ACQUISITIONS

9 Months Ended

Sep. 30, 2022

ACQUISITIONS

ACQUISITIONS

NOTE 3—ACQUISITIONS

Business combinations

The following table presents key information connected with our 2022 and 2021 acquisitions (dollars in thousands, except share amounts):

Assets and Operations Acquired	Acquisition Date	Shares Issued		Cash Consideration		Value of Shares Issued		Total Consideration	Segments
Nuverra	February 23, 2022	4,203,323	$	—	$	35,854	$	35,854	Water Services & Water Infrastructure
HB Rentals	December 3, 2021	1,211,375		2,610		7,135		9,745	Water Services
Agua Libre and Basic	October 1, 2021	902,593		16,394		4,684		21,078	Water Services & Water Infrastructure
Complete	July 9, 2021	3,600,000		14,356		20,304		34,660	Water Services & Water Infrastructure
Total		9,917,291	$	33,360	$	67,977	$	101,337

Nuverra Acquisition

On February 23, 2022, the Company completed the acquisition of Nuverra Environmental Solutions, Inc. (“Nuverra”) for total consideration of $35.9 million based on the closing price of the Company’s shares of Class A Common Stock on February 23, 2022 (the “Nuverra Acquisition”). Consideration transferred consisted of 4,203,323 shares of Class A Common Stock. The acquisition strengthened Select’s geographic footprint with a unique set of water logistics and infrastructure assets, particularly in the Bakken, Haynesville and Northeast, while continuing to expand Select’s production-related revenues. Select also acquired a 60-mile underground twin pipeline network in the Haynesville Shale in Texas and Louisiana. This pipeline network is used for the collection of produced water for transport to interconnected disposal wells and the delivery or re-delivery of water from water sources to operator locations for use in well completion activities. Additionally, Nuverra operates a landfill facility in North Dakota located on a 50-acre site. The facility provides a unique opportunity for Select to expand its logistics capabilities into a new service offering. The acquisition is expected to result in a bargain purchase gain based on our preliminary evaluation, as Nuverra was experiencing financial distress and actively evaluating strategic alternatives leading up to the transaction.

The Nuverra Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made estimates, judgments and assumptions. The Company has engaged third-party valuation experts to assist in the purchase price allocation. These estimates, judgments and assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities have not been finalized as of September 30, 2022. The Nuverra debt, including accrued interest, totaled $18.8 million, and was repaid during the Current Period after the acquisition was completed. The assets acquired and liabilities assumed are included in the Company’s Water Services and Water Infrastructure segments. The Company incurred $0.5 million and $3.6 million of transaction-related costs related to this acquisition in the Current Quarter and Current Period, respectively, and such costs are included in selling, general and administrative within the consolidated statements of operations.

The Company assumed $1.6 million of severance liabilities in connection with the Nuverra acquisition and $0.1 million is included in accrued salaries and benefits as of September 30, 2022.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition:

Preliminary purchase price allocation	As Reported as of June 30, 2022		Current Quarter Adjustment		Amount
Consideration transferred	(in thousands)
Class A Common Stock (4,203,323 shares)	$	35,854	$	—	$	35,854
Total consideration transferred		35,854		—		35,854
Less: identifiable assets acquired and liabilities assumed
Working capital		7,818		(117)		7,701
Property and equipment		65,138		—		65,138
Right-of-use assets		2,931		—		2,931
Other long-term assets		100		—		100
Long-term debt		(18,780)		—		(18,780)
Long-term ARO		(12,980)		—		(12,980)
Long-term lease liabilities		(1,189)		—		(1,189)
Total identifiable net assets acquired		43,038		(117)		42,921
Bargain Purchase Gain		(7,184)		117		(7,067)
Fair value allocated to net assets acquired, net of bargain purchase gain	$	35,854	$	—	$	35,854

HB Rentals Acquisition

On December 3, 2021, the Company, through its subsidiary Peak Oilfield Services, LLC, completed the acquisition of certain assets of H.B. Rentals, L.C. (“HB Rentals”), an operating subsidiary of Superior Energy Services, Inc. (“Superior”), for total initial consideration of $8.7 million based on the closing price of the Company’s shares of Class A Common Stock on December 2, 2021 (the “HB Rentals Acquisition”). Consideration transferred consisted of 1,211,375 shares of Class A Common Stock and $1.5 million in cash. The Company paid $1.1 million on April 1, 2022, representing the final working capital settlement. The Company acquired the U.S. onshore assets of HB Rentals, including working capital. This acquisition strengthened the Company’s accommodations and rentals footprint in the Permian, Haynesville, MidCon, Northeast and Rockies regions and added revenue-producing fixed assets including a significant number of skid houses and trailer houses. The acquisition resulted in a bargain purchase gain in part due to the seller recently emerging from bankruptcy and deciding to divest domestic assets and operations and focus on international operations.

The HB Rentals Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made estimates, judgments and assumptions. These estimates, judgments and assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities were finalized as of June 30, 2022. The assets acquired and liabilities assumed are included in the Company’s Water Services segment. The Company incurred $0.1 million of transaction-related costs related to this acquisition in the Current Period, and such costs are included in selling, general and administrative within the consolidated statements of operations.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition:

Purchase price allocation	As Reported as of December 31, 2021		Current Period Adjustment		Amount
Consideration transferred	(in thousands)
Class A Common Stock (1,211,375 shares)	$	7,135	$	—	$	7,135
Cash paid		1,526		—		1,526
Final working capital settlement		—		1,084		1,084
Total consideration transferred		8,661		1,084		9,745
Less: identifiable assets acquired and liabilities assumed
Working capital		29		880		909
Property and equipment		14,091		929		15,020
Right-of-use assets		1,316		—		1,316
Long-term lease liabilities		(835)		—		(835)
Total identifiable net assets acquired		14,601		1,809		16,410
Bargain Purchase Gain		(5,940)		(725)		(6,665)
Fair value allocated to net assets acquired, net of bargain purchase gain	$	8,661	$	1,084	$	9,745

Agua Libre Midstream and water-related assets from Basic Energy Services Acquisition

On October 1, 2021, the Company completed the acquisition of certain assets of Agua Libre Midstream, LLC (“Agua Libre”) and other water-related assets, operations and assumed liabilities from Basic Energy Services, Inc. (“Basic”) for total initial consideration of $21.1 million based on the closing price of the Company’s shares of Class A Common Stock on September 30, 2021 (the “Agua Libre and Basic Acquisition”). Consideration transferred consisted of 902,593 shares of Class A Common Stock and $16.4 million in cash. The Company acquired substantially all of the water-related assets and ongoing operations of Agua Libre and Basic, including working capital. With this acquisition, the Company acquired a solid production services footprint in Texas, New Mexico, Oklahoma and North Dakota, as well as more than 550,000 barrels per day of permitted disposal capacity. The acquisition resulted in a bargain purchase gain as the seller was distressed and decided to divest its assets and operations to multiple buyers as operations were wound down and the business was shuttered.

The Agua Libre and Basic Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made estimates, judgments and assumptions. The Company also engaged third-party valuation experts to assist in the purchase price allocation. These estimates, judgments and assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities have been finalized as of September 30, 2022. The assets acquired and liabilities assumed are included in the Company’s Water Services and Water Infrastructure segments. The Company incurred $1.4 million, $0.6 million and $1.4 million of transaction-related costs related to this acquisition in the Prior Quarter, Current Period and Prior Period, respectively, and such costs are included in selling, general and administrative within the consolidated statements of operations.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition:

Purchase price allocation	As Reported as of December 31, 2021		Current Period Adjustment		Amount
Consideration transferred	(in thousands)
Class A Common Stock (902,593 shares)	$	4,684	$	—	$	4,684
Cash paid		16,394		—		16,394
Total consideration transferred		21,078		—		21,078
Less: identifiable assets acquired and liabilities assumed
Working capital		(506)		37		(469)
Property and equipment		41,000		6,330		47,330
Right-of-use assets		309		—		309
Long-term ARO		(15,810)		—		(15,810)
Long-term lease liabilities		(281)		10		(271)
Total identifiable net assets acquired		24,712		6,377		31,089
Bargain Purchase Gain		(3,634)		(6,377)		(10,011)
Fair value allocated to net assets acquired, net of bargain purchase gain	$	21,078	$	—	$	21,078

Complete Energy Services Acquisition

On July 9, 2021, the Company completed the acquisition (the “Complete Acquisition”) of Complete Energy Services, Inc. (“Complete”), an operating subsidiary of Superior Energy Services, Inc. (“Superior”) for initial consideration of $34.5 million based on the closing price of the Company’s shares of Class A Common Stock on July 9, 2021. Consideration transferred consisted of 3.6 million shares of Class A Common Stock and $14.2 million in cash. In October 2021, the Company paid $0.2 million related to the settlement of the working capital which resulted in a final purchase price of $34.7 million. The Company acquired substantially all of the water-related assets, liabilities and ongoing operations of Complete as well as Superior’s well testing operations, including working capital. Superior retained certain non-core and non-water-related assets that were part of Complete as part of the transaction. This acquisition expanded the Company’s water-related services and infrastructure footprint and strengthened the geographic footprint, particularly in the Mid-Continent, Permian and Rockies. The acquisition resulted in a bargain purchase gain in part due to the seller recently emerging from bankruptcy and deciding to divest domestic assets and operations and focus on international operations.

The Complete Acquisition was accounted for as a business combination under the acquisition method of accounting. When determining the fair values of assets acquired and liabilities assumed, management made estimates, judgments and assumptions. The Company also engaged third-party valuation experts to assist in the purchase price allocation. These estimates, judgments and assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities were finalized as of June 30, 2022. The assets acquired and liabilities assumed are included in the Company’s Water Services and Water Infrastructure segments. The Company incurred $0.9 million, $0.4 million and $1.0 million of transaction-related costs related to this acquisition in the Prior Quarter, Current Period and Prior Period, respectively, and such costs are included in selling, general and administrative within the consolidated statements of operations.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition:

Purchase price allocation	As Reported as of December 31, 2021		Current Period Adjustment		Amount
Consideration transferred	(in thousands)
Class A Common Stock (3,600,000 shares)	$	20,304	$	—	$	20,304
Cash paid		14,356		—		14,356
Total consideration transferred		34,660		—		34,660
Less: identifiable assets acquired and liabilities assumed
Working capital		15,783		(200)		15,583
Property and equipment		36,761		(201)		36,560
Right-of-use assets		3,331		—		3,331
Other long-term assets		24		—		24
Long-term ARO		(9,800)		—		(9,800)
Long-term lease liabilities		(2,028)		—		(2,028)
Total identifiable net assets acquired		44,071		(401)		43,670
Bargain Purchase Gain		(9,411)		401		(9,010)
Fair value allocated to net assets acquired, net of bargain purchase gain	$	34,660	$	—	$	34,660

Contingent Consideration

In connection with an August 2021 business combination, the Company recorded a $1.1 million contingent earn-out liability. The maximum earn-out is $1.6 million, dependent on revenue generated in the first and second 12-month periods following the acquisition, beginning on October 1, 2021. This liability was $1.1 million as of both September 30, 2022 and December 31, 2021, is entirely related to the second 12-month period following the acquisition, and is recorded in other long-term liabilities in the accompanying consolidated balance sheets.