Welcome to the Western Gas Partners Third Quarter 2016 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Jon VandenBrand, Director of Investor Relations. Please go ahead.

Thank you. I am glad you could join us today for Western Gas's third quarter 2016 conference call. I would like to remind you that today's presentation includes forward-looking statements and certain non-GAAP financial measures. Be aware that actual results could differ materially from what we discuss today. I would encourage you to read our full disclosure on forward-looking statements as well as the non-GAAP reconciliation that are attached to last nights' earnings release and to the slides that we will reference on this call. With that I will turn the call over to our CEO, Don Sinclair and following his remarks we will open it up for Q&A with Don and the rest of the executive team. Don?

Thank, Jon. Good morning, everyone and thank you for joining us today. Last night, we announced our third quarter results for 2016. Our strong quarter was highlighted by continued growth in Delaware Basin, where Ramsey-IV is currently running the capacity and Ramsey-V was put into services this past week. Other recent highlights include beginning the build out of the first two Delaware basin water disposal systems and our successful issuance of $200 million of 2044 senior note at a very attractive yield of maturity of 5.3%. As previously announced we raised the WES quarterly distribution to $0.845 per unit is which is a 9% increase over the third quarter of last year and our 30th consecutive quarterly increase. We also raised a WGP quarter distribution of $0.4475 cents per unit which is the 17% increase over third quarter of last year. Turning to our quarterly results, we reported recorded adjusted EBITDA and distributable cash flow of $278.2 million and $237.3 million respectively. Our strong ratio of 1.42 times includes a $13.7 million of business interruption insurance proceeds, received during the quarter. Please see the appendix to our slides for an updated summary of our business interruption insurance claim. WES third quarter results were driven by sequential natural throughput growth at the Delaware Marcellus mountain gas and DJ assets partially offset by declines at [indiscernible]. Our gross margin per mcf for natural gas assets of $0.82 was $0.02 lower than the second quarter due to increased volumes at lower margin systems offset by significant margin improvement at our DBM complex. Crude and NGL throughput decreased slightly as growth on the Texas Express pipeline was offset by declines at the Mont Belvieu fractionators. Our crude and NGL margin increased by $0.17 to $2.20 per barrel as we received an additional distribution for…

[Operator Instructions]. Today's first question comes from Kristina Kazarian of Deutsche Bank. Please go ahead.

So a quick question, thanks for the announcement this morning on starting work on a water disposal system. So it sounds like two systems, 20 to 25 million in 2016, can you maybe talk about, great announcement for this year. Can you talk about longer-term opportunity and how you guys are thinking about framing that up as well? Meaning looking into '17?

Christina, as we said in the script, we think there's a significant amount of activity that is going to be around the water disposal business in West Texas, and as more and more infrastructure is put in relative to pipe versus truck, we think that will create quite an opportunity for WES. I think we will be able to give you a lot better guidance as we see the producers determine what their 2017 CapEx budgets look like and so when we give you our guidance for 17, we will probably be able to give you a lot more color around that.

Okay. And then, these two site, would this just be able to, primarily help out on if APC side, or how do I think about capacity out of these two sites?

Sure. They're solely for APCs and their working interest owners.

And my follow-up is we've had a lot of conversations about revenue gas take away within the region and the growing needs for that, can you maybe give me an update on, you know, what you guys are thinking in terms of the pipeline you were thinking about doing, and any incremental color you have there?

Okay. Christina, it is kinds of the same story as we have told in the past. How we look at it is we know, as ourselves along with producers and [indiscernible] loving county in the Western Delaware Basin that we need more res to take away. We also recognize that while ours is a premium natural gas hub for North America so those two facts should generate a project. We're going to go through the same process that we have continued to work on since 2015, which is to evaluate interest, and we think that will be able to happen in the first quarter of '17, a lot of it will be not be different from water where we see producers set up their 2017 CapEx, and then make a determination for exactly what they're going to need for [indiscernible] take away. Our focus is to try to have a project that we can work with in early 2017.

Our next question today comes from Jeremy Tonet of JPMorgan. Please go ahead.

Just want to touch base on the new guidance for 2016. It seems like it's implying a step down in 4Q so I was just wondering if you could provide a little bit more color on what might be some of the drivers there?

You’re right, that does imply a sequential quarter-over-quarter decrease. I would say the two key drivers behind that are the lack of any additional BI. We don't expect to receive any more proceeds this year and then we saw a pretty decent pop in sequential volumes in the Marcellus, about 10% quarter-over-quarter that had to do with some pricing dynamics in July, early August that has since gone away and so we’re expecting that asset to go back into sequential decline.

And then if I look a bit further out in the Delaware, great to see the Ramsey plant being pulled forward but just wondering if there's need for further expansion, do you see that at Ramsey or do you see that other locations, do you see the possibility of creating a hatter system or any color you can provide there would be helpful.

Jeremy, as we talked about in the past and talked about even in today's script we’re moving forward with Ramsey-VI. So when it is complete, that will give us 900 million a day of processing capacity at the Ramsey complex. As we look forward, beyond that capacity, we will build in another area other than the Ramsey plant, and we have worked - if you think about when we bought in Nuevo system and how we have looked at it since the very beginning is we wanted to have hydraulic loop that allows to get back and forth across the river and to have appropriate interconnects with the facilities we're going to own and operate. So that loop is in place, so hatter loop, whatever phrase you want to use I think we have already start that had work, and then we will start looking towards our, doing evaluation feed study for the next facility and where it's going to be located.

Our next question today comes from Noah Lerner of Hartz Capital. Please go ahead.

I was just wondering if you could talk a little bit Anadarko's plan or thinking about doing some asset divestitures that I’ve read about. And I am just curious, as to what you might think the impact, good or bad, could be on Western Gas.

Sure. I will take a stab at that, Noah. I think has been clear that there are some assets that are noncore to them that they're looking to divest. Last year was a very good example of that, where they divested the upstream, behind our due pinnacle system and we chose to tag along with that and we recently did that on the [indiscernible] system as well. I think if you were to get, if theoretically if they're doing anything besides some of our larger asset, we would be less likely to do that and what we have divested has been more of kind of noncore, very small percentage of our EBITDA, and theoretically if they were to divest to a party for which that asset competed for capital more favorably than it did with Anadarko that could that could be a real positive for WES. Anadarko has some wonderful assets that generate good economics on absolute basis, when you look at those relative to a DJ or Delaware, they just don't compete, so if that asset were to change hands with someone we thought compete great with whatever was in that parties portfolio that could be a real upside to our model.

So, you're feeling would be out time - and I am not trying to put words in your mouth, Ben, if there was a hypothetical divestment of their Eagle Ford acreage, more likely than not, you would hold on to the related infrastructure and that would be a good thing for WES and its unit holders.

I think that's a fair summary.

Our next question today comes from Selman Akyol of Stifel. Please go ahead.

First of all as it relate to Ramsey-VI, did APC take a 100% of that capacity?

No, but they have stepped up in their capacity commitments to the Ramsey complex. So, they did not take a 100% but there are significant portion of that capacity.

Okay. And then, on the two water disposal well, what do you think average daily volumes could be there? I guess what would be capacity there for those?

If you think about the hydraulics of disposal, you look at about, the industry thought is around 30,000 barrels a day of injection, and so you will have three wells associated with these two sets of facilities.

And just to clarify some, it is not two wells, it's two systems. And the water throughput in kind of the core part of the basin we're seeing, water to crude volumes is about 4 to 1.

And then, did Anadarko say it was increasing the number of rigs that it would be running in the Delaware going into next year, moving it up from eight to--?

They said they're going to add another one, up to nine yesterday in their call between now and the end of '16.

Our next question today comes from John Edwards of Credit Suisse. Please go ahead.

Just following up an earlier question on the water business, potential, I mean how should we think about the returns there in terms of how - it sounds like they do compete well for capital, you know, within your hurdle rates. I mean does it do a little better than your plants, about the same? If you can give us any kind of insight there would be helpful.

John, if you think about it, capital doesn't know what it is going to be deployed on, so we know that we have to manage a certain return on capital employed adjusted for the amount of risks we're taking and water is not going to be any different to that. So it will be like the rest of your portfolio, you will have opportunities to increment your rate of return in certain areas and there will be certain places where you will have less risk and the lower return. So it's not going look a whole lot different than anything else than the portfolio does.

In general, John, we're not interested in a project unless we can earn at least mid-teens unlevered on it.

Okay. And then, how do you - I don't know the technology that, how should we think about the risk? Because I mean is it similar to just a pipeline, similar to a gas plant operationally? Is it basically water disposal doesn't go down much? How should we think about that business?

John, it's kind of - that’s a loaded question, obviously. There's a difference in when you are managing vault or hydro carbons versus disposal of a non-hydro carbon fluid. So it's completely different but you have different issue, whether corrosion or what you can do relative to injection rates and how you manage that. So it's going to - you are going to have regulatory risk around it like we do the rest of your business. So I see the risk being different but not significant relative to the amount of risk to this business versus what we already do today.

Okay. And then do you envision in terms of potential any change to the water ratios that is you are speaking of? I think you were saying that's about 4 to 1 in terms of barrels of water to barrels of crude? Do you see that staying constant, or could that move around?

Well, John, the 4 to 1 is basically everyone's looking at it relative to bone springs and Avalon and Wolf Camp. So as other reservoirs are developed, that ratio could change, and we will know at the time when they start developing the wells and we see the production from them. So for what we have seen in the field WES has been developed to-date, 4 to 1 seems to be a good ratio to use.

Okay. And then, just a little bit, what was behind the acceleration of Ramsey-VI and then how many more Ramseys' do you envision?

Well Ramsey-VI will be the end, as I stated earlier it will get us to 900 million a day. We stated from the very beginning that we were going to build Ramsey-VI. It was just a function of when, and so when you saw the continued lower for longer model you want today make sure that producers were comfortable with their drone programs and their CapEx in West Texas as we have seen that has been the case and that allowed us to go ahead and move it back up in queue and get started with it based on the commitments we have.

And John, since our last call, Anadarko has had a material acquisition which has freed up some free cash flow and has accelerated their needs for capacity as well.

And our next question comes from Charles Marshall of Capital One. Please go ahead.

Sorry if I missed this but in terms of going back to water assets, can you tell us what the projected timing is to start receiving cash flows for the two systems that are currently being developed?

It will be mid next year.

Okay. And then how should I think about the contracts with Anadarko? Is this purely a fee-based margin business? Will it be any minimum volumes associated with these contracts?

It will be same typical contract structure we look at ten years it will be fee-based and it will have some volume commitments to it.

Okay. And the interim, do you anticipate any other logistical needs in terms of moving water ahead of the system i.e. like trucking assets etcetera or will this strictly be a pipe business?

These two projects are strictly pipe. As we continue to build out our water infrastructure and look at - start bringing third parties into this portfolio, we may need trucking on the front, it's an interim process to us getting our facilities in place to facilitate the contracts we're looking at but it won't be a critical part of our business model.

Our next question comes from Jerren Holder of Goldman Sachs. Please go ahead.

Just want today touch on the DJ basin, can you guys remind us that the processing capacity sharing agreement that you have and to the degree that expansions need to take place by either you or your partner, do you guys share in that as well?

Did you mean Delaware basin.

DJ.

Well, we don't have a partner in the DJ. So, all the facilities are owned by us. We have - I will do the quick math. In WES, we have 700, a little over 700 million a day of crowd capacity and we have to call it a 150 million a day of refridge [ph] capacity. So just within WES, there's over 850 million a day capacity that we own and operate, and then Anadarko has facilities the Wattenberg plant that is 200 plus an incremental hundred refridge on the front end of that. So, the way our forecast sets up today, we believe between us and APC we have adequate processing capacity.

This concludes our question and answer session. I would like to turn the conference back over to management for closing remark.

Thanks, Rocco. I want to thank everyone again for joining us today and for your interest in Western Gas We look forward to speaking with you again soon. Have a good day.

Thank you, sir. The conference has now concluded. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.