Western Midstream Partners, LP - Q1 2025 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2025, for Western Midstream Partners, LP (WES) and its consolidated subsidiary, Western Midstream Operating, LP (WES Operating). WES is a master limited partnership engaged in gathering, compressing, treating, processing, and transporting natural gas, crude oil, condensate, and natural gas liquids (NGLs), as well as produced water disposal. Operations are concentrated in Texas, New Mexico, and the Rocky Mountains. The filing is a combined report for both registrants.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Total Revenues | $917.1 million | $887.7 million |
| Net Income (Attributable to WES) | $309.0 million | $572.8 million |
| Adjusted EBITDA | $593.6 million | $608.4 million |
| Free Cash Flow | $399.4 million | $225.0 million |
| Operating Cash Flow | $530.8 million | $399.7 million |
| Capital Expenditures | $142.4 million | $193.8 million |
| Total Debt (Carrying Value) | $7.28 billion | $7.94 billion (Dec 31, 2024) |
| Cash and Equivalents | $448.4 million | $295.2 million |
| Distribution per Unit | $0.910 | $0.875 |
Material Changes vs. Prior Period
- Net Income Decline: Net income attributable to WES decreased by approximately $263.8 million compared to Q1 2024. This is primarily due to a $244.3 million decrease in "Gain on divestiture and other, net," as Q1 2024 included a $239.7 million gain from the sale of several equity investments (Mont Belvieu JV, Whitethorn, Panola, Saddlehorn).
- Revenue Growth: Total revenues increased 3.3% year-over-year, driven by a $41.9 million increase in fee-based service revenues, largely due to higher throughput at the West Texas complex and increased deficiency fees.
- Throughput Trends: Natural gas throughput decreased 2% sequentially but increased 2% year-over-year. Crude oil and NGLs throughput decreased 6% sequentially and 11% year-over-year, impacted by divestitures in 2024 and lower volumes on specific pipelines.
- Debt Reduction: WES Operating retired $663.8 million of 3.100% Senior Notes due 2025 at par value in February 2025. Total debt carrying value decreased from $7.94 billion at year-end 2024 to $7.28 billion.
- Cost Increases: Operation and maintenance expenses increased 16% year-over-year due to higher equipment, utility, and labor costs. Depreciation and amortization increased 8% due to new capital projects placed in service.
Guidance, Outlook, and Risks
- Outlook: Management expects business performance to be driven by producer activity levels, which are sensitive to commodity price fluctuations. NYMEX WTI crude prices ranged from $66.03 to $80.04 per barrel in Q1 2025. Waha Hub natural gas prices ranged from negative $1.12 to $7.50 per MMBtu.
- Capital Projects: The North Loving plant start-up in late February 2025 increased gas processing capacity at the West Texas complex by 250 MMcf/d.
- Shareholder Returns: The Board declared a Q1 2025 distribution of $0.910 per unit, an increase of $0.035 from the prior quarter. A $250 million share repurchase program was authorized in February 2025; no units were repurchased in Q1 2025.
- Risks: Key risks include commodity price volatility, inflation impacting operating and capital costs (including potential tariffs on steel/aluminum), interest rate fluctuations, and credit risk related to Occidental Petroleum, which accounts for a significant portion of revenues (36% of natural gas throughput and 91% of crude/NGLs throughput).
- Contingencies: The Partnership is discussing contractual interpretations with Occidental regarding cost-of-service rates for the DJ Basin oil-gathering system. An adverse resolution could negatively impact financial results.
Investor Verification Checklist
- Divestiture Impact: Verify the non-recurring nature of the Q1 2024 gain on divestitures to accurately assess normalized earnings power.
- Occidental Concentration: Review the extent of revenue reliance on Occidental Petroleum and the status of ongoing contract negotiations regarding the DJ Basin oil system.
- Debt Maturity Profile: Confirm the repayment plan for the remaining $336.8 million of senior notes due within the next year (3.950% Senior Notes due 2025).
- Capital Discipline: Monitor the execution of the $250 million share repurchase program and the trajectory of capital expenditures relative to Free Cash Flow generation.
- Commodity Exposure: Assess the impact of volatile natural gas prices (including negative pricing periods) on product-based revenues and imbalance positions.