8-K: Western Midstream Reports Strong First-Quarter 2025 Results, Exceeding Expectations

Western Midstream Partners, LP announced robust first-quarter 2025 results, driven by record natural gas throughput in the Delaware Basin and strategic capital deployment.

Summary

• Western Midstream Partners, LP (WES) reported a net income attributable to limited partners of $301.8 million for the first quarter of 2025.
• Adjusted EBITDA for the quarter totaled $593.6 million.
• Cash flows from operating activities were $530.8 million, resulting in a Free Cash Flow of $399.4 million.
• Capital expenditures for the first quarter amounted to $163.6 million.
• The company announced a first-quarter distribution of $0.910 per unit, or $3.64 per unit on an annualized basis, a 4% increase over the prior quarter.
• WES gathered record natural-gas throughput in the Delaware Basin of 2.0 Bcf/d.
• The North Loving natural-gas processing plant started operations in late February, adding 250 MMcf/d of processing capacity.
• The company retired $664 million of senior notes in January 2025 using cash on hand.
• First-quarter natural-gas throughput averaged 5.1 Bcf/d, a 2% sequential-quarter decrease.
• Crude-oil and NGLs throughput averaged 503 MBbls/d, a 6% sequential-quarter decrease.
• Produced-water throughput averaged 1,166 MBbls/d, a 2% sequential-quarter decrease.
• WES reaffirms its 2025 guidance and expects capital expenditures to range between $625 million and $775 million.
• The company has $2.4 billion in liquidity and net leverage below 3.0-times.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic growth initiatives, and a commitment to returning capital to unitholders. The management's comments are optimistic, and the company's financial position appears solid.

Positives

• Strong financial performance with $301.8 million in net income and $593.6 million in Adjusted EBITDA.
• Record natural-gas throughput in the Delaware Basin indicates strong operational performance.
• The start-up of the North Loving plant ahead of schedule and under budget demonstrates operational efficiency.
• The 4% increase in the quarterly distribution reflects a commitment to returning capital to unitholders.
• Retiring $664 million of senior notes strengthens the balance sheet.
• The company has $2.4 billion in liquidity and net leverage below 3.0-times, providing financial flexibility.

Negatives

• Sequential-quarter decreases in natural-gas, crude-oil and NGLs, and produced-water throughputs, although management anticipates growth for the year.
• Capital expenditures of $163.6 million in the first quarter.

Risks

• Potential impact from volatile market conditions and reduced activity levels by customers.
• Construction costs or capital expenditures exceeding estimated or budgeted costs.
• The supply of, demand for, and price of oil, natural gas, NGLs, and related products or services.

Future Outlook

WES reaffirms its 2025 guidance and anticipates throughput growth across all products, primarily driven by the Delaware Basin and the tie-in of the Altamont pipeline to the Chipeta plant in Utah. Capital expenditures are expected to range between $625 million and $775 million.

Management Comments

• Oscar Brown, President and Chief Executive Officer, stated that the company had another successful quarter marked by strong financial performance and stability.
• Mr. Brown noted that Adjusted EBITDA increased primarily due to increased NGLs recoveries, higher commodity pricing, record natural-gas throughput, increased margin contribution from the Delaware Basin, and lower operating expenses.
• Mr. Brown stated that the company's 2025 guidance remains unchanged and that they anticipate throughput growth this year across all products.
• Mr. Brown concluded that the company is committed to returning capital to unitholders and is confident that their disciplined approach will continue to create significant long-term value.

Industry Context

The announcement reflects the ongoing importance of the Delaware Basin for natural gas production and processing. WES's focus on fee-based contracts aligns with a broader industry trend towards stable cash flows amidst commodity price volatility.

Comparison to Industry Standards

• Companies like MPLX, Enterprise Products Partners, and Energy Transfer also operate in the midstream sector and are focused on expanding their infrastructure in key basins.
• WES's net leverage below 3.0-times is generally considered healthy compared to some peers with higher leverage ratios.
• The 4% distribution increase is competitive with other MLPs in the sector.

Stakeholder Impact

• Shareholders will benefit from the increased distribution and the company's commitment to long-term value creation.
• Employees are likely to be positively impacted by the company's strong financial performance and growth prospects.
• Customers will benefit from the expanded infrastructure and reliable midstream services.
• Suppliers and creditors can be confident in the company's financial stability and ability to meet its obligations.

Next Steps

• WES will host a conference call on May 8, 2025, to discuss its first-quarter results.
• The company will continue to focus on reducing its overall cost structure, maintaining a strong balance sheet, and allocating capital to growth projects.

Key Dates

Keywords

Western Midstream, WES, Midstream, Earnings, EBITDA, Distribution, Delaware Basin, Natural Gas, Throughput, Financial Results