Select Water Solutions Inc

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Select Water Solutions, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Select Water Solutions, Inc. (formerly known as Select Energy Services, Inc.) (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 21, 2024 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Realizability of deferred tax assets

As described further in Note 15 to the consolidated financial statements, deferred tax assets are reduced by a valuation allowance if, based on the evaluation of positive and negative evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. As of December 31, 2023, management concluded that sufficient positive evidence existed to release a portion of its valuation allowance related to its deferred tax assets, resulting in a deferred income tax benefit of $62 million for the year ended December 31, 2023. The assessment of the realizability of deferred tax assets requires management to make significant estimates and assumptions related to forecasts of future profitability. Changes in these assumptions could materially affect the assessment of the realizability of deferred tax assets and whether they are more likely than not to be realized in the future. We identified the realizability of deferred tax assets as a critical audit matter.

The principal consideration for our determination that the realizability of deferred tax assets is a critical audit matter is that management utilized significant judgment in determining that the net deferred tax assets are more likely than not to be realized in the future. In turn, auditing management’s judgments regarding the future realizability of deferred tax assets involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the realizability of deferred tax assets included the following, among others:

Measurement of the tax receivable agreement (“TRA”) liabilities

As described further in Note 14 to the consolidated financial statements, the Company has two tax receivable agreements, which are contractual commitments to pay 85% of any tax benefits (“TRA Payments”), realized or deemed to be realized by the Company, to the parties of the TRAs pursuant to certain terms and conditions described in the TRAs. The assessment of the TRA liabilities is based on the estimated amount of forecasted payments expected to be made to the parties of the TRAs that have been determined to be probable of occurring and requires management to make significant estimates and assumptions related to forecasts of future profitability. Changes in these assumptions could materially affect the assessment of the amount of TRA Payments and whether such payments are probable of occurring. As of December 31, 2023, the Company recognized TRA liabilities of $38 million. We identified measurement of the TRA liabilities as a critical audit matter.

The principal consideration for our determination that the measurement of the TRA liabilities is a critical audit matter is that management utilized significant judgment in determining the measurement of the TRA liabilities. In turn, auditing management’s judgments regarding the future profitability and amount of TRA liabilities involved a high degree of subjectivity due to the estimation uncertainty of management’s significant judgments.

Our audit procedures related to the measurement of the TRA liabilities included the following, among others:

/s/GRANT THORNTON LLP

We have served as the Company’s auditor since 2016.

Dallas, Texas

February 21, 2024