Select Water Solutions has agreed to acquire Delaware Basin-focused water midstream operator Pilot Water Solutions for $700 million, lifting the buyer's active permitted disposal capacity (PDC) by 2.7 million barrels per day (mbbl/d) and adding more than 700 miles of gathering pipelines to its Permian network.

Under the terms announced by the New York Stock Exchange-listed acquirer, Select will pay $600 million in cash and $100 million in Class A common stock on a debt-free basis. Up to $15 million in contingent cash is payable on operational milestones in early 2027. The share component is sized off Select's 30-day volume-weighted average price ahead of closing, with a six-month price-protection cash true-up.

What does Select acquire in the Delaware Basin?

Pilot Water operates 2.7 mbbl/d of active permitted disposal capacity and 900,000 bpd of undeveloped PDC, more than 700 miles of pipelines and 57 mbbl of storage. More than 80% of its produced-water volumes originate in the Delaware Basin, with the remainder drawn from the Midland, Eagle Ford, Haynesville, Rockies and Northeast.

Long-term contracts averaging more than seven years back more than 80% of annual revenue. The contracted book includes 480,000 bpd in volume commitments and 306,000 dedicated acres. Handled volumes are projected to reach 1 mbbl/d during 2027, a step-up anchored by a new 175,000 bpd minimum volume commitment contract that Select has already underwritten.

"We are excited to announce our agreement to acquire Pilot Water Solutions, a leading private water midstream company with a core position in the Delaware Basin," chairman, president and CEO John Schmitz said. "We expect this acquisition to further solidify Select's position as a diversified, market-leading water midstream platform operating across the US."

How will the combined platform perform?

Pilot Water is forecast to generate $100 million to $110 million of adjusted EBITDA in 2026, climbing to $120 million to $130 million in 2027 on the new MVC contract alone. Select has identified $10 million to $15 million in annual run-rate cost synergies achievable within 12 to 18 months of closing, drawn from duplicated G&A, logistics and saltwater disposal operations across the overlapping acreage.

On a pro forma basis, water infrastructure is forecast to account for roughly 70% of Select's profitability by 2027. The combined entity will run 3.8 mbbl/d of recycling capacity, 4.8 mbbl/d of total disposal capacity, more than 1,600 miles of pipelines and 57 mbbl of storage. Handled throughput is expected to clear 2.5 mbbl/d across 3.6 million dedicated acres in 2027.

Pro forma net leverage is expected to remain below 2.0x at closing, leaving Select with balance-sheet headroom against its 2027 EBITDA range.

When does the deal close and what funds it?

The transaction is scheduled to close in the fourth quarter of 2026, subject to Hart-Scott-Rodino Act antitrust clearance. JP Morgan Chase Bank and Bank of America have committed debt financing for the cash leg, alongside Select's cash reserves. JP Morgan Securities and BofA Securities advised Select, with Vinson & Elkins acting as legal counsel.

Schmitz framed the addition as accretive and production-tied. "Select will add highly contracted, production-related earnings streams at an accretive valuation in the heart of the Delaware Basin," he said.

Watch item: HSR clearance outcome and Select's 30-day VWAP at signing, which will set the share-consideration denominator for the $100 million Class A component.