Western Midstream Partners, Lp · NYSE:WES
Western Midstream Partners, Lp — Q2 2024 Earnings Presentation
46 slides from Western Midstream Partners, Lp's earnings presentation, Aug 8, 2024
Slide 1: Second-Quarter 2024 Review
Second-Quarter 2024 Review August 7, 2024
Slide 2: Forward-Looking Statements and Ownership Structure
Forward-Looking Statements and Ownership Structure WES OWNERSHIP STRUCTURE This presentation contains forward-looking statements. Western Midstream Partners, LP Occidental Public Unitholders (“WES”) believes that its expectations are based on reasonable assumptions. No assurance, however, can be giv
Slide 3: Recent Highlights
Western Midstream’ Recent Highlights
Slide 4: Recent Highlights
Recent Highlights Operational & Financial Accomplishments Total Operated Total Operated Achieved record natural-gas throughput in Natural-Gas Crude-Oil and NGLs both the Delaware and DJ Basins Throughput Throughput Gathered record operated and Delaware Basin 4.6 Bcf/d 396 MBbls/d crude-oil and NGLs
Slide 5: WES's Capital Allocation Priorities
WES's Capital Allocation Priorities Net Leverage Reduction1 Future Capital Allocation Priorities Continue Executing Expansion Opportunities Targeting organic capital projects that meet or exceed mid-teens, unlevered rates of return Pursuing Accretive M&A Targeting synergistic acquisitions that enhan
Slide 6: Second-Quarter Performance
Second-Quarter Performance
Slide 7: Second-Quarter Operational Performance
Second-Quarter Operational Performance 1Q 2024 2Q 2024 Actuals Actuals Natural-Gas Throughput (MMcf/d)1 4,990 4,988 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf)1 $1.32 $1.33 Crude-Oil and NGLs Throughput (MBbls/d)2 565 515 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl)2 $2.92 $2
Slide 8: Second-Quarter Financial Performance
Second-Quarter Financial Performance 1Q 2024 2Q 2024 ($ in millions) Actuals Actuals $370 Operating Cash Flow $399.7 $631.4 million Cash Capital Investments1 $174.8 $206.6 2Q'24 Net Income4 Free Cash Flow $225.0 $424.8 $223.42 $340.93 $578 Cash Distributions Paid million Free Cash Flow After Distrib
Slide 9: Guidance
Western Midstream’ Guidance
Slide 10: 2024 Financial & Operational Outlook
2024 Financial & Operational Outlook 2024 Financial Guidance 2024 Estimated Throughput Growth Rates5 Crude Oil & NGLs Low-teens ($ in millions) Natural Gas Mid-to-Upper Teens Adjusted EBITDA1 $2,200 – $2,400 Produced Water Mid-to-Upper Teens 2024 Commodity Price Sensitivities6 Total Capital Expendit
Slide 11: 2024 Guidance Highlights
2024 Guidance Highlights Adjusted Free Cash Leverage Cash EBITDA Flow Ratio Returns $2.30 $1.15 ~3.0x $3.20 Billion1 Billion2 YE’243 per unit4 Est. Base ~11%1 increase ~19%2 increase ~0.7x3 decrease Distribution4 vs. 2023 vs. 2023 vs. YE’23 in 2024 Note: Based on current producer production-forecast
Slide 12: Sustainability
Western Midstream’ Sustainability
Slide 13: 2023 Sustainability Highlights
2023 Sustainability Highlights Contributed Expanded >17,200 volunteer hours leadership to training >590 for newly promoted leaders and new causes Increased preventive employees in in our communities safety efforts with leadership roles Completed 144% >74,300 increase in Good hours of Catches reporte
Slide 14: Summary
h Western Midstream’ le = Summary
Slide 15: Accomplishments & Strategic Priorities Since 2020
Accomplishments & Strategic Priorities Since 2020 Balance sheet flexibility supports continued growth and strong unitholder returns Capital- Strong Standalone Efficient Accretive Capital Midstream Organic M&A Return Enterprise Expansion Framework • Enhanced governance rights of • Sanctioned Mentone
Slide 16: Evolution of the MLP
Evolution of the MLP WES has helped lead the optimization of the MLP model Portfolio Optimization Old MLP Model New MLP Model Free Operational Cash Flow Efficiencies & Generation Cost Reduction • Free Cash Flow • Distributable Cash Flow • Positive FCFaD • Negative FCFaD • Enhanced Capital Return • I
Slide 17: Opportunity for MLP Valuation Uplift
Opportunity for MLP Valuation Uplift Current, more sustainable MLP model trades at a ~5.0x discount compared to the old MLP model Quarterly Average MLP Valuations Average valuation of 13.7x under old MLP model1 Average yield: 9.1% Opportunity for multiple expansion Average yield: 6.8% Current averag
Slide 18: Comparative Valuation Metrics
Comparative Valuation Metrics Highlighting midstream’s compelling investment opportunity Russell 3000 and Midstream Investment Grade Russell 3000 Companies Companies with ≥ 7.0% forward yield1 Credit Profile with ≥ 7.0% yield2 Company Yield Rating Industry Investment Grade High Yield Leggett & Platt
Slide 19: WES – A Superior, Tax-Deferred Yield Opportunity
WES – A Superior, Tax-Deferred Yield Opportunity WES provides an attractive income opportunity relative to midstream and the S&P 500 1 Dividend / Distribution Yield by Sector2 Midstream Dividend / Distribution Yield1,2 WES continues to maintain one of the most lucrative distribution yields relative
Slide 20: MLP's Tax-Deferred Advantage
MLP's Tax-Deferred Advantage WES provides a strong, tax-deferred investment opportunity at an attractive valuation 2025 EV/EBITDA1 Est. Cumulative Cash Taxes to be Paid2 Future Tax-Payers The MLP model's differentiated tax structure should continue to benefit investors as Free cash flow grows and ca
Slide 21: Comparative Valuation Metrics
Comparative Valuation Metrics Highlighting WES's compelling investment opportunity Free Cash Flow Yield1 Price / Earnings Ratio2 (6%) WES continues to generate the highest free cash flow yield and yet trades at the lowest valuation relative to other sectors of the S&P 500. Note: Per FactSet and S&P
Slide 22: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) Strong track-record of returning capital to unitholders Total Capital Return Yield1 Total Capital Return Yield1 WES continues to be a market leader in total capital return yield relative to major energy indices, the S&P 500, and various publicly-traded midst
Slide 23: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) Leading returns on capital and redeployment of capital to stakeholders Total Capital Return as a Percentage of Return on Capital Employed2 Enterprise Value since 20201 WES continues to be a market leader in returning capital to stakeholders through a balance
Slide 24: Differentiated & Attractive Investment Opportunity
Differentiated & Attractive Investment Opportunity WES has been a leader in generating strong unitholder returns Total Capital Return Yield8,9 GROWING MAINTAINING Throughput & Profitability Capital Discipline 43% natural-gas growth in Delaware ROA of 18% compared to peer Basin since 20201 average of
Slide 25: Well Positioned for Growth and Capital Return
Well Positioned for Growth and Capital Return Well-Positioned Asset Base Situated within core of most attractive basins Operations Operational Excellence Increased efficiencies and competitive cost structure Increasing Producer Volumes Supporting domestic energy growth Customers Three-Stream Service
Slide 26: Appendix
7 Western Midstream’ Appendix
Slide 27: Returning Excess Free Cash Flow to Unitholders
Returning Excess Free Cash Flow to Unitholders Enhanced Distribution Framework Positive Capital Allocation Annual Net Annual Distribution Cash Flow Outlook Priorities Leverage Threshold3 Framework Debt Optimization 3.4x $3.20 Base Annual YE’22 Distribution1 Free Cash + Flow Base Distributions1 3.2x
Slide 28: Enhanced Distribution Mechanics
Enhanced Distribution Mechanics Illustrative Calculation Using TTM Financial Information • Any 2024 Enhanced Distribution would be Trailing Twelve-Month payable with first-quarter 2025 Base Enhanced Distribution Calculation Distribution $ in millions As of 6/30/24 Free Cash Flow1 $1,132 • Dependent
Slide 29: 2024 Adjusted EBITDA Guidance
2024 Adjusted EBITDA Guidance EXPECTED ASSET-LEVEL EBITDA CONTRIBUTION2 51% Delaware Basin 32% DJ Basin 68% Gas 88% Gas $2,200 Million 12% Oil 16% Oil to 16% Water $2,400 Million1 6% Powder River Basin 5% Equity Investments 6% Other3 1) Includes the impact of the non-core asset sales. 29 2) Excludes
Slide 30: 2024 Capital Expenditures Guidance
2024 Capital Expenditures Guidance 4% Other 7% Other 6% Powder River Basin < 1% Equity Investments < 1% Equity Investments 8% DJ Basin 73% Gas 11% Well Connect 27% Oil $700 Million to 15% Maintenance $850 Million1 & Regulatory 66% Expansion 81% Delaware Basin 73% Gas 5% Oil 22% Water 30 Note: Accrua
Slide 31: WES Liquidity Profile
WES Liquidity Profile Liquidity ($ in millions) Cash $344 Effective RCF $2,000 Capacity1 Senior Note Maturities ($ in millions) 2025 – 2026 $1,441 2028 $679 2029+ $5,057 Note: As of 6/30/2024. 31 1) Net of applicable commercial paper borrowings.
Slide 32: Diversified Asset Portfolio in Active Producing Basins
Diversified Asset Portfolio in Active Producing Basins Value-Focused Portfolio2 GATHERING Revenue: 53% Delaware Basin, 34% DJ Basin 21 SYSTEMS1 Total Capital: 80% Delaware Basin, 8% DJ Basin PROCESSING & 70 TREATING FACILITIES1 Direct Commodity Exposure Protection3 95% Fee-Based Gas Contracts NATURA
Slide 33: A Leading Midstream Provider in the Delaware Basin
A Leading Midstream Provider in the Delaware Basin Premier Delaware Location New Mexico Texas Only Low-Emission Oil Gatherer Only Three-Stream Midstream Provider Top 2 in Water Gathering & Disposal1 Gas-Processing Plant Regional-Oil-Treating Facility Gas-Gathering Lines Top 5 in Gas Processing Capac
Slide 34: Delaware Basin: Expansive Multi-Product Infrastructure
Delaware Basin: Expansive Multi-Product Infrastructure Customer Base Percentage of Related-Party Product Volumes1 Gas 42% Oil 98% Water 78% Long-Term Contract Support Weighted-Average Product Remaining Life2 Gas ~10 Years Oil > 8 Years Water > 8 Years 1) Percentage of production from Occidental as o
Slide 35: Delaware Basin: Gas Infrastructure
Delaware Basin: Gas Infrastructure EDDY LEA NEW MEXICO TEXAS NORTH LOVING (in-service 1Q'25) RAMSEY LOVING WES Gas Processing CULBERSON West Texas Complex 1,940 MMcf/d WINKLER +250 MMcf/d under construction Equity-Interest Gas MENTONE Processing Mi Vida 200 MMcf/d WARD REEVES RANCH MI VIDA WESTEX No
Slide 36: Delaware Basin: Oil Infrastructure
Delaware Basin: Oil Infrastructure EDDY LEA NEW MEXICO TEXAS NORTH LOVING LOVING REEVES CULBERSON WINKLER Oil Treating 310 MBbls/d Capacity REEVES WARD 36 Note: Capacity as of year-end 2023.
Slide 37: Delaware Basin: Water Infrastructure
Delaware Basin: Water Infrastructure Salt-Water Disposal 1,825 MBbls/d Capacity 54 SWD wells All SWDs inject into shallow zones 37 Note: Capacity as of year-end 2023.
Slide 38: DJ Basin
DJ Basin Customer Base Percentage of Related-Party Product Volumes1 Gas 51% Oil 100% Long-Term Contract Support Weighted-Average Product Remaining Life2 Gas ~88% = ~5 Years ~12% = Life of Lease Oil ~5 Years 1) Percentage of production from Occidental as of year-end 2023. 38 2) Weighted-average remai
Slide 39: A Core Position in the Heart of the DJ Basin
A Core Position in the Heart of the DJ Basin COLORADO LATHAM LARIMER WELD PLATTE VALLEY COSF Gas Processing FT. LUPTON LANCASTER 1,750 MMcf/d BOULDER Oil Stabilization 155 MBbls/d ADAMS WATTENBERG 39 Note: Capacities as of year-end 2023.
Slide 40: Largest G&P Provider in the Powder River Basin
Largest G&P Provider in the Powder River Basin Gas Processing 440 MMcf/d NGL Transportation 38 MBbls/d 40 Note: Capacities as of year-end 2023.
Slide 41: Additional Portfolio Assets
Additional Portfolio Assets South Texas Springfield Gathering Southwest Wyoming Utah Crude oil gathering Granger Gas Gathering Chipeta Natural gas processing Red Desert Complex Brasada Gas Plant Natural gas gathering Natural gas gathering & processing 41 Note: as of 5/8/2024.
Slide 42: Equity Investment Overview
Equity Investment Overview WES Equity Investment Ownership Location Description Operator Mi Vida 50% Ward County, TX 200 MMcf/d gas-processing plant Energy Transfer Red Bluff Express 30% Reeves County, TX to Waha, TX 1.5 Bcf/d natural-gas pipeline Energy Transfer Front Range Pipeline 33.33% DJ Basin
Slide 43: WES Non-GAAP Reconciliation
WES Non-GAAP Reconciliation “Adjusted EBITDA” WES defines Adjusted EBITDA attributable to Western Midstream Partners, LP (“Adjusted EBITDA”) as net income (loss), plus (i) distributions from equity investments, (ii) non-cash equity-based compensation expense, (iii) interest expense, (iv) income tax
Slide 44: WES Non-GAAP Reconciliation
WES Non-GAAP Reconciliation “Adjusted EBITDA” WES defines Adjusted EBITDA attributable to Western Midstream Partners, LP (“Adjusted EBITDA”) as net income (loss), plus (i) distributions from equity investments, (ii) non-cash equity-based compensation expense, (iii) interest expense, (iv) income tax
Slide 45: WES Non-GAAP Reconciliation
WES Non-GAAP Reconciliation “Free Cash Flow” WES defines Free cash flow as net cash provided by operating activities less total capital expenditures and contributions to equity investments, plus distributions from equity investments in excess of cumulative earnings. Three Months Ended June 30, March
Slide 46: WES Non-GAAP Reconciliation
WES Non-GAAP Reconciliation “Adjusted Gross Margin” WES defines Adjusted gross margin attributable to Western Midstream Partners, LP (“Adjusted gross margin”) as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributi
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