Western Midstream Partners, Lp · NYSE:WES
Western Midstream Partners, Lp — Q4 2023 Earnings Presentation
43 slides from Western Midstream Partners, Lp's earnings presentation, Feb 22, 2024
Slide 1: Fourth-Quarter 2023 Review
Fourth-Quarter 2023 Review February 21, 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, NYSE: OXY however,
Slide 3: Full-Year 2023 Highlights
Western Midstream’ Full-Year 2023 Highlights
Slide 4: Recent Asset Divestiture Activity
Recent Asset Divestiture Activity Expected net proceeds of approximately $790 million Non-Core Asset Sales1 February 2024 February 2024 February 2024 February 2024 February 2024 Marcellus Whitethorn Panola Mont Belvieu JV Saddlehorn Gas gathering system Crude-oil pipeline NGL pipeline NGL fractioniz
Slide 5: WES's Strong History of Value Creation
WES’s Strong History of Value Creation Non-core asset sales reduce leverage & accelerate capital return Strong track record of reducing …leads to allocating more capital leverage and buying back units1… to distribution increases2. Since 2020, WES has repurchased ~15% of its unaffected unit count, wh
Slide 6: 2023 Highlights
2023 Highlights Operational & Financial Accomplishments Total Total Achieved operated throughput growth Natural-Gas Crude-Oil and NGLs Throughput1 Throughput1,2 across all three products1,2 Achieved record throughput growth across all 4.4 Bcf/d 652 MBbls/d three products in the Delaware Basin 5% Y-o
Slide 7: Fourth-Quarter Performance
Fourth-Quarter Performance
Slide 8: Fourth-Quarter Operational Performance
Fourth-Quarter Operational Performance 3Q 2023 4Q 2023 Actuals Actuals Natural-Gas Throughput (MMcf/d) 4,484 4,876 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf) $1.26 $1.29 Crude-Oil and NGLs Throughput (MBbls/d) 667 702 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl) $2.27 $2.43
Slide 9: Fourth-Quarter Financial Performance
Fourth-Quarter Financial Performance 3Q 2023 4Q 2023 ($ in millions) Actuals Actuals $282 Operating Cash Flow $394.8 $473.3 million Cash Capital Investments1 $194.3 $191.3 4Q'23 Net Income4 Free Cash Flow $200.4 $282.0 $571 Cash Distributions Paid $221.4 2 $223.4 3 million Free Cash Flow After Distr
Slide 10: Full-Year Performance
Western Midstream’ Full-Year Performance
Slide 11: Full-Year Operational Performance
Full-Year Operational Performance FY 2022 FY 2023 Actuals Actuals Natural-Gas Throughput (MMcf/d)1 4,210 4,432 Adjusted Gross Margin for Natural-Gas Assets ($/Mcf)1 $1.32 $1.28 Crude-Oil and NGLs Throughput (MBbls/d)1,2 611 652 Adjusted Gross Margin for Crude-Oil and NGLs Assets ($/Bbl)1,2 $2.59 $2.
Slide 12: 2023 Financial Scorecard
2023 Financial Scorecard PAID 2023 2023 ($ in millions, except where otherwise noted) Guidance Actuals $978 Adjusted EBITDA1 $1,950 – $2,050 $2,069 million Total Distributions4 Total Capital Expenditures 2 $700 – $800 $739 Free Cash Flow1 $900 – $1,000 $964 COMPLETED Per-Unit Cash Distribution3 ≥ $2
Slide 13: 2024 Guidance Update
Western Midstream’ 2024 Guidance Update
Slide 14: 2024 Financial & Operational Outlook
2024 Financial & Operational Outlook 2024 Financial Guidance 2024 Estimated Throughput Growth Rates5 Crude Oil & NGLs Upper-Single Digits ($ in millions) Natural Gas Low-to-Mid Teens Adjusted EBITDA1 $2,200 – $2,400 Produced Water Low-to-Mid Teens 2024 Commodity Price Sensitivities6 Total Capital Ex
Slide 15: 2024 Adjusted EBITDA Guidance
2024 Adjusted EBITDA Guidance EXPECTED ASSET-LEVEL EBITDA CONTRIBUTION2 51% Delaware Basin 32% DJ Basin 64% Gas 88% Gas $2,200 Million 18% Oil 12% Oil to 18% Water $2,400 Million1 7% Powder River Basin 5% Equity Investments 5% Other3 1) Includes the impact of the non-core asset sales announced on Fe
Slide 16: 2024 Capital Expenditures Guidance
2024 Capital Expenditures Guidance 6% Other < 1% Equity Investments 8% Other 4% Powder River Basin < 1% Equity Investments 8% DJ Basin 75% Gas 8% Well Connect 25% Oil $700 Million 15% Maintenance & Regulatory to $850 Million1 68% Expansion 81% Delaware Basin 75% Gas 5% Oil 20% Water 16 Note: Accrual
Slide 17: Summary
h Western Midstream’ my = Summary
Slide 18: 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 19: 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 Piedmont Office Realty Trust 10.6% BBB- REIT Invest
Slide 20: Comparative Valuation Metrics (continued)
Comparative Valuation Metrics (continued) Highlighting WES's compelling investment opportunity Free Cash Flow Yield1 Price / Earnings Ratio2 (8%) 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 21: 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 22: 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 23: 2024 Budget & Guidance Highlights
2024 Budget & 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
Slide 24: 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 25: Appendix
7 Western Midstream’ Appendix
Slide 26: 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 27: Enhanced Distribution Mechanics
Enhanced Distribution Mechanics 2023 Financial Results • 2023 Enhanced Distribution would be Enhanced Distribution Calculation payable with first-quarter 2024 Base Distribution $ in millions As of 12/31/23 Free Cash Flow1 $964 • Dependent upon fulfillment of two Less: conditions: Debt Repayment (Add
Slide 28: WES Liquidity Profile
WES Liquidity Profile Liquidity ($ in millions) Cash $273 Effective RCF $1,381 Capacity1 Senior Note Maturities ($ in millions) 2025 – 2026 $1,483 2028 $740 2029+ $5,105 Note: As of 12/31/2023. 28 1) Net of commercial paper borrowings of $614 million; includes letters of credit of $5.1 million.
Slide 29: 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 30: 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 31: 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 32: Delaware Basin: Gas Infrastructure
Delaware Basin: Gas Infrastructure EDDY LEA NEW MEXICO TEXAS NORTH LOVING (in-service 1Q'25) RAMSEY LOVING WES Gas Processing West Texas Complex CULBERSON 1,640 MMcf/d WINKLER +550 MMcf/d under construction Equity-Interest Gas MENTONE Processing Mi Vida 200 MMcf/d WARD REEVES RANCH MI VIDA WESTEX No
Slide 33: 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 33 Note: Capacity as of year-end 2023.
Slide 34: 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 34 Note: Capacity as of year-end 2023.
Slide 35: 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. 35 2) Weighted-average remai
Slide 36: 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 36 Note: Capacities as of year-end 2023.
Slide 37: Largest G&P Provider in the Powder River Basin
Largest G&P Provider in the Powder River Basin Gas Processing 620 MMcf/d NGL Transportation 38 MBbls/d 37 Note: Capacities as of year-end 2023.
Slide 38: 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 38 Note: Pro forma for the divestitures announce
Slide 39: 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 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 “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 42: 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 Year Ended Dec
Slide 43: 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
Western Midstream Partners — Q4 2023 Earnings Presentation on 6ix