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. I would now like to turn the conference over to Daniel Jenkins, Director of Investor Relations. Please go ahead.

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.

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, 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 supports 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 in 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?

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 and 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 the 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.

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 in 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 a 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.

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 three-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.

And our first question comes from the line of Keith Stanley with Wolfe Research.

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? 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?

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 a 250-plus person corporate, public company acquisition that Aris was, which we executed really well on. Brazos is more of an asset deal; we'll only have about 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 pace our acquisition opportunities. As you know, a lot of this timing we can't control. We like the programmatic M&A strategy. We like these size transactions that we can handle efficiently. We'll continue to look for those, but we'll be cautious — 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 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. We like our counterparty here; the Brazos Midstream team is a great team, and I think they'll be very helpful in that transition as well. On the new ventures: 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 the megatrends going on today. We've made a lot of progress there. Certainly, the near-term opportunities exist on the produced water beneficial reuse side. We'll be talking more next quarter about where we are. We've commissioned a tenfold upsizing to our pilot desal plant right on the Texas-New Mexico border, and that's happening literally as we speak. We're confident we'll get to commercial plant operations very soon. We think we can supply water to all sorts of industrial offsets to freshwater sources that should be reserved for humans — 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 we're on the precipice of commerciality. On the CO2 side, I think there's a lot of options. It certainly is right down the fairway of what we can manage in terms of plant pressures, pipelines, compression, et cetera. I think it's longer term. We are particularly excited about the potential for CO2 shale enhanced oil recovery. We have a number of big customers who have been working on those projects. We see potential to support CO2 sequestration and other assets because that comes down to pipelines and compression, which we do really well. Behind-the-meter power: as we moved to the market we found while we have the skill set to handle electricity and people who 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 supporting the build-out in terms of power needs that everybody is talking about. Given the state of the grid in West Texas, there's an opportunity there for 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 behind beneficial reuse, but not too far. Those are our major initiatives. The idea is we have a pretty good line of sight to growth over the next couple of years and we're building the foundation for that longer-term growth outlook so we can keep delivering on average over time through cycle that kind of 4% to 5% enterprise growth that we're looking for.

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

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. 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?

Sure. So the numbers we put in the press release are really just the base Brazos Delaware business. 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 are utilizing offloads today, and once we get control of the system and connect it up, I think we can utilize that capacity in reasonably short order. There are other opportunities with systems integration around hydraulics and field-level cost savings and synergies; those will take a little longer. In terms of other upside, those are more on the commercial front and operationally, but that will be further down the road. The $100 million is basically taking ownership in the back half of this year. We expect the upside we identify around synergies over the next 12 months or so. In terms of the speed of integration, it's a commentary on the contiguous nature of the assets and that this is a simple asset transaction. So from a people and systems integration perspective, we should be able to move on that pretty quickly. On the broader growth runway into 2027, I think your characterization is fair. We have a lot of confidence in the Permian. We monitor the DJ basin in terms of growth or decline. We got cautious producer feedback earlier in the year, but that was before recent events and shifts in the global commodity market, so we'll keep an eye on that in terms of how it impacts the aggregate portfolio. Post-Brazos, we should be about 65% of our EBITDA in the Delaware Basin. We have a lot of confidence there; it's the biggest contributor to earnings and cash flow. With the Aris position in New Mexico and optionality around both organic and inorganic opportunities there, we feel good about the longer-term outlook for growth, particularly if the market environment is anything better than we had originally budgeted around the $57 WTI assumption.

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

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. I acknowledge that this is all likely going to change with deal close, but you sort of referenced the current commodity environment. So just curious, does that current strip just sort of get you to that high end? You also referenced producers leaning in here. If you do get an acceleration in activity midway through the year, apples-to-apples deal notwithstanding, would that sort of put you above?

Yes. I think that's right, Spiro. When we reviewed Q1 results and the increase in 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. We're running that strip through the remainder of the year, and that's what is propelling us to be near the high end of guidance for 2026. There's definitely been more commercial conversations recently, but nothing from a producer yet that makes us increase our volume throughput expectations for 2026. If we do get something, we might see it in the very last part of 2026, but it would be more impactful in 2027 on the volume side. Depending on what happens with pricing at the end of the year, that may impact our throughput expectations from a gas perspective as well.

Got it. That's helpful. Second question, maybe just going to Pathfinder. I was hoping for 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. I have to think water is coming along with that. Should we expect more activity on the commercial side in the coming months related to Pathfinder?

Yes. Part of the increase in our commercial conversations is around water. The shift in the conversation over the last six months has been significant, particularly with larger independents and majors looking at water in the Permian and the Delaware Basin as a basin-wide challenge to manage. That plays right into our fully integrated New Mexico-Texas system with a header system down the middle in terms of the Pathfinder pipeline. From our original vision focused on asset-specific contracting to Pathfinder, we now see a couple of additional ways Pathfinder can add value, more as an integrated water basin solution. We can provide produced water handling, recycling, gathering, disposal, and long-haul transport. We're essentially able to bid on integrated water basin services. Some customers are becoming very specific and want to understand exactly where we're moving the water and where it will be disposed over long distances, and that plays to our strength. We're also on the precipice of commercial future solutions around beneficial reuse. There is still a tendency among producers to wait to the last minute and use localized disposal options while they can, but we'll be here when they're ready to solve their problems. We are confident in the returns of Pathfinder; we've managed the capital very well. It's on the timeline we've discussed, and we think returns on that asset will improve over time.

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

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? And then just in terms of growth CapEx, how are you thinking about that number more on a long-term run-rate basis?

We've seen a lot of great efforts across the business. On the operations side, the O&M expense improvements have been notable in every category: maintenance and repairs programs, spans and layers on the people side, salaries and wages, contractor spend — bringing contractors into the business more effectively. It's across the board, including G&A.

Labor intensity and maintenance and repair process optimization have been the primary drivers so far, and we'll continue to look at pricing and other efficiencies going forward.

We've also seen efficiencies on the supply chain side and other operating processes where we've revisited zero-base assumptions to optimize. We're getting better at understanding equipment across plants and compression for maintenance timing and where we can stretch without additional risk. We'll continue to focus on these opportunities and on the G&A side, exploring tools to improve corporate efficiency so people can spend time on more complex problems. Over the long term, technologies like AI can help, but the impacts will be more marginal in our asset-heavy business compared to data-heavy businesses.

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?

Our sustaining capital is still in the $400 million to $600 million range, which depends on the nature of the wells that are brought online and their production and decline curves. That's the normalized sustaining capital. Growth capital will look more like the Pathfinder or North Loving II-type projects: chunky, project-level investments. To achieve a 4% to 5% consistent growth rate through time, the capital level could approach $1 billion, but it will come as a mix of organic projects and programmatic M&A. How we finance those — per unit accretion, maintaining leverage discipline, and a natural fit with our business — is important. The Brazos acquisition provides a significant free-cash-flow adder to distribution coverage, and we'll continue to deploy capital with discipline.

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

A two-part question on the cash flow conversion potential from the Brazos deal. 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? Also, part of the solid performance in the first quarter was driven by strong commodity prices in March resulting in higher contributions from excess NGLs and skim oil from your water operations. With commodity prices remaining elevated 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.

On EBITDA cash conversion for Brazos: Delaware has been pretty high the last few years, around the 90% plus range, and we hope to maintain that. The incremental capital to connect the systems is minimal; the Comanche processing complex sits right there adjacent to our system, so that part is small. We believe the Brazos Midstream team has done a great job with the asset, so we don't expect a typical private equity-to-public-company capital catch-up. We'll refine this by the second quarter, but maintenance CapEx for Brazos is probably around $20 million on average. There's capacity both on the system and in the processing plant, which means there shouldn't be large chunky capital needs in the next couple of years. We currently utilize offloads with third-party processors to support our existing gas volumes and maintenance turnarounds, so that provides immediate upside to fill capacity. We also anticipate gas throughput growth in the Brazos asset itself, and we expect to fill capacity reasonably quickly — it shouldn't affect the timing of North Loving II's plant fill materially. Regarding excess NGLs and skim oil: we expect water volumes to pick up a little in Q2 relative to Q1, which would increase skim oil somewhat. Skim oil varies month-to-month and week-to-week depending on how producers manage fluids, but we expect it to be incorporated into our Q2 gross margin expectations. On NGL recoveries, those will flow with throughput expectations; we do have some turnarounds in Q2 and have been using offloads more, which affects where we fall out from a gross margin per Mcf for Q2. With increased commodity prices for April, May, and June, that will be reflected in the equity barrels we retain.

Yes, I agree with Oscar. We expect some incremental skim oil with slightly higher water volumes in Q2, and those elevated commodity prices will be dialed into our gross margin expectations for the quarter.

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

As the Delaware Basin grows as a percent of EBITDA, you talked about the DJ Basin as a cash generator and the PRB having upside. Can you discuss some of the other natural gas assets you have and their strategic importance? Could those be assets that could be monetized at some point? Also, can you talk about programmatic M&A versus organic growth opportunities and areas you'd like to fill, such as New Mexico? Related to capital allocation, it looks like WES repurchased a little over 15 million units from Oxy in the quarter. Can you talk about that and whether you expect to continue opportunistic buybacks?

We like all our other positions as well. We have capacity in the Uinta and the Chipeta processing plant, and we see upside with Kinder and Williams connections. We've seen increased activity among customers in the Uinta Basin. South Texas has been an important part of our history, and we're working with our customer there to improve the JV structure. We have a long history in Southwest Wyoming and still hold a couple of minority interests in long-haul pipes; we've monetized where we were misaligned with partners and kept the ones with good performance and partnership. We're happy with the current portfolio. In terms of potential divestitures, as an MLP it's challenging to divest assets; we would only do so if we could redeploy capital into higher-return opportunities immediately. It's not an urgent priority; our balance sheet is strong. On programmatic M&A versus organic growth: our methodology is unchanged. On the organic side, we'll continue to build processing in the Permian and likely allocate capital to water beneficial reuse and potentially power, subject to target returns. There's potential to deploy incremental capital in the Powder River Basin. The DJ will depend on regulatory and political evolution. Regarding the repurchase you noted, that was part of the contract renegotiation of our Delaware Basin legacy gas contract with Oxy. As part of the adjustments, they contributed those units to WES and we retired them as part of the economics of the overall trade.

Okay. Great. And just a quick follow-up: with processing expansions going forward, how are you managing supply chain, specifically given long lead times for compression and certain engines?

When it comes to compression deliverability relative to cryogenic units or other processing capacity, the electrical equipment and cryo units tend to drive lead times more than compression. We focus on forecasting those long-lead components, maintaining relationships and orders, and ensuring we have spots in line and options so we can be nimble when equipment is needed.

We constantly review our processing stack and monitor the outlook of our producing customers and where GORs are going. That informed our decision to move forward with North Loving II and to value the extra processing capacity from Brazos. We adjusted our approach to building compression or processing capacity, focusing on where we understand our customers and their geology and habits, which led us to lean into North Loving II instead of building out a full plant that might leave us behind the market. We have confidence in the Permian long term, and we manage the multi-year outlook for processing while monitoring supply chain timing for long-lead items.

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

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 — 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. We'll also see many of you at investor and industry conferences in between. With that, we'll close the call. Thanks again, everyone.

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