WES

**Operator:**  
Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners First Quarter 2026 Earnings Conference Call. [Operator Instructions] And I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

**Daniel Jenkins:**  
Thank you for joining us today for Western Midstream's First Quarter 2026 Conference Call. I'd like to remind you that today's call, the accompanying slide deck and last night's press releases contain important disclosures regarding forward-looking statements and non-GAAP reconciliations, please reference Western Midstream's most recent Form 10-K and 10-Q and other public filings for a description of risk factors that could cause actual results to differ materially from any forward-looking statements we discuss today. Relevant reference materials are posted on our website. With me today are Oscar Brown, our Chief Executive Officer; Danny Holderman, our Chief Operating Officer; and Kristen Shults, our Chief Financial Officer. I'll now turn the call over to Oscar.

**Oscar Brown:**  
Thank you, Daniel, and good morning, everyone. Yesterday, we reported record adjusted EBITDA of $683 million, increasing 7% sequentially and 15% compared to the prior year period. Our first quarter outperformance reflects the full quarter contribution from the Aris acquisition, per day throughput growth across all three product lines and successful cost reduction efforts. Additionally, as crude oil prices rose in March, we captured incremental benefits from skim oil recoveries on our produced water system and from our fixed recovery natural gas processing contracts. Yesterday, we also announced the $1.6 billion acquisition of Brazos Delaware II. This strategic bolt-on exemplifies our programmatic M&A philosophy, transactions that enhance the value of our existing assets, diversify and enhance our high-quality customer base and generate incremental adjusted EBITDA and strong free cash flow for our unitholders, which is completely aligned with our philosophy of only deploying capital if it sustains or grows the distribution. While we are not currently updating our annual guidance ranges as we have not yet received formal changes to our producers' drilling plans for this year, we do expect to be towards the high end of both the adjusted EBITDA and distributable cash flow ranges without taking into account the impact of the Brazos transaction. This improved outlook is due to increased commercial discussions, the very favorable commodity price environment and our improving operating leverage due to our successful and ongoing cost competitiveness efforts. With that said, we intend to reevaluate our 2026 guidance ranges in conjunction with our second quarter results after the scheduled close of the Brazos transaction. Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027. This, in combination with our expectation of improved Waha natural gas pricing in the second half of this year gives us growing confidence in 2027's potential, certainly if the current elevated commodity price environment holds. Taking a closer look at the Brazos acquisition, the assets include natural gas and crude oil gathering systems that are highly complementary to our existing Texas Delaware Basin footprint. Integration creates a larger, more scalable midstream system in the core of the premier basin in North America. These assets fit well within our portfolio for several reasons. First, this acquisition materially strengthens and expands our Delaware Basin asset base. The Brazos system is contiguous to our existing West Texas complex with over 470,000 dedicated acres to more than 900 miles of pipeline and approximately 460 million cubic feet per day of processing capacity, immediately increasing our West Texas dedicated acreage by 49% and our gas processing capacity by 20%. The Brazos Comanche processing complex has approximately 125 million cubic feet per day of unused capacity, which is crucial as our West Texas volumes continue to grow and will enable us to optimize the performance of our overall processing complex. Additionally, there are approximately 3,500 drilling locations at $65 per barrel. Nearly all drilling locations on the dedicated acreage are within 2 miles of the low-pressure gathering system, which limits ongoing capital requirements and support strong free cash flow conversion. The systems also provide exposure to additional geologic formations, including the growing Woodford Shale play. Second, the transaction adds long-term stable contract structures that are foundational to WES' strategy. Brazos Delaware's recently extended contracts have a weighted average remaining contract life of approximately 9.2 years and align with the fee-based framework that underpins WES' cash flow durability. Third, this acquisition meaningfully diversifies our customer base. Brazos adds several new high-quality third-party customers to the WES portfolio. It also deepens our relationships with certain existing third-party customers and further diversifies WES' revenue stream and reduces producer concentration risk. Fourth, the transaction is financially attractive and accretive at a $1.6 billion purchase price composed of approximately $800 million of cash and approximately $800 million of WES common units, the transaction is valued at approximately 8x 2027 estimated EBITDA declining to approximately 7.5x with the commercialization of available processing capacity and other identified synergies. We expect the transaction to close at the end of the second quarter and it contributed approximately $100 million of incremental adjusted EBITDA in 2026. Further, the transaction is immediately accretive to 2026 distributable cash flow per unit. Finally, our strong balance sheet made this possible. By financing the transaction with a combination of cash and equity, we expect to maintain net leverage of approximately 3x on a pro forma basis throughout 2026, consistent with our conservative leverage philosophy and preserving the flexibility to continue funding our organic growth program and capital return framework. In summary, Brazos expands our Delaware Basin footprint, adds durable fee-based earnings from a diversified set of top-tier customers and is accretive to distributable cash flow on a per unit basis. We look forward to integrating Brazos' assets and team into the WES portfolio and updating you on our progress over the coming quarters. Turning to our record quarterly results. The Delaware Basin continues to perform exceptionally well. Natural gas throughput in the basin increased 3% sequentially to slightly over 2 billion cubic feet per day and we achieved record crude oil and NGL throughput of 272,000 barrels per day, which increased 4% sequentially and 6% year-over-year. Our produced water business achieved record throughput as well, increasing 4% sequentially to approximately 2.8 million barrels per day, primarily driven by the full quarter contribution from the Aris acquisition. This occurred despite higher Waha driven curtailments in the basin, which we expect will persist through the second quarter. Additionally, relative to our throughput expectations, both the DJ and the Powder River Basins outperformed this quarter. In addition to our throughput performance, we benefited from elevated commodity prices in March, which drove adjusted gross margin outperformance, particularly on excess natural gas liquids volumes and increased skim oil volumes driven by the Aris acquisition. Aris' long-term contracts share the fee-based foundation that defines WES's broader portfolio, but also provide for meaningful value creation and favorable commodity pricing environments due to the retention of skim oil volumes. This, combined with our efficiency and successful cost reduction actions has materially improved our operating leverage and the earnings power of WES as reflected in our first quarter results. With that, I'll turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance in the first quarter. Danny?

**Daniel Holderman:**  
Thank you, Oscar, and good morning, everyone. Our first quarter natural gas throughput increased by 1% on a sequential-quarter basis, primarily driven by increased throughput from the Delaware Basin despite curtailments. During the quarter, equity investment volumes declined mostly due to lower throughput at the Mi Vida plant in West Texas. Our crude oil and NGLs throughput increased by 3% on a sequential-quarter basis, mostly due to increased throughput from the Delaware Basin due to the timing of wells that came to market during the quarter. Additionally, our produced water throughput increased by 4% on a sequential-quarter basis, driven by the full quarterly impact from the Aris acquisition and continued growth in the legacy WES water business. Our first quarter per Mcf adjusted gross margin for our natural gas assets increased by $0.06 on a sequential-quarter basis. This was due to higher overall commodity pricing on excess natural gas liquids volumes under our fixed recovery contracts, specifically in the month of March, and decreased revenues in the fourth quarter of 2025 associated with the annual cumulative catch-up adjustment in South Texas. Going forward, we expect our second quarter per Mcf adjusted gross margin to be in line with the first quarter due to elevated commodity pricing. Additionally, we now expect our average adjusted gross margin to be approximately $1.28 per Mcf in 2026, which implies moderation in the second half relative to the first as our forecast reflects a more normalized commodity pricing environment for the full year average. Our first quarter per barrel adjusted gross margin for our crude oil and NGLs assets increased by $0.30 compared to the prior quarter, mostly due to the unfavorable revenue recognition, cumulative adjustments that were recorded in the fourth quarter of 2025 for the DJ Basin in South Texas that did not reoccur in the first quarter. Our first quarter performance was in line with our previous expectations of between $3.05 and $3.10 per unit that we communicated in our prior earnings call. We expect our second quarter per barrel adjusted gross margin to be slightly higher than the first quarter and for our average adjusted gross margin to still range between $3.10 and $3.15 per barrel for 2026. Our first quarter per barrel adjusted gross margin for our produced water assets increased by $0.07 due to the full quarter impact from the Aris acquisition and increased skim oil recoveries at higher commodity pricing. Going forward, we now expect our second quarter per barrel adjusted gross margin to average approximately $0.93 and for our adjusted gross margin to average approximately $0.91 for the year, especially if the current crude oil strip for 2026 is realized. Turning our attention to the remainder of the year. We continue to expect our portfolio-wide average year-over-year throughput to remain relatively flat for natural gas, decline low to mid-single digits for crude oil and NGLs, and increase by approximately 80% for produced water. We still expect average year-over-year throughput in the Delaware Basin to increase by low to mid-single digits for natural gas. But with the first quarter crude oil outperformance, we now expect crude oil to remain relatively flat in 2026 compared to 2025. Despite higher crude oil prices since mid-March, we are still witnessing certain customers curtail throughput in the Delaware Basin due to stubbornly low and sometimes negative Waha natural gas pricing. We expect Waha pricing to remain volatile throughout the second quarter as maintenance is performed downstream of our operations and the basin waits for the next tranche of basin takeaway capacity to come into service in the third and fourth quarters of this year. In the DJ Basin, throughput outperformed in the first quarter due to the timing of wells that came to market. This outperformance slightly improves our full-year expectations for both natural gas and crude oil and NGLs throughput. And while we still expect the overall number of wells that come to market to decline this year, we now expect mid-single-digit declines on average year-over-year versus mid to high single-digit declines we expected initially. Additionally, the first pad in Occidental's Bronco Pad development began flowing in late April, and by our next quarterly call, we should have further clarity regarding 2026 throughput expectations. In the Powder River Basin, we continue to expect throughput to decline on average by approximately 10% to 15% year-over-year. We continue to have discussions with our producing customers in the basin, and we still expect higher activity levels in 2027 as more rigs return to the basin. Additionally, one of our largest producers in the Powder River Basin recently informed us they would accelerate activity levels in the back half of 2026 in order to increase volumes earlier in 2027. Finally, softness in Rocky Mountain natural gas pricing over the past several months has driven some curtailments and deferred completions. That said, we still expect throughput growth of mid-single digits from our other natural gas assets driven by a full year's contribution from Williams Mountain West pipeline expansion, the tie-in of Kinder Morgan's Altamont Pipeline into our Chipeta processing plant in Utah in 2025 and steady throughput levels at our Brasada plant in South Texas. With that, I'll turn our call over to Kristen to discuss our financial performance during the quarter.

**Kristen Shults:**  
Thank you, Danny, and good morning, everyone. During the first quarter, we generated net income attributable to limited partners of $342 million, record adjusted EBITDA of $683 million and distributable cash flow of $509 million. Relative to the fourth quarter of 2025, our adjusted gross margin increased by $56 million, which was primarily driven by a full quarter's contribution from the Aris acquisition, higher commodity pricing on excess natural gas liquids and increased skim oil volumes and $30 million of unfavorable noncash revenue recognition cumulative adjustments recorded in the fourth quarter associated with redetermined cost of service rates on certain contracts at South Texas and in the DJ Basin, which did not reoccur in the first quarter. Our operation and maintenance expense increased approximately 5% quarter-over-quarter, mostly driven by the full quarter contribution from the Aris acquisition. Inclusive of the legacy Aris assets, we still expect our operation and maintenance expense to increase by only approximately 10% to 15%, which represents a meaningful reduction on a combined company basis as we continue to see success in our cost reduction efforts. As is typical with our business, we expect operation and maintenance expense to increase slightly in the second and third quarters, primarily due to increased asset maintenance and repair work and higher utility costs. As a reminder, we are reimbursed for approximately 65% of our utility costs portfolio-wide from our producing customers. Turning to cash flow. Our first quarter cash flow from operating activities totaled $470 million, a decrease of $88 million relative to the fourth quarter of 2025, primarily driven by the Delaware Basin natural gas gathering contract renegotiation with Occidental that became effective on January 1 and included the redemption of $610 million of WES units held by Oxy. Our operating cash flow resulted in $242 million of free cash flow generation and free cash flow after our fourth quarter 2025 distribution that was paid on February 16 was a use of cash of $137 million. Turning to the balance sheet. We ended the quarter with more than $2.5 billion in total liquidity and a trailing 12-month net leverage ratio of approximately 3.1x. In early April, we retired $441 million of 4.65% senior notes due in 2026 with proceeds from the senior notes issued in the fourth quarter of 2025. On April 20, we declared a quarterly distribution of $0.93 per unit, which was in line with our prior commentary of 2.2% increase over the prior quarter's distribution. Our first quarter distribution will be paid on May 15 to unitholders of record as of May 1. Turning to guidance. WES is well positioned with strong fee-based contract structures that provide protected cash flows throughout the commodity pricing cycles. As Oscar previously mentioned, we now expect our results to be towards the high end of our previously announced adjusted EBITDA guidance range of $2.5 billion to $2.7 billion and distributable cash flow guidance range of $1.85 billion to $2.05 billion before taking the Brazos transaction into account. This is due to new commercial discussions, the favorable commodity price environment and our improving operating leverage related to our continued cost competitiveness efforts. Additionally, we continue to expect our free cash flow to range between $900 million and $1.1 billion. We still expect our 2026 capital expenditures to range between $850 million to $1 billion. Approximately half of the 2026 capital spending is directed towards the construction of the Pathfinder produced water pipeline and associated systems and the North Loving II, both of which are still expected to come online in the first and second quarters of 2027, respectively. Turning to the distribution. The first quarter distribution of $0.93 per unit or $3.72 annualized keeps us on track towards our full year guidance of at least $3.70 per unit, which includes distributions paid within calendar year 2026. We remain focused on growing adjusted EBITDA mid- to low-single digits and growing the distribution at a rate slightly less than that in order to increase distribution coverage over time. With that, I will now turn the call back over to Oscar for closing remarks.

### Q&A Section

**Oscar Brown:**  
Thanks, Kristen. Before we open it up for Q&A, I wanted to leave you with a few key takeaways. First, we have a growth strategy that provides WES several ways to win. We have a consistent track record of throughput and adjusted EBITDA growth, coupled with strong cash flow generation. Our combination of strategic bolt-on acquisitions and high-returning organic growth projects, including the Pathfinder Pipeline and North Loving II provides multiple pathways to grow. Focusing on 2026, we are well on our way towards achieving our targeted 5% to 9% adjusted EBITDA growth rate before taking into account any benefit from the Brazos acquisition. Looking further ahead, produced water beneficial reuse, behind-the-meter power generation and CO2-related services represent meaningful optionality that our team continues to develop. Second, we operate in the best basins in the country. We are a leading 3-stream provider in the Delaware Basin, the most prolific basin in North America with a differentiated and growing position in New Mexico following the Aris acquisition. Additionally, favorable gas oil ratios and rising produced water rates in the Delaware Basin will support throughput growth for years to come. Our DJ Basin assets continue to generate substantial free cash flow and our expanded Powder River Basin position provides additional upside, all of which is underpinned by our long-term fixed fee contracts, supported by minimum volume commitments and substantial acreage dedications that deliver durable cycle resilient cash flows. Third, the Brazos acquisition is a natural extension of our strategy. It deepens our Delaware Basin footprint and alongside Pathfinder and North Loving II further solidifies WES as one of the largest gatherers and processors in the basin. Finally, WES offers one of the most compelling return profiles in the midstream sector. 12% to 14% potential annual equity return is underpinned by an almost 9% current cash yield and a 4% to 5% long-term adjusted EBITDA annual growth that drives further upside. Additionally, our investment-grade balance sheet continues to provide support for our capital allocation decisions, and we remain committed to maintaining net leverage of approximately 3x, growing the distribution over time while increasing our distribution coverage and preserving our peer-leading total capital return. In closing, WES is operating from a position of strength. Aris is fully integrated. We expect the Brazos acquisition to close in the second quarter and two large organic growth projects are well underway. Our successful track record from the Meritage and Aris integrations to the successful construction of Mentone III and North Loving I gives me great confidence in our team's ability to execute and create incremental value for our unitholders in the quarters ahead. We've had a very strong start to 2026, and I look forward to updating you in the second quarter on our progress on our organic growth projects and our initiatives to continue to enhance our cost competitiveness and returns. Finally, I want to thank the entire Western Midstream workforce for their hard work and dedication to our partnership. With that, we'll open the call for questions.

**Operator:**  
[Operator Instructions] And our first question comes from the line of Keith Stanley with Wolfe Research.

**Keith Stanley:**  
Congrats on the deal. I wanted to look forward a little bit. So the company acquired Aris in October, you're acquiring Brazos in June. As you look forward, how do you think about the organizational capability to continue to pursue incremental deals over the next year as you digest these two? And relatedly, you've talked in the past about interest in scaling up in New Mexico to integrate with Aris. Is that something that's still of interest?

**Oscar Brown:**  
Yes. Thanks a lot, Keith. This is Oscar. So in terms of our capacity, we've completed the integration of Aris. So we're confident we can shift our focus now once we close Brazos Delaware to the integration of that asset. That one will be much simpler as opposed to 250-plus people, a corporate entity, public company acquisition that Aris was, which we executed really, really well on. Brazos is more of an asset deal, we'll only have sort of 60 to 70 folks come over, most of them field based and so it should be a pretty straightforward integration that we can execute quite quickly. So we have a lot of confidence in the team. That said, I think there's a fairness to your comment that we need to sort of pace sort of our acquisition sort of opportunities. As you know, a lot of this, we can't control timing of often. We like the programmatic M&A strategy. We like sort of these size transactions that we can sort of handle efficiently. And so we'll continue to look for those, but we'll be cautious on -- and we are cognizant. We talk about it a lot as a leadership team about what our broader organization can handle and what pace we can move. As you know, we're also executing a couple of major growth projects. And so that's on our mind as well. So again, I think we'll be measured. We'll stick to our strategy on M&A and our discipline and we'll just be cautious with what the team can handle. But so far, really excellent execution on Aris, and I think we're going to do a great job. And we like our counterparty here, the Brazos Midstream team is a great team, and I think they'll be super helpful in that transition as well.

**Keith Stanley:**  
Second question, I wanted to pick up, I think you mentioned in the concluding remarks and the slides referenced potential growth in behind-the-meter power generation and CO2 services as part of the growth strategy. Can you elaborate a little on what you're looking at there and how near term these opportunities could be?

**Oscar Brown:**  
Yes. Thanks. We established a new ventures business group about a year ago to really focus on longer-term adjacencies to our core competencies and our footprint where we could add value and ensure we find a way to participate in sort of megatrends going on today. So we made a lot of progress there. Certainly, the near-term opportunities exist on the produced water beneficial reuse side. So we'll be talking more next quarter about where we are. We've commissioned a tenfold upsizing to our pilot plant, desal plant right on the Texas, New Mexico border. And that's happening kind of literally as we speak. And we're confident we'll get to commercial plant operations very soon. So that one we're very excited about. We think we can supply water to all sorts of industrial offsets to freshwater sources that should be reserved for humans. And that's everything from power plant cooling, data centers, golf courses, cotton, you name it. So it's a big opportunity. It will take years to build out, but that's the one we're on the precipice of sort of commerciality. On the CO2 side, I think there's a lot of options there. It certainly right down the fairway of what we can manage in terms of plant pressures, pipelines, compression, et cetera. I think it's longer term, I believe we're particularly excited about the potential for CO2 shale enhanced oil recovery. We talked before about a number of our big customers who've been working on those projects. We always think there's potential to support CO2 sequestration and other assets because, again, that just comes down to pipelines and pressure and compression. And so those are things we do really well. Behind the meter power, what we found as we move to the market is while we have the skill set to handle electricity all the time, and we have people that have built power facilities, WES itself hasn't built a major power plant project, and we'd like to do that where we can find the economic returns. That could come in a number of forms in ways that people have talked about across the industry already supporting all the build-out in terms of power needs that everybody is talking about. But also given the state of the grid in West Texas, I think there's an opportunity there for sort of self-help on our own power generation, for our own baseload and some of our key partners as well. So that's probably a little bit behind more news on beneficial reuse, but not too far. So those are our major sort of initiatives. There's other things we're looking at, but those are the key ones. And again, the idea there is we've got a pretty good line of sight to growth over the next couple of years, and we're just building the foundation for that longer-term growth sort of outlook so we can keep delivering kind of on average over time through cycle that kind of 4%, 5% enterprise growth that we're looking for.

**Operator:**  
And our next question comes from the line of Jeremy Tonet with JPMorgan.

**Francina Kolluri:**  
This is Francina on for Jeremy. Just wanted to kind of build on the insight that you've given for the recent acquisition of Brazos and whether you can provide any more clarity on kind of those contributions, the cadence of when they will be realized given the quick turnaround and integration here, and then also just the underlying drivers for that $100 million estimate as well.

**Oscar Brown:**  
Sure. So the numbers that we put in the press release are really just the base Brazos Delaware business. So we think we'll get to that kind of forward 7.5x-ish multiple once we're able to fully commercialize and utilize the Comanche gas processing complex, which we think we can in pretty short order. We do have -- we are utilizing offloads today. And so once we get a hold of the system and sort of connect it up, I think we can utilize that space in reasonably short order. There's other opportunities, I think, with the systems integrated around hydraulics and field level cost savings and synergies. Those will take a little bit longer. And then in terms of other upside, those are more on the commercial front, again, just some operationally, but that will be a little bit sort of further down the road, too. So I think in the $100 million is just sort of taking on the asset and taking ownership in sort of the back half of this year. And we expect the upside sort of that we identify around the synergies over the next kind of 12 months, something like that. In terms of the speed of integration, it's really just a commentary on sort of the contiguous nature of the assets and just that this is a simple asset transaction. So from a people and systems integration, we should be able to move on that pretty quickly.

**Francina Kolluri:**  
That's very helpful. And then not to get too ahead of ourselves, but it looks like you guys have a pretty constructive growth runway here through 2027 with North Loving II and Pathfinder coming online then and the PRB producer commentary kind of sounding like it leans into '27 as well and Waha volatility kind of easing by then also. With all of those drivers, would you say that that's a fair characterization or any other big things here that we're missing?

**Oscar Brown:**  
I think that's fair. I think we just got to keep in mind, we've got a lot of confidence in the Permian. We keep an eye on the DJ in terms of its ability to grow or decline. And so we've been -- we've gotten pretty cautious sort of producer feedback for the next year or so. That said, all that was provided sort of in the January, February time frame before all the recent events and the changes and shifts in the global commodity market. So we'll keep an eye on that, in particular, in terms of how that impacts the sort of aggregate portfolio. But post Brazos, we should be about 65% of our EBITDA, something like that, Delaware Basin. So we've got a lot of confidence there, and it's the biggest contributor to our sort of earnings and cash flow. And then again, with the Aris position in New Mexico and the optionality around both organic and inorganic in that part of the world. Indeed, we feel pretty good about the longer-term outlook for growth, particularly again, if we're in an environment that's anything better than we had originally budgeted around the $57 WTI back in the last quarter time frame.

**Operator:**  
And our next question comes from the line of Spiro Dounis with Citi.

**Spiro Dounis:**  
I want to start with the outlook for 2026 and really just trying to understand a little bit more what's underwriting the current guidance that you're going to be towards the high end and I acknowledge that this is all likely going to change with deal close, but you sort of referenced the current commodity environment. And so just curious, does that current strip just sort of get you to that high end? You also referenced producers leaning in here. And so just curious if you do get an acceleration in activity midway through the year, apples-to-apples deal notwithstanding, does that sort of maybe put you above?

**Kristen Shults:**  
Yes. I think that's right, Spiro. So when we took a look at Q1 results and just the increase that we saw in the commodity prices for March, you can really see it come through in the gross margin per Mcf and the gross margin per barrel on the gas and the water side, respectively. And so to your point, we're just running that strip out through the remainder of the year, and that's what's really propelling us to be near the high end of guidance for 2026. There's definitely been just a lot more commercial conversations right now, but nothing that we've gotten from a producer that makes us increase our volume throughput or volume expectations yet for 2026. If we do get something, we might see it in the very last part of 2026, but it will really be more of an impact into 2027 on the volume side. And then obviously, just depending on what happens with pricing at the end of the year, then that may impact our throughput expectations from a gas perspective as well.

**Spiro Dounis:**  
Got it. That's helpful, Kristen. And second question, maybe just going to Pathfinder. I was just hoping for maybe an update on where you are in commercializing the remaining open space on that pipeline. Your comments and comments from your peers are really pointing to an acceleration in activity. And I have to think that water is coming along with that. So just curious, should we expect -- should we be expecting more activity on the commercial side in the coming months related to Pathfinder?

**Oscar Brown:**  
Yes. Thanks for that. Oscar again. Indeed, I think part of what Kristen was talking about in the increase of our commercial conversations and activity, a big portion of that is around water. The shift in the conversation has been significant over the last even 6 months in terms of particularly the larger independent oil and gas companies and the majors and starting to look at water in the Permian and in particular, the Delaware Basin as a basin-wide sort of challenge to manage, which plays right into our fully integrated New Mexico, Texas system with basically a header system right down the middle in terms of Pathfinder pipeline. So I think from our original vision, which was more asset specific, just putting volumes directly contracting that on to Pathfinder. I think we've got a couple of additional ways that Pathfinder can add value, which is more as we've extended our gathering system and disposal system with the combination, now we've got the ability to bid on an integrated water basin basis. So we can -- we're, I believe, the only ones that kind of today can provide all the current solutions from produced water to recycling, gathering, disposal, long-haul transport. We've got whatever you need, and we can integrate those sort of services as you need. Again, some of our customers are even becoming very specific and want to understand exactly where we're moving the water and where it will be disposed over some great distances. And again, that plays right into our strength. And we're also the only ones, I think, that are on the precipice of being able to build commercial future solutions around beneficial reuse. So a lot of more conversation. There is still certainly a tendency among producers, and this is true of literally every service that many of our producers like from oil service to midstream. -- sort of waiting to the last minute and taking advantage of whatever localized disposal options they still have left. And we'll be here when they're ready to solve their problems. And I think Pathfinder will be a key part of it. So we're really confident in the returns of that asset. We've managed the capital extremely well. It's still on the time line that we've talked about. And we think the returns, frankly, are going nowhere but up on that asset.

**Operator:**  
And our next question comes from the line of Ivan Scotto with UBS Financial.

**Ivan Scotto:**  
Congrats on the quarter. Just turning to cost saving optimization efforts. What parts of the business are you seeing these most in? And then what parts of the business do you think there's still more to be done in?

**Kristen Shults:**  
Yes. We've seen a lot of great efforts, and I might have Danny chime in into this, too, but on the operations side in our operation and maintenance expense. And I'd say it's in every category, whether it's really taking a deep dive into our maintenance and repairs programs, looking at spans and layers on the people side, the salaries and wages side, contractor spend quite a bit, and so bringing those contractors into the business as well. But it's across the board, G&A as well.

**Daniel Holderman:**  
I don't have anything to add. Labor intensity and M&R processes have been the primary driver so far, and then we'll be looking at our price going forward.

**Oscar Brown:**  
Yes. We've seen a lot of also efficiencies on the supply chain side and some of our other operating processes where we've been able to revisit zero base and just sort of optimize those. We're getting more experience and a little bit better in terms of understanding all of our equipment across the plants as well as compression and everything else in terms of, again, that maintenance and repair, timing and where we can stretch without additional risk and that sort of thing. And as Kristen said, we'll continue to focus on both those kind of opportunities, but also on the G&A side, and we're looking at a lot of different tools to improve the sort of efficiency of sort of the corporate side of the house. and having people spend more time on some more complex problems like sort of the day-to-day simple management of the repetitive part of the business. And things over the long term like AI and everything else. But the impacts will be more marginal in our business as we're an asset-heavy intensive kind of business with physical product as opposed to just data, et cetera.

**Ivan Scotto:**  
Okay. Got it. Super helpful. And then just in terms of growth CapEx, how are you thinking about that number more on a long-term run rate basis?

**Oscar Brown:**  
I think our -- I guess I'll answer it this way. Our sort of kind of volume and kind of cash flow sustainable capital is still pretty much as we've talked about before in the sort of $400 million to $600 million range, and it's sort of a range because it just depends on the nature of the wells that are brought online and sort of their production and decline -- initial production and decline curves. So that's the purpose there. So when you think about sort of sustaining capital, it's in that zone. In terms of growth capital from here, I think it will be more like what we're seeing with Pathfinder or North Loving II in terms of either that will be a good capital range, that $400 million to $600 million is sort of a normalized year. If we can find high-return organic growth projects, we'll have those chunky pieces. And again, as we've talked about, we've committed to helping the Street sort of track those chunky projects away from the more typical well connects and compression and the things that just sort of sustain the cash flow and throughput of the business. In terms of sort of achieving that 4% to 5% sort of consistent growth rate through time, that probably is a higher number, probably approaching $1 billion. But again, that will come in a mix, right? Either some of these projects and/or some of these programmatic M&A opportunity. And that's why how we capitalize those is really, really important, and we sort of aim for that sort of trifecta of per unit accretion, keeping the leverage under control and sort of a natural fit with our business. This acquisition of Brazos Delaware provides a pretty significant sort of free cash flow post financing costs sort of adder to our distribution coverage, which is something that we're pretty excited about. So we'll continue to, whether that's organic or inorganic, look to deploy capital that way. So again, it won't be straight line year-to-years we're seeing. We kind of grew 6% last year. we're now looking at more like 5% to 9% this year. Next year, it will be something different, potentially higher with all the other -- with Brazos combined with sort of the environment and the other activity we talked about. So I hope that helps. It's a little bit of a -- it's hard to say just because there's a lot of different projects that we could pursue and some of that just depends on the timing and how those sort of are able to be commercialized.

**Operator:**  
And our next question comes from the line of Ned Baramov with Wells Fargo.

**Ned Baramov:**  
A 2-part one on the cash flow conversion potential from the Brazos deal. So first, what is a good annual maintenance CapEx run rate for these assets? And second, how are you thinking about filling up the $125 million of available capacity? Will this require additional capital to connect to your current system and redirect some of these current offloads? Or are you looking for producers to gradually grow into this capacity as they ramp up their production?

**Oscar Brown:**  
Yes. So on the first part, on your EBITDA cash conversion for Brazos, Delaware has been pretty high the last few years, sort of in that 90-plus percent range. We hope to maintain that. The incremental capital to connect the systems is pretty minimal. If you look at the map, again, it's especially the part that connects the Comanche, the Comanche gas processing complex, it's all right there. So that part is pretty minimal. We also believe, again, we hold the Brazos Midstream team in high regard and believe they've done a great job with this asset. And so we don't believe there's sort of as much of a typical private equity to public corporate capital catch-up that you often see. We certainly saw in the Meritage transaction. So we're more confident on that front. So it feels like this one is probably -- again, we'll refine this by the second quarter. but probably in something like $20 million on average kind of maintenance capital kind of range. And again, there's capacity both on the system and as you point out, in the processing plant, which means there shouldn't be a lot of big chunky capital going forward in the next couple of years for that asset. As I mentioned before, we are currently utilizing offloads, a number of offloads with third-party gas processing companies to support our existing gas volumes and our maintenance turnarounds, et cetera. So in terms of where that volume can come from, we could do a lot of work just by utilizing -- taking those volumes that we've been offloading onto the system, but we also anticipate the gas throughput growth in the Brazos asset themselves. So pretty soon we're going to fill that. It doesn't -- for better for worse, it doesn't really move our mindset or position or needle in terms of when North Loving II comes online, we're going to have that plant pretty full reasonably quickly as well by kind of middle of next year. And again, given the geographies, I think there's some logic to that as well.

**Ned Baramov:**  
I like the 90-plus conversion rate there. And then I guess part of your solid performance in the first quarter was driven by strong commodity prices in March, resulting in higher contributions from excess NGLs and also skim oil from your water operations. I guess with commodity prices remaining elevated here into the second quarter, could you talk about volume trends for these excess NGLs and skim oil? I presume weather could impact excess NGL volumes while skim oil volumes could vary based on how producers handle the water volumes before handing off to WES.

**Kristen Shults:**  
Yes, I think you're right about that. I mean we are expecting our water volumes to pick up just a little bit in second quarter relative to first quarter. So to your point, what comes along with that will be a little bit of increased skim oil. And it does vary month-to-month, week-to-week, it does vary how much skim oil we're getting in that flow. So -- but I do expect, and it's part of what we were mentioning on the call around our Q2 expectations for gross margin per barrel and the gross margin per Mcf for that to be incorporated in our second quarter results. On the recovery side of the NGLs, yes, expect the same there, too. It will just flow along with the throughput expectations there. We do have some turnarounds that we've been working specifically in the second quarter. So we've been utilizing some of our offloads a little bit more. So all that kind of just plays into where we think we will fall out from a gross margin per Mcf for second quarter too. But definitely, as we're seeing increased commodity prices for April, May, June, that will be dialed into those equity barrels that we get to keep.

**Operator:**  
And our final question comes from the line of Elvira Scotto with RBC Capital Markets.

**Elvira Scotto:**  
So as we see sort of the Delaware Basin growing as a percent of EBITDA, you talked about the DJ Basin as a cash generator and the PRB, you could see some growth there. But can you talk about some of the other natural gas assets that you have and the strategic importance of those assets? Or could those be assets that could be monetized at some point?

**Oscar Brown:**  
We certainly like all our other positions as well. And as Danny mentioned in his script, we've got a lot of capacity in the Uinta, the Chipeta processing plant, and we see with the Kinder and William connections upside there. And there's certainly been a lot more activity among the customers in the broader Uinta Basin. So we like that asset. South Texas has been great to us and an important part of our history, and we're working very hard with our customer there to improve what we have sort of a JV and the JV kind of structure there. So we're continuing to try to improve that asset as well. And again, we've had a long history going all the way back to the Anadarko days in Southwest Wyoming. So -- and we do have still a couple of other minority interests in long-haul pipes that are -- we monetize sort of the ones where we thought we were misaligned with our partners there, and we've kept the ones where we see continued sort of good performance and good partnership. So we're pretty happy with what we have now. And I think the way to think about any potential divestitures for us is it's hard as an MLP to divest assets, as many of you know, have been around for a long time. But we certainly would need a place to redeploy the capital at higher returns and that sort of thing to almost immediately to sort of make that work. So it's something that we look at. We always review sort of our portfolio and how everything fits. But it's not something that we spend a terrible amount of time on in terms of reviewing. We don't need the capital today. Our balance sheet is in really, really good shape. And as we do sort of these chunky organic projects or some of the programmatic M&A, we'll continue to stay disciplined on the balance sheet there, too. So not an urgent priority.

**Elvira Scotto:**  
Okay. And then just a little bit on capital allocation. Can you talk about some of the programmatic M&A versus organic growth opportunities? And then with M&A, what are some of these areas you'd like to fill? I think you had talked about New Mexico, if you're seeing some opportunities there. And then also related to capital allocation, it looks like West repurchased 15 -- a little over 15 million units from Oxy in the quarter in the quarter. Can you talk a little bit about that? And do you expect to continue some of these opportunistic buybacks?

**Oscar Brown:**  
Yes, certainly. So on the capital allocation front, again, our sort of methodology is unchanged for a number of years. And in the sort of go-forward case, it's very similar. In terms of -- where we see potential on the organic side, we'll continue to build out processing over time in the Permian Basin for sure, given where GORs are going and sort of the trends in the basin and a lot of, I think, in-basin gas use. So we just see the gas side of the business is very positive in the Permian. We do hope to build out additional gas assets one way or another in New Mexico for sure to complement our Aris footprint that may or may not require us getting into sour gas, which is again something our operating team has experience in. Probably you'll see over the next couple of years, some capital allocated to some of these new venture projects, in particular on the water beneficial reuse and potentially on the power side. But again, those will have to sort of adhere to our sort of target returns that are the same for gas, oil, water or anything else. So those will be sort of returns and project specific. So really not much change. There's potential, I think, to deploy incremental capital for sure in the Powder. And I think in terms of the DJ, honestly, it really depends on how sort of the regulatory and political environment evolves there. It's a fabulous basin. -- with a lot of oil still in place. We think the state is moderating some, but given their power needs and the 30% of their baseload is coal, but it's hard to predict. So that is truly a human outcome in the DJ in terms of whether we would deploy material additional capital in that part of the world. And I'm sorry, I lost your last part of the question. Sorry, yes. Yes, yes, on the repurchase. No, that was actually an integral part of the contract renegotiation of our Delaware Basin legacy gas contract with Oxy. So as part of sort of all the adjustments around that contract, the economic trade-off with that to rebalance that contract was -- they contributed those units to WES, and we retired those units as part of the economics of the overall trade.

**Elvira Scotto:**  
Okay. Great. And just if I can sneak one more in. I know you have North Loving II coming on and then some incremental capacity from Brazos. But if you think about processing expansions going forward, how are you managing supply chain? And I'm specifically thinking about compression where lead times have stretched to over 150 weeks for Cat engines.

**Daniel Holderman:**  
I mean I can talk about it briefly. But when it comes to compression deliverability relative to cryo units or other processing capacity, it tends to be the electrical equipment and the cryo units themselves, not compression that drive it. And so it's just being on top of forecasting for those 2 long lead components to be able to have it. And then we maintain kind of relationships and orders. Our supply chain group does a good job of making sure that we have spots in line that we have options for so that we can be nimble when it comes to needing compression.

**Oscar Brown:**  
Yes. We -- I mean we constantly review our processing stack and monitor the outlook of our producing customers and where we think GORs are going in particular and that sort of thing. So that's why in looking at having North Loving II underway, but also sort of the benefit of the Brazos extra processing capacity, we have a lot of confidence in that visibility. You'll recall, we slightly modified our approach to thinking about our stack and how we build out compression or processing -- gas processing capacity in terms of where we really believe we kind of understood our customers and sort of their habits as well as sort of their geology and what they're looking at going forward. We leaned in a little bit on North Loving II versus what we had done in the past, which was more of build up an entire gas processing plant, so to speak, of offloads, customer driven away from turnarounds, then sanction the plant, then build it. And by that time, you're sort of a couple of years behind the market. So again, we have incredible confidence in the Permian for the very long term. And so we just want to make sure we're not overextending, but we're managing sort of the multiyear outlook for processing. And that does tie into the look on supply chain in terms of when we want to sanction or maybe order long lead time item equipment. But to Danny's point, where we had more trouble is more specific equipment around electrical and not really the core of the plant itself.

**Operator:**  
There are no further questions at this time. Mr. Oscar Brown, I will turn the call back over to you.

**Oscar Brown:**  
Thank you, and thank you to everyone for your interest in Western Midstream and your participation on this call. Our unique portfolio, investment-grade balance sheet and our scale give us multiple ways to win in the near term as a midstream leader in natural gas, crude oil and produced water across some of the best basins in the United States. Added to that over the long term, our emerging water beneficial reuse business and strong potential new ventures in behind-the-meter power generation and CO2-related services. In addition to other business lines closer to our core natural gas business -- so stay tuned. I really think we're going to have a lot to talk about, and we look forward to speaking with you again on our next earnings call in August, and we'll see many of you at the investor and industry conferences in between. With that, we'll close the call. Thanks again, everyone.

**Operator:**  
Ladies and gentlemen, this concludes today's call. We thank you for your participation. You may now disconnect.