Financial Data and Key Metrics Changes - The second quarter generated net income attributable to limited partners of $334 million and adjusted EBITDA of $618 million, with an adjusted gross margin increase of $18 million compared to the first quarter, primarily driven by increased throughput and improved gross margin contribution from the Delaware Basin [19][20] - The company maintained a top-tier net leverage ratio of 2.9 times at quarter end, with free cash flow of $388 million [21][23] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 3% sequentially, crude oil and NGLs throughput increased by 6%, and produced water throughput increased by 4%, primarily due to new wells coming online in the Delaware Basin [13][14] - Adjusted gross margin per Mcf for natural gas decreased by $0.02, while per barrel adjusted gross margin for crude oil and NGLs decreased by $0.15, reflecting changes in contract mix and distribution payments [14][15] Market Data and Key Metrics Changes - The Delaware Basin continued to be the primary growth engine, with expectations of modest year-over-year increases in average throughput across all product lines [16][17] - The company anticipates meaningful natural gas throughput growth from other assets, particularly in the Uinta Basin, driven by pipeline expansions [18] Company Strategy and Development Direction - The company announced an agreement to acquire Arris Water Solutions, which is expected to optimize the value of existing assets and enhance service offerings [6][9] - The sanctioning of a second train at the North Loving natural gas processing plant aims to increase capacity and prepare for anticipated growth in natural gas and produced water volumes [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth outlook despite volatile market conditions, with no substantial changes in customers' expected production [26][27] - The company remains committed to generating strong returns for unitholders while sustaining and growing distributions over time [24][27] Other Important Information - The acquisition of Arris is valued at $2 billion, implying approximately 7.5 times 2026 consensus EBITDA, and is expected to be accretive to free cash flow per unit in 2026 [9][10] - The company has identified permanent annual run rate cost savings of approximately $50 million through operational efficiencies [22] Q&A Session Summary Question: Funding for ARRIS acquisition - Management explained the decision to finance the acquisition in a leverage-neutral way to preserve balance sheet capacity and position for future growth opportunities [31][33] Question: Water business percentage of EBITDA - Management indicated no specific target mix for the water business but expressed satisfaction with a range around 15% to 20% [34] Question: Opportunities for consolidation in New Mexico - Management noted that the ARRIS acquisition completes their system in the Delaware Basin and they are comfortable with the regulatory environment in New Mexico [36][38] Question: FID on North Loving II - Management acknowledged a more aggressive approach to FID, supported by strong underlying contracts and producer confidence [40][42] Question: Synergies from the ARRIS acquisition - Management clarified that the $40 million in synergies are primarily G&A savings and that they expect to realize these quickly post-acquisition [46][48] Question: Capital expenditures outlook - Management expects elevated capital expenditures in 2026 due to major projects, normalizing in 2027 [51][52] Question: Opportunities at McNeil Ranch - Management views McNeil Ranch as a long-term upside opportunity for water disposal and surface use [55][57] Question: Regulatory hurdles for ARRIS acquisition - Management does not foresee significant hurdles in the regulatory process and expects to close the transaction in the fourth quarter [60][62]