Western Midstream Partners, LP

Good day and welcome to the Western Midstream Partners second quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Kristen Shults, Vice President of Investor Relations and Communications. Please go ahead, Matt.

Thank you. I'm glad you could join us today for Western Midstream's second quarter 2020 conference call. I'd like to remind you that today's call, the accompanying slide deck, and last night's earnings release contain important disclosures regarding forward-looking statements and non-GAAP reconciliations. Please reference Western Midstream's Form 10-Q and other public filings for a description of risk factors Thank you, Kristen, and good afternoon, everyone. Our outstanding second quarter results.

evidence our ability to deliver high-quality service that is consistent with our customers' expectations and supportive of long-term enterprise value creation. Our expansive asset portfolio located in premier U.S. onshore basins, our strong fee-based contracts that are insulated from direct commodity price exposure, and our ability to realize operational efficiencies and cost savings position us to generate meaningful returns This profile, combined with the successful execution of creative commercial solutions, improved commodity prices that supported higher-than-expected producer activity, and Occidental's outperformance on its Delaware Basin legacy Anadarko acreage, contributed to our strong second quarter results. Over the last year, our commercial team focused on securing new business by leveraging our expansive infrastructure and optimizing our existing contracts. In response to the recent economic downturn and pronounced energy demand shock, our commercial team worked diligently with producers and other midstream service providers to secure mutually beneficial commercial solutions. For example, in the Delaware Basin, we avoided the curtailment of approximately 130 million cubic feet per day through creative commercial solutions that provided near-term incentives to producers and resulted in additional long-term value for WES. Similar successes continued to generate incremental capital-advantaged EBITDA for WES while providing near-term relief to customers that have been affected adversely by lower energy demand. With the release of our first quarter 2020 results, we announced revised guidance, capital savings initiatives, and a reduced quarterly distribution. As a result of the second quarter, commodity price increases, driving less than expected producer curtailments, and current commodity prices supporting continued producer activity, We have increased our 2020 guidance to reflect anticipated adjusted EBITDA between $1.85 and $1.9 billion, which represents a $100 million increase to the midpoint of our previously issued guidance. Additionally, we have continued to refine our capital discipline and investment plans and now anticipate full-year 2020 capital expenditures between $400 and $450 million. Reflective of a $75 million reduction to the prior guidance midpoint. Modification and standardization of facilities, improved internal collaboration by our midstream-centric workforce, and a focus on capital efficiency and investment lead time to cash flow has enabled CapEx savings and improved project timelines and costs. For example, facility redesign and procedure reviews allowed for two to three week construction time reductions for West Texas saltwater disposal wells and compressor stations, which yielded a 20% cost savings. Our revised 2020 guidance reflects the inclusion of an additional $40 million of incremental cost reductions, resulting in full year 2020 O&M and G&A cost reductions of $115 million. 59% of which have been realized year to date, with the majority of these savings being replicable for 2021 and beyond, assuming steady state activity and production levels. O&M and G&A reductions originated from our newly minted midstream focused employees who continue identifying operational efficiencies and cost savings. Our employees are best in class and demonstrate an entrepreneurial mentality and a willingness to broaden their skill sets and areas of responsibility. which positions us to deliver improved results with fewer resources. Throughout the pandemic, our employees have remained focused and dedicated to driving improved operational and financial results, and I would like to recognize, congratulate, and encourage them to continue their efforts. We expect incremental drilling and completion activity to be closely tied to commodity prices as we move into 2021. Continued market uncertainty exists. Thanks, Michael.