WES — Western Midstream Partners, LP

Summary of Western Midstream Partners (WES) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Adjusted EBITDA: $636 million for Q4 2025, a sequential increase of approximately 5% (excluding $29.5 million in negative noncash cumulative revenue adjustments, adjusted EBITDA would have been $665 million).
• Net Income: $187 million, impacted by $120 million in transaction costs from the Aris acquisition.
• Free Cash Flow: $341 million for Q4 2025, with full-year free cash flow totaling $1.53 billion, exceeding guidance.
• Distributions: Declared a distribution of $0.91 per unit, consistent with the prior quarter, totaling $3.64 per unit for 2025.
• Capital Expenditures: $722 million for 2025, within guidance of $625 million to $775 million.

2. Strategic Updates and Business Highlights

• Acquisition of Aris Water Solutions: Enhanced produced water capabilities and established a stronger presence in New Mexico, contributing to throughput growth.
• Operational Efficiency: Achieved $40 million in targeted cost synergies from the Aris acquisition, with integration ahead of schedule.
• Record Throughput: Increased throughput across all products in 2025, with notable records in the Delaware and DJ Basins.
• Cost Reduction Initiatives: Continued success in reducing operational expenses, with a 12% decrease in operations and maintenance costs (excluding Aris) compared to the previous year.

3. Forward Guidance and Outlook

• 2026 Adjusted EBITDA Guidance: Expected to range between $2.5 billion and $2.7 billion, implying a midpoint growth of approximately 5% year-over-year.
• Capital Expenditures for 2026: Reduced guidance to $850 million to $1 billion, with a midpoint of $925 million, reflecting a disciplined approach to spending.
• Distribution Guidance: Anticipating a distribution increase to at least $3.70 per unit for 2026, representing a 3% increase year-over-year.

4. Bad News, Challenges, or Points of Concern

• Activity Reduction: Producers are expected to reduce activity levels, particularly in the Delaware Basin, leading to flat natural gas throughput and a decline in crude oil and NGL throughput by low to mid-single digits in 2026.
• Waha Hub Pricing: Continued pricing pressure affecting natural gas throughput, with expected curtailments due to low pricing impacting producer activity.
• Market Volatility: Increased macroeconomic and commodity price-driven volatility is anticipated, affecting overall growth expectations.

5. Notable Q&A Insights

• M&A Strategy: CEO Oscar Brown emphasized a disciplined approach to M&A, focusing on bolt-on acquisitions that align with existing assets and competencies.
• Waha Pricing Solutions: The company is actively working on commercial solutions to mitigate the impact of Waha pricing on producers, indicating a proactive approach to customer support.
• Water Business Growth: The water segment is expected to grow faster than gas and oil, with ongoing interest in beneficial reuse and enhanced oil recovery (EOR) opportunities.
• Competitive Positioning: WES remains confident in its size and capabilities, asserting that it can compete effectively without needing to scale significantly, while also acknowledging the importance of scale in the industry.

Overall, while WES reported strong financial performance in 2025, challenges related to producer activity and commodity pricing pressures are expected to moderate growth in 2026. The company remains committed to its long-term growth strategy, leveraging recent acquisitions and operational efficiencies to navigate the evolving market landscape.