Western Midstream Partners, Lp · NYSE:WES
Western Midstream Partners, Lp — Q1 2024 Earnings Presentation
42 slides from Western Midstream Partners, Lp's earnings presentation, May 9, 2024
Slide 1: First-Quarter 2024 Review
First-Quarter 2024 Review May 8, 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 Total Operated Natural-Gas Crude-Oil and NGLs Achieved record natural-gas throughput Throughput Throughput portfolio wide and in the Delaware Basin 5.2 Bcf/d 374 MBbls/d Gathered record produced-water throughput in the Delaware Basin 2%
Slide 5: First-Quarter Performance
Western Midstream’ First-Quarter Performance
Slide 6: First-Quarter Operational Performance
First-Quarter Operational Performance 4Q 2023 1Q 2024 Actuals Actuals Natural-Gas Throughput (MMcf/d) 4,876 4,990 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf) $1.29 $1.32 Crude-Oil and NGLs Throughput (MBbls/d)1 702 565 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl)1 $2.43 $2.92
Slide 7: First-Quarter Financial Performance
First-Quarter Financial Performance 4Q 2023 1Q 2024 ($ in millions) Actuals Actuals $560 Operating Cash Flow $473.3 $399.7 million Cash Capital Investments1 $191.3 $174.8 1Q'24 Net Income4 Free Cash Flow $282.0 $225.0 $223.42 $223.43 $608 Cash Distributions Paid million Free Cash Flow After Distribu
Slide 8: 2024 Guidance Update
Western Midstream’ 2024 Guidance Update
Slide 9: 2024 Financial & Operational Outlook
2024 Financial & Operational Outlook 2024 Financial Guidance 2024 Estimated Throughput Growth Rates5 Crude Oil & NGLs Low-teens ($ 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 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: Summary
h Western Midstream’ ey j Summary
Slide 12: 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 13: 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 14: Opportunity for MLP Valuation Uplift
Opportunity for MLP Valuation Uplift Current, more sustainable MLP model trades at a 5.5x discount compared to the old MLP model Quarterly Average MLP Valuations Average valuation of 13.7x under old MLP model1 Average yield: 9.2% Opportunity for multiple expansion Average yield: 6.8% Current average
Slide 15: 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 Current Dividend / Distribution Yield 2 Note: Per FactSet as of April 11, 2024. 1) Various publicly traded midstream companies include ENLC, EPD, ET, ETRN, KMI, KNTK
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% yield1 Credit Profile with ≥ 7.0% yield2 Company Yield Rating Industry Investment Grade High Yield Walgreens Boots Allianc
Slide 17: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) 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 Fact
Slide 18: Consensus Estimates Highlight WES's Differentiated Value
Consensus Estimates Highlight WES's Differentiated Value WES appears undervalued relative to peers based on consensus long-term Free cash flow trajectories WES FCF Yield vs. Midstream Peers1,2 Incremental FCF Needed to Reach WES’s 2025 FCF Yield2 (1%) Even when peers’ Free cash flow begins to increa
Slide 19: Comparative Valuation Metrics
Comparative Valuation Metrics 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 midstream compani
Slide 20: 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 21: 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 22: Appendix
7 Western Midstream’ Appendix
Slide 23: 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 24: 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 3/31/24 Free Cash Flow1 $1,047 • Dependent
Slide 25: 2024 Adjusted EBITDA Guidance
2024 Adjusted EBITDA Guidance EXPECTED ASSET-LEVEL EBITDA CONTRIBUTION2 51% Delaware Basin 32% DJ Basin 65% Gas 88% Gas $2,200 Million 12% Oil 17% Oil to 18% Water $2,400 Million1 6% Powder River Basin 5% Equity Investments 6% Other3 1) Includes the impact of the non-core asset sales announced on Fe
Slide 26: 2024 Capital Expenditures Guidance
2024 Capital Expenditures Guidance 6% Other 8% Other 4% Powder River Basin < 1% Equity Investments < 1% Equity Investments 9% DJ Basin 80% Gas 12% Well Connect 20% Oil $700 Million to 15% Maintenance $850 Million1 & Regulatory 64% Expansion 80% Delaware Basin 71% Gas 6% Oil 23% Water 26 Note: Accrua
Slide 27: WES Liquidity Profile
WES Liquidity Profile Liquidity ($ in millions) Cash $295 Effective RCF $1,900 Capacity1 Senior Note Maturities ($ in millions) 2025 – 2026 $1,480 2028 $732 2029+ $5,101 Note: As of 3/31/2024. 27 1) Net of commercial paper borrowings of $100.0 million; includes letters of credit of $0.5 million.
Slide 28: 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 & 69 TREATING FACILITIES1 Direct Commodity Exposure Protection3 95% Fee-Based Gas Contracts NATURA
Slide 29: 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 30: 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 31: 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 32: 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 32 Note: Capacity as of year-end 2023.
Slide 33: 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 33 Note: Capacity as of year-end 2023.
Slide 34: 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. 34 2) Weighted-average remai
Slide 35: 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 35 Note: Capacities as of year-end 2023.
Slide 36: 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 36 Note: Capacities as of year-end 2023.
Slide 37: 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 37 Note: as of May 8, 2024.
Slide 38: 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 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 “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 41: 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 March 31, Dece
Slide 42: 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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