Q2 2025 Western Midstream Partners LP Earnings Call

Good morning. My name is Joanna and I will be your conference operator today.

At this time I would like to welcome everyone to the Western Midstream Partners. Second quarter 2025 earnings conference call all lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,

Followed by the number 2.

Thank you. I would now like to turn the conference over to Daniel Jenkins, director of investor relations. Please go ahead.

Thank you. I'm glad you could join us today. For Western midstreams, second quarter 2025 conference call.

I'd like to remind you that today's call the accompanying slide deck in yesterday's earnings release and the arrows acquisition press release and slide deck contain important disclosures regarding forward-looking statements and non-gaap. Reconciliations please reference Western midstream's most recent form 10K and 10 q and other public filings for a description of risk factors that could cause actual results to differ materially from any forward-looking statements, we discussed today.

Relevant reference materials are posted on our website. You will also note that due to the pending arrows, Water Solutions transaction, today's discussion is subject to certain additional Securities laws. And so we refer you to the slides in the arrows, acquisition slide, deck titled, or looking statements and ownership structure, and additional disclaimers that are posted in the events and presentation of Wes's corporate website.

With me today or Oscar Brown, our chief executive officer, Danny Holderman, our chief operating officer Kristen Schultz, our Chief Financial Officer and John.

Thank you, Daniel and good morning, everyone. The second quarter was both eventful and highly successful for Wes.

Yesterday afternoon, we reported strong second quarter operational and financial results, highlighted by sequential improvement in adjusted gross margin and the highest quarterly adjusted EBITDA. Our partnership's history also continued strong activity levels and high system operability, contributing to increased throughput across all core operating assets and product lines.

Notably, we achieved record-breaking natural, gas, crude oil, and ngls and produce water. Throughput in the Delaware Basin while our quarterly results were noteworthy. It is our steadfast commitment to and effective execution of or prudent growth strategy. That truly distinguishes, this quarter's performance.

This is exemplified by our recent announcement of an agreement to acquire arrows, Water Solutions in the sanctioning of a second train at our North loving natural gas processing plant.

These actions will enable us to further, strengthen our footprint in the Delaware Basin, expand our service offerings, and deliver enhanced flow Assurance to all our producing customers turning. First, to the arrows announcement, this secretive bolt-on acquisition. Enables us to optimize the value of our existing asset base and leverage. Our operational expertise to generate incremental value for our unit holders, which are both core principles of our m&a strategy.

By integrating arroces water, disposal Water, Solutions, and beneficial reuse capabilities, with Wes's existing produced, Water Business, including our under construction Pathfinder pipeline. This acquisition establishes West, as a best-in-class interbase and produced water system. Provider with a differentiated Texas and New Mexico, Water System, West will continue to deliver exceptional flow assurance and sustainable service. Offerings to customers for years to come the ability to transport water throughout the Basin is become increasingly important. Considering the volume of produce water generating, the Delaware Basin and the recent Texas Railroad Commission. Regulations pertaining to the permitting of new salt water, disposal, Wells.

After the close of this transaction Wes's pro-forma produced water disposal capacity will be more than 3.8 million barrels per day.

Additionally heiress's recent purchase of the mcneel ranch which straddles, New Mexico and Texas between the Delaware Basin and the central Basin platform provides significant long-term optionality with incremental access to poor space and other surface use opportunities.

Next this transaction further diversifies Wes's customer base and contributes to Wes's already strong. Midstream contract portfolio through ais's, long-term contracts, material acreage dedications that consists of more than 625,000 acres and minimum volume commitments. With investment grade counterparties, adding errors to our portfolio will provide additional support for our distribution. The transaction also significantly expands our footprint in New Mexico, unlocking, new opportunities to potentially grow, our natural gas and crude oil Gathering and processing. Businesses, ours is customers include large integrated producers, such as Chevron kico Phillips, and accidental, and large private producers such as mub.

Cost synergies based on this, the acquisition is expected to be a creative to 2026 free cash flow per unit by financing. The transaction was up to 28% cash and 72% West units. We expect our industry-leading net leverage position to remain at approximately 3 times in a proforma basis.

Over the past several years, we have prioritized strengthening our balance sheet through debt reduction enhancing operational, efficiencies reducing costs and growing adjusted IBA.

These actions have positioned our partnership to successfully execute this strategic bolt on acquisition from a position of strength.

Pivoting to our recently announced organic growth opportunities. We have also sanctioned an additional training that our existing North loving plant in the Delaware basin.

This 300 million cubic feet per day natural, gas processing, train will increase the north loving plant capacity, to 550 million, cubic feet per day, and take our total West Texas complex processing capacity, approximately 2 and a half billion cubic feet per day by early in the second quarter of 2027.

After evaluating multi-year, throughput forecasts and conducting numerous discussions with our producing customers in West Texas. We strongly believe that the volume of natural gas and produce water will be substantial for years to come our north 11 train 1 reach full capacity within just 1 month of its late February, 2025 startup, and we are still relying on offloads at times to manage our customers. Throughput profile. The offload market today is tighter than in 2022, when we put these original offloads into place.

Therefore, we see a need for additional owned processing capacity at our West, Texas complex. We think it is in our partnership's, best interest to be well prepared to receive more natural gas and produce water volumes as the gas to oil and the water to oil ratios experienced by our customers. Continue to increase over time.

In addition to these actions the teams at West have maintained, a sharp focus on enhancing productivity and efficiency to strengthen our cost structure and sharpen our Competitive Edge. During the first quarter. We implemented new initiatives to optimize operational processes and improve resource allocation both of which Drive meaningful efficiencies in operating performance improve our ability to compete for new business and advanced high-value organic growth initiatives. System will provide additional details on these accomplishments in a moment. These actions coupled with our Pathfinder pipeline in the recently. Commissioned North loving train 1, Advance our strategy of prioritizing Capital efficient growth that generates strong returns for West unit holders and aligns with our continued focus on sustaining and growing the distribution of time collectively. These efforts will help accelerate growth over the coming years. And I look forward to our teams continued strong execution, as we strive to deliver, excellent service and increase flow Assurance for our customers with that, I will turn the call over to our chief operating officer Dan

Any Holderman to discuss our operational performance during the second quarter Danny.

Thank you, Oscar, and good morning everyone. Our second quarter natural gas throughput. Increased by 3% on a sequential quarter basis, primarily due to increased throughput across all of our core operating basins.

The Delaware Basin outperformed in the second quarter, primarily due to numerous Wells coming online early in the second quarter. This increase was partially offset by lower throughput from our other apps, specifically, in South Texas, due to plant, turnaround activities during the quarter.

Our crude oil and NGL throughput increased by 6% on a sequential quarter basis, due to increase throughput across all of our core operating basins and new wells in the Delaware Basin that came on early in the quarter, we also experienced increased throughput from our Equity Investments. Additionally, our produced water, throughput, increased by 4% on a sequential quarter basis, due to new wells in the Delaware Basin coming online early in the quarter.

Our second quarter per mcf adjusted gross margin for natural. Gas decreased by 2 cents on a sequential quarter basis which was in line with our prior expectations coming into the quarter. This decrease was primarily driven by lower excess Natural, Gas Liquids volumes and conjunction with reduced NGL pricing and changes in contract, mix.

Going forward. We expect our third quarter per mcf adjusted gross margin to be in line with the second quarter. Our second quarter per barrel. Adjusted gross margin for crude oil in ngls decreased by 15 cents compared to the prior quarter which was in line with our prior expectations, coming into the quarter.

This decrease was primarily due to more normalized, timing of distribution payments and increase, throughput from our Equity Investments, which have a lower than average per barrel margin as compared to our other crude oil and NGL assets.

On an operated basis, our per barrel. Adjusted gross margin remained relatively flat

We expect our third quarter per barrel adjusted gross margin to be in line with the second quarter.

With our prior expectations, coming into the quarter going forward, we expect our third quarter per barrel adjusted gross margin to be in line with the second quarter.

Turning our attention to the remainder of the year, we continue to expect our portfolio wide, average year-over-year, throughput to increase by mid single digits percentage growth for both natural gas and produced water and low single digits percentage growth for crude oil and NGL for year-over-year compared to purposes. These expectations exclude the volumes associated with the non-core asset sales that closed in early 2024

In the Delaware Basin, we continue to expect modest year-over-year increases in average. Throughput across all 3 product lines reaffirming the basin's role as our primary growth engine in 2025.

During the second quarter, Delaware Basin throughput benefited from new wells coming online early in the quarter. Going forward, based on current producer forecasts, the cadence of wells that come to market is expected to remain fairly consistent throughout the second half of the year. Although we currently forecast this activity to be more heavily weighted towards the fourth quarter as a result, our latest forecast shows that our third quarter Delaware Basin volumes for all three products will remain flat compared to the second quarter levels in the DJ Basin. We continue to expect average year-over-year throughput to remain fairly flat for both natural gas and for crude oil and NGLs during the first half of the year in the Powder River Basin. We benefited from offloads from certain peers that experienced temporary downtime due to asset.

Maintenance or repairs.

Even though those trains return to service by the end of the second quarter and the volumes, from those offloads decreased, we still anticipate modest year-over-year increases in average, throughput for both natural gas and crude oil and ngls for 2025 due to offsetting customer-driven organic growth projects. Finally, we still expect meaningful natural, gas, throughput growth from our other assets, specifically, in the UA Basin to commence in the second half of the Year, driven by increased volumes from Williams Mountain West Pipeline expansion and the tie-in of Kinder Morgan's, Altima pipeline to our chapito plant in September,

With that, I'll turn the call over to Kristen to discuss our financial performance during the second quarter.

Thank you, Danny and good morning everyone. During the second quarter we generated a net income attributable to limited partners of 334 million and adjusted ibida of 618 million relative to the first quarter, our adjusted gross margin increased by 18 million dollars. This was primarily driven by increased throughput and improved gross. Margin contribution from the Delaware Basin which was partially offset by less. Gross margin contribution from the excess Natural Gas Liquids volumes in combination with lower NGL pricing and lower distributions from our Equity Investments.

Our operations and maintenance expense decreased slightly quarter of a quarter.

Going forward, we anticipate higher operation and maintenance expense during the third quarter resulting from increased utility expense during the hotter summer months associated with higher, estimated electricity pricing. As a reminder, we are reimbursed for approximately 75% of our utility costs portfolio wide from our producing customers.

Earning a cash flow. Our second quarter cash flow from operating activities total of 564 million.

Generating free cash flow of $3,888 million.

Free cash flow. After our first quarter of 2025 distribution payment, in May with 33 million.

Focusing on Capital markets activities. We retired 337 million of senior notes upon the maturity in early, June with cash on hand. And we were able to maintain our top tier net leverage ratio of 2.9 times at quarter end.

In July, we declared a quarterly distribution of 91 cents per unit, which is in line with the prior quarters distribution and will be paid on August 14th to unit holders of record on August 1st. At this time, we are not making any changes to our 2025 Financial guidance ranges considering the estimated aths, acquisition close date, which we expect to be during the fourth quarter. After the regulatory review process in the era. Shareholder meeting is complete

Additionally, as Oscar previously mentioned during the first quarter, we implemented new initiatives to optimize our operational processes and improve resource allocation, which has yielded meaningful efficiencies and cost reductions across the partnership.

Through targeted optimization of field, level operations, procurement practices, and maintenance. And turnaround procedures, we have successfully reduced downtime increased efficiencies and identified permanent annual run rate cost Savings of approximately 50 million dollars.

We are already realizing the benefits of these improvements which are expected to help us better manage and offset Rising variable costs and higher operation and maintenance expense as our operations continue to grow.

These are ongoing initiatives that we expect to continue yielding results in additional improvements in both 2025 and 2026.

Guidance range, but with the addition of North loving 2 coupled with the expected error acquisition close date during the fourth quarter. We now expect West to be towards the high end of our previous guidance range of 625 million to 775 million.

Looking ahead to 2026 and recognizing that the majority of expenditures related to Pathfinder and North Loving 2 will be incurred during that year.

We now expect 2026 capital expenditures to be at least $1.1 billion.

Given that both Pathfinder and North loving 2 are short cycle capital projects with expected returns of at least mid teens on an unlevered basis.

We expect these Investments to drive substantial. Eva growth beginning in 2027.

Over the coming months, we will continue to receive updated forecasts from our producers, which will allow us to continue developing our 2026 forecast.

Even with elevated levels of capital spending next year and the capital needed to close the Earth acquisition, we would still expect any leverage to remain at approximately 3 times.

With that said, based on our recent conversations with our customers and updated throughput. Forecast, we would expect to grow average year-over-year, throughput across all 3 product lines again in 2026.

Even before you incorporate the positive contribution from aerys.

With a growing asset base, the inclusion of arrows and net leverage at approximately 3 times. We are confident, we have plenty of financial flexibility to fund a more robust capital expenditure program. That will generate higher throughput in 2027 and Beyond.

We remain committed to generating strong returns for West unit holders to sustain and grow the base distribution over time.

However, in light of our strong current yield, we intend for distribution growth to Trail earnings growth in order to increase our distribution coverage, and provide greater cash flow, certainty,

With that, I will now turn the call over to Oscar for closing remarks.

Thanks Kristen before, we open it up for Q&A. I would like to emphasize how our Premier asset portfolio. Steadfast commitment to financial discipline and resilient business model. Distinguish us as an industry leader and positions us to capitalize on compelling growth opportunities. All while delivering industry-leading return of capital to our investors and sustain long-term value to our stakeholders first. The arrows acquisition significantly strengthens West's position as a Midstream Water Services leader and allows West to provide elevated levels of flow Assurance to our customers. That further de-risks their core exploration, and production businesses, The increased scale and expanded service offerings that the acquisition provides will better position West to compete for incremental Natural Gas,

and crude oil and NL's business over the long term, especially in New Mexico.

Second the arrows acquisition and the sanctioning of our second train at the North loving plant were driven by continued strong producer, activity levels in the Delaware Basin that greatly support our growth Outlook and strategy in 2026 and Beyond.

Despite experiencing volatile market conditions early in the second quarter. We have not experienced any substantial changes in our customers, expected production outlooks,

And we remain on track to execute our overall growth strategy.

Finally Wes's long-term contract, portfolio, strong balance sheet and investment grade, credit ratings, provide the financial flexibility necessary to support our multi-year expansion projects.

Our contract structures supported by minimum volume, commitments and cost of service protections further, enhance the stability and predictability of our future profitability and potential free cash flow generation.

By maintaining low net leverage and generating strong free cash flow, we are well positioned to maintain our disciplined capital allocation framework. Increased distribution coverage allows us to return more capital to unit holders over time.

Our strong second quarter results have kept us on track to achieving our 2025 operational and financial goals. The Pathfinder pipeline in North, along with 2 organic growth projects and the Arrows acquisition, currently accelerate our growth plans for 2026, 2027, and beyond.

We will remain focused on providing excellent, customer service for our producing customers. And we look forward to leveraging, our leading Midstream Water Services position to drive additional growth in our natural gas and crude oil Gathering and processing businesses.

Thank you to the entire West Workforce for your hard work and dedication to our partnership.

And with that, we'll open the call up for questions.

Thank you.

To remind everyone in order to ask a question. Press Start, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Keith Stanley at Wolf research, your line is open.

Can you talk to that financing decision? I, I guess yielding 9%, you know, I think you'd get it a lot more accretion if you use more cash on the deal.

Yeah, no thanks for that. It's Oscar. Um, so when we look at this, you know, we had the opportunity to do a transaction, that's immediately A Creative, uh, to really all our metrics and a per unit basis and to finance it. Leverage the neutral. Do we think that gives us the kind of capability uh, to lean into 1, our organic growth projects which are increasing as we talked about but also the position is for additional uh, consolidation opportunities and gas and oil as they arise arise.

So um you know, given the metrics here, we thought it was a great opportunity you know to just preserve the balance sheet uh and set us up for additional opportunities in the near term.

Okay uh great. Thanks for that uh Second 1, I guess, just from a business mix perspective, you make the point on the slides that, you know, water is still only 16% of Evita with the transaction. It's a big part of your growth strategy and capital plan though. So where do you see water? Kind of as a percentage of of the company going forward and is there any limit or or a mix that you're going for?

Yeah, I don't think we have a specific Target mix. Um we firmly believe the water business has evolved uh into a Midstream, a clear. Midstream uh type of business uh just like um, Gathering and processing for oil and gas. Uh, if you look at the commercial contracts that they have the dedication and the mvc's, it looks just like the rest of our business. So commercially, you know, we're sort of happy, you know, with any of the 3 streams that we support and that really helps us with our customers and helps them with overall integrated flow Insurance, in terms of the business makes, you know, we kind of like this 15% range. Uh, if you know when we're highly successful On a Pathfinder, it will creep up a little bit closer to 20%, we're probably pretty pretty happy with that mix.

Thank you.

Thank you.

Thank you. Your next question.

On the line of Gabriel moiraine at mizuho, your line is now open.

Hey, good morning team. I just wanted to ask about uh, following up sort of on the water deal and

Can you just talk about systems around Eros and and going to New Mexico? Here are there other privately held systems where you view the opportunity to continue to consolidate around here. And then also from a regulatory standpoint, you're making an entry into New Mexico. Just your views on doing business in that state versus in Texas, particularly on the waterfront, whether it's permitting, disposal, Wells, or what have you, uh, what your views are there?

Uh, thanks for that game. Um, so in terms of again, we're you know, aist was our number 1, sort of focus, uh opportunity given their sort of Midstream structure for us in the Water Business. And then when you look at the map, it really completes our system in the Delaware Basin. So we're pretty happy with the combination here and and don't see a lot of need to continue to, uh, add to the system from here in an inorganic way, um, and frankly, the commercial opportunities increased dramatically for both of these with the combination. Um, you know. So I think that'll help us on that front. Um, we've been looking for a way we operate. Um, in a small way in New Mexico today, uh, across streams. And, um, we've been looking for a way to grow in New Mexico. So, we're comfortable with the regulatory environment we have experienced there, obviously. And so we don't see, uh, any concern there with, um, with sort of those kind of issues. In fact, we think that the ability to move water, uh, across state lines, um,

And across the combined systems is going to be a critical feature and optimizing the assets, and frankly increases commercial opportunities for Pathfinder in the long run as well. Um, so we really think this this combination um, gives us a unique position, uh, in the space.

Thanks Oscar, and then maybe if I can pivot to the FID on loving 2, I think maybe a little bit sooner than some folks were expecting, you talked about, still needing some offloads and maybe having that base load some of the plant and the past, you've also had some commitments from some of your producers.

To base, load new plants. Can you talk about that? And also a lot of new plan fids

Are you playing a little more offense and being a little more aggressive here? In terms of the FID, is this plant maybe relative to some of your historical planned FIDs?

Past. Um, here, we spent a lot of time with our existing dedication customers and producers to really understand their medium and long-term sort of view on where their gas production. Um was expected over the next few years. Uh, and so really, we're thoughtful about this and um and have the opportunity to go ahead and take this ID. The design of North loving the, the area and then North loving 1, uh, sort of built in the opportunity to move quickly, uh, on a an additional train. We have the space, we had already had much of the design work done, uh, in line with complete, completing the first 1. So we are continuing to use offloads today. We see uh, growth in gas with our producers. We're aligned with, um, with the direction, the Basin is going in terms of increasing GRS as well. Um, so we have a lot of confidence and visibility, uh, at this time and decided we'd go ahead and move, uh, before waiting, you know, uh, to have a completely

full plant, you know, you know from the start

Thanks Oscar.

Thank you. The next question.

The next question comes from the line of manav Gupta, at UBS. Your line is now open.

Um, good morning. Uh, looks like a great deal. I, I'm just trying to understand uh, this uh, a little better. Uh, you talked about like 40 million in Synergy. So how should we think about Synergy capital capital? Would you have to spend anything to actually, uh, gain these energies and once this transaction closes? How should we think about the long-term distribution growth enabled by this transaction? No, thank you for that good questions. Um, in terms of the Synergy capture, the 40 million is all kind of g, g, g, and typical sort of public company consolidation Synergy so low hanging fruit. That should be quick to realize, of course we've got to wait for, um, this regulatory approval and shareholder vote. So, there's a lot of planning we've done and are going to do in the next couple months into closing. So we should be able to move very quickly. And realizing those synergies. As we know, we have not counted any, uh, revenue synergies or commercial opportunities that the

Combination will provide which we think are significant, including the potential to pull through of additional um you know gas and oil Gathering and processing based on the new and large footprint. Um, in terms, I'm sorry your second question.

I'm sorry distribution grounds. Yes. So that you know, we continue to to stand by our long-term, you know, mid to um, Mid single digit, distribution growth, uh, Outlook and plan and certainly in a creative transaction, helps support that. You know, everything we do in terms of deploying Capital either, you know, sustains or grows or distribution, you know, that's our core strategy. So, uh, This falls in line with that, you know, we, you know, given where the yield is today, you know, we, we don't see a lot of need to go above, you know, sort of our, our already indicated, you know. So, so distribution growth plans and as we build distribution coverage, it's the only thing, frankly, we can identify is any additional risk in our story that we can control. Uh, so, um, obviously this transaction sets us up for well, in excess of 10%, even dog growth next year, um, and will likely stick to something in that mid single digit range but of course, that'll be up to the board, um, and you know,

The efficiency of how we close and execute on this transaction before we can make that determination.

Thank you so much for that. You were kind enough to give us some idea of the 2026 capex and just from our modeling perspective, should we expect this capex pump to be 26 and 27 and then fall off or should we just expect 26 to be elevated and 27 to fall off, if you could help us understand that a little better, thank you.

Yeah, we've got obviously, we've got this moment, you know, based on what we see in in our announced, uh, organic drug projects, the biggest biggest of, with of which, of course, are Pathfinder, uh, and North loving too. Now, um, the vast majority of the capital for those projects sits in 2026. So if things remain unchanged, we would expect the capex to sort of normalize in the 2027.

Thank you so much, sir.

Thank you again. If you would like to ask a question,

Press star, then the number 1 on your telephone keypad.

Your next question comes from the line of Jeremy tonette at JP Morgan. Your line is open.

Surface use opportunities. Um, you know, what kind of opportunities do you see at that asset? And um, you know, that might be different than the way Aeris was looking at it. Thanks.

Yeah, thanks for that. We've seen mcneel as certainly, an upside opportunity, a bit of a call option. So we do view this as a longer term upside. Um, as you can see where the ranch sits, it's in a great location between basins and straddling, the, the, uh, state line and sort of the east side. But it is a little bit far from, um, the current structure of of the systems. Um, so, you know, on the plus side there it has, um, already applied for and received permits on the Texas side of that, ranch for water disposal. So there's an opportunity there. And certainly, as the Basin grows and water volumes continue to grow. We see that as a great long-term, uh, opportunity, uh, to expand our disposal business in terms of surface use. Um, I do think sort of our reach and footprint and many of our, uh, partners that we work with, give us the opportunity, um, you know, to maybe move a bit more quickly on Surface items and they run the gamut of every

Everything that frankly everybody's chasing. So we're pretty excited about having, uh, this this surface area, this land. I think it's like in a good spot and, um, and look forward to hopefully generating some value with it in the long run.

Awesome. Thanks. And then you know maybe just thinking about the impact and some of the feedback you've gotten from uh you know Kono or Chevron. Um you know, where do they stand on this and um you know, maybe if you could also just kind of touch a little bit on the, you know, Pathway to a deal approval from here, I know you talked about a 4225 close but just um, you know, what kind of hurdles do you see there to kind of get in this thing finished? Thanks.

Yeah, no thanks for that. So, obviously we've gotten a support, uh, from 42% of heiress's voting shareholders. Um, it it supports the transaction in terms of, you know, the largest, uh, shareholder and customer that's coming to Phillips. Um, we obviously already do a lot of business with Kano today and have a great relationship there and have spent time with them, you know, as part of this transaction, um, in um, in making sure. You know, they were they and we were aligned, and when we were trying to do here, so we're very happy with that relationship and obviously just a week or 2 ago kind of go extended, uh, their long-term contracts and dedication with the arrows. So, we're super pleased about that. Um, we also, of course, do a lot of work with Chevron oxy as well.

Uh, and and newer. So we've got some great history with the major customers here. Um, but this does this transaction, does do a nice job of sort of enhancing those business with those third-party customers. So uh, it's a big positive in terms of hurdles. I don't think we see anything. I think the regulatory process should be pretty standard and we'll follow all the rules and move that along, as quickly as we can, and support that. And again, also support, uh, you know, errors and the filing of their proxy and, and, uh, and their shareholder vote. So it's really just those are just pretty standardized processes. They just take a little time, um, but again, we're pretty confident that we should be able to close the transaction. Uh, middle of the late fourth quarter.

Thank you. The next question comes.

The next question comes from the line of Zack van Evan at tph. Your line is open.

Hi. All thanks for taking my question. Maybe going to the capital program for the remainder of the year. Looks like in the slides the powder percentage shifted down is this just the dynamic of the north loving plant adding to the the Parian or are you guys spending a little bit less than expected up in the powder?

We are spending a little bit less in the powder. We've seen some projects just shift around from the timing perspective. And so, um, especially as we get towards the latter part of the Year, you'll see stuff, flip out of 25 and into 26. So yes, you're right. You have seen that shifted down and then when you add in the incremental Capital as it would relate to North levying that's going to increase the Delaware a little bit.

Got it, that makes sense. And then maybe you talked to volumes being up across the board in 2016. I know it's it's still early but maybe a just a quick breakout of where most of that growth will be. I assume Delaware. But you know, is DJ still kind of in that flat as range and then maybe anywhere else you guys are expecting growth.

2026 agree with you. We'd expect the Delaware to continue to increase from a throughput perspective. Um the DJ we'll see how the rest of this year turns out in terms of wealth coming online and then obviously we're still waiting for producers forecast. A lot's going to change in the next 4 months, even, um, and into January and February with updated producers forecast, so we'll give some more thoughts and guidance around what 2026 will look like maybe closer to the Q3 and to this year and then into next year.

Got it. Appreciate the time. Thanks everybody.

Thank you. Your next question comes from the line of Elva. Scott at RBC Capital markets. Your line is open.

Hey, uh, great. Thank you. Uh, good morning everyone. Um, I guess a couple of questions from me on, uh, just a North loving issue. Can you provide a little more detail, um, on, uh, how you see that plant ramping when it comes online? Um, you know, given that you kind of shifted from, you know, doing a lot of offloads before before uh fee being a plant.

This is John know I think it's a great question. Like Oscar mentioned, we still continue to have a lot of interconnectivity on the offload side and and are utilizing those to the extent. We have volumes above the system. You saw the note that the plant reached full operational capacity already and so we're very positive that as the north loving 2 comes on. We're going to have significant amount of volume day, 1 upon that plan coming on. I think Oscar mentioned that we were just able to make this decision based on the strength of our underlying contracts. And frankly, the success of the organic business that we've had over the last 12 to 18 months with just new deals that I continue to add additional volume to our system. So, across the strength of the existing contracts. And those new ones, uh, it gave us the line of sight to not only have, uh, the confidence to pull the plant. But to know that there will be a substantial amount of volume, stay 1 of the coming offline.

Okay, great. That's helpful. Thank you. And then just a little bit on Capital allocation. So, how do you think about organic growth versus additional bolt-on opportunities? And then given this um, expanding your footprint in New Mexico. Um, for continued growth in New Mexico, do you expect that to be more organic or do you think you'll need to do some more bolt-ons there?

A good question, I think um you know m&a as we talked about before really does have to compete with Organic growth. Um from both the returns perspective, but we also think of a risk perspective, organic is always

In our minds a bit de-risked relative to acquisition. So it has to be really competitive. And I think in the case of aerys, we've all those goals and really checked every box in terms of our m&a framework and what we shoot for and sort of the the perfect deal if you will. Um, in terms of, you know where we go from here. Um, same thing again, we continue to see

Uh, a significant amount of, uh, organic opportunity across all our core basins. So uh, we expect some more success there. Uh, if it does, make us, um, a little more picky on the m&a side. Um, and of course, again, everything we do has to sort of sustain and grow the distribution. So, we've got some pretty good guard rails on how we think about value on an Acquisitions. And it's why it's really important that when we do these things, we have, um, a real, you know, opportunity to add value to a transaction and have synergies, uh, as we do in The Heirs steel. Um, so on, you know, it'll be a mix. I think in terms of New Mexico, specifically, um, I think we have real organic opportunity as a result of this added footprint. Um, but certainly if, um, if there's an opportunity to do something that hit all our metrics because this deal does, uh, would be open minded to, to adding, um, capacity in any of our streams. But particular,

I guess I would say.

Thank you.

Thank you.

Thank you. The next question comes from the line of Wade Suki, at Capitol 1. Your line is open.

Wage your line is open.

Please unmute your phone line.

Okay, can you all hear me okay?

At some point, maybe give us some color on the on the some of these other pieces of the arrows business, if you don't mind.

You bet actually Eric says efforts in the Consortium and their other technology, including industrial water where some of the more appealing Parts. The exciting parts of the business for the very long term. You know, obviously the more options we have and solving our producers water issues, uh, in the Delaware Basin the better. And so you know, initially obviously we've been as an industry focused on disposal and then recycle um and now you know other other uses for water becoming really important. So Advanced treatment Technologies are going to be really, really key. So we're pretty excited about all those features. We see real opportunity in the long term on even industrial water. Um, but again, our, you know, our core, our love, and then, it's just so forth is, is sort of the, Midstream business, the traditional Midstream business, um, and supporting our oil and gas producing customers. So that's our Focus. But I will say, I do believe we can bring um, a lot more resources to this technology effort than they really had access to on the Standalone basis. And so,

You know, we're we're very excited about it. We think these opportunities are going to be beneficial in the long run.

Great. Thanks so much. Congrats, there you go.

Thank you.

Thank you. No. No further questions at this time. Mr. Oscar Brown. I turn the call back over to you.

Uh, thank you so much. And thanks everyone for your interest in Western Midstream and your participation on this earnings call. We're really gratified that we've already been able to see the results of our previous growth strategy by doing 2. Things that are very hard to do at the same time and that is improve. Our overall cost structure and process. Efficiency, our executing on growth opportunities. In fact, the former truly enables the success of the latter, and we've only just begun on this journey. We look forward to welcoming errors in the stakeholders to the West partnership later this year. Thank you again, to everyone on the west team for an incredible start to the next phase of our Partnerships Evolution. There's so much to do and you've already proven that you're all up to the challenge.

We look forward to seeing investors and analysts at the upcoming conferences, later this month, and with that, we'll close the call.

Thank you, this.