Q3 2021 Western Midstream Partners LP Earnings Call

November 10, 2021

Good day and welcome to the Western Midstream Partners third quarter 2021 earnings conference call. All participants will be in listen-only mode.

Welcome to the Western Midstream partners third quarter 2021 earnings conference call, all participants will be in listen only mode should.

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I'd like to turn the conference over to Kristen Shults, Vice President Finance and Communications. Please go ahead. Thank you. I'm glad you could join us today for Western Midstream third quarter 2021 conference call. I'd like to remind you that today's call, the accompanying slide deck and last night's earnings release contain important disclosures regarding forward looking statements and non-GAAP reconciliation. Please reference Western Midstream's most recent Form 10-K, and Form 10-Q, and other public filings for a description of risk factors that could cause actual results to differ materially from what we discuss today. Relevant reference materials are posted on our website. With me today are Michael Ure, Our Chief Executive Officer, and Craig Collins, Our Chief operating Officer, I'll now turn the call over to Michael.

Patients. Please reference western midstream <unk>, most recent Form 10-K, and Form 10-Q, and other public filings for a description of risk factors that could cause actual results to differ materially from what we discuss today.

Relevant reference materials are posted on our website with me today are Michael <unk>, Our Chief Executive Officer, and Craig Collins, Our Chief operating Officer, I'll now turn the call over to Michael.

Thank you, Kristen, and good afternoon, everyone. As you saw from yesterday's earnings release, we are pleased to report another quarter of strong operational and financial performance at Western Midstream.

As you saw from yesterday's earnings release, we are pleased to report another quarter of strong operational and financial performance at Western Midstream.

We generated net income available to limited partners of $250 million that resulted in adjusted EBITDA of $532 million, representing increases of 11% and 8% respectively compared to the prior quarter.

Our third quarter performance was the result of increased throughput in the Delaware Basin, continued commercial success, lower operating expenses and the positive impact associated with the reversal of previously constrained revenue.

We continued to generate significant free cash flow in the third quarter by focusing on operational efficiencies, reducing our overall cost structure and remaining disciplined with our capital spending program.

We generated $320 million of free cash flow and $185 million of free cash flow after distributions. We increased our third quarter distribution $2.3 to $3 per unit, representing a 1.3% increase over the prior period and in line with our target of 5% annualized growth.

We increased our third quarter distribution 2.3 to $3 per unit, representing a 1.3% increase over the prior period and in line with our target of 5% annualized growth.

The third quarter also represented our third consecutive quarter of distribution increases since the onset of the pandemic.

Before Craig discusses our operational performance in particular, our outperformance in the Delaware, I would like to mention a few factors that affected our third quarter financial performance.

Starting at year end 2020 under revenue recognition accounting standards, we constrained revenue related to certain third party cost of service contracts associated with a gathering asset. Based on our current expectation, we no longer believe that previous constraint is warranted.

Based on our current expectation, we no longer believe that previous constraint is warranted.

As a result, we recorded a cumulative catch up revenue adjustment of approximately $19 million during this quarter. While this adjustment impacted our adjusted gross margin and adjusted EBITDA for the quarter. It did not impact our free cash flow.

While this adjustment impacted our adjusted gross margin and adjusted EBITDA for the quarter. It did not impact our free cash flow.

Turning to expenses, as expected, O&M expense declined 8% on a sequential quarter basis as the one time charges in the second quarter did not extend into the third quarter. We now expect the near term O&M run rate to be more in line with our third quarter results, while still recognizing that there is a variable component to O&M associated with throughput.

Ad Valorem taxes decreased by 24% on a sequential quarter basis due to a favorable adjustment to our year to date accrual recorded in the third quarter, as asset valuations were finalized. G&A expense increased over 13% on a sequential quarter basis, primarily related to increased personnel expense and contract and consulting costs. As we mentioned last quarter, we expect G&A to remain at this level as we work to fully transform our company into the best in class standalone enterprise that we envision.

costs. As we mentioned last quarter, we expect G&A to remain at this level as we work to fully transform our company into the best in class standalone enterprise that we envision.

With our strong third quarter performance, coupled with the impact of the cumulative revenue catch up adjustment, we now expect to exceed the high end of our previously announced 2021 adjusted EBITDA guidance range of 1.825 to $1.925 billion.

We also expect to be below the high end of our 2021 capital expenditure range of $275 million to $375 million as some of the capital is now expected to shift into 2022, thus reducing capital requirements for the year.

Additionally, we have continued to optimize our assets for example in the Delaware Basin, where our engineering team implemented design modifications to increase our nameplate road of capacity by 20% per train, resulting in a total increase in oil treating capacity by 36000 barrels per day.

These modifications were made with minimal investment and highlight a clear example of our team finding capital efficient solutions to expand our operational capabilities. Moving to the balance sheet, we exited the third quarter with $100 million of cash and $1 $8 billion of availability on our revolving credit facility, resulting in total liquidity of approximately $1.9 billion.

<unk> of approximately $1.9 billion.

Total outstanding debt was $7.2 billion, resulting in a 12-month trailing net leverage ratio of approximately 3.7 times at quarter end, well below our year end 2021 target of 4.0 times and closing in on our year end 2022 target of 3.5 times.

In late August, we successfully executed a tender offer retiring $500 million in aggregate principal of our outstanding senior notes for a total purchase price of $522 million.

With this tender we have reduced our annualized interest expense by $21 million and extended the weighted average time to maturity of our debt from 12.5 to 13.1 years. Since our bond issuance in January 2020, we've retired $1.15 billion of our senior notes and we intend to continue retiring near term maturities using free cash flow. During the third quarter, we received an upgrade for West operating as long term debt from double B to double B plus from S&P. This upgrade reaffirms the success we have had in improving the health of our balance sheet.

using free cash flow. During the third quarter, we received an upgrade for West operating as long term debt from double B to double B plus from S&P. This upgrade reaffirms the success we have had in improving the health of our balance sheet.

We are of the view that we have already achieved investment grade metrics and we believe others share that sentiment based on investor feedback received during the tender process. I'm also pleased to report that as of September 30th we've repurchased approximately $137 million of common units under the authorized $250 million unit repurchase program. Of which approximately $88 million of common units was repurchased during the third quarter.

<unk> of which approximately $88 million of common units was repurchased during the third quarter.

Through the unit buyback program and the Anadarko Note exchange we have retired approximately 36 million units. And we will continue to opportunistically repurchase units with the remaining authorization.

As you've seen over the last several quarters, we have made tremendous progress in strengthening our balance sheet. Since the January 2020 bond issuance, we have retired $1.15 billion of our senior notes or 14% of the senior note balance and 36 million units or 8% of the unit count.

Since the January 'twenty 'twenty bond issuance, we have retired $1.15 billion of our senior notes or 14% of the senior note balance and 36 million units or 8% of the unit count.

We've also paid out approximately $1.1 billion in distributions to both our limited and general partners, which has resulted in approximately $2.6 billion of total capital returned to our stakeholders. Said differently, on a per unit basis, we returned $3.69 through debt retirement and unit repurchases and $2.62 per unit in distributions for a total of $6.31 returned to unit holders since the onset of the pandemic. I would also like to note that this analysis does not consider any market driven appreciation in our quarter end unit price of $20.96, that resulted from the actions we have taken since the beginning of 2020. Additionally, through these actions we've increased our annualized free cash flow after distributions by $83 million and expect to further increase these savings through continued debt reduction.

Said differently on a per unit basis, we returned $3.69 through debt retirement and unit repurchases and $2 62 per unit in distributions for a total of $6.31 returned to unit holders since the onset of the pandemic I would also like to know.

that this analysis does not consider any market driven appreciation in our quarter end unit price of $20.96, that resulted from the actions we have taken since the beginning of 2020. Additionally, through these actions we've increased our annualized free cash flow after distributions by $83 million and expect to further increase

these savings through continued debt reduction.

With this track record and as market conditions allow, we look forward to creating additional value for our stakeholders through buying back more units, paying down debt and increasing our distribution over time. I'll now turn the call over to Craig to discuss our operations in the third quarter. Craig.

Thank you, Michael. As expected, we continue to see growing volumes in the Delaware basin and declining volumes in the DJ Basin, trends we expect to continue through the fourth quarter.

Additionally, we expect 2021 exit rates relative to 2020 to be in line with prior commentary from last quarter's earnings call. At the Delaware Basin activity levels remained strong and we are seeing continued capital investment on acreage that we service.

Our top tier position in the basin, strong producer relationships and competitive cost structure have enabled us to generate incremental and capital efficient adjusted EBITDA. Our commercial team has done a tremendous job to transform these competitive advantages and to additional business as we expect approximately $20 million of incremental EBITA in 2021 as a result of this additional third party business.

<unk> 2021 as a result of this additional third party business.

Turning towards the DJ basin, we have recently seen some positive momentum on permitting under the new process arising from Senate Bill 181, with the approval of the first permits in Weld County, shortly after quarter end.

Our producers remain cautiously optimistic with the new regulatory framework as they continue to work through their own permitting and budgeting processes.

We continue to see activity levels in line with expectations as discussed in our second quarter earnings call. We continued to witness private producers increasing activity levels with favorable commodity prices, especially in the Delaware basin and public producers maintaining capital discipline within their 2021 budgets.

We are having close conversations with our producers as they evaluate their 2022 capital allocation and drilling plans. And we intend to provide further basin inside through our formal 2022 guidance in conjunction with our fourth quarter and year end 2021 results. Overall, gas throughput declined by 4% or 184 million cubic feet per day on a sequential quarter basis.

Overall gas throughput declined by 4% or 184 million cubic feet per day on a sequential quarter basis.

The Delaware Basin growth was offset by decreased volumes at the bison treating facility, which we sold in the second quarter and by natural production declines in the DJ basin in areas around our Marcellus non operated position in the Springfield gas gathering system located in South Texas. Excluding the effects of the bison divestiture, our gas throughput would have only declined by approximately 2%.

Excluding the effects of the bison divestiture, our gas throughput would have only declined by approximately 2%.

Our crude oil and natural gas liquids throughput decreased by 7% on a sequential quarter basis or 46000 barrels per day, primarily due to declining volumes in the DJ and reduced volumes through our equity method investments.

Higher production in the Delaware Basin increase water throughput by 7% or 47000 barrels per day on a sequential quarter basis. Our per barrel and per MCF adjusted gross margin increased across all products.

Our per barrel and per Mcf adjusted gross margin increased across all products.

We saw an increase of 10 cents per MCF on our natural gas assets, 12 cents per barrel on our crude oil and natural gas liquids assets, and 2 cents per barrel on our produced water assets.

The margins for our natural gas assets as well as crude oil and natural gas liquid assets were positively impacted by recording revenue previously constrained from certain cost of service contracts. Resulting in an increase of a per MCF adjusted gross margin of approximately 3 cents and our per barrel adjusted gross margin of approximately 13 cents, respectively. Additionally, for our natural gas assets we saw increased throughput in the Delaware Basin, which has a higher margin contract mix. With that, I'd like to turn the call back over to Michael to talk about our recently issued sustainability report. Michael.

And our per barrel adjusted gross margin of approximately 13 cents, respectively. Additionally for our natural gas assets. We saw increased throughput in the Delaware Basin, which has a higher margin contract mix with that I'd like to turn the call back over to Michael to talk about our recently issued sustainability report Michael.

As many of you have already seen we published our second sustainability report in late October. Before we get into some of the reports highlights, I want to take a minute to thank all our employees and contractors for their work on ESG. Implementing our ESG framework and strategy has been a monumental effort and there is no doubt that we would not be where we are today without the focus and dedication of our entire workforce.

Before we get into some of the reports highlights I want to take a minute to thank all our employees and contractors for their work on ESG implementing.

Implementing our ESG framework and strategy has been a monumental effort and there is no doubt that we would not be where we are today without the focus and dedication of our entire workforce.

Our report features a number of ways we are advancing energy through the three pillars of our approach to ESG. Supporting sustainable environments, focusing on people and operating responsibly.

Supporting sustainable environments, focusing on people and operating responsibly.

We know that to provide superior midstream services, we must be transparent about our environmental performance that is why in 2020, we joined one future a coalition of industry peers working to reduce methane emissions across the oil and gas value chain.

Within a year of joining, I'm very pleased to report that we have surpassed one futures 2025 methane intensity targets for similarly situated companies that gather and boost and process hydrocarbons.

Additionally, we were instrumental in working with the energy infrastructure council and the GPA Midstream Association in developing the first ever ESG reporting template for our sector. And our organization was one of the first five companies to adopt the new reporting template.

We continue to focus on reducing our scope one and two emissions and a large part of that effort is utilizing electric driven compression, which has enabled us to reduce NOx emissions by 7% since 2018.

Through 2020, we have installed approximately 350000 horsepower of electric compression and we've expanded our utility usage from renewable sources to 25%. Shifting to our strategic pillar of operating responsibly, we made great strides in improving safety enhancing governance and increasing our focus on environmental issues, we've reduced our employee total recordable incident rate or TRIR by 73% since 2018.

issues, we've reduced our employee total recordable incident rate or TRIR by 73% since 2018.

Additionally, in 2020, our employees logged a total of 22000 training hours. Each employees required to complete lives save training, which focuses on risk identification and mitigation and general life saving rules.

Today, 100% of our field based contractors are assessed on both the scope of work to be performed and their historical safety performance.

We've also added several ESG leadership positions within our organization. At the board level, we established an ESG Committee to guide the company's direction on ESG issues.

We have also incorporated ESG metrics into our internal bonus compensation program and added leadership positions to oversee ESG reporting, sustainability in our operations and our diversity equity and inclusion efforts. I'm proud of our early record on diversity. As the majority of our current senior leadership team is either female or of racial or ethnic minority.

<unk> minority.

This sets the foundation for great diversity of thought and an expectation of inclusion throughout the entire organization. Finally, giving back to our communities is a big part of working at West. Improving lives as part of our vision.

So we have launched several employee led programs designed to incentivize volunteerism and social investment within our communities through partnerships with local nonprofit organizations. Additionally, as of today's call, we have exceeded our annual volunteering target of 50% employee participation for 2021.

Additionally, as of today's call, we have exceeded our annual volunteering target of 50% employee participation for 2020 one.

Donating over 8500 hours to the communities in which we live and work. I invite you to take some time to read about these efforts and more in our sustainability report found on the sustainability tab of our corporate website.

Before we close out today's call I would like to reiterate a few key points. First, we have a solid operational platform anchored by strong assets in the most active producing basins in the country and in particular, the Delaware Basin.

We have a solid operational platform anchored by strong assets in the most active producing basins in the country and in particular, the Delaware Basin.

The current commodity price environment supports increased producer activity and we've already seen pockets of improvement throughout our asset portfolio.

As we exit 2021 and move into 2022, we remain committed to addressing our customers' needs in a safe and efficient manner. Second, we have a strong liquidity position and we continue to improve the health of our balance sheet. Since the start of 2020, we've retired $1.15 billion of our senior notes, significantly decreasing our interest burden and reducing our leverage solidly below 4.0 times.

Second.

We have a strong liquidity position and we continue to improve the health of our balance sheet. Since the start of 'twenty 'twenty. We've retired $1.15 billion of our senior notes significantly decreasing our interest burden and reducing our leverage solidly below 4.0 times.

Finally, we continue to generate significant free cash flow, allowing us to pay down debt buy back units and increase our distribution. We have now executed on more than half of our $250 million unit repurchase program and increased the distribution for the third consecutive quarters since the onset of the pandemic.

We have now executed on more than half of our $250 million unit repurchase program and increased the distribution for the third consecutive quarters since the onset of the pandemic.

We continue to work with our board on the best avenues for future capital allocation as we focus on generating value for all our stakeholders.

I would like to wrap up by thanking our workforce for their hard work and dedication to Wes. We look forward to updating you on our fourth quarter and full year 2021 results and providing 2022 guidance on our next earnings call. With that, we'll open the line for questions.

Thank you. We will now begin the question and answer session. To ask a question, please press star then one on touchstone phone. To withdraw your question, please press star then two. If you're using a speakerphone, we do ask that you pick up your handset before pressing the keys. The first question comes from Ryan Reynolds at UBS. Please go ahead.

So it's all your question. Please press Star then two.

If youre using a speakerphone, we do ask that you pick up your handset before pressing the keys.

The first question comes from Ryan Reynolds UBS. Please go ahead.

Hi, good afternoon, everyone. To start off, I was wondering if you could provide some updated commentary around West's leverage target just given that why those retired over 1 billion in senior notes and with leverage heading towards three times. I was wondering if we could see any return of incremental return of capital opportunities as we look into 2022. And whether a potential distribution step up in early 2022 would be viewed as an efficient form of return on capital.

The third off I was wondering if you could provide some updated commentary around leverage target just given that why those retired over 1 billion in senior notes and with leverage heading towards three times I was wondering if we could see any return of incremental return of capital opportunities as we look into 2022, and whether a potential distribution step up in early 2022 would be.

Viewed as an efficient form of return on capital.

Yeah.

Yes. Thanks, Brian, that's a good question. Our targets as it relates to leverage really haven't changed. We're very pleased with the progress that we've been able to achieve up to this point.

Our targets as it relates to leverage really haven't changed.

We're very pleased with the progress that we've been able to achieve up to this point.

Around exiting this year at below four times, obviously, we sit below that level today, exiting 2022 at below three five times and we're approaching that based on the performance that we've been able to achieve up to this point. As we start getting a little closer towards, we're having an achieved pointing to being able to achieve those targets was that with greater certainty as we take a look at our guidance for 2022 and expectations around that, it's certainly a conversation we expect to have with the board around what are the most efficient ways at that point for us to be able to return additional capital to our stakeholders. We've been very disciplined in returning capital to our stakeholders and the proportionate which we do that is something that we that we hope to engage with our board on us as we take a look at our guidance for 2022. The first part of next year.

Based on the performance that we've been able to achieve up to this point as we start getting a little closer towards.

We're having an achieved pointing to being able to achieve those targets was that with greater certainty as we take a look at our.

Guidance for 2022 and expectations around that.

Certainly a conversation we expect to have with the board around what are the most efficient ways at that point for us to be able to reach.

Return additional capital to our stakeholders, we've been very disciplined in returning capital to our stakeholders and the proportionate, which we do that is something that we that we hope to engage with our board on us as we take a look at our guidance for 2022.

First part of next year.

The degree of which each of those levers are going to be pulled is definitely a topic of conversation and obviously within that will be.

The discussion around the distribution itself and whether or not there is there was a step change warranted in that regard.

Great appreciate the color and maybe just to continue for a follow up on capital allocation and unit buybacks.

Oxy has ownership in west continues to tick up close to that 50% threshold.

Just given the amount left on the share buyback authorization, just curious if theres been any conversations with oxy at this point.

If that threshold is crossed and then if there was a potential for any buybacks from axiom directly to.

Maintained deconsolidation of the oxy level. Thanks.

Yes.

Theres always continued dialogue that we have with oxy in that regard and our focus is buying back.

Any units that we can and obviously there is being the largest holder we have continued dialogue with them as it relates to that to that threshold.

Obviously, it's their decision.

To the best manner in which they would like to keep their ownership and how they want to keep their ownership but.

We certainly.

Stand ready ready and are constantly engaged in and.

Discussing whether or not where it can be a participant in any divestiture that they might have.

They continue to reiterate reiterate their support their desire to maintain it.

Our significant ownership in Wes and coordination cooperation has been very positive and continues to be positive.

And so if there is an opportunity for us to buy back some of those units as they seek to.

To maintain the desired ownership then we stand ready to have those conversations when when they might occur but for us. We're just focused on reducing the amount of units outstanding.

Regardless of where they they may come from.

Great. That's all for me have a great day everyone.

Thanks, Brian.

And our next question today comes from Spiro <unk> with <unk>.

Please go ahead.

Thanks, operator, and Mike Gregg.

I just want to follow up on that.

Not bad.

I wanted to follow up on some of the capital allocation questions and just narrowing a little bit on the buyback, but also growth. So I know buyback, obviously opportunistic and you sort of weave in and out of the market.

But you started described it as a lever there and I imagine theres, maybe a formula in the background that you are all using to decide when and maybe how much you sort of buyback any color you can give us as we think about sort of what makes you make that move into the market and then as we think about another bucket for capital allocation of course, there is growth and I know that's been largely absent the last few years, but as we look forward.

Just curious if <unk> been less aggressive up till now while you've got leverage lower.

And then now that we're at this point just curious if we should be thinking about accelerated growth again, any spending there and even if M&A comes into the picture.

Yeah sure let me take the first question.

Sure.

As it is.

As we think about.

Capital allocation in buying back units. So we've indicated that we wanted to do that on an opportunistic basis.

Do we really think about it is where we might see some weakness in the market then that's an opportunity for us too.

Two two by units in those particular instances and obviously, we thought what we found out in the third quarter and Thats why we utilize the program.

In that way as it relates to growth.

Really we are focused on being able to service our customers and the best way possible and so and as much as yes as.

Well as growing that customer base through.

Acquiring new customers.

Overall, and so in as much as our customer base desires that they want to grow there there.

Their volume significantly then obviously, we're going to spend our growth capital in order to follow that.

As it relates to M&A for US, we're always taking a look at M&A opportunities, whether it's on optimizing our portfolio through potential divestiture of assets as well as bolting on additional assets that might fit within our system.

But it really has to be in enhancing acquisition for us.

Making sure that we're able to optimize.

Our system through that acquisition target and so.

We've made that maintain that posture.

Really throughout over the past couple of years, and how we contemplate M&A either on the potential of the portfolio optimization side as well as new targets.

Got it that's helpful. Mike Thanks for that.

Switching gears, a bit but still thinking about the outlook I know, we're not giving guidance on this call. It sounds like we'll get it next quarter or so so fully understand that for 2022, but I guess just based on what you said before I think you've talked about 2022, EBITDA growing off a 2021, which now appears kind of an easy lift.

As we think about the back half of 2021 and the run rate here, even if we just look at the third quarter and back out that $19 million noncash revenue item. It would seem like 2009, two should even be stronger than the back half of 2021, just given all your outlook in terms of activity improving sequentially from here just curious if there's any read.

Or anything we're missing about next year any lumpiness that we should be thinking about that maybe makes that not a great comparison.

Yes, there are not that I can really point to you with regards to 'twenty two just yet with regards to any specificity with regards to what we're seeing in our business now or what we expect going forward, but definitely look forward to engaging on that conversation once we put out formal guidance and give some more specific details.

But nothing I can give to you right now spiro that wood.

We would guide you one way or the other.

Really look forward to doing that first part of next year.

Understood have to give it a track thanks for the time guys.

Thanks Darryl.

And gentlemen, as a brief reminder, if you'd like to ask a question. Please press Star then one.

Question comes from Derek Walker of Bank of America. Please go ahead.

Hey, good afternoon, everyone.

Hey, Derik.

Okay. Appreciate the time guys.

Maybe just a quick clarification I know you guys reiterated the expectations on exit rates for 'twenty one.

You guys talked about with the agreement with the.

Crestone next year.

Offsetting natural declines in the D J.

Has that outlook changed at all and I guess, how does how is that relationship going so far.

Yeah Eric.

We're actually in the final throes of.

Making those connections to bring those volumes onto our system and so there's been a lot of good progress relative to that project since our last call.

And really the outlook for those Crestone volumes that we expect in 2022, Hasnt Hasnt changed relative to what we had previously communicated.

So we're we're.

We're optimistic that.

Those additional volumes in the DJ in 2022 will will go a long ways and helping.

Maintain our volumes from that asset next year, but as we've stated we continue to work with our all of our producers to.

Understand what their development plans are for 2022, and I think we'll have a much more definitive and more clarity around what that looks like as we issue our 'twenty two guidance.

Understood.

I appreciate that and maybe just a higher level question I.

I think some peers have talked about.

Potentially.

Incremental Nat gas pipe out of the Permian.

Sooner than prior expectations.

As participating in a potential natural gas pipe out of the Permian at some point is that something of interest to you guys. I know you guys have several.

Equity interest in pipelines and didn't know if that was something that was on your radar.

Yes, we're always watching that market and as you point out we are an equity partner in many of those existing downstream pipes, both in the Delaware and out of the DJ and so.

Those are opportunities that.

We monitor it and we're looking at looking at an early fundamentally just.

Based on what the value proposition looks like for us.

And what we see is the downstream takeaway commitments that that may be necessary in order to support our business but.

We we feel like we're in a pretty good position right now with our desk takeaway.

Set up out in the Delaware Basin.

But we continue to.

Look at those opportunities in.

Part of that.

The customer service that we're providing to our producers is making sure that.

We're engaged in those opportunities or or working with producers who may have an interest in participating in.

Got it and maybe just one last one from me.

Just when I.

Looking at your water volumes relative to.

Sort of your crude and NGL that ratio continues to kind of creep higher.

The year I guess, how do you guys looking at that ratio going forward.

Yes, again, one thing to point out there Derek is that our water business is only in the Delaware basin, whereas our crude and natural gas volumes are across our full portfolio of assets and so.

Youre seeing a lot of the differentiation in the growth rates overall large part has more to do with what is concentrated in one particular area and the others.

Our across our portfolio.

So we really haven't seen a huge step change as it relates to the water to oil ratio across our assets. It's really just more a reflection of the fact that the majority of our growth is really coming out of the Delaware basin, and that's where our water assets are located.

I would just add to that that we have the ability and have been quite successful commercially.

To go after.

Incremental business on the water side and so the.

The addition of volumes.

Each of our three systems out in.

In the Delaware isn't necessarily a.

Formulaic ratio going forward, because we're looking to build on incremental business across all three of those systems with our water assets haven't been in an area.

Particularly right for our commercial opportunities and the team's been doing a great job at bringing incremental barrels onto it.

Got it appreciate it thanks, Mike Thanks, guys. That's it from me.

Thank you ladies and gentlemen. This concludes the question and answer session I would like to turn the conference back over to the management team for any final remarks.

Thank you everyone for joining the call we look forward to discussing our 2022 guidance as well as our full year 2021 results. The first part of next year happy holidays, everyone.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines have a wonderful day.

Okay.

Q3 2021 Western Midstream Partners LP Earnings Call

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