Junction is a Permian Basin water services company focused on the production and sale of freshwater and saltwater disposal (“SWD”). Junction’s existing assets are located in the core of the Midland Basin and surrounded by a variety of high-quality operators. Junction owns approximately 2,500 net surface acres where it has developed significant water infrastructure and capabilities to service nearby operators. Such development includes water wells, water storage pits, pipelines, SWD wells, and other water-related assets, which service both the front-end (used to drill new wells) and back-end (used to dispose toxic saltwater) segments of the water market.

It typically takes 1-2 years to create a water operation like Junction. Off Road invested at a time when certain assets were already developed, effectively bypassing a portion of the ramp up period, limiting execution risk. Off Road believed that Junction is located in a high-quality drilling area, characterized by low breakeven costs. The water business is less capital intensive than traditional oil and gas projects. Junction is unlevered with a low fixed costs, high margin profile. Furthermore, Junction owns the surface area acreage, or land, which potentially provides long-term option value in a prolonged downturn in the form of collateral value and limits the complete loss of capital in a downside scenario. Owning the land rather than leasing, as most water companies do, also provides Junction with a significant cost advantage to sell or dispose water at a meaningful discount to competitors.