Western Midstream Partners LP (WES) 2024 Q3 法說會逐字稿

Welcome to Western Midstream's third-quarter 2024 post-earnings call fireside chat with our Chief Financial Officer, Kristen Shults; and our newly appointed Chief Executive Officer, Oscar Brown.

歡迎參加西中游 2024 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；以及我們新任命的執行長奧斯卡布朗。

Oscar, congratulations on your new role. Why don't you give our investors a quick introduction, a brief overview of your background, and how long you've been affiliated with WES?

奧斯卡，祝賀你擔任新角色。您為何不向我們的投資人簡單介紹一下您的背景，以及您加入 WES 多久了？

Thanks, Daniel. It's a great pleasure to be here, and I've actually had a great couple of weeks stepping into the role. So my background goes back a long ways. I started my career on the banking side and spent 25 years covering energy companies and working with those companies to grow their businesses and provide capital. About eight years ago, I decided to take the challenge of joining industries and joined Occidental Petroleum and spent four years with the company working with them in business development and leading supply chain and also part of our strategy.

謝謝，丹尼爾。很高興來到這裡，實際上我在擔任這個角色的幾週時間裡度過了愉快的時光。所以我的背景可以追溯到很久以前。我的職業生涯始於銀行業，花了 25 年的時間報道能源公司並與這些公司合作發展他們的業務並提供資金。大約八年前，我決定接受業界加入的挑戰，加入了西方石油公司，並在該公司工作了四年，與他們合作開展業務發展和領導供應鏈，這也是我們策略的一部分。

Over that time, really had the opportunity to maintain relationships with certain Board members and the CEO and a lot of the leaders over there. And of course, our Chairman is a great colleague and friend of mine.

在那段時間裡，我確實有機會與某些董事會成員、執行長以及那裡的許多領導者保持關係。當然，我們的主席是我的一位偉大的同事和朋友。

So after that, we did part ways. So it's important to note that we did leave. I'd like to say that I very much like Occi, I continue to like them, but I love WES, and the last five years of my life and part of my time has been spent focused on WES as a Board member and as a director. In the interim period between Occi and WES, I did spend a few years in the renewable space. So really got a chance to live first hand within the energy transition and really experience a lot of the challenges that that part of the energy industry is facing.

所以在那之後我們就分道揚鑣了。所以重要的是要注意我們確實離開了。我想說，我非常喜歡 Occi，我會繼續喜歡他們，但我喜歡 WES，我生命的最後五年和我的部分時間都花在了作為董事會成員和董事會成員的 WES 上。在 Occi 和 WES 之間的過渡時期，我確實在再生能源領域度過了幾年。因此，我確實有機會親身體驗能源轉型，並真正體驗能源產業所面臨的許多挑戰。

So I'm very pleased to be back in the oil and gas business, and very pleased to take sort of additional responsibilities with WES. Of course, I remain on the Board, but I'm really excited with the opportunities we have to grow the company and grow the business and make WES even bigger and better than before.

因此，我很高興回到石油和天然氣行業，也很高興在 WES 中承擔一些額外的責任。當然，我仍留在董事會，但我對我們有機會發展公司、發展業務並使 WES 比以前更大、更好感到非常興奮。

That's a great lead-in. A lot of our investors are probably interested in hearing more of your top priorities for WES. Can we expect to see any changes in strategy in the near term?

這是一個很好的引導。我們的許多投資者可能有興趣了解更多關於 WES 的首要任務。我們可以期望在短期內看到戰略上的任何變化嗎？

As I said, my vision for the partnership is very much in line with the current strategy. Because of my time on the Board, I was really a part of supporting the company's mission and strategy and vision and all those things and certainly how we think about creating value for our unitholders. And again, those priorities, as we said many times, and I'll continue to say, are really executing on organic expansion opportunities, focusing on accretive M&A where we can find it. I'll probably say more than once, we like to hold that M&A to a very high standard. And I say risk-adjusted because it's important to remember when we have organic growth opportunities, we typically have much better insight and control over our risks and our returns.

正如我所說，我對合作關係的願景與當前策略非常一致。由於我在董事會任職的時間，我確實參與了支持公司的使命、策略和願景以及所有這些事情，當然還有我們如何考慮為我​​們的單位持有者創造價值。再說一次，正如我們多次說過的那樣，我將繼續說，這些優先事項實際上是在執行有機擴張機會，重點是我們能找到的增值併購。我可能會不只一次地說，我們希望將併購保持在非常高的標準。我說風險調整是因為重要的是要記住，當我們擁有有機成長機會時，我們通常對風險和回報有更好的洞察力和控制力。

And in M&A, you sometimes don't know what you get. But in the case of Meritage, it was a textbook acquisition and validation of the company's strategy and how to find accretive M&A and execute and integrate appropriately.

在併購中，您有時不知道自己會得到什麼。但就 Meritage 而言，這是對公司策略的教科書收購和驗證，以及如何找到增值併購並適當執行和整合。

And then finally, all this really leads to probably the most important thing, which is growing our base distribution over time and in line with the growth of the business. So all these should sound very familiar to investors. We continue to look for ways to return capital to our unitholders at the same time, drive this growth, so we have a sustainable business model over time and then, of course, maintain our strong investment-grade ratings on the balance sheet.

最後，所有這一切確實導致了可能是最重要的事情，即隨著時間的推移並與業務的成長保持一致，擴大我們的基礎分銷。因此，所有這些對於投資者來說應該非常熟悉。我們繼續尋找方法，同時向我們的單位持有人返還資本，推動這種增長，因此我們隨著時間的推移擁有可持續的商業模式，當然，我們也會在資產負債表上保持強勁的投資級評級。

Thank you, Oscar. Kristen, looking at our third-quarter results, can you give us a general overview and an update on what happened during the quarter and what we should expect for the remainder of the year?

謝謝你，奧斯卡。克里斯汀（Kristen），看看我們第三季度的業績，您能給我們一個總體概述和本季度發生的情況的最新情況以及我們對今年剩餘時間的預期嗎？

Sure, Daniel. So the third quarter was another very strong quarter for WES. We had strong customer service, and our system operability was above 98% despite doing quite a bit of maintenance activity and turnaround activity in our plants. Our natural gas throughput increased by 1% quarter over quarter due to Powder River Basin growth and our seventh consecutive quarter of record natural gas throughput in the Delaware Basin. Our crude and NGL volumes decreased by 2%, but this was primarily due to decreased throughput in the DJ Basin with the sale of the Wamsutter pipeline in Wyoming and finally, lower volumes from our equity investments.

當然，丹尼爾。因此，第三季對於 WES 來說是另一個非常強勁的季度。我們擁有強大的客戶服務，儘管我們的工廠進行了大量的維護活動和周轉活動，但我們的系統可操作性仍高於 98%。由於粉河盆地的成長以及特拉華盆地天然氣吞吐量連續第七個季度創紀錄，我們的天然氣吞吐量季增了 1%。我們的原油和液化天然氣銷量下降了 2%，但這主要是由於出售懷俄明州沃姆特管道導致 DJ 盆地吞吐量下降，以及我們股權投資的銷量下降。

Our produced water volumes increased 2% quarter over quarter. We had some of our producers taking volumes off the system for recycling programs. These volumes will eventually make their way back on to the system, but it did cause our throughput to be a little bit lower than what we expected for the quarter. Because of our third-quarter throughput activity and then what we're seeing for the rest of the year, we actually lowered our year-over-year average throughput growth rates that we put into our slide deck.

我們的產水量較上季成長 2%。我們讓一些生產商從系統中取出一定量的產品用於回收計劃。這些卷最終將返回系統，但這確實導致我們的吞吐量略低於我們本季的預期。由於我們第三季的吞吐量活動以及今年剩餘時間的情況，我們實際上降低了幻燈片中的同比平均吞吐量成長率。

So our produced water went from mid- to upper teens to low double digits growth year over year, and our crude went from low teens to low double digits year over year. These changes were really on the margin, which is why we're still able to say that we'll be towards the high end of our adjusted EBITDA and free cash flow guidance ranges for the year.

因此，我們的採出水逐年成長從中十幾位數到低兩位數，我們的原油產量逐年從低十幾位數成長到低兩位數。這些變化確實是微不足道的，這就是為什麼我們仍然可以說我們將達到今年調整後 EBITDA 和自由現金流指導範圍的高端。

From a financial perspective, our adjusted EBITDA was slightly below what we saw for Q2. Because of the plant turnaround activity that we had, we experienced lower recoveries. And with lower commodity prices, coupled with those lower recoveries, we didn't have quite as much adjusted gross margin.

從財務角度來看，我們調整後的 EBITDA 略低於第二季的水平。由於我們進行了工廠週轉活動，我們的回收率較低。由於大宗商品價格較低，再加上回收率較低，我們的調整後毛利率沒有那麼高。

Additionally, there was a distribution payment from one of our JVs that we didn't receive this quarter that we expect to receive next quarter. And as we've talked about many times, our OpEx was a little bit higher, especially during the second quarter and third quarter just from maintenance activities that pick up during that time period. So as we're looking forward into Q4, we expect our adjusted EBITDA to tick back up as those turnaround activities have subsided and much of the maintenance work will have subsided as well.

此外，我們本季沒有收到我們合資企業的分配付款，但預計下季會收到。正如我們多次討論的那樣，我們的營運支出略高一些，尤其是在第二季度和第三季度，這只是由於該時期維護活動的增加。因此，當我們展望第四季時，我們預計調整後的 EBITDA 將回升，因為這些週轉活動已經平息，而且大部分維護工作也將平息。

We also mentioned in our press release that we had executed an agreement pertaining to our Mi Vida JV, where we essentially created a plant within a plant type of structure. So we now have 100 million cubic feet a day of dedicated processing capacity that will become part of our Delaware Basin complex processing capacity in mid-2025.

我們也在新聞稿中提到，我們已經執行了一項與 Mi Vida 合資企業有關的協議，我們基本上在工廠類型的結構中創建了一個工廠。因此，我們現在擁有每天 1 億立方英尺的專用處理能力，這些能力將在 2025 年中期成為我們特拉華盆地綜合處理能力的一部分。

I know we will provide our full outlook for 2025 in February, but are there any early insights you can give us into next year?

我知道我們將在 2 月提供 2025 年的全面展望，但是您可以為我們提供一些關於明年的早期見解嗎？

Sure. Maybe just a few notes. When we're looking at capital for 2025, we're expecting capital to be lower than it was in 2024. We're going to finish the vast majority of the construction on North Loving this year for it to be ready to be placed in service in Q1 of 2025. So don't expect to have a plant, which is a very large capital project impacting our capital budget.

當然。也許只是一些註解。當我們考慮 2025 年的資本時，我們預期資本將低於 2024 年。我們將於今年完成 North Loving 的大部分建設工作，以便在 2025 年第一季投入使用。因此，不要指望擁有一座工廠，這是一個影響我們資本預算的非常大的資本項目。

We do expect to have more spend in the PRB as we're building out that system more. And as we talked about on prior calls, we've had a lot of commercial successes up in the Powder River Basin.

我們確實希望在 PRB 上投入更多資金，因為我們正在進一步建立該系統。正如我們在之前的電話中談到的那樣，我們在保德河流域取得了許多商業成功。

More insight will come on the February call as it relates to EBITDA, but to provide a little clarity on what we're seeing right now in terms of throughput in 2025. When we look at the forecast that we've been receiving from our producers for next year, we expect the growth in the Delaware and DJ Basins to moderate relative to what we've seen in 2023 and 2024. We've had a few years now of increased activity levels and incremental wells coming online. And while activity is still very strong in those basins, that steady activity is leading to more moderate growth rate.

更多與 EBITDA 相關的見解將在 2 月的電話會議上公佈，但我們會稍微澄清一下我們目前所看到的 2025 年吞吐量情況。當我們查看生產商對明年的預測時，我們預計特拉華州和 DJ 盆地的成長相對於 2023 年和 2024 年的情況將有所放緩。幾年來，我們的活動水準不斷提高，油井也不斷增加。儘管這些盆地的活動仍然非常強勁，但這種穩定的活動正在導致成長率更加溫和。

Additionally, when we look at our total portfolio growth, our average year-over-year throughput increased from 2023 to 2024 in part due to the acquisition of Meritage Midstream. And so this year, we haven't had an acquisition like this. In fact, we've been divesting of our assets. So with that, we won't be including 23,000 barrels a day of crude oil and NGLs, and we won't have 38 million cubic feet a day of natural gas throughput associated with those JVs that we divested of this year. Those volumes that are lost from those asset sales represent approximately $26 million of adjusted EBITDA in 2024 that will not repeat in 2025.

此外，當我們考慮總投資組合成長時，我們的平均吞吐量從 2023 年到 2024 年有所增加，部分原因是收購了 Meritage Midstream。所以今年我們還沒有進行過這樣的收購。事實上，我們一直在剝離我們的資產。因此，我們將不再包括每天 23,000 桶的原油和液化天然氣，也不會包括與我們今年剝離的合資企業相關的每天 3800 萬立方英尺的天然氣吞吐量。這些資產出售造成的損失相當於 2024 年調整後 EBITDA 的約 2,600 萬美元，這一情況在 2025 年不會重複。

With that, over the next few months, we'll be receiving updated forecast from our producers as they continue to work through their budgets and their changes in the overall environment, and these forecasts will allow us to provide further thoughts and guidance in February. We're still really excited about 2025. We've had a lot of growth projects going on this year. The PRB has been doing incredibly well. But just wanted to give a little bit of context of '25 relative to 2024 just because we did have such large throughput increases in '24 because of the inorganic opportunities and uptick in activity that we saw in prior years, too.

這樣，在接下來的幾個月裡，我們將收到來自生產商的最新預測，因為他們將繼續研究預算和整體環境的變化，這些預測將使我們能夠在二月提供進一步的想法和指導。我們對 2025 年仍然感到非常興奮。今年我們正在進行很多成長項目。PRB 的表現非常出色。但只是想提供一些相對於 2024 年而言的 25 年背景，因為我們在 24 年確實實現瞭如此大的吞吐量增長，因為我們在前幾年也看到了無機機會和活動的增加。

Thanks, Kristen. Oscar, would you end by reiterating WES's capital allocation priorities going forward?

謝謝，克里斯汀。Oscar，您最後能否重申一下 WES 未來的資本配置優先事項？

Sure, Daniel. We've worked really hard over the past few years to grow the business, prudently allocate capital, improve the strength of our balance sheet, and generate leading returns for our stakeholders. In fact, since becoming an independent partnership, we have reduced our net debt balances and lowered our leverage ratio considerably. We've also paid out almost $4 billion to unitholders through distributions and bought back over $1 billion of our common units or about 15% of the unaffected unit count.

當然，丹尼爾。在過去的幾年裡，我們非常努力地發展業務，審慎地配置資本，提高資產負債表的實力，並為我們的利害關係人創造領先的回報。事實上，自從成為獨立合夥企業以來，我們已經減少了淨債務餘額並大幅降低了槓桿率。我們還透過分配向單位持有人支付了近 40 億美元，並回購了超過 10 億美元的普通單位，即未受影響單位數量的約 15%。

Now that we have comfortably achieved our 3 times leverage target a little sooner than we expected, we plan to continue focusing on the following three priorities: organic growth, accretive acquisitions, and increasing our distributions to unitholders. Regarding organic growth, and this one is my favorite way to grow the business, we'll continue to work with our customers to support them with projects that meet their needs and generate the returns our unitholders expect with reasonable payback periods. Organic growth tends to be lower risk than acquisitions.

既然我們已經比預期早一點輕鬆實現了 3 倍槓桿目標，我們計劃繼續關注以下三個優先事項：有機成長、增值收購以及增加對單位持有人的分配。關於有機成長，這是我最喜歡的業務成長方式，我們將繼續與客戶合作，透過滿足他們需求的專案來支持他們，並以合理的投資回收期產生我們的單位持有人所期望的回報。有機成長的風險往往低於收購。

That said, we continue to evaluate acquisitions that are accretive to our free cash flow and returns over time, such as the Meritage acquisition. We want to follow our customers where they need us, and we need to be able to add value as an owner to drive those returns. Even on a risk-adjusted basis, acquisitions are still held to a higher standard.

也就是說，我們將繼續評估隨著時間的推移可增加我們的自由現金流和回報的收購，例如 Meritage 收購。我們希望跟隨客戶需要我們的地方，並且我們需要能夠作為所有者增加價值以推動這些回報。即使在風險調整的基礎上，收購仍需遵守更高的標準。

And finally, the reason for our first two priorities is the most important one, driving long-term distribution growth. We have said and I continue to support, we will grow our distribution in line with the overall growth in our business. If we are unable to find organic acquisition or other opportunities that can generate sufficient returns and long-term free cash flow growth over time, we also have our enhanced distribution framework to return additional capital to unitholders as well as the ability to repurchase units.

最後，我們的前兩個優先事項也是最重要的一個，即推動長期分銷成長。我們已經說過並且我將繼續支持，我們將根據我們業務的整體成長來擴大我們的分銷。如果我們無法找到有機收購或其他能夠隨著時間的推移產生足夠回報和長期自由現金流增長的機會，我們還可以透過增強的分配框架向單位持有人返還額外資本以及回購單位的能力。

Oscar, Kristen, 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.

奧斯卡、克莉絲汀，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。