Solaris Midstream Holdings is ready to challenge the market with an IPO driven by environmentally-friendly values at its core.
An initial public offering (IPO) is in the works for ConocoPhillips affiliated with Solaris Water Midstream, a company whose water pipelines serve the oil and gas fracking industry in the U.S. The Texas-based company seeks to attract the attention of sensible investors with its sustainability pitch in the aim to expand its scale of operation and recycling capacity.
Extensive environmental degradation caused by fracking has gradually become a boiling point in the energy-linked industries. Fracking relies on water-bound chemicals and sand in order to release oil and gas, which caused it to be accused of destroying and polluting freshwater resources.
In the arid areas of the Permian Basin where Solaris operates, the consequences of such pollution are a life-threatening risk. In New Mexico and Texas in particular water shortages worsen as energy companies use huge amounts of groundwater while consumers struggle with droughts.
In the meantime Solaris has pledged to recycle up to 60% of the water it provides for fracking by 2022, an increase from 42.1% in 2020, and will continue to improve further. The company is confident that with its proposed water recycling system damages caused by fracking can be negated, with the hopes of making the process essentially environmentally friendly by 2030.
Solaris outlined these goals as part of a $400 million sustainability-backed bond that is issued in March. This makes Solaris the only company among its peers with concrete targets to increase recycled produced water.
Solaris is set to go public in New York in a confidential initial public offering (IPO). The listing may come as early as this year-end with a speculated value of more than 1 billion dollars. The company intends to attract investors who adhere to environmental, social, and corporate governance (ESG) initiatives. Not just in fracking, but in the energy sector as a whole, water is becoming an increasingly important issue.
Should they succeed, this would be the first public U.S. pipeline company to be listed in three years. The last one was Rattler Midstream in 2019 since the sector has been shunned by many investors because of its poor returns over the years, particularly among other industries such as technology.
While the water recuperation rates between U.S. companies and shale plays may shift significantly, the whole US industry nevertheless is expected to create a lot of challenges for the environment. According to a number of industry professionals, a large portion of the wastewater leaving the oil field in 2022 still won't be reused, instead being infused into disposal wells, and Solaris stands to revolutionize this practice.
For its part in this change, the Rextag platform also strives to include water produced from oil and gas wells. Water conservation is a key concern for oil & gas companies and their service providers. Connect with us to learn more about how Rextag's asset intelligence can contribute to your ESG performance.
