As producers seek to deliver on inves­tor demand for free cash flow from ongoing drilling operations and the reduction of debt, the industry has seen a rapid emergence of large-scale water management companies. Further, because most producers constructed their water infrastructure assets purely to service their own production, ineffi­ciencies and excess capacity on these systems became prevalent across the Permian Basin.

Armed with billions of dollars of non-de­ployed capital, private-equity-backed players have entered the water management market over the past few years to capitalize on both the increased efficiencies they could offer through the interconnection of these independent water systems and their operational expertise. The water companies’ desire for assets, coupled with the producers’ need for liquidity, has set the stage for the rapid emergence of a more so­phisticated water management industry.

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