Q3 2025 Western Midstream Partners LP Post-Earnings Interview
Daniel: Senior Vice President, Kristen Shults. Kristin, can you give us an overview of our record Q3 results?
Daniel Holderman: Director and Senior Vice President, Kristen Shults. Kristen, can you give us an overview of our record third-quarter results?
Christian can you give us an overview of our record third quarter results sure. Daniel as you mentioned third quarter was another record of adjusted EBITDA for Western It was $634 million, that's up $19 million on a sequential quarter basis, our adjusted gross margin was relatively flat compare.
Daniel Jenkins: Senior Vice President, Kristen Shults. Kristin, can you give us an overview of our record Q3 results?
Kristen Shults: Sure, Daniel. As you mentioned, Q3 was another record of Adjusted EBITDA for Western. It was $634 million, that's up $19 million on a sequential quarter basis. Our adjusted gross margin was relatively flat compared to Q2. We saw some decreased throughput in the PRB and had less gross margin contribution from excess NGL volumes in combination with some lower overall pricing in the Delaware Basin.
Kristen Shults: Sure, Daniel. As you mentioned, Q3 was another record of Adjusted EBITDA for Western. It was $634 million, that's up $19 million on a sequential quarter basis. Our adjusted gross margin was relatively flat compared to Q2. We saw some decreased throughput in the PRB and had less gross margin contribution from excess NGL volumes in combination with some lower overall pricing in the Delaware Basin. However, we did see the DJ outperform again. Really the biggest story for Q3 was the decrease in O&M. The teams have done a great job this year on focusing on lowering costs. You saw it come out slightly in Q2, in Q3 it really shined as O&M decreased 5% quarter-over-quarter.
Kristen Shults: Sure, Daniel. As you mentioned, third quarter was another record of adjusted EBITDA for Western. It was $634 million, that's up $19 million on a sequential quarter basis. Our adjusted gross margin was relatively flat compared to Q2. We saw some decreased throughput in the PRB and had less gross margin contribution from excess NGL volumes, in combination with some lower overall pricing in the Delaware Basin. However, we did see the DJ outperform again, and really the biggest story for the third quarter was the decrease in O&M. The teams have done a great job this year on focusing on lowering costs. You saw it come out slightly in second quarter, but in third quarter it really shined as O&M decreased 5% quarter over quarter.
To Q2, we saw some decrease throughput in the pier B and had less gross margin contribution from excess NGL volumes in combination with some lower overall pricing in the Delaware basin.
However, we did see the D J outperform again and really the biggest story for the third quarter was the decrease in O&M. The teams have done a great job. This year on focusing on lowering cost you saw it come out slightly in second quarter, but in third quarter, It really shined as O&M decreased 5% quarter over quarter.
Kristen Shults: However, we did see the DJ outperform again. Really the biggest story for Q3 was the decrease in O&M. The teams have done a great job this year on focusing on lowering costs. You saw it come out slightly in Q2, in Q3 it really shined as O&M decreased 5% quarter-over-quarter.
Can you give our listeners some examples of what the company has done to reduce O&M and G&A. So this year our employees have been keenly focused on a company wide cost reduction initiative that we launched at the end of last year and you're really starting to see the results of that come through as I mentioned previously various teams throughout the whole entire organization.
Daniel Jenkins: Can you give our listeners some examples of what the company has done to reduce O&M and G&A?
Daniel: Can you give our listeners some examples of what the company has done to reduce O&M and G&A?
Daniel Holderman: Can you give our listeners some examples of what the company has done to reduce O&M and G&A?
Kristen Shults: This year, our employees have been keenly focused on a company-wide cost reduction initiative that we launched at the end of last year, and you're really starting to see the results of that come through, as I mentioned previously. Various teams throughout the whole entire organization, including our E&C team who works on our capital projects, finance team, legal team, HR team, operations team, and supply chain teams, they've all been zero-based budgeting their processes in their organizations. The cost reductions that we've seen are going to be permanent as we've been changing how people operate and what we're doing on a day-to-day basis. Things like optimizing our contractors versus employees and who's doing what jobs, and can we do those same jobs but with fewer contractors. Optimizing our asset and maintenance schedules and moving from a time-based approach to more of a risk-based approach.
Kristen Shults: This year, our employees have been keenly focused on a company-wide cost reduction initiative that we launched at the end of last year, you're really starting to see the results of that come through, as I mentioned previously. Various teams throughout the whole entire organization, including our E&C team who works on our capital projects, finance team, legal team, HR team, operations teams, supply chain teams, they've all been zero-based budgeting their processes in their organizations. The cost reductions that we've seen are going to be permanent as we've been changing how people operate and what we're doing on a day-to-day basis. Things like optimizing our contractors versus employees and who's doing what jobs, and can we do those same jobs but with less contractors. Optimizing our asset and maintenance schedules and moving from a time-based approach to more of a risk-based approach. Supply chain optimization.
Kristen Shults: This year, our employees have been keenly focused on a company-wide cost reduction initiative that we launched at the end of last year, you're really starting to see the results of that come through, as I mentioned previously. Various teams throughout the whole entire organization, including our E&C team who works on our capital projects, finance team, legal team, HR team, operations teams, supply chain teams, they've all been zero-based budgeting their processes in their organizations.
<unk>, including R. E N C team, who works on our capital projects Finance team legal team HR team operations team supply chain teams, they've all been zero based budgeting their processes in their organizations.
And so the cost reductions that we've seen are going to be permanent as we've been changing how people operate in what we're doing on a day to day basis things like optimizing our contractors versus employees and who's doing what jobs and can we do those same jobs, but with less contractors, optimizing our asset and maintenance schedules and moving from.
Kristen Shults: The cost reductions that we've seen are going to be permanent as we've been changing how people operate and what we're doing on a day-to-day basis. Things like optimizing our contractors versus employees and who's doing what jobs, and can we do those same jobs but with less contractors. Optimizing our asset and maintenance schedules and moving from a time-based approach to more of a risk-based approach. Supply chain optimization.
Time based approach to more of a risk based approach supply chain optimization debottlenecking. The water system. These are all the types of activities, we have been performing differently in the second and third quarter and are equating to the results that you're now seeing in the press release, we pointed to the high end of the guidance range for adjusted <unk>.
Kristen Shults: Supply chain optimization, debottlenecking the water system, these are all the types of activities we have been performing differently in the second and third quarter and are equating to the results that you're now seeing.
Kristen Shults: De-bottlenecking the water system. These are all the types of activities we have been performing differently in Q2 and Q3 and are equating to the results that you're now seeing.
Kristen Shults: De-bottlenecking the water system. These are all the types of activities we have been performing differently in Q2 and Q3 and are equating to the results that you're now seeing.
Daniel Holderman: In the press release, we pointed to the high end of the guidance range for adjusted EBITDA for 2025. How much of this is related to ERIS versus growth in the underlying business?
Daniel Jenkins: In the press release, we pointed to the high end of the guidance range for Adjusted EBITDA for 2025. How much of this is related to Aris versus growth in the underlying business?
Daniel: In the press release, we pointed to the high end of the guidance range for Adjusted EBITDA for 2025. How much of this is related to Aris versus growth in the underlying business?
EBITDA for 2025, how much of this is related to areas versus growth in the underlying business. That's right. Daniel we now expect west to be towards the high end of our previously announced 2025 adjusted EBITDA guidance range, which is 2.35 billion to $2.55 billion. This includes about 45%.
Kristen Shults: That's right, Daniel. We now expect WES to be towards the high end of our previously announced 2025 adjusted EBITDA guidance range, which is $2.35 to 2.55 billion. This includes about $45 to 50 million related to ERIS since we closed on 15 October 2025, so two and a half months of adjusted EBITDA from that new acquisition. The outperformance that we've seen in West Texas and DJ is helping us get to the high end, as well as all of the cost reduction initiatives that we previously discussed.
Kristen Shults: That's right, Daniel. We now expect WES to be towards the high end of our previously announced 2025 Adjusted EBITDA guidance range, which is $2.35 to 2.55 billion. This includes about $45 to 50 million related to Aris since we closed on 15 October. Two and a half months of Adjusted EBITDA from that new acquisition. The outperformance that we've seen in WES Texas and DJ is helping us get to the high end as well as all of the cost reduction initiatives that we previously discussed.
Kristen Shults: That's right, Daniel. We now expect WES to be towards the high end of our previously announced 2025 Adjusted EBITDA guidance range, which is $2.35 to 2.55 billion. This includes about $45 to 50 million related to Aris since we closed on 15 October. Two and a half months of Adjusted EBITDA from that new acquisition. The outperformance that we've seen in WES Texas and DJ is helping us get to the high end as well as all of the cost reduction initiatives that we previously discussed.
The $50 million related to Erez since we closed on October 15th So two and a half months of adjusted EBITDA from that new acquisition. The outperformance that we've seen in West, Texas, and DJ is helping us get to the high end as well as all of the cost reduction initiatives that we previously discussed.
We also announced a new Pathfinder offload agreement can you tell us a bit about this agreement was this part of the original plan for Pathfinder poor space in the Delaware Basin is becoming increasingly more scarce. So any deal that we can sign that it increases our ability to access incremental poorer space is really beneficial for <unk>.
Daniel Holderman: We also announced a new Pathfinder offload agreement. Can you tell us a bit about this agreement? Was this part of the original plan for Pathfinder?
Daniel Jenkins: We also announced a new Pathfinder offload agreement. Can you tell us a bit about this agreement? Was this part of the original plan for Pathfinder?
Daniel: We also announced a new Pathfinder offload agreement. Can you tell us a bit about this agreement? Was this part of the original plan for Pathfinder?
Kristen Shults: Pore space in the Delaware Basin is becoming increasingly more scarce. Any deal that we can sign that increases our ability to access incremental pore space is really beneficial for WES. On this particular agreement, this is an offload to take volumes off of Pathfinder, and someone else will dispose of those volumes. We haven't acquired a new asset or new land, but it is going to be helpful and help increase the return associated with Pathfinder.
Kristen Shults: Pore space in the Delaware Basin is becoming increasingly more scarce. Any deal that we can sign that increases our ability to access incremental pore space is really beneficial for WES. On this particular agreement, this is an offload to take volumes off of Pathfinder, and someone else will dispose of those volumes. We haven't acquired a new asset or new land, but it is going to be helpful and help increase the return associated with Pathfinder.
Kristen Shults: Poor space in the Delaware Basin is becoming increasingly more scarce, so any deal that we can sign that increases our ability to access incremental poor space is really beneficial for WES. On this particular agreement, this is an offload to take volumes off of Pathfinder, and someone else will dispose of those volumes. We haven't acquired a new asset or new land, but it is going to be helpful and help increase the return associated with Pathfinder.
First on this particular agreement. This is an offload to take volumes off a pathfinder and someone else will dispose of those volume. So we haven't acquired a new asset or new land, but it is going to be helpful and help increase the return associated with Pathfinder. We also mentioned on the earnings call some curtain.
Ailments, and the Delaware basin due to negative walk on natural gas pricing in the fourth quarter can you give us an update on the impact of those curtailments.
Daniel Holderman: We also mentioned on the earnings call some curtailments in the Delaware Basin due to negative Waha natural gas pricing in the fourth quarter. Can you give us an update on the impact of those curtailments?
Daniel: We also mentioned on the earnings call some curtailments in the Delaware Basin due to negative Waha natural gas pricing in Q4. Can you give us an update on the impact of those curtailments?
Daniel Jenkins: We also mentioned on the earnings call some curtailments in the Delaware Basin due to negative Waha natural gas pricing in Q4. Can you give us an update on the impact of those curtailments?
Sure Daniel we've continued to see an impact to throughput from producer curtailments through mid November as Walnut prices continue to be negatively impacted by the infrastructure maintenance and downtime on out of basin takeaway. During this month. So in the third quarter call really at the very beginning of the.
Kristen Shults: Sure, Daniel. We've continued to see an impact to throughput from producer curtailments through mid-November as Waha prices continue to be negatively impacted by the infrastructure maintenance and downtime on out-of-Basin takeaway during this month. On the third quarter call, really at the very beginning of the month, we said that we didn't believe it would be a material impact to adjusted EBITDA. Obviously, as that continues, we expected to have a little more impact throughout November, and if it continues even into late November and into December, we would expect this to have a little bit more of an impact than what we originally thought at the end of October. It obviously won't be as material as it is to some of our other peers that are out there, but it will impact our adjusted EBITDA at the end of the day.
Kristen Shults: Sure, Daniel. We've continued to see an impact to throughput from producer curtailments through mid-November as Waha prices continue to be negatively impacted by the infrastructure maintenance and downtime on out-of-basin takeaway during this month. On the Q3 call, really at the very beginning of the month, we said that we didn't believe it would be a material impact to adjusted EBITDA.
Kristen Shults: Sure, Daniel. We've continued to see an impact to throughput from producer curtailments through mid-November as Waha prices continue to be negatively impacted by the infrastructure maintenance and downtime on out-of-basin takeaway during this month. On the Q3 call, really at the very beginning of the month, we said that we didn't believe it would be a material impact to adjusted EBITDA. Obviously, as that continues, we expect it to have a little more impact throughout November, and if it continues even into November, late November and into December, we would expect this to have a little bit more of an impact than what we originally thought at the end of October. It obviously won't be as material as it is to some of our other peers that are out there, but it will impact our adjusted EBITDA at the end of the day.
The months, we said that we didn't believe it would be a material impact to adjusted EBITDA.
Obviously as that continues we expect it to have a little more impact throughout November and if it continues even into November late November and into December we would expect this to have a little bit more of an impact than what we originally thought at the end of October it obviously won't be as material as it is to some of our.
Kristen Shults: Obviously, as that continues, we expect it to have a little more impact throughout November, and if it continues even into November, late November and into December, we would expect this to have a little bit more of an impact than what we originally thought at the end of October. It obviously won't be as material as it is to some of our other peers that are out there, but it will impact our adjusted EBITDA at the end of the day.
Our other peers that are out there, but it will impact our adjusted EBITDA at the end of the day Kristen. Thank you for joining us today for our listeners do 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 Western Midstream Dotcom.
Daniel Jenkins: Kristin, 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.
Daniel: Kristin, 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.
Daniel Holderman: 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.
Sure.