Western Midstream Partners (WES) Q2 2024 earnings summary

Executive summary

• Achieved record throughput for natural gas, crude oil, and NGLs in the Delaware and DJ Basins for the fifth consecutive quarter, with sequential growth across all products in the DJ Basin and strong operational and commercial performance across key basins.

• Executed multiple new and amended long-term commercial agreements in the Delaware, DJ, and Uinta Basins, enhancing firm-processing capacity and supporting future volume growth.

• Sale of non-core assets, including Marcellus Interest and equity investments, generated over $1B in proceeds and contributed to achieving a net leverage ratio of 3.0x earlier than expected.

• Continued focus on organic growth, accretive M&A, disciplined capital allocation, and increasing base distributions as free cash flow grows.

• Regular Q2 2024 per-unit distribution held at $0.875, with annualized base distribution guidance of at least $3.20 per unit for 2024.

Financial highlights

• Q2 2024 net income attributable to limited partners was $370 million–$378.6 million; Adjusted EBITDA was $578.1 million, down 5% sequentially but up 20% year-over-year.

• Q2 2024 total revenues were $905.6 million, up from $738.3 million in Q2 2023.

• Cash flow from operating activities was $631.4 million; free cash flow was $424.8 million; post-distribution free cash flow was $84.0 million.

• Adjusted gross margin for Q2 2024: $1.33/Mcf for natural gas, $2.96/Bbl for crude oil/NGLs, $0.97/Bbl for produced water.

• Cash distributions paid in Q2 2024 were $340.9 million, up from $223.4 million in Q1 2024.

Outlook and guidance

• Expect to reach the high end of 2024 Adjusted EBITDA ($2.2–$2.4 billion) and free cash flow ($1.05–$1.25 billion) guidance ranges, representing double-digit growth over 2023.

• Anticipate portfolio-wide year-over-year throughput growth: mid- to upper-teens % for natural gas and produced water, low-teens % for crude oil and NGLs.

• 2024 capital expenditure guidance remains $700–$850 million, with over 80% allocated to the Delaware Basin.

• Year-end 2024 net leverage ratio targeted at ~3.0x, a 0.7x decrease from YE 2023.

• Base distribution guidance of at least $3.20 per unit for 2024 remains unchanged, subject to Board review.