Western Midstream Partners, LP

Good afternoon. My name is Ludi and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners second 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 the 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 second 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. Yesterday afternoon, we reported another strong operational quarter for Wes. Our sequential quarter throughput growth was driven by our robust system operability. And as a result, we experienced throughput records from both natural gas and crude oil and NGLs in the Delaware Basin for the fifth consecutive quarter. Taking these results into consideration, we still expect our throughput to steadily grow for the remainder of the year and for West to be towards the high end of our 2024 adjusted EBITDA and free cash flow guidance ranges. The second quarter was also very successful from a commercial perspective, as we executed numerous agreements with both new and existing customers in several of our most active basins. First, in the Delaware Basin, we signed several new agreements with both public and private customers for natural gas and produced water services that will positively benefit West starting in the third quarter. and to an even greater extent in 2025. Second, in the DJ Basin, we executed an amendment to DCP Midstream's, now Phillips 66's, natural gas processing agreement in the DJ Basin to extend the original firm processing capacity of 175 million cubic feet per day from 2027 to 2029 on a 100% take or pay basis. Additionally, this multi-year amendment provides Phillips 66 with an incremental 200 million cubic feet per day of firm processing capacity primarily supported by minimum volume commitments starting in 2026. If fully utilized, these agreements could fill up the remaining capacity across our DJ Basin complex over the coming years. Third, And just after quarter end, in Utah, we executed a multi-year natural gas processing agreement with Kinder Morgan in support of their Altamont Green River Pipeline project providing for up to 150 million cubic feet per day of firm processing capacity at our Chapita facility in the Uinta Basin, which is expected to be in service by mid-2025. Finally, we executed agreements with several customers supporting Williams Company's Mountain West Pipeline expansion to provide up to 110 million cubic feet per day of natural gas processing capacity at our Chapita facility. We have already begun to receive a portion of these volumes, and we expect incremental volumes in the months ahead. Taking all these agreements into account, we believe our existing cryogenic capacity at Chapita of 550 million cubic feet per day may be fully utilized by the second half of 2025. Turning to the balance sheet, the sale of non-core assets throughout the first quarter and early in the second quarter enabled us to achieve our trailing 12-month net leverage ratio threshold of three times earlier than anticipated. In this leverage environment, we will continue to look for the most efficient ways to allocate capital to generate the best returns for our unit holders over time. Those options include investing capital to prudently expand the business, In order to bring more throughput onto our systems, we will continue to allocate capital to organic growth projects that grow volumes and meet our strict returns thresholds, with the goal of driving adjusted EBITDA and free cash flow higher and enhancing our return on assets over time. Second, allocating capital towards a creative M&A. We continue to evaluate strategic opportunities that will ultimately enhance the value of our existing asset base. such as the Meritage midstream acquisition that closed in the fourth quarter of 2023. And finally, increasing the base distribution. As our business grows and we generate incremental free cash flow, management and the board will continue to look at opportunities to grow the base distribution in line with the overall growth in our business. If our business outperforms relative to our initial expectations in a given year, we also have the enhanced distribution framework in place to return to the unit holders. We will remain opportunistic regarding unit buybacks and additional debt retirement. However, based on current market conditions and our net leverage ratio of three times, we do not expect these options to be the most efficient ways to allocate capital. With that, I will turn the call over to Kristen to discuss our operational and financial performance.