Western Midstream's Impressive Q2 2024 Performance
Western Midstream Partners, LP has reported a robust performance in the second quarter of 2024, highlighting its strong operational capabilities and the anticipation of steady throughput growth throughout the year. The company's CEO, Michael Ure, emphasized this success in their recent earnings call.
Key Operational Areas and Customer Agreements
Operating in regions like the Delaware Basin, DJ Basin, and Utah, Western Midstream has secured several new customer agreements. These agreements are projected to significantly drive the company’s long-term performance. The company is also celebrating its achievement of the 2023 sustainability goals, which includes efforts in monitoring greenhouse gas emissions and promoting a safety culture.
Financial Highlights and Capital Allocation
For Q2 2024, Western Midstream reported a net income of $370 million and an adjusted EBITDA of $578 million. The sale of non-core assets has allowed the company to meet its net leverage ratio target ahead of schedule. Capital is being strategically allocated towards organic growth, accretive mergers and acquisitions (M&A), and increases in distributions.
Sustainability and Future Outlook
The company anticipates record operated throughput, adjusted EBITDA, and free cash flow for the year. Western Midstream has no major projects planned for the Uinta Basin due to having sufficient capacity, but it will focus on asset acquisitions and operational enhancements in its current operational areas.
Bearish and Bullish Highlights
Some bearish highlights include a decrease in produced-water throughput and an outlook below the minimum volume commitment levels for the DJ Basin in 2024. However, there are bullish signs as well, such as flat overall throughput and increased natural gas liquids (NGL) throughput. New agreements are expected to be highly accretive with minimal capital requirements, especially in the Delaware Basin, where the North Loving Plant is on track for Q1 2025.
Unanswered Questions and Management Changes
During the earnings call, some specifics, such as contract rates and potential M&A transactions, were not disclosed. However, Western Midstream announced the appointment of a new Chief Operating Officer, which indicates a strengthened focus on operational leadership.
Overall, Western Midstream's Q2 2024 performance, strategic customer agreements, and focus on sustainable growth show the company's commitment to delivering stakeholder value and leveraging its operational strengths for continued financial success.
