Q1 2025 Aris Water Solutions Inc Earnings Call
John Mackay, David Tuerff, John Mackay, David Tuerff, John Mackay, David Tuerff, John Mackay
David Tuerff, David Tuerff,
Speaker Change: Greetings and welcome to the Aris Water Solutions first quarter 2025 earnings conference call. At this time, all participants are to listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone
Speaker Change: As a reminder, this conference call is being recorded. It is now a pleasure to introduce David Tuerff, Senior Vice President, Finance and Investor Relations.
Please go ahead.
Speaker Change: Good morning and welcome to the Aris Water Solutions first quarter 2025 earnings conference call. I am joined today by our president and CEO Amanda Brock, our founder and executive chairman, Bill Zartler and our CFO , Steven Tompsett.
Speaker Change: Before we begin, I'd like to remind you that in this call and the related presentation we will make forward-looking statements regarding our current beliefs, plans and expectations which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from results and events contemplated by such forward-looking statements.
Speaker Change: You are cautioned not to place undue reliance on forward-looking statements [inaudible]
Speaker Change: Please refer to the risk factors and other cautionary statements included in our filings made from time to time with the Securities and Exchange Commission. I would also like to point out that our investor presentation in today's conference call will contain discussion of non-GAAP financial measures which we believe are useful in evaluating our performance.
Speaker Change: These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with US gap.
Speaker Change: Reconciliation to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation. I'll now turn the call over to our founder and executive chairman, Bill Zartler.
Bill Zartler: Thank you, David. Aris began 2025 with a strong first quarter, continuing its momentum from last year. We saw record volumes in both produced water handling and water supply, driven by higher than anticipated completion activity and sustained produced water takeaway to band.
Bill Zartler: Early in the second quarter, we're seeing those volumes continue, giving us a strong outlook for the first half of the year.
Bill Zartler: As we look forward to the second half of 2025, we are actively monitoring commodity price impacts to our customers' activity levels and tariff uncertainty around our costs.
Bill Zartler: Currently, we've not seen material scheduled changes from our customers on our dedicated April but we remain in constant contact with them as their outlets are further refined.
Bill Zartler: We believe we are well-positioned for potential uncertainty given our long-term contracts in the core of the Northern Delaware Basin featuring multiple decades of highly economic inventory with well-capitalized customers.
Bill Zartler: We're focused on managing our capital investment to match that of our customers and can moderate our capital investment alongside a slowdown in activity if one were to occur.
Bill Zartler: We have a dynamic theme that is whether COVID and commodity price volatility in the past, and we will manage the business prudently while taking advantage of our pristine balance sheet and strong contractual underpinning to capture opportunities that may arise, without turning over to Amanda.
Thank you, Bill.
Amanda Brock: We continued our success in the first quarter of 2025 with record volumes driven by higher than anticipated customer activity levels, strong sustained produced water volumes and increased spot volume demand on our infrastructure network.
Amanda Brock: As a result, we grew both produced water volumes and water solution volumes, 7% sequentially versus the fourth quarter of last year [inaudible]
Amanda Brock: We achieved adjusted operating margin of 44 cents a barrel in the quarter with record volumes and sustained margins driving adjusted EBITDA of 56.5 million, another all-time high for
Amanda Brock: The first quarter represented our first full quarter integrating the McNeil Ranch into our operations and we're evaluating several encouraging inbound opportunities to bring additional revenue streams to the ranch, including active discussions for large scale solar and other surface royalty development.
Amanda Brock: As we said last quarter, we remain excited about the optionality the ranch provides and subtractive subsurface characteristics for additional porcelain base and disposal which have been validated by our customers.
Amanda Brock: We have an opportunity to accelerate growth as land becomes increasingly valuable adjacent to the fastest growing areas of production in New Mexico and remain an active conversations with current and potential new customers to bring incremental water volumes to the ranch in the future under long term agreements. Next.
Amanda Brock: While delivering consistent outstanding results in our core gathering and recycling business, we've accelerated our beneficial reuse efforts and partnership with leading operators.
Amanda Brock: We continue to progress through the permitting process to desalinate produced water at large scale for potential reservoir replenishment, industrial, non-consumptive agricultural use.
Amanda Brock: Our team is leading broad industry efforts to reduce desalination costs as we expand our existing partnerships to accelerate commercialization.
Amanda Brock: We also continue to make progress in our strategic efforts in industrial water treatment further integrating the new team that joined us in the first quarter of this year.
Amanda Brock: On mineral extraction, we have finalized site selection on the first iodine facility and this plant should be online in early 2026, providing another source of margin uplift.
Amanda Brock: As they'll reference the significant uncertainty around commodity prices and tariffs [inaudible]
Amanda Brock: However, we're all to a strong start this year and a seeing that strength continue into the second quarter.
Amanda Brock: We have continual dialogue with our customers about the potential impact commodity prices could have on their businesses and activity levels and at this time we are not seeing any immediate impact to our outlook.
Amanda Brock: We are working closely with our customers as they evaluate their plans for the second half of 2025 and will provide further updates if our outlook changes accordingly.
Amanda Brock: Our customers are large, blue chip operators under long-term dedication agreements and highly economic acreage.
Amanda Brock: In past commodity down cycles, our customers have a track record of sustained production strength and importantly, we are positioned to moderate our capital investments alongside our customers if and as needed.
Amanda Brock: With that, I'll turn it over to Steve to discuss financial results of the quarter and details on our outlook for the second quarter of 2025.
Steve: Thank you, Amanda. We recorded adjusted EBITDA for the first quarter of $56.5 million up 4% sequentially and 6% year over year driven by record volumes in both produced water handling and water solutions.
Steve: We generated adjusted operating margins of 44 cents per barrel, reflecting the durability of our operating improvements over the last 24 months.
Steve: In the quarter, we also had approximately $2 million of planned well maintenance costs deferred until the second quarter, benefiting margins by approximately one cent per barrel.
David Tuerff, David Tuerff, David Tuerff,
Steve: Turning to CapEx, we invested $21 million in the quarter, down 44% versus the first quarter of last year.
Steve: For the second quarter, we expect produced water volumes to be between 1.2 and 1.25 million barrels per day and water solutions volumes to be between 475 and 525,000 barrels per day.
Steve: We expect adjusted operating margin to be between 41 cents and 43 cents per barrel for the quarter, down slightly versus the first quarter due to timing of well-made ins expenses and lower scheme oil price realizations.
Steve: Relative to our initial outlook for the year, the current WTI price trip represents a six to eight million dollar headwind to our business [inaudible]
Steve: However, we do have offsetting benefits from our strong first half volumes, stronger skim oil volume recoveries, CPI linked revenue escalation clauses and out performance on first quarter earnings.
Steve: With regard to tariffs, we have evaluated operating in capital expenses and do not believe we currently have any meaningful direct exposure to potential tariff increases within our existing cost structure.
Steve: We are in close contact with our suppliers as they assess any potential impacts to their supply chains and we will continue to work with them to monitor and mitigate any potentially broad inflationary pressures that might arise.
Steve: Starting to our balance sheet, during the first quarter we successfully refinanced our senior notes which were set to mature in 2026 and due to significant investor demand, upsides that are offering to $500 million alongside a credit upgrade by Moody's from B1 to B2.
Steve: Net of the offering, we ended the quarter with net debt of $480 million and a 2.2 times debt to adjusted EBITDA ratio with $372 million worth of equity.
Steve: Finally, we declared our second quarter dividend of $0.14 per share to be paid June 18th to share holders of record on June 5th.
Steve: Needless to say, this will be a very dynamic year but we are confident in our team's ability to effectively manage through this period of volatility and uncertainty.
Steve: We remain committed to maintaining our strong balance sheet, delivering free cash flow and creating further long-term value for our shareholders.
With that, I'll turn it back to Amanda. Thanks, Steve.
We understand there is market uncertainty and belief.
Speaker Change: With our continued strong performance, supported by our long-term contracts and large dedicated customers in the core of the Permian, we are in a strong position to weather potential disruptions and to take advantage of the opportunities that often arise during periods of volatility.
Speaker Change: We want to reiterate that should our customers reduce their activity levels in a sustained, low oil price environment, we will be able to moderate our own capital investment accordingly and produce resilient free cash flow.
With that, we are happy to take questions.
Speaker Change: Thank you. We'll now be conducting a question and answer session.
Speaker Change: If you would like to ask you a question, please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For
One moment please, while we pull for questions.
Our first question is from Wade Suki with Capital One
Good morning, everyone. Thank you for taking my questions.
Speaker Change: I recognize the uncertainties out here, but I am kind of curious what your expectations for things like water cuts, volumes, etc. over the near to intermediate term, if your producers were to move more into maintenance mode.
Morning, Wade. Thank you for the question.
Speaker Change: So we've had an excellent Q1 as you know and we've also got great visibility into Q2 and we've had a strong start in Q2 so we believe that we're on track for a very strong.
Speaker Change: First half. When we look at the second half of the year, we understand that there's a lot of volatility, there's a lot of uncertainty and it's going to be very dynamic. At this time, our customers have not communicated material changes in their forecast. Thank you very much.
but of course what we have done.
Speaker Change: Is run scenarios to try and anticipate if changes were to occur?
Speaker Change: and if volumes were to decrease, what will we do? And as we've always said, we grow alongside our customers, so if our customers start to reduce volumes, we in turn will react depending on timing, depending on geography, and we'll be able to reduce capex.
Speaker Change: and we think that CapEx reduction will be significant enough in the 25-30% range.
Speaker Change: We don't know where volumes are going to go but we do know that we can react. We also in terms of the water cut to that question, the water cut will remain the same. It just is going to be a volume impact. All right.
Great. Thank you so much. Appreciate that.
Speaker Change: Just in terms of M&A, can you give us an update on what you're seeing out there? Has any of this volatility or uncertainty impacted seller motivations, bid aspects, etc.?
Speaker Change: I mean, Bill, do you want to respond to that? I mean, we're not... Yeah, relative value game, and we've obviously...
Speaker Change: The change is expectations on both sides, so I think that the bid-ass spread has been there. It was probably closer than ever as our valuations were up and expectations were high, but there's a few things transacting but very little of the large water combinations are really happening at this point time. [inaudible]
Speaker Change: But we do think we are well positioned with our balance sheet which is extremely strong to sort of take advantage of some things that might arise during a time of volatility like this [inaudible]
Anderson, thank you so much, appreciate it.
Thanks, Wade.
Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please click the like button and subscribe to my channel. I'll see you in the next video.
Our next question is from Jackie Colettus, with Goldman Sachs [inaudible]
https://www.youtube.com.uk
Jackie Colettis: Hi, thank you so much for taking my question. First, I just wanted to start on the volume front. They were significantly stronger than expected in the first quarter. I believe you mentioned potential spot volumes, so whether any one time impact or activity that occurred, and therefore how should we think about volume growth cadence from here? Sure.
Speaker Change: I'll start and then I let Steve sort of elaborate, but yes, volumes were extremely strong. Some of the wells came on better than expected. That always, you know, is a nice thing to see. We also saw more interruptible, and obviously that resulted in more skin.
Steve: That's the right Amanda. Jackie, when we're doing large scale recycling it opens up capacity on our system. Thank you.
Speaker Change: And it's sometimes difficult to forecast when exactly we're going to receive or be able to take interruptable volumes because it is location specific. Thank you.
Speaker Change: But our commercial team goes out and tries to procure, you know, whatever additional revenue that can, as that activity moves around the system, so...
Speaker Change: We do see it in a quarter to quarter. It does vary, but it's hard to forecast months in advance. So we're always charging them without going out and achieving more. In this case they were able to exceed expectations.
Speaker Change: Got it. That's clear. Thank you. And then just one follow-up, you know, in a downside environment, you know, how would you be thinking about capital allocation, specifically continued dividend growth versus further debt reduction, a little bit more color there.
Speaker Change: Absolutely. So I guess at this point in time, there's no change to our capital allocation framework. We continue to focus on balance sheet strength, the financial health of the business.
Speaker Change: As Amanda mentioned, we do have the ability to flex down capital. You know, if there is a downturn in volumes, it's going to depend on geography and timing of any customer slowdown, but we do feel confident we could reduce 2025 capital in the 20 to 30% range.
Speaker Change: We've talked about in the past from a sustaining and maintenance standpoint, we'd be looking at under $50 million of spending to maintain flat volumes, so we really have a lot of optionality as it relates to sustaining our free cash flow and protecting the balance sheet.
Speaker Change: I think it's premature to think about many changes to our long-term shareholder return framework right now. We're still consistent in wanting to deliver annual dividend growth, and we look to do that for the long term.
Great, thank you so much appreciate it.
Bye-bye.
Our next question is from Spiro Dounis with City [inaudible]
Spiro Dunis: Thanks operator. Morning team. Maybe you just want to start with McNeil Ranch if we could. Amanda, you give us an update and that's prepared remarks but...
Spiro Dunis: We'd love to get a little more color on commercializing that land, maybe what eating you think you're in in terms of filling that out. I know at one point you talked about maybe options to monetize that in some way, and then just timing from here and I think about next updates. Thank you very much.
Amanda Brock: David Tuerff, David Tuerff, David Tuerff,
Spiro Dunis: Certainly, and Morning, Spiro. McNeill is exceeding our expectations. We knew it was in a great location, but we've had a lot of
Spiro Dunis: We've had more in-bounds than we expected as it relates to the surface with its location with Hobbes, with that gas transmission line going through it the railway line with the, you know...
Spiro Dunis: Power Transmission. We've had a lot of in-bounds, whether it's been solar, battery, so we're evaluating all of those in addition to just your more traditional surface royalty type activities.
Spiro Dunis: So that's great. In addition, from a milestone perspective, we've already been granted on the Texas side 11 permits. So at this point, and this is quick, we are sitting on 330,000 barrels of permitted disposal capacity.
Spiro Dunis: So do we have an opportunity to monetize? Yes, there are in-bounds all the time but we think this property just gets more valuable over time but we will always be listening.
Spiro Dunis: We are in early innings. We continue to talk to our core customers about the subsurface characteristics, about the roots right of way. But overall, we are very, very happy with this acquisition. Thank you very much.
Speaker Change: Got it, that's great to hear. Second question, maybe go back to Wade's question a little bit here and thinking about the outlook. But maybe want to focus on areas where there is maybe a lot of durability in your cash flow stream and maybe some variability too. But I guess maybe confirm my thinking on the produce water side. You know one I suspect that there were cuts announced. [inaudible]
Speaker Change: You know, tomorrow, we wouldn't really see that impact on the produce water until maybe next year. And as far as I know about the water cut, you know, man, I think he said stays the same, but I guess my was right.
Speaker Change: You said it sort of increases as the well ages and so curious is there a similar dynamic with natural gas where if the crude is kind of flat, you know, gas tends to increase is there a similar dynamic with water?
Speaker Change: So, let's talk about the water kit. We get asked this question a lot.
But...
Speaker Change: The water cut as a reservoir and a well ages does increase slightly, but it's not something that we are really running through the model at this time.
Speaker Change: I think on the produced water side, what you would see, for example, if completion slowed down, is you would actually see volumes produced water volumes increase.
Speaker Change: and again, allows us to achieve the free cash load targets we set out at the beginning of the year. So while you can't see some variability in water cut over time, we really think the best coral air to our water volumes is oil production and given the resilience of that in the northern Delaware, we see that as very steady. Thank you.
Yeah, a little nuance to that will be that when-
Speaker Change: There's a significant amount of water recycled, not just by us, but others that do it themselves.
Speaker Change: That volume, if completions go down, that volume tends to flow in our system as interruptable and we'll try to take every bit of that we can't we saw that same dynamic early in COVID when
Speaker Change: Completions Activity came to a rapid halt and produce water volumes.
Speaker Change: that needed to go to disposal, increased pretty dramatically over that short period of time for the trail back off.
Speaker Change: Got it, got it. Okay, appreciate the color. I'll leave it there. Thank you, team.
Thanks, Vera.
Our next question is from Jeremy Tonay with JP Morgan.
Hi, good morning.
Good morning Jeremy.
Speaker Change: I just want to start off with the question on the competitive landscape. As you see here we've seen some other mid streamers with water operations. I think we're recently redoubled a reference in the water field and just wondering how you feel about your, you know.
Speaker Change: David Tuerff, competitive standing versus maybe some of these other larger midstreamers looking maybe a bit more at water.
Speaker Change: Sure Jeremy, I think you may be referring to the announcements on the long haul, Pipelines, Western announcing, Pathfinder and some others announcing an open season.
Speaker Change: We are seeing all of that activity as it relates to Weston. That is south of us. It does not impact us competitively in any way. So I think when we look at how we are positioned geographically and the
Speaker Change: Pipeline that we anticipate we'll be building, you know, in 26th award, the McNeil Ranch, we think we are still well positioned competitively. [inaudible]
Speaker Change: Got it. That's helpful. Thanks for that. And then maybe turning to beneficial reuse and industrial water.
Speaker Change: Any incremental kind of updated thoughts on expanding the applications here, I believe there have been discussion about potential data center applications in the past just wondering any updated thoughts you might be able to share here.
Speaker Change: There's always a lot of talk right now about data centers.
Speaker Change: If the question is can we use this water and can we treat it for data centers the answer is yes. [inaudible]
Speaker Change: But we think it's early innings on data centers and we are watching that market.
Speaker Change: You do get the in-bounds, but we are not relying on that market in any way. What we are doing and we've had great success and have really made some positive improvements. Thank you very much.
Speaker Change: through the piloting is we'll be able to reduce the price and op-ex and even cap-ex.
Are desalinating this water for...
Speaker Change: Joseph Discharge for Reservoir Replenishment, and we're making a lot of progress in the permitting.
Speaker Change: talking to customers as well as I think we indicated in the script and in the press release that we have now got the site for the first iodine facility so all in all we are seeing great great progress. Thanks.
Got it, that's helpful. Thank you Thank you very much.
Our next question is from Praneeth Satish with Wells Fardo [inaudible]
Speaker Change: Thanks, good morning. Maybe just going back to Jeremy's question here on...
Praneeth Satish: Competition, so recognizing the Western pipeline is south of your footprint, but I guess water bridge has an open season that that pipeline seems
Praneeth Satish: Closer to your McNeil Ranch. So just trying to understand, you know, how does this project have any impact on your development timeline, your prospects of building your own water pipeline, I think you said in 2026, just trying to understand the implications and if it has any bearing on your development plans.
Praneeth Satish: Praneeth, thanks for the question. I think people need to focus on the fact that we have entered into long term contracts and these contracts with our customers and they get extended and so it really we've got a large footprint, large acreage dedication. Thank you very much.
We're engaged in discussions to expand.
Praneeth Satish: You know, that over time, so it really does not impact us. Bill, you want to sort of comment on that? Well, ultimately it's the moving the water out of the particular
Bill Zartler: well sites, locations, is a complicated environment. So this isn't like gas and oil that you're going from producing region to consuming region.
Bill Zartler: This water goes into disposal zones, it goes into recycling networks where we have built extensive pond infrastructure where we can wheel water around for various customers as treated water for
Bill Zartler: and move that then into two zones. So it's a complicated equation.
Bill Zartler: But we believe, and I think it's proving out, that controlling the water at its source and locking up the long-term consumption under long-term agreements for our customers completion activity for the use of treated-produced water in their completions activity provides the base load for a very dynamic system and allows us to flex capital around the system in a way that's very unique.
Got it. That's very helpful.
Speaker Change: I think Billy, you mentioned there's the potential for at least a temporary surge of interruptible volumes, if drilling activity slows. Just looking at the Q2 guidance, how much of that do you assume is interruptibles versus contractually committed volumes is trying to get a sense of the...
Underlying Assumptions Behind the Guide .
Praneeth very little and we really don't
And we view interruptible as a bonus.
In large part, so there is very little model, David.
Speaker Change: Yeah, that's right, Praneeth. We model primarily around what our contracts are slated to deliver and were in constant contact with those customers as those planned plans are defined. And then as Bill referenced earlier, as we have opportunities to add additional volumes into the system, we try to go capture those on a spot basis, but really we try to plan around what our contracted customers are doing.
Makes sense. Thank you.
Thank you [inaudible]
Our next question is from Salmon Atgel with Stiefel.
Thank you. Good morning all. So, two quick questions.
Speaker Change: You reference being able to flex down your capital spend by 25 to 30% and should we think about is it more than just well-connected that you can address there or you know with capital?
Yeah, so good morning. Yeah, I think Thank you.
Again, I want to stress, it's-
Very dependent upon... [inaudible]
Speaker Change: Who slows down and when and where? Because the system's dynamic and it takes into account recycling which opens up capacity on the system.
Speaker Change: So it's all the above in terms of capital and where we might be able to reduce it. So it's capital for new pipeline, capital for Wilkenex, capital for bonds, surface facilities [inaudible]
Speaker Change: It's all the above. And again, if we look at that under $50 million for sustaining capital, at that point, you're probably not drilling many wells. But again, it's going to be location-specific.
Speaker Change: Got it. Thank you for that. And then you also mentioned, and I'm sure it's very small as you look out into 2026, the iodine, but is there any way you can put some, you know, metrics or economics around what you're expecting out of that? Yeah.
Speaker Change: As we've said before, we are going to do it on a royalty basis [inaudible]
Speaker Change: And that royalty rally is dependent on the amount of iodine that is produced.
Speaker Change: and at this time, the company that we are talking to is evaluating whether or not they up size their facility. So we'll come back and give you more information next quarter once we have more visibility of their construction plans and the size of the plant. Thank you very much.
Alright, thank you very much.
Jeffrey Campbell: Our next question is from Jeffrey Campbell with Seaport Research Partners.
And good morning, Amanda. Congratulations on the 24th quarter.
Jeffrey Campbell: My first question is now that the first project is coming into the year and based on some remarks you made earlier today, it sounds like surface disposal could increasingly compete to the end of the year.
Jeffrey Campbell: with traditional disposal on cost. So I wanted to first ask, am I understanding that correctly? And the second will it be restricted to very specific reservoir types, or could this eventually even take place on McNeil Ranch at some point?
I'm Jeffrey Ed.
Speaker Change: Sense of question there, let me try and break it up. Yes, we did have a great first quarter. So thanks for recognizing that I think everybody's so focused on the uncertainty going forward. We do want to emphasize the fact that we've been operating very efficiently. The team is executed. We've got a great first quarter and it looks good in second quarter. Yeah.
Speaker Change: and surface disposal in terms of what reservoirs that is too early, that is a function of working with the regulators, at this time it is.
You know, looking at surface and reservoir discharge .
as it relates to McNeil. [inaudible]
Speaker Change: One of the things we said when we bought MacNeil is that we could use MacNeil for surface discharge for non-consumptive agriculture because we would be aggregating volumes at that location and as it relates to price
Speaker Change: It is becoming more competitive. So it is not on a par with disposal, but it is no longer as expensive as people thought it would be when we began the piloting
[inaudible]
Speaker Change: That's very helpful. I want to ask a name and a question a little bit different way and...
Tom Tom Tom Tom Tom Tom Tom Tom
Speaker Change: I'm not trying to be pejorative, I'm just curious. Every quarter you get asked about M&A. I'm wondering what your extending use of treated water, the good things you just told us there, your entry into industrial water treatment and obvious enthusiasm for it. I'm curious of an acquisition and the core business is still a preference for Aris.
Speaker Change: Great question, actually. And I think we are still very focused on an acquisition in our call.
Speaker Change: and we would have loved to have made an acquisition at this time. We don't want to buy anybody else's problem and we've been very disciplined as it comes to value.
We are looking outside of our call at smaller bolt-ons. You saw us add a team with some great
Speaker Change: IP, which we are, you know, bringing into the system and expanding.
Speaker Change: But overall, we are still focused on on our core, Bill. Yeah, I mean, it's a pretty simple analysis. We have a very good business, great contracts, great customers, great acres, we're very confident.
Speaker Change: and potentially people is really paramount. And so, as we continue to evaluate those, nothing has fit that bill just yet.
Speaker Change: and we're looking hard at this small incremental organic growth around non-energy oil that we think has some very interesting attributes, but it's very early days and small.
Okay, great. Thank you. I appreciate it.
Our next question is from Derrick Whitfield with Texas Capital.
Thanks, good morning all.
Tony Derrick, George
Speaker Change: Regarding the D-style opportunity, you've noted a few times that cost has come down quite a bit relative to initial expectations.
Speaker Change: In your view, could this be done with a cost recovery included for less than a dollar per barrel?
Speaker Change: We've always talked about, as of others who've been focused on this, on trying to break through that dollar of barrel from an apex, yes?
Speaker Change: It depends on size, from a capex and sort of balance of plant cost, but certainly, the apex can be below dollar a barrel.
Speaker Change: Great, and then maybe leaning in further on that beneficial use side. It appears you guys are making progress beyond iodine or evaluating technologies and identifying partners for commercialization of other minerals. What appears the most promising at this time beyond iodine? It appears the most promising at this time beyond iodine or evaluating technologies and identifying partners for commercialization of other minerals.
Speaker Change: I'm going to use lithium cautiously because there is technology today and that technology is improving.
Speaker Change: And so there are a lot of inbound on lithium from names that are familiar to people that there's a lot of price volatility on lithium again.
I think magnesium is something that is very attractive, ammonia.
Speaker Change: So I think there are a lot of these trace metals and minerals that we are looking at but I think you will see us focus on the iodine and then you'll see us begin to talk most likely a little bit more about magnesium. Praneeth.
Great, I'll turn it back to the operator.
Speaker Change: Our next question is from Sean Mitchell with Daniel Energy Partners
Sean Mitchell: Good morning, guys. Thanks for taking my question. Amanda, I know the range of outcomes is widened dramatically with Tuerffs and OPEC bringing barrels back to the market.
Speaker Change: Given the size of your customer base and who you work for, any guess at what price these guys might start to, I mean what oil price is potentially whether these guys actually start to adjust activity?
Speaker Change: Morning, Sean, and I wish we knew. We saw Enterprise come out and you know...
Make a couple of statements about that.
I think.
Speaker Change: What I want to focus on is who our customers are. If you look at 75% of our customer base is Chevron.
Speaker Change: They are out saying they're going to grow and continue to grow. Are you got Conoco?
Speaker Change: You've got Oxy, then of course, we've got Mubert, and Mubert may be private, but Mubert is a great large customer running a lot of rigs, and we are in some of their core rock.
Speaker Change: So focused on who our customers are, I think is very important because I think they will be more resilient and they will not be as reactive to movements in oil price. [inaudible]
Speaker Change: But that is a million dollar question that everybody is asking. Again, we think we are going to be resilient because our customers are going to be resilient. And because of how they behave during COVID, they did not react like the smaller private equity backed, you know, operators. [inaudible]
Speaker Change: Yeah, no, that's helpful color, thank you, and it may be just to follow up on on skim oil, what price are you guys assuming for Q2?
Speaker Change: We assume the strip, we don't provide, or we don't, we don't go up with our own internal forecast, we just take care of it. Yeah, yeah. Okay. Yeah, yeah. Fair enough. All right. Thank you. Appreciate the color. Thanks, Sean.
David Tuerff, David Tuerff, David Tuerff,
Speaker Change: Thank you. There are no further questions at this time. I would like to hand the floor back over to Amanda Brock for any closing comments.
Amanda Brock: Thank you. We understand that there is a lot of uncertainty, but we want to reiterate that we are well positioned. We have produced great results.
The team is very focused [inaudible]
Amanda Brock: And we think that we will be very resilient and effectively managed through his period of volatility uncertainty.
We want to thank our customers, our team, our suppliers for your support and support.
Amanda Brock: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.