Aris Water Solutions, Inc. (ARIS): A Bull Case Theory

Ricardo Pillai

Mon, Jun 9, 2025, 6:32 AM 3 min read

We came across a bullish thesis on Aris Water Solutions, Inc. (ARIS) on DualEdgeInvest’s Substack. In this article, we will summarize the bulls’ thesis on ARIS. Aris Water Solutions, Inc. (ARIS)'s share was trading at $24.12 as of 3^rd June. ARIS’s trailing and forward P/E were 29.06 and 18.15 respectively according to Yahoo Finance.

An aerial view of a water treatment plant, emphasizing the use of reverse osmosis technology.

Aris Water Solutions is carving out a niche as a small-cap water midstream player in the Permian Basin, addressing one of oil production’s dirtiest byproducts, produced water. With 50% of its revenue tied to ConocoPhillips and Chevron and a key 22% equity stake held by the former, Aris benefits from deep industry entrenchment and alignment of interests.

Aris’s business remains anchored in water handling, but it's expanding into recycling, reuse, and mineral recovery, with revenue from skim oil alone jumping 68% between 2022 and 2024. Backed by $178 million in operating cash flow on $435 million in revenue—a strong 41% conversion—Aris is reinvesting in scalable infrastructure, highlighted by acquisitions like Delaware Energy Services and the McNeill Ranch.

Aris Water Solutions is positioning itself as both a forward-looking innovator and a grounded infrastructure operator through a deliberate two-pronged investment strategy. On the intangible front, Aris is building a moat in water treatment technology. The 2025 acquisition of Crosstek Membrane Technology marked a strategic step into industrial and non-oil wastewater markets, following its 2022 purchase of patented systems from Water Standard Management.

Regulatory tailwinds and limited interest rate sensitivity further reduce risk. While customer concentration and capex variability make forecasting tricky, management’s strategy of tech-led expansion and infrastructure growth supports long-term upside. With expected FCFF growth near 10% and an IRR of ~11%, Aris looks like a promising, if under-the-radar, play on sustainable oilfield infrastructure.

Previously we have covered a bullish thesis on American Water Works Company, Inc. (AWK) by Max Dividends on Substack in October 2024 which operates in the same industry as Aris Water Solutions, Inc. (ARIS). The thesis considers American Water Works (NYSE: AWK), the largest and most geographically diverse U.S. water utility, combines 17 years of consecutive dividend growth, strong financial health, and a conservative payout ratio to offer investors a rare blend of stability and long-term income growth in the utility sector. At that time the stock was trading at $137.66 which has since then appreciated by approximately 3%.