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, 2024.
Overview: 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 the Delaware Basin (Texas/New Mexico), DJ Basin (Colorado), and Powder River Basin (Wyoming). Occidental Petroleum Corporation (OXY) is the general partner's parent company and the largest customer, accounting for 60% of total revenues in 2024.
Key Financial Metrics (Year Ended Dec 31, 2024)
| Metric | 2024 Value | 2023 Value |
|---|---|---|
| Total Revenues | $3.61 billion | $3.11 billion |
| Net Income (Attributable to WES) | $1.57 billion | $1.02 billion |
| Adjusted EBITDA | $2.34 billion | $2.07 billion |
| Free Cash Flow | $1.32 billion | $0.96 billion |
| Operating Cash Flow | $2.14 billion | $1.66 billion |
| Capital Expenditures | $0.83 billion | $0.74 billion |
| Total Debt (Carrying Value) | $7.94 billion | $7.90 billion |
| Working Capital Surplus | $155.5 million | Not explicitly stated |
| Quarterly Distribution | $0.875 per unit | $0.575 - $0.875 per unit |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 16% to $3.61 billion, driven by higher fee-based service revenues ($3.25 billion) due to increased throughput and cost-of-service rate redeterminations.
- Throughput:
- Natural Gas: Increased 14% to 5,052 MMcf/d (attributable to WES), led by growth in the Delaware and Powder River Basins.
- Crude Oil & NGLs: Decreased 19% to 530 MBbls/d, primarily due to the divestiture of several equity investments (Whitethorn, Mont Belvieu JV, Saddlehorn, Panola).
- Produced Water: Increased 11% to 1,124 MBbls/d.
- Divestitures: Sold Marcellus Interest systems (Q2) and four equity investments (Q1) for combined proceeds of $794.8 million, resulting in a net gain on divestiture of $300.6 million.
- Acquisitions: Completed the Meritage acquisition in late 2023, which contributed to Powder River Basin growth in 2024.
- Impairments: Long-lived asset impairments dropped significantly to $6.2 million in 2024 compared to $52.9 million in 2023.
Guidance, Outlook, and Risks
- Capital Expenditure Guidance (2025): Expected to range between $625 million and $775 million (accrual-based).
- Capital Return: The $1.25 billion unit repurchase program expired on December 31, 2024. A new $250 million repurchase program was authorized in February 2025 through December 31, 2026.
- Outlook: Management expects continued growth in natural gas and produced water throughput. The company is constructing the North Loving Plant (250 MMcf/d) expected to be online in Q1 2025.
- Key Risks:
- Customer Concentration: Heavy reliance on Occidental Petroleum (60% of revenue). A reduction in OXY production would materially impact WES.
- Regulatory: Potential impacts from new EPA methane emission rules (Subpart OOOOb/c) and state-level regulations (e.g., Colorado) which could increase compliance costs.
- Commodity Prices: While 95% of natural gas and 100% of crude/water throughput are fee-based, low commodity prices could reduce producer drilling activity and future volumes.
- Debt Maturity: $1.0 billion in senior notes due within the next year (3.100% and 3.950% notes due 2025), though refinancing is underway.
Investor Verification Checklist
- Occidental Exposure: Verify the stability of Occidental's upstream drilling plans in the Delaware and DJ Basins, as they drive the majority of WES's volumes.
- Debt Refinancing: Confirm the successful refinancing of the $1.0 billion in senior notes maturing in 2025 and the impact of interest rates on future debt service.
- Regulatory Compliance Costs: Monitor the financial impact of new EPA methane regulations and state-level emission caps on operating expenses and capital requirements.
- Divestiture Proceeds Usage: Track how the ~$795 million in divestiture proceeds are utilized (debt reduction vs. growth projects) to assess leverage trajectory.
- North Loving Plant: Verify the on-time completion and commissioning of the North Loving Plant in Q1 2025 to ensure projected capacity additions are realized.