Western Midstream Partners, LP

Morning, my name is Chihuana and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners Second Quarter 2025 Earnings Conference Call. My 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 the star followed by the number two. Thank you. 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 2025 Conference Call. I'd like to remind you that today's call, the accompanying slide deck in yesterday's earnings release and the ARIES Acquisition Press Release and slide deck contain important disclosures regarding forward-looking statements and non-GAAP reconciliations. Please reference Western Midstream's most recent Form 10-K and 10-Q and other public filings for a description of risk factors that could cause actual results to differ materially from any forward-looking statements we discussed today. Relevant reference materials are posted on our website. You will also note that due to the pending ARIES Water Solutions Transaction, today's discussion is subject to certain additional securities laws. And so we refer you to the slides in the ARIES Acquisition slide deck titled, Board-Looking Statements and Ownership Structure and Additional Disclaimers that are posted in the Events and Presentations section of WESA's corporate website. With me today are Oscar Brown, our Chief Executive Officer, Danny Holderman, our Chief Operating Officer, Kristen Schultz, our Chief Financial Officer, and John Vandenbrand, our Senior Vice President of Commercial. I'll now turn the call over to Oscar. Thank you, Daniel,

and good morning, everyone. The Second Quarter was both eventful and highly successful for WESA. Yesterday afternoon, we reported strong Second Quarter operational and financial results, highlighted by sequential improvement in adjusted gross margin and the highest quarterly adjusted EBITDA in our partnership's history. In addition, continued strong activity levels and high system operability contributed to increased throughput across all core operating assets and product lines. Notably, we achieved record-breaking natural gas, crude oil and NGLs, and produced water throughput in the Delaware Basin. While our quarterly results were noteworthy, it is our steadfast commitment to and effective execution of our prudent growth strategy that truly distinguishes this quarter's performance. This is exemplified by our recent announcement of an agreement to acquire Eris Water Solutions and the sanctioning of a second train at our north-loving natural gas processing plant. These actions will enable us to further strengthen our footprint in the Delaware Basin, expand our service offerings, and deliver enhanced flow assurance to all our producing customers. Turning first to the Eris announcement, this secretive bolt-on acquisition enables us to optimize the value of our existing asset base and leverage our operational expertise to generate incremental value for our unit holders, which are both core principles of our M&A strategy. By integrating Eris's water disposal, water solutions, and beneficial reuse capabilities with WES's existing produce water business, including our under-construction Pathfinder Pipeline, this acquisition establishes WES as a -in-class inter-basin produce water system provider. With a differentiated Texas and New Mexico water system, WES will continue to deliver exceptional flow assurance and sustainable service offerings to customers for years to come. The ability to transport water throughout the basin has become increasingly important considering the volume of produced water generated in the Delaware Basin and the recent Texas Railroad Commission regulations pertaining to the permitting of new salt water disposal wells. After the close of this transaction, WES's pro forma produced water disposal capacity will be more than 3.8 million barrels per day. Additionally, Eris's recent purchase of the McNeil Ranch, which straddles New Mexico and Texas between the Delaware Basin and the Central Basin platform, provides significant long-term optionality with incremental access to pore space and other surface use opportunities. Next, this transaction further diversifies WES's customer base and contributes to WES's already strong midstream contract portfolio. Through Eris's long-term contracts, material acreage dedications that consist of more than 625,000 acres, and minimum volume commitments with investment-grade counterparties, adding Eris to our portfolio will provide additional support for our distribution. The transaction also significantly expands our footprint in New Mexico, unlocking new opportunities to potentially grow our natural gas and crude oil gathering and processing businesses. At $25 per share, the acquisition values Eris at $2 billion, including the assumption of Eris's net debt and other liabilities, before transaction costs. This implies approximately 7.5 times 2026 consensus EBITDA, inclusive of $40 million of estimated cost synergies. Based on this, the acquisition is expected to be accretive to 2026 free cash flow per unit. By financing the transaction with up to 28% cash and 72% WES units, we expect our industry-leading net leverage position to remain at approximately 3 times on the pro forma basis. Over the past several years, we have prioritized strengthening our balance sheet through debt reduction, enhancing operational efficiencies, reducing costs, and growing adjusted EBITDA. These actions have positioned our partnership to successfully execute this strategic, bolt-on acquisition from a position of strength. Tipping to our recently announced organic growth opportunities, we have also sanctioned an additional train at our existing North Loving Plant in the Delaware Basin. This 300 million cubic feet per day natural gas processing train will increase the North Loving Plant capacity to 550 million cubic feet per day and take our total West Texas Complex processing capacity to approximately 2.5 billion cubic feet per day by early in the second quarter of 2027. After evaluating multi-year throughput forecasts and conducting numerous discussions with our producing customers in West Texas, we strongly believe that the volume of natural gas and produced water will be substantial for years to come. Our North Loving Train 1 reached full capacity within just one month of its late February 2025 startup, and we are still relying on offloads at times to manage our customers' throughput profile. The offload market today is tighter than in 2022 when we put these original offloads into place. Therefore, we see a need for additional owned processing capacity at our West Texas Complex. We think it is in our partnership's best interest to be well prepared to receive more natural gas and produce water volumes as the gas to oil and the water to oil ratios experienced by our customers continue to increase over time. In addition to these actions, the teams at West have maintained a sharp focus on enhancing productivity and efficiency to strengthen our cost structure and sharpen our competitive edge. During the first quarter, we implemented new initiatives to optimize operational processes and improve resource allocation, both of which drive meaningful efficiencies in operating performance, improve our ability to compete for new business, and advance high-value organic growth initiatives. Tristan will provide additional details on these accomplishments in a moment. These actions, coupled with our Pathfinder pipeline and the recently commissioned North Loving Train 1, advance our strategy of prioritizing capital-efficient growth that generates strong returns for West's unit holders and aligns with our continued focus on sustaining and growing the distribution over time. Collectively, these efforts will help accelerate growth over the coming years, and I look forward to our teams' continued strong execution as we strive to deliver excellent service and increased flow assurance for our customers. With that, I will turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance during the second quarter. Danny?