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Western Midstream Partners, LP (WES)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was stable operationally with resilient financials: Revenue $917.1M, diluted EPS $0.79, Adjusted EBITDA $593.6M, and Free Cash Flow $399.4M, while the quarterly base distribution was raised 4% to $0.910 per unit .
  • Guidance was reaffirmed across Adjusted EBITDA ($2.35–$2.55B), Capex ($625–$775M), and Free Cash Flow ($1.275–$1.475B), citing strong contract structures, net leverage below 3x, and ~$2.4B of liquidity .
  • Commissioning of the North Loving plant added 250 MMcf/d of processing capacity in the Delaware Basin (now ~2.2 Bcf/d), reducing offloads and positioning WES for growth; steel for the Pathfinder produced-water pipeline was ordered domestically, mitigating tariff risk .
  • Sequential throughput softened (-2% gas, -6% liquids, -2% water) driven by DJ normalization and equity investment declines; management expects throughput to grow through 2025, led by Delaware Basin and Uinta Basin tie-ins (Williams/Kinder Morgan) .
  • Versus consensus, Q1 EPS ($0.79) and revenue ($917.1M) were modest misses, largely due to non-repeating Q4 revenue recognition and lower throughput; Adjusted EBITDA was robust on higher NGL recoveries and pricing in Delaware Basin (consensus comparisons note definitional differences) . EPS/revenue/EBITDA consensus values marked with * below are retrieved from S&P Global*.

What Went Well and What Went Wrong

What Went Well

  • Commissioned North Loving (250 MMcf/d) ahead of schedule and under budget, expanding West Texas processing capacity to ~2.2 Bcf/d and reducing offloading fees; “the plant is full” since start-up .
  • Adjusted EBITDA increased primarily due to increased NGL recoveries and higher commodity pricing in Delaware Basin, plus lower operating expenses; “strong financial performance and stability” .
  • Capital returns and balance sheet: distribution up 4% to $0.910; retired $664M senior notes in January; net leverage below 3x and ~$2.4B liquidity, enabling flexibility despite volatility .

What Went Wrong

  • Sequential volume softness: gas (-2%), liquids (-6%), water (-2%) as DJ throughput normalized and equity investment distributions fell; gross margin adjusted decreased slightly .
  • Prior-year comparison unfavorable: Q1 2024 diluted EPS $1.47 vs $0.79 driven by the year-ago gain on divestiture ($239.6M) that lifted operating income materially .
  • External macro uncertainty: management flagged lower commodity price environment could impact profitability (within sensitivities), though guidance remains intact; capex likely flexed if producers slow .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus*
Revenue ($USD Millions)$887.7 $928.5 $917.1 $926.6*
Diluted EPS ($USD)$1.47 $0.85 $0.79 $0.84*
Adjusted EBITDA ($USD Millions)N/A$590.7 $593.6 $595.2*
Cash from Operations ($USD Millions)$399.7 $554.4 $530.8 N/A
Free Cash Flow ($USD Millions)N/A$309.3 $399.4 N/A
  • EPS and revenue were modest misses versus consensus; Adjusted EBITDA comparable to consensus but note consensus vs company “Adjusted” definition differences. Values marked * retrieved from S&P Global*.

Segment/Asset-Line Adjusted Gross Margin

MetricQ4 2024Q1 2025
Adjusted Gross Margin – Natural Gas ($USD Millions)$616.4 $618.5
Adjusted Gross Margin – Crude Oil & NGLs ($USD Millions)$147.1 $143.5
Adjusted Gross Margin – Produced Water ($USD Millions)$105.0 $98.9
Total Adjusted Gross Margin ($USD Millions)$868.4 $860.8

KPIs

KPIQ4 2024Q1 2025Change
Natural Gas Throughput – WES attributable (Bcf/d)5.213 5.110 -2%
Crude Oil & NGL Throughput – WES attributable (MBbls/d)534 503 -6%
Produced Water Throughput – WES attributable (MBbls/d)1,191 1,166 -2%
Per-Mcf Adjusted Gross Margin – Natural Gas ($/Mcf)$1.29 $1.34 +4%
Per-Bbl Adjusted Gross Margin – Crude/NGL ($/Bbl)$3.00 $3.17 +6%
Per-Bbl Adjusted Gross Margin – Produced Water ($/Bbl)$0.96 $0.94 -2%

Guidance Changes

MetricPeriodPrevious Guidance (Feb 26, 2025)Current Guidance (Q1 2025)Change
Adjusted EBITDAFY 2025$2.350B–$2.550B Reaffirmed (unchanged) Maintained
Free Cash FlowFY 2025$1.275B–$1.475B Reaffirmed (unchanged) Maintained
Total Capital ExpendituresFY 2025$625M–$775M Reaffirmed (unchanged) Maintained
Base DistributionFY 2025≥$3.605 per unit Quarterly base $0.910 per unit (annualized $3.64) Raised versus Q4 (4% q/q)
Pathfinder Spend24 months$400M–$450M Proceeding; domestic steel ordered to mitigate tariffs Execution updates

Management reiterated it can flex capex lower to the low end or below if activity slows materially .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Delaware Basin throughput and capacityRecord throughput; Mentone III startup; expect Q4 EBITDA up North Loving online; capacity ~2.2 Bcf/d; Delaware drives growth though volumes slightly below expectations due to well timing Capacity up; volumes steady-to-modest growth
Produced water & PathfinderAnnounced Pathfinder (800+ MBbl/d), Oxy MVCs; 2025 guidance unveiled Domestic steel order placed; strong customer/midstream interest; pursuing MVC-style contracts Commercial progress, risk mitigation (tariffs)
Commodity price volatility & guidanceQ3 expected Q4 EBITDA increase despite volatility Guidance reaffirmed; sensitivities acknowledged; capex first lever if needed Steady guidance; cautious tone
Contract structures (MVC/CoS)Strong legacy contracts in DJ/Permian; fee-based cash flows Focus on MVC and cost-of-service; 2.8 Bcf/d protections highlighted; majority in West Texas/DJ Stability sustained
Capex flexibility2025 plan includes PRB growth; path to leverage ≤3x Capex can be reduced quickly; likely low-end or below in flat Permian/weak PRB scenario High flexibility
Utility costs & O&M seasonalityTypical Q3 O&M uptick Expect higher summer utility costs; ~75% reimbursable Seasonal uptick, mitigated by recovery

Management Commentary

  • “Our Adjusted EBITDA increased primarily due to increased NGLs recoveries in combination with higher commodity pricing, another quarter of record natural-gas throughput… and lower operating expenses… our 2025 guidance remains unchanged” — Oscar Brown, CEO .
  • “This achievement increases our West Texas natural gas processing capacity by approximately 13% or 250 MMcf/d… reducing our need for offloads… brought online safely, ahead of schedule and under budget” — Oscar Brown, on North Loving .
  • “Our balance sheet and our leverage is sitting underneath 3x right now… we’re in a great place if the cycle does turn” — Kristen Shults, CFO .
  • “We have the financial flexibility needed to execute our growth plans… net leverage below 3.0-times, and $2.4 billion in liquidity” — Oscar Brown .
  • “We retired $664 million of senior notes upon their maturity in early January with cash on hand” — Kristen Shults, CFO .

Q&A Highlights

  • Capital allocation in a slower growth environment: maintain priorities; opportunistic M&A and buybacks if returns exceed organic/inorganic options .
  • Guidance cadence: no material changes expected; growth led by West Texas and Uinta; capex adjustable if activity changes .
  • Pathfinder contracting: pursuing MVC-type commitments; strong interest from producers and midstream; longer-term, complex agreements expected .
  • Producer outlook: active real-time engagement; rig drops seen at fringes but no change to WES guidance so far; flexibility to pivot capex .
  • Capex flex: under flat Permian/weak PRB scenario, spend would trend to low end or below guidance range .

Estimates Context

  • Q1 2025 EPS: actual $0.79 vs consensus $0.84* — bold miss; Revenue: actual $917.1M vs consensus $926.6M* — bold miss; Adjusted EBITDA: reported $593.6M vs EBITDA consensus $595.2M* — definitional differences likely (company “Adjusted” vs consensus standard) .
  • Drivers: non-repeat of $9.2M Q4 revenue recognition benefit, sequential throughput declines, offset by stronger Delaware Basin NGL recoveries and pricing .
  • Implication: Estimates may drift lower near term for liquids/water throughput and O&M/utility seasonality; EBITDA resilience supported by MVC/cost-of-service contracts .

Consensus values marked * retrieved from S&P Global.

Key Takeaways for Investors

  • Distribution growth with balance sheet strength: 4% q/q increase to $0.910 and net leverage <3x provide defensive yield and optionality through cycles .
  • Delaware Basin remains core growth engine; North Loving online and full; expect throughput growth across products through 2025, with Uinta Basin contributions in H2 .
  • Guidance intact despite volatility; strong contract mix (MVC/cost-of-service) supports cash flow predictability; capex is the first lever if producers slow .
  • Pathfinder advances with commercial momentum and tariff risk mitigation (domestic steel); potential for multi-year returns and basin-wide produced-water solution .
  • Near-term trading: headline misses on EPS/revenue versus consensus may cap near-term upside, but robust Adjusted EBITDA and distribution increase are supportive; watch commodity price trends and DJ/PRB activity .
  • Medium-term thesis: organic projects (Pathfinder, Delaware capacity) plus bolt-on M&A optionality; sustained base distribution growth targeted mid-to-low single digits annually .
  • Risk monitoring: commodity price sensitivity (utilities/O&M seasonality), producer capex changes, and equity investment distributions; WES’s contract protections and capex flexibility mitigate downside .
Notes:
- All consensus estimate figures marked * retrieved from S&P Global.

Appendices (select detail from primary sources)

  • Q1 2025 revenue/earnings tables, balance sheet, and cash flow provided in press release and 8-K .
  • Adjusted Gross Margin and Adjusted EBITDA reconciliations included in press materials .
  • Operating statistics by basin and product provided for sequential comparison .