Aris Water Solutions is a Fast-Growing Dividend-Payer Worth a Close Look

Photo of author
Written By Faith Boluwatife

Aris Water Solutions is a fast-growing, dividend-paying company that appears significantly undervalued, with its environmental credentials overlooked due to its operations within the oil and gas industry.

Aris’s Expanding Revue and Margins

Credits: DepositPhotos

Aris has been expanding its revenue and margins by investing in its footprint and enhancing research and development to optimize the yield from recycled produced water for the oil industry. With a robust pipeline infrastructure in the Permian basin, Aris has established a competitive moat and secures long-term contracts with large, investment-grade oil companies.

These contracts typically include six-month termination clauses, ten-year terms, and CPI adjustment clauses. Aris profits by reducing the environmental impact of oil and gas drilling, offering valuable services to the industry.

Market Overview

By 2030, the U.S. petrochemical industry is forecast to produce 60 million barrels per day (mbpd) of water containing high concentrations of dissolved solids, hydrocarbons, and other contaminants. Traditionally, this produced water has been disposed of in deep wells, but environmental regulations are tightening, necessitating better water management, treatment, and recycling.

Aris plays a crucial role in the Department of Energy’s plans to improve produced water management, working closely with ConocoPhillips, a key customer and investor.

Aris went public in 2021 and operates two main divisions: one for collecting, transporting, and handling produced water, and another for treating, storing, and recycling it. The company has secured numerous long-term contracts with investment-grade companies, ensuring a stable revenue stream.

Infrastructure and Operations

Aris operates 745 miles of produced water pipelines, 66 handling facilities, and 23 recycling facilities in the Permian basin. With permits in place to double its current footprint, Aris is well-positioned for future growth. In Q1 2024, the company guided for 1.03 mbpd of produced water and 415,000 bpd of water solutions sales, representing less than 3% of the potential market in the Permian basin.

Aris is also engaged in research into produced water treatment, including reverse osmosis systems, and has received a Department of Energy grant for research on using treated produced water for irrigation.

The company is building desalination pilot plants in collaboration with major oil companies to extract high-value minerals and expand water reuse opportunities.

Financial Performance

Aris has shown impressive financial growth, with revenue up nearly 300% over five years. In 2023, the company generated positive free cash flow and achieved record operating margins. Long-term contracts provide 80% of revenue from ongoing oil production, offering strong revenue visibility.

Despite a high debt-to-equity ratio of 59%, Aris has strong operating cash flow, allowing it to service its debt comfortably. The company’s balance sheet is heavily weighted towards long-term infrastructure, providing a competitive advantage but limiting liquidity.


A discounted cash flow (DCF) model suggests that Aris is significantly undervalued, with a fair value estimate of $24.7, indicating more than 50% upside. The model assumes reduced CAPEX in 2024, reflecting the end of the initial pipeline buildout, and a gradual increase in CAPEX thereafter to continue expanding infrastructure.

Dividends and Shareholder Returns

Aris has been paying dividends since Q2 2022, with a recent increase to $0.105 per share, yielding 2.7%. The company’s strong cash flow and reduced CAPEX needs suggest that dividends will continue to grow, potentially reaching a yield of 4% by the end of the decade.

Risks and Conclusion

Credits: DepositPhotos

Despite its environmental benefits, Aris operates within the oil and gas industry, exposing it to regulatory, market, and environmental risks. Regulations such as the Clean Water Act and Superfund law could impose liabilities and operational restrictions.

Additionally, the company’s reliance on the Permian basin, where production could peak soon, presents a risk. However, consolidation among operators and increased recycling requirements could mitigate this threat.

Aris Water Solutions presents a compelling investment opportunity with its extensive infrastructure, long-term contracts, and focus on environmental sustainability. The company’s strong balance sheet, positive cash flow, and dividend growth potential make it an attractive medium-term investment.


You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.

The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at; the Financial Industry Regulatory Authority (the "FINRA") at, and relevant State Securities Administrator website and the OTC Markets website at The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.

The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.

By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: and

By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.