Q1 2026 Western Midstream Partners LP Earnings Call

May 7, 2026

Operator: Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners Q1 2026 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.

Speaker #2: 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. withdraw your question, press star 1 again. would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations.

Operator: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you, and I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

Speaker #2: ahead. Thank you for joining us today for Western Midstream's first quarter 2026 conference call. I'd like to remind you that today's call, the accompanying slide deck, and last night's press releases contain important disclosures regarding forward-looking statements and non-GAAP reconciliations. Midstream's most recent Form 10-K 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.

Daniel Jenkins: Thank you for joining us today for Western Midstream's Q1 2026 Conference Call. I'd like to remind you that today's call, the accompanying slide deck, and last night's press releases contain important disclosures regarding forward-looking statements and non-GAAP reconciliations. Please reference Western Midstream's most recent Form 10-K 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 discuss today. Relevant reference materials are posted on our website. With me today are Oscar Brown, our Chief Executive Officer, Danny Holderman, our Chief Operating Officer, and Kristen Shults, our Chief Financial Officer. I'll now turn the call over to Oscar.

Speaker #2: reconciliations. Thank you. And I Relevant reference materials are posted on our website. With me today are Oscar Brown, our Chief Executive Officer, Danny Holderman, our Chief Operating Officer, and Kristen Shults, our Chief call over to Oscar.

Speaker #3: Thank you, Daniel, and good morning, everyone. Yesterday, we reported record-adjusted EBITDA of $683 million increasing 7% sequentially and 15% compared to the prior year period.

Oscar Brown: Thank you, Daniel, and good morning, everyone. Yesterday, we reported record adjusted EBITDA of $683 million, increasing 7% sequentially and 15% compared to the prior year period. Our Q1 outperformance reflects the full quarter contribution from the Aris acquisition, per day throughput growth across all three product lines, and successful cost reduction efforts. As crude oil prices rose in March, we captured incremental benefits from skim oil recoveries on our produced water system and from our fixed recovery natural gas processing contracts. Yesterday, we also announced the $1.6 billion acquisition of Brazos Delaware II.

Speaker #3: Our first quarter outperformance reflects the full quarter contribution from the ARIS acquisition, per-day throughput growth across all three product lines, and successful cost reduction efforts.

Speaker #3: Additionally, as crude oil prices rose in March, we captured incremental benefits from skim oil recoveries on our produced water system and from our fixed recovery natural gas processing contracts.

Speaker #3: Yesterday, we also announced the $1.6 billion acquisition of Brazos Delaware II, this strategic bolt-on exemplifies our programmatic M&A philosophy. Transactions that enhance the value of our existing assets diversify and enhance our high-quality customer base and generate incremental adjusted EBITDA and strong free cash flow for our unit holders, which is completely aligned with our philosophy of only deploying capital if it sustains or grows the distribution.

Oscar Brown: This strategic bolt-on exemplifies our programmatic M&A philosophy, transactions that enhance the value of our existing assets, diversify and enhance our high-quality customer base, and generate incremental adjusted EBITDA and strong free cash flow for our unit holders, which is completely aligned with our philosophy of only deploying capital if it sustains or grows the distribution. While we are not currently updating our annual guidance ranges, as we have not yet received formal changes to our producers' drilling plans for this year, we do expect to be towards the high end of both the adjusted EBITDA and distributable cash flow ranges without taking into account the impact of the Brazos transaction. This improved outlook is due to increased commercial discussions, the very favorable commodity price environment, and our improving operating leverage due to our successful and ongoing cost competitiveness efforts.

Speaker #3: While we are not currently updating our annual guidance ranges, as we have not yet received formal changes to our producers' drilling plans for this year, we do expect to be towards the high end of both the adjusted EBITDA and distributable cash flow ranges without taking into account the impact of the Brazos transaction.

Speaker #3: This improved outlook is due to increased commercial discussions, the very favorable commodity price environment, and our improving operating leverage due to our successful and ongoing cost-competitiveness efforts.

Speaker #3: With that said, we intend to reevaluate our 2026 guidance ranges in conjunction with our second quarter results after the schedule close of the Brazos transaction.

Oscar Brown: With that said, we intend to reevaluate our 2026 guidance ranges in conjunction with our Q2 results after the scheduled close of the Brazos transaction. One of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the H2 of 2026 in order to increase volumes earlier in 2027. This, in combination with our expectation of improved Waha natural gas pricing in the H2 of this year, gives us growing confidence in 2027's potential, certainly if the current elevated commodity price environment holds. Taking a closer look at the Brazos acquisition, the assets include natural gas and crude oil gathering systems that are highly complementary to our existing Texas-Delaware Basin footprint. Integration creates a larger, more scalable midstream system in the core of the premier basin in North America.

Speaker #3: Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027.

Speaker #3: This, in combination with our expectation of improved Waha natural gas pricing in the second half of this year, gives us growing confidence in 2027's potential, certainly if the current elevated commodity price environment holds.

Speaker #3: Taking a closer look at the Brazos acquisition, the assets include natural gas and crude oil gathering systems that are highly complementary to our existing Texas-Delaware Basin footprint.

Speaker #3: Integration creates a larger, more scalable midstream system in the core of the premier basin in North America. These assets fit well within our portfolio for several reasons.

Oscar Brown: These assets fit well within our portfolio for several reasons. First, this acquisition materially strengthens and expands our Delaware Basin asset base. The Brazos system is contiguous to our existing West Texas complex with over 470,000 dedicated acres and more than 900 miles of pipeline and approximately 460 million cubic feet per day of processing capacity, immediately increasing our West Texas dedicated acreage by 49% and our gas processing capacity by 20%. The Brazos Comanche processing complex has approximately 125 million cubic feet per day of unused capacity, which is crucial as our West Texas volumes continue to grow and will enable us to optimize the performance of our overall processing complex.

Speaker #3: First, this acquisition materially strengthens and expands our Delaware Basin asset base. The Brazos system is contiguous to our existing West Texas complex with over 470,000 dedicated acres and more than 900 miles of pipeline, and approximately 460 million cubic feet per day of processing capacity, immediately increasing our West Texas dedicated acreage by 49% and our gas processing capacity by 20%.

Speaker #3: The Brazos Comanche processing complex has approximately 125 million cubic feet per day of unused capacity, which is crucial as our West Texas volumes continue to grow and will enable us to optimize the performance of our overall processing complex.

Speaker #3: Additionally, there are approximately 3,500 drilling locations at 65 dollars per barrel, and nearly all drilling locations on the dedicated acreage are within two miles of the low-pressure gathering system, which limits ongoing capital requirements and supports strong free cash flow conversion.

Oscar Brown: Additionally, there are approximately 3,500 drilling locations at $65 per barrel, and nearly all drilling locations on the dedicated acreage are within 2 miles of the low-pressure gathering system, which limits ongoing capital requirements and supports strong free cash flow conversion. The systems also provide exposure to additional geologic formations, including the growing Woodford Shale play. Second, the transaction adds long-term, stable contract structures that are foundational to WES's strategy. Brazos Delaware's recently extended contracts have a weighted average remaining contract life of approximately 9.2 years and align with the fee-based framework that underpins WES's cash flow durability. Third, this acquisition meaningfully diversifies our customer base. Brazos adds several new high-quality third-party customers to the WES portfolio. It also deepens our relationships with certain existing third-party customers and further diversifies WES's revenue stream and reduces producer concentration risk. Fourth, the transaction is financially attractive and accretive.

Speaker #3: The systems also provide exposure to additional geologic formations including the growing Woodford Shale Play. Second, the transaction adds long-term stable contract structures that are foundational to West's strategy.

Speaker #3: Brazos Delaware's recently extended contracts have a weighted average remaining contract life of approximately 9.2 years and align with the fee-based framework that underpins West's cash flow durability.

Speaker #3: Third, this acquisition meaningfully diversifies our customer base. Brazos adds several new, high-quality third-party customers to the West portfolio. It also deepens our relationships with certain existing third-party customers and further diversifies West's revenue stream, reducing producer concentration risk.

Speaker #3: Fourth, the transaction is financially attractive and accretive, at a $1.6 billion purchase price composed of approximately $800 million of cash and approximately $800 million of West's common units.

Oscar Brown: At a $1.6 billion purchase price composed of approximately $800 million of cash and approximately $800 million of WES common units, the transaction is valued at approximately 8x 2027 estimated EBITDA, declining to approximately 7.5x with the commercialization of available processing capacity and other identified synergies. We expect the transaction to close at the end of Q2 and to contribute approximately $100 million of incremental adjusted EBITDA in 2026. The transaction is immediately accretive to 2026 distributable cash flow per unit. Our strong balance sheet made this possible.

Speaker #3: The transaction is valued at approximately eight times 2027 estimated EBITDA declining to approximately 7.5 times with the commercialization of available processing capacity and other identified synergies.

Speaker #3: We expect the transaction to close at the end of the second quarter and to contribute approximately $100 million of incremental adjusted EBITDA in 2026.

Speaker #3: Further, the transaction is immediately accretive to 2026's distributable cash flow per unit. Finally, our strong balance sheet made this possible. By financing the transaction with a combination of cash and equity, we expect to maintain net leverage of approximately three times on a pro forma basis throughout 2026, consistent with our conservative leverage philosophy and preserving the flexibility to continue funding our organic growth program and capital return framework.

Oscar Brown: By financing the transaction with a combination of cash and equity, we expect to maintain net leverage of approximately 3x on a pro forma basis throughout 2026, consistent with our conservative leverage philosophy and preserving the flexibility to continue funding our organic growth program and capital return framework. In summary, Brazos expands our Delaware Basin footprint, adds durable fee-based earnings from a diversified set of top-tier customers, and is accretive to distributable cash flow on a per unit basis. We look forward to integrating Brazos's assets and team into the WES portfolio and updating you on our progress over the coming quarters. Turning to our record quarterly results, the Delaware Basin continues to perform exceptionally well.

Speaker #3: In summary, Brazos expands our Delaware Basin footprint, adds durable fee-based earnings from a diversified set of top-tier customers, and is accretive to distributable cash flow on a per-unit basis.

Speaker #3: We look forward to integrating Brazos's assets and team into the West portfolio and updating you on our progress over the coming quarters. Turning to our record quarterly results, the Delaware Basin continues to perform exceptionally well.

Speaker #3: Natural gas throughput in the basin increased 3% sequentially to slightly over $2 billion cubic feet per day, and we achieved record crude oil and NGL throughput of 272,000 barrels per day, which increased 4% sequentially and 6% year over year.

Oscar Brown: Natural gas throughput in the basin increased 3% sequentially to slightly over 2 billion cubic feet per day, and we achieved record crude oil and NGL throughput of 272,000 barrels per day, which increased 4% sequentially and 6% year-over-year. Our produced water business achieved record throughput as well, increasing 4% sequentially to approximately 2.8 million barrels per day, primarily driven by the full quarter contribution from the Aris acquisition. This occurred despite higher Waha-driven curtailments in the basin, which we expect will persist through Q2. Additionally, relative to our throughput expectations, both the DJ and the Powder River Basins outperformed this quarter.

Speaker #3: Our produce water business achieved record throughput as well, increasing 4% sequentially to approximately 2.8 million barrels per day, primarily driven by the full quarter contribution from the ARIS acquisition.

Speaker #3: This occurred despite higher Waha-driven curtailments in the basin, which we expect will persist through the second quarter. Additionally, relative to our throughput expectations, both the DJ and the Powder River Basins outperformed this quarter.

Speaker #3: In addition to our throughput performance, we benefited from elevated commodity prices in March, which drove adjusted gross margin outperformance particularly on excess natural gas liquids volumes and increased skim oil volumes driven by the ARIS acquisition.

Oscar Brown: In addition to our throughput performance, we benefited from elevated commodity prices in March, which drove adjusted gross margin outperformance, particularly on excess natural gas liquids volumes and increased skim oil volumes driven by the Aris acquisition. Aris's long-term contracts share the fee-based foundation that defines WES's broader portfolio but also provide for meaningful value creation in favorable commodity pricing environments due to the retention of skim oil volumes. This, combined with our efficiency and successful cost reduction actions, has materially improved our operating leverage and the earnings power of WES, as reflected in our Q1 results. With that, I'll turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance in the Q1. Danny?

Speaker #3: ARIS's long-term contracts share the fee-based foundation that defines West's broader portfolio but also provide for meaningful value creation in favorable commodity pricing environments due to the retention of skim oil volumes.

Speaker #3: This, combined with our efficiency and successful cost reduction actions, has materially improved our operating leverage and the earnings power of West, as reflected in our first quarter results.

Speaker #3: With that, I'll turn the call over to our chief operating officer, Danny Holderman, to discuss our operational performance in the first quarter. Danny?

Speaker #4: Thank you, Oscar, and good morning, everyone. Our first quarter natural gas throughput increased by 1% on a sequential quarter basis, primarily driven by increased throughput from the Delaware Basin despite curtailments.

Danny Holderman: Thank you, Oscar. Good morning, everyone. Our Q1 natural gas throughput increased by 1% on a sequential quarter basis, primarily driven by increased throughput from the Delaware Basin despite curtailments. During the quarter, equity investment volumes declined mostly due to lower throughput at the Mi Vida plant in West Texas. Our crude oil and NGL throughput increased by 3% on a sequential quarter basis, mostly due to increased throughput from the Delaware Basin due to the timing of wells that came to market during the quarter. Additionally, our produced water throughput increased by 4% on a sequential quarter basis, driven by the full quarterly impact from the Aris acquisition and continued growth in the Legacy West Water business. Our Q1 per Mcf adjusted gross margin for our natural gas assets increased by $0.06 on a sequential quarter basis.

Speaker #4: During the quarter, equity investment volumes declined mostly due to lower throughput at the Movida plant in West Texas. Our crude oil and NGL's throughput increased by 3% on a sequential quarter basis, mostly due to increased throughput from the Delaware Basin due to the timing of wells that came to market during the quarter.

Speaker #4: Additionally, our produced water throughput increased by 4% on a sequential quarter basis, driven by the full quarterly impact from the ARIS acquisition and continued growth in the legacy West water business.

Speaker #4: Our first quarter per MCF adjusted gross margin for our natural gas assets increased by 6 cents on a sequential quarter basis, this was due to higher overall commodity pricing on excess natural gas liquids volumes under our fixed recovery contracts, specifically in the month of March, and decreased revenues in the fourth quarter of 2025 associated with the annual cumulative catch-up adjustment in South Texas.

Danny Holderman: This was due to higher overall commodity pricing on excess natural gas liquids volumes under our fixed recovery contracts, specifically in the month of March, and decreased revenues in Q4 2025 associated with the annual cumulative catch-up adjustment in South Texas. Going forward, we expect our Q2 per Mcf adjusted gross margin to be in line with Q1 due to elevated commodity pricing. Additionally, we now expect our average adjusted gross margin to be approximately $1.28 per Mcf in 2026, which implies moderation in H2 relative to H1 as our forecast reflects a more normalized commodity pricing environment for the full year average.

Speaker #4: Going forward, we expect our second quarter per MCF adjusted gross margin to be in line with the first quarter due to elevated commodity pricing.

Speaker #4: Additionally, we now expect our average adjusted gross margin to be approximately $1.28 per MCF in 2026, which implies moderation in the second half relative to the first as our forecast reflects a more normalized commodity pricing environment for the full year average.

Speaker #4: Our first quarter per barrel adjusted gross margin for our crude oil and NGL's assets increased by 30 cents, compared to the prior quarter, mostly due to the unfavorable revenue recognition, cumulative adjustments that were recorded in the fourth quarter of 2025 for the DJ Basin in South Texas, that did not reoccur in the first quarter.

Danny Holderman: Our Q1 per barrel adjusted gross margin for our crude oil and NGLs assets increased by $0.30 compared to the prior quarter, mostly due to the unfavorable revenue recognition, cumulative adjustments that were recorded in Q4 2025 for the DJ Basin in South Texas that did not reoccur in Q1. Our Q1 performance was in line with our previous expectations of between $3.05 and $3.10 per unit that we communicated in our prior earnings call. We expect our Q2 per barrel adjusted gross margin to be slightly higher than the Q1 and for our average adjusted gross margin to still range between $3.10 and $3.15 per barrel for 2026.

Speaker #4: Our first quarter performance was in line with our previous expectations of between $3.05 and $3.10 per unit that we communicated in our prior earnings call.

Speaker #4: We expect our second quarter per barrel adjusted gross margin to be slightly higher than the first quarter, and for our average adjusted gross margin to still range between $3.10 and $3.15 per barrel for 2026.

Speaker #4: Our first-quarter per-barrel adjusted gross margin for our produced water assets increased by $0.07 due to the full-quarter impact from the ARIS acquisition and increased skim oil recoveries at higher commodity pricing.

Danny Holderman: Our first quarter per barrel adjusted gross margin for our produced water assets increased by $0.07 due to the full quarter impact from the Aris acquisition and increased skim oil recoveries at higher commodity pricing. Going forward, we now expect our second quarter per barrel adjusted gross margin to average approximately $0.93 and for our adjusted gross margin to average approximately $0.91 for the year, especially if the current crude oil strip for 2026 is realized. Turning our attention to the remainder of the year, we continue to expect our portfolio-wide average year-over-year throughput to remain relatively flat for natural gas, decline low to mid-single digits for crude oil and NGLs, and increase by approximately 80% for produced water. We still expect average year-over-year throughput in the Delaware Basin to increase by low to mid-single digits for natural gas.

Speaker #4: Going forward, we now expect our second quarter per barrel adjusted gross margin to average approximately $0.93, and for our adjusted gross margin to average approximately $0.91 for the year, especially if the current crude oil strip for 2026 is realized.

Speaker #4: Turning our attention to the remainder of the year, we continue to expect our portfolio-wide average year-over-year throughput to remain relatively flat for natural gas, decline low to mid-single digits for crude oil and NGLs, and increase by approximately 80% for produced water.

Speaker #4: We still expect average year-over-year throughput in the Delaware Basin to increase by low to mid-single digits for natural gas, but with the first quarter crude oil outperformance, we now expect crude oil to remain relatively flat in 2026 compared to 2025.

Danny Holderman: With the Q1 crude oil outperformance, we now expect crude oil to remain relatively flat in 2026 compared to 2025. Despite higher crude oil prices since mid-March, we are still witnessing certain customers curtail throughput in the Delaware Basin due to stubbornly low and sometimes negative Waha natural gas pricing. We expect Waha pricing to remain volatile throughout the Q2 as maintenance is performed downstream of our operations and the basin waits for the next tranche of basin takeaway capacity to come into service in the Q3 and Q4 of this year. In the DJ Basin, throughput outperformed in the Q1 due to the timing of wells that came to market. This outperformance slightly improves our full year expectations for both natural gas and crude oil and NGLs throughput.

Speaker #4: Despite higher crude oil prices since mid-March, we are still witnessing certain customers curtail throughput in the Delaware Basin due to stubbornly low and sometimes negative Waha natural gas pricing.

Speaker #4: We expect Waha pricing to remain volatile throughout the second quarter, as maintenance is performed downstream of our operations and the basin waits for the next tranche of basin takeaway capacity to come into service in the third and fourth quarters of this year.

Speaker #4: In the DJ Basin, throughput outperformed in the first quarter due to the timing of wells that came to market. This outperformance slightly improves our full-year expectations for both natural gas and crude oil and NGL's throughput, and while we still expect the overall number of wells that come to market to decline this year, we now expect mid-single digit declines on average year-over-year versus mid to high single digit declines we expected initially.

Danny Holderman: While we still expect the overall number of wells that come to market to decline this year, we now expect mid-single digit declines on average year over year versus mid to high single digit declines we expected initially. Additionally, the first pad in Occidental's Bronco Cab development began flowing in late April, and by our next quarterly call, we should have further clarity regarding 2026 throughput expectations. In the Powder River Basin, we continue to expect throughput to decline on average by approximately 10% to 15% year over year. We continue to have discussions with our producing customers in the basin, and we still expect higher activity levels in 2027 as more rigs return to the basin.

Speaker #4: Additionally, the first pad in Occidental's Bronco Cab development began flowing in late April, and by our next quarterly call, we should have further clarity regarding 2026 throughput expectations.

Speaker #4: In the Powder River Basin, we continue to expect throughput to decline on average by approximately 10 to 15 percent year-over-year. We continue to have discussions with our producing customers in the basin, and we still expect higher activity levels in 2027 as more rigs return to the basin.

Speaker #4: Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027.

Danny Holderman: Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027. Finally, softness in Rocky Mountain natural gas pricing over the past several months has driven some curtailments in deferred completions. That said, we still expect throughput growth of mid-single digits from our other natural gas assets driven by a full year's contribution from Williams MountainWest pipeline expansion, the tie-in of Kinder Morgan's Ultima pipeline into our Chipeta processing plant in Utah in 2025, and steady throughput levels at our Brasada plant in South Texas. With that, I'll turn our call over to Kristin Schultz to discuss our financial performance during the quarter.

Speaker #4: Finally, softness in Rocky Mountain natural gas pricing over the past several months has driven some curtailments and deferred completions. That said, we still expect throughput growth of mid-single digits from our other natural gas assets driven by a full year's contribution from Williams Mountain West pipeline expansion, the tie-in of Kinder Morgan's Altamotte pipeline into our Chapita processing plant in Utah in 2025, and steady throughput levels at our Prasada plant in South Texas.

Speaker #4: With that, I'll turn our call over to Kristen to discuss our financial performance during the quarter.

Speaker #1: Thank you, Danny, and good morning, everyone. During the first quarter, we generated net income attributable to limited partners of $342 million. Record adjusted EBITDA of $683 million and distributable cash flow of $509 million.

Kristen Shults: Thank you, Danny, and good morning, everyone. During Q1, we generated net income attributable to limited partners of $342 million, record adjusted EBITDA of $683 million, and distributable cash flow of $509 million. Relative to Q4 2025, our adjusted gross margin increased by $56 million, which was primarily driven by a full quarter's contribution from the Aris acquisition, higher commodity pricing on excess natural gas liquids and increased skim oil volumes, and $30 million of unfavorable non-cash revenue recognition cumulative adjustments recorded in Q4 associated with redetermined cost of service rates on certain contracts at South Texas and in the DJ Basin, which did not reoccur in Q1.

Speaker #1: Relative to the fourth quarter of 2025, our adjusted gross margin increased by 56 million dollars, which was primarily driven by a full quarter's contribution from the ARIS acquisition, higher commodity pricing on excess natural gas liquids and increased skim oil volumes, and $30 million of unfavorable non-cash revenue recognition cumulative adjustments recorded in the fourth quarter associated with redetermined cost of service rates on certain contracts at South Texas and in the DJ Basin, which did not reoccur in the first quarter.

Speaker #1: Our operation and maintenance expense increased approximately 5% quarter over quarter, mostly driven by the full quarter contribution from the ARIS acquisition, inclusive of the legacy ARIS assets we still expect our operation and maintenance expense to increase by only approximately 10 to 15 percent, which represents the meaningful reduction on a combined company basis as we continue to see success in our cost reduction efforts.

Kristen Shults: Our operation and maintenance expense increased approximately 5% quarter-over-quarter, mostly driven by the full quarter contribution from the Aris acquisition. Inclusive of the legacy Aris assets, we still expect our operation and maintenance expense to increase by only approximately 10% to 15%, which represents a meaningful reduction on a combined company basis as we continue to see success in our cost reduction efforts. As is typical with our business, we expect operation and maintenance expense to increase slightly in Q2 and Q3, primarily due to increased asset maintenance and repair work and higher utility costs. As a reminder, we are reimbursed for approximately 65% of our utility costs portfolio-wide from our producing customers.

Speaker #1: As is typical with our business, we expect operation and maintenance expense to increase slightly in the second and third quarters, primarily due to increased asset maintenance and repair work and higher utility costs.

Speaker #1: As a reminder, we are reimbursed for approximately 65% of our utility costs portfolio-wide from our producing customers. Turning to cash flow, our first quarter cash flow from operating activities totaled $470 million.

Kristen Shults: Turning to cash flow, our first quarter cash flow from operating activities totaled $470 million, a decrease of $88 million relative to Q4 2025, primarily driven by the Delaware Basin natural gas gathering contract renegotiation with Occidental that became effective on 1 January and included the redemption of $610 million of WES units held by Occidental. Our operating cash flow resulted in $242 million of free cash flow generation. Free cash flow after our Q4 2025 distribution that was paid on 16 February was a use of cash of $137 million. Turning to the balance sheet, we ended the quarter with more than $2.5 billion in total liquidity and a trailing 12-month net leverage ratio of approximately 3.1 times.

Speaker #1: A decrease of $88 million relative to the fourth quarter of 2025, primarily driven by the Delaware Basin natural gas gathering contract renegotiation with Occidental that became effective on January 1st, and included the redemption of $610 million of West units held by Oxy.

Speaker #1: Our operating cash flow resulted in $242 million of free cash flow generation, and free cash flow after our fourth quarter 2025 distribution that was paid on February 16th was a use of cash of $137 million.

Speaker #1: Turning to the balance sheet, we ended the quarter with more than $2.5 billion in total liquidity, and a trailing 12-month net leverage ratio of approximately 3.1 times.

Speaker #1: In early April, we retired $441 million of 4.65% senior notes due in 2026, with proceeds from the senior notes issued in the fourth quarter of 2025.

Kristen Shults: In early April, we retired $441 million of 4.65% senior notes due in 2026 with proceeds from the senior notes issued in Q4 2025. On 20 April, we declared a quarterly distribution of $0.93 per unit, which was in line with our prior commentary of 2.2% increase over the prior quarter's distribution. Our Q1 distribution will be paid on 15 May to unit holders of record as of 1 May. Turning to guidance, West is well-positioned with strong fee-based contract structures that provide protected cash flows throughout the commodity pricing cycles.

Speaker #1: On April 20th, we declared a quarterly distribution of $0.93 per unit, which was in line with our prior commentary of a 2.2% increase over the prior quarter's distribution.

Speaker #1: Our first quarter distribution will be paid on May 15th to unit holders of record as of May 1st. Turning to guidance, West is well positioned with strong fee-based contract structures that provide protected cash flows throughout the commodity pricing cycles.

Speaker #1: As Oscar previously mentioned, we now expect our results to be toward the high end of our previously announced adjusted EBITDA guidance range of $2.5 billion to $2.7 billion, and distributable cash flow guidance range of $1.85 billion to $2.05 billion.

Kristen Shults: As Oscar previously mentioned, we now expect our results to be towards the high end of our previously announced adjusted EBITDA guidance range of $2.5 billion to $2.7 billion and distributable cash flow guidance range of $1.85 billion to $2.05 billion before taking the Brazos transaction into account. This is due to new commercial discussions, the favorable commodity price environment, and our improving operating leverage related to our continued cost competitiveness efforts. We continue to expect our free cash flow to range between $900 million and $1.1 billion. We still expect our 2026 capital expenditures to range between $850 million to $1 billion.

Speaker #1: Before taking the Brazos transaction into account. This is due to new commercial discussions, the favorable commodity price environment, and our improving operating leverage related to our continued cost competitiveness efforts.

Speaker #1: Additionally, we continue to expect our free cash flow to range between $900 million and 1.1 billion dollars. We still expect our 2026 capital expenditures to range between $850 million to $1 billion dollars, approximately half of the 2026 capital spending is directed towards the construction of the Pathfinder produced water pipeline, and associated systems, and the North Loving 2, both of which are still expected to come online in the first and second quarters of 2027, respectively.

Kristen Shults: Approximately half of the 2026 capital spending is directed towards the construction of the Pathfinder produced water pipeline and associated systems in the North Loving Two, both of which are still expected to come online in Q1 and Q2 of 2027, respectively. Turning to the distribution, the Q1 distribution of $0.93 per unit, or $3.72 annualized, keeps us on track towards our full year guidance of at least $3.70 per unit, which includes distributions paid within calendar year 2026. We remain focused on growing adjusted EBITDA mid to low single digits and growing the distribution at a rate slightly less than that in order to increase distribution coverage over time. With that, I will now turn the call back over to Oscar for closing remarks.

Speaker #1: Turning to the distribution, the first quarter distribution of $93 cents per unit, or $3.72 annualized, keeps us on track towards our full year guidance of at least $3.70 per unit.

Speaker #1: Which includes distributions paid within calendar year 2026. We remain focused on growing adjusted EBITDA mid to low single digits, and growing the distribution at a rate slightly less than that in order to increase distribution coverage over time.

Speaker #1: With that, I will now turn the call back over to Oscar for closing remarks.

Speaker #2: Thanks, Kristen. Before we open it up for Q&A, I wanted to leave you with a few key takeaways. First, we have a growth strategy that provides West several ways to win.

Oscar Brown: Thanks, Kristen. Before we open it up for Q&A, I wanted to leave you with a few key takeaways. First, we have a growth strategy that provides West several ways to win. We have a consistent track record of throughput and adjusted EBITDA growth, coupled with strong cash flow generation. Our combination of strategic bolt-on acquisitions and high-returning organic growth projects, including the Pathfinder Pipeline and North Loving 2, provides multiple pathways to grow. Focusing on 2026, we are well on our way towards achieving our targeted 5% to 9% adjusted EBITDA growth rate before taking into account any benefit from the Brazos acquisition. Looking further ahead, produced water beneficial reuse, behind the meter power generation, and CO2-related services represent meaningful optionality that our team continues to develop. Second, we operate in the best basins in the country.

Speaker #2: We have a consistent track record of throughput and adjusted EBITDA growth, coupled with strong cash flow generation. Our combination of strategic bolt-on acquisitions and high returning organic growth projects, including the Pathfinder pipeline and North Loving 2, provides multiple pathways to grow.

Speaker #2: Focusing on 2026, we are well on our way towards achieving our targeted 5 to 9 percent adjusted EBITDA growth rate before taking into account any benefit from the Brazos acquisition.

Speaker #2: Looking further ahead, produced water beneficial reuse, behind-the-meter power generation, and CO2-related services represent meaningful optionality that our team continues to develop. Second, we operate in the best basins in the country.

Speaker #2: We are a leading three-stream provider in the Delaware Basin, the most prolific basin in North America, with a differentiated and growing position in New Mexico following the ARIS acquisition.

Oscar Brown: We are a leading three-stream provider in the Delaware Basin, the most prolific basin in North America, with a differentiated and growing position in New Mexico following the Aris acquisition. Additionally, favorable gas oil ratios and rising produced water rates in the Delaware Basin will support throughput growth for years to come. Our DJ Basin assets continue to generate substantial free cash flow, and our expanded Powder River Basin position provides additional upside, all of which is underpinned by our long-term fixed-fee contracts, supported by minimum volume commitments and substantial acreage dedications that deliver durable cycle-resilient cash flows. Third, the Brazos acquisition is a natural extension of our strategy. It deepens our Delaware Basin footprint, alongside Pathfinder and North Loving Two, further solidifies West as one of the largest gatherers and processors in the basin. Finally, West offers one of the most compelling return profiles in the midstream sector.

Speaker #2: Additionally, favorable gas oil ratios and rising produced water rates in the Delaware Basin will support throughput growth for years to come. Our DJ Basin assets continue to generate substantial free cash flow, and our expanded powder river basin position provides additional upside.

Speaker #2: All of which is underpinned by our long-term fixed fee contracts, supported by minimum volume commitments and substantial acreage dedications, that deliver durable, cycle-resilient cash flows.

Speaker #2: Third, the Brazos acquisition is a natural extension of our strategy. It deepens our Delaware Basin footprint, and alongside Pathfinder and North Loving 2, further solidifies West as one of the largest gatherers and processors in the basin.

Speaker #2: Finally, West offers one of the most compelling return profiles in the midstream sector. 12 to 14 percent potential annual equity return is underpinned by an almost 9 percent current cash yield, and a 4 to 5 percent long-term adjusted EBITDA annual growth that drives further upside.

Oscar Brown: 12% to 14% potential annual equity return is underpinned by an almost 9% current cash yield and a 4% to 5% long-term adjusted EBITDA annual growth that drives further upside. Additionally, our investment-grade balance sheet continues to provide support for our capital allocation decisions, and we remain committed to maintaining net leverage of approximately 3 times, growing the distribution over time while increasing our distribution coverage and preserving our peer-leading total capital return. In closing, West is operating from a position of strength. Aris is fully integrated. We expect the Brazos acquisition to close in Q2, and two large organic growth projects are well underway.

Speaker #2: Additionally, our investment-grade balance sheet continues to provide support for our capital allocation decisions, and we remain committed to maintaining net leverage of approximately three times.

Speaker #2: Growing the distribution over time while increasing our distribution coverage, and preserving our peer-leading total capital return. In closing, West is operating from a position of strength.

Speaker #2: ARIS is fully integrated. We expect the Brazos acquisition to close in the second quarter, and two large organic growth projects are well underway. Our successful track record, from the Meritage and ARIS integrations, to the successful construction of Mentone 3 and North Loving 1, gives me great confidence in our team's ability to execute and create incremental value for our unit holders in the quarters ahead.

Oscar Brown: Our successful track record, from the Meritage and Aris integrations to the successful construction of Mentone Three and North Loving One, gives me great confidence in our team's ability to execute and create incremental value for our unit holders in the quarters ahead.

Speaker #2: We've had a very strong start to 2026, and I look forward to updating you in the second quarter on our progress on our organic growth projects, and our initiatives to continue to enhance our cost competitiveness and returns.

Oscar Brown: We've had a very strong start to 2026, I look forward to updating you in Q2 on our progress on our organic growth projects and our initiatives to continue to enhance our cost competitiveness and returns. Finally, I want to thank the entire Western Midstream workforce for their hard work and dedication to our partnership. With that, we'll open the call for questions.

Speaker #2: Finally, I want to thank the entire Western Midstream Workforce for their hard work and dedication to our partnership. With that, we'll open the call for questions.

Speaker #1: And thank you at this time. I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad.

Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Keith Stanley with Wolfe Research. Your line is open.

Speaker #1: We'll pause for just a moment to compile the Q&A roster. And our first question comes from the line of Your line is open.

Speaker #3: Hi. Good morning and congrats on the deal. I wanted to look forward a little bit. So the company is acquired ARIS in October. You're acquiring Brazos in June.

Keith Stanley: Hi. Good morning and congrats on the deal. Wanted to look forward a little bit. The company's acquired Aris in October. You're acquiring Brazos in June. As you look forward, how do you think about the organizational capability to continue to pursue incremental deals over the next year as you digest these two? Relatedly, you've talked in the past about interest in scaling up in New Mexico to integrate with Aris. Is that something that's still of interest?

Speaker #3: As you look forward, how do you think about the organizational capability to continue to pursue incremental deals over the next year as you digest these two and relatedly you've talked in the past about interest in scaling up in New Mexico to integrate with ARIS?

Speaker #3: Is that something that's still of interest?

Speaker #4: Yeah. Thanks a lot, Keith. It's Oscar. Yeah. So in terms of our capacity, we've completed the integration of ARIS. So we're confident we can shift our focus now.

Oscar Brown: Thanks a lot, Keith. It's Oscar. In terms of our capacity, you know, we've completed the integration of Aris, so we're confident we can shift our focus now, once we close Brazos Delaware to the integration of that asset. That one will be much simpler as opposed to, you know, 250-plus people, a corporate entity, you know, public company acquisition that Aris was, which we executed really, really well on. You know, Brazos is more of an asset deal. We'll only have sort of 60 to 70 folks come over, most of them field-based. It should be a pretty straightforward integration that we can execute quite quickly. We have a lot of confidence in the team.

Speaker #4: Once we close Brazos-Delaware to the integration of that asset, that one will be much simpler as opposed to 250-plus people, a corporate entity, a public company acquisition that ARIS was, which we executed really, really well on.

Speaker #4: Brazos is more of an asset deal. We'll only have sort of 60 to 70 folks come over, most of them field-based. And so it should be a pretty straightforward integration that we can execute quite quickly.

Speaker #4: So we have a lot of confidence in the team. That said, I think there's fairness to your comment that we need to sort of pace sort of our acquisition sort of opportunities.

Oscar Brown: That said, I think there's fairness to your comment that we need to pace our acquisition opportunities. As you know, a lot of this, we can't control timing of often. We like the programmatic M&A strategy. We like these size transactions that we can handle efficiently. We'll continue to look for those, but we are cognizant. We talk about it a lot as a leadership team about, you know, what our, you know, what our broader organization can handle and what pace we can move. As you know, we're also executing a couple major growth projects, that's on our mind as well. Again, I think we'll be measured.

Speaker #4: As you know, a lot of this we can't control timing of often. We like the programmatic M&A strategy. We like sort of these size transactions that we can sort of handle efficiently.

Speaker #4: And so we'll continue to look for those, but we'll be cautious on and we are cognizant. We talk about it a lot as a leadership team, about what are our broader organization can handle and what pace we can move.

Speaker #4: As you know, we're also executing a couple of major growth projects. And so that's on our mind as well. So again, I think we'll be measured.

Speaker #4: We'll stick to our strategy. On M&A and our discipline. And we'll just be cautious with what the team can handle. But so far, really excellent execution on ARIS.

Oscar Brown: You know, we'll stick to our strategy on M&A and our discipline, and we'll just be cautious with what the team can handle. So far, really excellent execution on Aris, and I think we're gonna do a great job. We like our counterparty here. The Brazos Midstream team's a great team and think they'll be super helpful in that transition as well.

Speaker #4: And I think we're going to do a great job. And we like our counterparty here the Brazos Midstream team's a great team. I think they'll be super helpful in that transition as well.

Speaker #3: Thanks for that. Second question, wanted to pick up. I think you mentioned in the concluding remarks and the slides reference potential growth in behind-the-meter power generation and CO2 services.

Keith Stanley: Thanks for that. Second question, wanted to pick up, I think you mentioned in the concluding remarks and the slides reference potential growth in behind-the-meter power generation and CO2 services as part of the growth strategy. Can you elaborate a little on what you're looking at there and how near-term these opportunities could be?

Speaker #3: As part of the growth strategy, can you elaborate a little on what you're looking at there and how near-term these opportunities could be?

Speaker #4: Yeah. Thanks, Tom. We established a new ventures business group about a year ago to really focus on longer-term adjacencies to our core competencies. And our footprint where we could add value and ensure we find a way to participate in sort of megatrends going on today.

Oscar Brown: Thanks, Tim. We established a new ventures business group about a year ago to really focus on longer-term adjacencies to our core competencies in our footprint where we could, you know, add value and ensure we find a way to participate in sort of megatrends going on today. We made a lot of progress there. Certainly, the near-term opportunities exist on the produced water beneficial reuse side. We'll be talking more next quarter about, you know, where we are. We've commissioned a tenfold upsizing to our pilot plant, desal plant, right on the Texas-New Mexico border. That's happening kind of literally as we speak. You know, we're confident we'll get to commercial plant operations very soon. That one we're very excited about.

Speaker #4: So we've made a lot of progress there. Certainly, the near-term opportunities exist on the produce water beneficial reuse side. So we'll be talking more next quarter about where we are.

Speaker #4: We've commissioned a 10-fold upsizing to our pilot plant. Decel plant right on the Texas-New Mexico border. And that's happening kind of literally as we speak.

Speaker #4: And we're confident we'll get to commercial plant operations very soon. So that one we're very excited about. We think we can supply water to all sorts of industrial offsets to freshwater sources that should be reserved for humans.

Oscar Brown: We think we can supply water to all sorts of industrial offsets to freshwater sources that, you know, should be reserved for humans. That's everything from, you know, power plant cooling, data centers, golf courses, you know, cotton, you name it. It's a big opportunity. It'll take years to build out, that's the one we're on the precipice of sort of commerciality. On the CO2 side, I think there's a lot of options there. It's certainly right down the fairway of what we can manage in terms of plant pressures, pipelines, compression, etc. I think that it's longer term, I believe. We're particularly excited about the potential for CO2 shale enhanced oil recovery. We've talked before about a number of our big customers who've been working on those projects.

Speaker #4: And that's everything from power plant cooling, data centers, golf courses, cotton, you name it. So it's a big opportunity. It'll take years to build out.

Speaker #4: But that's the one we're on the precipice of sort of commerciality. On the CO2 side, I think there's a lot of options there. It's certainly right down the fairway of what we can manage in terms of plant pressures, pipelines, compression, etc.

Speaker #4: I think that it's a longer-term, I believe. We're particularly excited about the potential for CO2 shale enhanced oil recovery. We've talked before about a number of our big customers who've been working on those projects.

Speaker #4: We always think there's potential to support CO2 sequestration and other assets because, again, that just comes down to pipelines and pressure and compression. And so those are things we do really well.

Oscar Brown: We always think there's potential to support, you know, CO2 sequestration and other assets because, again, that just comes down to pipelines and pressure and compression. Those are things we do really well. Behind the meter power, you know, what we found as we moved through the market is, you know, while we have the skill set to handle electricity all the time, and we have people that have built power facilities, West itself hasn't built a major power plant project. We'd like to, you know, do that where we can find the economic returns.

Speaker #4: On behind-the-meter power, what we found as we move through the market is while we have the skill set and handle electricity all the time and we have people that have built power facilities, West itself hasn't built a major power plant project.

Speaker #4: And we'd like to do that where we can find the economic returns that could come in a number of forms. In ways that people talked about across the industry already supporting all the build-out in terms of power needs that everybody's talking about.

Oscar Brown: That could come in a number of forms, you know, in ways that people talked about across the industry already supporting, you know, all the build-out in terms of power needs that everybody's talking about. But also given the state of the grid in West Texas, I think there's an opportunity there for sort of self-help on our own power generation for our own base load and some of our key partners as well. That's probably a little bit behind, you know, more news on beneficial reuse, but not too far. Those are our major sort of initiatives. There's other things we're looking at, but those are the key ones.

Speaker #4: But also given the state of the grid in West Texas, I think there's an opportunity there for sort of self-help on our own power generation for our own base load and some of our key partners as well.

Speaker #4: So that's probably a little bit behind more news on beneficial reuse, but not too far. So that's our those are our major sort of initiatives.

Speaker #4: There's other things we're looking at. But those are the key ones. And again, the idea there is we've got a pretty good line of sight to growth over the next couple of years.

Oscar Brown: The idea there is we've got a pretty good line of sight to growth, over the next 2 years, and we're just building the foundation for that longer-term growth, you know, sort of outlook so we can keep delivering, you know, kinda on average over time through cycle that kinda 4% or 5% enterprise growth that we're looking for.

Speaker #4: And we're just building the foundation for that longer-term growth sort of outlook so we can keep delivering kind of on average over time through cycle that kind of 4 or 5 percent enterprise growth that we're looking for.

Speaker #3: Thank you. Appreciate all the details.

Keith Stanley: Thank you. Appreciate all the details.

Speaker #4: Yep.

Oscar Brown: Yes.

Speaker #1: And our next question comes from the line of Jeremy Tonette with J.P. Morgan. Your line is open.

Operator: Our next question comes from the line of Jeremy Tonet with JP Morgan. Your line is open.

Operator: Our next question comes from the line of Jeremy Tonet with JPMorgan. Your line is open.

Speaker #5: Good morning. This is Francina on for Jeremy. Thank you so much for taking questions. Just wanted to kind of build on the insight that you've given for the recent acquisition of Brazos and whether you can provide any more clarity on kind of those contributions, the cadence of when they will be realized given the quick turnaround and integration here.

Francina: Good morning. This is Francina on for Jeremy. Thank you so much for taking questions. Just wanted to, kind of build on the insight that you've given for the recent acquisition of Brazos and whether you can provide any more clarity on kind of those contributions, the cadence of when they will be realized given the quick turnaround in integration here. Then also just the underlying drivers for that $100 million estimate as well. Thank you.

[Analyst] (JPMorgan): Good morning. This is Francina on for Jeremy. Thank you so much for taking questions. Just wanted to, kind of build on the insight that you've given for the recent acquisition of Brazos and whether you can provide any more clarity on kind of those contributions, the cadence of when they will be realized given the quick turnaround in integration here. Then also just the underlying drivers for that $100 million estimate as well. Thank you.

Speaker #5: And then also just to underline drivers for that $100 million estimate as well. Thank you.

Speaker #4: Sure. So the numbers that we put in the press release are really just the base Brazos, Delaware business. So we think we'll get to that kind of forward 7 and a half times-ish multiple.

Oscar Brown: Sure. The numbers that we put in the press release are really just the base Brazos Delaware business. We think we'll get to that kind of forward 7.5 times-ish multiple once we're able to, you know, fully commercialize and utilize the Comanche gas processing complex, which we think we can in pretty short order. We are utilizing offloads today. Once we get a hold of the system and sort of connect it up, I think we can utilize that space in reasonably short order. There's other opportunities, I think, with the systems, you know, integrated around hydraulics and field level, you know, cost savings and synergies. Those will take a little bit longer. In terms of other upside, those are more on the commercial front.

Speaker #4: Once we're able to fully commercialize and utilize the Comanche gas processing complex, which we think we can in pretty short order. We do have we are utilizing offloads today.

Speaker #4: And so once we get a hold of the system and sort of connect it up, I think we can utilize that space reasonably short order.

Speaker #4: There's other opportunities, I think, with the systems integrated around hydraulics and field level cost savings and synergies. Those will take a little bit longer.

Speaker #4: And then, in terms of other upside, those are more on the commercial front—again, just at some operationally. But that'll be a little bit, sort of, further down the road too.

Oscar Brown: Just, you know, and some operationally, but that'll be a little bit, you know, sort of further down the road too. I think in, you know, the $100 million is just sort of taking on the asset and taking ownership in sort of the H2 of this year. We expect the upside, you know, sort of that we identify around the synergies over the next, you know, kind of 12 months, something like that. In terms of the speed of integration, it's really just a commentary on sort of the, you know, the contiguous nature of the assets and just that it's a simple asset transaction. From a people and systems integration, we should be able to, you know, move on that pretty quickly.

Speaker #4: So I think the $100 million is just sort of taking on the asset and taking ownership in sort of the back half of this year.

Speaker #4: And we expect the upside sort of that we identify around the synergies over the next kind of 12 months, something like that. In terms of the speed of integration, it's really just a commentary on sort of the contiguous nature of the assets and just that it's a simple asset transaction.

Speaker #4: So from a people and systems integration, we should be able to move on that pretty quickly.

Speaker #5: That's very helpful. Thank you. And then, not to get too ahead of ourselves, but it looks like you guys have a pretty constructive growth runway here through 2027 with North Loving 2 and Pathfinder coming online then, and the PRB producer commentary kind of sounding like it leans into 2027 as well.

Francina: That's very helpful. Thank you. Then not to get it too ahead of ourselves, but it looks like you guys have a pretty constructive growth runway here through 2027 with North Loving 2 and Pathfinder coming online then, and the PRB producer commentary, kind of sounding like it leans into 2027 as well and Waha volatility, kind of easing by then also. With all of those drivers, would you say that that's a fair characterization or any other big things here that we're missing?

[Analyst] (JPMorgan): That's very helpful. Thank you. Then not to get it too ahead of ourselves, but it looks like you guys have a pretty constructive growth runway here through 2027 with North Loving 2 and Pathfinder coming online then, and the PRB producer commentary, kind of sounding like it leans into 2027 as well and Waha volatility, kind of easing by then also. With all of those drivers, would you say that that's a fair characterization or any other big things here that we're missing?

Speaker #5: And Waha Volatility kind of easing by then. Also, with all of those drivers, would you say that that's a fair characterization or any other big things here that we're missing?

Speaker #4: No, I think that's fair. I think we just got to keep in mind well, we've got a lot of confidence in the Permian. We keep an eye on the DJ in terms of its ability to grow or decline.

Oscar Brown: No, I think that's fair. I think we just gotta keep in mind, while we've got a lot of confidence in the Permian, we keep an eye on the DJ in terms of its ability to grow, you know, or decline. You know, we've gotten pretty cautious, sort of producer feedback, you know, for the next year or so. That said, all that was provided, you know, sort of in the January, February timeframe, before all the recent events and the changes and shifts in the global commodity market. We'll keep an eye on that in particular in terms of, you know, how that impacts the sort of aggregate portfolio. You know, post Brazos, we should be about 65% of our EBITDA, something like that, Delaware Basin.

Speaker #4: And so we've been we've gotten pretty cautious sort of producer feedback for the next year or so. That said, all that was provided sort of in the January-February timeframe.

Speaker #4: Before all the recent events and the changes and shifts in the global commodity market. So we'll keep an eye on that in particular in terms of how that impacts the sort of aggregate portfolio.

Speaker #4: But post-Brazos, we should be about 65% of our EBITDA, something like that. Delaware Basin so we've got a lot of confidence there. And it's the biggest contributor to our sort of earnings and cash flow.

Oscar Brown: We've got a lot of confidence there, and it's the biggest contributor to our sort of earnings and cash flow. Then again, with the ARIS position in New Mexico and the optionality around, you know, both organic and inorganic, in that part of the world, indeed, we feel pretty good about the longer term outlook for growth, particularly again, if we're in an environment that's anything better than we had originally budgeted around the $57 WTI, you know, back in the last quarter timeframe.

Speaker #4: And then again, with the ARIS position in New Mexico and the optionality, around both organic and inorganic in that part of the world, indeed, we feel pretty good about the longer-term outlook for growth, particularly, again, if we're in an environment that's anything better than we had originally budgeted around the $57 WTI back in the last quarter timeframe.

Speaker #5: That's super helpful. Thank you.

Francina: That's super helpful. Thank you.

[Analyst] (JPMorgan): That's super helpful. Thank you.

Speaker #1: And our next question comes from the line of Spiro Donis with Citi. Your line is open.

Operator: Our next question comes from the line of Spiro Dounis with Citi. Your line is open.

Speaker #3: Thank you, operator. Morning, everybody. I want to start with the outlook for 2026. And really just trying to understand a little bit more what's underwriting the current guidance for you that you're going to be towards the high end and acknowledge that this is all likely going to change with deal close.

Spiro Dounis: Thank you, operator. Morning, everybody. Wanna start with the outlook for 2026, and really just trying to understand a little bit more what's underwriting the current guidance to you that you're gonna be towards the high end and acknowledge that this is all likely gonna change with deal close. You sorta referenced the current commodity environment, so just curious, does that current strip just sort of get you to that high end? You also referenced producers leaning in here, so just curious if you do get an acceleration in activity midway through the year, apples to apples, deal notwithstanding, does that sort of maybe put you above?

Speaker #3: But you sort of referenced the current commodity environment. And so just curious, does that current strip just sort of get you to that high end?

Speaker #3: You also referenced producers leaning in here. And so just curious if you do get an acceleration in activity midway through the year, apples to apples, deal notwithstanding, does that sort of maybe put you above?

Speaker #2: Yeah, I think that's right, Spiro. So when we took a look at Q1 results and just the increase that we saw in the commodity prices from March, you can really see it come through in the gross margin per Mcf, and the gross margin per barrel on the gas and the water side, respectively.

Kristen Shults: Yeah, I think that's right, Spiro. When we took a look at Q1 results and just the increase that we saw in the commodity prices for March, you can really see it come through in the growth margin for Mcf and the growth margin per barrel on the gas and the water side respectively. To your point, we're just running that strip out through the remainder of the year, and that's what's really propelling us to be near the high end of guidance for 2026. There's definitely been just a lot more commercial conversations right now. Nothing that we've gotten from a producer that makes us increase our volume throughput or our volume expectations yet for 2026.

Speaker #2: And so to your point, we're just running that strip out through the remainder of the year. And that's what's really propelling us to be near the high end of guidance for 2026.

Speaker #2: There's definitely been just a lot more commercial conversations right now, but nothing that we've gotten from a producer that makes us increase our volume throughput or our volume expectations yet for 2026.

Speaker #2: If we do get something we might see it in the very last part of 2026, but it will really be more of an impact into 2027 on the volume side.

Kristen Shults: If we do get something, we might see it in the very last part of 2026, but it will really be more of an impact into 2027 on the volume side. Obviously, just depending on what happens with Waha pricing at the end of the year, then that may impact our throughput expectations from a gas perspective as well.

Speaker #2: And then obviously, just depending on what happens with Waha pricing at the end of the year, then that may impact our throughput expectations from a gas perspective as well.

Speaker #3: Got it. It's helpful, Kristen. Second question, maybe just going to Pathfinder. Was there something for maybe an update on where you are in commercializing the remaining open space on that pipeline?

Spiro Dounis: Got it. It's helpful, Kristen. Second question, maybe just going to Pathfinder. Was just hoping for maybe an update on where you are in commercializing the remaining open space on that pipeline. Your comments and comments from some of your peers are really pointing to an acceleration in activity, and I have to think that water is coming along with that. Yeah, just curious, should we be expecting more activity on the commercial side in the coming months related to Pathfinder?

Speaker #3: Your comments, and comments from some of your peers, are really pointing to an acceleration in activity. And I have to think that water is coming along with that.

Speaker #3: So yeah, just curious, should we be expecting more activity on the commercial side in the coming months related to Pathfinder?

Speaker #4: Yeah. Thanks for that. That's asked again. Indeed, I think part of what Kristen's talking about in the increase of our commercial conversations and activity, a big portion of that is around water.

Oscar Brown: Yeah, thanks for that. It's Oscar again. Indeed, I think our Part of what Kristen's talking about in the increase of our commercial conversations and activity, a big portion of that is around water. The shift in the conversation has been significant over the last even six months in terms of, particularly the larger independent oil and gas companies and the majors, and starting to look at water in the Permian, and in particular the Delaware Basin, as a basin-wide sort of challenge to manage, which plays right into, you know, our fully integrated, you know, New Mexico-Texas system, you know, with basically a header system right down the middle in terms of Pathfinder Pipeline.

Speaker #4: The shift in the conversation has been significant over the last even six months. In terms of particularly the larger independent oil and gas companies and the majors and starting to look at water in the Permian and particularly the Delaware Basin, as a basin-wide sort of challenge to manage.

Speaker #4: Which plays right into our fully integrated New Mexico, Texas, system. With basically a header system right down the middle in terms of Pathfinder pipeline.

Speaker #4: So I think from our original vision, which was more asset-specific, just putting volumes directly contracting that onto Pathfinder, I think we've got a couple additional ways that Pathfinder can add value, which is more as we've extended the our gathering system and disposal system.

Oscar Brown: I think from our original vision, which was more asset-specific, just putting volumes directly, contracting that onto Pathfinder, I think we've got a couple additional ways that Pathfinder can add value, which is more, as we've extended our gathering system and disposal system with the combination. Now we've got the ability to bid on an integrated water basis, so we can, we're the, I believe, the only ones that today can provide all the current solutions from produced water to recycling, gathering, disposal, long-haul transport. We've got whatever you need, and we can integrate those sort of services as you need.

Speaker #4: With the combination, now we've got the ability to bid on an integrated water basin basis. So we can we're, I believe, the only ones that kind of today can provide all the current solutions from produced water to recycling, gathering, disposal, long-haul transport.

Speaker #4: We've got whatever you need. And we can integrate those sort of services as you need. Again, some of our customers are even becoming very specific and want to understand exactly where we're moving the water.

Oscar Brown: Some of our customers are even becoming very specific and want to understand exactly where we're moving the water and where it'll be disposed over, you know, some great distances. That plays right into our strength. We're also the only ones, I think, that are, you know, on the precipice of being able to build commercial future solutions around beneficial reuse. A lot of more conversation. There is still certainly a tendency among producers, and this is true of literally every service that any of our producers, like, from oil service to midstream, is sort of waiting till the last minute, and, you know, taking advantage of whatever localized disposal options they still have left. We'll be here when they're ready to solve their problems.

Speaker #4: And where it’ll be disposed over some great distances. And again, that plays right into our strength. And we’re also the only ones, I think, that are on the precipice of being able to build commercial future solutions around beneficial reuse.

Speaker #4: So a lot of more conversation. There is still certainly a tendency among producers, and this is true of literally every service that many of our producers like from all service to midstream, is sort of waiting to the last minute.

Speaker #4: And taking advantage of whatever localized disposal options they still have left. And we'll be here when they're ready to solve their problems. And I think Pathfinder will be a key part of it.

Oscar Brown: I think Pathfinder will be a key part of it. We're really confident in the returns of that asset. We've managed the capital extremely well. It's still on the timeline that we've talked about. We think the returns, you know, frankly, are going nowhere but up on that asset.

Speaker #4: So we're really confident in the returns of that asset. We've managed the capital extremely well. It's still on the timeline that we've talked about.

Speaker #4: And we think the returns frankly are going nowhere but up on that asset.

Speaker #3: Great. I'll leave it there. Thanks, everyone.

Spiro Dounis: Great. I'll leave it there. Thanks, everyone.

Speaker #1: And our next question comes from the line of Ivan Skoto with UBS Financial. Your line is open.

Operator: Our next question comes from the line of Ivan Scotto with UBS. Your line is open.

Speaker #6: Hi, team. Congrats on the quarter. I'm just turning to cost-saving optimization efforts. What parts of the business are you seeing these most in? And then what parts of the business do you think they're still more to be done in?

Ivan Scotto: Hi, team. Congrats on the quarter. Just turning to cost-saving optimization efforts, what parts of the business are you seeing these most in? What parts of the business do you think there's still more to be done in?

Speaker #2: Yeah. We've seen a lot of great efforts. And I might have Danny chime into this too. But on the operations side in our operation and maintenance expense, and I say it's in every category, whether it's really taking a deep dive into our maintenance and repairs programs.

Kristen Shults: Yeah, we've seen a lot of great efforts, and I might have Danny chime into this too, but on the operations side, in our operation and maintenance expense. I say it's in every category, whether it's really taking a deep dive into our maintenance and repairs programs, looking at spans and layers on the people side and the salaries and wages side. Contractor spend quite a bit, bringing those contractors into the business as well. It's across the board, G&A as well.

Speaker #2: Looking at spans and layers on the people side and the salaries and wages side. Contractor spend quite a bit. And so bringing those contractors into the business as well.

Speaker #2: But it's across the board. G&A as well.

Speaker #3: Wow. I don't have anything to add. Labor intensity and M&R processes have been the primary driver so far. And then we'll be looking at our price book going forward, so.

Danny Holderman: Well, I don't have anything to add. Labor intensity and M&R processes have been the primary driver so far. We'll be looking at our price book going forward.

Speaker #4: Yeah. We've seen a lot of also efficiencies on the supply chain side. And some of our other operating processes where we've been able to revisit zero base and just sort of optimize those.

Oscar Brown: Yeah. We've seen a lot of also efficiencies on the supply chain side, and some of our other operating processes where we've been able to revisit zero base and just, you know, sort of optimize those. We're getting more experience and a little bit better in terms of understanding, you know, all of our equipment across the plants as well as compression and everything else in terms of again, that maintenance and repair timing, and where we can stretch without additional risk and that sort of thing.

Speaker #4: We're getting more experience and a little bit better in terms of understanding all of our equipment across the plants as well as compression and everything else.

Speaker #4: In terms of, again, that maintenance and repair timing—and where we can stretch without additional risk and that sort of thing. And as Kristen said, we'll continue to focus on both those kind of opportunities.

Oscar Brown: And as Kristin said, we'll continue to focus on both, you know, those kind of opportunities, but also on the G&A side and, you know, we're looking at a lot of different tools to improve the sort of efficiency of sort of the corporate side of the house and, having people spend more time on, you know, some more complex problems than sort of the day-to-day, you know, simple management of the repetitive part of the business. No common things over the long term like AI and everything else. The impacts will be more marginal in our business as we're an asset-heavy, intensive, you know, kind of business with physical product as opposed to just data, et cetera.

Speaker #4: But also on the G&A side and we're looking at a lot of different tools. To improve the sort of efficiency of sort of the corporate side of the house.

Speaker #4: And having people spend more time on sort of more complex problems than sort of the day-to-day simple management of the repetitive part of the business.

Speaker #4: And then it’ll come in things over the long term, like AI and everything else. But the impacts will be more marginal in our business, as we’re an asset-heavy, intensive kind of business with physical product, as opposed to just data, etc.

Speaker #6: Okay, got it. Super helpful. And then, just in terms of growth capex, how are you thinking about that number more on a long-term run-rate basis?

Ivan Scotto: Okay. Got it. Super helpful. Then just in terms of growth CapEx, how are you thinking about that number more on a long-term run rate basis?

Speaker #4: I think our I guess I'll answer it this way. Our sort of kind of volume and kind of cash flow sustainable capital is still pretty much as we've talked about before in this sort of four to six hundred million dollar range.

Oscar Brown: I think our, I guess I'll answer it this way. Our sort of, kind of volume and kind of cash flow sustainable capital is still pretty much as we've talked about before in this sort of $400 to 600 million range. It's sort of a range because it just depends on the nature of the wells that, you know, that are brought online, and sort of their production and decline, initial production and decline curves. That's the purpose there. When you think about sort of sustaining capital, it's in that zone. In terms of growth capital from here, I think it'll be more like what we're seeing with Pathfinder North Loving 2 in terms of, either that'll be a good capital range, that $400 to 600 million in sort of a normalized year.

Speaker #4: And it's sort of a range because it just depends on the nature of the wells that are brought online. And sort of their production and decline.

Speaker #4: Initial production and decline curves. So that's the purpose there. So when you think about sort of sustaining capital that's in that zone, in terms of growth capital from here, I think it'll be more like what we're seeing with Pathfinder and North Loving 2 in terms of either that'll be a good capital range like four to six hundred million and sort of a normalized year.

Speaker #4: If we can find high return organic growth projects, we'll have those chunky pieces. And again, as we've talked about, we've committed to helping the street sort of track those chunky projects.

Oscar Brown: If we can find high return organic growth projects, we'll have those chunky pieces. Again, as we've talked about, we've committed to helping the street sort of track those chunky projects away from the more typical well connects and compression and the things that sort of sustain the cash flow throughput of the business. In terms of achieving that 4% to 5% sort of consistent growth rate through time, you know, that probably is a higher number, probably approaching $1 billion. Again, that that'll come in a mix, right? Either some of these projects and/or some of these programmatic M&A opportunity. That's why how we capitalize those is really, really important.

Speaker #4: Away from the more typical well connects and compression, and the things that just sort of sustain the cash flow and throughput of the business.

Speaker #4: In terms of sort of achieving that four to five percent sort of consistent growth rate through time, that probably is a higher number probably approaching a billion.

Speaker #4: But again, that'll come in a mix, right? Either some of these projects and/or some of these programmatic M&A opportunity. And that's why how we capitalize those is really, really important.

Speaker #4: And we sort of aim for that trifecta of per unit accretion, keeping the leverage under control, and a natural fit with our business.

Oscar Brown: We sort of aim for that, you know, sort of trifecta of, you know, per unit accretion, keeping the leverage, you know, under control, and sort of a natural fit, you know, with our business. You know, this acquisition of Brazos Delaware, you know, provides a pretty, you know, significant sort of free cash flow post-financing costs, sort of adder to our distribution coverage, which is something that we're pretty, you know, excited about. We'll continue to, whether that's organic or inorganic, look to deploy capital that way. Again, it won't be, you know, straight line year to years we're seeing. We kinda grew 6% last year. You know, we're now looking at more like 5% to 9% this year.

Speaker #4: This acquisition of Brazos Delaware provides a pretty significant sort of free cash flow post-financing costs sort of add to our distribution coverage. Which is something that we're pretty excited about.

Speaker #4: So we'll continue to whether that's organic or inorganic, look to deploy capital that way. So again, it won't be straight line year-to-years we're seeing.

Speaker #4: We kind of grew 6% last year. We're now looking at more like 5 to 9 percent this year. Next year will be something different potentially higher with all the other with Brazos combined with sort of the environment and the other activity we talked about.

Oscar Brown: Next year it'll be, you know, something different, potentially higher, you know, with all the other, with Brazos combined with sort of the environment and the other activity we talked about. I hope that helps. It's, you know, it's a little bit of, it's hard to say just because, you know, there's a lot of different projects that we could pursue, and some of that just depends on the timing and how those sort of are able to be commercialized.

Speaker #4: So I hope that helps. It's a little bit of a it's hard to say just because there's a lot of different projects that we could pursue.

Speaker #4: And some of that's just depends on the timing and how those sort of are able to be commercialized.

Speaker #6: That makes sense. Thank you.

Ivan Scotto: That makes sense. Thank you.

Speaker #1: And our next question comes from the line of Ned Baramoth with Wells Fargo. Your line is open.

Operator: Our next question comes from the line of Ned Baramov with Wells Fargo. Your line is open.

Speaker #4: Hi. Good morning. Thanks for taking the questions. A two-part one on the cash flow conversion potential from the Brazos deal. So first, what is a good annual maintenance capex run rate for these assets?

Ned Baramov: Hi. Good morning. Thanks for taking the questions. A two-part one on the cash flow conversion potential from the Brazos deal. First, what is a good annual maintenance CapEx run rate for these assets? Second, how are you thinking about filling up the 125 of available capacity? Will this require additional capital to connect to your current system and redirect some of these current offloads, or are you looking for producers to gradually grow into this capacity as they ramp up their production?

Speaker #4: And second, how are you thinking about filling up the 125 of available capacity? Will this require additional capital to connect to your current system and redirect some of these current offloads?

Speaker #4: Or are you looking for producers to gradually grow into this capacity as they ramp up their production?

Speaker #3: Yeah. So on the first part, EBITDA cash conversion, for Brazos, Delaware, has been pretty high the last few years sort of in that 90-plus percent range.

Oscar Brown: Yeah. On the first part, on our EBITDA cash conversion, for Brazos Delaware has been pretty high the last few years, sort of in that 90%+ range. You know, we hope to maintain that. The incremental capital to connect the systems is pretty minimal. You know, if you look at the map, again, it's especially the part that connects to Comanche. The Comanche gas processing complex, it's all right there. That part's pretty minimal. We also believe, again, we hold the Brazos Midstream team in high regard and believe they've done a great job with this asset. We don't believe there's sort of as much of a typical private equity to public corporate capital catch-up that you often see, and we certainly saw in the Meritage transaction. We're more confident on that front.

Speaker #3: We hope to maintain that. The incremental capital to connect the systems is pretty minimal. If you look at the map, again, it's especially the part that connects to Comanche.

Speaker #3: The Comanche gas processing complex, it's all right there. So that part's pretty minimal. We also believe again, we hold the Brazos midstream team in high regard and believe they've done a great job with this asset.

Speaker #3: And so we don't believe there's as much of the typical private equity to public corporate capital catch-up that you often see. And we certainly saw that in the Meritage transaction.

Speaker #3: So we’re more confident on that front. So it feels like this one is probably—again, we’ll refine this by the second quarter.

Oscar Brown: It feels like this one. We'll refine this by Q2, but probably in the something like $20 million on average kind of, you know, maintenance capital kinda range. Again, there's capacity both on the system and as you point out, in the processing plant which means there shouldn't be a lot of big chunky capital going forward in the next couple years for that asset. As I mentioned before, we're currently utilizing offloads, a number of offloads with third-party gas processing companies to support our existing gas volumes and our maintenance turnarounds, etc.

Speaker #3: But probably in the something like 20 million dollars on average kind of maintenance capital kind of range. And again, there's capacity both on the system and as we point out, in the processing plant.

Speaker #3: Which means there shouldn't be a lot of big chunky capital going forward in the next couple of years for that asset. As I mentioned before, we're currently utilizing offloads, a number of offloads with third-party gas processing companies to support our existing gas volumes and our maintenance turnarounds, etc.

Speaker #3: So in terms of where that volume can come from, we can do a lot of work just by utilizing taking those volumes that we've been offloading onto the system but we also anticipate the gas throughput growth in the Brazos asset themselves.

Oscar Brown: In terms of where that volume can come from, we can do a lot of work just by utilizing taking those volumes that we've been offloading onto the system. We also anticipate the gas throughput growth in the Brazos asset themselves. Pretty soon we're gonna fill that. Doesn't, for better or for worse, doesn't really move our mindset or position or needle in terms of when North Loving Two comes online, we're gonna have that plant pretty full, reasonably quickly, as well by kind of middle of next year. Given the geographies, I think there's some logic to that as well.

Speaker #3: So pretty soon we're going to fill that. It doesn't for better or for worse, doesn't really move our mindset or position or needle in terms of when North Loving 2 comes online, we're going to have that plant pretty full.

Speaker #3: Reasonably quickly as well by kind of middle of next year. And again, given the geographies, I think there's some logic to that as well.

Speaker #4: Thanks for this. I like the 90-plus conversion rate there. And then I guess part of your solid performance in the first quarter was driven by strong commodity prices in March resulting in higher contributions from Excess NGOs and also skim oil from your water operations.

Ned Baramov: Thanks for this. I like the 90 plus conversion rate there. I guess part of your solid performance in Q1 was driven by strong commodity prices in March, resulting in higher contributions from excess NGLs and also skim oil from your water operations. I guess with commodity prices remaining elevated here into Q2, could you talk about volume trends for these excess NGLs and skim oil? I presume weather could impact excess NGL volumes, while the skim oil volumes could vary based on how producers handle the water volumes before handing off to West.

Speaker #4: I guess with commodity prices, remaining elevated here into the second quarter, could you talk about volume trends for these Excess NGOs and skim oil?

Speaker #4: I presume weather could impact excess NGO volumes, while the skim oil volumes could vary based on how producers handle the water volumes before handing off to WES.

Speaker #5: Yeah. I think you're right about that. I mean, we are expecting our water volumes to tick up just a little bit in second quarter relative to first quarter.

Kristen Shults: Yeah, I think you're right about that. I mean, we are expecting our water volumes to tick up just a little bit in Q2 relative to Q1. To your point, what comes along with that will be a little bit of increased skim oil. It does vary month to month, week to week. It does vary how much skim oil we're getting in that flow. I do expect, and it's part of what we were mentioning on the call around our Q2 expectations for gross margin per barrel and the gross margin per Mcf, for that to be incorporated in our Q2 results. On the recovery side of the NGLs, yes, expect the same there too. It'll just flow along with the throughput expectations there.

Speaker #5: So, to your point, what comes along with that will be a little bit of increased skim oil. And it does vary month to month, week to week.

Speaker #5: It does vary how much skim oil we're getting in that flow. So but I do expect and it's part of what we were mentioning on the call around our Q2 expectations for gross margin per barrel and the gross margin per MCF.

Speaker #5: For that to be incorporated in our second quarter results. On the recovery side of the NGOs, yes, expect the same there too. It'll just flow along with the throughput expectations there.

Speaker #5: We do have some turnarounds that we've been working specifically in the second quarter and so we've been utilizing some of our offloads a little bit more.

Kristen Shults: We do have some turnarounds that we've been working specifically in Q2. We've been utilizing some of our offloads a little bit more. All that kind of just plays into where we think we'll fall out from a gross margin per Mcf for Q2 too. Definitely as we're seeing increased commodity prices, for April, May, June, that'll be dialed into those equity barrels that we get to keep.

Speaker #5: And so all that kind of just plays into where we think we'll fall out from a gross margin per MCF for second quarter too.

Speaker #5: But definitely, as we're seeing increased commodity prices, for April, May, June, that'll be dialed into those equity barrels that we get to keep.

Speaker #4: That's great. Thank you.

Ned Baramov: That's great. Thank you.

Speaker #1: And our final question comes from the line of Elvira Scota with RBC Capital Markets. Your line is open.

Operator: Our final question comes from the line of Elvira Scotto with RBC Capital Markets. Your line is open.

Speaker #5: Hey. Thanks. Good morning, everyone. So as we see sort of the Delaware Basin growing as a percent of EBITDA, you talked about the DJ Basin as a cash generator and the PRB you could see some growth there.

Elvira Scotto: Hey, thanks. Good morning, everyone. As we see sort of the Delaware Basin, you know, growing as a % of EBITDA, you talked about the DJ Basin as a cash generator and the PRB, you know, you could see some growth there. Can you talk about some of the other natural gas assets that you have and the strategic importance of those assets? Could those be assets that could be monetized at some point?

Elvira Scotto: Hey, thanks. Good morning, everyone. As we see sort of the Delaware Basin, you know, growing as a percent of EBITDA, you talked about the DJ Basin as a cash generator and the PRB, you know, you could see some growth there. Can you talk about some of the other natural gas assets that you have and the strategic importance of those assets? Could those be assets that could be monetized at some point?

Speaker #5: But can you talk about some of the other natural gas assets that you have and the strategic importance of those assets? Or could those be assets that could be monetized at some point?

Speaker #3: Yeah, and we'd certainly like all our other positions as well. And as Danny mentioned in his script, we've got a lot of capacity in the Uinta at the Chapita gas processing plant.

Oscar Brown: No, we certainly like all our other positions as well. As Danny mentioned in his script, you know, we've got a lot of capacity in the Uinta at the Chipeta gas processing plant. We see with the Kinder and William connections, upside there. There's certainly been a lot more activity among the customers in the broader Uinta Basin. We like that asset. South Texas has been great to us and been an important part of our history, and we're working very hard with our customer there to improve what we have, sort of a JV in a JV kind of structure there. We're continuing to, you know, try to improve that asset as well.

Speaker #3: And we see with the Kinder and William connections, upside there and there's certainly been a lot more activity among the customers and the broader Uinta Basin.

Speaker #3: So we like that asset. South Texas has been a great to us. And been an important part of our history. And we're working very hard with our customer there to improve what we have sort of a JB in the JB kind of structure there.

Speaker #3: So we're continuing to try to improve that asset as well. And again, we've had a long history going all the way back to the Anadarko days in Southwest Wyoming.

Oscar Brown: Again, we've had a long history going all the way back to the Anadarko days in Southwest Wyoming. We do have still a couple other minority interests in long-haul pipes that are, you know, we monetized sort of the ones where we thought we were misaligned with our partners there, and we've kept the ones where we see continued sort of good performance and good partnership. We're pretty happy with what we have now. I think the way to think about any potential divestitures for us is, you know, it's hard as an MLP to divest assets, as many of you know, have been around, you know, for a long time.

Speaker #3: So and we have we do have still a couple other minority interests and long-haul pipes that are we monetize sort of the ones where we thought we were misaligned with our partners there.

Speaker #3: And we've kept the ones where we see continued sort of good performance and good partnership. So we're pretty happy with what we have now.

Speaker #3: And I think the way to think about any potential divestitures for us is it's hard as an MLP to divest assets as many of you know have been around for a long time.

Speaker #3: But we'd certainly would need a place to redeploy the capital at higher returns and that sort of thing to almost immediately to sort of make that work.

Oscar Brown: We certainly would need a place to redeploy the capital at higher returns and, you know, and that sort of thing to, you know, almost immediately to sort of make that work. It's something that we look at. We always review sort of our portfolio and how everything fits. It's not something that, you know, we spend, you know, a terrible amount of time on in terms of reviewing. We don't need the capital today. Our balance sheet's in really, really good shape. Again, as we do sort of these chunky organic projects or some of the programmatic M&A, you know, we'll continue to stay disciplined on the balance sheet there too. Not an urgent, not an urgent priority.

Speaker #3: So it's something that we look at. We always review sort of our portfolio and how everything fits but it's not something that we spend a terrible amount of time on in terms of reviewing.

Speaker #3: We don't need the capital today. Our balance sheets and really, really good shape. And again, as we do sort of these chunky organic projects or some of the programmatic M&A, we'll continue to stay disciplined on the balance sheet there too.

Speaker #3: So not an urgent priority.

Speaker #5: Okay. And then just a little bit on capital allocation. Can you talk about some of the programmatic M&A versus organic growth opportunities? And then with M&A, what are some of these areas you'd like to fill?

Elvira Scotto: Okay. Just a little bit on capital allocation. Can you talk about, you know, some of the programmatic M&A versus organic growth opportunities? With M&A, you know, what are some of these areas you'd like to fill? I think you had talked about New Mexico, you know, if you're seeing some opportunities there. Also related to capital allocation, it looks like West repurchased a little over 15 million units from Oxy in the quarter. Can you talk a little bit about that? Do you expect to continue some of these opportunistic buybacks?

Speaker #5: I think you had talked about New Mexico. If you're seeing some opportunities there. And then also related to capital allocation, it looks like Wes repurchased 15, a little over 15 million units from Oxy in the corner.

Speaker #5: In the quarter, can you talk a little bit about that, and do you expect to continue some of these opportunistic buybacks?

Speaker #3: Yeah. Certainly. So on the capital allocation front, again, our sort of methodology is unchanged for a number of years. And in the sort of go-forward case, it's very similar.

Oscar Brown: Yeah, certainly. On the capital allocation front, again, our sort of methodology is unchanged for a number of years. In the sort of go forward case, it's very similar. you know, in terms of where we see potential on the organic side, we'll continue to build out processing over time in the Permian Basin for sure, given where GORs are going and sort of the trends of the basin and a lot of, I think, in-basin gas use. We just see the gas side of the business as very positive in the Permian. We do hope to build out additional gas assets one way or another in New Mexico for sure to complement our ARIS footprint.

Speaker #3: In terms of where we see potential on the organic side, we'll continue to build out processing over time. In the Permian Basin, for sure.

Speaker #3: Given where GORs are going and sort of the trends in the basin and a lot of, I think, in-basin gas use so we just see the gas side of the business as very positive in the Permian.

Speaker #3: We do hope to build out additional gas assets, one way or another, in New Mexico for sure to complement our ARES footprint. That may or may not require us getting into sour gas, which is again something our operating team has experience in.

Oscar Brown: That may or may not require us getting into sour gas, which is again, something our operating team has experience in. Probably, you'll see over the next couple years some capital allocated to some of these new venture projects, in particular, on the water beneficial reuse and potentially on the power side. Again, those will have to sort of, you know, adhere to our, you know, sort of target returns that are the same for gas, oil, water, or anything else. Those will be sort of returns and project specific. Really not too much change. We, you know, there's potential, I think, to deploy incremental capital for sure in the Powder.

Speaker #3: Probably you'll see over the next couple of years some capital allocated to some of these new venture projects, in particular on the water beneficial reuse and potentially on the power side.

Speaker #3: But again, those will have to sort of adhere to our sort of target returns that are the same for gas, oil, water, or anything else.

Speaker #3: So those will be sort of returns and project-specific. So really not too much change. There's potential, I think, to deploy incremental capital for sure in the powder.

Oscar Brown: I think in terms of the DJ, honestly, it really depends on how sort of the regulatory and political environment evolves there. It's a fabulous basin, with a lot of oil still in place. We think the state is moderating some, but given their power needs and their, you know, 30% of their base load is coal, but it's hard to predict. You know, that is truly a human outcome in the DJ in terms of whether we would deploy material, additional capital in that part of the world. Then, sorry, I've lost your last part of the question.

Speaker #3: And I think in terms of the DJ, honestly, it really depends on how sort of the regulatory and political environment evolves there. It's a fabulous basin.

Speaker #3: With a lot of oil still in place, we think the state is moderating some. But given their power needs, and that 30% of their base load is coal, it's hard to predict.

Speaker #3: So that is truly a human outcome in the DJ in terms of whether we would deploy material additional capital in that part of the world.

Speaker #3: And then sorry, I've lost your last part of the question.

Speaker #5: 16.

Danny Holderman: Sixteen.

Elvira Scotto: Sixteen. Oh, sorry. Should you share about that?

Speaker #6: Oh, sorry.

Danny Holderman: Oh, sorry. Should share-

Speaker #3: Oh, sorry. Yeah. I'm the yeah, yeah. I'm the repurchase. No. That was actually an integral part of the contract renegotiation of our Delaware Basin Legacy Gas contract.

Oscar Brown: Oh, sorry. Yeah. On the.

Elvira Scotto: Yeah.

Oscar Brown: Yeah, yeah, on the repurchase. No, that was actually an integral part of the contract renegotiation of our Delaware Basin legacy gas contract with Oxy. As part of sort of all the adjustments around that contract, the economic trade-off with that to rebalance that contract was, you know, they contributed those units to West, so we retired those units as part of the economics of the overall trade.

Speaker #3: With Oxy. So as part of sort of all the adjustments around that contract, the economic trade-off with that to rebalance that contract was they contributed those units to Wes.

Speaker #3: So we retired those units as part of the economics. Of the overall trade.

Speaker #6: Okay. Great. Hey, just if I can sneak one more in. I know you have North Loving 2 coming on and then some incremental capacity from Brazos.

Elvira Scotto: Okay, great. Hey, just if I can sneak one more in. I know you have North Loving 2 coming on and then some incremental capacity from Brazos. If you think about processing expansions going forward, how are you managing supply chain? I'm specifically thinking about, you know, compression where lead times have stretched over 150 weeks for Caterpillar engines.

Speaker #6: But if you think about processing expansions supply chain? And I'm specifically thinking about compression where lead times have stretched over 150 weeks for cab engines.

Speaker #3: Yeah. I mean, I can talk about it briefly. But when it comes to compression deliverability relative to cryo units or other processing capacity, it tends to be the electrical equipment and the cryo units themselves, not compression, that drive it.

Danny Holderman: Yeah, I mean, I can talk about it briefly, but when it comes to compression deliverability relative to cryo units or other processing capacity, it tends to be the electrical equipment and the cryo units themselves, not compression that drive it. It's just being on top of forecasting for those two long lead components to be able to have it. We maintain kind of relationships and orders. Our supply chain group does a good job of making sure that we have spots in line, that we have options for, so that we can be nimble when it comes to meeting compression.

Speaker #3: And so it's just being on top of forecasting for those two long lead components to be able to have it. And then we maintain kind of relationships and orders.

Speaker #3: Our supply chain group does a good job of making sure that we have spots in line that we have options for so that we can be nimble when it comes to needing compression.

Speaker #4: Yeah. I mean, we constantly review our processing stack. And monitor the outlook of our producing customers and where we think GORs are going in particular and that sort of thing.

Oscar Brown: Yeah, we've, I mean, we constantly review our processing stack and monitor the outlook of our producing customers and where we think GORs are going in particular and that sort of thing. You know, that's why, you know, in looking at, you know, having North Loving 2 underway, but also sort of the benefit of the Brazos extra processing capacity, we have a lot of confidence in that and visibility. You'll recall we slightly modified our approach to thinking about our stack and how we build out compression or processing, gas processing capacity, in terms of, you know, where we really believe we kind of understood our customers and sort of their habits as well as sort of their geology and what they're looking at going forward.

Speaker #4: So that's why in looking at having North Loving 2 underway, but also sort of the benefit of the Brazos extra processing capacity, we have a lot of confidence in that and visibility.

Speaker #4: You'll recall we slightly modified our approach to thinking about our stack and how we build out compression or processing gas processing capacity in terms of where we really believe we kind of understood our customers and sort of their habits as well as sort of their geology and what they're looking at going forward.

Oscar Brown: You know, we leaned in a little bit on North Loving 2 versus what we had done in the past, which was more of build up an entire gas processing plant, so to speak, of offloads, customer driven away from turnarounds, then sanction a plant, then build it, and by that time, you're sort of a couple years, you know, behind the market. Again, we have incredible confidence in the Permian, you know, for the very long term. We just wanna make sure we're not overextending, but we're managing sort of the multi-year outlook for processing. That does tie into the look on supply chain in terms of when we wanna sanction or maybe order long lead long lead time item equipment.

Speaker #4: We leaned in a little bit on North Loving 2 versus what we had done in the past, which was more of build up an entire gas processing plant, so to speak, of offloads, customer-driven away from turnarounds, then sanction a plant, then build it.

Speaker #4: And by that time, you're sort of a couple of years behind the market. So again, we have incredible confidence in the Permian for the very long term.

Speaker #4: And so we just want to make sure we're not overextending but we're managing sort of the multi-year outlook for processing and that does tie into the look on supply chain.

Speaker #4: In terms of when we want to sanction or maybe order long lead time item equipment, to Danny's point, where we've had more trouble is with more specific equipment around electrical and not really the core of the plant itself.

Oscar Brown: To Danny's point, where we had more trouble is, you know, more specific equipment around electrical, not really the core of the plant itself.

Speaker #6: Great. Thank you very much.

Elvira Scotto: Great. Thank you very much.

Speaker #4: Thank you.

Operator: Thank you.

Oscar Brown: Thank you.

Speaker #7: I'm Anna. There are no further questions at this time. Mr. Oscar Brown, I will turn the call back over to you.

Operator: There are no further questions at this time. Mr. Oscar Brown, I will turn the call back over to you.

Speaker #3: Great. Thank you. And thank you to everyone for your interest in Western Midstream and your participation on this call. Our unique portfolio investment-grade balance sheet and our scale give us multiple ways to win in the near term as a midstream leader in natural gas crude oil and produced water across some of the best basins in the United States.

Oscar Brown: Great. Thank you. Thank you to everyone for your interest in Western Midstream and your participation on this call. Our unique portfolio, investment grade balance sheet, and our scale give us multiple ways to win in the near term as a midstream leader in natural gas, crude oil, and produced water across some of the best basins in the United States. Add to that over the long term, our emerging water beneficial reuse business and strong potential new ventures in behind the meter power generation and CO2 related services. In addition to other business lines closer to our core natural gas business. Stay tuned. I really think, you know, we're gonna have a lot to talk about, and we look forward to speaking with you again at our next earnings call in August. We'll see many of you at the investor and industry conferences in between.

Speaker #3: Add to that over the long term, our emerging water beneficial reuse business and strong potential new ventures in behind-the-meter power generation and CO2-related services.

Speaker #3: In addition to other business lines closer to our core natural gas business, so stay tuned. I really think we're going to have a lot to talk about.

Speaker #3: And we look forward to speaking with you again at our next earnings call in August. We'll see many of you at the investor and industry conferences in between.

Speaker #3: With that, we'll close the call. Thanks again, everyone.

Oscar Brown: With that, we'll close the call. Thanks again, everyone.

Danny Holderman: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.