Western Midstream Partners Q1 2025 Earnings Report

Western Midstream Partners EPS Results

• Actual EPS: $0.79
• Consensus EPS: $0.83
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: $1.47

Western Midstream Partners Revenue Results

• Actual Revenue: $917.12 million
• Expected Revenue: $926.55 million
• Beat/Miss: Missed by -$9.44 million
• YoY Revenue Growth: +3.30%

Western Midstream Partners Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 10:00AM ET

Western Midstream Partners (NYSE:WES), together with its subsidiaries, operates as a midstream energy company primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. The company also buys and sells natural gas, NGLs, and condensate. It operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.

Western Midstream Partners Q1 2025 Earnings Call Transcript

Key Takeaways

• North Loving plant commissioned in mid-February, boosting West Texas natural gas processing capacity by ~13% (250 MMcf/d) under fixed-fee agreements, delivered safely, ahead of schedule and under budget.
• Q1 net income of $302 million and adjusted EBITDA of $594 million generated $399 million of free cash flow, funding the retirement of $664 million of debt and a 4% distribution increase to $0.91 per unit.
• Balance sheet remains robust with net leverage below 3×, an investment-grade credit rating and ~$2.4 billion of liquidity, providing flexibility to navigate and capitalize on market volatility.
• 2025 throughput outlook unchanged: expecting mid-single-digit y-o-y growth for natural gas and produced water and low-single-digit growth for crude oil & NGLs, led by the Delaware Basin and augmented by Uinta and Powder River expansions.
• Pathfinder produced water pipeline advancing positive customer and midstream contracting ahead of its Jan 2027 in-service date, targeting MVC commitments and using US-sourced pipe to limit tariff risk.

Presentation

[Operator]

Good morning. My name is Ludi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners First Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

[Daniel Jenkins, Director - IR at Western Midstream Partners]

Thank you. I'm glad you could join us today for Western Midstream's first quarter twenty twenty five conference call. I would like to remind you that today's call, the accompanying slide deck and last night's earnings release contain important disclosures regarding forward looking statements and non GAAP reconciliations. Please reference Western Midstream's most recent Form 10 ks 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.

[Daniel Jenkins, Director - IR at Western Midstream Partners]

With me today are Oscar Brown, our chief executive officer Danny Holderman, our chief operating officer and Kristen Schultz, our chief financial officer. I'll now turn the call over to Oscar.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thank you, Daniel, and good morning, everyone. Yesterday, we reported another successful quarter for WES, marked by strong financial performance and continued high levels of customer service and system wide operability. I'm also pleased to announce that we completed the commissioning of the North Loving plant in the Delaware Basin in mid February, and it became operational later that month. This is our first major greenfield construction project as a stand alone partnership, and I would like to thank the teams involved for bringing the plant to completion. This achievement increases our West Texas natural gas processing capacity by approximately 13% or two fifty million cubic feet per day, benefiting WES financially through our fixed fee processing agreements and reducing our need for offloads.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thanks again to our employees and contractors for bringing the North Loving plant online safely, ahead of schedule, and under budget. Before turning the call over to Danny and Kristin, I want to address the recent market volatility and reiterate WES' strong position. Since early twenty twenty, we have taken significant steps to strengthen our balance sheet, optimize our asset portfolio, reduce operational costs, and generate substantial free cash flow. These actions have meaningfully reduced our leverage, enabled disciplined investment in organic growth projects supported by minimum volume commitments, and allowed us to return significant capital to unitholders. Today, we have the strongest balance sheet in the partnership's history, an investment grade credit rating, net leverage below three times, and approximately $2,400,000,000 of liquidity, giving us financial optionality and flexibility to navigate and potentially take advantage of volatile markets and commodity price cycles.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Our stable long term contract structures, proactive customer engagement, and strategic supply chain sourcing all contribute to our financial resilience. Our contracts, which include cost of service protections and or minimum volume commitments, provide more predictable cash flows even when commodity prices are volatile. By maintaining close communication with our customers regarding their drilling and completion plans, we can quickly reduce capital spending if desired. Additionally, our potential direct tariff exposure for 2025 is minimal because we've already ordered all the pipe needed to construct the Pathfinder produced water pipeline from a domestic steel mill using mostly US produced materials. Also regarding Pathfinder, I am pleased to share that we have had positive conversations with several customers and midstream providers regarding contracting pipe space prior to the estimated January 2027 in service date.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

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?

[Danny Holderman, SVP & COO at Western Midstream Partners]

Thank you, Oscar, and good morning, everyone. Our first quarter natural gas throughput decreased by 2% on a sequential quarter basis, primarily due to lower volumes from the DJ Basin, which achieved a record in the prior quarter and from the Powder River Basin. These declines were partially offset by volume growth from our other assets, specifically in South Texas and in Utah. Volumes from the Delaware Basin were slightly higher sequentially, but a bit below expectations as a result of delays in wells coming online relative to our initial estimates coming into the year. Our crude oil and NGL throughput decreased by 6% on a sequential quarter basis due to reduced throughput from our equity investments and lower volumes from both the DJ and Delaware Basins.

[Danny Holderman, SVP & COO at Western Midstream Partners]

Our operated crude oil and NGLs throughput decreased by 3% on a sequential quarter basis. Additionally, produced water throughput decreased by 2% on a sequential quarter basis due to the timing of wells coming online in the Delaware Basin and slightly higher recycling activity in the quarter. Our first quarter per 1,000 cubic foot adjusted gross margin for our natural gas assets increased by $05 compared to the prior quarter. This increase was primarily driven by increased excess natural gas liquids volumes under our fixed recovery contracts at our West Texas complex in combination with higher overall natural gas liquids pricing. Going forward, we expect our second quarter per 1,000 cubic foot adjusted gross margin to be more in line with the fourth quarter, primarily due to lower forecasted excess natural gas liquids volumes and reduced NGL pricing experienced so far in the second quarter.

[Danny Holderman, SVP & COO at Western Midstream Partners]

Our first quarter per barrel adjusted gross margin for our crude oil and NGL assets increased by $0.17 compared to the prior quarter due to the timing of distribution payments associated with our equity investments. On an operated basis, our per barrel adjusted gross margin remained relatively flat. We expect our second quarter per barrel adjusted gross margin to be more in line with the fourth quarter due to more normalized distributions from our equity investments. Our first quarter per barrel adjusted gross margin for our produced water assets decreased by $02 and was in line with our expectations due to the new produced water amendment we executed with Oxy and the cost of service rate redetermination, both of which became effective on January 1. Going forward, we expect our second quarter per barrel adjusted gross margin to be in line with the first quarter.

[Danny Holderman, SVP & COO at Western Midstream Partners]

Turning our attention to the remainder of the year, at this time, we still expect our portfolio wide average year over year throughput to increase by mid single digits percentage growth for both natural gas and produced water and low single digits percentage growth for crude oil and NGLs. For year over year comparative purposes, these expectations exclude the volumes associated with the non core asset sales that closed in early twenty twenty four. In the Delaware Basin, we still expect average year over year throughput to increase modestly for all three product lines and for the Basin to continue being the main engine of throughput growth in 2025. As Oscar previously mentioned, we are staying in close contact with our customers due to the volatile market and recent commodity price weakness. Our Delaware Basin customers remain focused on capital discipline and operational efficiency as they continue to monitor the pricing environment before making any long term operational changes.

[Danny Holderman, SVP & COO at Western Midstream Partners]

We plan to stay engaged with all of our customers and are prepared to adjust our plans as needed. In the DJ Basin, we still expect average year over year throughput to remain flat for natural gas and to be flat to slightly down for crude oil and NGL. In the Powder River Basin, even though our most active customers continue to evaluate the current environment, we still expect average year over year throughput for both natural gas and crude oil and NGLs to increase slightly. We also still expect meaningful natural gas throughput growth from our other assets, specifically in the Uinta Basin to commence early in the second half of twenty twenty five driven by increased volumes from Williams Mountain West pipeline expansion and the tie in of Kinder Morgan's Altamont pipeline to our Chepeda plant early in the third quarter. Finally, if any of our customers begin to alter their development plans, we can pivot and delay certain expansion capital projects.

[Danny Holderman, SVP & COO at Western Midstream Partners]

Any material changes to our capital expenditure plan would impact growth and development plans late in the second half of this year, which would most likely impact our initial throughput expectations for 2026 as opposed to materially impacting throughput in 2025. With that, I'll turn the call over to Kristen to discuss our financial performance during the quarter.

[Kristen Shults, SVP & CFO at Western Midstream Partners]

Thank you, Danny, and good morning, everyone. During the first quarter, we generated net income attributable to limited partners of $3.00 $2,000,000 and adjusted EBITDA of $594,000,000 Relative to the fourth quarter, our adjusted gross margin decreased by $8,000,000 which was primarily driven by decreased throughput and the recording of $9,200,000 of favorable revenue recognition cumulative adjustments that we benefited from in the fourth quarter and that did not reoccur in the first quarter associated with redetermined cost of service rates on certain contracts associated with our assets in South Texas and our DJ Basin oil system. These decreases were partially offset by increased gross margin contribution from our Delaware Basin natural gas assets due to higher excess natural gas liquids volumes in combination with higher NGL pricing. Our operation and maintenance expense decreased slightly quarter over quarter, but we expect it to trend modestly higher in both the second and third quarters, primarily due to increased asset maintenance and repair expense and higher expected utility costs, all of which should be partially offset by ongoing cost containment efforts. We continue to expect seasonality associated with our utility expense in the summer months, mostly due to higher estimated electricity pricing.

[Kristen Shults, SVP & CFO at Western Midstream Partners]

As a reminder, we are able to seek reimbursement for approximately 75% of our utility costs portfolio wide from our producing customers. Turning to cash flow. Our first quarter cash flow from operating activities totaled $531,000,000 generating free cash flow of $399,000,000 Free cash flow after our fourth quarter twenty twenty four distribution payment in February was $58,000,000 Focusing on capital markets activities, we retired $664,000,000 of senior notes upon their maturity in early January with cash on hand, and we maintained our trailing twelve month net leverage ratio of just below three times at quarter end. Looking forward, we plan to retire the remaining tranche of senior notes that mature in 2025 in early June with cash on hand and from free cash flow generation. In April, we declared a quarterly distribution of $0.91 per unit, which represents a 4% increase over the prior quarter's distribution that will be paid on May 15 to unitholders of record on May 2.

[Kristen Shults, SVP & CFO at Western Midstream Partners]

At this time, we're not making any changes to our 2025 financial guidance ranges. With that said, the lower commodity price environment could have an impact on our profitability in line with the sensitivities that we have provided in our investor deck. Even if that turns out to be the case, we would still expect our full year 2025 results to be within the guidance ranges that we have provided. With that, I will now turn the call over to Oscar for closing remarks.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thanks, Kristin. Before we open it up to Q and A, I would like to highlight why WES is well positioned to manage the recent market volatility. First, we continue to be prudent allocators of capital, which should support our future growth and profitability. All major expansion projects, such as Mentone 3, North Loving, and Pathfinder, are backed by material minimum volume commitments, which provide adjusted EBITDA and free cash flow stability even during commodity price swings that help us achieve our targeted returns. Second, our disciplined capital allocation decisions have delivered leading returns for our investors.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Since becoming a standalone partnership, WES has generated leading return on capital employed and has maintained one of the highest positive rates of change in ROCE among midstream peers. Our strong distribution yield has also resulted in a leading total capital return yield compared to both midstream peers and all sectors of the S and P five hundred for at least 11. And finally, WES' strong balance sheet gives us the flexibility to execute multiyear expansion projects like Pathfinder, driving future profitability and supporting our returns. We plan to maintain a strong balance sheet with net leverage at or below 3x, allowing us to pursue growth while increasing distributions, such as the 4% increase to the distribution that will be paid later this month. Before turning the call over to Q and A, I'm delighted to highlight that Bob Phillips, the founder and CEO of Crestwood Equity Partners until its merger with Energy Transfer, has recently joined our board as an independent director.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Bob brings significant midstream knowledge and expertise to our already talented board, and his years of successful leadership within the midstream space will be invaluable as we execute on our capital efficient growth strategy with the goal of creating long term value for all of our stakeholders. Thank you to the entire WES workforce for your hard work and dedication. We have had a strong start to 2025, and I am proud of how everyone has maintained focus on servicing our customers and progressing our cost containment efforts, especially in light of the recent market uncertainty. We remain committed to achieving our 2025 goals, and I look forward to sharing our progress on our second quarter earnings call in August. With that, we'll open the call for questions.

[Operator]

Thank you. And at this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the q and a roster. And your first question comes from the line of Spiro Dounis with Citi. Please go ahead.

[Spiro Dounis, Director at Citigroup]

Oscar, I want to go back to some of your closing comments there. You talked about strong balance sheet and flexibility and sort of mentioned capital allocation. So I'm just curious, to the extent we do sort of move into a slower growth environment here, curious how that allocation stack maybe restacks, how you reprioritize some of those buckets?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thanks for that. No, don't think we've changed our strategy in any way or our priorities. Obviously, as the environment slows and there's less organic growth opportunities, I think we're in great shape to take advantage of potential acquisitions and things like that. Obviously, we'll continue to be opportunistic when we look at the opportunities for a stock buyback or reducing debt further. But really, so far what we're seeing is pretty robust activity in terms of assets available in the M and A market.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So that's something that we're keeping an eye on. And if market continues to be volatile, we'd hope that sellers' expectations around price would change accordingly. But so far, we're keeping our BD team pretty busy.

[Spiro Dounis, Director at Citigroup]

Got it. That's helpful. Second question, just moving on to guidance for the rest of the year. I think as it stands, looks like guidance would imply a stronger second half of the year. And so just want to get you to maybe fine tune that a little bit.

[Spiro Dounis, Director at Citigroup]

I'm not sure if there's any specific projects ramping up from here. Obviously, North Lovings online now, just really point to and maybe which basins are really driving that in the go forward?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

I think it's I mean, as we've mentioned, nothing's really changed materially in the outlook. And so you're correct, we've expected the volumes to pick up a bit. We came up in a very strong fourth quarter and so that sort of impacted sort of tough comparables sequentially. But for the remainder of the year, there's no signs yet that our outlook should change on volume expectations. Growth continue to be driven by West Texas, as Danny said also in the Uinta.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Some growth is still in the powder, although we're making investments there in anticipation of 2026. That's obviously an area where if activity changes for some reason, then we can adjust capital accordingly pretty easily. So yeah, again, it's with $5 swings every week, seems like in oil prices, we like our customers are just sort of monitoring carefully running scenarios. But so far, everything appears to be on track with guidance.

[Spiro Dounis, Director at Citigroup]

Great. I'll leave it there. Thanks, Afir.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thank you.

[Operator]

Your next question comes from the line of Keith Stanley with Wolfe Research. Please go ahead.

[Keith Stanley, Director at Wolfe Research, LLC]

Hi. Good morning. Wanted to start on PATHFINDER, if there's any update on contracts in place for the project and how discussions are going with customers? And then relatedly, are you mainly targeting take or pay contracts with third parties on that pipeline? Or would it be fixed fee commitments where you do have some volume risk?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Yes, thanks for that. On Pathfinder, we've been pretty excited. Sort of the conversations have developed better than we hoped. So we're getting a lot of interest from producing customers, but also other midstream players in the water space. And that latter piece is sort of extra gratifying because it just sort of shows the folks that are in the business day to day across different producers are seeing what we see in a very crucial need for this pipeline.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

These are complicated contracts, you're alluding to that. This is a different decision than just deciding to put an SWD down somewhere and longer term commitments. And we are seeking MVC type commitments and we're looking at a range of commercial sort of structures. But again, the whole premise of this pipeline was very much in line and why we're excited about it is that it's right down the fairway of whether it be a gas line or an oil line. It's typical.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

We've got our anchor shipper in place and a lot of capacity to fill to drive returns sort of north of typical midstream returns. So that's our strategy. I don't think we'll necessarily see rapid fire series of contracts, again, given these are sort of longer term, more complicated commitments. We've also got some time. So frankly, the longer we go, I think the more challenging the water environment becomes in the Delaware Basin.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So time works to our advantage here. And so we're being pretty thoughtful about sort of the incremental shippers and contracts that we're going to take for this pipe. Trying to balance that with not getting too aggressive and damaging our progress, but we're pretty pleased. I mean, it's pretty exciting and it's nice to be validated in a thesis like this that's sort of a multiyear solution.

[Keith Stanley, Director at Wolfe Research, LLC]

Thank you. That was all for me.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thank you.

[Operator]

And your next question comes from the line of Jeremy Tonet with JPMorgan. Please go ahead.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Hi, good morning.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Good morning.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Just wanted to, I guess, think about the producer outlook at this point, your producer customer conversations. Just wondering how, I guess, recent they were at this point. We've seen a lot of changes already during earnings, and it seems like it's been very fluid where things have been changing very recently. So just wondering, we've seen some announcements of CapEx cuts and rig drops across multiple different producers here and just wondering how recent are your conversations with your producer customers? Does it account for, I guess, the number of different updates we've been hearing during earnings season?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Great question. I haven't seen much of our commercial team. They're basically living in customers' offices. So it's pretty real time, but you're right. It seems like it's day to day the way people are sort of reacting.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

But in general, I think, look, everybody is sort of running their scenarios. In our customer base, mostly what we've seen is folks looking at different projects. Again, we haven't seen enough activity or change in activity or outlook to change anything around our guidance, including on the CapEx front at this point. And I think even the customers that our customers specifically that have announced any changes in capital, frankly haven't adjusted changes in sort of their well count other than frankly up, but certainly not production outlook yet. So again, we're just sort of responding accordingly.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So for now, again, at least with our customer portfolio, we feel pretty good and everybody's doing exactly like you're saying the producers who aren't our customers, what we're saying is what you're saying, which is some rig drops around sort of the fringes of different geographies and that sort of thing. A lot of it's sort of performance driven and not necessarily commodity price driven at this point. So we're ready, right? We're in there every day. And the good news is we've got, let's put it this way, a lot more flexibility in our capital than we would expect to experience on volatility in our cash flows given our customers and our contract structure.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So we're pretty confident in the outlook and just monitor the situation. So don't know if that's helpful, that's what we're seeing.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. Understood. Not to belabor the point and realize it's probably too early to ask, but just wondering in a scenario with commodity prices, you know, go to the mid-50s or whatever point that leads to flat Permian growth and gas growth is just modest. Wondering any thoughts you might be able to share on how West might look in that scenario?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Again, I mean, that's sort of what we're looking at. So I don't think there's, again, not much change from what you're seeing in our guidance. Under that scenario, customers start dropping rigs or we see lower activity across the basin, I think it more impacts sort of our growth outlook than sort of a big negative impact on our free cash flow. And in fact, if people want to drop projects on the growth side and we pull back capital, frankly, just gives us some firepower to be opportunistic on the capital side, capital allocation side that we already talked about. So for us, we don't hope for a slowdown, but I think we come at it with a position of strength and frankly, probably see some opportunities to take advantage of in that scenario too.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So things hold well or improve to back to where we thought they would be a few months ago. I think we've got a great organic growth story. And if that shifts, then I think we've got a potential consolidation story to work on as well. And of course, we'll keep an eye on the unit price. If that goes out of whack, we'll jump there too.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. That's helpful. I'll leave it there. Thanks.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Awesome. Thank you.

[Operator]

Your next question comes from the line of Sumantra Banerjee with UBS. Please go ahead.

[Sumantra Banerjee, Equity Research Associate at UBS Group]

Hi. Thank you for taking the question. Wanted to go back on return of capital for a second in capital allocation priorities. It's great to see that leverage is now below the three times target. And so I know you mentioned that you're targeting mid to low single digit distribution increases, but also wanted to ask how buybacks might fit into those priorities?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

You bet. So I guess the way to look at it is, if the return on our equity is in excess of sort of our organic or inorganic growth opportunities, and it's obviously highly derisked because we're pretty sure we understand our own business, then it's something we got to look at and we'll be opportunistic on. But right now, far, we're seeing both on the projects that we have in place that haven't the customers haven't yet adjusted or give us any signal on the change. Those returns are still in excess of what we can earn just by buying back our own stock on a risk adjusted basis. And it's the same for the moment as to what we're seeing externally as well.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

So for now, seems like our cascade of sort of capital allocation is the same, right? We love to pursue organic growth at our midstream type returns. And then it's inorganic growth sort of M and A and that sort of thing. And then, of course, the buybacks are in the mix. The whole thing, as we've said over and over again, we only allocate capital to sustain or grow the distribution.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

That's sort of our financial license to operate as an MLP. And so that's our North Star in terms of how we allocate capital. So we'll just keep an eye on it. And if we exhaust the first two, then of course, buybacks are an option out there as well, especially if there's just uncertainty, right? We don't necessarily want to lean into jumping past our targeted distribution growth.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

If there's just volatility in the market, then buybacks might make sense. We're also cognizant of float is lower than we'd like it to be. And buybacks also impact some of the technical trading around our stocks. So we're just always cautious there. But again, it's a great option if I don't really want to see it because it means our stocks going down.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

But if we can buy back shares at Midstream Plus returns on a, you know, from our purposes of risk free basis, you know, we'll kind of do it.

[Sumantra Banerjee, Equity Research Associate at UBS Group]

Got it. That's really helpful. Thank you. I'll turn it over.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thank you.

[Operator]

And your next question comes from the line of Zach Van Everend with TPH. Please go ahead.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Hi, all. Thanks for taking my question. Maybe just going back to M and A. I know you mentioned if organic projects slow, there's still a lot out there on the inorganic side. Maybe touch on know you've talked about this before, but would these be in basin bolt ons on the G and P side?

[Zack Van Everen, Director - Equity Research at TPH&Co]

Or would you guys also look outside the Permian and your current basins for different type of assets?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Yeah, think so again, nothing's really changed in our thought or strategy around acquisitions. We really believe that to be successful in those, we have to bring something additive to the mix. So that does tend to steer you more likely to in basin opportunities or add ons to our various products and service teams, service activities. So again, I think it's going to be pretty much down the fairway unless there's a customer or something that wants to bring us to a new basin and can really de risk it for us and maybe that's the value add we can bring. So it's going to be very likely in our core businesses and our core geographies unless something kind of unusual happens with the way that we can add value and de risk a different opportunity.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Got it. That makes sense. And then one more quick one. On slide 24, you guys talk about 2.8 Bcf a day of natural gas MVC or cost of service protection as well as on the crude and NGL side. Have you guys ever broken out or could you give some more color where these contracts are?

[Zack Van Everen, Director - Equity Research at TPH&Co]

Is it mostly Permian and DJ? Maybe a percent on which is MVC versus cost of service?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Yeah, I don't think we've broken out that much detail, but obviously the vast majority of MVCs and cost of service are in West Texas and in the DJ. Obviously, the Permian market is more of a dedication market. I'm sorry, Powder River is more of a dedication market, whereas we've got some great legacy contracts in the DJ and in the Permian.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Makes sense. Appreciate the time. Thanks.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Thank you.

[Operator]

And your next question comes from the line of Ned Varma with Wells Fargo. Please go ahead.

[Ned Baramov, Analyst at Wells Fargo]

Hi. Good morning. Thanks for taking the question. In a in a flat Permian production environment and assuming you pull back your PRB growth projects, which I think contribute to twenty twenty six volumes, but are currently included in your 2025 CapEx guidance. What

[Ned Baramov, Analyst at Wells Fargo]

do

[Ned Baramov, Analyst at Wells Fargo]

you think your spending budget would look like this year? Should we think about CapEx as the low end of your current CapEx guidance range or maybe just closer to sustaining CapEx levels?

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Yeah, Chris can help me out here, but I think in your scenario with Permian's flat and powder weekends, I think is what you're asking, we would probably that happens soon, let's say, because we're almost mid year as it is. I guess the answer is probably the low end of CapEx guidance, maybe even below that.

[Kristen Shults, SVP & CFO at Western Midstream Partners]

Agree. I mean, I think kind of going back to when you look at our capital spend, there's quite a bit in the PRB. So if you see some type of pullback and then to Oscar's point relatively soon, we're very our capital spend is very dependent on our producers and what they're doing. So we can pretty much delay or cancel or pause most projects if we see changes like that, do that relatively quickly.

[Ned Baramov, Analyst at Wells Fargo]

Understood. Very helpful. Thank you. That's all I had.

[Operator]

Alright. Thank you. There are no further questions at this time. I would like to turn it back to mister Oscar Brown for closing remarks.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

Great. Thanks everyone for participating on our first quarter twenty twenty five earnings call. We continue to be exceptionally well positioned to navigate a range of business environments. So I'll just reiterate, we have an incredibly strong contract portfolio, excellent assets in the most economic basins in North America, and engaged and resilient workforce, a strong balance sheet with one of the lowest net leverage ratios amongst midstream peers, a nearly 10% deferred distribution yield, our seasoned leadership team, strong board oversight, and a solid prudent strategy underpinned by organic growth projects. I wanted to thank again our incredible employees for supporting the efforts to increase our competitiveness and their focus on our mission, our licenses to operate and our differentiating capabilities, all while operating safely, efficiently and responsibly.

[Oscar Brown, President, CEO & Director at Western Midstream Partners]

I would also like to thank our customers for their continued support and their trust in West to provide flow assurance and creative midstream solutions. We look forward to seeing everyone at upcoming energy conferences this month. And with that, we'll close the call. Thanks again.

[Operator]

Thank you. And this concludes today's conference call. Thank you all for joining. You may now disconnect.

Participants

Executives

• Daniel Jenkins, Director - IR
• Oscar Brown, President, CEO & Director
• Danny Holderman, SVP & COO
• Kristen Shults, SVP & CFO

Analysts

• Spiro Dounis, Director at Citigroup
• Keith Stanley, Director at Wolfe Research, LLC
• Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan
• Sumantra Banerjee, Equity Research Associate at UBS Group
• Zack Van Everen, Director - Equity Research at TPH&Co
• Ned Baramov, Analyst at Wells Fargo