Company: WBI
Filing Date: 2025-08-22
Form Type: S-1
Source: 0000950170-25-111048
Chunk: 406

Company: WaterBridge Infrastructure LLC
Filing Date: 2025-08-22
Form: S-1
Chunk 406
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 a reduction of long-term debt on the consolidated balance sheets. Debt issuance costs associated with the Company’s revolving credit facility are deferred and presented within prepaid expenses and other current assets and other assets on the consolidated balance sheets. Refer to Note 7 –Debtfor further information.

Asset Retirement Obligations

The fair value of a liability for an asset retirement obligation (“ARO”) is recognized in the period in which it is incurred. These obligations are those for which we have a legal obligation for settlement. The fair value of the liability is added to the carrying amount of the associated asset. The Level 3 inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, inflation rates, credit-adjusted risk-free rate, and expected abandonment dates. This additional carrying amount is then depreciated over the period remaining to the expected abandonment date. The liability increases due to the passage of time based on the time value of money until the obligation is settled. Our ARO relates primarily to the dismantlement, removal, site reclamation and similar activities of our pipelines, water handling facilities and associated operations. Our asset retirement obligations are included within other long-term liabilities on the consolidated balance sheets. Refer to Note 3 –Additional Financial Statement Informationfor further information.

Derivatives

Derivative instruments are recorded on the consolidated balance sheets as either assets or liabilities measured at their fair values. Changes in the fair value of our derivative instruments are recorded in earnings, unless we elect to apply hedge accounting and meet specified criteria. The Company did not designate any derivative instruments as cash flow or fair value hedges as of December 31, 2024, and 2023.

Embedded derivatives

The Company evaluates its contracts to determine whether embedded features exist that require bifurcation and separate accounting from the related host contract under ASC 815 – Derivatives and Hedging. All embedded derivatives identified are initially recorded at fair value and subsequently remeasured at fair value at the end of each reporting period, with changes in fair value recognized in earnings. The Series A-1 Preferred Units contained redemption features that required separate accounting as embedded derivatives. As discussed further in Note 10 –Mezzanine Equity, the Series A-1 Preferred Units were redeemed under an arrangement other than the terms of the embedded derivative, resulting in a final measurement of the embedded derivative of zero on the redemption date of the Series A-1 Preferred Units. As a result, the company recognized a gain on derivative instrument of $4.5 million for the year ended December 31