Western Midstream Partners, LP

Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners first quarter 2026 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 one again. Thank you. And I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

Thank you for joining us today for Western Midstream's first quarter 2026 conference call. I'd like to remind you that today's call, the accompanying slide deck, and last night's press releases 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. With me today are Oscar Brown, our Chief Executive Officer, 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 morning, everyone. Yesterday we reported record adjusted EBITDA of $683 million, increasing 7% sequentially and 15% compared to the prior year period. Our first quarter outperformance reflects the full quarter contribution from the ARIS acquisition, per day throughput growth across all three product lines, and successful cost reduction efforts. Additionally, as crude oil prices rose in March, we captured incremental benefits from skim oil recoveries on our produced water system and from our fixed recovery natural gas processing contracts. Yesterday, we also announced the $1.6 billion acquisition of Brazos Delaware II. This strategic bolt-on exemplifies our programmatic M&A philosophy, transactions that enhance the value of our existing assets diversify and enhance our high-quality customer base, and generate incremental adjusted EBITDA and strong free cash flow for our unit holders, which is completely aligned with our philosophy of only deploying capital if it sustains or grows the distribution. While we are not currently updating our annual guidance ranges, as we have not yet received formal changes to our producers' drilling plans for this year, we do expect to be towards the high end of both the adjusted EBITDA and distributable cash flow ranges without taking into account the impact of the Brazos transaction. This improved outlook is due to increased commercial discussions, the very favorable commodity price environment, and our improving operating leverage due to our successful and ongoing cost competitiveness efforts. With that said, we intend to reevaluate our 2026 guidance ranges in conjunction with our second quarter results after the scheduled close of the Brazos transaction. Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027. This, in combination with our expectation of improved Waha natural gas pricing in the second half of this year, gives us growing confidence in 2027's potential, certainly if the current elevated commodity price environment holds. Taking a closer look at the Brazos acquisition, The assets include natural gas and crude oil gathering systems that are highly complementary to our existing Texas-Delaware Basin footprint. Integration creates a larger, more scalable midstream system in the core of the premier basin in North America. These assets fit well within our portfolio for several reasons. First, this acquisition materially strengthens and expands our Delaware Basin asset base. The Brazzo system is contiguous to our existing West Texas complex with over 470,000 dedicated acres and more than 900 miles of pipeline and approximately 460 million cubic feet per day of processing capacity, immediately increasing our West Texas dedicated acreage by 49 percent and our gas processing capacity by 20 percent. The Brazos Comanche Processing Complex has approximately 125 million cubic feet per day of unused capacity, which is crucial as our West Texas volumes continue to grow and will enable us to optimize the performance of our overall processing complex. Additionally, there are approximately 3,500 drilling locations at $65 per barrel, and nearly all drilling locations on the dedicated acreage are within two miles of the low-pressure gathering system, which limits ongoing capital requirements and supports strong free cash flow conversion. The systems also provide exposure to additional geologic formations, including the growing Woodford shale play. Second, the transaction adds long-term stable contract structures that are foundational to WESA's strategy. Brazos Delaware's recently extended contracts have a weighted average remaining contract life of approximately 9.2 years and align with the fee-based framework that underpins West's cash flow durability. Third, this acquisition meaningfully diversifies our customer base. Brazos adds several new, high-quality, third-party customers to the West portfolio. It also deepens our relationships with certain existing third-party customers and further diversifies West's revenue stream and reduces producer concentration risk. Fourth, the transaction is financially attractive and accretive. At a $1.6 billion purchase price, composed of approximately $800 million of cash and approximately $800 million of West common units, the transaction is valued at approximately eight times 2027 estimated EBITDA, declining to approximately 7.5 times with the commercialization of available processing capacity and other identified synergies. We expect the transaction to close at the end of the second quarter, and to contribute approximately $100 million of incremental adjusted EBITDA in 2026. Further, the transaction is immediately accretive to 2026 distributable cash flow per unit. Finally, our strong balance sheet made this possible. By financing the transaction with a combination of cash and equity, we expect to maintain net leverage of approximately three times on a pro forma basis throughout 2026, consistent with our conservative leverage philosophy and preserving the flexibility to continue funding our organic growth program and capital return framework. In summary, Brazos expands our Delaware Basin footprint, adds durable fee-based earnings from a diversified set of top-tier customers, and is a creative to distributable cash flow on a per-unit basis. We look forward to integrating Brazos' assets and team into the West portfolio and updating you on our progress over the coming quarters. Turning to our record quarterly results. The Delaware Basin continues to perform exceptionally well. Natural gas throughput in the basin increased 3% sequentially to slightly over 2 billion cubic feet per day, and we achieved record crude oil and NGL throughput of 272,000 barrels per day, which increased 4% sequentially and 6% year over year. Our produced water business achieved record throughput as well, increasing 4% sequentially to approximately 2.8 million barrels per day, primarily driven by the full quarter contribution from the ARIS acquisition. This occurred despite higher Waha-driven curtailments in the basin, which we expect will persist through the second quarter. Additionally, relative to our throughput expectations, both the DJ and the Powder River basins outperformed this quarter. In addition to our throughput performance, we benefited from elevated commodity prices in March, which drove adjusted gross margin outperformance, particularly on excess natural gas liquids volumes and increased skim oil volumes driven by the ARIS acquisition. ARIS's long-term contracts share the fee-based foundation that defines WES's broader portfolio, but also provide for meaningful value creation in favorable commodity pricing environments due to the retention of skim oil volumes. This, combined with our efficiency and successful cost reduction actions, has materially improved our operating leverage and the earnings power of WES, as reflected in our first quarter results. With that, I'll turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance in the first quarter. Danny?