Western Midstream Partners, LP

Good afternoon, my name is Constantine and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

Thank you. I'm glad you could join us today for Western Midstream's first quarter 2024 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 most recent Form 10-Q 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 Ure, our Chief Executive Officer, and Kristen Schultz, our Chief Financial Officer. I'll now turn the call over to Michael.

Thank you, Daniel, and good afternoon, everyone. I'm excited to announce that the first quarter exceeded our expectations as strong producer activity levels, higher rates associated with the cost of service rate redeterminations that became effective on January 1st, and our continued focus on maintaining high levels of system operability all contributed to better than expected throughput increases and higher overall profitability. Also, based on the latest producer forecasts, We expect these throughput trends to continue throughout the year. Thus, we now expect higher average year-over-year throughput growth rates for all products, and we expect to end up near the high end of our previously disclosed adjusted EBITDA and free cash flow guidance ranges. Kristen will provide more detail on our updated guidance expectations shortly. Before we get into the specifics of the first quarter, I am pleased to announce that Mentone Train 3 completed the commissioning phase and became operational in early April. This is our first major construction project since becoming a standalone enterprise, and I would like to thank and congratulate all the teams that worked so diligently to bring Mentone 3 to completion. This achievement increases our natural gas processing capacity at our West Texas complex in the Delaware Basin by approximately 18%, which will benefit West financially due to our fixed fee processing agreements and reduce reliance on offloads going forward. Again, many thanks to all of our employees and contractors that played a critical role in bringing Mentone 3 online safely and in line with our initial cost estimates. Focusing on our first quarter performance, continued strong producer activity levels resulted in increased throughput across all our core operated assets. Specifically, in the Delaware Basin, we benefited from additional wells coming online sequentially, which resulted in another quarter of record-breaking natural gas and produced water throughput from the basin. In the DJ Basin, both natural gas and crude oil and NGL's throughput increased quarter-over-quarter, a trend we expect to result in annual average year-over-year growth. And in the Powder River Basin, throughput also increased primarily due to a full quarter's contribution from Meritage and volume growth from those assets. a trend we expect will gradually increase throughout 2024, especially for natural gas volumes. This increased throughput and higher cost of service rates were the main drivers behind the $26 million increase in our adjusted gross margin compared to the fourth quarter. Additionally, certain operating costs were lower than anticipated, resulting in higher than expected adjusted EBITDA. Finally, I am pleased to announce that we officially closed all of our non-core asset sales that we highlighted on last quarter's earnings call. At quarter end, Wes's net leverage ratio on a trailing 12-month basis was approximately 3.3 times, which incorporates five and a half months of contribution for Meritage, as well as the proceeds received from the non-core asset sales that closed throughout the first quarter. And we now expect to exit 2024 at or below our three times leverage threshold. With that, I will turn the call over to Kristen to discuss our operational and financial performance.