Western Midstream Partners, LP

Good day and welcome to the Western Midstream Partners third 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, Investor Relations and Communications. Please go ahead.

Thank you. I'm glad you could join us today for Western Midstream's third 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 Forum 10Q and other public filings for a description of risk factors that could cause actual results to differ materially from what we discussed today. Relevant reference materials are posted on our website. With me today are Michael Yerr, our Chief Executive Officer and Chief Financial Officer, and Craig Collins, our Chief Operating Officer. I now would like to turn the call over to Michael Yerr.

Thank you, Kristen, and good afternoon, everyone. Yesterday, we reported $518 million of adjusted EBITDA, the highest adjusted EBITDA in West's history, and $339 million of free cash flow. We generated $198 million of free cash flow after distributions, almost three times more than last quarter. The team at West has worked incredibly hard on our strategic positioning, and this steadfast commitment to excellence has culminated in this quarter's success. The outstanding results from our third quarter performance is a testament to what we can achieve with the harmonization of our portfolio. This quarter represents a pivotal moment in our company's history as we highlight the strength of our premier asset portfolio, the resiliency of our producers, and the consistent and exceptional performance of our people. This time last year, we announced three focus areas for Wes, which included optimizing our existing assets, developing and growing our relationship with Occidental, and generating additional third party business. I'm pleased to say we have made substantial progress towards these goals, all while overcoming the headwinds of the pandemic and challenging market environment. Our ability to attract additional volumes onto our system and generate sustainable cost savings and operational efficiencies has better positioned West to emerge from this downturn as a stronger, more resilient company. Our ability to realize readily available economies of scale and self-fund 2020 capital requirements have enabled us to capitalize on unique opportunities and attract additional business onto our system. Those successes continue to this day as our commercial team secures mutually beneficial commercial solutions with new and existing customers. We have also further strengthened our relationship and communication with Occidental by identifying opportunities for our two companies to improve operability, Deploy capital more efficiently and ultimately drive value for our stakeholders. Above all, optimizing our existing assets, including the transition to a standalone midstream business, has proven to be the most transformational work in our company's history. We expect to realize approximately $175 million of O&M and G&A savings compared to our originally issued guidance. And we believe that substantially all of these cost savings are sustainable. Through a comprehensive review of our operations and supporting processes, we have identified opportunities to reduce our cost structure and enhance operational efficiencies, thereby generating improved, sustainable results with fewer resources. Through these efforts, we have become a cost leader among our peers. The hard work from our teams coupled with producer outperformance increases confidence in our ability to exceed the high end of our pre-COVID originally guided EBITDA target of $1.97 billion, despite slightly reduced throughput, while reducing our capital expenditures by more than 55%. This EBITDA growth exemplifies the benefits of the contractual protections to support our business during downturns, our renewed focus on driving cost and operational efficiencies, and the responsiveness and scalability of our capital profile. Year to date, we have utilized free cash flow after distributions to repurchase $194 million of debt. Furthermore, we have recently repaid the entire second quarter outstanding balance of $75 million under our revolving credit facility, enabling us to accelerate leverage reduction. These actions yield the current debt-to-adjusted EBITDA ratio below 4.0 times, which is below both our targeted year-end 2020 and 2021 leverage ratios. In fact, our leverage ratio has returned to early 2019 pre-simplification levels. We remain committed to maintaining our target of at or below 4.0 times at year end 2021, continued restoration of our balance sheet, and maintaining investment grade credit metrics. Before I turn it over to Craig, I'd like to take a minute to extend my thanks to our entire organization. Their long hours and hard work to unlock our company's full potential and their dedication to realizing substantial cost savings and operational efficiencies which positions us to be an industry leader for the foreseeable future. With that, I would like to turn the call over to Craig to discuss our operational performance for the quarter.