Western Midstream Partners LP (WES) 2024 Q2 法說會逐字稿

Welcome to Western Midstream Second Quarter 2024 post earnings call fireside chat with our Chief Financial Officer, Kristen Shults and our newly appointed Chief Operating Officer, Danny Holderman. Kristin, we'll start with you. Can you provide us with a general overview of WES' second quarter results? And what were some of the key drivers for WES' strong operational performance?

歡迎參加 2024 年西部中游第二季財報電話會議，與我們的財務長 Kristen Shults 和我們新任命的營運長 Danny Holderman 進行爐邊談話。克里斯汀，我們就從你開始。您能否向我們介紹一下 WES 第二季業績的整體概況？WES 強勁營運績效的關鍵驅動因素有哪些？

Sure, Daniel. The second quarter was another really strong quarter for WES. We had sequential quarter throughput growth in the Delaware Basin and in the DJ Basin for natural gas. They both grew by about 6% quarter-over-quarter. We also had record total operated crude oil and NGL throughput that increased about 6% quarter over quarter as well.

當然，丹尼爾。第二季是 WES 另一個非常強勁的季度。特拉華盆地和 DJ 盆地的天然氣吞吐量連續季度增長。它們的季度環比增長率均約為 6%。我們的原油和液化天然氣總營運量也創歷史新高，季增約 6%。

The Powder River also continued to grow for both natural gas and crude oil and NGLs. So when you look at all those strong operational results that we had this quarter, we're still expecting our throughput steadily growth throughout the remainder of the year and for us to be at the high end of our 2024 adjusted EBITDA and free cash flow guidance ranges.

粉河地區的天然氣、原油和液化天然氣產量也持續成長。因此，當您查看本季度我們所有強勁的營運業績時，我們仍然預計我們的吞吐量在今年剩餘時間內穩定增長，並且我們將處於 2024 年調整後 EBITDA 和自由現金流指導的高端範圍。

The second quarter adjusted EBITDA was a little bit lower than we had in first quarter, but that's predominantly due to the asset divestiture that occurred during the first quarter and then at the very beginning of the second quarter, that drove our adjusted gross margin down by about $9 million. Our operating expense was also a little bit higher in the second quarter. We expect that to continue into the third quarter, just part of the summer months as we're getting into those months, the utilities go up a little bit. We do more of our maintenance and repair jobs. So we see more maintenance and repair expense, things like that.

第二季調整後的 EBITDA 比第一季略低，但這主要是由於第一季和第二季初發生的資產剝離導致我們調整後的毛利率下降了約900萬美元。第二季我們的營運費用也略有增加。我們預計這種情況將持續到第三季度，只是夏季的一部分，隨著我們進入這些月份，公用事業費將略有上升。我們做更多的維護和修理工作。所以我們看到更多的維護和修理費用，諸如此類。

Danny, with your new role as COO, can you talk about some of the transformation-oriented processes our teams have been implementing and how that has and will continue to benefit WES over the coming quarters?

Danny，您擔任營運長後，您能談談我們團隊一直在實施的一些以轉型為導向的流程嗎？

Certainly. Since our transformation go live in April 2023, our teams have implemented several processes that had a significant positive impact on WES. One of the key initiatives has been enhancing the resolution of our data relative to spending. These improvements have enabled us to develop more effective sourcing strategies, resulting in over $15 million in cost savings across both OpEx and CapEx year-to-date.

當然。自 2023 年 4 月實施轉型以來，我們的團隊實施了多個流程，對 WES 產生了重大正面影響。關鍵舉措之一是提高我們與支出相關的數據的分辨率。這些改進使我們能夠制定更有效的採購策略，今年迄今為止，營運支出和資本支出節省了超過 1500 萬美元的成本。

Additionally, we've made substantial strides in our compression preventative maintenance program which has contributed to the significant improvement in our West Texas operability this year. We expect even greater synergies with this preventative maintenance work in 2025 as we incorporate our supply chain strategies across the full year and across all basins to leverage additional cost savings by more effectively leveraging our scale. Furthermore, our ongoing operations data management initiative is set to elevate our data quality and analysis capabilities. By the end of the year, this will provide our engineers and operators with advanced tools to further optimize our cost and operational performance across our assets. These initiatives collectively position us to achieve sustained operational excellence and cost efficiency, driving long-term benefits for WES.

此外，我們在壓縮預防性維護計劃方面取得了重大進展，這有助於今年西德克薩斯州可操作性的顯著改善。我們預計到 2025 年，這項預防性維護工作將產生更大的協同效應，因為我們將全年和所有流域的供應鏈策略納入其中，透過更有效地利用我們的規模來節省額外的成本。此外，我們正在進行的營運數據管理計劃旨在提高我們的數據品質和分析能力。到今年年底，這將為我們的工程師和操作員提供先進的工具，以進一步優化我們整個資產的成本和營運績效。這些舉措共同使我們能夠實現持續的卓越營運和成本效率，從而為 WES 帶來長期利益。

Danny, it's also been a while since we talked about commercial successes in the Rockies or the Northern region. Can you provide some additional color on the new commercial contracts that WES has signed in the DJ and Uinta basins? Also, what's driving the increase in activity in these regions?

丹尼，我們也有一段時間沒有談論落基山脈或北部地區的商業成功了。您能否對 WES 在 DJ 和 Uinta 盆地簽署的新商業合約提供一些額外的資訊？此外，是什麼推動了這些地區活動的增加？

Sure, Daniel. In the DJ Basin, WES signed an amendment to DCP's original natural gas offload agreement to WES that extends the firm processing of 175 million cubic feet a day from 2027 to 2029, which is 100% take-or-pay. Additionally, this multiyear amendment provides P-66 with an incremental 200 million a day of firm processing capacity, primarily supported by minimum volume commitments starting in 2026.

當然，丹尼爾。在DJ盆地，WES向WES簽署了DCP原有天然氣卸載協議的修正案，將每天1.75億立方英尺的固定加工量從2027年延長至2029年，即100%照付不議。此外，這項多年期修正案為 P-66 提供了每天 2 億增量的固定處理能力，這主要是由 2026 年開始的最低數量承諾提供支援。

If fully utilized, these agreements could fill up the remaining capacity across our DJ Basin complex starting in 2026 through at least 2029. At our Chipeta facility in Utah, we executed a multi-year natural gas processing agreement with Kinder Morgan in support of their Altamont Green River Pipeline project, providing up to 150 million a day of firm natural gas processing capacity, which is expected to be in service by mid 2025. Additionally, we executed agreements with several customers supporting Williams Companyies Mountain West Pipeline expansion to provide up to 110 million cubic feet per day of natural gas processing capacity at Chipeta, all of which are on a take-or-pay basis. We have already begun to receive a portion of these volumes and expect incremental volumes in the second half of 2024 and into 2025. These new agreements will require some expansion capital for our facilities in the basin, mostly for compression, additional liquid stabilization capacity at Chipeta with incremental capital needs mostly occurring in 2025.

如果充分利用，這些協議可以填補 DJ Basin 綜合體從 2026 年到至少 2029 年的剩餘容量。在我們位於猶他州的奇佩塔工廠，我們與金德摩根簽署了一項多年天然氣加工協議，以支持他們的阿爾塔蒙特綠河管道項目，提供每天高達1.5 億美元的固定天然氣加工能力，預計將在 2025 年中期提供服務。此外，我們還與支持 Williams Companyies Mountain West 管道擴建的幾家客戶簽署了協議，在奇佩塔提供每天高達 1.1 億立方英尺的天然氣處理能力，所有這些都是按照付不議的方式進行的。我們已經開始接收其中的一部分，預計 2024 年下半年和 2025 年將增加數量。這些新協議將需要一些用於我們盆地設施的擴張資金，主要用於奇佩塔的壓縮和額外的液體穩定能力，增量資本需求主要發生在 2025 年。

Thanks, Danny. Kristin, how are these new agreements going to potentially affect our capital expenditure plans for the rest of 24 and going into 2025.

謝謝，丹尼。克里斯汀，這些新協議將如何影響我們剩下的 24 年和 2025 年的資本支出計畫。

So in general, when we're looking at 2024, we started the beginning of the year looking at what's in the commercial pipeline and I'm just giving some thought to what can make it over into final executable stage throughout the year. So that type of pipeline within it and some of those discussions, they help us form how wide the range should be. It's a little bit more of an art than a science on that win. But for us right now, this year, we still expect to be within the guidance range that we set for capital even with those new commercial deals because we gave some thought to what type of commercial deals might materialize as the year progresses.

因此，總的來說，當我們展望 2024 年時，我們從年初開始研究商業管道中的內容，我只是考慮一下什麼可以使其進入全年的最終可執行階段。因此，其中的那種類型的管道和其中一些討論，它們幫助我們確定範圍應該有多寬。這場勝利與其說是一門科學，不如說是一門藝術。但對我們來說，今年，即使有這些新的商業交易，我們仍然預計資本將處於我們設定的指導範圍內，因為我們考慮了隨著時間的推移，什麼類型的商業交易可能會實現。

As we look into 2025, there are commercial deals that we talked about this quarter that will impact the 2025 capital budget. So a little bit too early to get into the details, obviously of what the 2025 capital budget should be. But we do expect to spend some capital in the DJ Basin in Wyoming and Utah, where we haven't historically been spending as much capital. At the same time, we don't have a big chunky capital project like the plants that we've had for the last two years. We haven't sanctioned another plant there. And so I do still expect a large part of the capital that you saw in 2024 to not reoccur in 2025. But we will update everyone later as we continue to work through producers' forecasting and really define what the capital budget should be for 2025.

當我們展望 2025 年時，我們本季討論的一些商業交易將影響 2025 年的資本預算。因此，現在討論 2025 年資本預算的細節顯然還為時過早。但我們確實預計在懷俄明州和猶他州的 DJ 盆地投入一些資金，而我們在這兩個盆地歷來沒有投入那麼多資金。同時，我們沒有像過去兩年的工廠那樣的大型資本項目。我們還沒有批准那裡的另一家工廠。因此，我仍然預計 2024 年看到的大部分資本在 2025 年不會再次出現。但我們稍後會向大家通報最新情況，因為我們將繼續研究生產商的預測並真正確定 2025 年的資本預算。

In light of that, WES did achieve its three times leverage target at the end of the second quarter. Can you talk about WES's capital allocation priorities going forward?

有鑑於此，WES確實在第二季末實現了三倍槓桿目標。您能談談 WES 未來的資本配置優先事項嗎？

So if you look at the new slide, we've put into the earnings deck, Slide 24. We have worked really hard over the past few years to grow the business to prudently allocate capital to improve the strength of the balance sheet and to be a leading return generator for our stakeholders. In fact, since January of 2020, we have reduced our debt balance. We've paid out approximately $3.5 billion through base and enhanced distributions to our unitholders. And we've bought back over 1.1 billion of our common units, which is about 15% of our unaffected unit count.

因此，如果您查看新投影片，我們已將其放入收益表中，即投影片 24。在過去的幾年裡，我們非常努力地發展業務，審慎地分配資本，以提高資產負債表的實力，並成為利害關係人的領先回報創造者。事實上，自2020年1月以來，我們已經減少了債務餘額。我們已透過基礎分配和增強分配向我們的單位持有人支付了約 35 億美元。我們已經回購了超過 11 億個普通單位，約佔未受影響單位數量的 15%。

And now that we've achieved our target three times leverage a little bit sooner than what we had expected, we're going to focus on the following priorities in no particular order: investing capital in the business to expand organically. And you're seeing us do that quite a bit. We just talked about this quarter, all the commercial success we had and we'll put a little money in there and to build out and bring those volumes onto the system for those high returning projects.

現在，我們已經比預期早一點實現了槓桿率三倍的目標，我們將重點關注以下優先事項（排名不分先後）：向業務投資資本以實現有機擴張。你會看到我們經常這樣做。我們剛剛談到了本季度，我們所取得的所有商業成功，我們將投入一點資金，為那些高回報項目構建並將這些數量引入系統。

We always look at M&A, and what makes sense from an asset perspective to inorganically, bring those assets into the portfolio. And so we're going to continue to look at that and see if there's any capital that we can allocate towards accretive M&A. We also look at the base distribution and when is the right time to increase the base distribution based on us being at the leverage that we're at and what kind of cash flow is the business generating. And then obviously, if there's anything left from a cash flow perspective after we've bought back debt and we've bought back units. And we've paid our base distribution, if there's anything left, and that's what our enhanced distribution is for as well. So I think we've been very consistent in the delivery of that message around our capital allocation priorities, and we're really happy that we've reached our leverage target.

我們總是關注併購，以及從資產的角度來看什麼是有意義的，將這些資產納入投資組合。因此，我們將繼續關注這一點，看看是否有任何資本可以分配給增值併購。我們也會考慮基本分配，以及根據我們所處的槓桿情況以及業務產生的現金流量，何時是增加基本分配的合適時機。顯然，從現金流的角度來看，在我們回購債務和回購單位之後，是否還有剩餘。我們已經支付了基本分配的費用（如果還有剩餘的話），這也是我們增強分配的目的。因此，我認為我們在圍繞資本配置優先事項傳遞這一訊息方面一直非常一致，而且我們非常高興我們已經達到了槓桿目標。

Kristin, Danny, thank you both for joining us today. For our listeners, 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

克莉絲汀、丹尼，謝謝你們今天加入我們。對於我們的聽眾，如果您還有任何其他問題，請隨時與我們聯繫。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