Why did net income rise so sharply compared with the prior-year quarter?

Net income attributable to Western Midstream Partners, LP was $572.8 million in the first quarter of 2024 versus $203.6 million a year earlier. The results include a $239.6 million gain on divestiture and other, net, compared with a $2.1 million loss in the first quarter of 2023. Total revenues and other rose to $887.7 million from $734.0 million, led by fee-based service revenues of $781.3 million versus $647.9 million.

How much debt did the partnership reduce, and what is its leverage target?

Commercial paper repayments, net, were $510.4 million and debt repayments were $14.5 million in the first quarter. Long-term debt was $7.27 billion at March 31, 2024. Net leverage on a trailing-twelve-month basis was approximately 3.3 times, and management expects to reduce it to or below 3.0 times by year-end. The company also repurchased $15.1 million of senior notes in the first quarter and $134.9 million more in the second quarter to date, at approximately 96-percent of par.

Is the distribution sustainable?

The first-quarter Base Distribution was $0.875 per unit, paid May 15, 2024. Free cash flow was $225.0 million for the quarter, and Free cash flow after distributions was $1.5 million. Distributions to Partnership unitholders totaled $223.4 million in the quarter. Management said it remains committed to its capital-return framework and expects to return incremental capital as Free cash flow grows.

What drove throughput growth this quarter?

Natural-gas throughput averaged 5.0 Bcf/d attributable to WES, up 2 percent sequentially, with a record 5.2 Bcf/d gathered across the asset base. Delaware Basin produced-water throughput reached a record 1,149 MBbls/d, up 7 percent sequentially. Operated crude-oil and NGLs throughput rose 2 percent to 374 MBbls/d. Total crude-oil and NGLs throughput attributable to WES fell 20 percent to 565 MBbls/d because of the previously announced equity-investment asset sales.

What is the status of the Mentone Train III project?

Mentone Train III at the West Texas complex in the Delaware Basin started up in early April 2024 and has reached nameplate capacity of 300 MMcf/d. It increased operated natural-gas processing capacity by 300 MMcf/d to approximately 1.9 Bcf/d. Management described it as the first major new-build construction project since the partnership became standalone in early 2020.

WES 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 8, 2024. Cited figures are marked; the original filing is the authoritative source.

Western Midstream Partners, LP (NYSE: WES) reported first-quarter 2024 net income attributable to limited partners of $559.5 million^a, or $1.47 per common unit (diluted), and record first-quarter Adjusted EBITDA of $608.4 million, with cash flows provided by operating activities of $399.7 million and Free cash flow of $225.0 million.

The partnership stated these were the highest quarterly Net income and Adjusted EBITDA in its history, driven by increased throughput across operated assets and products. Net income in the quarter was boosted by a $239.6 million^b gain on divestiture and other, net, tied to the sale of non-core assets, and total proceeds from the five non-core asset sales were $794.8 million. Free cash flow after distributions was $1.5 million.

The partnership announced a first-quarter Base Distribution of $0.875^c per unit, or $3.50 annualized, a 52-percent increase over the prior quarter, payable May 15, 2024. Management said it expects to reduce its net leverage ratio, which was approximately 3.3 times on a trailing-twelve-month basis at quarter-end, to or below its 3.0 times threshold by year-end. The Mentone Train III project at the West Texas complex reached nameplate capacity of 300 MMcf/d, bringing operated Delaware Basin natural-gas processing capacity to approximately 1.9 Bcf/d.

Management also raised its average year-over-year throughput growth expectations for 2024 and said WES is positioned to reach the high end of its 2024 Adjusted EBITDA and Free cash flow guidance ranges. The company repurchased $15.1 million^d of senior notes in the first quarter and an additional $134.9 million in the second quarter to date, all at approximately 96-percent of par. Total long-term debt was $7.27 billion at March 31, 2024, compared with $7.28 billion at December 31, 2023.

The Form 8-K furnishes the earnings press release as Exhibit 99.1, and a conference call is scheduled for May 9, 2024 at 1:00 p.m. Central Time.

02—Key points

Key Highlights

Record first-quarter Net income attributable to limited partners of $559.5 million ($1.47 per diluted common unit) and record Adjusted EBITDA of $608.4 million.
Operating cash flow of $399.7 million and Free cash flow of $225.0 million; Free cash flow after distributions was $1.5 million.
Base Distribution of $0.875 per unit for the quarter ($3.50 annualized), a 52-percent increase over the prior quarter, payable May 15, 2024.
Mentone Train III reached nameplate capacity of 300 MMcf/d, lifting operated Delaware Basin processing capacity to approximately 1.9 Bcf/d.
Closed all five previously announced non-core asset sales for total aggregate proceeds of $794.8 million; the quarter included a $239.6 million gain on divestiture and other, net.
Trailing-twelve-month net leverage of approximately 3.3 times, with a target of reaching or falling below 3.0 times by year-end 2024.
Raised 2024 average year-over-year throughput growth expectations, primarily in the Delaware Basin, and positioned to reach the high end of 2024 Adjusted EBITDA and Free cash flow guidance.

03—Questions

Frequently Asked Questions

Why did net income rise so sharply compared with the prior-year quarter?
Net income attributable to Western Midstream Partners, LP was $572.8 million in the first quarter of 2024 versus $203.6 million a year earlier. The results include a $239.6 million gain on divestiture and other, net, compared with a $2.1 million loss in the first quarter of 2023. Total revenues and other rose to $887.7 million from $734.0 million, led by fee-based service revenues of $781.3 million versus $647.9 million.
How much debt did the partnership reduce, and what is its leverage target?
Commercial paper repayments, net, were $510.4 million and debt repayments were $14.5 million in the first quarter. Long-term debt was $7.27 billion at March 31, 2024. Net leverage on a trailing-twelve-month basis was approximately 3.3 times, and management expects to reduce it to or below 3.0 times by year-end. The company also repurchased $15.1 million of senior notes in the first quarter and $134.9 million more in the second quarter to date, at approximately 96-percent of par.
Is the distribution sustainable?
The first-quarter Base Distribution was $0.875 per unit, paid May 15, 2024. Free cash flow was $225.0 million for the quarter, and Free cash flow after distributions was $1.5 million. Distributions to Partnership unitholders totaled $223.4 million in the quarter. Management said it remains committed to its capital-return framework and expects to return incremental capital as Free cash flow grows.
What drove throughput growth this quarter?
Natural-gas throughput averaged 5.0 Bcf/d attributable to WES, up 2 percent sequentially, with a record 5.2 Bcf/d gathered across the asset base. Delaware Basin produced-water throughput reached a record 1,149 MBbls/d, up 7 percent sequentially. Operated crude-oil and NGLs throughput rose 2 percent to 374 MBbls/d. Total crude-oil and NGLs throughput attributable to WES fell 20 percent to 565 MBbls/d because of the previously announced equity-investment asset sales.
What is the status of the Mentone Train III project?
Mentone Train III at the West Texas complex in the Delaware Basin started up in early April 2024 and has reached nameplate capacity of 300 MMcf/d. It increased operated natural-gas processing capacity by 300 MMcf/d to approximately 1.9 Bcf/d. Management described it as the first major new-build construction project since the partnership became standalone in early 2020.

04—Continue

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