Select Water Solutions has strengthened its Northern Delaware Basin infrastructure position through a new seven-year agreement with a large publicly traded oil and gas operator.
The agreement is supported by a minimum-volume commitment covering 128 million barrels of produced water. It also includes the transfer of 14 saltwater disposal wells located across Eddy and Lea counties in New Mexico.
Select plans to connect these disposal wells to its existing water infrastructure network. The associated project is expected to require approximately $25 million to $30 million of capital and become operational within 12 months.
The agreement gives Select additional contracted water volumes, disposal capacity and pipeline infrastructure in one of the most active oil-producing regions in the United States.
Agreement highlights
| Agreement detail | Description |
|---|---|
| Contract term | Seven years |
| Minimum-volume commitment | 128 million barrels |
| Transferred assets | 14 saltwater disposal wells |
| Primary location | Eddy and Lea counties, New Mexico |
| Estimated investment | $25 million to $30 million |
| Expected construction period | Approximately 12 months |
| Strategic purpose | Expand Select’s recycling and disposal network |
The operator was not identified during Select’s Q2 2026 earnings call.
Why the disposal wells matter
The transferred saltwater disposal wells were previously underutilized by the operator. Select believes they will become more valuable when connected to its broader Northern Delaware water network.
Select’s system is designed around a “recycling first” strategy. Produced water is collected and treated for reuse in drilling and completion operations whenever possible. When recycling demand is unavailable or the system approaches its recycling capacity, excess water can be routed to disposal wells.
Connecting additional disposal capacity should help Select:
- Increase the reliability of its water network.
- Operate recycling facilities at higher utilization rates.
- Provide customers with firm produced-water takeaway capacity.
- Accommodate fluctuations in completion schedules.
- Accept additional volumes from third-party operators.
- Expand its infrastructure toward the Texas–New Mexico border.
The larger and more interconnected the system becomes, the easier it is for Select to move water between operators, recycling facilities, storage locations and disposal wells.
New Mexico permitting supports long-term water demand
New Mexico remains one of the most active areas for new oil and gas development. A dataset of 2026 New Mexico well permits contains 1,882 records.
Eddy and Lea counties—the two counties directly associated with Select’s new agreement—account for 1,780 permits, or 94.6% of the statewide dataset.
New Mexico well permits by county
| County | Permit records | Share of total |
|---|---|---|
| Eddy | 971 | 51.6% |
| Lea | 809 | 43.0% |
| San Juan | 36 | 1.9% |
| Sandoval | 30 | 1.6% |
| Rio Arriba | 27 | 1.4% |
| Roosevelt | 6 | 0.3% |
| Chaves | 3 | 0.2% |
| Total | 1,882 | 100.0% |
This concentration is important for water infrastructure providers. Every new horizontal oil well can create demand for freshwater or recycled water during completion and generate produced water over the life of the well.
The high level of permitting in Eddy and Lea counties therefore supports the need for additional pipelines, recycling facilities, storage capacity and disposal infrastructure.
Oil wells dominate the permit dataset
Oil wells represent more than 80% of the New Mexico permit records.
New Mexico permits by well type
| Well type | Permit records | Share of total |
|---|---|---|
| Oil | 1,510 | 80.2% |
| Gas | 356 | 18.9% |
| Not specified | 7 | 0.4% |
| Disposal | 3 | 0.2% |
| Injection | 3 | 0.2% |
| Other | 3 | 0.2% |
| Total | 1,882 | 100.0% |
The dataset contains three wells classified as disposal and three classified as injection. The Field column identifies these six records as SWD-related wells.
Although only a small number of new SWD permits appear in the dataset, Select’s agreement involves the transfer of 14 existing disposal wells. This demonstrates another way water companies can expand capacity: acquiring and integrating underutilized infrastructure rather than relying entirely on newly permitted facilities.
Leading New Mexico operators
New Mexico permit activity is concentrated among several large operators. The top five accounts represent 1,134 records, or 60.3% of the dataset.
Top five accounts by permit count
| Rank | Account | Permit records | Share of total |
|---|---|---|---|
| 1 | Permian Resources Corporation | 362 | 19.2% |
| 2 | Devon Energy Corporation | 288 | 15.3% |
| 3 | EOG Resources, Inc. | 197 | 10.5% |
| 4 | Exxon (XTO) | 147 | 7.8% |
| 5 | Matador Resources Company | 140 | 7.4% |
The identity of the operator behind Select’s seven-year agreement was not disclosed. The permit rankings should therefore be viewed as an indication of overall operator activity—not as evidence identifying the contracting customer.
A network built for additional customers
The new pipeline extension is being developed around the needs of the anchor customer, but Select intends to install enough capacity to serve other operators.
This is a central part of the company’s infrastructure strategy. Select frequently builds pipelines with more capacity than the initial contracted customer requires. It can then commercialize the unused capacity through:
- Additional minimum-volume commitments.
- Acreage dedications.
- Interruptible water-transport agreements.
- Third-party disposal volumes.
- Additional recycling customers.
These incremental volumes can carry attractive margins because much of the initial infrastructure investment has already been made.
Management indicated that utilization should continue to increase even without additional capital spending as customers develop their acreage and more operators connect to the system.
Supporting Select’s growth into 2027
Select’s Water Infrastructure segment generated record quarterly revenue of $102 million in Q2 2026, an increase of 26% compared with the same quarter of 2025.
The segment handled approximately 1.5 million barrels of produced water per day and reported a 58% gross margin before depreciation and amortization.
Management expects Water Infrastructure revenue to finish 2026 near the upper end of its 25% to 30% annual growth target. The company is also forecasting another year of double-digit Infrastructure growth in 2027.
Because the newly announced project will take approximately 12 months to complete and may require an additional optimization period, its financial contribution should become more meaningful in late 2027 and subsequent years.
Outlook
Select’s seven-year agreement combines long-term contracted volumes with strategic infrastructure expansion in the heart of New Mexico’s most active oil-producing region.
The 128-million-barrel commitment provides revenue visibility, while the 14 transferred disposal wells give Select greater control over produced-water takeaway and network reliability. Extending the system toward the Texas–New Mexico border also creates opportunities to connect additional operators and infrastructure.
With 94.6% of New Mexico’s 2026 permit records concentrated in Eddy and Lea counties, the agreement positions Select directly alongside the drilling and completion activity expected to generate future water-management demand.
For oilfield service companies, equipment suppliers and water-management providers, Select’s expansion could create opportunities connected to pipeline construction, pumps, storage, water treatment, automation, disposal-well services, maintenance and ongoing field operations.
Author: phinds