Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners Second Quarter 2025 Earnings Conference Call. Thank you. I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

Thank you. I'm glad you could join us today for Western Midstream's Second Quarter 2025 Conference Call. I'd like to remind you that today's call, the accompanying slide deck, yesterday's earnings release, and the Aris acquisition press release and slide deck 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. You will also note that due to the pending Aris Water Solutions transaction, today's discussion is subject to certain additional securities laws. And so we refer you to the slides in the Aris acquisition slide deck titled Forward-Looking Statements and Ownership Structure, and additional disclaimers that are posted in the Events and Presentations section of WES's corporate website. With me today are Oscar Brown, our Chief Executive Officer; Danny Holderman, our Chief Operating Officer; Kristen Shults, our Chief Financial Officer; and Jon VandenBrand, our Senior Vice President of Commercial. I'll now turn the call over to Oscar.

Thank you, Daniel, and good morning, everyone. The second quarter was both eventful and highly successful for WES. Yesterday afternoon, we reported strong second quarter operational and financial results, highlighted by sequential improvement in adjusted gross margin and the highest quarterly adjusted EBITDA in our partnership's history. In addition, continued strong activity levels and high system operability contributed to increased throughput across all core operating assets and product lines. Notably, we achieved record-breaking natural gas, crude oil and NGLs, and produced water throughput in the Delaware Basin. While our quarterly results were noteworthy, it is our steadfast commitment to and effective execution of our prudent growth strategy that truly distinguishes this quarter's performance. This is exemplified by our recent announcement of an agreement to acquire Aris Water Solutions and the sanctioning of a second train at our North Loving natural gas processing plant. These actions will enable us to further strengthen our footprint in the Delaware Basin, expand our service offerings and deliver enhanced flow assurance to all our producing customers. Turning first to the Aris announcement. This accretive bolt-on acquisition enables us to optimize the value of our existing asset base and leverage our operational expertise to generate incremental value for our unitholders, which are both core principles of our M&A strategy. By integrating Aris's water disposal, water solutions, and beneficial reuse capabilities with WES's existing produced water business, including our under-construction Pathfinder pipeline, this acquisition establishes WES as a best-in-class intra-basin produced water system provider. With a differentiated Texas and New Mexico water system, WES will continue to deliver exceptional flow assurance and sustainable service offerings to customers for years to come. The ability to transport water throughout the basin has become increasingly important considering the volume of produced water generated in the Delaware Basin and the recent Texas Railroad Commission regulations pertaining to the permitting of new saltwater disposal wells. After the close of this transaction, WES's pro forma produced water disposal capacity will be more than 3.8 million barrels per day. Additionally, Aris's recent purchase of the McNeill Ranch, which straddles New Mexico and Texas between the Delaware Basin and the Central Basin Platform, provides significant long-term optionality with incremental access to pore space and other surface use opportunities. Next, this transaction further diversifies WES's customer base and contributes to WES's already strong midstream contract portfolio. Through Aris's long-term contracts, material acreage dedications that consist of more than 625,000 acres and minimum volume commitments with investment-grade counterparties, adding Aris to our portfolio will provide additional support for our distribution. The transaction also significantly expands our footprint in New Mexico, unlocking new opportunities to potentially grow our natural gas and crude oil gathering and processing businesses. Aris's customers include large integrated producers such as Chevron, ConocoPhillips, Occidental, and large private producers such as Mewbourne. At $25 per share, the acquisition values Aris at $2 billion, including the assumption of Aris's net debt and other liabilities before transaction costs. This implies approximately 7.5 times 2026 consensus EBITDA, inclusive of $40 million of estimated cost synergies. Based on this, the acquisition is expected to be accretive to 2026 free cash flow per unit. By financing the transaction with up to 28% cash and 72% WES units, we expect our industry-leading net leverage position to remain at approximately 3 times on a pro forma basis. Over the past several years, we have prioritized strengthening our balance sheet through debt reduction, enhancing operational efficiencies, reducing costs, and growing adjusted EBITDA. These actions have positioned our partnership to successfully execute this strategic bolt-on acquisition from a position of strength. Pivoting to our recently announced organic growth opportunities, we have also sanctioned an additional train at our existing North Loving plant in the Delaware Basin. This 300 million cubic feet per day natural gas processing train will increase the North Loving plant capacity to 550 million cubic feet per day and take our total West Texas complex processing capacity to approximately 2.5 billion cubic feet per day by early in the second quarter of 2027. After evaluating multiyear throughput forecasts and conducting numerous discussions with our producing customers in West Texas, we strongly believe that the volume of natural gas and produced water will be substantial for years to come. Our North Loving Train I reached full capacity within just one month of its late February 2025 start-up, and we are still relying on offloads at times to manage our customers' throughput profile. The offload market today is tighter than in 2022 when we put these original offloads into place. Therefore, we see a need for additional owned processing capacity at our West Texas complex. We think it is in our partnership's best interest to be well prepared to receive more natural gas and produced water volumes as the gas-to-oil and the water-to-oil ratios experienced by our customers continue to increase over time. In addition to these actions, the teams at WES have maintained a sharp focus on enhancing productivity and efficiency to strengthen our cost structure and sharpen our competitive edge. During the first quarter, we implemented new initiatives to optimize operational processes and improve resource allocation, both of which drive meaningful efficiencies in operating performance, improve our ability to compete for new business, and advance high-value organic growth initiatives. Kristen will provide additional details on these accomplishments in a moment. These actions, coupled with our Pathfinder pipeline and the recently commissioned North Loving Train I, advance our strategy of prioritizing capital-efficient growth that generates strong returns for WES unitholders and aligns with our continued focus on sustaining and growing the distribution over time. Collectively, these efforts will help accelerate growth over the coming years, and I look forward to our team's continued strong execution as we strive to deliver excellent service and increased flow assurance for our customers. With that, I will turn the call over to our Chief Operating Officer, Danny Holderman, to discuss our operational performance during the second quarter. Danny?

Thank you, Oscar, and good morning, everyone. Our second quarter natural gas throughput increased by 3% on a sequential quarter basis, primarily due to increased throughput across all of our core operating basins. The Delaware Basin outperformed in the second quarter, primarily due to numerous wells coming online early in the second quarter. This increase was partially offset by lower throughput from our other assets, specifically in South Texas due to plant turnaround activities during the quarter. Our crude oil and NGLs throughput increased by 6% on a sequential quarter basis due to increased throughput across all of our core operating basins and new wells in the Delaware Basin that came on early in the quarter. We also experienced increased throughput from our equity investments. Additionally, our produced water throughput increased by 4% on a sequential quarter basis due to new wells in the Delaware Basin coming online early in the quarter. Our second quarter per Mcf adjusted gross margin for natural gas decreased by $0.02 on a sequential quarter basis, which was in line with our prior expectations coming into the quarter. This decrease was primarily driven by lower excess natural gas liquids volumes in conjunction with reduced NGL pricing and changes in contract mix. Going forward, we expect our third quarter per Mcf adjusted gross margin to be in line with the second quarter. Our second quarter per barrel adjusted gross margin for crude oil and NGLs decreased by $0.15 compared to the prior quarter, which was in line with our prior expectations coming into the quarter. This decrease was primarily due to more normalized timing of distribution payments and increased throughput from our equity investments, which have a lower-than-average per barrel margin compared to our other crude oil and NGL assets. On an operated basis, our per barrel adjusted gross margin remained relatively flat. We expect our third quarter per barrel adjusted gross margin to be in line with the second quarter. Our second quarter per barrel adjusted gross margin for produced water was unchanged and in line with our prior expectations coming into the quarter. Going forward, we expect our third quarter per barrel adjusted gross margin to be in line with the second quarter. Turning our attention to the remainder of the year, we continue to expect our portfolio-wide average year-over-year throughput to increase by mid-single-digit percentage growth for both natural gas and produced water, and low single-digit percentage growth for crude oil and NGLs. For year-over-year comparative purposes, these expectations exclude the volumes associated with the noncore asset sales that closed in early 2024. In the Delaware Basin, we continue to expect modest year-over-year increases in average throughput across all three product lines, reaffirming the basin's role as our primary growth engine in 2025. During the second quarter, Delaware Basin throughput benefited from new wells coming online early in the quarter. Going forward and based on current producer forecasts, the cadence of wells that come to market is expected to remain fairly consistent throughout the second half of the year, although we currently forecast this activity to be more heavily weighted towards the fourth quarter. As a result, our latest forecast shows that our third quarter Delaware Basin volumes for all three products will remain flat compared to the second quarter levels. In the DJ Basin, we continue to expect average year-over-year throughput to remain fairly flat for both natural gas and for crude oil and NGLs. During the first half of the year in the Powder River Basin, we benefited from offloads from certain peers that experienced temporary downtime due to asset maintenance or repairs. Even though those trains returned to service by the end of the second quarter and the volumes from those offloads decreased, we still anticipate modest year-over-year increases in average throughput for both natural gas and crude oil and NGLs for 2025 due to offsetting customer-driven organic growth projects. Finally, we still expect meaningful natural gas throughput growth from our other assets, specifically in the Uinta Basin to commence in the second half of the year, driven by increased volumes from Williams' Mountain West pipeline expansion and the tie-in of Kinder Morgan's Altamont pipeline to our Chipeta plant in September. With that, I'll turn the call over to Kristen to discuss our financial performance during the second quarter.

Thank you, Danny, and good morning, everyone. During the second quarter, we generated net income attributable to limited partners of $334 million and adjusted EBITDA of $618 million. Relative to the first quarter, our adjusted gross margin increased by $18 million. This was primarily driven by increased throughput and improved gross margin contribution from the Delaware Basin, which was partially offset by less gross margin contribution from the excess natural gas liquids volumes in combination with lower NGL pricing and lower distributions from our equity investments. Our operations and maintenance expense decreased slightly quarter-over-quarter. Going forward, we anticipate higher operation and maintenance expense during the third quarter, resulting from increased utility expense during the hotter summer months associated with higher estimated electricity pricing. As a reminder, we are reimbursed for approximately 75% of our utility cost portfolio-wide from our producing customers. Turning to cash flow. Our second quarter cash flow from operating activities totaled $564 million, generating free cash flow of $388 million. Free cash flow after our first quarter 2025 distribution payment in May was $33 million. Focusing on capital markets activities, we retired $337 million of senior notes upon their maturity in early June with cash on hand, and we were able to maintain our top-tier net leverage ratio of 2.9 times at quarter end. In July, we declared a quarterly distribution of $0.91 per unit, which is in line with the prior quarter's distribution and will be paid on August 14 to unitholders of record on August 1. At this time, we are not making any changes to our 2025 financial guidance ranges considering the estimated Aris acquisition close date, which we expect to be during the fourth quarter after the regulatory review process and the Aris shareholder meeting is complete. Additionally, as Oscar previously mentioned, during the first quarter, we implemented new initiatives to optimize our operational processes and improve resource allocation, which has yielded meaningful efficiencies and cost reductions across the partnership. Through targeted optimization of field-level operations, procurement practices and maintenance and turnaround procedures, we have successfully reduced downtime, increased efficiencies, and identified permanent annual run rate cost savings of approximately $50 million. We are already realizing the benefits of these improvements, which are expected to help us better manage and offset rising variable costs and higher operation and maintenance expenses as our operations continue to grow. These are ongoing initiatives that we expect to continue yielding results and additional improvements in both 2025 and 2026. With regard to capital spending, we still expect to remain within the 2025 guidance range. But with the addition of North Loving II, coupled with the expected Aris acquisition close date during the fourth quarter, we now expect WES to be towards the high end of our previous guidance range of $625 million to $775 million. Looking ahead to 2026 and recognizing that the majority of expenditures related to Pathfinder and North Loving II will be incurred during that year, we now expect 2026 capital expenditures to be at least $1.1 billion. Given that both Pathfinder and North Loving II are short-cycle capital projects with expected returns of at least mid-teens on an unlevered basis, we expect these investments to drive substantial EBITDA growth beginning in 2027. Over the coming months, we will continue to receive updated forecasts from our producers, which will allow us to continue developing our 2026 forecast. Even with elevated levels of capital spending next year and the capital needed to close the Aris acquisition, we would still expect net leverage to remain at approximately 3 times. With that said, based on our recent conversations with our customers and updated throughput forecasts, we would expect to grow average year-over-year throughput across all three product lines again in 2026, even before you incorporate the positive contribution from Aris. With a growing asset base, the inclusion of Aris and net leverage at approximately 3 times, we are confident we have plenty of financial flexibility to fund a more robust capital expenditure program that will generate higher throughput in 2027 and beyond. We remain committed to generating strong returns for WES unitholders to sustain and grow the base distribution over time. However, in light of our strong current yield, we intend for distribution growth to trail earnings growth in order to increase our distribution coverage and provide greater cash flow certainty. With that, I will now turn the call over to Oscar for closing remarks.

Thanks, Kristen. Before we open it up for Q&A, I would like to emphasize how our premier asset portfolio, steadfast commitment to financial discipline, and resilient business model distinguish us as an industry leader and positions us to capitalize on compelling growth opportunities, all while delivering industry-leading returns of capital to our investors and sustained long-term value to our stakeholders. First, the Aris acquisition significantly strengthens WES's position as a midstream water services leader and allows WES to provide elevated levels of flow assurance to our customers that further derisks their core exploration and production businesses. The increased scale and expanded service offerings that the acquisition provides will better position WES to compete for incremental natural gas and crude oil and NGLs business over the long term and especially in New Mexico. Second, the Aris acquisition and the sanctioning of our second train at the North Loving plant were driven by continued strong producer activity levels in the Delaware Basin that greatly support our growth outlook and strategy in 2026 and beyond. Despite experiencing volatile market conditions early in the second quarter, we have not experienced any substantial changes in our customers' expected production outlooks, and we remain on track to execute our overall growth strategy. Finally, WES's long-term contract portfolio, strong balance sheet, and investment-grade credit ratings provide the financial flexibility necessary to support our multiyear expansion projects. Our contract structure, supported by minimum volume commitments and cost-of-service protections, further enhance the stability and predictability of our future profitability and potential free cash flow generation. By maintaining low net leverage and generating strong free cash flow, we are well positioned to maintain our disciplined capital allocation framework, increase distribution coverage, and return more capital to unitholders over time. Our strong second quarter results have kept us on track to achieving our 2025 operational and financial goals and the Pathfinder Pipeline and North Loving II organic growth projects as well as the Aris acquisition prudently accelerate our growth plans for 2026, 2027, and beyond. We will remain focused on providing excellent customer service for our producing customers, and we look forward to leveraging our leading midstream water services position to drive additional growth in our natural gas and crude oil gathering and processing businesses. Thank you to the entire WES workforce for your hard work and dedication to our partnership. And with that, we'll open the call up for questions.

Your first question comes from the line of Keith Stanley of Wolfe Research.

I wanted to start on the funding for Aris. So you're issuing over $1 billion of equity for the deal in a leverage-neutral way. The company has excess balance sheet capacity today. So can you talk to that financing decision? I guess, especially with the stock yielding 9%, I think you'd get a lot more accretion if you used more cash on the deal.

Yes. No, thanks for that. It's Oscar. So when we looked at this, we had the opportunity to do a transaction that's immediately accretive to really all our metrics on a per-unit basis and to finance it as leverage-neutral. And we think that gives us the kind of capability to lean into, one, our organic growth projects, which are increasing as we talked about, but also to position us for additional consolidation opportunities in gas and oil as they arise. So given the metrics here, we thought it was a great opportunity to just preserve the balance sheet and set us up for additional opportunities in the near term.

Okay. Great. Second one, I guess, just from a business mix perspective, you make the point on the slides that water is still only 16% of EBITDA with the transaction. It's a big part of your growth strategy and capital plan, though. So where do you see water kind of as a percentage of the company going forward? And is there any limit or mix that you're going for?

I don't think we have a specific target mix. We firmly believe the water business has evolved into a midstream, a clear midstream type of business, just like gathering and processing for oil and gas. If you look at the commercial contracts that they have, the dedications and the minimum volume commitments, it looks just like the rest of our business. So commercially, we're sort of happy with any of the three streams that we support, and it really helps us with our customers and helps them with overall integrated flow assurance. In terms of the business mix, we kind of like this 15% range. When we're highly successful on a Pathfinder, it will creep up a little bit closer to 20%. We're probably pretty happy with that mix.

Your next question comes from the line of Gabriel Moreen at Mizuho.

I just wanted to ask about following up sort of on the water deal. And can you just talk about systems around Aris and going to New Mexico here? Are there other privately held systems where you view the opportunity to continue to consolidate around here? And then also from a regulatory standpoint, you're making an entry into New Mexico. Just your views on doing business in that state versus in Texas, particularly on the water front, whether it's permitting disposal wells or what have you, what your views are there?

Thanks for that, Gabe. Aris was our primary focus due to their midstream structure in the water business. Looking at the map, it truly completes our system in the Delaware Basin, so we're pleased with this combination and don’t see a strong need to expand the system further inorganically. Additionally, the commercial opportunities for both companies have significantly increased with this merger, which should benefit us. We currently operate on a small scale in New Mexico and are looking for ways to grow in that area. We're comfortable with the regulatory environment there, having some experience already, so we have no concerns in that regard. In fact, the ability to move water between states and across our combined systems will be crucial in optimizing our assets and will enhance commercial opportunities for Pathfinder in the long term. We believe this combination puts us in a unique position within the market.

And then maybe if I can pivot to the FID on Loving II, I think maybe a little bit sooner than some folks were expecting. You talked about still needing some offloads and maybe having that baseload some of the plant. In the past, you've also had some commitments from some of your producers to baseload new plants. Can you talk about that? And also a lot of new plant FIDs. Are you playing a little more offense and being a little more aggressive here in terms of the FID of this plant maybe relative to some of your historical plant FIDs?

Yes. I think that's right. So historically, we've taken a very conservative approach and built up an offload portfolio that ultimately equips the size of a plant and then at that time would take FID and two years later, you'd have a plant. We've probably ceded a little market share with that strategy in the past. Here, we spent a lot of time with our existing dedication customers and producers to really understand their medium- and long-term views on where their gas production is expected over the next few years. So really we're thoughtful about this and had the opportunity to go ahead and take FID. The design of North Loving, the area, and then North Loving I sort of built in the opportunity to move quickly on an additional train. We have the space. We already had much of the design work done, in line with completing the first one. So we are continuing to use offloads today. We see growth in gas with our producers. We're aligned with the direction the basin is going in terms of increasing GORs as well. So we have a lot of confidence and visibility this time and decided to go ahead and move before waiting to kind of a completely full plant from the start.

The next question comes from the line of Manav Gupta at UBS.

Looks like a great deal. I'm just trying to understand this a little better. You talked about like $40 million in synergies. So how should we think about synergy capital? Would you have to spend anything to actually gain these synergies? And once this transaction closes, how should we think about the long-term distribution growth enabled by this transaction?

Thank you for your questions. Regarding the synergy capture, the $40 million primarily relates to general and administrative costs and typical public company consolidation synergies. This is relatively easy to achieve and should be quickly realized. We are currently waiting for regulatory approval and a shareholder vote, but we have done extensive planning for the upcoming months leading up to the closing. Therefore, we expect to act swiftly in realizing those synergies. It’s important to note that we have not factored in any revenue synergies or commercial opportunities from the combination, which we believe are significant, particularly regarding the potential for additional gas and oil gathering and processing due to the expanded footprint. As for your second question about distribution growth, we maintain our long-term outlook for mid- to mid-single-digit distribution growth. An accretive transaction like this supports that outlook. Our strategy focuses on deploying capital in ways that sustain or grow our distribution, which aligns with this transaction. Given the current yield, we don't see a strong need to exceed our stated distribution growth plans. As we strengthen distribution coverage, we identify any additional risks in our strategy that we can manage. This transaction positions us for substantial EBITDA growth next year, and we anticipate staying in the mid-single-digit range, although final decisions will rest with the Board and depend on the efficiency of our closing and execution on this transaction.

You were kind enough to give us some idea of the 2026 CapEx. And just from a modeling perspective, should we expect this CapEx bump to be '26 and '27 and then fall off? Or should we just expect '26 to be elevated and '27 to fall off? If you could help us understand that a little better.

Yes. At this moment, based on our announced organic growth projects, the largest of which are Pathfinder and North Loving II, the majority of the capital for those projects is allocated for 2026. If there are no changes, we would anticipate the CapEx to normalize in 2027.

Your next question comes from the line of Jeremy Tonet at JPMorgan.

This is Eli on for Jeremy. Congrats on the strong quarter. Maybe just to look at the McNeill Ranch a little bit and understand how that fits into WES's long-term plans for pore space and surface use opportunities. What kind of opportunities do you see at that asset? And that might be different than the way Aris was looking at it?

Thanks for that. We see McNeill as certainly an upside opportunity, a bit of a call option. So we do view it as a longer-term upside. As you can see where the ranch sits, it's in a great location between basins and straddling the state line, on sort of the east side, but it is a little bit far from the current structure of the systems. So on the plus side, Aris has already applied for and received permits on the Texas side of that ranch for water disposal. So there's an opportunity there. And certainly, as the basin grows and water volumes continue to grow, we see that as a great long-term opportunity to expand our disposal business. In terms of surface use, I do think sort of our reach and footprint and many of our partners that we work with give us the opportunity to maybe move a bit more quickly on surface items, and they run the gamut of everything that, frankly, everybody is chasing. So we're pretty excited about having this surface area, this land. I think it's in a good spot and look forward to hopefully generating some value with it in the long run.

Awesome. And then maybe just thinking about the impact and some of the feedback you've gotten from Conoco or Chevron, where do they stand on this? And maybe if you could also just kind of touch a little bit on the pathway to a deal approval from here. I know you talked about a 4Q '25 close, but just what kind of hurdles do you see there to kind of getting this thing finished?

We've received support from 42% of Aris's voting shareholders for the transaction involving our largest shareholder and customer coming to Phillips. We have a strong working relationship with Conoco and have collaborated closely with them as part of this transaction to ensure alignment in our goals. Recently, Conoco extended their long-term contracts with Aris, which we are very pleased about. We also have strong partnerships with Chevron, Oxy, and Mewbourne, which adds to our positive history with major customers. This transaction will further strengthen our business relationships with these third-party customers. Regarding potential hurdles, we do not foresee any significant issues. The regulatory process should be quite standard, and we will comply with all regulations to facilitate a smooth progression. We are also committed to supporting Aris in their proxy filing and shareholder vote. Overall, these processes are standard and may take some time, but we are confident that we will be able to complete the transaction by the middle or late fourth quarter.

The next question comes from the line of Zack Van Everen at TPH.

Maybe going to the capital program for the remainder of the year. It looks like in the slide, the Powder percentage shifted down. Is this just a dynamic of the North Loving plant adding to the Permian? Or are you guys spending a little bit less than expected up in the Powder?

We are spending a little bit less in the Powder. We've seen some projects just shift around from a timing perspective. And so especially as we get towards the latter part of the year, you'll see stuff slip out of '25 and into '26. So yes, you're right. You have seen that shift down. And then when you add in the incremental capital as it would relate to North Loving, that's going to increase the Delaware a little bit.

Got it. That makes sense. And then maybe you talked to volumes being up across the board in '26. I know it's still early, but maybe just a quick breakout of where most of that growth will be. I assume Delaware, but is DJ still kind of in that flattish range and then maybe anywhere else you guys are expecting growth?

Yes. So for next year, for 2026, I agree with you. We'd expect the Delaware to continue to increase from a throughput perspective. The DJ, we'll see how the rest of this year turns out in terms of wells coming online. And then obviously, we're still waiting for producers' forecasts. A lot is going to change in the next four months even and into January and February with updated producers' forecasts. So we'll give some more thoughts and guidance around what 2026 will look like maybe closer to the Q3 into this year and then into next year.

Your next question comes from the line of Elvira Scotto at RBC Capital Markets.

I have a couple of questions. Regarding North Loving II, could you provide more details on how you expect that plant to ramp up when it becomes operational, especially considering the shift from doing many offloads before final investment decisions on the plant?

Elvira, this is Jon. No, I think it's a great question. Like Oscar mentioned, we still continue to have a lot of interconnectivity on the offload side and are utilizing those to the extent we have volumes above the system. You saw the note that the plant reached full operational capacity already. And so we're very positive that as North Loving II comes on, we're going to have a significant amount of volume day one upon that plant coming on. I think Oscar mentioned that we were just able to make this decision based on the strength of our underlying contracts and frankly, the success of the organic business that we've had over the last 12 to 18 months with just new deals that continue to add additional volumes to our system. So across the strength of the existing contracts and those new ones, it gave us the line of sight to not only have the confidence to build the plant, but to know that there will be a substantial amount of volumes day one of it coming online.

Okay. Great. That's helpful. And then just a little bit on capital allocation. So how do you think about organic growth versus additional bolt-on opportunities? And then given this expanding your footprint in New Mexico, for continued growth in New Mexico, do you expect that to be more organic? Or do you think you'll need to do some more bolt-ons there?

Good question. I think M&A, as we talked about before, really does have to compete with organic growth from both the returns perspective, but we also think from a risk perspective, organic is always, in our minds, a bit dereisked relative to acquisitions. So it has to be really competitive. And I think in the case of Aris, we've sort of achieved all those goals and really checked every box in terms of our M&A framework and what we shoot for and sort of the perfect deal, if you will. In terms of where we go from here, same thing, again, we continue to see a significant amount of organic opportunity across all our core basins. So we expect some more success there. It does make us a little more picky on the M&A side. And of course, again, everything we do has to sort of sustain and grow the distribution. So we've got some pretty good guardrails on how we think about value on acquisitions. And that's why it's really important that when we do these things, we have a real opportunity to add value to a transaction and have synergies as we do in the Aris deal. So it will be a mix, I think, in terms of New Mexico specifically. I think we have real organic opportunity as a result of this added footprint. But certainly, if there's an opportunity to do something that hits all our metrics as this deal does, we'd be open-minded to adding capacity in any of our streams, but particularly gas, I would say.

The next question comes from the line of Wade Suki at Capital One.

Wonderful. I apologize. And I apologize if you already addressed this question on the call. But going back to Aris, as you all are well aware, there are some sort of nontraditional things in here with mineral extraction and I'm thinking about the industrial water business in particular. Are these all areas you all plan on retaining, expanding? Are these things that you might consider outsourcing or jettisoning maybe at some point? Maybe give us some color on some of these other pieces of the Aris business, if you don't mind.

Absolutely. Aris's involvement in the consortium and the other technologies, especially industrial water, are among the most appealing and exciting aspects of the business for the long term. The more solutions we have for addressing water issues for producers in the Delaware Basin, the better. Initially, the industry has focused on disposal and recycling, but other water uses are becoming increasingly important. Therefore, advanced treatment technologies will be crucial. We are quite enthusiastic about these developments. We see significant long-term potential in industrial water as well. However, our main focus remains on the traditional midstream business and supporting our oil and gas producing clients. I believe we can provide far more resources to this technology initiative than they could access independently. We are very optimistic about this and believe these opportunities will be advantageous in the long term.

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

Thank you so much, and thanks, everyone, for your interest in Western Midstream and your participation on this earnings call. We're really gratified that we've already been able to see the results of our prudent growth strategy by doing two things that are very hard to do at the same time, and that is improve our overall cost structure and process efficiency while executing on growth opportunities. In fact, the former truly enables the success of the latter, and we've only just begun on this journey. We look forward to welcoming Aris and its stakeholders to the WES partnership later this year. Thank you again to everyone on the WES team for an incredible start to the next phase of our partnership's evolution. There's still much to do, and you've already proven that you're all up to the challenge. We look forward to seeing investors and analysts at the upcoming conferences later this month. And with that, we'll close the call.

Thank you. This concludes today's conference call. You may now disconnect.