Western Midstream Partners, LP (NYSE:WES) Q1 2023 Earnings Conference Call May 4, 2023 2:00 PM ET

Company Participants

Daniel Jenkins - Director of Investor Relations

Michael Ure - Chief Executive Officer

Kristen Shults - Chief Financial Officer

Conference Call Participants

Spiro Dounis - Citi

Keith Stanley - Wolfe Research

Gabe Moreen - Mizuho

Operator

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners' First Quarter 2023 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 Instructions]

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

Daniel Jenkins

Thank you. I'm glad you could join us today for Western Midstream's first quarter 2023 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-Q and other public filings for a description of risk factors that could cause actual results to differ materially from what we discuss today. Relevant reference materials are posted on our website.

With me today are Michael Ure, our Chief Executive Officer; and Kristen Shults, our Chief Financial Officer.

I'll now turn the call over to Michael.

Michael Ure

Thank you, Daniel, and good afternoon, everyone. During the first quarter, we continued to experience strong producer activity levels in the Delaware Basin, resulting in higher throughput across all three product lines, including record-breaking natural gas and produced water throughput.

Despite continued throughput growth in the Delaware Basin, our first quarter adjusted EBITDA declined sequentially, primarily due to decreased distributions from Cactus II which was sold in the fourth quarter of 2022, reduced margin from our South Texas assets due to a contractual step down in demand fees, which we previously communicated on last quarter's call and reduced natural gas throughput and margin from our assets in Utah and Wyoming, mostly due to weather.

Although, adjusted EBITDA declined sequentially, we expect quarterly profitability to gradually improve as throughput increases for the remainder of the year. Kristen will go into more detail regarding our first quarter performance and our second quarter expectations shortly.

Operationally, I'm very pleased to highlight that our commercial team continues to generate substantial value for WES. Subsequent to quarter end, we executed long-term amendments to Occidental's natural gas gathering and processing agreement in the Delaware Basin, increasing their firm capacity on our system and extending the gathering agreement by three years to 2035.