Western Gas Partners LP Earnings Call Nuggets: CapEx and Marcellus Hookups

Western Gas Partners, LP (NYSE:WES) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.


Bradley Olsen – Tudor Pickering: First question is on CapEx. I noticed that between this quarter and last quarter the range that you provided for the full year ticked up between about $120 million and $140 million exclusive of the investments in the fractionators. Between the 50% of Lancaster II spending and the $30 million OTTCO acquisition, seems like there is maybe room for one other item in there. Is that timing around Marcellus well connects or is something else driving that delta?

Benjamin M. Fink – SVP, CFO and Treasurer: OTTCO is actually not in there, because that is exclusive of acquisitions. So what you really have is, as you mentioned, the 2013 portion of Lancaster II. As Don mentioned, you’ve got expansion projects at Wattenberg and Hilight, and that’s just driven by additional development in those areas.

Bradley Olsen – Tudor Pickering: As far as Brasada goes, congrats on getting that plant completed. What kind of ramp up schedule or EBITDA .contribution schedule are you looking at over the next couple of quarters as that gets ramped up?

Benjamin M. Fink – SVP, CFO and Treasurer: As you know, starting January 1 of next year will be – 180 a day will be guaranteed and we’re going to ramp up slowly from, call it, less than 50 to 180 over the course of the year. Best guess of EBITDA contribution for this year call it $10 million to $20 million…

Bradley Olsen – Tudor Pickering: On the OTTCO acquisition, connecting it looks like two of your other facilities from your presentation. Is that an asset that can provide you with more organic opportunities going forward, or does it just allow you to run your existing assets more efficiently?

Donald R. Sinclair – President and CEO: Obviously it will give us ability to use the hydraulics between the two plants with the pipe. We’ve got a quality end use around there as well as deliveries off-system. The pipe is also laid through the checkerboard that Anadarko has some (mineral) interest in, so we do believe there is going to be some good, solid organic growth around it over time as well.


Marcellus Hookups

Selman Akyol – Stifel: Two quick questions for me. Last quarter you talked about how many hookups you had in the Marcellus. Can you give that number again?

Donald R. Sinclair – President and CEO: If you combine our non-op and our operated, close to 100.

Selman Akyol – Stifel: Also on Brasada, I know you just completed the first plant, but I guess there was maybe looking at starting a second train, given demand that you were seeing there. Is there any update on that?

Danny J. Rea – SVP and COO: Given the active program by Anadarko in that area, we have currently done some FEED studies on a potential Train II. We’ll be continuing to evaluate that.

A Closer Look: Western Gas Partners LP Earnings Cheat Sheet>>