Western Gas Partners Expands West Texas Processing Capacity

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Researched by Industrial Info Resources (Sugar Land, Texas)--Western Gas Partners LP (NYSE:WES) (Houston, Texas) has obtained key air permits allowing it to expand natural gas processing capacity in west Texas by up to 900 million standard cubic feet per day (scfd), midstream company executives said Thursday. The partnership maintained its capital expenditure (capex) guidance for 2015 at $640 million to $740 million.

Donald Sinclair, the chief executive officer of Western Gas Partners, said the air permits will allow the company to expand its DBM complex in Orla, Texas, where it processes natural gas from the Delaware Basin. The complex currently processes 300 million scfd. Sinclair spoke during the partnership's second-quarter earnings conference call.

Western Gas Partners has begun construction of two additional processing trains, each capable of processing 200 million scfd, Sinclair said. The Ramsey IV train is slated to begin operations in second-quarter 2016, and the Ramsey V train in mid-2016, he said.

Also, the company hopes to make a final investment decision in the near future on yet another Ramsey expansion, Sinclair said.

Western Gas Partners took on the projects when it agreed in late 2014 to acquire Delaware Basin gas gatherer Nuevo Midstream for $1.5 billion. The Ramsey IV and V projects have a combined investment value of $240 million. In June, the company put in service its Lancaster Train II natural gas processing plant in Mount Belvieu, Texas. The two Lancaster trains can process 500 million scfd, said Chief Financial Officer Benjamin Fink. The expansion had a total investment value of $70 million.

Western Gas Partners reported $110.5 million in net income for the second quarter, compared with $99.2 million in second-quarter 2014. Revenues totaled $402.4 million, up from $345.6 million a year earlier.

The master limited partnership was formed in 2008 by Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) to acquire, own, develop and operate midstream energy assets. Since then it has invested $2.5 billion in organic capex projects.

Fink said two-thirds of its current capital is directed to Delaware and D-J Basin activities.

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