Western Midstream Partners LP Q3 FY2024 earnings call

Third Quarter Performance

• Operationally successful quarter with operability above 98% despite elevated plant turnaround activity. Natural gas throughput increased sequentially, produced water volumes increased. Adjusted EBITDA declined relative to second quarter due to factors like decreased NGL volume, lower commodity pricing, etc. Expect adjusted EBITDA to increase in fourth quarter.

Commercial Development

• Executed new agreements for Mi Vida joint venture to realign commercial structure, providing 100 million cubic feet per day of dedicated natural gas processing capacity starting mid-2025.

Capital Allocation

• Options include investing in organic growth projects, accretive M&A, and increasing base distribution. Issued $800 million of new senior notes for debt retirement and general partnership purposes.

Financial Guidance

• Still expect to be at high end of 2024 adjusted EBITDA and free cash flow guidance ranges. 2025 throughput growth expected to moderate, with volumes and fee revenue impacts from asset sales.

Natural gas throughput increased sequentially with robust growth in Powder River Basin and seventh consecutive quarter of record natural gas throughput in Delaware Basin. Crude oil and NGL throughput declined sequentially due to DJ Basin, Wamsutter oil pipeline sale, etc., but had record volumes in Delaware and Powder River Basins. Produced water volumes increased quarter-over-quarter despite elevated recycling. Third quarter per Mcf adjusted gross margin for natural gas assets decreased due to lower NGL recoveries and commodity pricing. Per barrel adjusted gross margin for crude oil and NGL assets decreased due to timing of equity investment distributions. Per barrel adjusted gross margin for produced water assets was flat. Expect adjusted EBITDA to increase in fourth quarter due to higher Delaware Basin throughput and lower operating/maintenance expense. For the year, still expect to be at high end of adjusted EBITDA and free cash flow guidance ranges. 2025 throughput growth expected to moderate relative to 2024, with volumes lost from asset sales and fee revenue reduction.

2024 Guidance

• Still expect to be towards the high end of adjusted EBITDA range ($2.2 billion to $2.4 billion) and free cash flow range ($1.05 billion to $1.25 billion) for the year. Full year capital expenditure guidance range remains $700 million to $850 million. Achieved full year base distribution guidance of at least $3.20 per unit.

2025 Guidance

• Throughput growth rates for all products expected to moderate relative to 2024. 2025 throughput will not include volumes from non-core asset sales. Expect $20 million reduction in 2025 fee revenue. 2025 financial guidance to be provided in late-February when reporting fourth quarter earnings.

• Commodity price fluctuations could impact adjusted EBITDA. - Operational disruptions such as plant turnarounds may affect performance. - Regulatory changes could potentially impact the business environment for oil and gas operations.

Q: Jeremy Tonet at JPMorgan asked about the abrupt CEO transition.

A: Oscar Brown said it's been smooth, he's worked with Michael since 2016, views on capital allocation are same, Michael is focusing on faith, family, etc., and it's an opportune time for new path.

Q: Manav Gupta at UBS asked about consolidation in Delaware Basin and regulatory outlook.

A: Oscar Brown said midstream M&A environment is robust, WES will continue to look at M&A disciplinedly, organic growth may win in tie, and new administration is likely more friendly to oil and gas, benefiting midstream space.

Q: Keith Stanley at Wolfe Research asked about Delaware Basin volume growth moderation and Navita contracting.

A: Kristen Shults said 2025 volume growth moderation due to past activity levels and no 2024-like acquisition, Danny Holderman said Movida processing plant is one of lower utility areas.

Q: Zach Van Everen at TPH asked about cost of service contracts and crude assets in DJ and Eagle Ford.

A: Kristen Shults said early to update on cost of service, and it relates to 2025 forecast; on crude assets, it's about deficiency revenues and contract step changes.

Q: Ned Baramov at Wells Fargo asked about volume outlook for DJ exceeding MVCs and board seat.

A: Kristen Shults said MVC breakthrough likely longer-term; Oscar Brown said board has seven members, may add independent director.

Q: Neel Mitra at Bank of America asked about Movida plant in super system and processing plants beyond North Loving.

A: Danny Holderman said Movida plant is lower utility area; Oscar Brown said philosophy is to work with customers, no immediate new plants but will look at if makes sense for customers and returns.