Western Midstream Partners LP (WES) 2015 Q1 法說會逐字稿

Good morning and welcome to the Western Gas first-quarter earnings call. I would now like to turn the call over to Benjamin Fink, Senior Vice President and Chief Financial Officer. Please proceed, sir.

Thank you for joining us today to discuss Western Gas' first-quarter 2015 results.

I'd like to remind you that today's presentation includes forward-looking statements and certain non-GAAP financial measures. Be aware that actual results could differ materially from what we discuss today and I would encourage you to read our full disclosure on forward-looking statements and the non-GAAP reconciliations we've attached to last night's Earning Release and attached to the slides that we will reference on this call.

With that, I'll turn the call over to Don Sinclair, and following his remarks we'll open it up for Q&A with Don and the rest of our management team. Don.

Thanks, Ben. Good morning everyone and thank you for joining us today.

Last night we announced our first quarter results for 2015. We raised the WES quarterly distribution to $0.725 cents per unit, which is a 16% increase over the first quarter of last year. We also raised the WGP quarterly distribution to $0.3425 cents per unit, which is a 37% increase over the first quarter of last year.

Our quarter was highlighted by our continued strong performance in the DJ and Delaware Basins, significant progress made towards the completion of Lancaster 2 and the closing of the DBJV acquisition that we discussed on our last call. We reported adjusted EBITDA of $180.9 million, and distributable cash flow of $148 million, demonstrating yet another quarter of consistent performance.

Our coverage ratio was a healthy 1.11 times for the quarter and we continue to believe that distribution coverage will trend towards 1.0 times later this year. Our longer term target coverage ratio remains unchanged at 1.1 times.

The drivers behind WES's first quarter results were sequential natural gas throughput growth in the DJ and the Delaware Basins. Our gross margin per Mcf was flat with the prior quarter, as our throughput growth on higher margin systems was offset by gross margin per Mcf decreases at our Hilight, Newcastle, and Granger assets, as well as throughput growth on some lower margin systems.

Crude and NGL throughput was sequentially flat, with our gross margin per barrel slightly lower due to a lower distribution received from the Mont Belvieu 7 and 8 fractionators. We're also pleased to report that we are in process of commissioning Lancaster Train 2 and the plant remains on schedule to be in service this quarter.

With respect to our 2015 outlook, our only change at this time is that we are slightly reducing our total capital expenditure range to $640 million to $700 million, due to a combination of increased efficiencies, project deferrals, cost savings, primarily in the DJ and Delaware Basins. This outlook does not include the effect of any future acquisitions we may make. Any acquisitions we pursue would be added to this outlook and we would update guidance, consistent with our past practice.

With that, operator, I'd like to open up the line for questions.

Thank you. And now we will open up for the question-and-answer session.

(Operator Instructions)

Your first question comes from the line of Brandon Blossman of Tudor, Pickering, Holt and Company. Please proceed.

Good morning, gentlemen.

Morning, Brandon.

Couple quick ones. In your March 2015 outlook update, you said, I think the language was, if necessary an acquisition from Anadarko second half 2015. Is that language still hold true, or is there some tweaks to that?

Good morning, Brandon. This is Ben.

What we've clarified that guidance that we gave a couple months ago. Now our outlook assumes no additional acquisitions and any acquisitions will be additive to this outlook. So you have a little more clarity on where we think we're coming in on a same-store basis.

Fair enough. Just wanted to check the box and make sure that was indeed correct.

How about Lancaster 2? How has that project gone? Have you actually moved forward the in-service date, or is it full throughput in June?

Brandon, this is Don. We're still on schedule to have it in service in the second quarter of this year. We'll probably start -- we're facing the mechanical completion of the plant and we'll do gas to it at the end of this month.

So it'll take, you know, it takes a few days to get a crawl up and running. So we're still on schedule as we've discussed in the past.

Fair enough. I think that's actually it from me for right now. Thanks.

Thank you.

Thank you.

(Operator Instructions).

Your next question comes from the line of Sunil Sibal of Global Hunter Securities. Please proceed.

Hi. Good morning.

Morning.

Morning.

Sorry I missed some of your earlier comments, so apologize if this was already covered, but I was just curious having brought in the capital spend for 2015, how should we think about 2016? Is it too early to think about that? And then, how do you look at organic growth versus drop down opportunities in that context?

Hi, Sunil. This is Ben. The short answer is, it is a bit early. I will say that the bulk of our expenditures on Ramsey V are scheduled for 2016, so you know you'll have a big lump there, if you will. Aside from that, we're really not ready to talk about 2016 guidance.

Okay. That's all I had. Thanks.

At this time, there are no additional questions in the call, and I would like to turn the call back over for closing remarks. Please proceed.

We'd like to thank everyone again for joining us and for your interest in Western Gas, and we look forward to speaking with you again soon. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation.

You may now disconnect. Have a wonderful day.