Western Midstream Partners, Lp ((WES)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Western Midstream Partners, Lp was marked by a generally positive sentiment, underscoring record-breaking achievements in EBITDA and throughput in the Delaware Basin, alongside strategic acquisitions and a robust financial stance. However, the call also acknowledged some hurdles, such as decreased margins and anticipated increases in operation and maintenance expenses.
Record-Breaking Quarterly Adjusted EBITDA
Western Midstream Partners celebrated a milestone by achieving the highest quarterly adjusted EBITDA in its history. This accomplishment was attributed to the company’s strong operational and financial performance, marking a significant achievement for the partnership.
Record Throughput in Delaware Basin
The company reported record-breaking throughput in the Delaware Basin, covering natural gas, crude oil, NGLs, and produced water. This achievement highlights the company’s operational efficiency and capacity to handle increased volumes in this critical region.
Aris Water Solutions Acquisition
Western Midstream announced its acquisition of Aris Water Solutions, a strategic move expected to be accretive to 2026 free cash flow per unit. This acquisition will enhance the company’s water disposal capacity to over 3.8 million barrels per day, providing significant operational synergies.
Sanctioning of North Loving Train II
The company has sanctioned an additional train at the North Loving natural gas processing plant. This expansion will increase the plant’s capacity to 550 million cubic feet per day by early Q2 2027, reflecting Western Midstream’s commitment to enhancing its processing capabilities.
Strong Financial Position
Western Midstream maintains a strong financial position, with a top-tier net leverage ratio of 2.9x. The company also retired $337 million of senior notes using cash on hand, demonstrating its financial prudence and commitment to reducing debt.
Decreased Margins
Despite the positive achievements, the company faced decreased margins in the second quarter. This was due to lower natural gas liquids volumes, reduced NGL pricing, and changes in contract mix, which impacted the adjusted gross margin for natural gas and crude oil.
Higher Expected O&M Expenses
The company anticipates higher operation and maintenance expenses in the third quarter, primarily due to increased utility expenses during the hotter summer months. This expectation highlights the challenges posed by seasonal variations in operating costs.
Flat Throughput in DJ Basin
Western Midstream expects the average year-over-year throughput in the DJ Basin to remain flat for both natural gas and crude oil and NGLs. This projection suggests a stable but unchanging output in this area.
Forward-Looking Guidance
Looking ahead, Western Midstream Partners has set ambitious goals, maintaining its capital expenditure guidance for 2025 while planning for increased expenditures in 2026, particularly with new projects like North Loving Train II. The company emphasizes its strong balance sheet and commitment to generating returns for unitholders, sustaining distribution growth, and maintaining financial flexibility for future opportunities.
In summary, Western Midstream Partners’ earnings call conveyed a positive outlook, with record achievements and strategic initiatives positioning the company for future growth. Despite some challenges, the company’s strong financial position and forward-looking strategies underscore its potential for continued success.