Western Gas Partners’ 4Q16 EBITDA estimates
Western Gas Partners (WES) and its general partner, Western Gas Equity Partners (WGP), are scheduled to release their 4Q16 earnings on February 22, 2017. WES’s peer Enable Midstream Partners (ENBL) is expected to report its 4Q16 results on February 21, 2017. For a pre-earnings review on ENBL, read Earnings Preview: What to Expect from Enable Midstream in 4Q16.
In this series, we’ll look at WES’s 4Q16 estimates, market performance, key performance indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.
Wall Street analysts’ 4Q16 consensus EBITDA (earnings before interest, tax, depreciation, and amortization) estimate for WES is $252.7 million. That’s 33.9% higher than its 4Q15 adjusted EBITDA and 9.2% below the previous quarter’s adjusted EBITDA.
WES beat its EBITDA estimate in 3Q16. The estimate was $246.6 million, and adjusted EBITDA was $278.2 million, a beat of 12.8%.
The above graph compares adjusted EBITDA to consensus estimates. The sudden rise in WES’s EBITDA since 1Q16 is due to the impact of the Springfield acquisition, which was completed in March 2016.
4Q16 EBITDA drivers
Western Gas Partners’ (WES) 4Q16 YoY (year-over-year) EBITDA growth is expected to be driven by the Springfield acquisition and the ramp-up of the Ramsey plants. WES placed five processing plants at the Ramsey complex through the fourth quarter of 2016 and is planning to place Ramsey VI into service in the fourth quarter of 2017. Following the completion of the Ramsey VI plant, the complex’s total processing capacity could rise to 900 Mcf/d (million cubic feet per day).
WES is also expected to benefit from strong Delaware volumes and higher processing margins in 4Q16.
The above rise is expected to be slightly offset by a fall in Eagle Ford production. We’ll look at the recent trend in Eagle Ford production in the next part of this series.