Western Midstream Partners LP (WES) 2023 Q3 法說會逐字稿

Welcome to Western Midstream's Third Quarter 2023 Post Earnings Call Fireside Chat with our Chief Financial Officer, Kristen Shults; and our Vice President of Corporate Development, Jon Greenberg.

歡迎參加西中游 2023 年第三季財報電話會議，與我們的財務長 Kristen Shults 進行爐邊談話；以及我們的企業發展副總裁 Jon Greenberg。

Kristen, can you talk about what WES saw from a throughput perspective during the third quarter? What growth rates do you anticipate for 2023?

Kristen，您能談談 WES 在第三季從吞吐量角度看到的情況嗎？您預計 2023 年的成長率是多少？

Daniel, we had a really strong third quarter. Our total portfolio natural gas throughput was up 5%. Our crude oil NGL throughput was up 7%, and our water throughput was up 14%. All of that was driven by the Delaware Basin, just having a fantastic quarter-over-quarter growth story.

丹尼爾，我們第三季的表現非常強勁。我們的總投資組合天然氣吞吐量成長了 5%。我們的原油 NGL 吞吐量成長了 7%，水吞吐量成長了 14%。所有這一切都是由特拉華盆地推動的，該盆地有著出色的季度環比增長故事。

As we're looking at the annual throughput growth rates, now that we've actually closed Meritage, we're bringing those gas volumes into our system. We anticipate the year-over-year natural gas throughput growth to be mid-single digits. Our expectations for the crude oil and NGLs and produced water remain unchanged from the second quarter call, which would be single digits for the crude oil and NGLs and upper teens for the produced water.

當我們考慮年吞吐量成長率時，現在我們實際上已經關閉了 Meritage，我們正在將這些天然氣量引入我們的系統。我們預計天然氣吞吐量年增將達到中個位數。我們對原油、液化天然氣和採出水的預期與第二季的預測相比保持不變，原油和液化天然氣的預期為個位數，採出水的預期為兩位數。

What do you expect for gross margin per unit in the fourth quarter?

您預計第四季的單位毛利率是多少？

So quarter-over-quarter, excluding any adjustments that we would have from cost of service and the revenue recognition impacts we would see during fourth quarter. We expect our natural gas per Mcf adjusted gross margin to increase slightly as we add those Meritage volumes into our system. On the crude oil and NGLs, we expect that to slightly increase as well. This quarter, you saw a decrease in the per barrel adjusted gross margin on the crude oil side.

因此，按季度計算，不包括我們在第四季度看到的服務成本和收入確認影響的任何調整。我們預計，隨著我們將這些 Meritage 數量添加到我們的系統中，我們的天然氣每 Mcf 調整後毛利率將略有增加。對於原油和天然氣液體，我們預計也會略微增加。本季度，原油方面每桶調整後毛利率有所下降。

If you remember, about half of our oil throughput is from the equity investments that we own. And so as we're looking towards Q4. We expect some of that throughput to decrease in those equity investments just a little bit and hopefully bring that gross margin per barrel up a little bit on the oil side. On the produced water side, you've seen that remain relatively flat throughout this year. Second quarter at $0.83 and then third quarter now at $0.84, I would expect fourth quarter to be right in line with third quarter as well.

如果你還記得的話，我們大約一半的石油產量來自我們擁有的股權投資。我們正在展望第四季。我們預計這些股權投資的部分吞吐量將略有下降，並有望使石油方面的每桶毛利率略有上升。在產出水方面，您已經看到今年全年保持相對穩定。第二季為 0.83 美元，第三季現在為 0.84 美元，我預計第四季也將與第三季保持一致。

Thanks, Kristen. Jon, we recently closed on the acquisition of Meritage Midstream, which we announced during the third quarter. Can you talk a bit about the strategic rationale for that transaction?

謝謝，克里斯汀。喬恩，我們最近完成了對 Meritage Midstream 的收購，這是我們在第三季宣布的。您能談談該交易的戰略理由嗎？

Sure, Daniel. At WES, we're consistently looking for ways to optimize the value of our asset base across our portfolio. Like Michael mentioned on the earnings call, our legacy assets were undersized in the Powder River Basin, and the Meritage transaction transformed our footprint into the largest gathering and processing provider in the basin while also being able to purchase the business for an attractive valuation of 5 to 6x 2024 adjusted EBITDA.

當然，丹尼爾。在 WES，我們一直在尋找優化整個投資組合資產基礎價值的方法。正如邁克爾在財報電話會議上提到的那樣，我們在保德河流域的遺留資產規模過小，而Meritage 交易將我們的足跡轉變為該盆地最大的收集和加工提供商，同時還能夠以5 美元的有吸引力的估值購買該業務。2024 年 調整後 EBITDA 的 6 倍。

If you look at the map on Slide 5 of our earnings presentation, you can see the geographic overlap between the Meritage assets and our legacy PRB assets. WES now has 440 million cubic feet per day of processing capacity that is approximately 2/3 utilized at this time, and that open capacity will allow us to handle growth from our existing customers and pursue new customer opportunities in a capital-efficient way.

如果您查看我們收益簡報投影片 5 上的地圖，您可以看到 Meritage 資產和我們的傳統 PRB 資產之間的地理重疊。 WES 目前每天擁有 4.4 億立方英尺的處理能力，目前利用率約為 2/3，開放的產能將使我們能夠應對現有客戶的成長，並以資本效率高的方式尋求新的客戶機會。

The Meritage acquisition also expanded our customer base to include new third-party blue-chip counterparties in the region. Along with these producers, comes a strong portfolio of long-term contracts secured by large acreage dedications and minimum volume commitments that will contribute to WES' future profitability and free cash flow generation.

Meritage 收購也擴大了我們的客戶群，包括該地區新的第三方藍籌交易對手。與這些生產商一起，還有強大的長期合約組合，這些合約由大面積奉獻和最低產量承諾保證，這將有助於 WES 未來的盈利能力和自由現金流的產生。

Lastly, we are optimistic about the prospects for the basin. In the near term, rig activity on the footprint remains robust, driving anticipated production growth going into next year. Over the long term, we believe that we will see sustained activity and growth in the basin driven by several factors. First, as producers drill out inventory in other basins, we believe that we will see a shift to increased producer activity in the Powder over time.

最後，我們對流域的前景持樂觀態度。短期內，鑽機活動依然強勁，推動明年的預期產量成長。從長遠來看，我們相信，在多種因素的推動下，我們將看到該盆地的持續活動和成長。首先，隨著生產商在其他盆地鑽探庫存，我們相信隨著時間的推移，我們將看到粉礦生產商活動增加。

And second, as LNG export facilities come online, we believe that will create an increasing pull on domestic gas production to supply those LNG facilities. In addition, long-term drilling activity would be well supported by significant depth of upstream inventory and stacked pay locations in the Powder. So taking all those factors together, it makes us really excited about the future of what we just bought.

其次，隨著液化天然氣出口設施的上線，我們相信這將對供應這些液化天然氣設施的國內天然氣生產產生越來越大的拉力。此外，長期鑽探活動將得到上游庫存深度和粉礦區堆積支付地點的良好支持。因此，綜合考慮所有這些因素，我們對剛購買的產品的未來感到非常興奮。

Why did WES choose to expand the PRB instead of the Delaware Basin?

為什麼 WES 選擇擴大 PRB 而不是特拉華盆地？

Yes. With M&A being opportunistic in nature, buying Meritage came at the right time at the right valuation and was very transformative to our Powder River Basin footprint. So we capitalized on that opportunity when we saw that it could be actionable. With that said, buying Meritage does not preclude or prevent us from making acquisitions in the Delaware.

是的。由於併購本質上是機會主義的，因此收購 Meritage 的時機恰到好處，估值也合適，這對我們在保德河流域的足跡產生了巨大的變革。因此，當我們看到這個機會可行時，我們就利用了這個機會。話雖如此，收購 Meritage 並不排除或阻止我們在德拉瓦州進行收購。

We still look at all relevant M&A opportunities, and we'll pursue them to the extent that we believe they'll add value to unitholders. Another thing to keep in mind is that WES still continues to heavily invest in the Delaware as evidenced by the amount of capital that we are currently spending to expand our processing capacity at Mentone and North Loving in West Texas.

我們仍然關注所有相關的併購機會，我們將在我們相信它們能為單位持有人增加價值的範圍內追求這些機會。另一件需要記住的事情是，WES 仍然繼續在特拉華州進行大量投資，我們目前為擴大西德克薩斯州 Mentone 和 North Loving 的加工能力而投入的資金量就證明了這一點。

Our investment to date has just taken the form of organic growth to service our customers in the Delaware. And so far, we found organic growth to be more attractive and more actionable than inorganic opportunities in the basin.

迄今為止，我們的投資剛採取有機成長的形式，為特拉華州的客戶提供服務。到目前為止，我們發現該盆地的有機成長比無機成長更具吸引力，也更可行。

Kristen, can you provide some high-level thoughts on WES' outlook for 2024?

Kristen，您能否為 WES 2024 年的展望提供一些高層次的想法？

So as I was just mentioning, throughput growth was really strong during the third quarter, driven by the Delaware Basin. The Delaware Basin continues to have strong activity levels from our producers, and we're expecting to bring more wells online year-over-year, the once again strong throughput growth in 2024, just like we saw in 2023.

正如我剛才提到的，在特拉華盆地的推動下，第三季的吞吐量成長非常強勁。特拉華盆地的生產商繼續保持強勁的活動水平，我們預計將比去年同期增加更多油井，2024 年產量將再次強勁增長，就像我們在 2023 年看到的那樣。

As we talked about this quarter in the DJ Basin, we've actually hit the trough, the bottom of the decline that we've been seeing there since 2021. So at this point, expecting some modest increases on the oil side and that to steadily modestly increase throughout 2024.

正如我們談到本季度 DJ 盆地的情況時，我們實際上已經觸底，即自 2021 年以來我們一直看到的下降的底部。因此，在這一點上，預計石油方面會出現一些溫和的增長， 2024 年全年穩定小幅成長。

On the gas side, a little bit more of a pickup in the back half of 2024, but once again, expect to see average year-over-year throughput growth in the DJ Basin in 2024 as well. As we add those Meritage volumes into the system, the Powder River Basin is going to be strong for next year as well. So overall, expecting nice throughput in 2024 relative to 2023.

在天然氣方面，2024 年下半年將有所回升，但預計 2024 年 DJ 盆地的平均吞吐量也將實現同比增長。當我們將這些功績量添加到系統中時，粉紅河流域明年也將表現強勁。總體而言，預計 2024 年的吞吐量將高於 2023 年。

On the capital side, we're seeing some of our 2023 capital needs push into 2024. This is pretty typical at the end of the year just as a few projects push. We've got both plants that are being constructed right now. And so time lines and really just some of the construction related to that have pushed a little bit. They're still on track to come in during Q1 of 2024 for Mentone III and then Q1 of 2025 for North Loving, but a little bit of the capital is pushing out of '23 and into 2024.

在資本方面，我們看到 2023 年的部分資本需求會推遲到 2024 年。這在年底是非常典型的，就像一些項目會推動一樣。我們目前正在建造兩座工廠。因此，時間安排以及與之相關的一些建設確實被推遲了一些。他們仍有望在 2024 年第一季進入 Mentone III，然後在 2025 年第一季進入 North Loving，但資本的一小部分正在從 23 年推遲到 2024 年。

So on the capital side, I expect a little bit of that push. We're also going to bring Meritage in for next year. Normal run rate that we've seen for Meritage is around $50 million-ish of capital a year, and next year is slightly heavier just being a growth year for that asset. From a DJ perspective, I don't really expect much of the capital change year-over-year there where you have spare capacity still in the DJ. And so you're just looking at additional well connect and hooking up to new pads as they come online.

因此，在資本方面，我預計會得到一點推動。明年我們也將引進 Meritage。我們看到 Meritage 的正常運作率每年約為 5000 萬美元左右，而明年只是資產的成長年，因此略重一些。從 DJ 的角度來看，我並不認為 DJ 仍有閒置產能，因此每年的資本變動不會太大。因此，您只需在新的焊盤上線時尋找額外的良好連接和連接即可。

Kristen and Jon, thank you for joining us today. If you have any additional questions, please feel free to reach out to us. Our contact information is located in the Investor Relations section of our corporate website at westernmidstream.com.

克里斯汀和喬恩，感謝你們今天加入我們。如果您還有任何其他問題，請隨時與我們聯絡。我們的聯絡資訊位於我們公司網站westernmidstream.com 的投資者關係部分。