Western Midstream Partners, Lp · NYSE:WES
Western Midstream Partners, Lp — Q3 2024 Earnings Presentation
41 slides from Western Midstream Partners, Lp's earnings presentation, Nov 7, 2024
Slide 1: Third-Quarter 2024 Review
Third-Quarter 2024 Review November 6, 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 Record Delaware Basin Natural-Gas Natural-Gas Achieved record natural-gas throughput in the Throughput Throughput Delaware Basin for the 7th consecutive quarter Gathered record crude-oil and NGLs 5.2 Bcf/d 1.9 Bcf/d throughput in the De
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: Third-Quarter Performance
Western Midstream’ Third-Quarter Performance
Slide 7: Third-Quarter Operational Performance
Third-Quarter Operational Performance 2Q 2024 3Q 2024 Actuals Actuals Natural-Gas Throughput (MMcf/d)1 4,988 5,016 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf)1 $1.33 $1.29 Crude-Oil and NGLs Throughput (MBbls/d) 515 506 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl) $2.96 $2.88
Slide 8: Third-Quarter Financial Performance
Third-Quarter Financial Performance 2Q 2024 3Q 2024 ($ in millions) Actuals Actuals $282 Operating Cash Flow $631.4 $551.3 million Cash Capital Investments1 $206.6 $186.2 3Q'24 Net Income4 Free Cash Flow $424.8 $365.1 $340.92 $340.93 $567 Cash Distributions Paid million Free Cash Flow After Distribu
Slide 9: Guidance
Western Midstream Guidance
Slide 10: 2024 Guidance Highlights
2024 Guidance Highlights Adjusted Free Cash Leverage Cash EBITDA Flow Ratio Returns $2.30 $1.15 ~3.0x $3.20 Billion1 Billion2 YE’243 per unit4 Est. Base ~11%1 increase ~19%2 increase ~0.7x3 decrease Distribution4 vs. 2023 vs. 2023 vs. YE’23 in 2024 Note: Based on current producer production-forecast
Slide 11: 2024 Financial & Operational Outlook
2024 Financial & Operational Outlook 2024 Financial Guidance 2024 Estimated Throughput Growth Rates5 Crude Oil & NGLs Low-double-digits ($ in millions) Natural Gas Mid-to-Upper Teens Adjusted EBITDA1 $2,200 – $2,400 Produced Water Low-double-digits 2024 Commodity Price Sensitivities6 Total Capital E
Slide 12: Summary
h Western Midstream’ le = Summary
Slide 13: 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 14: 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 15: 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: 9.0% Opportunity for multiple expansion Average yield: 6.8% Current averag
Slide 16: 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 Industry Investment Grade High Yield Western Midstream 9.0%
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 46% natural-gas growth in Delaware ROA of 18% compared to peer Basin since 20201 average of
Slide 23: 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 24: Appendix
7 Western Midstream’ Appendix
Slide 25: 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 26: 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 9/30/24 Free Cash Flow1 $1,297 • Dependent
Slide 27: 2024 Adjusted EBITDA Guidance
2024 Adjusted EBITDA Guidance EXPECTED ASSET-LEVEL EBITDA CONTRIBUTION2 52% Delaware Basin 32% DJ Basin 66% Gas 88% Gas $2,200 Million 12% Oil 17% Oil to 17% Water $2,400 Million1 5% Powder River Basin 5% Equity Investments 6% Other3 1) Includes the impact of the non-core asset sales. 27 2) Excludes
Slide 28: 2024 Capital Expenditures Guidance
2024 Capital Expenditures Guidance 5% Other 8% Other < 1% Equity Investments < 1% Equity Investments 7% Powder River Basin 9% DJ Basin 75% Gas 11% Well Connect 25% Oil $700 Million to $850 Million1 16% Maintenance & Regulatory 64% Expansion 78% Delaware Basin 71% Gas 4% Oil 25% Water 28 Note: Accrua
Slide 29: WES Liquidity Profile
WES Liquidity Profile Liquidity ($ in millions) Cash $1,125 Effective RCF $2,000 Capacity1 Senior Note Maturities ($ in millions) 2025 – 2026 $1,441 2028 $679 2029+ $5,857 Note: As of 9/30/2024. 29 1) Net of applicable commercial paper borrowings.
Slide 30: 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 & 72 TREATING FACILITIES1 Direct Commodity Exposure Protection3 95% Fee-Based Gas Contracts NATURA
Slide 31: Delaware Basin Asset Overview
Delaware Basin Asset Overview Leading Midstream Provider in the Core of the Texas Delaware Basin • Premier Texas Delaware Basin Location • Large asset base in the most prolific part of the basin • More than half of basin rig count within 5 miles of assets NEW MEXICO • Top Five in Natural-Gas Process
Slide 32: Delaware Basin Asset Overview (continued)
Delaware Basin Asset Overview (continued) 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 produ
Slide 33: DJ Basin Asset Overview
DJ Basin Asset Overview A Core Position in the Heart of the DJ Basin • ~1,798 miles of natural-gas gathering pipelines and 1,750 MMcf/d of processing COLORADO capacity • Low-emission, centralized facility providing 155 MBbls/d of crude-oil and NGLs LATHAM COSF stabilization BOULDER PLATTE VALLEY FT.
Slide 34: DJ Basin Asset Overview (continued)
DJ Basin Asset Overview (continued) 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. 3
Slide 35: Powder River Basin Asset Overview
Powder River Basin Asset Overview Largest G&P Provider in the Powder River Basin • ~2,700 miles of high & low-pressure natural-gas WYOMING gathering pipelines • 620 MMcf/d of natural-gas processing capacity with CAMPBELL ~400 MMcf/d of CO2 treating capacity 50 BUTTES HILIGHT • ~8-years of rich gas r
Slide 36: Other Operated Assets Overview
Other Operated Assets Overview Strong portfolio of assets forecasted to provide incremental throughput growth Utah Southwest Wyoming South Texas • Chipeta facility provides 790 MMcf/d • Granger and Red Desert • Brasada provides ~200 MMcf/d of of cryogenic and refridge natural- complexes provide natu
Slide 37: 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 38: 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 39: 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 40: 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 September 30,
Slide 41: 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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