It’s a Tremendous Asset, It’s ‘Gonna Be Huuuge


Strong growth in the Delaware Basin will start to define Western Gas (WES) in the next few years as the company ramps up capacity at the Ramsey Plant to 900 MMcf/d by YE 2018. WES gross margin from the Permian Basin as a whole is expected to increase 165% in 2020 from 2016 levels. The asset also brings a diverse group of E&Ps into their APC-backed portfolio, including Concho, ConocoPhillips, and Shell. WES paid $1.5 billion for the DBM system in 1Q2015, and we expect the purchase to reach a 10x cost/EBITDA multiple by 2018 accounting for an extra $500 million in CAPEX toward plant expansions. Our base case forecast indicates that 10 rigs would fill Ramsey’s capacity by 2021, but drilling activity has increased in the past few weeks to 13 rigs on the system. This would fill capacity by 2019. Ramsey was brought back online in March 16 following an explosion at the facility in Dec 2015. Trains III & IV are online currently (400 MMcf/d), and the company expects Train II to be back online by 4Q2016. (Ticker: WES)

About The Author Justin Carlson

I have over 10 years of experience in data analysis, research, and consulting across the energy sector. I currently serve as Vice President of Research and Managing Director at East Daley Capital, an energy assets research firm that is changing how investors look at midstream energy risk with an asset-driven information service that combines proprietary research with a trusted team of unbiased, experienced energy analysts. My insights and analysis bring greater transparency to the energy financial market by quantifying potential risks by asset and enabling investors to make more informed and accurate projections and investments. Prior to joining East Daley Capital, I was a senior manager at Platts, a division of McGraw Hill Financial, which acquired Bentek Energy, where I was a senior member of the leadership team.