Western Midstream Partners, LP

Good day and welcome to the Western Midstream Partners first quarter 2021 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 Schultz, Vice President, Western Relations and Communications.

Please go ahead, ma'am. Thank you. I'm glad you could join us today for Western Midstream's first quarter 2021 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-K, Form 10-Q, and other public filings. for 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 Ure, our Chief Executive Officer, and Craig Collins, our Chief Operating Officer. I'll now turn the call over to Michael.

Thank you, Kristen, and good afternoon, everyone. Yesterday, we reported first quarter 2021 adjusted EBITDA of $443 million. The impacts of winter storm Uri and the Colorado blizzard decreased adjusted EBITDA by approximately $30 million for the quarter. While these winter storms caused throughput to decrease and operating costs to increase for a short period of time, the impact was temporary with no long-term infrastructure or supply issues. We expect throughput and adjusted EBITDA to now increase throughout the year, especially in the second half, and we remain comfortable in our ability to meet our previously communicated 2021 guidance of adjusted EBITDA between $1.825 and $1.925 billion. Furthermore, while capital expenditures have been pushed out slightly, we still expect to fall within our previously communicated CapEx guidance range of $275 and $375 million. We remain focused on identifying innovative ways to reduce our cost structure and work more efficiently. Despite the winter storms, we generated $214 million of free cash flow and $83 million of free cash flow after distributions during the first quarter. Our focus on free cash flow generation since 2020 has enabled us to repay our 2021 debt maturity in March for total debt reduction this year of $431 million. Furthermore, we expect to generate free cash flow after distributions sufficient to allow us to repay our $821 million of near-term maturities as they come due over the next two years using free cash flow. This will maintain leverage at or below four times at year-end 2021 and further reduce leverage at or below three and a half times by year-end 2022. We also implemented a 1.3% increase in our first quarter 2021 per unit distribution versus the prior quarter's distribution, which aligns with a targeted annualized distribution growth of 5%. Over the past year, we've completed a number of transactions to support this distribution increase. In September 2020, we completed the $255 million Anadarko note exchange for units owned by Occidental. In November 2020, our board authorized and we initiated a $250 million unit buyback program. We repurchased $218 million of debt in 2020 and recently retired $431 million of 2021 maturities. These transactions have increased our annualized free cash flow after distributions by $54 million. This increase in annualized free cash flow more than offsets an annualized 5% distribution growth target for nearly two years. Furthermore, current forecasts support a paydown of our 2022 debt maturity of $581 million, which would increase our free cash flow an additional $23 million and almost offset an additional year of 5% distribution growth. We expect the significant organizational and operational improvements achieved during 2020 to continue to generate incremental free cash flow and further support our ability to increase the distribution. As recently commented, if producer activity levels remain consistent with 2021 levels over the next five years, we believe we will have the ability to internally fund our core business and generate sufficient excess cash to repay all debt maturities through 2025. target at least a 5% annual distribution growth rate, and achieve a net debt to trailing 12-month adjusted EBITDA ratio at or below 3.0 times. While the Board will continue to evaluate our distribution level each quarter based on business needs, we're optimistic that the fundamental changes we've implemented at West will enable us to confidently sustain a reasonable distribution growth rate while still allowing for meaningful free cash flow for other stakeholder enhancing opportunities. At the end of the first quarter, we have repurchased a total of $49 million of units through our previously announced Common Unit Buyback Program, which is currently authorized through December 31, 2021. We continue to see the value in the buyback program, which we will execute opportunistically. Through the Unit Buyback Program and Anadarko Note Exchange, we have repurchased 31.34 million units to date. which represents over 7% of our outstanding unit count as of the filing of our second quarter 2020 10Q. By repurchasing debt in 2020 and retiring our 2021 maturity, we continue to prove our commitment to reducing leverage. Furthermore, through further debt repayments, cash distribution growth, and unit buybacks, we remain flexible and opportunistic in how we return value to stakeholders. With that, I'll turn the call over to Craig to discuss our first quarter operations.