Western Midstream Partners, LP

Good afternoon, my name is Joanna and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners third 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, press star followed by two. Thank you. I will now 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 third 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 include our newly appointed Chief Executive Officer, Oscar Brown, Danny Holderman, our Chief Operating Officer, and Kristen Schultz, our Chief Financial Officer. I'll now turn the call over to Oscar.

Thank you, Daniel, and good afternoon, everyone. Let me first take a moment to say how thrilled I am to be here today as the new CEO of Western Midstream. As a member of the board since 2019, I am intimately familiar with and have been supportive of the partnership's mission, vision, and strategy. I would like to thank Michael Ure for all his outstanding contributions that have made West the best-in-class midstream partnership that it is today. Under Michael's leadership, West has undergone an impressive transformation, including standing up the partnership as an independent business, significant growth in the Delaware Basin, the acquisition of Meritage Midstream in the Powder River Basin, operational improvements and cost reductions, and the return of $4.6 billion to unit holders through distributions and unit repurchases, all while significantly lowering leverage for five times to just under three times today. As we close out this chapter of the West story, I'm extremely honored to have been chosen by the Board to lead West on the next chapter of growth and development. Now, turning to third quarter earnings, yesterday we reported another operationally successful quarter for West, marked by strong customer service and continued flow assurance for our producers and operability above 98% despite elevated plant turnaround activity. Our natural gas throughput increased sequentially due to robust throughput growth in the Powder River Basin and our seventh consecutive quarter of record natural gas throughput in the Delaware Basin. Our produced water volumes also increased quarter over quarter, despite continued elevated levels of recycling activity used in the upstream operations of our producers, which Danny will comment on shortly. While we still expect to be at the high end of our guidance range for the year, our adjusted EBITDA declined relative to the second quarter as a result of decreased natural gas liquids volume under our fixed recovery contracts, coupled with lower commodity pricing, lower distributions from our equity investments, and higher seasonally driven operations and maintenance expense. As we focus on the fourth quarter, we expect our adjusted EBITDA to increase due to higher throughput, primarily from the Delaware Basin. Our expectations of higher throughput are supported by short-term forecasts and consultation with our customers, including well connection activity through year-end. In addition, we expect lower operating and maintenance expense in the fourth quarter. Turning to commercial developments and subsequent to quarter-end, we executed new agreements pertaining to our MiVita joint venture to realign the commercial structure tied to the facility. These new agreements provide West with 100 million cubic feet per day of dedicated natural gas processing capacity at the plant starting in mid 2025 this will enable us to provide incremental flow assurance for our customers in the delaware basin in mid-august we issued 800 million dollars of new senior notes the proceeds of which we will use to retire debt maturing in february and june of next year and for general partnership purposes our trailing 12-month net leverage ratio has comfortably reached our year-end 2024 threshold of three times and we continue to look for the most efficient ways to allocate capital to generate the best returns for our unit holders over time. As discussed last quarter, these options include, first, investing capital to prudently expand the business. We will allocate capital towards organic growth projects that grow our volumes over time with reasonable payback periods and that meet our return thresholds. This is usually our lowest risk, highest potential return option. Second, allocating capital towards a creative M&A. We will evaluate strategic opportunities that enhance the value of our existing asset base such as the Meritage midstream acquisition. Keep in mind that we will hold any potential acquisition to a very high standard, as it must meet our risk-adjusted returns thresholds relative to organic growth opportunities. And finally, increasing the base distribution. As our business grows and we generate incremental free cash flow, management and the board will continue to evaluate opportunities to grow the base distribution in line with the overall growth of our business. Additionally, if our business outperforms relative to our initial expectations in a given year and we have exhausted other higher return opportunities, we also have the enhanced distribution framework in place to return incremental capital to unit holders. With that, I will turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance in the quarter.