Western Midstream Partners, LP - 2025 Q3 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2025, for Western Midstream Partners, LP (WES) and its consolidated subsidiary, Western Midstream Operating, LP. WES is a master limited partnership engaged in gathering, compressing, treating, processing, and transporting natural gas, crude oil, NGLs, and produced water. Operations are concentrated in Texas, New Mexico, and the Rocky Mountains. The filing is a combined report for both registrants.
Key Financial Metrics (Nine Months Ended Sept 30, 2025)
- Revenue: Total revenues and other were $2.81 billion, an increase of 5% compared to the prior year period ($2.68 billion). Fee-based service revenues accounted for the majority at $2.54 billion.
- Profitability: Net income attributable to WES was $990.3 million, down from $1.24 billion in the prior year, primarily due to the absence of significant divestiture gains recorded in 2024.
- Cash Flow: Net cash provided by operating activities was $1.66 billion. Free Cash Flow (non-GAAP) totaled $1.19 billion, a 17% increase year-over-year.
- Adjusted EBITDA: Adjusted EBITDA (non-GAAP) was $1.85 billion, up 5% from the prior year.
- Debt: Total debt carrying value was approximately $6.94 billion as of September 30, 2025. The company retired $1.0 billion in senior notes due in 2025 during the period.
- Liquidity: Cash and cash equivalents stood at $177.3 million. The company maintains a $2.0 billion revolving credit facility (RCF) with no outstanding borrowings and a $2.0 billion commercial paper program.
- Distributions: The quarterly distribution was maintained at $0.910 per unit.
Material Changes vs. Prior Period
- Divestiture Gains: The prior year period included a $299.4 million net gain on divestitures (sales of Marcellus Interest, Mont Belvieu JV, Whitethorn, Panola, and Saddlehorn). The current period recorded a net loss of $8.0 million on divestitures, significantly impacting year-over-year net income comparisons.
- Throughput: Natural gas throughput attributable to WES increased by 5% (243 MMcf/d) year-over-year, driven by higher volumes at the West Texas, DJ Basin, and Chipeta complexes. Crude oil and NGLs throughput decreased by 3% due to prior divestitures and lower volumes on the TEP pipeline.
- Capital Expenditures: Capital expenditures decreased by $89.3 million to $505.8 million, primarily due to the completion of the North Loving plant in Q1 2025 and reduced construction at DBM water systems.
- Impairments: Long-lived asset impairments increased to $12.3 million (from $6.2 million), largely due to a $9.9 million impairment at the Granger complex.
Outlook, Risks, and Subsequent Events
- Acquisition of Aris Water Solutions: On October 15, 2025, WES closed the acquisition of Aris Water Solutions, Inc. in an equity-and-cash transaction valued at $1.5 billion, plus approximately $500 million of assumed debt. The deal adds significant produced-water infrastructure in New Mexico and West Texas.
- Buyback Program: A $250 million share repurchase program was authorized in February 2025. No units were repurchased during the nine months ended September 30, 2025.
- Risks: Key risks include commodity price volatility affecting producer activity, inflation and tariffs increasing operating costs, and credit risk related to Occidental Petroleum, which remains the primary customer (accounting for significant related-party revenues). Management notes ongoing discussions with Occidental regarding cost-of-service rates for the DJ Basin oil-gathering system.
- Guidance: Management expects business performance to be driven by producer activity levels, which are sensitive to commodity prices. They intend to adjust capital spending plans based on customer activity while maintaining liquidity.
Investor Verification Checklist
- Verify the integration progress and accretive impact of the Aris Water Solutions acquisition closed in October 2025.
- Monitor the resolution of the contractual rate discussions with Occidental regarding the DJ Basin oil-gathering system, as an adverse resolution could impact earnings.
- Assess the sustainability of Free Cash Flow generation given the reduction in capital expenditures and the upcoming capital requirements for the Aris integration.
- Review the debt maturity profile and refinancing plans, noting the successful retirement of $1 billion in 2025 notes and the classification of $440.5 million of 2026 notes as long-term.
- Track throughput volumes at the West Texas and DJ Basin complexes, as these are the primary drivers of fee-based revenue growth.