Q1 2025 Western Midstream Partners LP Post-Earnings Call
Fireside Chat with our Chief Financial Officer, Kristen Shults. Kristen, can you give us an overview of West's first-order financial and operational results?
Sure, Daniel.
So, first quarter was a very strong quarter for us financially. Our first quarter adjusted EBITDA was $594 million that was an increase relative to fourth quarter of 2024. Our adjusted growth margin decreased slightly because of decrease throughput, but the revenue recognition adjustment we had in Q4 of 9.2 million also contributed to that decrease relative to Q4. Our operating expense also decreased.
Fourth quarter was very strong in the DJ, and so from a gas perspective, you actually saw a decrease in our gas volumes, quarter over quarter, because the DJ went back to what I would call more normalized level. For oil, slight decrease there on an operated asset basis, mostly driven by the DJ again.
as well as a little bit from the Delaware basin and then water decreased 2% just because of the timing of wells and then some more volumes being taken off for recycling purposes.
We announced that the North Loving Plan is now fully online. How does this impact West going forward?
Yes, so really exciting. Obviously, I've been working on that plant for a while. This is our first major Greenfield construction project.
It will bring our total processing capacity in the Delaware basin up to 2.2 BCF a day. That plant itself is a 250 million cubic feet per day train. And so it's going to help on the gross margin side slightly because we won't be burdened by the offloading fees that we previously had. We'll also see an increase though on the op-x side as we actually bring in people to run that plant, maintain it. So we'll reduce the need for offloads on a go-forward basis.
and so what you'll really see from a three-part perspective is no real changes there because we're just taking those volumes and putting them back on our system.
That plant has actually been full since we've started it up. Obviously, we need a little bit of spare capacity within the system as we do turn around or different maintenance activities. So, we have some of that in the system today, but the plant's, plants full.
The macroeconomic environment has become much more volatile since West initially announced guidance in February .
Can we expect any changes to West's 2025 plans?
What they do and they're changing forecast obviously directly impact us and that very much impacts our capital program so as of right now with those conversations we have had we haven't seen any material changes from a forecast perspective or throughput perspective for this year. [inaudible]
If for some reason that does change in the future, our first lever that we're going to start pulling is on capital because obviously once again being on the GMP side.
If they stop a rake or they stop drilling in the acreage that we're in, we're going to quickly drop capital from the from the plants. I'd say from just taking a step back and looking at west on where we are now. You'll see that we've we've also done a lot in the past few years to put west in a really strong position to go into some type of market downturn or commodity price downturn our balance sheet our leverage is sitting underneath three times right now. We've instilled a lot of just best
practices and efficiencies, offices within the company that weren't there prior to COVID. And just feel like we're in a great place if the cycle does turn and we do see some changes in customers forecast.
Do you expect any changes to the Pathfinder Pipeline project at this point based on the recent market volatility? No, we don't. The issue we are trying to solve with Pathfinder is around or pressure issues within the basin and us needing to relocate that water to another part of the basin. [inaudible]
That's not going to go away, and so we're still moving forward with that project to the end of the day.
Once again, we have that underwritten with a very large commitment by Oxy. So as we're looking at our 25 budget and our 26 budget, those cost related to Pathfinder that we discussed last time, that 400 to 450 million dollar range for Pathfinder.
Those are fixed and we're going to spend that money. We're going to continue to build out that pipe. From a producing customer perspective, we've seen, we've had and have seen a lot of excitement from producers around the pipe itself and other midstream companies. So,
I think as the issues that we're trying to solve for become more noticed and more recognized within the basin by others.
Then more demand for that pipe will start to show up and so we're very optimistic and really excited to continue building that.
Kristen, thank you for joining us today for our listeners. If you have any additional questions, please feel free to reach out to us. Our contact information is located in the Investor Relations section of our corporate website at WesternMidstream.com The Investor Relations section is located in the Investor Relations section of our corporate website at WesternMidstream.com