10-K: Western Midstream Partners, LP Announces 2024 Results, Outlines Strategy for Future Growth

Western Midstream Partners, LP reports its financial results for the year ended December 31, 2024, highlighting strategic initiatives and operational performance.

Summary

• Western Midstream Partners, LP (WES) reported its financial results for the year ended December 31, 2024.
• The company's strategy focuses on capitalizing on core assets, enhancing growth through acquisitions, controlling costs, optimizing cash returns to stakeholders, and generating stable cash flows.
• Key financial events included the sale of the Marcellus Interest systems for $206.2 million and equity investments for $588.6 million.
• WES Operating completed a public offering of $800.0 million in senior notes due 2034 and repurchased $150.0 million of its senior notes.
• Natural-gas throughput attributable to WES increased by 14% to 5,052 MMcf/d, while crude-oil and NGLs throughput decreased by 19% to 530 MBbls/d.
• Produced-water throughput attributable to WES increased by 11% to 1,124 MBbls/d.
• Gross margin increased by 19% to $2.8 billion.
• Adjusted Gross Margin for natural-gas assets averaged $1.30 per Mcf, crude-oil and NGLs assets averaged $2.94 per Bbl, and produced-water assets averaged $0.96 per Bbl.
• The company expects capital expenditures for 2025 to range between $625.0 million and $775.0 million.
• In February 2025, the Board authorized a buyback program of up to $250.0 million of common units through December 31, 2026.

Sentiment

Score: 7

Explanation: The document presents a balanced view with positive financial results and strategic initiatives, but also acknowledges risks and challenges. The sentiment is moderately positive.

Positives

• Natural-gas and produced-water throughput increased year-over-year.
• Gross margin and Adjusted EBITDA showed significant increases.
• The company is actively managing its capital structure through debt repurchases and new note issuances.
• A new unit buyback program has been authorized, indicating confidence in the company's future prospects.
• Adjusted Gross Margin increased for all asset types.

Negatives

• Crude-oil and NGLs throughput decreased year-over-year.
• Equity income from related parties decreased.
• The company is dependent on Occidental for a significant portion of its revenues and throughput.

Risks

• Dependence on Occidental's production and financial health poses a risk.
• Sustained low commodity prices could adversely affect the business.
• Competition and potential development of midstream systems by customers could reduce throughput.
• Indebtedness may limit the company's ability to capitalize on opportunities.
• Security threats, including cyber-threats, could disrupt operations.
• Stringent environmental laws and regulations may expose the company to significant costs and liabilities.

Future Outlook

The company intends to grow organically, enhance growth through acquisitions, control costs, optimize cash returns to stakeholders, and generate stable cash flows.

Industry Context

The midstream services business is extremely competitive, with competition based on reputation, commercial terms, operational reliability, service levels, location, available capacity, capital expenditures, and fuel efficiencies.

Comparison to Industry Standards

• The document benchmarks against a peer group of midstream companies including Antero Midstream Corporation, Magellan Midstream Partners, L.P., Cheniere Energy, Inc., NiSource Inc., Crestwood Equity Partners LP, NuStar Energy, L.P., DT Midstream, Inc., ONEOK, Inc., Energy Transfer LP, Plains All American Pipeline, L.P., EnLink Midstream, LLC, Targa Resources Corp., Equitrans Midstream Corporation, Tellurian Inc., Genesis Energy, L.P., and The Williams Companies, Inc.
• The company aims for median market annual base compensation, slightly above median short-term incentives, and third-quartile long-term incentives compared to its peers.

Management Changes

Related Party Transactions

• The company has significant gathering, processing, and produced-water disposal arrangements with affiliates of Occidental.
• Occidental was the only customer from which revenues exceeded 10% of consolidated revenues for all periods presented in the consolidated statements of operations.

Stakeholder Impact

• The company aims to create long-term value for unitholders through profitable operations and increasing returns of capital.
• The company is committed to the safe and efficient delivery of energy for its customers.
• The company strives to minimize emissions and protect the environment.

Next Steps

• Complete construction of the North Loving Plant in the first quarter of 2025.
• Complete construction of produced-water disposal facilities by the first quarter of 2027.
• Execute the $250.0 million unit buyback program through December 31, 2026.

Key Dates