Western Midstream(US:WES)2025-11-05 15:02Financial Data and Key Metrics Changes - The company reported net income attributable to limited partners of $332 million and adjusted EBITDA of $634 million for Q3 2025, with adjusted gross margin remaining relatively flat compared to the previous quarter [17][20] - Operating and maintenance expenses decreased by 5%, or $12 million, quarter over quarter, attributed to reduced asset maintenance and repair expenses [17][18] - Cash flow from operating activities totaled $570 million, generating free cash flow of $397 million [19] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 2% sequentially, driven by higher volumes from the Chepeta plant in Utah and the DJ Basin [7][10] - Crude oil and NGLs throughput decreased by 4% sequentially, primarily due to reduced throughput in the Delaware Basin [8] - Produced water throughput remained flat sequentially, with expectations for a 40% year-over-year increase in Q4 2025 due to the Aris acquisition [10][12] Market Data and Key Metrics Changes - The Delaware Basin throughput was in line with expectations, with low double-digit year-over-year growth anticipated for natural gas and low to mid-single digits for crude oil and NGLs [10][11] - The DJ Basin is expected to see flat growth for natural gas and low to mid-single digits for crude oil and NGLs [12] - The Powder River Basin is projected to have flat throughput growth for both natural gas and crude oil and NGLs [12] Company Strategy and Development Direction - The acquisition of Aris Water Solutions positions the company as a leader in produced water midstream solutions in the Delaware Basin, enhancing its commercial capabilities [4][24] - The company aims to capture $40 million in annual run rate synergies from the Aris acquisition and is focused on organic growth alongside potential inorganic opportunities [4][15][67] - The company plans to maintain a disciplined capital allocation framework while pursuing growth opportunities in both Texas and New Mexico [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to address produced water challenges in the Delaware Basin and highlighted the importance of regulatory engagement [4][24] - The company anticipates continued throughput growth in the Delaware Basin, driven by the Aris acquisition and ongoing projects like the Pathfinder pipeline [10][14] - Management acknowledged potential commodity price weakness impacting certain basins but remains optimistic about overall growth prospects [12][58] Other Important Information - The company expects capital expenditures to be at least $1.1 billion in 2026, with a focus on supporting throughput growth across all product lines [22] - The company declared a quarterly distribution of $0.91 per unit, consistent with the prior quarter [19] Q&A Session Summary Question: Discussion on O&M expense sustainability - Management indicated that the reduction in O&M expenses is sustainable and that further improvements are expected [30][34] Question: Potential for distribution step-ups with major projects - Management confirmed that distribution step-ups are possible with successful project completions or acquisitions, while being mindful of yield levels [35][37] Question: Update on the Pathfinder project and pore space agreement - Management noted that the pore space agreement enhances project efficiency and allows for better growth potential in New Mexico [40][41] Question: Plans for expanding gas and oil infrastructure in New Mexico - Management plans to pursue both organic and inorganic growth opportunities in New Mexico, leveraging the Aris acquisition [45][46] Question: Insights on synergies from the Aris acquisition - Management expressed confidence in achieving the $40 million synergy target and anticipates additional operational synergies [64][67]