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Why Analysts Expect Western Gas Partners’ 3Q17 Earnings to Fall

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Western Gas Partners’ 3Q17 EBITDA estimates

Western Gas Partners (WES) and its GP (general partner) Western Gas Equity Partners (WGP) are scheduled to release their 3Q17 earnings on October 31, 2017. In this series, we’ll look at WES’s 3Q17 estimates, throughput volumes, distribution, and market performance. We’ll also look its valuations, technical indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.

Wall Street analysts’ 3Q17 consensus EBITDA (earnings before interest, tax, depreciation, and amortization) estimate for WES is $260.9 million. That’s 6.2% lower than its 3Q16 adjusted EBITDA and 5.1% less than the previous quarter’s adjusted EBITDA. WES beat its EBITDA estimate in 2Q17. The estimate was $258.0 million, and adjusted EBITDA came in at $274.8 million, a beat of 6.5%.

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3Q17 EBITDA drivers

Western Gas Partners’ YoY (year-over-year) estimated fall in EBITDA is expected to be driven by a decline in throughput volumes from the Eagle Ford region and recent asset sales. That could be offset by higher throughput volumes from the Delaware and D-J (Denver Julesburg) Basins and expansions projects placed into service.

Its gross margins are expected to be driven by higher prices for crude oil, NGLs (natural gas liquids), and natural gas. Average crude oil prices in 3Q17 were $48.20 per barrel compared to $44.90 per barrel in the same quarter in the prior year, a YoY rise of 7.3%. WES’s peers Energy Transfer Partners (ETP), EnLink Midstream Partners (ENLK), and DCP Midstream (DCP) are also expected to benefit from a YoY rise in commodity prices.

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