01—Abstract
Summary
Summary of the 8-K filed August 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (NYSE: WES) reported second-quarter 2024 net income attributable to limited partners of $369.8 milliona, or $0.97 per diluted common unit, with Adjusted EBITDA of $578.1 million and cash flows provided by operating activities of $631.4 million.
Free cash flow was $424.8 millionb, and Free cash flow after distributions was $84.0 million. Management said Adjusted EBITDA declined 5-percent sequentially, mainly due to lower distributions from equity investments following previously announced divestitures, seasonally higher operation and maintenance expense, and more normalized property and other taxes. The company declared a second-quarter Base Distribution of $0.875 per unit, or $3.50 annualized, in line with the prior quarter, payable August 14, 2024.
Operationally, WES reported record natural-gas throughput in the Delaware Basin (1.9 Bcf/d) and DJ Basin (1.5 Bcf/d), and record total operated crude-oil and NGLs throughput of 396 MBbls/d. Management expects throughput to keep growing through the rest of 2024, which it said should drive 2024 Adjusted EBITDA and Free cash flow toward the high end of prior guidance ranges. The company also cited new and amended commercial agreements, including a DJ Basin processing amendment with DCP Midstream, now Phillips 66, that extends 175 MMcf/d of firm-processing capacity to 2029 and adds 200 MMcf/d starting in 2026, and post-quarter agreements at the Chipeta facility supporting up to 110 MMcf/d and 150 MMcf/d of firm-processing capacity.
On the balance sheet, WES reduced total debt by $762.6 millionc since year-end 2023, using asset sale proceeds, and reached its long-term net leverage threshold of 3.0x earlier than expected. The company repurchased $134.9 million of senior notes in the second quarter, bringing the year-to-date total to $150.0 million at an average of 96% of par.
The Marcellus Interest gathering system sale closed early in the second quarter. Management said it will use the Base Distribution and its Enhanced Distribution framework as the primary tools for returning incremental capital to unitholders.
02—Key points
Key Highlights
- Second-quarter 2024 net income attributable to limited partners of $369.8 million, or $0.97 per diluted common unit; Adjusted EBITDA of $578.1 million, down 5-percent sequentially.
- Operating cash flow of $631.4 million and Free cash flow of $424.8 million; Free cash flow after distributions of $84.0 million; second-quarter capital expenditures of $207.5 million.
- Declared Base Distribution of $0.875 per unit ($3.50 annualized), unchanged from the prior quarter and payable August 14, 2024.
- Record Delaware Basin (1.9 Bcf/d) and DJ Basin (1.5 Bcf/d) natural-gas throughput, with natural-gas throughput up 6-percent sequentially in both basins; record total operated crude-oil and NGLs throughput of 396 MBbls/d, up 6-percent.
- Management expects 2024 Adjusted EBITDA and Free cash flow toward the high end of previously disclosed guidance ranges.
- Total debt reduced by $762.6 million since year-end 2023 using asset sale proceeds; net leverage reached the 3.0x long-term threshold earlier than expected; $150.0 million of senior notes repurchased year-to-date at an average of 96% of par.
- Marcellus Interest gathering system sale closed early in the second quarter; second-quarter gain on divestiture and other, net of $59.3 million.
03—Questions
Frequently Asked Questions
Why did Adjusted EBITDA decline sequentially in the second quarter?
Management said Adjusted EBITDA declined 5-percent sequentially due to lower distributions from equity investments following previously announced asset divestitures, higher seasonally driven operation and maintenance expense, and more normalized property and other taxes.
Is the distribution changing?
No. The second-quarter Base Distribution is $0.875 per unit, or $3.50 annualized, in line with the prior quarter's Base Distribution. It is payable on August 14, 2024.
What drove the outlook for the rest of 2024?
Management expects throughput to continue growing through the remainder of the year, which it said will drive 2024 Adjusted EBITDA and Free cash flow toward the high end of previously disclosed guidance ranges. It also cited Delaware Basin third-party gathering agreements beginning to contribute in the second half of 2024 and more fully in 2025.
How is WES using its cash and capital?
WES reduced total debt by $762.6 million since year-end 2023 and repurchased $134.9 million of senior notes in the second quarter. Management said it will continue to allocate capital to expansion-oriented spending and accretive M&A, and will use the Base and Enhanced Distribution framework as the primary tools for returning incremental capital to unitholders.
04—Continue