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REVENUE
 6 Months Ended
Jun. 30, 2026
REVENUE  
REVENUE

NOTE 4—REVENUE

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The Company follows ASC 606, Revenue from Contracts with Customers, for most revenue recognition, which provides a five-step model for determining revenue recognition for arrangements that are within the scope of the standard: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model only to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the goods or services the Company transfers to the customer. The accommodations and rentals revenue continues to be guided by ASC 842 – Leases, which is discussed further below.

The following factors are applicable to the Company’s segments for the Current Quarter, Prior Quarter, Current Period and Prior Period:

●The vast majority of Water Services and Chemical Technologies customer agreements are short-term, lasting less than one year. Water Infrastructure contains both short-term and long-term agreements.
●Contracts are seldom combined together as virtually all of our customer agreements constitute separate performance obligations. Each job or project is typically distinct, thereby not interdependent or interrelated with other customer agreements.
●Most contracts allow either party to terminate at any time without substantive penalties. If the customer terminates the contract, the Company is unconditionally entitled to the payments for the services rendered and products delivered to date. This largely applies to Water Services and Chemical Technologies.
●Contract terminations before the end of the agreement are rare.
●Sales returns are rare and no sales return assets have been recognized on the balance sheet.
●There are minimal volume discounts.
●There are no service-type warranties.
●There is no long-term customer financing.
●Taxes assessed by government authorities included on customer invoices are excluded from revenue.

In the Water Infrastructure and Water Services segments, performance obligations arise in connection with services provided to customers in accordance with contractual terms, in an amount the Company expects to collect. Services are generally sold based on customer orders or contracts with customers that include fixed or determinable prices. Revenues are generated by services rendered and measured based on the output generated, which is usually simultaneously received and consumed by customers at their job sites. As a multi-job site organization, contract terms, including the pricing for the Company’s services, are negotiated on a job site level on a per-job basis. Most jobs are completed in a short period of time, usually between one day and one month. Revenue is recognized as performance obligations are completed on a daily, hourly or per-unit basis with unconditional rights to consideration for services rendered reflected as accounts receivable trade, net of allowance for credit losses. In cases where a prepayment is received before the Company satisfies its performance obligations, a contract liability is recorded in accrued expenses and other current liabilities. Final billings generally occur once all of the proper approvals are obtained. Mobilization and demobilization are factored into the pricing for services. Billings and costs related to mobilization and demobilization are not material for customer agreements that start in one period and end in another. The Company recognizes revenue from certain sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer.

Within the Water Infrastructure segment, we have contracts containing acreage dedications, areas of mutual interest (“AMIs”), wellbore dedications and minimum volume commitments (“MVCs”). Acreage dedications are longer-term contracts pursuant to which a customer dedicates certain activities or volumes to Select within a defined set of the customer’s leased acreage, typically committing to us all water demanded by future wells they complete or produced from current and future wells that they operate, and we commit to provide, gather, recycle or dispose such water volumes. AMI arrangements similarly are defined by a geographic right to current and future customer volumes, though AMIs may encompass a broader geographic area beyond a customer’s existing leasehold acreage. Wellbore dedications are similar to acreage dedications; however, they limit the contractual obligations to a defined set of existing or future wells. Under our MVC agreements, our customers guarantee to deliver certain minimum volumes of produced water to our pipeline networks at an agreed-upon fee or pay a deficiency fee for the minimum volume that is not met for a specified period. In most cases, these contracts are covenant to the land and assets they encompass.

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The following table presents supplementary information regarding accounts receivable arising from rental agreements, accounts receivable related to contracts with customers and contract liabilities associated with contracts with customers. The Company did not have any contract assets during the periods presented. Contract liabilities of $1.8 million, $0.5 million, $2.3 million and $1.1 million at the beginning of the period were recognized as revenue during the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively.

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As of June 30, 

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As of December 31,

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2026

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2025

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(in thousands)

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Trade Accounts Receivable - Lease Arrangements (ASC 842)(1)

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$

25,246

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$

29,523

Trade Accounts Receivable - Revenue (ASC 606)(1)

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294,678

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234,505

Contract liabilities - Revenue (ASC 606)

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(14,313)

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(2,815)

(1)Trade accounts receivable is net of the allowance for credit losses and includes related party receivables.

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Accommodations and rentals revenue is included in the Water Services segment and the Company accounts for its accommodations and rentals agreements as an operating lease. The Company recognizes revenue from renting equipment on a straight-line basis. Accommodations and rental contract periods are generally daily, weekly or monthly. The average lease term is less than three months and as of June 30, 2026, there were no material rental agreements in effect lasting more than one year. During the Current Quarter, Prior Quarter, Current Period and Prior Period, approximately $27.0 million, $19.9 million, $48.4 million and $40.8 million, respectively, of accommodations and rentals revenue was accounted for under ASC 842 lease guidance. The Company had $33.2 million and $31.2 million of in-service and deployed machinery and equipment supporting rental income activities as of June 30, 2026 and December 31, 2025, respectively.

In the Chemical Technologies segment, the typical performance obligation is to provide a specific quantity of chemicals to customers in accordance with the customer agreement in an amount the Company expects to collect. Products and services are generally sold based upon customer orders or contracts with customers that include fixed or determinable prices. Revenue is recognized as the customer takes title to chemical products in accordance with the agreement. Products may be provided to customers in packaging or delivered to the customers’ containers through a hose. In some cases, the customer takes title to the chemicals upon consumption from storage containers on their property, where the chemicals are considered inventory until customer usage. In cases where the Company delivers products and recognizes revenue before collecting payment, the Company has an unconditional right to payment reflected in accounts receivable trade, net of allowance for credit losses. Customer returns are rare and immaterial and there were no material in-process customer agreements for this segment as of June 30, 2026, lasting greater than one year.

The following table sets forth certain financial information with respect to the Company’s disaggregation of revenues by geographic location:

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Three months ended June 30, 

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Six months ended June 30, 

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2026

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2025

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2026

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2025

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(in thousands)

Geographic Region

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Permian Basin

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$

215,508

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$

187,293

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$

411,539

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$

367,136

Rockies

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47,386

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39,041

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88,410

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88,626

Marcellus/Utica

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42,908

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44,466

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84,633

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87,021

Eagle Ford

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32,076

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36,019

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59,272

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78,713

Mid-Continent

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26,393

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23,162

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53,589

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47,746

Haynesville/E. Texas

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21,241

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12,688

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41,578

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27,948

Bakken

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14,612

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25,389

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29,427

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48,053

Eliminations and other regions

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(4,317)

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(3,843)

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(6,683)

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(6,644)

Total

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$

395,807

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$

364,215

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$

761,765

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$

738,599

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In the Water Infrastructure segment, the most recent top three revenue-producing regions are the Permian Basin, Haynesville and Bakken, which collectively comprised 89%, 87%, 88% and 85% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. In the Water Services segment, the most recent top three revenue-producing regions are the Permian Basin, Rockies and Marcellus/Utica, which collectively comprised 80%, 73%, 79% and 73% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. In the Chemical Technologies segment, the most recent top three revenue-producing regions are the Permian Basin, MidCon and Haynesville, which collectively comprised 87%, 79%, 88% and 79% of segment revenue for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively.

Non-cash consideration

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As part of a long-term agreement to receive and transport water that was executed in the Current Quarter, the Company received non-cash consideration in the form of saltwater disposal assets. The assets were measured at fair value at contract inception and included in the transaction price in accordance with ASC 606. Upon receipt, the Company recorded $14.0 million in property and equipment and a corresponding contract liability of $12.3 million, representing its obligation to provide future services. The Company also recorded $1.7 million of liabilities for required initial repairs. The contract liability will be recognized as revenue over the term of the agreement using a units-of-production method based on actual volumes transported, which reflects the pattern in which the customer receives and consumes the benefits of the services.