Business Context and Reporting Period
Company: Western Midstream Partners, LP (WES) and Western Midstream Operating, LP (WES Operating).
Filing Type: Form 10-K (Annual Report).
Period: Fiscal year ended December 31, 2025.
Business Overview: WES is a master limited partnership engaged in gathering, compressing, treating, processing, and transporting natural gas, crude oil, condensate, and NGLs, as well as produced-water services. Operations are concentrated in the Delaware Basin (Texas/New Mexico), DJ Basin (Colorado), and Powder River Basin (Wyoming). The Partnership is a consolidated subsidiary of Occidental Petroleum Corporation (Occidental), which owns the General Partner and approximately 39.7% of the limited partner interest.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Total Revenues and Other | $3,843.4 million | $3,605.2 million |
| Net Income (Attributable to WES) | $1,181.0 million | $1,573.6 million |
| Adjusted EBITDA | $2,480.8 million | $2,344.0 million |
| Free Cash Flow | $1,526.0 million | $1,324.2 million |
| Operating Cash Flow | $2,222.6 million | $2,136.9 million |
| Total Debt (Carrying Value) | $8.6 billion | $7.9 billion |
| Capital Expenditures | $728.0 million | $833.9 million |
| Quarterly Distribution | $0.910 per unit | $0.875 per unit |
Material Changes vs. Prior Period
- Acquisition of Aris: In Q4 2025, WES acquired Aris Water Solutions, Inc. for approximately $2.0 billion (including debt assumption). This significantly expanded produced-water infrastructure in the Delaware Basin, adding 1,812 MBbls/d of handling capacity and 1,560 MBbls/d of recycling capacity.
- Revenue Growth: Total revenues increased 6.6% to $3.84 billion, driven by higher fee-based service revenues ($3.45 billion) due to increased throughput and the Aris acquisition.
- Net Income Decline: Net income attributable to WES decreased 25% to $1.18 billion. This was primarily due to a $307.9 million decrease in "Gain on divestiture" (which was $296.8 million in 2024 vs. a loss of $11.1 million in 2025) and higher operating expenses.
- Throughput Changes:
- Natural Gas: Increased 3% to 5,404 MMcf/d.
- Crude Oil/NGLs: Decreased 3% to 524 MBbls/d.
- Produced Water: Increased 40% to 1,608 MBbls/d, largely due to the Aris acquisition.
- Debt Activity: WES Operating issued $1.2 billion in new senior notes (4.800% due 2031 and 5.500% due 2035) and assumed $500 million in Aris debt. It retired $1.0 billion in maturing notes (3.100% and 3.950% due 2025).
Guidance, Outlook, and Risks
- Capital Expenditure Guidance: For 2026, capital expenditures are expected to range between $850.0 million and $1.0 billion (accrual-based).
- Distribution Policy: The Board declared a Q4 2025 distribution of $0.910 per unit, unchanged from Q3. The partnership distributes all available cash quarterly.
- Buyback Program: A $250.0 million unit repurchase program was authorized in February 2025, ending December 31, 2026. No units were repurchased in 2025.
- Key Risks:
- Customer Concentration: Occidental accounts for over 50% of revenues and a significant portion of throughput (36% of natural gas, 91% of crude oil/NGLs, 61% of produced water). A reduction in Occidental's production would materially impact WES.
- Regulatory Environment: Stricter environmental regulations regarding methane emissions, produced-water disposal (seismicity concerns), and pipeline safety could increase compliance costs and restrict operations.
- Commodity Prices: While 97% of natural gas and 100% of crude oil/water throughput are fee-based, low commodity prices can reduce producer drilling activity, indirectly affecting volumes.
Investor Verification Checklist
- Aris Integration: Verify the realization of synergies and the integration of Aris's water assets into the existing Delaware Basin infrastructure.
- Occidental Production Levels: Monitor Occidental's upstream drilling activity and production volumes in the Delaware, DJ, and Powder River Basins, as these directly drive WES's fee-based revenue.
- Debt Maturity Profile: Review the impact of the new long-term debt issuances on interest expense and leverage ratios, noting the retirement of lower-cost 2025 maturities.
- Regulatory Compliance Costs: Assess the financial impact of new EPA methane rules (Subpart OOOOb/OOOOc) and state-level regulations on produced-water disposal.
- Throughput Trends: Track the 40% increase in produced-water throughput to ensure it sustains the margin profile, noting the per-Bbl Adjusted Gross Margin for water assets decreased slightly to $0.89 in 2025.