Western Midstream Partners, LP Q1 FY2026 earnings call

• Record adjusted EBITDA of $683 million, up 7% sequentially and 15% year over year, driven by ARIS acquisition full quarter contribution, throughput growth across product lines, and cost reduction efforts. • Announced $1.6 billion acquisition of Brazos Delaware II, which expands Delaware Basin footprint, adds durable fee-based earnings, diversifies customer base, and is financially attractive. • First quarter net income attributable to limited partners $342 million, distributable cash flow $509 million. • Operational performance: natural gas throughput increased 1% sequentially, crude oil and NGL throughput increased 3% sequentially, produced water throughput increased 4% sequentially. Expectations for second quarter performance and full year throughput trends discussed. • Cost reduction efforts have improved operating leverage, with operation and maintenance expense expected to increase moderately but with combined company reduction.

In the first quarter, Western Midstream reported record adjusted EBITDA of $683 million, increasing 7% sequentially and 15% year over year. The Delaware Basin continued to perform exceptionally well with natural gas throughput increasing 3% sequentially to slightly over 2 billion cubic feet per day, crude oil and NGL throughput at 272,000 barrels per day (up 4% sequentially and 6% year over year), and produced water throughput increasing 4% sequentially. Adjusted gross margin for natural gas assets increased six cents sequentially, for crude oil and NGL assets increased 30 cents, and for produced water assets increased 7 cents. Guidance for 2026 adjusted EBITDA is towards the high end of $2.5 billion to $2.7 billion range, distributable cash flow towards high end of $1.85 billion to $2.05 billion range, free cash flow between $900 million and $1.1 billion, capital expenditures between $850 million to $1 billion.

• Not updating annual guidance ranges currently but expect to be towards high end of adjusted EBITDA and distributable cash flow ranges without Brazos transaction impact. • Intend to reevaluate 2026 guidance ranges with second quarter results after Brazos transaction close. • Expect 2026 adjusted EBITDA in $2.5 billion to $2.7 billion range, distributable cash flow in $1.85 billion to $2.05 billion range, free cash flow between $900 million and $1.1 billion, capital expenditures between $850 million to $1 billion. • First quarter distribution of $0.93 per unit, on track for full year guidance of at least $3.70 per unit.

• Uncertainty regarding producers' drilling plans affecting adjusted EBITDA and distributable cash flow. • Volatility in Waha natural gas pricing impacting throughput in Delaware Basin. • Potential delays or issues in integrating acquisitions like Brazos Delaware II. • Softness in Rocky Mountain natural gas pricing driving curtailments and deferred completions. • Supply chain challenges, particularly with long-lead components for compression and processing capacity. • Regulatory and political uncertainties in certain basins affecting capital allocation and operations.

Q: How does the company think about organizational capability to pursue incremental deals after ARIS and Brazos acquisitions?

A: Oscar Brown states they're confident in integrating Brazos, which is an asset deal with simpler integration than ARIS. They'll be measured in pursuing incremental deals, considering what the broader organization can handle and ongoing growth projects.

Q: Elaborate on behind-the-meter power generation and CO2 services growth opportunities?

A: Established new ventures business group. Near-term opportunities in produced water beneficial reuse, with a pilot plant upsized and close to commercial operations. CO2 side has potential in shale enhanced oil recovery and sequestration, longer term. Behind-the-meter power has skill set but need economic returns.

Q: Clarity on Brazos acquisition contributions and cadence?

A: $100 million incremental adjusted EBITDA in 2026 from Brazos, with full commercialization and utilization of Comanche gas processing complex expected to lead to seven and a half times multiple. Integration is straightforward with contiguous assets.

Q: Outlook for 2026 guidance under current commodity environment?

A: Current commodity strip propels towards high end of guidance, with more commercial conversations but no immediate volume impact yet, with potential impact in 2027.

Q: Update on Pathfinder commercializing remaining open space?

A: Pathfinder is key for water solutions, with ability to provide integrated water basin services, and more commercial opportunities as producers look to manage water in Permian.

Q: Cost-saving optimization efforts and long-term CapEx run rate?

A: Cost savings across operations, maintenance, G&A. Long-term sustainable capital in $400 to $600 million range, growth capital for projects like Pathfinder and North Loving, with aim for per unit accretion and leverage control.

Q: Cash flow conversion potential from Brazos deal and volume trends for excess NGLs and skim oil?

A: Brazos has high cash conversion rate (90+%). Volume trends for excess NGLs and skim oil vary with throughput, expected to be incorporated in second quarter results.

Q: Strategic importance of other natural gas assets and capital allocation?

A: Other assets like Uinta, Chapita, South Texas are strategic, with potential divestitures if capital can be redeployed at higher returns. Programmatic M&A vs organic growth considered, with focus on Permian processing, New Mexico complementing ARIS, and new ventures. Repurchase of units part of contract renegotiation.

Q: Supply chain management for processing expansions?

A: Supply chain group monitors producing customers and GORs, manages long-lead components, and is nimble in meeting compression needs