Western Midstream(US:WES)2024-11-07 21:18Financial Data and Key Metrics Changes - The company reported net income attributable to limited partners of $282 million and adjusted EBITDA of $567 million for Q3 2024, with a sequential decrease in adjusted gross margin by $8 million due to lower natural gas liquids recoveries and commodity prices [27][28][33] - The trailing 12-month net leverage ratio reached three times, aligning with the year-end 2024 threshold [11] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 1% sequentially, driven by growth in the Powder River and Delaware basins, while total crude oil and NGL throughput declined by 2% due to decreased volumes in the DJ Basin and the sale of the Wamsutter oil pipeline [16][17] - Produced water throughput increased by 2% sequentially despite elevated recycling activities, with expectations for future volumes to cycle into the system [18][25] Market Data and Key Metrics Changes - The company expects average year-over-year throughput growth for crude oil and NGLs and produced water to be in the low double digits percentage range, slightly lower than initial expectations due to reduced throughput in the Delaware Basin [23][24] - Natural gas throughput growth remains unchanged at mid- to upper teens percentage growth, supported by strong performance in the Delaware, DJ, and Powder River basins [26] Company Strategy and Development Direction - The company plans to allocate capital towards organic growth projects, accretive M&A, and increasing base distributions as business grows [12][14] - The new CEO emphasized maintaining the partnership's mission and strategic initiatives while focusing on superior customer service and optimizing the new MLP model [39][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a more favorable regulatory environment for oil and gas under the new administration, which could benefit midstream operations [57] - The company anticipates a moderation in growth rates for 2025 across all products, influenced by the absence of significant acquisitions and the divestment of non-core assets [35][59] Other Important Information - The company issued $800 million of senior notes to retire upcoming debt and for general partnership purposes, with the issuance being well-received by the market [31] - A base distribution of $0.875 per unit was declared, unchanged from the previous quarter [32] Q&A Session Summary Question: Transition of CEO and its implications - The transition was described as smooth, with the new CEO emphasizing continuity in capital allocation policy and goals for the partnership [48][51] Question: Consolidation in the Delaware Basin - The company sees itself as a potential consolidator in the Delaware Basin, focusing on M&A opportunities that add value [56] Question: Volume growth moderation in 2025 - Management indicated that growth in the Delaware and DJ basins would be more moderate due to increased activity levels leading to slower growth [59] Question: Navita contracting update - The restructuring of the commercial arrangement with the Mi Vida joint venture allows for better access to processing capacity, but it is not a significant increase in overall capacity [60] Question: Outlook on processing plants - There are no immediate plans for new processing plants, but the company remains open to opportunities based on customer needs and commercial arrangements [68]