Western Midstream Partners (NYSE:WES) Q4 2025 Earnings call February 19, 2026 10:00 AM ET Speaker6Good morning. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Western Midstream Partners fourth quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply pres ...

Fourth-Quarter 2025 Review February 18, 2026 Forward-Looking Statements and Ownership Structure This presentation contains forward-looking statements. Western Midstream Partners, LP ("WES") believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this presentation. These fact ...

Record 2025 performance was driven by throughput growth in the Delaware and DJ Basins and the strategic acquisition of Aris Water Solutions. Management characterizes 2026 as a transition year due to a temporary reallocation of producer activity away from WES-serviced acreage in the Delaware Basin. Natural gas throughput faced headwinds from third-party curtailments linked to volatile Waha Hub pricing, which management expects to persist through mid-2026. The Aris integration is ahead of schedule, ac ...

Company Overview - As of December 31, 2025, the company owns a 98.1% limited partner interest in WES Operating[26] - The company is engaged in gathering, compressing, treating, processing, and transporting natural gas, as well as handling produced water[28] - The company has a $2.0 billion senior unsecured revolving credit facility[23] - The company has a $250.0 million buyback program ending December 31, 2026[23] - The company operates in the DJ Basin complex, which includes multiple processing plants and gathering systems[22] - The company has a relationship with Occidental Petroleum Corporation, which is its general partner[26] Acquisitions and Growth Strategy - The company has acquired Aris Water Solutions, Inc. on October 15, 2025, enhancing its water solutions capabilities[22] - The acquisition of Aris was completed in Q4 2025 for a total transaction value of $2.0 billion, which included $415 million in cash and 26.6 million common units issued[39] - The company aims to enhance growth through systematic acquisition activity and organic growth opportunities in existing or new areas of operation[42] Financial Performance - The company has reported on its financial condition and results of operations in its annual report[19] - The company reported that 97% of its wellhead natural-gas volume and 100% of its crude-oil and produced-water throughput were under fee-based contracts for the year ended December 31, 2025[45] - The company has approximately 2.5 Bcf/d of natural-gas assets and 1,028 MBbls/d of produced-water assets supported by minimum-volume commitments[45] - The effective borrowing capacity under the revolving credit facility was $2.0 billion as of December 31, 2025[49] Infrastructure and Capacity - As of December 31, 2025, the company had total assets including 14,910 miles of pipeline and a processing capacity of 5,780 MMcf/d for natural gas assets[36] - The North Loving plant was completed in 2025, adding 250 MMcf/d of processing capacity to the West Texas complex[56] - The North Loving Train II is under construction with a capacity of 300 MMcf/d, expected to be completed in Q2 2027, increasing total processing capacity of the West Texas complex to 2,490 MMcf/d[59] - The DJ Basin complex includes 26 processing and treating plants with a total capacity of 2,540 MMcf/d and 225 MBbls/d[67] Regulatory Environment - FERC regulates the company's interstate natural-gas pipelines, overseeing rates, services, and market conduct, with potential penalties exceeding $1.0 million per day for violations[102] - The company’s interstate liquids pipelines are regulated by FERC, which requires rates to be "just and reasonable" and can impose significant penalties for violations[103] - Proposed regulations by PHMSA in May 2023 could enhance leak detection and repair requirements, potentially increasing compliance costs and operational expenditures[98] - The company is subject to numerous environmental and occupational health and safety laws, including the Clean Air Act and the Clean Water Act, which impose various operational and reporting requirements[110] Environmental and Safety Considerations - The company may incur liabilities for environmental remediation related to properties acquired from third parties, which could affect financial performance[112] - The company has incurred and will continue to incur significant operating and capital expenditures to comply with environmental and occupational health and safety laws and regulations, which may have a material adverse effect on its financial condition and results of operations[115] - The EPA's New Source Performance Standards and Emissions Guidelines, effective in May 2024, will impose more stringent emissions standards for methane and volatile organic compounds from oil and gas facilities, potentially increasing capital expenditures and operating costs[117] - Colorado has adopted regulations requiring a 20.5% reduction in combustion greenhouse gas emissions from the midstream sector by 2030 compared to a 2015 baseline, which may increase compliance costs for the company[118] Workforce and Culture - The company employs 1,704 persons as of December 31, 2025, with a voluntary attrition rate of 9%, which is considered reasonable for the industry[122] - The company offers competitive compensation packages and a comprehensive range of health and retirement benefits to attract and retain top talent[123] - The company has implemented safety metrics in its incentive compensation program to foster a culture of safety throughout the organization[124] Market Position and Competition - The midstream services business is highly competitive, with competition based on reputation, commercial terms, operational reliability, and service levels, particularly in areas with heightened producer activity[94] - The company believes its assets are well-positioned to attract both Occidental and third-party volumes due to proximity to production and service flexibility[95]

Financial Performance - Reported fourth-quarter 2025 net income attributable to limited partners of $187.2 million, with record fourth-quarter Adjusted EBITDA of $635.6 million, including $29.5 million of unfavorable non-cash revenue adjustments[1][2] - Full-year 2025 net income attributable to limited partners totaled $1.154 billion, generating record full-year Adjusted EBITDA of $2.481 billion, representing a 6-percent year-over-year increase[1][2] - Full-year 2025 cash flows provided by operating activities reached $2.223 billion, with Free Cash Flow of $1.526 billion, a 15-percent year-over-year increase[1][2] - Total revenues for the year ended December 31, 2025, were $3,843.4 million, an increase from $3,605.2 million in 2024, representing a growth of 6.6%[20] - Net income attributable to Western Midstream Partners, LP for the year ended December 31, 2025, was $1,180.98 million, compared to $1,573.57 million in 2024, reflecting a decrease of 25%[20] - Adjusted EBITDA for the year ended December 31, 2025, was $2,480,782 thousand, compared to $2,344,038 thousand in 2024, reflecting an increase of about 5.8%[32] - Free Cash Flow for the year ended December 31, 2025, reached $1,526,025 thousand, up from $1,324,164 thousand in 2024, indicating a growth of approximately 15.2%[33] - Net income for the year ended December 31, 2025, was $1,212,455, a decrease from $1,611,252 in 2024[35] Cash Flow and Distributions - Announced a fourth-quarter distribution of $0.910 per unit, consistent with the prior quarter, equating to an annualized distribution of $3.64 per unit[1][4] - The company plans to distribute at least $3.67 per unit for the full year 2026, including a February 2026 distribution of $0.910 per unit[20] - Anticipated 2026 Distributable Cash Flow ("DCF") guidance range of $1.850 billion to $2.050 billion, or $4.59 to $5.08 per unit[1][9] - Planning to recommend a distribution increase to $0.93 per unit, representing a 2.2-percent increase over the prior quarter's distribution, starting in Q1 2026[1][9] Capital Expenditures and Guidance - Total capital expenditure guidance for 2026 is set between $850.0 million and $1.000 billion, significantly below previous expectations of at least $1.1 billion[1][9] - Capital expenditures for the year ended December 31, 2025, totaled $727,991 thousand, down from $833,856 thousand in 2024, representing a decrease of about 12.7%[33] Operational Metrics - Achieved record annual natural-gas throughput of 5.2 Bcf/d, a 4-percent year-over-year increase, and annual produced-water throughput of 1,578 MBbls/d, a 40-percent year-over-year increase[3][6] - Total throughput for natural-gas assets was 5,343 MMcf/d for the three months ended December 31, 2025, a decrease of 4% from 5,549 MMcf/d in the previous quarter[37] - Throughput for produced-water assets increased significantly by 121% to 2,744 MBbls/d for the three months ended December 31, 2025, compared to 1,242 MBbls/d in the previous quarter[39] - Total throughput attributable to WES for crude-oil and NGLs assets was 508 MBbls/d for the three months ended December 31, 2025, a decrease of 3% from 514 MBbls/d in the previous quarter[39] - The company experienced a 5% decrease in throughput for equity investments in natural-gas assets, totaling 525 MMcf/d for the three months ended December 31, 2025[39] Debt and Assets - Long-term debt as of December 31, 2025, was $8,195.17 million, an increase from $6,926.65 million in 2024, representing a rise of 18.3%[22] - The company reported a total asset value of $14,998.42 million as of December 31, 2025, compared to $13,144.79 million in 2024, reflecting an increase of 14.1%[22] Operating Expenses - Operating expenses for the year ended December 31, 2025, totaled $2,316.68 million, up from $2,043.65 million in 2024, indicating an increase of 13.3%[20] - Interest expense for the year ended December 31, 2025, was $390,490 thousand, slightly up from $378,513 thousand in 2024, indicating an increase of approximately 3.0%[32] Acquisitions - Completed the acquisition of Aris Water Solutions, significantly expanding the company's produced-water capabilities and diversifying its customer base[5][6]

Core Insights - Western Midstream Partners, LP reported record financial results for the fourth quarter and full year of 2025, with significant increases in cash flow and adjusted EBITDA, driven by strong throughput growth and cost reduction initiatives [1][2][3] Financial Performance - The company announced a fourth-quarter distribution of $0.910 per unit, consistent with the previous quarter, and a full-year 2025 Free Cash Flow of $1.526 billion, exceeding guidance by 15% [1][2] - Full-year 2025 net income attributable to limited partners was $1.154 billion, or $2.98 per common unit, with adjusted EBITDA reaching $2.481 billion, a 6% year-over-year increase [1][2] - The company provided 2026 guidance for distributable cash flow between $1.850 billion and $2.050 billion, and adjusted EBITDA between $2.500 billion and $2.700 billion, reflecting a moderate growth outlook [1][3] Operational Highlights - The company achieved record annual produced-water throughput of 1,578 MBbls/d, a 40% year-over-year increase, primarily due to the acquisition of Aris Water Solutions [1][2] - Natural gas throughput averaged 5.2 Bcf/d for the full year, representing a 4% increase year-over-year, while crude oil and NGLs throughput averaged 514 MBbls/d, a 1% increase [2][3] - The company sanctioned the Pathfinder pipeline to transport over 800 MBbls/d of produced water and expanded natural gas processing capacity by 18% in the Delaware Basin [1][2] Strategic Initiatives - The company renegotiated natural-gas gathering and processing contracts in the Delaware Basin, transitioning to a fixed-fee structure, which is expected to enhance revenue stability [1][2] - The integration of Aris is on track to deliver significant synergies, with approximately 85% of the $40 million target expected to be captured by the end of Q1 2026 [2][3] - The company maintained a disciplined capital allocation framework, returning $1.431 billion to unitholders in 2025 while keeping a net leverage ratio near 3.0 times [1][2]

Core Viewpoint - Western Midstream Partners (WES) is set to report quarterly earnings on February 18, 2026, with an anticipated EPS of $0.91 and projected revenue of approximately $1.05 billion, indicating growth in the midstream energy sector [1][6] Financial Performance - The expected EPS of $0.91 represents a 7.1% increase from the same period last year, reflecting WES's growth trajectory [2][6] - Projected revenue of $1.11 billion marks a substantial 20% increase from the previous year's quarter, showcasing the company's ability to capitalize on market opportunities [3][6] Valuation Metrics - WES has a price-to-earnings (P/E) ratio of 12.58 and a price-to-sales ratio of 4.74, indicating a reasonable valuation [4] - The enterprise value to sales ratio is 6.56, and the enterprise value to operating cash flow ratio is 11.06, highlighting the company's efficiency in generating cash flow relative to its valuation [4] Financial Health - The company maintains a debt-to-equity ratio of 2.20, indicating financial leverage, while a current ratio of 1.43 suggests a solid liquidity position to cover short-term liabilities [5] - An earnings yield of 7.95% provides a comprehensive view of WES's financial health and potential for future growth [5][6]

Core Viewpoint - Analysts expect Western Midstream (WES) to report quarterly earnings of $0.91 per share, reflecting a year-over-year increase of 7.1%, with revenues projected at $1.11 billion, up 20% from the previous year [1] Earnings Estimates - The consensus EPS estimate has been adjusted downward by 3.7% over the past 30 days, indicating a reassessment by analysts of their initial projections [1][2] Key Metrics Forecast - Analysts are closely monitoring specific metrics for Western Midstream, which can provide a more comprehensive perspective on the company's performance [3] - Estimates for 'Throughput for natural-gas assets per day - Delaware Basin' and 'Throughput for produced-water assets per day - Delaware Basin' are significant, with the latter expected to reach 2,379.05 thousand barrels of oil, compared to 1,216.00 thousand barrels of oil in the same quarter last year [6] - Predictions for 'Throughput for crude-oil and NGLs assets per day - Delaware Basin' are set at 253.92 thousand barrels of oil, slightly down from 260.00 thousand barrels of oil year-over-year [7] Stock Performance - Shares of Western Midstream have shown a return of +4.4% over the past month, contrasting with the Zacks S&P 500 composite's -1.7% change, indicating a stronger performance relative to the market [10]

Core Viewpoint - Western Midstream (WES) is expected to report quarterly earnings of $0.91 per share, reflecting a 7.1% increase year-over-year, with revenues projected at $1.11 billion, a 20% increase compared to the previous year [1]. Earnings Estimates - Analysts have revised the consensus EPS estimate for the quarter down by 3.7% over the last 30 days, indicating a collective reevaluation of initial estimates [1][2]. Key Metrics Forecast - Analysts predict various throughput metrics for Western Midstream's natural gas and crude oil assets, which are essential for understanding the company's operational performance: - 'Throughput for natural-gas assets per day - Delaware Basin' is projected to reach a certain figure, compared to last year's estimate [6]. - 'Throughput for produced-water assets per day - Delaware Basin' is estimated at 2,379.05 thousand barrels of oil, up from 1,216.00 thousand barrels of oil last year [6]. - 'Throughput for crude-oil and NGLs assets per day - Delaware Basin' is expected to be 253.92 thousand barrels of oil, slightly down from 260.00 thousand barrels of oil reported last year [7]. - 'Throughput for crude-oil and NGLs assets per day - DJ Basin' is forecasted at 104.18 thousand barrels of oil, up from 102.00 thousand barrels of oil last year [8]. - 'Throughput for crude-oil and NGLs assets per day - Other' is expected to reach 40.24 thousand barrels of oil, compared to 34.00 thousand barrels of oil last year [9]. Stock Performance - Over the past month, Western Midstream shares have gained 0.5%, contrasting with the Zacks S&P 500 composite's decline of 0.3%, indicating a performance that aligns with the overall market [10].

Company Performance - Western Midstream closed at $42.45, reflecting a +1.8% increase from the previous day, outperforming the S&P 500's daily loss of 0.01% [1] - Over the past month, shares of Western Midstream have decreased by 1.09%, while the Oils-Energy sector has gained 13.82% [1] Upcoming Earnings - The earnings report for Western Midstream is anticipated on February 18, 2026, with an expected EPS of $0.91, representing a 7.06% increase from the prior-year quarter [2] - Revenue is projected to be $1.11 billion, up 19.98% from the prior-year quarter [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $3.44 per share, a decrease of 14.43% from the prior year, while revenue is expected to be $3.93 billion, an increase of 8.9% [3] Analyst Forecasts - Recent revisions to analyst forecasts for Western Midstream are important as they reflect changes in short-term business dynamics, with positive revisions indicating analysts' confidence in business performance [4] Zacks Rank and Valuation - The Zacks Rank for Western Midstream is currently 3 (Hold), with the Zacks Consensus EPS estimate having decreased by 1.26% in the past month [6] - The company has a Forward P/E ratio of 11.44, which is lower than the industry's Forward P/E of 16.4, indicating a valuation discount [7] Industry Context - Western Midstream operates within the Oil and Gas - Refining and Marketing - Master Limited Partnerships industry, which is part of the Oils-Energy sector and currently holds a Zacks Industry Rank of 87, placing it in the top 36% of over 250 industries [7]