Western Midstream Partners, Lp · NYSE:WES
Western Midstream Partners, Lp — Q2 2023 Earnings Presentation
39 slides from Western Midstream Partners, Lp's earnings presentation, Aug 9, 2023
Slide 1: Second-Quarter 2023 Review
Second-Quarter 2023 Review August 9, 2023
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, NYSE: OXY however,
Slide 3: Recent Highlights
Western Midstream’ Recent Highlights
Slide 4: Recent Highlights
Recent Highlights Operational & Financial Accomplishments Total Total Natural-Gas Crude-Oil and NGLs Increased total natural-gas and crude- Throughput Throughput oil and NGLs throughput sequentially 4.42 Bcf/d 639 MBbls/d Record breaking natural-gas and crude-oil and NGLs throughput in the Delaware
Slide 5: Second-Quarter Performance
Second-Quarter Performance
Slide 6: Second-Quarter Operational Performance
Second-Quarter Operational Performance 1Q 2023 2Q 2023 Actuals Actuals Natural-Gas Throughput (MMcf/d) 4,107 4,254 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf) $1.30 $1.26 Crude-Oil and NGLs Throughput (MBbls/d) 611 626 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl) $2.65 $2.58
Slide 7: Second-Quarter Financial Performance
Second-Quarter Financial Performance 1Q 2023 2Q 2023 ($ in millions) Actuals Actuals $247 Operating Cash Flow $302.4 $490.8 million Cash Capital Investments1 $160.8 $150.7 2Q'23 Net Income4 Free Cash Flow $141.6 $340.1 $488 Cash Distributions Paid $196.6 2 $337.0 3 million Free Cash Flow After Distr
Slide 8: 2023 Guidance Update
Western Midstream’ 2023 Guidance Update
Slide 9: Revised 2023 Financial & Operational Outlook
Revised 2023 Financial & Operational Outlook 2023 Financial Guidance 2023 Estimated Throughput Growth Rates5 Crude Oil & NGLs Low-Single Digits6 ($ in millions) Natural Gas Low-Single Digits Adjusted EBITDA1 $1,950 – $2,050 Produced Water Upper-Teens 2023 Commodity Price Sensitivities7 Total Capital
Slide 10: Revised 2023 Adjusted EBITDA Guidance
Revised 2023 Adjusted EBITDA Guidance EXPECTED ASSET-LEVEL EBITDA CONTRIBUTION1 50% Delaware Basin 33% DJ Basin 67% Gas 86% Gas $1,950 Million 19% Oil 14% Oil to 14% Water $2,050 Million 9% Equity Investments 8% Other2 1) Excludes G&A. Represents asset-level cash contribution to EBITDA. 10 2) Marcel
Slide 11: Revised 2023 Capital Expenditures Guidance
Revised 2023 Capital Expenditures Guidance 1% Equity Investments 6% Other 10% Well Connect 1% Equity Investments 9% DJ Basin 9% Maintenance 78% Gas 22% Oil 3% Other $700 Million to $800 Million 84% Delaware Basin 77% Expansion 67% Gas 13% Oil 20% Water Note: Accrual-based, includes equity investment
Slide 12: Environmental, Social & Governance
Environmental, Social & Governance
Slide 13: 2022 Sustainability Report Highlights
2022 Sustainability Report Highlights Contributed Expanded >13,200 comp program to volunteer hours include goals for and methane and >$422K GHG to causes emissions in our communities Completed Completed emissions-related reduction >50,300 projects reducing hours of methane safety training intensity
Slide 14: Summary
h Western Midstream’ my = Summary
Slide 15: 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 Rating Yield Industry American Financial Group BBB+ 13.85% Financials / I
Slide 16: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) Highlighting WES's compelling investment opportunity Free Cash Flow Yield Price / Earnings Ratio (Trailing Twelve Months)1 (Trailing Twelve Months)2 36x WES continues to generate the highest Free cash flow yield and trades at the lowest valuation relative to
Slide 17: Comparative Valuation Metrics (continued): Capital Return Yield
Comparative Valuation Metrics (continued) Strong track-record of returning capital to unitholders Total Capital Return Yield Total Capital Return Yield (Trailing Twelve Months)1 (Trailing Twelve Months)1 WES continues to be a market leader in total capital return yield relative to major energy indic
Slide 18: 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 Employed (Trailing Twelve Months)2 Enterprise Value since 20201 WES continues to be a market leader in returning capital to stake
Slide 19: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) WES's value creation progression Adjusted EBITDA per unit Debt / Adjusted EBITDA vs. Return on Assets (Trailing Twelve Months)2 (Trailing Twelve Months)1 WES has increased Adjusted EBITDA per unit and materially reduced debt while generating leading returns
Slide 20: 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 21: Q&A
Western Midstream’ Q&A
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 $2.1875 Base Annual YE’22 Distribution1 Free Cash + Flow Base Distributions1 3.2
Slide 24: Enhanced Distribution Mechanics
Enhanced Distribution Mechanics Illustrative Calculation using TTM Financial Information • 2023 Enhanced Distribution would be Trailing Twelve-Month payable with first-quarter 2024 Base Enhanced Distribution Calculation Distribution $ in millions As of 6/30/23 Free Cash Flow1 $1,178 • Dependent upon
Slide 25: WES Liquidity Profile
WES Liquidity Profile Liquidity ($ in millions) RCF Capacity1 $1,995 Cash $214 Senior Note Maturities ($ in millions) 2025 – 2026 $1,546 2028 $780 2029+ $4,560 Note: As of 6/30/2023. 25 1) Includes letters of credit of $5.1 million.
Slide 26: Premier Asset Portfolio
Premier Asset Portfolio Value-Focused Portfolio1 Revenue: 52% Delaware Basin, 32% DJ Basin GATHERING 23 SYSTEMS Total Capital: 82% Delaware Basin, 7% DJ Basin PROCESSING & 71 TREATING FACILITIES Direct Commodity Exposure Protection2 93% Fee-Based Gas Contracts NATURAL-GAS 7 PIPELINES 100% Fee-Based
Slide 27: A Leading Provider in the Delaware Basin
A Leading Provider in the Delaware Basin New Mexico Premier Delaware Location 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 Capacity2 Water
Slide 28: Delaware Basin: Expansive Multi-Product Infrastructure
Delaware Basin: Expansive Multi-Product Infrastructure Customer Base Percentage of Related-Party Product Volumes1 Gas 44% Oil 98% Water 80% Long-Term Contract Support Weighted-Average Product Remaining Life2 Gas ~10 Years Oil ~ 10 Years Water ~10 Years 1) Percentage of production from Occidental as
Slide 29: Delaware Basin: Gas Infrastructure
Delaware Basin: Gas Infrastructure EDDY LEA NEW MEXICO TEXAS RAMSEY LOVING WES Gas Processing CULBERSON West Texas Complex 1.540 Bcf/d MENTONE WINKLER Equity-Interest Gas Processing Mi Vida 200 MMcf/d 5 MILES REEVES WARD MI VIDA RANCH WESTEX Note: Capacities as of December 31, 2022. 29 Under 5% of t
Slide 30: Delaware Basin: Oil Infrastructure
Delaware Basin: Oil Infrastructure EDDY LEA NEW MEXICO TEXAS NORTH LOVING LOVING REEVES CULBERSON WINKLER Oil Treating 292 MBbls/d Capacity REEVES 5 MILES WARD 30 Note: Capacity as of year-end 2022.
Slide 31: Delaware Basin: Water Infrastructure
Delaware Basin: Water Infrastructure EDDY LEA NEW MEXICO TEXAS LOVING CULBERSON WINKLER Salt-Water Disposal 1,390 MBbls/d Capacity REEVES 5 MILES WARD 31 Note: Capacity as of year-end 2022.
Slide 32: DJ Basin
DJ Basin Customer Base Percentage of Related-Party Product Volumes1 Gas 54% Oil 100% Long-Term Contract Support Weighted-Average Product Remaining Life2 Gas ~88% = ~6 Years ~12% = Life of Lease Oil ~6 Years 1) Percentage of production from Occidental as of year-end 2022. 32 2) Weighted-average remai
Slide 33: DJ Basin
DJ Basin COLORADO LATHAM LARIMER WELD PLATTE VALLEY COSF FT. LUPTON Gas Processing LANCASTER BOULDER 1,750 MMcf/d Oil Stabilization 155 MBbls/d 5 MILES ADAMS WATTENBERG 33 Note: Capacities as of year-end 2022.
Slide 34: Additional Portfolio Assets
Additional Portfolio Assets South Texas Wyoming Utah Pennsylvania Hilight Complex Springfield Gathering Chipeta Marcellus Gas Gathering Granger Complex Brasada Gas Plant Red Desert Complex 34
Slide 35: 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 Whitethorn LLC 20% Midland, TX to Ho
Slide 36: 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 37: 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 38: 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 39: 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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