The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Spiro Dounis - Citi - Analyst
: I want to start maybe with the growth outlook. You sort of changed your capital allocation framework a bit here. And introduced this new target
for distribution growth at low to mid-single digits. Kristen, it sounds like your comments suggest that should kind of more or less mirror here, but
EBITDA growth going forward. So two part question here.
Curious, maybe how did you come up with that amount and why that's the right amount going forward. And as you think about the capital spending
necessary to drive that growth, what kind of levels are you thinking about there?
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FEBRUARY 27, 2025 / 7:00PM, WES.N - Q4 2024 Western Midstream Partners LP Earnings Call
Question: Spiro Dounis - Citi - Analyst
: Got it Very helpful. Second one, just going to Pathfinder, pretty big gap between the sort of size of the pipeline at 800,000 a day versus the initial
contract from Oxy. So I guess, curious on a few fronts here. One, is that initial contract from Oxy effectively underwriting that entire 800. And as
you think about in up that space, what does that do to the return multiple over time?
And do you expect to kind of do that by '27 or '28? Or could that take a little more time?
Question: Keith Stanley - Wolfe Research - Analyst
: I wanted to follow up on the last question and just check in if you're already actively in discussions with other customers to help fill up the pipeline
at this point to improve returns.
Question: Keith Stanley - Wolfe Research - Analyst
: Great. And another follow-up one on water. Can you talk a little bit about who you see as your main competitors in Permian produced water today?
And thinking longer term, what the opportunity set is to try to grow the water business and potentially consolidate it over time?
Question: Noah Katz - JPMorgan - Analyst
: This is Noah Katz on for Jeremy. First, I want to touch on the new long-term produced water gathering and disposal system agreements with Oxy.
Are there any other contracts with Oxy that you'd consider extending going forward? And what would these contracts most likely be centered
around?
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FEBRUARY 27, 2025 / 7:00PM, WES.N - Q4 2024 Western Midstream Partners LP Earnings Call
Question: Noah Katz - JPMorgan - Analyst
: Yes, water.
Question: Noah Katz - JPMorgan - Analyst
: Sounds good. And then as a follow-up, looking ahead to 2026 CapEx, what are your initial thoughts, I guess, on the CapEx range there with the
$360 million from Pathfinder flowing into the range? And what could we expect steady state to be going forward, I guess, ex the Pathfinder CapEx?
Question: Noah Katz - JPMorgan - Analyst
: And Jon, Jeremy wanted me to say he's excited for you to come to be back.
Question: Manav Gupta - UBS - Analyst
: My question here is you mentioned that you could be looking to grow through bolt-on deals. I'm trying to understand, can you give us some
criterias which would make a deal a good bolt-on deal for you guys, rate of return kind of investment synergies. If you could just help us talk through
those things.
Question: Manav Gupta - UBS - Analyst
: Perfect. Second quick follow-up is slide 16 looks like you outperformed on all matrix versus the guidance. Now moving to slide 19, particularly
interested in what could drive the free cash flow towards that 1.475 or maybe even above it as you were able to do in 2024 where you beat your
free cash flow guidance.
Question: Ned Baramov - Wells Fargo - Analyst
: One more question on capital allocation, if I may. So the Board recently authorized a $250 million buyback program, and you just talked about
CapEx guidance and elevated capital requirements into 2026. You also laid out the planned distribution increases. So it doesn't seem there is much
room for unit repurchases. So could you maybe walk through how you think about the timing of buybacks and whether leaning into balance sheet
capacity is something you would consider should the unit prices present an attractive opportunity for buybacks.
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