity of oil and natural gas pipelines and other transportation infrastructure;
•technological advances affecting energy consumption, energy storage and energy supply;
•the price and availability of alternative fuels and any efforts to transition to a low-carbon economy; and
•the impact of energy conservation efforts.
These factors have at times resulted in, and may in the future result in, a reduction in global economic activity and volatility in the global financial markets and make it extremely difficult to predict future oil and natural gas price movements with certainty. A sustained decline in oil and natural gas prices may reduce the amount of oil and natural gas that can be produced economically by producers in our areas of operation, which may reduce such producers’ willingness to use our water management solutions, which could have a material adverse effect on our business. Producers in our areas of operation could also determine during periods of low oil and natural gas prices to shut-in or curtail production from wells, or plug and abandon marginal wells that otherwise may have been allowed to continue to produce for a longer period under conditions of higher prices. The scale and duration of the impact of these factors cannot be predicted but could lead to an increase in our customers’ operating costs or a decrease in our or our customers’ revenues, and any substantial decline in the price of oil and natural gas or prolonged period of low oil and natural gas prices may have a material adverse effect on our results of operations, cash flows and financial position.
Our business is dependent upon the willingness of E&P companies to outsource their water management requirements, and we compete with other water management providers to meet these needs.
Our business is largely dependent on the willingness of E&P companies to outsource their water management requirements generally, and to us, specifically. Many E&P companies have developed their own proprietary water infrastructure systems, including pipelines and water treatment and handling facilities, designed to manage their produced water needs. In addition, we compete with numerous third-party water management companies with existing water infrastructure to provide produced water management to E&P companies. E&P companies, including our customers, could decide to recycle or otherwise manage their produced water internally or use another water management provider, which could have a material adverse effect on our results of operations, cash flows and financial position.
We cannot predict the rate at which our customers will develop acreage that is dedicated to us or the areas they will decide to develop.
Our acreage dedications from our customers cover water management services in a number of areas that are at the early stages of development, in areas that our customers are still determining whether to develop, and in areas where we may have to construct additional gathering or transportation pipelines or acquire assets from third parties to connect to our water infrastructure network. We cannot predict which of these areas our customers will develop or when they might do so. Our customers may decide to explore and develop areas that are not dedicated to us. Our customers’ decisions to delay development of acreage that is dedicated to us or to develop acreage that is not dedicated to us could have a material adverse effect on our results of operations, cash flows and financial position.
Our success largely depends on the produced water volumes we handle, which are dependent on certain factors beyond our control. Any decrease in the volumes of produced water that we handle, which because of natural declines, producer inactivity or otherwise, could have a material adverse effect on our business and operating results.
The volumes of produced water that support our business are dependent on, among other things, the level of produced water from oil and natural gas wells connected to our infrastructure network. This production of oil and natural gas and, eventually, the produced water produced alongside naturally declines over time. Ultimately, a well will likely be shut-in when oil and natural gas production is no longer economic. As a result, our cash flows associated with these wells will also decline over time. In order to maintain or increase volumes of produced water on our infrastructure network, we must obtain new sources of produced water. The primary factors affecting our ability to obtain sources of produced water include (i) the level of successful drilling activity near our network, (ii) our ability to compete for volumes from successful new wells, to the extent such wells are not dedicated to our network and (iii) our ability to capture volumes of produced water currently handled by producers or third-party produced water management companies. Any failure to obtain new sources of produced water on our network could have a material adverse effect on our business, financial position, results of operations and cash flows.
A majority of our revenue is derived from our operations in the Delaware Basin, making us vulnerable to risks associated with geographic concentration generally and the Delaware Basin specifically, including basin-specific supply and demand factors, regulatory changes and severe weather impacts that could have a material adverse effect on our business.
The Delaware Basin of Texas and New Mexico is presently our largest operating region, accounting for a majority of our revenue for the nine months ended September 30, 2025. As a result of this concentration, we are vulnerable to risks associated with geographic concentration generally and the Delaware Basin specifically. In particular, we and our customers may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from oil and natural gas wells in this area, availability of equipment, facilities, personnel or services, market limitations, governmental regulation and political activities, processing or transportation capacity constraints, natural disasters, adverse weather conditions, water shortages or other drought related conditions or interruption of the processing or transportation of oil and natural gas. Additionally, increased producer consolidation activity has occurred recently in the Delaware Basin, which may lead to reductions in capital spending in our areas of operation that could have an adverse effect on our business. The effect of fluctuations on supply and demand may also become more pronounced within specific geographic oil and natural gas producing areas such as the Delaware Basin, which may cause these conditions to occur with greater frequency or magnify the effects of these conditions. Each of these factors could have a material adverse effect on our business, financial position, results of operations and cash flows.
We rely on a small number of key individuals, certain of whom have responsibilities with affiliated entities, whose absence or loss could adversely affect our business, and difficulty attracting and retaining experienced personnel and qualified directors could reduce our competitiveness and prospects for future success.
The successful operation and growth of our business depends to a large extent on a small number of key individuals to whom many integral responsibilities within our business have been assigned. Such individuals hold positions with or dedicate a portion of their time and resources to the activities of our affiliates, including Five Point and LandBridge, and there can be no assurance as to the future allocation of time and resources between our business, on the one hand, and those affiliates in which our directors and management team hold an interest or dedicate their time and resources, on the other hand. We rely on our key personnel for their knowledge of the energy industry, relationships within the industry and experience in operating a business in our areas of operation. The loss of the services of one or more of these key directors or management team members, and the inability to recruit or retain additional key personnel, could have an adverse effect on our business. Further, we do not currently have a succession plan for the replacement of, and do not maintain “key-person” life insurance policies on, such key personnel.
In addition, our business and the success thereof is also dependent, in part, on our ability to attract and retain qualified personnel. Acquiring and keeping these personnel could prove more difficult or cost substantially more than estimated due to competition within the broader energy industry. Other companies may be able to offer better compensation and benefits packages to attract and retain such personnel. If we cannot retain our experienced personnel or attract additional experienced personnel, our ability to compete in our industry could be harmed, which could have a material adverse effect on our results of operations, cash flows and financial position.
We generally do not own in fee the land on which our pipelines and water handling facilities are located. Our inability to acquire or retain necessary access to land on commercially reasonable terms in order to provide services for our customers or obtain new business could result in disruptions to our operations.
Most of the land on which our water infrastructure network is located is held by surface use agreements (“SUAs”), rights-of-way or other easement rights. While our relationship with LandBridge provides us with access to a large, semi-contiguous, or checkerboarded, acreage position to expand and develop our pipelines and produced water handling facilities, we are, in certain circumstances, subject to the possibility of more onerous terms or increased costs to obtain new rights-of-way or retain existing rights-of-way if such rights-of-way renew, lapse or terminate. In addition, while some states allow regulated facilities to request that a court exercise condemnation powers on their behalf in certain circumstances, our pipelines and produced water handling facilities are not subject to such statutory rights. Our loss of real property rights, or inability to obtain real property rights on commercially reasonable terms, could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Our operations depend upon access to available pore space in subsurface geologic formations by which we can dispose of produced water. Our inability to acquire new pore space or our loss of existing pore space may negatively impact our ability to service new and existing customers.
We handle produced water generated by our customers during oil and natural gas operations by constructing produced water handling facilities and injecting such produced water into porous subsurface geologic formations. The amount of subsurface pore space that is capable of permanently storing injected produced water is finite. While our relationship with LandBridge provides us with access to additional, underutilized pore space in strategically advantaged locations in the Delaware Basin, as we or third parties continue to inject produced water at our existing produced water handling facilities, we may exhaust the geologic or technical limits of the subsurface strata for produced water injection.
Any loss of pore space or injection capacity for technical, geological or regulatory reasons could require us to spend significant time and capital expenditure to locate, apply for, permit, drill, complete and place into service new produced water handling facilities and to build pipeline infrastructure to transport produced water to such new facilities. Permits for new produced water handling facilities could be challenged for a variety of reasons by our competitors, oil and natural gas producers, landowners or non-governmental organizations. Such regulatory challenges could be successful and prevent us from being able to secure access to additional pore space.
If we are unable to accept all of the forecasted produced water volumes properly delivered to us by our customers because we lack available pore space, we may be subject to contractual penalties in certain circumstances for alternative handling solutions, including trucking, and such penalties could be significant. Any curtailment of our customers’ operations and related produced water production due to a lack of available pore space would result in lost revenue to us and could trigger contractual termination rights. Any of these events, either individually or in aggregate, could have a material adverse effect on our business, results of operation and financial condition.
Our customers depend on the availability of oil and natural gas transportation and processing services to support their oil and natural gas production. Any constraint or interruption of such services could decrease oil and natural gas production and as a result, the demand for our services, which could have a material adverse effect on our business, results of operations, cash flows and financial position.
Our customers depend on the availability of oil and natural gas transportation and processing services in order to support their oil and natural gas production. A lack of availability of such services could force our customers to limit their oil and natural gas production or even require our customers to shut-in their producing wells or delay their development of new oil and natural gas wells within our areas of operation. As a result, the volume of oil and natural gas our customers produce, and the related produced water we handle, may decrease, which could have a material adverse effect on our business, results of operations, cash flows and financial position.
The growth of our business through acquisitions may expose us to various risks, including those relating to difficulties in identifying suitable, accretive acquisition opportunities and integrating businesses, assets and personnel, as well as difficulties in obtaining financing for targeted acquisitions and the potential for increased leverage or debt service requirements.
As a component of our business strategies, we intend to pursue selected, accretive acquisitions of assets and businesses that are complementary to our existing water infrastructure network. We routinely evaluate potential acquisitions, and, based on our evaluation criteria and other relevant factors relating to an acquisition, many of which are subject to change, including our evaluation of the market environment, pricing expectations for the assets or business and the competitive situation with respect to a potential acquisition, we may determine to pursue acquisitions of assets and businesses that are currently available for purchase or that become available for purchase in the future. If we are unable to make accretive acquisitions, whether because we are (i) unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, (ii) unable to obtain financing for these acquisitions on economically acceptable terms or (iii) outbid by competitors or for any other reason, then our future growth will be limited.
Any acquisition involves potential risks, including, among other things:
•mistaken assumptions about future volumes, revenue and costs and efficiencies, including synergies;
•an inability to secure adequate customer commitments to use the acquired assets;
•an inability to integrate successfully the assets or businesses we acquire;
•the assumption of unknown liabilities, including environmental liabilities;
•limitations on rights to indemnity from the seller;
•increases in our expenses and working capital requirements;
•mistaken assumptions about the overall costs of equity or debt; and
•the diversion of management’s and employees’ attention from other business concerns.
In evaluating acquisitions, we generally prepare one or more financial forecasts based on a number of business, industry, economic, legal, regulatory and other assumptions applicable to the proposed transaction. Although we expect a reasonable basis will exist for such assumptions, the assumptions will generally involve current estimates of future conditions. The realization of many of the assumptions will be beyond our control. Moreover, the uncertainty and risk of inaccuracy inherent in any financial projection increases with the length of the forecasted period. Some acquisitions may not be accretive in the near term and will be accretive in the long-term only if we are able to timely and effectively integrate the underlying assets and such assets perform at or near the levels anticipated in our acquisition forecasts.
The process of integrating an acquired business may involve unforeseen costs and delays or other operational, technical, regulatory, legal and financial difficulties and may require a significant amount of time and resources. Our failure to successfully incorporate the acquired business and assets into our existing operations or to minimize any unforeseen difficulties could have a material adverse effect on our financial condition and results of operations. Furthermore, there is intense competition for acquisition opportunities in our industry. Competition for acquisitions may increase the cost of, or cause us to refrain from, completing acquisitions.
As a result of factors including the risks and other considerations referred to above and elsewhere in this Quarterly Report, the trading price of our Class A shares could be negatively impacted by the announcement or completion of any acquisition, or our ability to successfully integrate or achieve our business plan in connection with an acquisition.
We may need to pursue substantial amounts of financing to fund future acquisitions and also issue equity, debt or convertible securities in connection with such acquisitions. We may incur substantial indebtedness to finance acquisitions, and debt service requirements could represent a significant burden on our results of operations and financial condition. We may issue substantial amounts of equity to finance
acquisitions, and such issuance of additional equity or convertible securities could result in significant dilution to our existing shareholders. The announcement or consummation of any such transaction may negatively impact the trading price of our Class A shares. Furthermore, we may not be able to obtain additional financing on satisfactory terms. Even if we have access to the necessary capital, we may be unable to continue to identify suitable acquisition opportunities, negotiate acceptable terms or successfully acquire identified targets.
If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and our shareholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.
We may experience difficulty in achieving and managing future growth.
Future growth may strain our resources, possibly negatively affecting our results of operations, cash flows and financial position. Our ability to grow will depend on a number of factors, including:
•investment by our customers in oil and natural gas production in our areas of operation;
•the results of drilling operations in our areas of operation;
•future and existing limitations imposed by applicable laws or regulations;
•oil and natural gas prices;
•our ability to develop existing and future projects;
•our ability to continue to retain and attract skilled personnel, and our ability to contract for the services of key personnel who are sufficiently dedicated to performing services with respect to our business;
•our ability to maintain or enter into new relationships with customers; and
•our access to, and cost of, capital.
We may also be unable to make attractive acquisitions, which could inhibit our ability to grow, or we could experience difficulty commercializing any acquired assets. It may be difficult to identify attractive acquisition opportunities and, even if such opportunities are identified, our existing and/or future debt agreements contain, or may contain, limitations on our ability to enter into certain transactions, which could limit our future growth.
We may not be successful in pursuing additional commercial opportunities to serve customers outside the oil and natural gas sector.
One of our strategies is to pursue commercial opportunities to serve customers outside the oil and natural gas sector, such as addressing water management needs of power generation businesses supporting data center operations. We may not be able to identify such commercial opportunities or may be unsuccessful in executing on such opportunities. The rapidly evolving and competitive nature of many of the industries we are targeting for such development makes it difficult to evaluate the future prospects of these projects. In addition, we have limited insight into emerging trends that may adversely affect the development of such projects in our areas of operation, and the developers of these projects, if they were to materialize, would encounter the risks and difficulties frequently experienced by growing companies and project developers in rapidly changing industries, including, unpredictable and volatile revenues, increased expenses, an uncertain regulatory environment, novel litigation and corresponding outcomes and changes in business conditions. The viability of this business strategy and the resulting demand for the use of our services by such customers will be affected by many factors outside of our control and may not be successful.
Technological advancements in connection with alternatives to hydraulic fracturing could decrease the demand for our services or require us to implement or acquire new technologies at a significant cost.
Wide-scale development of techniques to recycle produced water for use in completion activities or otherwise could adversely affect the amount of produced water we manage on our infrastructure network, which could have a material adverse effect on our results of operations, cash flows and financial position. Some E&P companies are focusing on developing and utilizing non-water fracturing techniques, including those utilizing propane, carbon dioxide or nitrogen instead of water, and we may face competitive pressure to implement or acquire certain new technologies at a significant cost. If producers in our areas of operation were to shift their fracturing techniques to waterless fracturing in the development of their wells, demand for our services would be materially and negatively impacted, and we may be unable to implement or acquire new technologies or products on a timely basis or at an acceptable cost.
While our intellectual property is protected under copyright and trade secret law, we cannot guarantee that such protections will be adequate. Any failure to protect our intellectual property could impair our ability to protect our proprietary technology, and our use of “open-source” code in the WAVE platform may create additional risks. If we do not continue to maintain, improve and adapt our data analysis technologies, including the WAVE platform, our ability to service new and existing customers may be negatively impacted, our competitive advantage may be diminished and we could be subject to claims by third parties for alleged infringement of their intellectual property, which could have a material adverse effect on our results of operations, cash flows and financial position.
We protect our rights in the WAVE platform primarily through a combination of copyright and trade secret law, as well as non-disclosure and intellectual property assignment agreements. While we try to enter into confidentiality and intellectual property assignment agreements with our employees and independent contractors, we cannot guarantee that we have entered into such agreements with all employees or contractors with access to the WAVE platform. Additionally, we cannot guarantee that our contractors have entered into such confidentiality and intellectual property assignment agreements with their subcontractors. Also, while we generally keep the proprietary source code for the WAVE platform as if it were a trade secret, we cannot guarantee that the source code would be adequately protected by trade secret laws, or that such laws, or the contractual protections we have now or in the future, will be effective in preventing against or providing remedies for unauthorized access to, or use or disclosure of, our confidential information, including in our WAVE platform. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.
While we developed our WAVE platform in-house with the assistance of independent contractors, our developers have used industry-standard open-source software in connection with the development of the platform. The use of “open-source” code entails greater risks than the use of commercial software, as open-source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, and the code may be more susceptible to hackers and other security risks. Furthermore, our future success depends in part on our ability to maintain, improve and adapt our data analysis technologies, including the WAVE platform, to meet the operational requirements of our infrastructure network and address the needs of our customers. We rely on our WAVE platform and the systems underlying it for data gathering, logistics optimization and scenario planning in order to enhance our entire network. Many of our competitors also utilize various data analysis technologies, and if we fail to maintain, improve and adapt our own technologies, our competitors may develop similar or more advanced technologies, which could result in new and existing customers seeking commercial opportunities with our competitors. Even if we are successful in innovating our data analysis technologies, such innovations may not result in the intended benefits or have a significant impact on our business, or our data analysis technologies may become obsolete. Failing to maintain, improve and adapt our data analysis technologies, including the WAVE platform, could negatively impact our ability to service new and existing customers and may diminish our competitive advantage.
Additionally, it is possible that certain of our data analysis technologies, including the WAVE platform or those we license from third parties, as well as other aspects of our business, could infringe the intellectual property rights of others, and from time to time, we may be subject to allegations that we infringe such rights. If we are unable to successfully defend against such claims or license necessary third-party technology or intellectual property on acceptable terms, we may be required to develop alternative, non-infringing technology, which could require significant time, effort and expense, and any attempt to develop non-infringing technology may ultimately not be successful. Any claims of infringement, misappropriation or other claims for violations of intellectual property, regardless of merit, may result in substantial costs to us and a substantial diversion of management’s attention, and could have a material and adverse effect on our results of operations, cash flows or financial position.
Our customer contracts are subject to renewal risks.
A large percentage of our revenue and volumes is currently derived from long-term customer contracts that include acreage dedications and/or MVCs, and we intend to continue focusing on entering into additional contracts of this nature. As these contracts expire, we will have to negotiate extensions or renewals with existing customers and/or enter into new contracts with other customers. We may not be able to enter into new contracts on favorable commercial terms or at all. We also may be unable to maintain the economic structure of a particular contract with an existing customer or maintain the overall mix of our contract portfolio. Our inability to renew existing contracts on favorable terms or to successfully manage our overall contract mix over time could have a material adverse effect on our results of operations, cash flows and financial position.
Declining general economic, business or industry conditions may have a material adverse effect on our results of operations, cash flows and financial position.
Concerns over global economic conditions, global health threats, trade policies, increased trade restrictions and tariffs, supply chain disruptions, decreased demand, labor shortages, geopolitical issues, inflation, interest rates, the availability and cost of credit and U.S. financial markets and other factors have contributed to increased economic uncertainty. Although inflation in the United States had been relatively low for many years, there was a significant increase in inflation beginning in the second half of 2021, with a general decline beginning in the second half of 2022 and a relative settling in 2023 and 2024. In addition, the U.S. federal government has recently
imposed tariffs on international goods, such as those produced in Canada, Mexico and China, and those countries have enacted retaliatory tariffs against the United States. To the extent that any U.S. trade policy results in retaliatory tariffs, such developments could result in inflationary pressures and have an adverse effect on our customers’ business, and reduce demand for use of our services, which could have a material adverse effect on our business, results of operations and financial condition.
In addition, hostilities related to the Russia-Ukraine war, the heightened tensions in the Middle East and the occurrence or threat of terrorist attacks in the United States or other countries could adversely affect the global economy. These and other factors, such as declining business and consumer confidence, may contribute to an economic slowdown and a recession. Concerns about global economic health also have a significant adverse impact on global financial markets and commodity prices. If the economic climate in the United States or abroad deteriorates, worldwide demand for oil and natural gas products could diminish, which could impact operations in our areas of operations, affect the ability of our customers to continue operations and ultimately adversely impact our results of operations, cash flows and financial position.
While the financial health of the broader oil and gas industry has shown improvement as compared to prior periods, central bank policy actions and associated liquidity risks and other factors may negatively impact the value of our equity and that of our customers, and may reduce our and their ability to access liquidity in the capital markets or result in capital being available on less favorable terms, which could negatively affect our financial condition and that of our customers. If our customers have difficulty accessing the capital markets, then they may reduce their capital expenditures, which could reduce demand for our water management solutions and ultimately adversely impact our results of operations, cash flows and financial position.
The fees charged to customers under our agreements for the gathering, transportation or handling of produced water may not escalate sufficiently to cover increases in costs.
Though we seek to include inflation escalators in all of our long-term customer contracts, contractual provisions providing for inflation escalators in certain contracts are subject to caps, which may limit the amount of any single pricing increase, and may also vary as to the commencement date of such increases and the timing and calculation of the applicable adjustment. As a result, inflation may outpace the revenue adjustments provided by those provisions. We may also experience supply chain constraints, due to international trade policies or otherwise, and inflationary pressure on our cost structures, which could impact or operating costs. We may also face shortages of equipment, raw materials, supplies, commodities, labor and services. These supply chain constraints, trade policies and inflationary pressures may continue to adversely impact our operating costs and, if we are unable to manage our supply chain, it may impact our ability to procure materials and equipment in a timely and cost-effective manner, if at all, which could have a material adverse effect on our ability to provide our water management solutions to our customers and consequently our business, results of operations and financial condition.
Operational disruptions in our areas of operation from weather, natural disasters, terrorism or other similar causes could impact our results of operations, cash flows and financial position.
We operate in the Delaware Basin, the Eagle Ford Basin and the Arkoma Basin, each of which may be adversely affected by seasonal weather conditions and natural or man-made disasters. A natural disaster (such as an earthquake, tornado, fire or flood) or an act of terrorism could damage or destroy our or our customers’ infrastructure in our areas of operations or result in a disruption of our or their operations. During periods of heavy rain or extreme weather conditions such as tornados or after other disruptive events such as earthquakes or wildfires, our or our customers’ infrastructure and assets may be damaged. Such disruptions could have a material adverse effect on our results of operations, cash flows and financial position.
Global incidents, such as world health events, could have a similar effect of disrupting ours or our customers’ businesses to the extent they impact global demand for oil and natural gas, our areas of operation, the availability of supplies required by our customers, or the employees or other personnel who operate our or our customers’ businesses.
Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. The occurrence of a significant accident or other event that is not fully insured could curtail our operations and have a material adverse effect on our results of operations, cash flows and financial position.
Our operations are subject to all of the hazards inherent in the gathering, transporting, disposal, treating and recycling of produced water, including:
•damage to pipelines, water handling facilities, storage tanks, tank batteries, pump stations, related equipment and surrounding properties caused by design, installation, construction materials or operational flaws, natural disasters, acts of terrorism and acts of third parties;
•leaks or losses of produced water as a result of the malfunction of, or other disruptions associated with, equipment or facilities;
•fires, ruptures, earthquakes and explosions; and
•other hazards that could also result in personal injury and loss of life, property damage, pollution and suspension of operations.
Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:
•damage to and destruction of property, natural resources and equipment;
•pollution and other environmental damage;
•regulatory investigations and penalties;
•suspension of our operations; and
•repair and remediation costs.
While we maintain insurance coverage at levels that we believe to be reasonable and prudent, we can provide no assurance that our current levels of insurance will be sufficient to cover any losses that we have incurred or may incur in the future, whether due to deductibles, coverage challenges or other limitations. Additionally, we may not be able to maintain adequate insurance in the future at rates or on other terms we consider commercially reasonable. Additionally, insurance will not cover many types of interruptions or events that might occur and will not cover all risks associated with our business and may not be available in certain areas in which we operate. In addition, the proceeds of any such insurance may not be paid in a timely manner and may be insufficient if such an event were to occur. The occurrence of a significant event, the consequences of which are either not covered by insurance or not fully insured, or a significant delay in, or denial of, the payment of a major insurance claim, could have a material adverse effect on our results of operations, cash flows and financial position.
In addition, we are subject to various claims and litigation in the ordinary course of business. For additional information, please see “Part II. Item 1. LEGAL PROCEEDINGS.”
We and our customers may be subject to catastrophic events, which could have a material adverse effect on our results of operations, cash flows and financial position.
We and our customers may be subject to hazards and operational risks associated with their operations in oil and natural gas drilling, completion and production activities and our associated operations. These hazards may include the risk of fire, explosions, blowouts, seismic events, surface cratering, uncontrollable flows of crude oil, natural gas, NGLs and produced water, pipe or pipeline failures, abnormally pressured formations and pore spaces, casing collapses and environmental hazards such as crude oil and NGL spills, natural gas leaks and ruptures or discharges of toxic gases, release of hazardous materials into the environment and worker health and safety issues. The occurrence of any of these events could result in interruption of our customer’s operations or substantial losses to our and our customers due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations and penalties, suspension of operations and repairs required to resume operations, which could have a material adverse effect on our results of operations, cash flows and financial position.
Changes in laws or adverse court rulings related to the ownership of produced water in our areas of operation could lead to uncertainty with respect to produced water management, delayed or cancelled development by our customers and increased operating costs and litigation expenses for our customers and us, which could have a material adverse effect on our results of operations, cash flows and financial position.
While we include representations in all of our long-term customer contracts that our customers have all right, title and interest required to deliver produced water to us for gathering, transportation and handling, changes in law or adverse court rulings in our areas of operation related to the ownership of produced water, including changes in law and/or court rulings that produced water belongs to the owner of the surface estate, could cause general uncertainty with respect to produced water management. Recently, the Texas Supreme Court in Cactus Water Services, LLC v. COG Operating, LLC, affirmed the determination by the Court of Appeals for the Eighth District of Texas that the lessees (or the mineral interest owners) had superior rights over surface owners to the produced water in dispute. Nevertheless, future litigation or court decisions challenging the results of the Cactus decision may result in impacts on produced water management within our areas of operation, delayed development and/or reallocation of capital to other areas of operation by our
customers and/or increased operating costs and litigation expenses for our customers and us, which could have a material adverse effect on our results of operations, cash flows and financial position.
We operate in a highly competitive industry, and competition may intensify as our competitors expand their operations or our existing and potential customers develop their own water infrastructure systems, which may cause us to lose market share and could negatively affect our ability to expand our operations.
The produced water management business is highly competitive and includes numerous existing companies capable of competing effectively in our markets on a local basis. There may also be new companies that enter the midstream water management sector or our existing and potential customers may develop their own water infrastructure systems. Our ability to maintain our market share, revenue and cash flows, as well as our ability to expand our operations, could be adversely affected by the activities of our competitors and our customers. If our competitors substantially increase the resources they devote to the development and marketing of competitive services or substantially decrease the prices at which they offer their services, we may be unable to effectively compete. If our existing and potential customers develop their own water infrastructure networks, we may not be able to effectively replace that revenue. All of these competitive pressures could have a material adverse effect on our results of operations, cash flows and financial position.
Growing or adapting our business by constructing new infrastructure subjects us to construction risks and risks that supplies for such infrastructure will not be available upon completion thereof.
One of the ways we intend to grow our business is through the construction of expansions to our existing pipelines and water handling facilities and/or the construction of new pipelines and water handling facilities and other infrastructure. These projects and any similar projects that we are obligated to undertake to support existing customers’ operations require the expenditure of significant amounts of capital and involve numerous regulatory, environmental, political and legal uncertainties, including opposition by landowners, environmental activists and others. There can be no assurance that we will complete these projects on schedule, or at all, or at the budgeted cost. Moreover, we may undertake these projects to capture anticipated future growth in production in a region in which anticipated production growth does not materialize or for which we are unable to acquire new customers. As a result, our new infrastructure may not be able to attract enough demand for our water management solutions to achieve our expected investment return, which could have a material adverse effect on our results of operations and financial position.
We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us.
We have historically entered into a number of transactions with related parties. In particular, we have certain agreements with LandBridge and Five Point. Related party transactions create the possibility of conflicts of interest with regard to our management. Such a conflict could cause an individual in our management to seek to advance the economic interests of a related party above ours. It is possible that a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition.
A loss of one or more significant customers could have a material adverse effect on our results of operations, cash flows and financial position.
For the nine months ended September 30, 2025, on a pro forma basis, revenues from Permian Resources Corporation and Devon each individually comprised more than 10% of our total revenues and collectively represented 29% of our total pro forma revenues. Permian Resources Corporation and Devon each individually comprised 15%, respectively, of our total accounts receivable as of September 30, 2025, and collectively represented 30% of our total accounts receivable at such date. No other customer accounted for more than 10% of our total pro forma revenue or outstanding accounts receivables.
Any development that materially and adversely affects these customers could result in a reduction in our customers’ spending for our water management solutions. The loss of key customers, failure to renew contracts upon expiration or a sustained decrease in demand by one or more key customers could result in a substantial loss of revenues and could have a material and adverse effect on our results of operations, cash flows and financial position.
Cyber incidents or attacks targeting systems and infrastructure used by the oil and natural gas industry may adversely impact our operations, and a cyber incident or systems failure could result in information theft, data corruption or operational disruption and our results of operations, cash flows and financial position may be adversely impacted.
We and our customers increasingly rely on uninterrupted information technology systems and digital technologies to operate our respective businesses. This reliance extends to the majority of our and our customers’ operations, from monitoring and managing critical infrastructure to processing and storing proprietary and sensitive information. Our information technology systems and networks, and those of our customers, vendors and other business partners, are subject to damage or interruption from cyberattacks, power outages, computer and telecommunications failures, catastrophic events, such as natural disasters or acts of war or terrorism, usage errors by our employees or other personnel and other events unforeseen or generally beyond our control. Damage or interruption to information
technology systems could result in significant costs and may lead to significant liability, loss of critical data, reputational damage and disruptions to services or operations.
Threats to information technology systems associated with cybersecurity risks and cyber incidents or attacks continue to grow. Cyber incidents, including deliberate attacks, have increased in frequency globally, with energy-related assets particularly at risk. Due to the critical nature of these assets, any such attack on energy infrastructure could result in widespread service disruptions and challenges in maintaining public trust. The U.S. government has issued public warnings that specifically indicate energy assets could be targets of cybersecurity threats. Our technologies and systems, networks, and those of our customers, affiliates, vendors and other business partners, may become the target of cyberattacks or information security breaches that could result in the unauthorized access, release, gathering, monitoring, corruption, misuse or destruction of proprietary, personal and other information, or other disruption of business operations. Any such event could lead to significant liability, loss of critical data, reputational damage and disruptions to our services or operations.
While we have implemented and maintain commercially reasonable security measures and safeguards, such security measures and safeguards may not be sufficient to protect against an attack. Attackers are increasingly using advances in technologies, such as artificial intelligence and encryption bypasses that may evade our efforts. Emerging artificial intelligence technologies may improve or expand the capabilities of malicious third parties in a way we cannot predict at this time, including being used to develop new hacking tools, exploit vulnerabilities, obscure malicious activities and increase the difficulty detecting threats. Moreover, some of our networks and systems are managed by third-party service providers and are not under our direct control. We regularly enter into transactions with third parties, some of whom may have less sophisticated electronic systems or networks and may be more vulnerable to cyberattacks. Our reliance on these third parties means that any vulnerability in their systems could propagate to our own systems, increasing our risk exposure despite our internal controls.
In addition, certain cyber incidents, such as surveillance, ransomware, deepfake-based social engineering attacks and credential stuffing, may remain undetected for some period of time, and cyber incidents and attacks are continually evolving and unpredictable. As cyber incidents and attacks continue to evolve, we may be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cybersecurity incidents. While we utilize various procedures and controls to reduce the risk of the occurrence of cyber incidents, there can be no assurance that our business, finances, systems and assets will not be compromised in a cyber incident. Any failure or perceived failure to detect or respond effectively to a cybersecurity incident could lead to significant liability, undermine shareholder and stakeholder trust and negatively impact business continuity. Furthermore, we are subject to an evolving regulatory landscape, including state, federal and international data privacy laws that require rigorous cybersecurity standards and standards relating to artificial intelligence. Compliance with various data privacy and cybersecurity regulations may impose significant costs, and any perceived or actual failure to comply could result in regulatory penalties, litigation and reputational harm.
Risks Related to Environmental and Other Regulations
We or our customers may be unable to obtain and renew permits necessary for operations, which could have a material adverse effect on our results of operations, cash flows and financial position.
Our and our customers’ ability to conduct operations is subject to a variety of required permits from various governmental authorities, which may limit such operations, including those associated with oil and natural gas exploration, drilling, completion and production activities, disposal or transport of produced water and other hazardous materials or wastes or oilfield wastes, construction activities, stormwater discharge, water use, air emissions, mining, health and safety workplace exposure activities and other activities that may be conducted in association with our or our customers’ operations. The public stakeholders often have the right to comment on permit applications and otherwise participate in the permitting process, including through court and administrative hearing intervention. Accordingly, permits required to conduct our or our customers’ operations may be delayed, not be issued, maintained or renewed, may not be issued or renewed in a timely fashion, or may involve requirements that restrict our or our customers’ ability to economically conduct operations. Limitations on our or our customers’ ability to conduct operations due to difficulties and the inability to obtain or renew necessary permits or similar approvals could have a material adverse effect on our results of operations, cash flows and financial position.
Legislation or regulatory initiatives intended to address seismic activity, over-pressurization or subsidence could restrict drilling, completion and production activities, as well as our ability to handle produced water gathered from our customers, which could have a material adverse effect on our results of operations, cash flows and financial position.
We handle large volumes of produced water in connection with our customers’ drilling and production operations pursuant to permits issued by governmental authorities overseeing such produced water handling activities. While these permits are issued pursuant to existing laws and regulations, these legal and regulatory requirements are subject to change, which could result in the imposition of more stringent permitting or operating constraints or new monitoring and reporting requirements, owing to, among other things, concerns
of the public or governmental authorities regarding such produced water handling activities. For example, there exists a growing concern that the injection of produced water into certain produced water handling facilities triggers seismic activity in certain areas, including Texas, where a substantial majority of our network is located. This has led to the creation of operator-led response plans in certain areas in New Mexico or Texas by the New Mexico Oil Conservation Division (the “NMOCD”) and the RRC, respectively, which can include the RRC suspending or declining to issue produced water handling permits, restrictions on the amount of material that can be handled or requiring producers to cease disposal in certain produced water handling facilities and in areas within the vicinity of seismic events.
State and federal regulatory agencies have recently focused on a possible connection between hydraulic fracturing related activities, particularly the underground injection of produced water into produced water handling facilities, and the increased occurrence of seismic activity, and regulatory agencies at all levels are continuing to study the possible linkage between oil and natural gas activity and induced seismicity. The U.S. Geological Survey has identified Oklahoma, Texas and New Mexico as three of six states with the most significant hazards from induced seismicity. In addition, a number of lawsuits have been filed in some states alleging that produced water handling operations have caused seismic events, caused damage to neighboring properties or otherwise violated state and federal regulations related to waste disposal. In response to these concerns, regulators in some states have imposed, or are considering imposing, additional requirements, including requirements regarding produced water handling permits, to assess the relationship between seismicity and the use of such produced water handling facilities. For example, the RRC has previously published a rule governing permitting or re-permitting of produced water handling facilities that would require, among other things, the submission of information on seismic events occurring within a specified radius of the produced water handling facility location, as well as logs, geologic cross sections and structure maps relating to the water handling area in question. On certain occasions, state regulatory agencies have and could request that we limit or suspend operations at one or multiple produced water handling facilities within the boundaries of certain Seismic Response Areas (“SRAs”), pending further study of a location’s potential impact on seismic activity. Although we have not historically been subject to any state government requests to suspend operations of our produced water handling facilities within the boundaries of any SRAs, there is a risk that we may be subject to such suspension orders in the future, which could have a material adverse effect on our results of operations, cash flows and financial position. Certain of our areas of operation along the Texas – New Mexico state borders and certain areas within Eddy County, New Mexico and Loving County, Texas are within SRAs. In recent years, the RRC has suspended produced water handling permits within certain SRAs. For example, in January 2024, the RRC indefinitely suspended all deep oil and gas produced water injection in Culberson and Reeves counties. Separately, in November 2021, the NMOCD implemented protocols requiring producers to take various actions within a specified proximity of certain seismic activity, including a requirement to limit injection rates if a seismic event of a certain magnitude occurs within a specified radius of a produced water handling facility. The adoption and implementation of any new laws or regulations that restrict our ability to handle produced water, by limiting volumes, fees, produced water handling facility locations or otherwise, or requiring us to shut down produced water handling facilities, could limit existing operations and future development activity in affected areas and reduce demand for our water management solutions, which could have a material adverse effect on our results of operations, cash flows and financial position.
Additionally, studies have linked hydraulic fracturing related activities with subsidence and expansion. Both the injection of produced water into produced water facilities and the extraction of water, oil, natural gas or mineral resources from the ground can result in surface subsidence and uplifts caused by changes underground (such as, but not limited to, loss of volume and pressure depletion). Such changes underground have been linked to various geological and environmental hazards, such as alteration of local ecosystems and impacts upon local communities, including a potential increase in seismic activity and the formation of sinkholes. Any new laws or regulations that may be adopted and implemented with respect to addressing subsidence and expansion risks may lead to restrictions upon our operations, which could have a material adverse effect on our results of operations, cash flows and financial position.
Our produced water handling operations expose us to potential regulatory risks.
There are unique risks associated with handling produced water, and the legal requirements related to handling produced water into a non-producing geologic formation by means of produced water handling facilities are subject to change based on concerns of the public or governmental authorities. There remains substantial uncertainty regarding the handling of produced water by means of produced water handling facilities, the regulation of which could have a material adverse effect on us or our customers in a manner that cannot be predicted. These include liabilities related to the handling, treatment, storage, disposal, transport, release and use of radioactive materials, which could be in produced water, and uncertainties regarding the ultimate, and potential exposure to, technical and financial risks associated with modifying or decommissioning produced water handling facilities. Federal or state regulatory agencies could require the shutdown of produced water handling facilities for safety reasons or refuse to permit the restart of any facility after unplanned or planned outages. New or amended safety and regulatory requirements may give rise to additional operational and maintenance costs and capital expenditures. Additionally, aging equipment or facilities may require increased capital expenditures to keep produced water infrastructure operating efficiently or in compliance with applicable laws and regulations. Such equipment is also likely to require periodic upgrading and improvement in order to maintain compliance. Although we have had a strong safety record, accidents and other unforeseen problems have occurred and may occur in the future. The consequences of any major incident could be severe and may result
in loss of life or property damage. Any resulting liability from a major environmental or catastrophic incident could have a material adverse effect on us and limit our operations.
Restrictions on the ability to procure brackish water or changes in brackish water sourcing requirements could decrease demand for our water-sourcing solutions.
A portion of our business includes supplying brackish water for use in our customers’ hydraulic fracturing activities. Our access to the brackish water we supply may be limited due to reasons such as prolonged drought or our inability to acquire or maintain brackish water sourcing permits or other rights. In addition, some state and local governmental authorities have begun to monitor or restrict the use of brackish water subject to their jurisdiction for hydraulic fracturing to ensure adequate local water supply. For instance, some states require E&P companies to report certain information regarding the water they use for hydraulic fracturing and to monitor the quality of groundwater surrounding some wells stimulated by hydraulic fracturing. Any such decrease in the availability of brackish water, or demand for water-sourcing solutions, could have a material adverse effect on this portion of our business, including our ability to grow this portion of our business.
Federal and state legislation and regulatory initiatives relating to produced water handling facilities could result in increased costs and additional operating restrictions or delays and could harm our business.
The produced water handling process is primarily regulated by state oil and gas authorities. This water handling process has come under scrutiny from the public, various state regulatory bodies, as well as environmental and other groups asserting that the operation of certain deep injection produced water handling facilities has contributed to specific induced seismic events. For additional information, please see the risk factor titled “Legislation or regulatory initiatives intended to address seismic activity, over-pressurization or subsidence could restrict drilling, completion and production activities, as well as our ability to handle produced water gathered from our customers, which could have a material adverse effect on our results of operations, cash flows and financial position.”
New laws or regulations, or changes to existing laws or regulations related to the water disposal process may adversely impact the produced water handling industry. For example, in their past legislative sessions, the New Mexico and Texas legislatures both considered bills that would have impacted produced water production and management activities in each state.
We cannot predict whether any federal, state or local laws or regulations will be enacted and, if so, what actions any such laws or regulations would require or prohibit. However, any restrictions on produced water handling could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform produced water management, which would negatively impact our profitability.
We and our customers are subject to environmental and occupational health and safety laws and regulations that may expose us to significant liabilities for penalties, damages or costs of remediation or compliance.
Our operations and the operations of our customers are subject to federal, regional, state and local laws and regulations relating to the protection of natural resources, the environment and health and safety aspects of our operations, including laws and regulations related to waste management, such as the transportation and disposal of wastes and other materials. These laws and regulations may impose numerous obligations on our operations and the operations of our customers, including the acquisition of permits to take water from surface and underground sources, construct pipelines or handling facilities, drill wells or conduct other regulated activities. Such laws and regulations may also result in the incurrence of capital expenditures to mitigate or prevent releases of materials from our facilities or from customer locations where we are providing services, the imposition of substantial liabilities for pollution resulting from our operations, and the application of specific health and safety criteria addressing worker protection. Any failure on our part or the part of our customers to comply with these laws and regulations could result in restrictions on operations, assessment of administrative, civil and criminal penalties, delays, suspension or revocation of permits and issuance of corrective action orders or injunctions requiring the performance of investigatory, remedial or curative activities.
Our business activities present risks of incurring significant environmental costs and liabilities, including costs and liabilities resulting from our handling of produced water, because of air emissions and wastewater discharges related to our operations, and due to historical oilfield industry operations and waste disposal practices. Our business includes the operation of produced water handling facilities that pose risks of environmental liability, including potential leakage from produced water handling facilities to surface or subsurface soils, surface water or groundwater and obligations relating to remediating, plugging or decommissioning wells or other facility components. In addition, private parties, including the owners of properties upon which we perform services or neighboring properties, also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property or natural resource damages. Some environmental laws and regulations may impose strict liability, without regard to fault or to the legality of the original conduct, and in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Remedial costs and other damages arising from environmental laws and costs associated with changes in environmental laws
and regulations could be substantial and could have a material adverse effect on our financial position, results of operations, cash flows and ability to pay future dividends on our Class A shares.
Laws and regulations protecting the environment generally have become more stringent over time and may continue to do so, which could lead to material increases in costs for future environmental compliance and remediation. Changes in existing laws or regulations, or the adoption of new laws or regulations, could delay or curtail exploratory or developmental drilling for our E&P customers and could limit our well servicing opportunities. We may not be able to recover some or any of our costs of compliance with these laws and regulations from insurance. On January 20, 2025, President Trump issued a series of executive orders and memoranda signaling a shift in environmental and energy policy in the United States, including the revocation of approximately 80 executive orders issued by President Biden related to public health, the environment, climate change and climate-related financial risks. President Trump also declared a “national energy emergency,” directing agencies to expedite conventional energy projects. While the extent of the Trump Administration’s changes to the environmental regulatory landscape in the United States is unknown at this time, it is possible that such actions could prompt more activity from state and local legislative bodies and administrative agencies to pass stricter laws, regulations and other binding commitments, and additional changes in the future could impact our results of operation and those of our customers.
Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues.
Our ability to retain existing customers and attract new business is dependent on many factors, including our ability to demonstrate that we can reliably and safely operate our business and stay current on constantly changing rules, regulations, training and laws. Existing and potential customers consider the safety record of their service providers to be of high importance in their decision to engage third-party servicers. If one or more accidents were to occur at one of our facilities, the affected customer may seek to terminate or cancel its use of our facilities or services and may be less likely to continue to use our services, which could cause us to lose substantial revenues. Further, our ability to attract new customers may be impaired if they elect not to purchase our third-party services because they view our safety record as unacceptable. In addition, it is possible that we will experience numerous or particularly severe accidents in the future, causing our safety record to deteriorate. This may be more likely as we continue to grow or if we experience high employee turnover or labor shortage or add inexperienced personnel.
We may face increased obligations relating to the future closure of our water handling facilities and may be required to provide an increased level of financial assurance to guarantee that the appropriate closure activities will occur for a water handling facility.
Operating produced water handling facilities generally requires us to establish performance bonds, letters of credit or other forms of financial assurance to address remediation and closure obligations. As we acquire additional water handling facilities or expand our existing water handling facilities, these obligations may increase. Additionally, in the future, regulatory agencies may require us to increase the amount of our closure bonds. Moreover, actual costs could exceed our expectations, as a result of, among other things, federal, state or local government regulatory action, increased costs charged by service providers that assist in closing water handling facilities and additional environmental remediation requirements. Increased regulatory requirements regarding our existing or future water handling facilities, including the requirement to pay increased closure and post-closure costs or to establish increased financial assurance for such activities could substantially increase our operating costs and have a material adverse effect on our results of operations, cash flows and financial position.
Increased regulation of hydraulic fracturing could result in reductions or delays in oil and natural gas production by our customers, which could reduce the volumes of produced water through our water infrastructure systems, which could adversely impact our revenues.
We do not conduct hydraulic fracturing operations, but our customers’ oil and natural gas production is developed from unconventional sources, such as shales, that require hydraulic fracturing as part of the completion process. Hydraulic fracturing is a well-stimulation process that utilizes large volumes of water and sand combined with fracturing chemical additives that are pumped at high pressure to crack open previously impenetrable rock to release hydrocarbons. Hydraulic fracturing is typically regulated by state oil and natural gas commissions and similar agencies. Some states, including those in which we operate, cities, and counties have adopted, or are considering adopting, laws and regulations that could impose more stringent disclosure and well construction requirements on hydraulic fracturing operations, or otherwise seek to ban some or all of these activities. Further, the U.S. Environmental Protection Agency (the “EPA”) and other federal agencies have asserted certain regulatory authority over hydraulic fracturing and has moved forward with various regulatory actions, including the issuance of regulations requiring green completions for hydraulically fractured wells and emission requirements for certain midstream equipment. In addition, the EPA and other federal agencies have conducted various studies concerning the potential environmental impacts of hydraulic fracturing activities. Certain environmental groups have also suggested that additional laws may be needed to more closely and uniformly regulate the hydraulic fracturing process; and legislation has been proposed
from time to time by some members of the U.S. Congress to provide for such regulation. We cannot predict whether any such legislation will be enacted by the U.S. Congress and if so, what its provisions would be.
Additional levels of regulation and permits required through the adoption of new laws and regulations at the federal, state or local level could lead to delays, increased operating costs and process prohibitions that could reduce the volumes of produced water that move through our water infrastructure systems, which in turn could have a material adverse effect on our results of operations, cash flows and financial position.
We are subject to a series of risks related to climate change.
There are inherent environmental risks wherever business is conducted. Natural disasters and other environmental pressures, such as water scarcity, can have various adverse impacts on us or our customers. Climate change is expected to increase the frequency and severity of such events, as well as contribute to various chronic changes in meteorological and hydrological patterns that may result in similar impacts. For example, changes in the availability of water may impact our customers’ operations or otherwise impact demand for certain of our services. Societal efforts to address climate change may also result in various impacts from the actions of regulators, customers, capital providers and other stakeholders. See the risk factors titled “The results of operations of our customers may be materially impacted by efforts to transition to a lower-carbon economy, which could have a material adverse effect on our business, results of operation, cash flows and financial position” and “Increasing stakeholder attention to environmental, social and governance (“ESG”) matters may impact our or our customers’ business” for additional information.
The results of operations of our customers may be materially impacted by efforts to transition to a lower-carbon economy, which could have a material adverse effect on our business, results of operation, cash flows and financial position.
Concerns over the risk of climate change have increased the focus by global, regional, national, state and local regulators on greenhouse gas (“GHG”) emissions, including carbon dioxide emissions, and on transitioning to a lower-carbon future. A number of countries and states have adopted, or are considering the adoption of, regulatory frameworks to reduce GHG emissions. These regulatory measures may include, among others, adoption of cap-and-trade regimes, carbon taxes, increased energy efficiency standards, prohibitions or reductions on the sales of new automobiles with internal combustion engines, and tax credits, incentives or mandates for battery-powered or electric automobiles and/or wind, solar or other forms of alternative energy. These include laws such as the Inflation Reduction Act of 2022 (the “IRA”), which appropriates significant federal funding for renewable energy initiatives and amends the federal Clean Air Act (the “CAA”) to impose a first-time fee on the emission of methane from sources required to report their GHG emissions to the EPA. In May 2024, the EPA issued a final rule to implement the IRA’s methane fee, which starts at $900 per metric ton of waste emissions in 2024, increasing to $1,200 for 2025, and $1,500 for 2026 and beyond, and only applies to emissions that exceed the statutorily specified levels. However, on March 14, 2025, a joint Congressional resolution disapproved the EPA’s 2024 rule, and the rule is no longer in effect. While the future implementation or repeal of all or a portion of the IRA is uncertain at this time, it is possible that additional changes in the future could impact our results of operation and those of our customers. Compliance with changes in laws, regulations and obligations relating to climate change could result in increased costs of compliance for our customers or costs of consuming oil and natural gas products, and thereby reduce demand for the use of our land and resources, which could reduce our profitability. Changes in laws and regulations may also result in delays or increased costs associated with obtaining permits needed for oil and natural gas operations.
Additionally, our customers could incur reputational risk tied to changing customer or community perceptions of our customers’ contribution to, or detraction from, the transition to a lower-carbon economy. The evolution of global energy sources is affected by factors outside of our control, such as the pace of technological developments and related cost considerations, the levels of economic growth in different markets around the world and the adoption of climate change-related policies and incentives. These changing trends and perceptions could lower demand for oil and natural gas products, resulting in lower prices and lower revenues as consumers avoid carbon-intensive industries, and could also pressure banks and investment managers to shift investments and reduce lending.
Separately, banks and other financial institutions, including investors, may decide to adopt policies that restrict or prohibit investment in, or otherwise funding, us or our customers based on climate change-related concerns, which could affect our and our customers’ access to and cost of capital for potential growth projects. Additionally, insurers may decide to raise rates and/or cease insuring us or our customers based on climate change-related concerns.
Approaches to climate change and transition to a lower-carbon economy, including government regulation, company policies and consumer behavior, are continuously evolving. For example, in March 2024, the SEC issued a rule regarding climate change related disclosures, which has been stayed pending various legal challenges, although the SEC voted to end its defense of the rule in March 2025. Other policymakers, including several U.S. states, have also adopted or are considering adopting disclosure requirements on similar or more expansive matters. Any such disclosure or other climate-related requirements that we may become subject to could require us or our customers to incur significant costs and additional attention from management, including for the establishment of additional controls given the relatively novel nature of such reporting. At this time, we cannot predict how such approaches may develop
or otherwise reasonably or reliably estimate their impact on us or our customers’ financial condition, results of operations and ability to compete. However, any long-term material adverse effect on the oil and natural gas industry may affect our results of operations, cash flows and financial position.
Increasing stakeholder attention to ESG matters may impact our or our customers’ business.
Companies across industries are facing increasing scrutiny from investors, regulators, customers and other stakeholders related to their climate, human capital and other ESG practices, for example, various ESG initiatives, leverage methodologies, data or standards that are complex and continue to evolve. We cannot guarantee that our approach to such matters will align with the expectations or preferences of any particular stakeholder. Moreover, various stakeholders have different, and at times conflicting, expectations, which can increase the complexity and cost of navigating such matters and associated risks.
Various institutional investors and other financial institutions have also incorporated ESG considerations into their decision-making. In some instances, capital providers make use of ESG scores or ratings, either developed internally or by third parties, such as organizations that provide proxy advisory services, to inform their decision-making; these ratings can be informed by various factors, including our disclosures (or failure to disclose on certain matters). Some capital providers have also announced plans to limit investments in fossil fuels or to more generally transition their portfolio to lower or net zero GHG emissions (generally over several decades). Any divestment or limitation of capital available to us or our customers in either debt or equity markets, as well as any changes in the availability of insurance or similar financial risk-mitigation products, may have an adverse impact on our business, financial condition or share price.
There are also increasing laws and regulations regarding ESG matters. For example, various policymakers (including the State of California and European Union) have adopted requirements for certain companies to prepare disclosures or take other actions on climate- or other ESG-related matters. See the risk factor titled “The results of operations of our customers may be materially impacted by efforts to transition to a lower-carbon economy, which could have a material adverse effect on our business, results of operation, cash flows and financial position.” As with other stakeholder expectations, these requirements are not uniform. Disclosures, whether voluntary or otherwise, may also increase the risk of stakeholder engagement by parties with varying views on such matters. Advocates and opponents of ESG matters have also increasingly turned to activism, including litigation, to advance their perspectives. For example, there have been increasingly nuanced claims of greenwashing against companies for alleged deficiencies in actions, methodologies or disclosures. Moreover, litigants have particularly targeted certain companies associated with the fossil fuel sector, alleging a variety of claims under tort, regulatory and investor/consumer protection theories seeking to either recover damages or constrain fossil fuel operations, which could adversely impact our business to the extent related to us or our customers.
Any failure to successfully navigate stakeholder expectations or regulatory requirements, including any change to existing laws and regulations or their interpretation, may result in increased costs, lower demand for our products and services, reputational harm, challenges with employee or customer attraction or retention, regulatory or investor engagement or other adverse impacts to our business. Our customers, business partners and other stakeholders are also often subject to similar expectations, which may augment or result in additional risks, including risks which may not be known to us.
The Endangered Species Act (“ESA”) and Migratory Bird Treaty Act (“MBTA”) govern our and our E&P customers’ operations and additional restrictions may be imposed in the future, which could have an adverse impact on our ability to expand some of our existing operations or limit our customers’ ability to develop new infrastructure on our land.
The ESA and comparable state laws restrict activities that may result in negative impacts to endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the MBTA and comparable state laws. To the degree that species listed or protected under the ESA, MBTA or similar state laws are identified in the areas where we and our customers operate, both our and our customers’ abilities to conduct or expand operations and construct facilities could be limited, and both we and our customers could be forced to incur additional material costs. Additionally, the United States Fish and Wildlife Service (“FWS”) may make future determinations on the listing of currently unlisted species as endangered or threatened under the ESA. For example, in January 2023, the FWS listed two distinct population segments (“DPS”) of the lesser prairie chicken as endangered for the Southern DPS and as threatened for the Northern DPS under the ESA, which live in certain areas in southeastern New Mexico and western Texas. In May 2024, the FWS designated the dunes sagebrush lizard as endangered under the ESA, which also live in certain areas in southeastern New Mexico and western Texas. The designation of previously unlisted species as endangered or threatened could indirectly cause us or our customers to incur additional costs, cause our or our customers’ operations to become subject to operating restrictions or bans and limit future development activity in affected areas, which developments could have a material adverse effect on our results of operations, cash flows and financial position.
Risks Related to Our Financial Condition
We may be unable to generate sufficient cash to service all of our indebtedness and financial commitments, and any future indebtedness could adversely affect our financial condition.
As of September 30, 2025, we had $1.7 billion of total debt outstanding. Our ability to make scheduled payments on, or to refinance, our indebtedness and financial commitments depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions including financial, business and other factors beyond our control, and may vary significantly from year to year. As a result, the amount of debt that we can manage in some periods may not be appropriate for us in other periods and we may be unable to generate sufficient cash flow to permit us to pay the principal, premium, if any, and interest on our indebtedness. Any insufficiency may impact our business.
If our cash flows and capital resources are insufficient to fund debt and other obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to raise additional capital or refinance or restructure our indebtedness. Our ability to restructure or refinance indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be on unfavorable terms, including at higher interest rates, and may require us to comply with more restrictive covenants. The terms of our existing or future debt instruments may restrict us from adopting some of these alternatives. We cannot assure you that any refinancing or restructuring would be possible, that any assets could be sold or that, if sold, the timing of the sales and the amount of proceeds realized from those sales would be favorable to us or that additional financing could be obtained on favorable terms, if at all. In addition, any failure to service our debt, including paying interest or principal on a timely basis, would likely result in a reduction of our credit rating, if any, which could harm our ability to incur additional indebtedness. In addition, if we fail to comply with the covenants or other terms of any agreements governing our debt, our lenders will have the right to accelerate the maturity of that debt and foreclose upon the collateral, if any, securing that debt.
Our indebtedness could have important consequences to you and significant effects on our business, including:
•increasing our vulnerability to adverse changes in general economic, industry and competitive conditions and limiting our ability to address such changes;
•requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund general company and other purposes, including capital expenditures and dividend payments;
•restricting us from exploiting business opportunities and making strategic acquisitions;
•making it more difficult to satisfy our financial obligations, including payments on our indebtedness, and contractual and commercial commitments;
•disadvantaging us when compared to our competitors that have less debt;
•complying with covenants contained in the documents governing such indebtedness may require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise; and
•increasing our borrowing costs or otherwise limiting our ability to borrow additional funds for the execution of our business strategy.
Finally, the agreements governing our outstanding indebtedness limit our ability to incur additional debt, but such agreements do not prohibit us from doing so. As a result, we could incur more indebtedness in the future, including indebtedness incurred in connection with the OpCo Credit Facility and the Notes, which would exacerbate the foregoing risks.
We are subject to interest rate risk, which may cause our debt service obligations to increase significantly. The weighted average interest rate on borrowings outstanding under our NDB credit facilities as of September 30, 2025 was 8.05% in the case of the NDB Revolving Credit Facility and 8.34% in the case of the NDB Term Loan borrowings. The weighted average interest rate on borrowings outstanding under our SDB Term Loan as of September 30, 2025 was 9.31%
Borrowings under our credit facilities bear interest at variable rates and expose us to interest rate risk. The weighted average interest rate on borrowings outstanding under our NDB credit facilities as of September 30, 2025 was 8.05% in the case of the NDB Revolving Credit Facility and 8.34% in the case of the NDB Term Loan borrowings. The weighted average interest rate on borrowings outstanding under our SDB Term Loan as of September 30, 2025 was 9.31%. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even if the amount borrowed remained the same, and we would be required to devote more of our cash flow to servicing our indebtedness.
In March 2022, the Federal Reserve began, and continued through 2023, to raise interest rates in an effort to curb inflation. Although the Federal Reserve reduced benchmark interest rates in 2024, we may continue to experience further financing cost increases if interest rates on borrowings, credit facilities and debt offerings increase compared to previous levels. Changes in interest rates, either positive or negative, may also affect the yield requirements of investors who invest in our Class A shares, and the elevated interest rate environment could have an adverse impact on the price of our Class A shares, or our ability to issue equity or incur debt for acquisitions or other purposes.
Changes to applicable tax laws and regulations, exposure to additional income tax liabilities, changes in our effective tax rates or an assessment of taxes resulting from an examination of our income or other tax returns could adversely affect our results of operations, cash flows and financial position, including our ability to repay our debt.
We are subject to various complex and evolving U.S. federal, state and local taxes. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our results of operations, cash flows and financial position, including our ability to repay our debt.
Changes in our effective tax rates or tax liabilities could also adversely affect our results of operations, cash flows and financial position. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
•changes in the valuation of our deferred tax assets and liabilities;
•expected timing and amount of the release of any tax valuation allowances;
•expansion into future activities in new jurisdictions;
•the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities; and
•tax effects of share-based compensation.
In addition, an adverse outcome arising from an examination of our income or other tax returns could result in higher tax exposure, penalties, interest or other liabilities that could have an adverse effect on our results of operations, cash flows and financial position.
We are subject to counterparty credit risk. Nonpayment or nonperformance by our customers could have an adverse effect on our results of operations, cash flows and financial position.
We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers of their respective obligations. Although we maintain policies and procedures to limit such risks, our credit procedures and policies may not be adequate to fully eliminate customer credit risk. If we fail to adequately assess the creditworthiness of existing or future customers or unanticipated deterioration in their creditworthiness, any resulting increase in nonpayment or nonperformance by them of their respective obligations and our inability to collect on outstanding payables or find substitute customers could have an adverse effect on our results of operations, cash flows and financial position. A decline in oil and natural gas prices could negatively impact the financial condition of our customers and sustained lower prices could impact their ability to meet their obligations to us. Further, our contract counterparties may not perform or adhere to our existing or future contractual arrangements. To the extent one or more of our contract counterparties is in financial distress or commences bankruptcy proceedings, contracts with these counterparties may be subject to renegotiation or rejection under applicable provisions of the Bankruptcy Code. Any material nonpayment or nonperformance by our contract counterparties due to inability or unwillingness to perform or adhere to contractual arrangements could adversely affect our results of operations, cash flows and financial position.
If we fail to comply with the restrictions and covenants in our credit facilities or our future debt agreements, there could be an event of default under the terms of such agreements, which could result in an acceleration of maturity.
A breach of compliance with any restriction or covenant in our credit facilities or any of our future debt agreements could result in a default under the terms of the applicable agreement, and our ability to comply with such restrictions and covenants may be affected by events beyond our control. As a result, we cannot assure you that we will be able to comply with these restrictions and covenants. A default could result in acceleration of the indebtedness and a declaration of all amounts borrowed, due and payable, which could have an adverse effect on us and negatively impact our ability to borrow. If an acceleration occurs, we may be unable to make all of the required payments and may be unable to find alternative financing. Even if alternative financing were available at that time, it may not be on terms that are favorable or acceptable to us. Additionally, we may not be able to amend our credit agreements or such future agreements governing our indebtedness or obtain necessary waivers on satisfactory terms.
Our obligations under our credit facilities are secured by first priority security interests in substantially all of our assets and various guarantees.
The amounts borrowed pursuant to the terms of our credit agreements are secured by substantially all of our and our subsidiaries’ present and after-acquired assets. Additionally, our obligations under our credit facilities are jointly and severally guaranteed by us and our material subsidiaries.
As a result of the above, in the event of the occurrence of a default under our credit facilities, the administrative agent may enforce its security interests (for the ratable benefit of the lenders under our credit facilities and the other secured parties) over our and/or our subsidiaries’ assets that secure the obligations under our credit facilities, take control of our assets and business, force us to seek bankruptcy protection or force us to curtail or abandon our current business plans. If that were to happen, you may lose all, or a part of, your investment in our Class A shares.
The unaudited pro forma condensed combined financial statements, and any other pro forma data, included herein are based on a number of preliminary estimates and assumptions and our actual results of operations, cash flows and financial position of may differ materially.
The unaudited pro forma condensed combined financial statements, and any other pro forma or pro forma, as adjusted, data, included herein is presented for illustrative purposes only, has been prepared based on available information and certain assumptions and estimates that we believe are reasonable, and is not necessarily indicative of what our actual financial position or results of operations would have been had the pro forma or pro forma, as adjusted, events been completed on the dates indicated. Further, our actual results and financial position after the pro forma or pro forma, as adjusted, events occur may differ materially and adversely from the pro forma or pro forma, as adjusted, information herein.
Risks Related to Our Corporate Structure and Our Class A Shares
The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of the Sarbanes-Oxley Act, may increase our costs and divert management’s attention from other business concerns, and we may be unable to comply with these requirements in a timely or cost-effective manner.
As a result of the IPO, we became a public company, and, as such, we must comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and the NYSE and NYSE Texas rules, with which we were not required to comply as a private company. Complying with these statutes, regulations and requirements occupy a significant amount of time of our board of directors and management and significantly increase our costs and expenses. We are continuing our efforts to:
•institute a more comprehensive compliance function;
•comply with rules promulgated by the NYSE and NYSE Texas;
•prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws; and
•involve and retain to a greater degree outside counsel and accountants in the above activities.
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting. Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal controls over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC.
Additionally, as of October 6, 2025, we lost our status as an “emerging growth company” as defined in the JOBS Act and as such, we no longer are entitled to take advantage of specified reduced reporting requirements and relief from certain other significant requirements that are otherwise generally applicable to companies that are emerging growth companies. As a public company without emerging growth company status, we are required to increase our disclosures in periodic reports, proxy statements and other SEC filings compared to our historical filings. Compliance with these requirements will strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. If our additional disclosures in future SEC filings are perceived as insufficient or inadequate by investors or regulatory authorities, the market price of our Class A shares could decline and we could be subject to actions by shareholders or regulatory authorities.
In addition, being a public company subject to these rules and regulations has increased our director and officer liability insurance expenses and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage in the future. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
If we experience any material weaknesses in the future or otherwise fail to develop or maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our Class A shares.
Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results will be harmed. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting beginning in the year following our first annual report required to be filed with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We will take steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for our internal control over financial reporting.
If we identify one or more material weaknesses in our internal control over financial reporting during the evaluation and testing process, we may be unable to conclude that our internal controls are effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm were to express an adverse opinion on the effectiveness of our internal control over financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and completeness of our financial disclosures, which could cause the price of our Class A shares to decline. Internal control deficiencies could also result in a restatement of our financial results in the future or restrict our future access to the capital markets.
Future sales of Class A shares, or the perception that such sales may occur, may depress our share price, and any additional capital raised through the sale of equity or convertible securities may dilute your ownership in us.
We may in the future issue additional securities. The potential issuance of such additional shares may result in the dilution of the ownership interests of the holders of our Class A shares and may create downward pressure on the trading price of our Class A shares.
In addition, we have granted registration rights to our Legacy Owners, who hold 6,809,850 Class A shares, or approximately 15.7% of our Class A shares, and all of our Class B shares, pursuant to which we agreed to register under the federal securities laws the offer and resale of all Class A shares owned by, or underlying the Class B shares owned by, our Legacy Owners or certain of their affiliates or permitted transferees. Such Legacy Owners may exercise their rights under the registration rights agreement in their sole discretion, and sales pursuant to such rights may be material in amount and occur at any time. The sales of substantial amounts of our Class A shares or the perception that these sales may occur could cause the market price of our Class A shares to decline and impair our ability to raise capital. We also may grant additional registration rights in connection with any future issuance of our membership interests.
We cannot predict the size of future issuances of our Class A shares or securities convertible into Class A shares or the effect, if any, that future issuances and sales of shares of our Class A shares will have on the market price of our Class A shares. Sales of substantial amounts of our Class A shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A shares.
We are a holding company. Our sole material asset is our equity interest in OpCo and accordingly, we will be dependent upon distributions from OpCo to pay taxes, make payments under the Tax Receivable Agreement and cover our corporate and other expenses.
We are a holding company and have no material assets other than our equity interest in OpCo, and we do not have any independent means of generating revenue. As such, our ability to pay our taxes and expenses or declare and pay dividends in the future is dependent upon the financial results and cash flows of OpCo and its subsidiaries and distributions we receive from OpCo. OpCo and its subsidiaries may not generate sufficient cash flow to distribute funds to us and applicable state law and contractual restrictions, including negative covenants in our debt instruments, may not permit such distributions.
OpCo is classified as a partnership for U.S. federal income tax purposes and, as such, is not subject to any entity-level U.S. federal income tax. Instead, OpCo’s taxable income is allocated to OpCo Unitholders, including us. Accordingly, we incur income taxes on our allocable share of any net taxable income of OpCo. In addition to tax expenses, we also incur expenses related to our operations, including obligations for payments under the Tax Receivable Agreement, which obligations could be significant.
The Limited Liability Company Agreement of OpCo, dated as of September 18, 2025 (the “OpCo LLC Agreement”) provides, subject to the terms of any current or future debt or other arrangements, for: (i) pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow us to satisfy our actual income tax liabilities with respect to our allocable share of the income of OpCo; (ii) pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow us to make payments under the Tax Receivable Agreement we entered into with OpCo and the TRA Holders in connection with the closing of the IPO and any subsequent tax receivable agreements that we may enter into in connection with future acquisitions; and (iii) to the extent cash is available, additional pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow the OpCo Unitholders (other than us) to satisfy their estimated tax liabilities with respect to their allocable share of the income of OpCo, based on certain assumptions and conventions. In addition, as the sole managing member of OpCo, we intend to cause OpCo to make pro rata distributions to all of its unitholders, including to us, in an amount sufficient to allow us to fund dividends to our shareholders to the extent our board of directors declares such dividends.
OpCo, however, is a distinct legal entity and may be subject to legal or contractual restrictions that, under certain circumstances, may limit our ability to obtain cash from it. If OpCo is unable to make distributions, we may not receive adequate distributions to pay our tax or other liabilities or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the Tax Receivable Agreement), which could have a material adverse effect on our results of operations, cash flows, financial position and ability to fund any dividends. To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in a termination of the Tax Receivable Agreement and the acceleration of payments due under the Tax Receivable Agreement.
We have not adopted a formal written dividend policy nor have we adopted a dividend policy to pay a fixed amount of cash each quarter in respect of each Class A share or to pay an amount based on the achievement of, or amount derivable based on, any specific financial metrics. Any future dividends are within the absolute discretion of our board of directors. Our board of directors has not declared any dividends and may determine not to declare any dividends in the future. Our board of directors will take into account general economic and business conditions, our financial condition and results of operations, our cash flows from operations and current and anticipated cash needs, our capital requirements, legal, tax, regulatory and contractual restrictions, and implications of such other factors as our board of directors may deem relevant in determining whether, and in what amounts, to pay any such dividends in the future. In addition, our debt agreements may limit the amount of distributions that OpCo’s subsidiaries can make to OpCo and OpCo can make to us and the purposes for which distributions could be made. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Instruments” for further discussion of our debt agreements. Accordingly, we may not be able to pay dividends even if our board of directors would otherwise deem it appropriate. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Any decision to pay cash dividends in the future will be made in the sole discretion of our board of directors. If we do not pay any cash dividends on our Class A shares, you may not receive a return on investment unless you sell your Class A shares for a price greater than that which you paid for them.
Any decision to declare and pay cash dividends in the future will be made in the sole discretion of our board of directors. We have not adopted, and do not expect to adopt, a formal written dividend policy. Our board of directors has not declared any dividends, and may determine not to declare any cash dividends in the future. Although our board of directors may elect to declare cash dividends, subject to our compliance with applicable law, and depending on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, legal, tax, regulatory and contractual restrictions (including any applicable restrictions in our debt agreements) and such other factors that our board of directors may deem relevant, there can be no assurance that it will do so. In addition, our ability to pay cash dividends is, and may be, limited by
covenants of any current or future outstanding indebtedness we or our subsidiaries incur. There can be no assurance that we will pay dividends in the future or continue to pay any dividends if we do commence paying dividends. Any return on investment in our Class A shares may be solely dependent upon the appreciation of the price of our Class A shares on the open market, which may not occur.
Five Point has the ability to direct the voting of a majority of our common shares and control certain decisions with respect to our management and business, including certain consent rights and the right to designate more than a majority of the members of our board as long as it and its affiliates beneficially own at least 40% of our outstanding common shares, as well as lesser director designation rights as long as it and its affiliates beneficially own less than 40% but at least 10% of our outstanding common shares. Five Point’s interests may conflict with those of our other shareholders.
As of September 30, 2025, the Five Point Members owned 3,411,735 of our Class A shares and 58,682,925 of our Class B shares, representing approximately 50.3% of our voting power. Five Point’s beneficial ownership of greater than 50% of our common shares means Five Point is able to control matters requiring shareholder approval, including the election of directors, changes to our organizational documents, approval of acquisition offers and other significant corporate transactions. This concentration of ownership makes it unlikely that any other holder or group of holders of our Class A shares will be able to affect the way we are managed or the direction of our business. The interests of Five Point with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other shareholders.
Furthermore, in connection with the consummation of the IPO, we entered into a shareholders agreement, dated as of September 18, 2025 (the “Shareholders Agreement”), with the Five Point Members and Devon Holdco. The Shareholders Agreement provides that the Five Point Members have the right to designate more than a majority of the members of our board as long as they and their affiliates beneficially own at least 40% of our outstanding common shares, as well as lesser director designation rights as long as they and their affiliates beneficially own less than 40% but at least 10% of our outstanding common shares. So long as the Five Point Members or Devon Holdco, as the case may be, have the right to designate at least one director to our board, the Five Point Members or Devon Holdco, as applicable, also have the right to appoint a number of board observers, who will be entitled to attend all meetings of the board in a non-voting, observer capacity, equal to the number of directors that the Five Point Members or Devon Holdco, as applicable, is entitled to appoint. Additionally, for so long as the Five Point Members, collectively, or Devon Holdco, as the case may be, have beneficial ownership of at least 5% of our voting power, then the Five Point Members, collectively, or Devon Holdco, as applicable, will have the right to appoint one board observer.
In addition, under our First Amended and Restated Limited Liability Company Agreement (the “Operating Agreement”), for so long as the Five Point Members and certain affiliates beneficially own at least 40% of our outstanding common shares, we have agreed not to take, and will take all necessary action to cause our subsidiaries not to take, the following direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of the designated representative of the Five Point Members (the “Five Point Representative”):
•terminating our chief executive officer and/or hiring or appointing his or her successor;
•removing the chairman of our board of directors and/or appointing his or her successor;
•increasing or decreasing the size of our board of directors, any committees of our board or the governing body or committees of any of our subsidiaries;
•agreeing to or entering into any transactions that would result in a change of control of WaterBridge or enter into definitive agreements with respect to a change of control transaction (other than, in each case, a sale of shares by a Five Point Member to a person that either results in (i) the Five Point Members ceasing to own at least 40% of our outstanding common shares or (ii) the Five Point Members and certain affiliates and Devon Holdco and certain affiliates ceasing to hold the ability to elect a majority of the members of the board of directors);
•incurring debt for borrowed money (or liens securing such debt) in an amount that would result in outstanding debt for borrowed money that exceeds our Adjusted EBITDA for the four quarter period immediately prior to the proposed date of the incurrence of such debt by 4.00 to 1.00;
•authorizing, creating (by way of reclassification, merger, consolidation or otherwise) or issuing any equity securities of any kind (other than pursuant to any equity compensation plan approved by our board of directors or a committee of our board of directors or intra-company issuances among WaterBridge and our subsidiaries);
•the fullest extent permitted by applicable law, making any voluntary election to liquidate or dissolve or commence bankruptcy or insolvency proceedings or the adoption of a plan with respect to any of the foregoing or any determination not to oppose such an action or similar proceeding commenced by a third party; and
•selling, transferring or disposing of assets outside the ordinary course of business in a transaction or series of transactions with a fair market value in excess of $10.0 million.
Additionally, for so long as the Five Point Members, collectively with their affiliates, beneficially own at least 10% of our outstanding common shares, the Company shall not, and shall take all necessary action to cause each member of the Company and its subsidiaries not to, directly or indirectly (whether by amendment, merger, consolidation, reorganization or otherwise), make (or enter into an agreement to make) any amendment, modification or waiver of our Operating Agreement or any other governing documents of the Company that materially and adversely affects any of the Five Point Members or any such member’s rights under our Operating Agreement without the prior consent of such member, which consent may be withheld in such member’s sole discretion.
The existence of the Five Point Members as significant shareholders may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our company. Moreover, the concentration of share ownership with the Five Point Members and other Legacy Owners may adversely affect the trading price of our Class A shares to the extent investors perceive a disadvantage in owning shares of a company with significant shareholders.
In addition, the Five Point Members and other Legacy Owners may have different tax positions from us that could influence their decisions regarding whether and when to support the disposition of assets and the incurrence or refinancing of new or existing indebtedness. In addition, the determination of future tax reporting positions, the structuring of future transactions and the handling of any challenge by any taxing authority to our tax reporting positions may take into consideration tax or other considerations of the Five Point Members or other Legacy Owners, which may differ from the considerations of our other shareholders.
The Five Point Members and other Legacy Owners, as well as their affiliates, are not limited in their ability to compete with us, and may benefit from opportunities that might otherwise be available to us.
Our Operating Agreement provides that our officers and directors and their respective affiliates and certain of our Legacy Owners, as well as their officers, directors and affiliates (each an “Unrestricted Party”), are not restricted from owning assets or prohibited from engaging in other businesses or activities, including those that might be in direct competition with us, and that we renounce any interest or expectancy in any business opportunity that may from time to time be presented to them that would otherwise be subject to a corporate opportunity or other analogous doctrine under the Delaware General Corporation Law (the “DGCL”). In addition, the Unrestricted Parties may compete with us for investment opportunities and may own an interest in entities that compete with us. In particular, our Operating Agreement, subject to the limitations of applicable law, provides, among other things, that (i) the Unrestricted Parties may conduct business that competes with us and may make investments in any kind of property in which we may make investments, and (ii) if any of the Unrestricted Parties acquire knowledge of a potential business opportunity, transaction or other matter, they have no duty, to the fullest extent permitted by law, to communicate such offer to us, our shareholders or our affiliates.
We may refer any conflicts of interest or potential conflicts of interest involving any of the Unrestricted Parties to a conflicts committee, which must consist entirely of independent directors, for resolution. Additionally, our board of directors adopted a written related party transactions policy relating to the approval of related party transactions, pursuant to which any such transactions, including transactions with the Unrestricted Parties, will be reviewed and approved or ratified by our Audit Committee or such conflicts committee or pursuant to the procedures outlined in such policy.
Five Point or other Legacy Owners may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Furthermore, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. This renouncing of our interest and expectancy in any business opportunity may create actual and potential conflicts of interest between us and Five Point and the other Legacy Owners and their affiliates, and result in less than favorable treatment of us and our shareholders if attractive business opportunities are pursued by Five Point or other Legacy Owners and their affiliates for their own benefit rather than for ours.
Certain of our directors and officers may have significant duties with, and spend significant time serving, other entities, including entities that may compete with us in seeking acquisitions and business opportunities, and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities.
Certain of our directors and officers, who are responsible for managing our business may hold positions of responsibility with other entities, including those that are in the energy industry, including LandBridge. The existing and potential positions held by these directors and officers may give rise to fiduciary or other duties that are in conflict with the duties they owe to us and may also otherwise require attention and time that could otherwise be devoted to our business. Although we expect that our directors and officers will initially spend a significant amount of their time on matters involving our business, we expect that they will also spend time on matters relating to other entities in which they are involved, including LandBridge. The ultimate allocation of our directors’ and officers’ time among us and such other entities will be subject to a variety of factors, including operational and business considerations. These directors and officers may become aware of business opportunities that may be appropriate for presentation to us as well as to the other entities with which they are or may become affiliated. Due to these existing and potential future affiliations, such directors and officers may present potential business opportunities to other entities prior to presenting them to us, which could cause additional conflicts of interest. They may also decide that certain opportunities are more appropriate for other entities with which they are affiliated, and, as a result, they may elect not to present those opportunities to us. These conflicts may not be resolved in our or your best interests.
A significant reduction by Five Point of its ownership interests in us could adversely affect us.
We believe that Five Point’s ownership interest in us provides it with an economic incentive to assist us to be successful. Upon the expiration of (or a waiver of) the applicable lock-up restrictions on transfers or sales of our securities following the completion of the IPO, Five Point will not be subject to any obligation to maintain its ownership interest in us and may elect at any time thereafter to sell all or a substantial portion of or otherwise reduce its ownership interest in us. If Five Point sells all or a substantial portion of its ownership interests in us, it may have less incentive to assist in our success and its affiliate(s) that are expected to serve as members of our board of directors may resign. Such actions could adversely affect our ability to successfully implement our business strategies, which could adversely affect our results of operations, cash flows and financial position.
The underwriters from the IPO may waive or release parties to the lock-up agreements entered into in connection with the IPO, which could adversely affect the price of our Class A shares.
We, all of our directors, all of our executive officers, our Legacy Owners and certain of their affiliates entered into lock-up agreements pursuant to which we and they are subject to certain restrictions with respect to the sale or other disposition of our Class A shares or securities convertible into or exercisable or exchangeable for Class A shares, including OpCo Units and Class B shares, for a period of 180 days following the closing date of the IPO. If the restrictions under the lock-up agreements are waived, then the Class A shares, subject to compliance with the Securities Act or exceptions therefrom, will be available for sale into the public markets, which could cause the market price of our Class A shares to decline and impair our ability to raise capital.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our Class A shares or if our operating results do not meet their expectations, our share price could decline.
The trading market for our Class A shares is influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrades our Class A shares or if our operating results do not meet their expectations, our Class A share price could decline.
The market price of our Class A shares could be adversely affected by sales of substantial amounts of our Class A shares in the public or private markets or the perception in the public markets that these sales may occur, including sales by our Legacy Owners after the exercise of their Redemption Rights.
As of September 30, 2025, we had 43,264,850 Class A shares and 80,190,150 Class B shares outstanding. The Class A shares sold in the IPO are freely tradable without restriction under the Securities Act, except for any Class A shares that are held or acquired by our directors, officers or affiliates, which constitute “control securities” under the Securities Act. Any Class A shares that our Legacy Owners acquire through the exercise of the Redemption Right will be subject to resale restrictions under the 180-day lock-up agreement with the underwriters. Each of the lock-up agreements with the underwriters may be waived in the discretion of certain of the underwriters. Future sales by our Legacy Owners after the exercise of the Redemption Right (as described in the OpCo LLC Agreement) or sales by other large holders of our Class A shares in the public markets, or the perception that such sales might occur, could have a material adverse effect on the price of our Class A shares or could impair our ability to obtain capital through an offering of equity securities. In addition, we have agreed to provide registration rights to our Legacy Owners, who hold 6,809,850 Class A shares, or approximately
15.7% of our Class A shares, and all of our Class B shares, pursuant to which we agreed to register under the federal securities laws the offer and resale of all Class A shares owned by, or underlying the Class B shares owned by, our Legacy Owners or certain of their affiliates or permitted transferees. Alternatively, we may be required to undertake a future public or private offering of Class A shares and use the net proceeds from such offering to purchase an equal number of OpCo Units, with the cancellation of a corresponding number of Class B shares, from certain of our Legacy Owners.
We may sell additional Class A shares in future offerings. Sales of substantial amounts of our Class A shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A shares.
We cannot predict the size of future issuances of our Class A shares or securities convertible into Class A shares or the effect, if any, that future issuances and sales of our Class A shares will have on the market price of our Class A shares. Sales of substantial amounts of our Class A shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A shares.
We are a “controlled company” within the meaning of the NYSE and NYSE Texas rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements.
The Five Point Members collectively hold a majority of the voting power of our common shares. As a result, we are a controlled company within the meaning of the NYSE and NYSE Texas rules. Under the NYSE rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company is a controlled company, and under NYSE Texas rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a controlled company. Under NYSE and NYSE Texas rules, controlled companies may elect not to comply with certain NYSE corporate governance requirements, including the requirements that:
•a majority of the board of directors consist of independent directors as defined under the rules of the NYSE and NYSE Texas;
•the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
•the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
These requirements will not apply to us as long as we remain a controlled company. A controlled company does not need its board of directors to have a majority of independent directors or to form independent compensation and nominating and governance committees. We currently utilize all of these exemptions. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the rules of the NYSE and NYSE Texas.
If at any time we cease to be a controlled company, including upon the earlier of (i) the Five Point Members ceasing to collectively own 40.0% of our combined voting power and (ii) the Initial Shareholders (as defined in the Shareholders’ Agreement) ceasing to collectively own 50.0% or more of our combined voting power, we intend to take all action necessary to comply with the Sarbanes-Oxley Act and the NYSE and NYSE Texas rules, including by appointing a majority of independent directors to our board of directors and establishing a compensation committee and a nominating and corporate governance committee, each composed entirely of independent directors, subject to a permitted “phase-in” period.
Our Operating Agreement, as well as Delaware law, contains provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A shares and deprive our investors of the opportunity to receive a premium for their shares.
Our Operating Agreement authorizes our board of directors to issue preferred shares without shareholder approval in one or more series, designate the number of shares constituting any series and fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption prices and liquidation preferences of such series. If our board of directors elects to issue preferred shares, it could be more difficult for a third party to acquire us.
In addition, certain provisions of our Operating Agreement could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our shareholders. Among other things, such provisions of our Operating Agreement include:
•providing that after the Five Point Members, Devon and their affiliates no longer beneficially own or control the voting of more than 40% of our outstanding common shares (the “Trigger Event”), our board of directors will be divided into three classes that are as nearly equal in number as is reasonably possible and each director will be assigned to one of three classes, with each class of directors elected for a three-year term to succeed the directors of the same class whose terms are then expiring; provided that the Five Point Members shall have the right to designate the initial class assigned to each director immediately following the occurrence of the Trigger Event;
•prohibiting cumulative voting in the election of directors;
•providing that after the Trigger Event, the affirmative vote of the holders of not less than 66 2/3% in voting power of all then-outstanding common shares entitled to vote generally in the election of our board of directors, voting together as a single class, will be required to remove any director from office, and such removal may only be for “cause”;
•providing that after the Trigger Event, all vacancies, including newly created directorships, may, except as otherwise required by the terms of the Shareholders’ Agreement, law or, if applicable, the rights of holders of a series of preferred shares, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director;
•providing that after the Trigger Event, shareholders will not be permitted to call special meetings of shareholders;
•providing that after the Trigger Event, our shareholders may not act by written consent and may only act at a duly called annual or special meeting;
•establish advance notice procedures with respect to shareholder proposals and nominations of persons for election to our board of directors, other than nominations made by or at the direction of our board of directors or any committee thereof; and
•providing that a majority of our board of directors is expressly authorized to adopt, or to alter or repeal our Operating Agreement.
Pursuant to our Operating Agreement, for so long as the Five Point Members and certain affiliates beneficially own at least 40% of our outstanding common shares, we will agree not to take, and will take all necessary action to cause our subsidiaries not to take, certain direct or indirect actions (or enter into an agreement to take such actions) without the prior consent of the Five Point Representative.
Our Operating Agreement designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders and the federal district court in Delaware as the sole and exclusive forum for Securities Act claims, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our Operating Agreement provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that court having personal jurisdiction over the indispensable parties named defendants therein) will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our shareholders, (iii) any action asserting a claim against us or any director or officer or other employee of ours arising pursuant to any provision of the Delaware Limited Liability Company Act (the “Delaware LLC Act”) or our Operating Agreement or (iv) any action asserting a claim against us or any director or officer or other employee of ours that is governed by the internal affairs doctrine, provided that the exclusive forum provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, for which a suit must be brought in the federal district court in Delaware, or the Exchange Act, for which our Operating Agreement does not designate an exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in our common shares will be deemed to have notice of, and consented to, the provisions of our Operating Agreement described in the preceding sentence. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our Operating Agreement inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our results of operations, cash flows and financial position.
There are certain provisions in our Operating Agreement regarding fiduciary duties of our directors, exculpation and indemnification of our officers and directors and the approval of conflicted transactions that differ from the DGCL in a manner that may be less protective of the interests of our public shareholders and restrict the remedies available to shareholders for actions taken by our officers and directors that might otherwise constitute breaches of fiduciary duties if we were subject to the DGCL.
Our Operating Agreement contains certain provisions regarding exculpation and indemnification of our officers and directors and the approval of conflicted transactions that differ from the DGCL in a manner that may be less protective of the interests of our public shareholders. For example, our Operating Agreement provides that to the fullest extent permitted by applicable law our directors or officers will not be liable to us. In contrast, under the DGCL, a director or officer would be liable to us for (i) breach of duty of loyalty to us or our shareholders, (ii) intentional misconduct or knowing violations of the law that are not done in good faith, (iii) improper redemption of shares or declaration of dividends or (iv) a transaction from which the director derived an improper personal benefit.
Pursuant to our Operating Agreement and indemnification agreements, we must indemnify our directors and officers for acts or omissions to the fullest extent permitted by law. In contrast, under the DGCL, a corporation can only indemnify directors and officers for acts and omissions if the director or officer acted in good faith, in a manner he or she reasonably believed to be in or not opposed to the best interest of the corporation, and, in a criminal action, if the officer or director had no reasonable cause to believe his or her conduct was unlawful.
Additionally, our Operating Agreement provides that in the event a potential conflict of interest exists or arises between any of our directors, officers, equity owners or their respective affiliates, including Five Point, on the one hand, and us, any of our subsidiaries or any of our public shareholders, on the other hand, a resolution or course of action by our board of directors shall be deemed approved by all of our shareholders, and shall not constitute a breach of the fiduciary duties of members of our board of directors to us or our shareholders, if such resolution or course of action (i) is approved by a conflicts committee, which is composed entirely of independent directors, (ii) is approved by shareholders holding a majority of our common shares that are disinterested parties, (iii) is determined by our board of directors to be on terms that, when taken together in their entirety, are no less favorable than those generally provided to or available from unrelated third parties or (iv) is determined by our board of directors to be fair and reasonable to us, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us). In contrast, under the DGCL, a corporation is not permitted to exempt board members from claims of breach of fiduciary duty under such circumstances.
Accordingly, our Operating Agreement may be less protective of the interests of our public shareholders, when compared to the DGCL, insofar as it relates to the exculpation and indemnification of our officers and directors.
In certain circumstances, OpCo will be required to make tax distributions to OpCo Unitholders, and such tax distribution may be substantial. To the extent we receive tax distributions in excess of our actual tax liabilities and retain such excess cash, the OpCo Unitholders would benefit from such accumulated cash balances if they exercise their Redemption Right.
The OpCo LLC Agreement provides, subject to the terms of any current or future debt or other arrangements, for: (i) pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow us to satisfy our actual income tax liabilities with respect to our allocable share of the income of OpCo; (ii) pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow us to make payments under the Tax Receivable Agreement we entered into with OpCo and the TRA Holders in connection with the closing of the IPO and any subsequent tax receivable agreements that we may enter into in connection with future acquisitions; and (iii) to the extent cash is available, additional pro rata tax distributions to the OpCo Unitholders in an amount generally intended to allow the OpCo Unitholders (other than us) to satisfy their estimated tax liabilities with respect to their allocable share of the income of OpCo, based on certain assumptions and conventions. For this purpose, the determination of available cash will take into account, among other factors, (i) the existing indebtedness and other obligations of OpCo and its subsidiaries and their anticipated borrowing needs, (ii) the ability of OpCo and its subsidiaries to take on additional indebtedness on commercially reasonable terms, (iii) capital expenditures and (iv) cash reserves for the proper conduct of our business.
The amount of such additional tax distributions to allow the OpCo Unitholders (other than us) to satisfy their assumed tax liabilities will be determined based on certain assumptions, including assumed income tax rates, and will be calculated after taking into account other distributions (including other tax distributions) made by OpCo. Additional tax distributions may significantly exceed the actual tax liability for many of the OpCo Unitholders, including us. Our board of directors will determine the appropriate uses for any such excess cash, which may include, among other uses, the payment of obligations under the Tax Receivable Agreement and the payment of other expenses. We will have no obligation to distribute such cash (or other available cash) to our shareholders. If we retain the excess cash we receive from such distributions, the OpCo Unitholders would benefit from any value attributable to such accumulated cash balances as a result of their exercise of the Redemption Right. However, we may take steps to eliminate any material excess cash balances, which could include, but are not necessarily limited to, a distribution of the excess cash to holders of our Class A shares or the reinvestment of such cash in OpCo for additional OpCo Units. We may also adjust the exchange ratio between OpCo Units and our Class A shares to take into account any material excess cash balances that we retain.
In addition, the tax distributions that OpCo may be required to make may be substantial, and the amount of any additional tax distributions OpCo is required to make likely will exceed the tax liabilities that would be owed by a corporate taxpayer similarly situated to OpCo. Funds used by OpCo to satisfy its obligation to make tax distributions will not be available for reinvestment in our business, except to the extent we or certain other OpCo Unitholders use any excess cash received to reinvest in OpCo for additional OpCo Units. In addition, because cash available for additional tax distributions will be determined by taking into account the ability of OpCo and its subsidiaries to take on additional borrowing, OpCo may be required to increase its indebtedness in order to fund additional tax distributions. Such additional borrowing may adversely affect our results of operations, cash flows and financial position by, without limitation, limiting our ability to borrow in the future for other purposes, such as capital expenditures, and increasing our interest expense and leverage ratios.
The Tax Receivable Agreement with the TRA Holders (as defined below) requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we are required to make will be substantial.
In connection with the closing of the IPO, we entered into a tax receivable agreement (the “Tax Receivable Agreement”) with OpCo and certain of our shareholders party thereto (the “TRA Holders”). Under the Tax Receivable Agreement, we are required to make cash payments to the TRA Holders equal to 85% of the amount of cash tax savings, if any, that we actually realize, or in certain circumstances are deemed to realize (calculated using certain assumptions), as a result of Existing Basis, Basis Adjustments, Historical NOLs and Interest Deductions (each as defined below). The actual amount of cash tax savings will depend on, among other things, changes in the relevant tax law, whether we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement and the timing of any future redemptions or exchanges of OpCo Units. We will depend on cash distributions from OpCo to make payments under the Tax Receivable Agreement. Any payments made by us to the TRA Holders under the Tax Receivable Agreement will generally reduce the amount of cash that might have otherwise been available to us. Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of the purchase of OpCo Units and OpCo Unit exchanges, and the resulting amounts we are likely to pay out to the TRA Holders pursuant to the Tax Receivable Agreement; however, we estimate that such payments will be substantial.
The payment obligation is an obligation of us and not of OpCo. Any payments made by us to the TRA Holders under the Tax Receivable Agreement will not be available for reinvestment in our business and will generally reduce the amount of overall cash flow that might have otherwise been available to us. To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid by us. Payments under the Tax Receivable Agreement are not conditioned upon one or more of the TRA Holders maintaining a continued ownership interest in OpCo or us. Furthermore, if we experience a Change of Control (as defined in the OpCo LLC Agreement), which includes certain mergers, asset sales and other forms of business combinations, our (or our successor’s) future payments under the Tax Receivable Agreement for each taxable year after any such event would be based on certain assumptions (instead of our or our successor’s actual, realized cash tax savings), including an assumption that we would have sufficient taxable income to fully use all potential tax benefits that are subject to the Tax Receivable Agreement. This payment obligation could (i) make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are subject to the Tax Receivable Agreement, (ii) result in holders of our Class A shares receiving substantially less consideration in connection with a change of control transaction than they would receive in the absence of such obligation and (iii) require us to make payments under the Tax Receivable Agreement that are greater than the specified percentage of our actual cash tax savings, which would negatively impact our liquidity. Accordingly, the TRA Holders’ interests may conflict with those of the holders of our Class A shares.
In addition, decisions we make in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments made under the Tax Receivable Agreement. For example, the earlier disposition of assets following a redemption or exchange of OpCo Units may accelerate the recognition of associated tax benefits for which we would be required to make payments under the Tax Receivable Agreement and increase the present value of such payments, and the disposition of assets before a redemption or exchange of OpCo Units may increase the tax liability of the TRA Holders (or their transferees or assignees) without giving rise to any rights to receive payments under the Tax Receivable Agreement with respect to tax attributes associated with such assets.
The ability to generate tax assets covered by the Tax Receivable Agreement, and the actual use of any resulting tax benefits, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges of OpCo Units by, or purchases of OpCo Units from, the TRA Holders (or their transferees or other assignees), the price of our Class A shares at the time of the redemption, exchange or purchase; the extent to which such redemptions, exchanges or purchases are taxable; the amount and timing of the taxable income allocated to us or otherwise generated by us in the future; the tax rates and laws then applicable and the portion of our payments under the Tax Receivable Agreement constituting imputed interest.
In certain cases, payments under the Tax Receivable Agreement to the TRA Holders may be accelerated and/or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
The Tax Receivable Agreement provides that if (i) we materially breach any of our material obligations thereunder or the Tax Receivable Agreement is rejected by operation of law or (ii) we elect an early termination of the Tax Receivable Agreement, then our obligations, or our successor’s obligations, under the Tax Receivable Agreement to make payments would be accelerated and become immediately due and payable. The amount due and payable in those circumstances is based on the present value (at a discount rate equal to the secured overnight financing rate (“SOFR”) plus 100 basis points) of projected future tax benefits that are based on certain assumptions, including an assumption that we would have sufficient taxable income to fully use all potential future tax benefits that are subject to the Tax Receivable Agreement Based on such assumptions, if we were to exercise our termination right, or if the Tax Receivable Agreement is otherwise terminated, immediately following the consummation of the IPO, the aggregate amount of the termination payments would be approximately $589.2 million. In addition, upon a change of control our (or our successor’s) payments under the Tax Receivable Agreement for each taxable year after any such event would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully use all potential tax benefits that are subject to the Tax Receivable Agreement.
As a result of the foregoing, we would be required to make an immediate cash payment that may be made significantly in advance of the actual realization, if any, of such future tax benefits. We could also be required to make cash payments to the TRA Holders that are greater than 85% of the actual cash tax savings we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement. In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. We may not be able to fund or finance our obligations under the Tax Receivable Agreement.
We will not be reimbursed for any payments made to the TRA Holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we determine, which are complex and factual in nature, and the IRS or another taxing authority may challenge all or part of the tax basis increases or other tax benefits we claim, as well as other related tax positions we take, and a court could sustain such challenge. If the outcome of any such challenge would reasonably be expected to materially affect a recipient’s rights and obligations under the Tax Receivable Agreement, then our ability to settle such challenges may be restricted by the rights of the TRA Holders pursuant to the Tax Receivable Agreement, and such restrictions apply for as long as the Tax Receivable Agreement remains in effect. In addition, we will not be reimbursed for any cash payments previously made to the TRA Holders under the Tax Receivable Agreement in the event that any tax benefits initially claimed by us and for which payment has been made to a TRA Holder are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cash payments made by us to a TRA Holder will be netted against any future cash payments that we might otherwise be required to make to such TRA Holder under the terms of the Tax Receivable Agreement. However, we might not determine that we have effectively made an excess cash payment to a TRA Holder for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the Tax Receivable Agreement until any such challenge is finally settled or determined. Moreover, the excess cash payments we made previously under the Tax Receivable Agreement could be greater than the amount of future cash payments against which we would otherwise be permitted to net such excess. As a result, payments could be made under the Tax Receivable Agreement significantly in excess of 85% of the actual cash tax savings that we realize in respect of the tax attributes with respect to a TRA Holder that are the subject of the Tax Receivable Agreement.
If OpCo were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result, and we would not be able to recover payments we previously made under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
We intend to operate such that OpCo does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. A “publicly traded partnership” is a partnership the interests of which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. Under certain circumstances, redemptions of OpCo Units pursuant to the Redemption Right (or our Call Right (as described in the OpCo LLC Agreement)) or other transfers of OpCo Units could cause OpCo to be treated as a publicly traded partnership. Applicable U.S. Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership, and we intend to operate such that redemptions or other transfers of OpCo Units qualify for one or more such safe harbors. For example, we intend to limit the number of OpCo Unitholders, and the OpCo LLC Agreement, provides for limitations on the ability of OpCo Unitholders to transfer their OpCo Units and provides us, as managing member of OpCo, with the right to impose restrictions (in addition to those already in place) on the ability of OpCo Unitholders to redeem their OpCo
Units pursuant to the Redemption Right to the extent we believe that it is necessary to ensure that OpCo will continue to be classified as a partnership for U.S. federal income tax purposes.
If OpCo were to become a publicly traded partnership, significant tax inefficiencies might result for us and for OpCo, including as a result of our inability to file a consolidated U.S. federal income tax return with OpCo. In addition, we may not be able to realize tax benefits covered under the Tax Receivable Agreement, and we would not be able to recover any payments previously made by us under the Tax Receivable Agreement, even if the corresponding tax benefits (including any claimed increase in the tax basis of OpCo’s assets) were subsequently determined to have been unavailable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)Recent Sales of Unregistered Securities
On September 18, 2025, pursuant to the Contribution and Reorganization Agreement, (a) the Five Point Members, Devon Holdco and Elda River contributed approximately $80,200 in cash to WaterBridge in exchange for the issuance of an aggregate 80,190,150 Class B shares to the Five Point Members, Devon Holdco and Elda River and (b) WaterBridge issued 3,411,735 Class A shares and 3,398,115 Class A shares to WBR Holdings and GIC, respectively, in exchange for the equity interests in WBEF directly or indirectly held by each of them and contributed to WaterBridge in connection with the WaterBridge Combination and the Corporate Reorganization.
After giving effect to the WaterBridge Combination transactions and Corporate Reorganization transactions, including the IPO, (a) the Five Point Members collectively own 3,411,735 of our Class A shares and 58,682,925 of our Class B shares; (b) Devon Holdco owns 17,757,225 of our Class B shares; (c) Elda River owns 3,750,000 of our Class B shares; (d) GIC owns 3,398,115 of our Class A shares.
Our Class B shares have no economic rights but entitle holders to one vote per Class B share on all matters to be voted on by shareholders generally. Holders of Class A shares and Class B shares will vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law or by our Operating Agreement.
These securities were issued pursuant to the exemption from registration for sales of securities not involving a public offering as set forth in Rule 506(d) promulgated under the Securities Act and in Section 4(a)(2) of the Securities Act. Each of the parties receiving such securities is an accredited investor for purposes of Rule 501 of Regulation D.
On September 16, 2025, our Registration Statement on Form S-1 (File No. 333-289823) was declared effective by the SEC for the IPO, pursuant to which we registered and sold an aggregate of 36,455,000 Class A shares, including the underwriters’ option to purchase 4,755,000 additional Class A shares, at a price of $20.00 per share to the public. The sale of WaterBridge’s Class A shares resulted in gross proceeds of $729.1 million to WaterBridge and net proceeds of $672.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses. The material terms of the IPO are described in the Prospectus. J.P. Morgan Securities LLC and Barclays Capital Inc. acted as lead book-running managers and representatives of the underwriters in the IPO.
WaterBridge used approximately $228.2 million of the net proceeds of the IPO to purchase certain OpCo Interests from Elda River, and contributed the remaining net proceeds of the IPO to OpCo in exchange for newly issued OpCo Units. OpCo used approximately $130.0 million of the net proceeds from the IPO to repay certain outstanding indebtedness of WaterBridge Operating, NDB Operating and Desert Environmental. On October 6, 2025, OpCo used an additional $303.9 million of the remaining net proceeds to repay all outstanding borrowings and accrued interest under the NDB Term Loan and SDB Term Loan. The remainder of the net proceeds was retained for general company purposes, including funding working capital and future growth projects.
There has been no material change in the planned use of proceeds from the IPO from that described in the Prospectus for the IPO.
(c)Issuer Purchases of Equity Securities.
Neither we nor any affiliated purchaser repurchased any of our equity securities during the period covered by this Quarterly Report on Form 10‑Q.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
(b)Material changes to the procedures by which security holders may recommend nominees to the board of directors.
None.
(c)Trading arrangements and policies.
During the three months ended September 30, 2025, none of our officers (as defined in Rule 16a-1(f) under the Exchange Act) or directors adopted or terminated a “Rule 10b5‑1 trading arrangement” or “non‑Rule 10b5‑1 trading arrangement,” as each term is defined in Item 408(c) of Regulation S‑K.
Item 6. Exhibits
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Exhibit
Number |
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Description |
3.1 |
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Certificate of Formation of WaterBridge Infrastructure LLC (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S‑1 (File No. 333‑289823) filed with the SEC on August 22, 2025). |
3.2 |
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First Amended and Restated Limited Liability Company Agreement of WaterBridge Infrastructure LLC, dated as of September 18, 2025 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
4.1 |
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Registration Rights Agreement, dated as of September 18, 2025, by and among WaterBridge Infrastructure LLC, WBR Holdings LLC, NDB Holdings LLC, Desert Environmental Holdings LLC, Devon WB Holdco L.L.C., Elda River Infrastructure WB LLC and Ashburton Investment Pte. Ltd. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
10.1† |
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WaterBridge Infrastructure LLC Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
10.2† |
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Form of Restricted Share Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 24, 2025). |
10.3 |
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Amended and Restated Limited Liability Company Agreement of WBI Operating LLC, dated as of September 18, 2025 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
10.4 |
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Shareholders’ Agreement, dated as of September 18, 2025, by and among WaterBridge Infrastructure LLC, WBR Holdings LLC, NDB Holdings LLC, Desert Environmental Holdings LLC and Devon Holdco L.L.C. (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
10.5 |
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Tax Receivable Agreement, dated as of September 18, 2025, by and among WaterBridge Infrastructure LLC, WBI Operating LLC, WBR Holdings LLC, NDB Holdings LLC, Desert Environmental Holdings LLC, Devon WB Holdco L.L.C., Elda River Infrastructure WB LLC and Ashburton Investment Pte. Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K/A (File No. 001‑42850) filed with the SEC on September 24, 2025). |
10.6# |
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Contribution and Corporate Reorganization Agreement, dated as of September 8, 2025, by and among WaterBridge Infrastructure LLC, WBR Holdings LLC, NDB Midstream LLC, WaterBridge Equity Finance LLC, Desert Environmental LLC, WaterBridge Resources LLC, WaterBridge Co-Invest LLC, WaterBridge Co-Invest II LLC, WaterBridge II LLC, NDB Holdings LLC, Devon WB Holdco L.L.C., Desert Environmental Holdings LLC, WB 892 LLC, Elda River Infrastructure WB LLC and Ashburton Investment Private Limited, and each other person who becomes a party thereto in accordance with the terms of the agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 18, 2025). |
10.7# |
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Third Amendment to Credit Agreement, dated as of September 19, 2025, by and among WaterBridge Midstream Operating LLC (formerly WaterBridge NDB Operating LLC), as borrower, the lenders party thereto, and Truist Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 24, 2025). |
10.8# |
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First Amendment to Credit Agreement, dated as of September 19, 2025, by and among WaterBridge Midstream Operating LLC, as borrower, Truist Bank, as administrative agent and collateral agent, and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 24, 2025). |
10.9# |
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Revolving Credit Agreement, dated as of September 26, 2025, among WBI Operating LLC, Truist Bank, as the administrative agent, the collateral agent, the issuing bank and a lender, and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K (File No. 001‑42850) filed with the SEC on September 29, 2025). |
10.10 |
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Form of Indemnification Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1/A (File No. 333-289823) filed with the SEC on September 3, 2025). |
31.1* |
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Certification of Chief Executive Officer of WaterBridge Infrastructure LLC pursuant to Rule 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. |
31.2* |
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Certification of Chief Financial Officer of WaterBridge Infrastructure LLC pursuant to Rule 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. |
32.1** |
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Certification of Chief Executive Officer of WaterBridge Infrastructure LLC pursuant to 18 U.S.C. § 1350, as adopted pursuant to the Sarbanes‑Oxley Act of 2002. |
* Filed herewith.
** Furnished herewith.
# Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S‑K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC on request.
† Identifies management contracts and compensatory plans or arrangements.
