Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2026

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisitions and Divestitures

3. ACQUISITIONS AND DIVESTITURES

Aris. On October 15, 2025, the Partnership closed on the acquisition of Aris by merger in a transaction valued at $2.0 billion, including the cash and equity merger consideration, Aris’s outstanding debt of $80.0 million in revolving credit facility borrowings that were repaid at closing, and $500.0 million in principal amount of senior notes (see Note 9). Based on Aris shareholder consideration elections, the Partnership issued 26.6 million common units and paid $415.0 million in cash, funded with borrowings under the commercial paper program, in exchange for all issued and outstanding shares of Aris common stock. The cash paid to Aris shareholders (net of cash acquired as presented in the table below) was $368.6 million for the year ended December 31, 2025.

The Partnership acquired Aris to expand its existing produced-water infrastructure and access additional customers in the area. The assets acquired, located in Lea and Eddy Counties, New Mexico, and West Texas, include approximately 830 miles of produced-water pipeline, 1,812 MBbls/d of produced-water handling capacity, 1,560 MBbls/d of water recycling capacity, and 625,000 dedicated acres.

The Aris acquisition has been accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed in the Aris acquisition were recorded in the consolidated balance sheet at their estimated fair values as of the acquisition date. Results of operations attributable to the Aris acquisition were included in the Partnership’s consolidated statements of operations beginning on the acquisition date in the fourth quarter of 2025. For the three months ended March 31, 2026, general and administrative expenses in the consolidated statements of operations include acquisition-related transaction costs of $0.5 million.

The following is the preliminary acquisition-date fair value for the assets acquired and liabilities assumed in the Aris acquisition. Measurement period adjustments recorded during the three months ended March 31, 2026, resulted in a $5.6 million reduction to goodwill. The preliminary fair values are subject to change within the measurement period (up to one year from the acquisition date), pending a final determination of the values assigned to tangible and identifiable intangible assets of approximately $10.0 million.


thousands
Assets acquired:
Cash and cash equivalents	$	46,362
Accounts receivable, net	90,240
Other current assets	9,627
Property, plant, and equipment	1,460,748
Goodwill	342,860
Other intangible assets	298,844
Other assets	16,706
Total assets acquired	2,265,387
Liabilities assumed:
Accounts payable and accrued liabilities	6,683
Other current liabilities	153,173
Long-term debt	531,675
Asset retirement obligation	52,020
Other liabilities	94,651
Total liabilities assumed	838,202
Net assets acquired	$	1,427,185

3. ACQUISITIONS AND DIVESTITURES

Goodwill recognized in the Aris acquisition relates primarily to enhancing and diversifying the Partnership’s water-asset position, as well as delivering operational synergies, including increasing volumes on its existing processing facilities and increasing revenues on its produced-water systems.

Other intangible assets recognized in the Aris acquisition are related to customer contracts. The basis for determining the value of these intangible assets is estimated future net cash flows to be derived from acquired customer contracts and relationships, offset with appropriate charges for the use of contributory assets and discounted using a risk-adjusted discount rate. These intangible assets are being amortized on a straight-line basis over an initial period of 19 years, which represents the estimated term over which the customer contracts are expected to contribute to the Partnership’s cash flows.

The acquisition-date fair values are based on an assessment of the fair value of the assets acquired and liabilities assumed in the Aris acquisition using inputs that are not observable in the market and thus represent Level 3 inputs. The fair values of the produced-water disposal and recycling systems and related facilities and equipment are based on market and cost approaches.