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WM

Western Midstream Partners, LP (WES)·Q3 2025 Earnings Summary

Executive Summary

  • Strong quarter: revenue $0.95B, diluted EPS $0.87, record Adjusted EBITDA $633.8M, and Free Cash Flow $397.4M; cost-reduction initiatives drove the second consecutive quarterly Adjusted EBITDA record .
  • Estimates context: Primary EPS modestly beat S&P consensus (actual 0.903 vs 0.87*), while revenue slightly missed (actual $952.5M vs $964.5M*); S&P EBITDA slightly below consensus (actual $609.1M vs $613.5M*), though company-reported Adjusted EBITDA set a record .
  • Guidance: Management expects to finish FY25 toward the high end of Adjusted EBITDA ($2.35–$2.55B) and capex ($625–$775M), and above the high end of Free Cash Flow ($1.275–$1.475B) ranges; distribution maintained at $0.910 per unit .
  • Catalysts: Closing of Aris Water Solutions (26.6M units issued; $415M cash; ~$500M debt assumed), incremental disposal capacity agreement for Pathfinder, and targeted $40M run-rate synergies underpin produced-water leadership and 2026 growth visibility .

What Went Well and What Went Wrong

What Went Well

  • Record Adjusted EBITDA ($633.8M) and strong cost control: O&M fell 5% QoQ; management expects more efficiency gains and sees Q3 O&M levels as sustainable, excluding Aris .
    • “Our operations teams achieved the highest level of asset operability…while still reducing operation and maintenance expense” — CFO Kristen Shults .
  • Natural gas throughput: highest in partnership history at 5.5 Bcf/d total, +2% QoQ; Delaware Basin throughput hit another record .
  • Strategic positioning: Aris acquisition closed, pore space agreement improves Pathfinder returns, and management is “well on our way to capturing the $40.0 million of targeted cost synergies” — CEO Oscar Brown .

What Went Wrong

  • Liquids softness: crude oil and NGLs throughput declined 4% sequentially, with Delaware Basin down 9% QoQ, offset by DJ Basin growth [+9%] .
  • Margin pressure: per-Mcf Adjusted Gross Margin for natural gas decreased to $1.27 from $1.32 (-4% QoQ) due to lower excess NGL volumes and pricing in the Delaware Basin .
  • Powder River Basin headwinds: throughput fell as intermittent onloads ended and customer activity moderated amid commodity weakness; natural gas throughput expected to decline further in Q4 .

Financial Results

Revenue & EPS vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Total revenues and other ($USD Millions)$883.4 $942.3 $952.5
Net income attributable to LPs ($USD Millions)$281.8 $333.8 $331.7
Diluted EPS ($USD)$0.74 $0.87 $0.87

Costs and EBITDA vs prior quarter

MetricQ2 2025Q3 2025
Operation & Maintenance ($USD Millions)$224.6 $212.4
Adjusted EBITDA ($USD Millions)$617.9 $633.8

Actual vs Wall Street Consensus (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 ActualQ3 2025 ConsensusQ3 2025 Actual
Primary EPS ($)0.824*0.877 (Primary EPS actual)*0.870*0.903 (Primary EPS actual)*
Revenue ($USD Millions)944.6*942.3 964.5*952.5
EBITDA ($USD Millions)596.4*591.1 (S&P EBITDA actual)*613.5*609.1 (S&P EBITDA actual)*

Values retrieved from S&P Global.*

Segment/Product-Line Adjusted Gross Margin

MetricQ2 2025Q3 2025
Adjusted GM – Natural Gas ($USD Millions)$629.1 $623.7
Adjusted GM – Crude Oil & NGLs ($USD Millions)$146.1 $145.5
Adjusted GM – Produced Water ($USD Millions)$103.8 $105.7
Total Adjusted Gross Margin ($USD Millions)$879.1 $874.9

KPIs

KPIQ2 2025Q3 2025
Natural-gas total throughput (MMcf/d)5,433 5,549
Crude oil & NGLs total throughput (MBbls/d)543 520
Produced-water throughput (MBbls/d)1,217 1,217
Per-Mcf Adjusted GM – Natural Gas ($/Mcf)$1.32 $1.27
Per-Bbl Adjusted GM – Crude & NGLs ($/Bbl)$3.02 $3.10
Per-Bbl Adjusted GM – Produced Water ($/Bbl)$0.94 $0.94

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$2.35–$2.55B Toward high end of range Maintained range; bias higher
Free Cash FlowFY 2025$1.275–$1.475B Above high end of range Raised (above prior high end)
Total Capital ExpendituresFY 2025$625–$775M Toward high end; includes ~$20M from Aris Maintained range; tilt higher
Adjusted EBITDA contribution (Aris)Q4 2025N/A~$45–$50M New
O&M and G&AQ4 2025N/A+20–25% vs Q3 (2.5 months of Aris) New
Produced-water throughputQ4 2025N/A~2.6–2.7 MMbbl/d (incl. Aris) New
Distribution per unitQ3 2025$0.910 (Q2) $0.910 (Q3) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Cost reduction / O&M disciplineQ1: lower operating expenses; focus on cost structure . Q2: sequential throughput growth; cost reductions continue .O&M down 5% QoQ; record operability; savings sustainable; more to come .Improving
Delaware Basin growthQ1: North Loving plant start-up . Q2: record NG, crude, water throughput; sanctioned North Loving II .Another record NG throughput; crude/NGL rebound expected in Q4; North Loving II supports 2026 .Strong
Produced water strategy & regulationQ2: announced Aris acquisition (EV ~$2.0B) .Closed Aris; pore space deal enhances Pathfinder returns; regulatory engagement; long-term dedications .Strengthening
Pathfinder pipelineQ1: domestic steel order to mitigate tariffs .Incremental disposal capacity; route optimization; improved returns; contracting progressing .Positive
Capital allocation / distribution policyQ2: distribution $0.910; retired $337M notes .Mid-single-digit distribution growth long-term; step-ups possible with major projects/M&A; buybacks considered if yield too high .Disciplined
2026 Capex and leverageQ2: reaffirm guidance; projects set up 2026+ .2026 capex ≥$1.1B; leverage ~3x through 2026 .Stable planning

Management Commentary

  • “Lower operational costs…drove a sequential-quarter increase in Adjusted EBITDA, even though volumes remained relatively in line with the second-quarter.” — CEO Oscar Brown .
  • “We now expect WES to be towards the high end of our previously announced 2025 adjusted EBITDA guidance…[and] above the high end of our 2025 free cash flow guidance.” — CFO Kristen Shults .
  • “The successful closing of the Aris acquisition marks a major milestone…we are well on our way to capturing the $40.0 million of targeted cost synergies.” — CEO Oscar Brown .
  • “We executed an agreement for incremental disposal capacity to support the Pathfinder pipeline…optimizes the pipeline’s planned route, and enhances the overall returns.” — CEO Oscar Brown .

Q&A Highlights

  • O&M sustainability: Management sees Q3 O&M level as sustainable (ex-Aris) with further efficiency gains; examples include maintenance rationalization, rental fleet and contractor optimization, and supply chain renegotiations .
  • Distribution policy: Mid-single-digit growth baseline; discrete step-ups possible with major projects or accretive M&A; buybacks considered if yield becomes excessive .
  • Pathfinder updates: Pore space deal adds capacity and enables route savings; contracting momentum expected to improve post-Aris; pricing strength seen amid increasing regulatory focus .
  • New Mexico expansion and AGI: Sour-gas and permitting challenges acknowledged; WES has internal capabilities; organic and inorganic paths under evaluation .
  • Synergies beyond $40M: Confident on $40M overhead synergies; operational synergies likely to start showing in 1H26 with best-practice sharing across combined teams .

Estimates Context

  • EPS: Primary EPS beat S&P consensus (0.903 vs 0.87*), while GAAP diluted EPS matched the press release at $0.87; the difference reflects normalization adjustments in S&P’s Primary EPS .
  • Revenue: Slight miss vs consensus ($952.5M actual vs $964.5M*), consistent with liquids throughput softness and lower excess NGL volumes .
  • EBITDA: S&P EBITDA modestly missed consensus ($609.1M vs $613.5M*), but company-reported Adjusted EBITDA was a record $633.8M on lower operating costs .
  • Street likely to lift FY25 FCF and bias FY25 Adjusted EBITDA toward the top of the range given management’s updated guidance, while Q4 O&M/G&A uptick (Aris inclusion) may temper near-term margin assumptions .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Cost discipline is the core driver: two consecutive record Adjusted EBITDA quarters despite mixed volumes; O&M trajectory supports sustained margin strength .
  • Produced-water leadership + Aris integration: synergy capture ($40M target) and expanded pore space underpin improved Pathfinder returns and multi-stream commercial opportunities into New Mexico .
  • FY25 outlook improved: High-end bias for Adjusted EBITDA and capex; FCF above range—supports distributions and potential incremental capital returns if yield overshoots .
  • Near-term watch items: Q4 O&M/G&A +20–25% (Aris inclusion), crude/NGLs sequential rebound timing, and Powder River Basin activity amid commodity weakness .
  • 2026 setup: Capex ≥$1.1B with North Loving II and Pathfinder as anchors; leverage ~3x maintains flexibility for organic and inorganic initiatives .
  • Trading implications: Expect narrative to focus on FCF durability, produced-water moat/regulatory tailwinds, and synergy execution pace; any confirmatory Q4 volume/margin prints could be stock catalysts .