Western Midstream Partners, LP (NYSE:WES) Q1 2022 Results Conference Call May 11, 2022 3:00 PM ET
Company Participants
Daniel Jenkins - Director, IR
Michael Ure - CEO
Kristen Shults - CFO
Craig Collins - COO
Conference Call Participants
Spiro Dounis - Credit Suisse
Colton Bean - Tudor, Pickering
Chase Mulvehill - Bank of America
Michael Cusimano - Pickering Energy Partners
Ned Baramov - Wells Fargo
Operator
Good afternoon. My name is Celina, and I will be your conference operator today. At this time, I would like to welcome everyone to the 1Q ‘22 Western Midstream Partners 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] Thank you.
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 2022 conference call.
I’d 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; Kristen Shults, our Chief Financial Officer; and Craig Collins, our Chief Operating Officer. I’ll now turn the call over to Michael.
Michael Ure
Thank you, Daniel, and good afternoon, everyone.
Yesterday, we reported another quarter of strong financial performance. We generated net income available to limited partners of $302 million and record-breaking adjusted EBITDA of $539 million, representing a sequential quarter increase of 27% and 12%, respectively.
Taking a closer look at our first quarter results, the sequential quarter EBITDA increase was driven by the following factors. First, our contracts with minimum volume commitments and associated deficiency payments helped support our gross margin, despite volume declines across the portfolio relative to the fourth quarter. These declines were the result of well completion timing and weather impacts in the Delaware Basin, as well as expected declines in the DJ Basin and on our equity method investments. Craig will extend on throughput shortly.
Second, we also entered into and converted certain natural gas processing agreements from actual recoveries, to fixed recoveries for multiple customers during the first quarter. As a result of strong plant performance leading to actual recoveries exceeding the contractually specified recoveries, we’ve retained excess natural gas liquid volumes in the Delaware Basin under these contracts. Therefore, these additional volumes along with high commodity prices led to an increase in gross margin, despite a decrease in throughput.